navb20200930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

September 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35076

NAVIDEA BIOPHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

31-1080091

State or Other Jurisdiction of

Incorporation or Organization

IRS Employer Identification No.

4995 Bradenton Avenue, Suite 240, Dublin, Ohio		43017-3552
Address of Principal Executive Offices		Zip Code

(614) 793-7500

Registrant’s Telephone Number, Including Area Code

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock	NAVB	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b-2 of the Act.) Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 26,687,198 shares of common stock, par value $.001 per share (as of the close of business on November 6, 2020).

	September 30, 2020			December 31, 2019
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	3,722,852		$	1,047,159
Stock subscriptions and other receivables		820,211			901,339
Prepaid expenses and other		249,888			967,285
Total current assets		4,792,951			2,915,783
Property and equipment		838,714			1,207,537
Less accumulated depreciation and amortization		704,411			1,177,327
Property and equipment, net		134,303			30,210
Right-of-use lease assets		458,280			404,594
Less accumulated amortization		178,003			122,906
Right-of-use lease assets, net		280,277			281,688
License agreements, patents and trademarks		680,750			478,672
Less accumulated amortization		119,638			93,259
License agreements, patents and trademarks, net		561,112			385,413
Other assets		227,192			537,812
Total assets	$	5,995,835		$	4,150,906
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	1,115,871		$	1,112,069
Accrued liabilities and other		2,246,634			2,150,974
Notes payable		366,000			305,955
Lease liabilities, current		285,913			250,553
Total current liabilities		4,014,418			3,819,551
Lease liabilities		380,236			512,344
Deferred revenue		700,000			700,000
Total liabilities		5,094,654			5,031,895
Commitments and contingencies (Note 10)
Stockholders’ equity (deficit):
Preferred stock; $.001 par value; 5,000,000 shares authorized; no shares issued or outstanding as of September 30, 2020 and December 31, 2019, respectively		—			—
Series D preferred stock subscribed; $.001 par value, 148,500 and 0 shares subscribed as of September 30, 2020 and December 31, 2019, respectively		149			—
Series D preferred stock subscriptions receivable		(14,150,000	)		—
Common stock; $.001 par value; 300,000,000 shares authorized; 26,373,908 and 19,234,960 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		217,370			210,232
Common stock subscribed; $.001 par value, 1,000,000 and 902,162 shares subscribed as of September 30, 2020 and December 31, 2019, respectively		1,000			902
Common stock subscriptions receivable		(5,000,000	)		—
Additional paid-in capital		375,154,360			345,847,676
Accumulated deficit		(356,053,002	)		(347,671,102	)
Total Navidea stockholders' equity (deficit)		169,877			(1,612,292	)
Noncontrolling interest		731,304			731,303
Total stockholders’ equity (deficit)		901,181			(880,989	)
Total liabilities and stockholders’ equity (deficit)	$	5,995,835		$	4,150,906

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Revenue:
Royalty revenue	$	2,047		$	4,895		$	26,188		$	13,985
License revenue		4,726			—			4,726			9,953
Grant and other revenue		261,616			231,916			664,848			514,589
Total revenue		268,389			236,811			695,762			538,527
Cost of revenue		82			195			1,048			6,559
Gross profit		268,307			236,616			694,714			531,968
Operating expenses:
Research and development		1,377,998			1,801,558			3,659,046			3,612,783
Selling, general and administrative		1,788,934			1,519,496			4,946,279			5,109,612
Total operating expenses		3,166,932			3,321,054			8,605,325			8,722,395
Loss from operations		(2,898,625	)		(3,084,438	)		(7,910,611	)		(8,190,427	)
Other income (expense):
Interest (expense) income, net		(149	)		11,858			12,822			23,336
Other, net		(564	)		(1,524	)		(777	)		(5,880	)
Total other (expense) income, net		(713	)		10,334			12,045			17,456
Loss before income taxes		(2,899,338	)		(3,074,104	)		(7,898,566	)		(8,172,971	)
Provision for income taxes		—			—			—			(707	)
Loss from continuing operations		(2,899,338	)		(3,074,104	)		(7,898,566	)		(8,173,678	)
Loss from discontinued operations, net of tax effect		—			—			—			(2,665	)
Net loss		(2,899,338	)		(3,074,104	)		(7,898,566	)		(8,176,343	)
Loss (income) attributable to noncontrolling interest		—			2			(1	)		16
Deemed dividend on Series C and Series D Preferred Stock beneficial conversion features		(405,555	)		—			(483,333	)		—
Net loss attributable to common stockholders	$	(3,304,893	)	$	(3,074,102	)	$	(8,381,900	)	$	(8,176,327	)
Loss per common share (basic and diluted):
Continuing operations	$	(0.13	)	$	(0.17	)	$	(0.37	)	$	(0.62	)
Attributable to common stockholders	$	(0.13	)	$	(0.17	)	$	(0.37	)	$	(0.62	)
Weighted average shares outstanding		25,843,732			18,044,406			22,946,201			13,082,393

For the Nine Months Ended September 30, 2020
	Preferred Stock						Preferred Stock Subscribed				Preferred Stock Subscriptions			Common Stock Issued				Common Stock Subscribed						Common Stock Subscriptions			Additional Paid-In			Accumulated			Accumulated Other Comprehensive		Non-controlling
	Shares			Amount			Shares		Amount		Receivable			Shares		Amount		Shares			Amount			Receivable			Capital			Deficit			Loss		Interest			Total
Balance, January 1, 2020		-		$	-			-	$	-	$	-			19,234,960	$	210,232		902,162		$	902		$	-		$	345,847,676		$	(347,671,102	)	$	-	$	731,303		$	(880,989	)
Issued stock in payment of services		-			-			-		-		-			3,810		4		-			-			-			4,797			-			-		-			4,801
Issued stock in payment of employee bonuses		-			-			-		-		-			53,315		53		-			-			-			64,458			-			-		-			64,511
Issued stock pursuant to private placement		-			-			-		-		-			902,162		902		(902,162	)		(902	)		-			-			-			-		-			-
Issued stock pursuant to registered direct offering, net of issuance costs		-			-			-		-		-			1,000,001		1,000		-			-			-			699,000			-			-		-			700,000
Stock subscribed in connection with private placement		-			-			-		-		-			-		-		2,373,529			2,374			(912,500	)		2,015,126			-			-		-			1,105,000
Stock subscribed in connection with registered direct offering		-			-			-		-		-			-		-		647,058			647			-			549,353			-			-		-			550,000
Stock compensation expense		-			-			-		-		-			-		-		-			-			-			39,246			-			-		-			39,246
Comprehensive loss:
Net loss		-			-			-		-		-			-		-		-			-			-			-			(2,673,610	)		-		2			(2,673,608	)
Total comprehensive loss		-			-			-		-		-			-		-		-			-			-			-			-			-		-			(2,673,608	)
Balance, March 31, 2020		-			-			-		-		-			21,194,248		212,191		3,020,587			3,021			(912,500	)		349,219,656			(350,344,712	)		-		731,305			(1,091,039	)
Issued restricted stock		-			-			-		-		-			10,000		10		-			-			-			-			-			-		-			10
Issued stock pursuant to registered direct offering		-			-			-		-		-			647,058		647		(647,058	)		(647	)		-			-			-			-		-			-
Issued stock pursuant to private placement		-			-			-		-		-			1,911,800		1,912		(1,911,800	)		(1,912	)		520,030			-			-			-		-			520,030
Issued stock to 401(k) plan		-			-			-		-		-			32,651		33		-			-			-			39,801			-			-		-			39,834
Issued stock upon exercise of warrants		-			-			-		-		-			300,595		300		-			-			-			(300	)		-			-		-			-
Issued stock in payment of employee bonuses		-			-			-		-		-			40,844		41		-			-			-			106,970			-			-		-			107,011
Issued Series C Preferred Stock		70,000			70			-		-		-			-		-		-			-			-			699,930			-			-		-			700,000
Deemed dividend on Series C Preferred Stock		-			-			-		-		-			-		-		-			-			-			77,778			(77,778	)		-		-			-
Issued stock upon conversion of Series C Preferred Stock		(70,000	)		(70	)		-		-		-			410,765		411		-			-			-			(341	)		-			-		-			-
Stock subscribed in connection with private placement		-			-			-		-		-			-		-		-			-			392,470			-			-			-		-			392,470
Stock compensation expense		-			-			-		-		-			-		-		-			-			-			34,588			-			-		-			34,588
Comprehensive loss:
Net loss		-			-			-		-		-			-		-		-			-			-			-			(2,325,618	)		-		(1	)		(2,325,619	)
Total comprehensive loss		-			-			-		-		-			-		-		-			-			-			-			-			-		-			(2,325,619	)
Balance, June 30, 2020		-			-			-		-		-			24,547,961		215,545		461,729			462			-			350,178,082			(352,748,108	)		-		731,304			(1,622,715	)
Issued Series C Preferred Stock, net of costs		350,000			350			-		-		-			-		-		-			-			-			3,462,828			-			-		-			3,463,178
Deemed dividend on Series C Preferred Stock		-			-			-		-		-			-		-		-			-			-			388,889			(388,889	)		-		-			-
Issued stock upon conversion of Series C Preferred Stock		(350,000	)		(350	)		-		-		-			1,014,311		1,014		-			-			-			(664	)		-			-		-			-
Issued stock in payment of Series C Preferred Stock fees		-			-			-		-		-			14,205		14		-			-			-			(14	)		-			-		-			-
Issued stock pursuant to private placement		-			-			-		-		-			461,729		462		(461,729	)		(462	)		-			-			-			-		-			-
Issued stock pursuant to Jubilant MOU		-			-			-		-		-			209,205		209		-			-			-			999,791			-			-		-			1,000,000
Issued restricted stock		-			-			-		-		-			50,000		50		-			-			-			-			-			-		-			50
Issued stock in payment of services		-			-			-		-		-			20,000		20		-			-			-			65,380			-			-		-			65,400
Issued Series D Preferred Stock, net of costs		1,500			2			-		-		-			-		-		-			-			-			132,089			-			-		-			132,091
Deemed dividend on Series D Preferred Stock		-			-			-		-		-			-		-		-			-			-			16,667			(16,667	)		-		-			-
Issued stock upon conversion of Series D Preferred Stock		(1,500	)		(2	)		-		-		-			56,497		56		-			-			-			(54	)		-			-		-			-
Stock subscribed in connection with Series D Preferred Stock		-			-			148,500		149		(14,150,000	)		-		-		-			-			-			14,849,851			-			-		-			700,000
Stock subscribed in connection with private placement		-			-			-		-		-			-		-		1,000,000			1,000			(5,000,000	)		4,999,000			-			-		-			-
Stock compensation expense		-			-			-		-		-			-		-		-			-			-			62,515			-			-		-			62,515
Comprehensive loss:
Net loss		-			-			-		-		-			-		-		-			-			-			-			(2,899,338	)		-		-			(2,899,338	)
Total comprehensive loss		-			-			-		-		-			-		-		-			-			-			-			-			-		-			(2,899,338	)
Balance, September 30, 2020		-		$	-			148,500	$	149	$	(14,150,000	)		26,373,908	$	217,370		1,000,000		$	1,000		$	(5,000,000	)	$	375,154,360		$	(356,053,002	)	$	-	$	731,304		$	901,181

Consolidated Statements of Stockholders’ Equity (Deficit) (continued)

For the Nine Months Ended September 30, 2019
	Common Stock					Additional Paid-In			Accumulated			Accumulated Other Compre -hensive (Loss)			Non- controlling			Total Stockholders’
	Shares			Amount		Capital			Deficit			Income			Interest			Equity
Balance, January 1, 2019		10,019,535		$	200,391	$	338,265,383		$	(336,722,905	)	$	(730	)	$	668,321		$	2,410,460
Issued restricted stock		15,000			300		—			—			—			—			300
Issued stock pursuant to Stock Purchase Agreement		17,857			357		49,643			—			—			—			50,000
Stock compensation expense		—			—		61,978			—			—			—			61,978
Comprehensive loss:
Net loss		—			—		—			(2,429,049	)		—			(12	)		(2,429,061	)
Unrealized gain on available-for-sale securities		—			—		—			—			958			—			958
Total comprehensive loss		—			—		—			—			—			—			(2,428,103	)
Balance, March 31, 2019		10,052,392			201,048		338,377,004			(339,151,954	)		228			668,309			94,635
Rounding adjustments related to reverse stock split		(1,114	)		—		(3,385	)		—			—			—			(3,385	)
Issued stock to 401(k) plan		8,128			8		19,580			—			—			—			19,588
Shares issued for public offering, net of offering costs of $841,559		8,000,000			8,000		5,158,441			—			—			—			5,166,441
Value of warrants issued in connection with public offering		—			—		261,288			—			—			—			261,288
Stock compensation expense		—			—		66,159			—			—			—			66,159
Comprehensive loss:
Net loss		—			—		—			(2,673,176	)		—			(3	)		(2,673,179	)
Unrealized loss on available-for-sale securities		—			—		—			—			(40	)		—			(40	)
Total comprehensive loss		—			—		—			—			—			—			(2,673,219	)
Balance, June 30, 2019		18,059,406			209,056		343,879,087			(341,825,130	)		188			668,306			2,931,507
Stock compensation expense		—			—		50,042			—			—			—			50,042
Comprehensive loss:
Net loss		—			—		—			(3,074,102	)		—			(2	)		(3,074,104	)
Unrealized loss on available-for-sale securities		—			—		—			—			(188	)		—			(188	)
Total comprehensive loss		—			—		—			—			—			—			(3,074,292	)
Balance, September 30, 2019		18,059,406		$	209,056	$	343,929,129		$	(344,899,232	)	$	—		$	668,304		$	(92,743	)

1.	Summary of Significant Accounting Policies

Basis of Presentation: The information presented as of September 30, 2020 and for the three-month and nine-month periods ended September 30, 2020 and 2019 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. In addition, 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 September 30, 2020 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, 2019, 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, as well as those of our majority-owned subsidiary, Macrophage Therapeutics, Inc. (“MT”). All significant inter-company accounts were eliminated in consolidation.

In March 2020, the World Health Organization categorized the current COVID-19 outbreak as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. COVID-19 continues to spread globally, including throughout the United States, which has impacted the global economy and may impact our operations, including the potential interruption of our clinical trial activities and our supply chain. To date, we do not believe there has been any appreciable impact to the Company’s clinical development and regulatory timelines resulting from COVID-19. However, the COVID-19 pandemic has adversely affected economies and financial markets worldwide, resulting in an economic downturn that could impact our business, financial condition and results of operations, including our ability to obtain additional funding, if needed. The funding from the February 2020 transactions described in Note 2 below was received on a delayed basis during the second and third quarters of 2020, due in part to the COVID-19 pandemic and its devastating impact on global financial markets. The extent to which COVID-19 impacts our operations and financial results will depend on numerous evolving factors that we are not able to accurately predict, including: the duration and scope of the pandemic, government actions taken in response to the pandemic, and the impact on our ability to continue to conduct our clinical trials

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, stock subscriptions 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 as of September 30, 2020 and December 31, 2019 primarily consisted of the face amount of the notes plus accrued interest. As of September 30, 2020 and December 31, 2019, the fair value of our notes payable was approximately $366,000 and $306,000, both amounts equal to the carrying value of the notes payable. See Note 8.

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.

Leases: All of our leases are operating leases and are included in right-of-use lease assets, current lease liabilities and noncurrent lease liabilities on our consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s incremental borrowing rates or implicit rates, when readily determinable. The discount rates used for each lease were based principally on the Platinum debt, which was secured and outstanding for most of 2018. We used a “build-up” method where the approach was to estimate the risk/credit spread priced into the debt rate and then adjust that for the remaining term of each lease. Additionally, some market research was completed on the Company’s peer group as identified for purposes of compensation analysis. Short-term operating leases which have an initial term of 12 months or less are not recorded on the consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease expense is included in selling, general and administrative expenses on our consolidated statements of operations. See Note 9.

Series C and Series D Convertible Preferred Stock: The Company evaluated the provisions of the Series C and Series D Preferred Stock under Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity, ASC 815, Derivatives and Hedging, ASC 470, Debt, and Accounting Series Release (“ASR”) 268, Presentation in Financial Statements of “Redeemable Preferred Stocks.” Based on this evaluation, the Company determined that neither the Series C nor Series D Preferred Stock is a mandatorily redeemable financial instrument and any obligation to issue a variable number of shares of Common Stock is not unconditional. Accordingly, the Series C and Series D Preferred Stock should be classified as equity. Neither the embedded conversion option nor the embedded call option meet the criteria to be separated from the Series C or Series D Preferred stock and thus these features should not be bifurcated and accounted for as derivatives. Additionally, both the Series C and Series D Preferred Stock contain a beneficial conversion feature (“BCF”) that results in an increase to additional paid-in capital and a discount on the Series C and Series D Preferred Stock. The discount on the Series C and Series D Preferred Stock is considered to be fully amortized at the date of issuance because the Series C and Series D Preferred Stock are immediately convertible. This results in a deemed dividend at the date of issuance for the amount of the BCF. Finally, the Company determined that the conversion features of the Series D Preferred Stock cannot result in the Company being required to redeem a portion of the shares converted, thus the Series D Preferred Stock should not be classified in mezzanine equity. See Note 11.

Recently Adopted Accounting Standards: In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 is intended to improve the effectiveness of disclosure requirements on fair value measurements in Topic 820. ASU 2018-13 modifies certain disclosure requirements and is effective for annual and interim reporting periods beginning after December 15, 2019. The adoption of ASU 2018-13 did not have any impact on our consolidated financial statements or our fair value disclosures.

Recently Issued Accounting Standards: In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to improve consistent application and simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance. ASU 2019-12 is effective for annual and interim reporting periods beginning after December 15, 2020, with early adoption permitted. We do not expect the adoption of ASU 2019-12 to have a material impact on our consolidated financial statements.

In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 was issued to reduce the complexity associated with accounting for certain financial instruments with characteristics of liabilities and equity. ASU 2020-06 reduces 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 2020-06 also 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 2020-06 is 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, 2023 for 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 the adoption on ASU 2020-06 on our consolidated financial statements.

Liquidity

As disclosed in the Company’s Annual Report on Form 10-K and other filings, the Company has been engaged in litigation with Platinum-Montaur Life Sciences LLC (“Platinum-Montaur”), an affiliate of Platinum Management (NY) LLC, Platinum Partners Value Arbitrage Fund L.P., Platinum Partners Capital Opportunity Fund, Platinum Partners Liquid Opportunity Master Fund L.P., Platinum Liquid Opportunity Management (NY) LLC, and Montsant Partners LLC (collectively, “Platinum”), in which Platinum-Montaur was seeking damages of approximately $1.9 million plus interest. See Note 10.

In addition, the Company is engaged in ongoing litigation with our former President and Chief Executive Officer, Dr. Michael Goldberg. See Notes 6 and 10.

The Company has also been engaged in ongoing litigation with Capital Royalty Partners II L.P. (“CRG”) and pursuing recovery of approximately $4.3 million and other damages. On November 27, 2019, the Court of Common Pleas of Franklin County, Ohio (the “Ohio Court”) entered a judgment in the amount of $4.3 million to Navidea, plus statutory interest from April 9, 2018 (the “CRG Judgment”). See Note 10.

In December 2019, the Company executed a Stock Purchase Agreement with the investors named therein. Pursuant to the Stock Purchase Agreement, the investors agreed to purchase approximately 2.1 million shares of the Company’s Common Stock in a private placement for aggregate gross proceeds to the Company of approximately $1.9 million. Of this amount, approximately $1.1 million was received during 2019. The remaining $812,000 of proceeds were received and the related Common Stock was issued in January 2020. See Note 11.

In February 2020, the Company executed agreements with two existing investors to purchase approximately 4.0 million shares of the Company’s Common Stock for aggregate gross proceeds to Navidea of approximately $3.4 million. The entire $3.4 million was received during the first three quarters of 2020. See Note 11.

On May 6, 2020, the Company entered into a Stock Purchase Agreement and Letter of Investment Intent with Keystone Capital Partners, LLC (“Keystone”) pursuant to which the Company agreed to issue to Keystone 420,000 shares of newly-designated Series C Redeemable Convertible Preferred Stock (the “Series C Preferred Stock”) for an aggregate purchase price of $4.2 million. The entire $4.2 million was received and the related Series C Preferred Stock was issued during the second and third quarters of 2020. The Series C Preferred Stock was guaranteed by a portion of the proceeds of the CRG Judgment. See Note 11.

On August 9, 2020, the Company entered into a binding memorandum of understanding (“MOU”) with Jubilant Draximage Inc., dba Jubilant Radiopharma, Radiopharmaceuticals Division (“Jubilant”). The MOU outlines the terms and framework for a potential Exclusive License and Distribution Agreement (“ELDA”) for Navidea’s Tc99m-Tilmanocept Rheumatoid Arthritis diagnostic application (“TRA”) in the United States, Canada, Mexico, and Latin America. In connection with the MOU, the Company entered into a Stock Purchase Agreement with Jubilant (the “Jubilant Stock Purchase Agreement”), pursuant to which Jubilant purchased $1.0 million in shares of the Company’s common stock (the “Transaction Shares”) in exchange for exclusivity of negotiations while due diligence efforts are completed. The investment was priced “at market,” which was the closing price of Navidea’s common stock on the NYSE American on the trading day immediately preceding the investment.

The MOU outlines certain terms that are expected to be included in the ELDA, including:

●

Jubilant to provide Navidea with an additional $19.0 million in the form of stock purchases and license fees, subject to the achievement of certain milestones, to be used to fund Navidea’s upcoming NAV3-32 (Phase 2b) and NAV3-33 (Phase 3) trials.

●

Jubilant will pay license fees and sales-based royalties to Navidea based on revenue generated from the sale of TRA in the licensed territory.

●

Jubilant will serve as the exclusive commercial and distribution partner for TRA in the United States, Canada, Mexico, and Latin America. Jubilant will be responsible for all commercialization efforts within the licensed territory.

The execution of the ELDA is subject to certain conditions, including negotiation of a definitive agreement in mutually acceptable form and Jubilant’s completion of its due diligence. See Note 11.

On August 30, 2020, the Company entered into a Stock Purchase Agreement (the “Common Stock Purchase Agreement”) with each of the investors named therein (the “Investors”), pursuant to which the Investors agreed to purchase from the Company, up to $25.0 million in shares of the Company’s common stock, par value $0.001 per share (“Common Stock”). See Note 11.

On August 31, 2020, the Company entered into a Stock Purchase Agreement and Letter of Investment Intent (the “Series D Preferred Stock Purchase Agreement” and, together with the Common Stock Purchase Agreement, the “Purchase Agreements”) with Keystone pursuant to which the Company agreed to issue to Keystone 150,000 shares of newly-designated Series D Redeemable Convertible Preferred Stock (the “Series D Preferred Stock”) for an aggregate purchase price of $15.0 million. Pursuant to the Series D Preferred Stock Purchase Agreement, Keystone will purchase Series D Preferred Stock in amounts to be determined by Keystone in one or more closings (each, a “Series D Call Closing”). The Series D Preferred Stock will be convertible into a maximum of 5,147,000 shares of Common Stock. See Notes 11 and 16.

Navidea intends to use the net proceeds from these transactions to fund its research and development programs, including continued advancement of its two Phase 2b and Phase 3 clinical trials of Tc99m tilmanocept in patients with rheumatoid arthritis, and for general working capital purposes and other operating expenses.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020. Among the provisions contained in the CARES Act is the creation of the Payroll Protection Program (“PPP”) that provides for Small Business Administration (“SBA”) Section 7(a) loans for qualified small businesses. PPP loan proceeds are available to be used to pay for payroll costs, including salaries, commissions, and similar compensation, group health care benefits, and paid leaves; rent; utilities; and interest on certain other outstanding debt. On May 18, 2020, Fifth Third Bank (the “Lender”) funded a loan to the Company in the amount of $366,000 under the SBA’s PPP (the “PPP Loan”). In accordance with the loan forgiveness requirements of the CARES Act, the Company used the proceeds from the PPP Loan primarily for payroll costs, rent and utilities, thus the Company anticipates that 100% of the loan will be forgiven.

During the ongoing COVID-19 global pandemic, the Company’s primary focus is the safety of its employees, the employees of its clinical trial sites, and the patients enrolled in its clinical trials. The Company is working to mitigate any safety risk along with any long-term impact on its clinical development programs. To date, we do not believe there has been any appreciable impact to the Company’s clinical development and regulatory timelines resulting from COVID-19. The funding from the February 2020 transactions described above was received on a delayed basis during the second and third quarters of 2020, due in part to the COVID-19 pandemic and its devastating impact on global financial markets.

The Company has experienced recurring net losses and has used significant cash to fund its operations. The Company has considerable discretion over the extent of development project expenditures and has the ability to curtail the related cash flows as needed. The February 2020 transactions described above have provided approximately $7.6 million of additional working capital. The August 2020 transactions described above may potentially provide up to an additional $60.0 million of working and growth capital, $20.0 million of which is fully committed. The Company also has funds remaining under outstanding grant awards, and continues working to establish new sources of funding, including collaborations, potential equity investments, and additional grant funding that can augment the balance sheet. Based on our committed equity investments, current working capital, and our projected cash burn, management believes that the Company will be able to continue as a going concern for at least twelve months following the filing of this Quarterly Report on Form 10-Q.

3.	Revenue from Contracts with Customers

Navidea is focused on the development and commercialization of precision immunodiagnostic agents and immunotherapeutics. We manage our business based on two primary types of drug products: (i) diagnostic substances, including Tc99m tilmanocept and other diagnostic applications of our Manocept platform, and (ii) therapeutic development programs, including all therapeutic applications of our Manocept platform. Tc99m tilmanocept, which the Company has a license to distribute outside of Canada, Mexico and the United States, is the only one of the Company’s drug product candidates that has been approved for sale in any market. The Company has license and distribution agreements in place in India and China, however Tc99 tilmanocept has not been approved in either of those markets. On May 11, 2020, the Company terminated its license and distribution agreement in Europe, which is the only market in which Tc99m tilmanocept has been approved.

The Company also has an agreement in place to provide Meilleur Technologies, Inc., (“Meilleur”), a wholly-owned subsidiary of Cerveau Technologies, Inc. (“Cerveau”), worldwide rights to conduct research using NAV4694, as well as an exclusive license for the development and commercialization of NAV4694 in Australia, Canada, China, and Singapore. Meilleur also has an option to commercialize worldwide.

Currently, the Company recognizes revenue from up-front license fees and pre-market milestones after the cash has been received from its customers and the performance obligations have been met. Payments for sales-based royalties and milestones are generally received after the related revenue has been recognized and invoiced. Normal payment terms generally range from 15 to 90 days following milestone achievement or royalty invoice, in accordance with each contract.

Up-front and milestone payments received related to our license and distribution agreements in India and China are deferred until Tc99m tilmanocept has been approved by the regulatory authorities in each of those countries. It is not possible to determine with any degree of certainty whether or when regulatory approval for this product will be achieved in India or China, if at all. In addition, since sales of Tc99m tilmanocept have not yet begun in India or China, there is no basis for estimating whether, to what degree, or the rate at which the product will be accepted and utilized in these markets. Therefore, it is not possible to determine with any degree of certainty the expected sales in future periods in those countries. As such, the Company intends to recognize revenue from up-front and milestone payments on a straight-line basis beginning at the time of regulatory approval in each country through the end of the initial term of each agreement. The initial term of each agreement begins on the date of regulatory approval in each country and lasts for eight years in India and ten years in China.

The transaction price of a contract is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer. Transaction prices do not include amounts collected on behalf of third parties (e.g., sales taxes). To determine the transaction price of a contract, the Company considers the terms of the contract. For the purpose of determining transaction prices, the Company assumes that the goods or services will be transferred to the customer as promised in accordance with existing contracts and that the contracts will not be cancelled, renewed, or modified.

When estimating a contract’s transaction price, the Company considers all the information (historical, current, and forecasted) that is reasonably available to it and identifies possible consideration amounts. Most of the Company’s contracts with customers include both fixed and variable components of the transaction price. Under those contracts, some or all of the consideration for satisfied performance obligations is contingent on events over which the Company has no direct influence. For example, regulatory approval or product sales volume milestones are contingent upon the achievement of those milestones by the distributor. Additionally, the prices charged to end users of Tc99m tilmanocept, upon which royalty payments are based in Europe, India and China, are set by the distributor in each of those countries.

The milestone payments have a binary outcome (that is, the Company will either receive all or none of each milestone payment) and can be estimated using the most-likely-amount method. Taking into account the constraint on variable consideration, the Company has assessed the likelihood of achieving the non-sales-based milestone payments in our contracts and has determined that it is probable the milestones will be achieved and the Company will receive the consideration. Accordingly, it is probable that including those payments in the transaction price will not result in a significant revenue reversal when the contingency is resolved. Therefore, the amount of the non-sales-based milestone payments is included in the transaction price.

Royalties are estimated based on the expected value method because they are based on a variable amount of sales representing a range of possible outcomes. However, when taking into account the constraint on variable consideration, the estimate of future royalties included in the transaction price is generally $0. This conclusion is based on the fact that Tc99m tilmanocept is early in the commercial launch process in Europe and sales have not yet begun in India or China, therefore there is currently no basis for estimating whether, to what degree, or the rate at which the product will be accepted and utilized in these markets. Similarly, we currently have no basis for estimating whether sales-based milestones will ever be achieved. Accordingly, the Company recognizes revenue from royalties when the related sales occur and from sales-based milestones when they are achieved.

The sublicense of NAV4694 to Meilleur provides for payments to Navidea including up-front payments, milestones, an option for worldwide commercial rights, royalties on net sales, and reimbursement for product development assistance during the initial transition period. In accordance with Accounting Standards Codification No. 606, Revenue from Contracts with Customers (“ASC 606”), the upfront payments were recognized upon contract inception, and reimbursement for product development assistance will be recognized on a monthly basis. Should some or all of the variable consideration from milestones, the option and royalties meet the requirements of ASC 606 to be included in the transaction price, those amounts will be recognized as revenue in future periods.

Up-front fees, milestones and royalties are generally non-refundable. Therefore, the Company does not estimate expected refunds nor do we adjust revenue downward. The Company will evaluate and update the estimated transaction prices of its contracts with customers at the end of each reporting period.

During the three-month periods ended September 30, 2020 and 2019, the Company recognized revenue from contracts with customers of approximately $7,000 and $5,000, respectively. During the nine-month periods ended September 30, 2020 and 2019, the Company recognized revenue from contracts with customers of approximately $31,000 and $35,000, respectively. During the three-month and nine-month periods ended September 30, 2020 and 2019, the Company did not recognize any related impairment losses, nor did the Company recognize any revenue from performance obligations associated with long-term contracts that were satisfied (or partially satisfied) in previous periods.

The following table disaggregates the Company’s revenue from contracts with customers for the three-month and nine-month periods ended September 30, 2020 and 2019.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Royalty revenue:
Tc99m tilmanocept - Europe	$	2,047	$	4,895	$	26,188	$	13,985

License revenue:
Tc99m tilmanocept - Europe	$	4,726	$	—	$	4,726	$	—
NAV4694		—		—		—		9,953
Total license revenue	$	4,726	$	—	$	4,726	$	9,953

Other revenue:
Additional stability studies	$	—	$	—	$	—	$	11,024

The following economic factors affect the nature, amount, timing and uncertainty of the Company’s revenue and cash flows as indicated:

Geographical Location of Customers: Drug pricing models vary among different markets, which in turn may affect the royalty rates and milestones we are able to negotiate with our distributors in those markets. Royalty rates and milestone payments vary by contract but may be based in part on the potential market size in each territory. In the case of Tc99m tilmanocept, royalty rates for Europe have been lower than rates in India but higher than in China.

Status of Regulatory Approval: The majority of revenue from contracts with customers will generally be recognized after the product is approved for sale in each market. Each Tc99m tilmanocept customer operates in its own distinct regulatory environment, and the laws and pathways to drug product approval vary by market. Tc99m tilmanocept has been approved for sale in Europe, thus the Company has begun to recognize royalties from sales in Europe. Tc99m tilmanocept has not yet been approved for sale in India or China, and may never achieve approval in those markets. The regulatory pathways and timelines in those markets will impact whether and when the Company recognizes the related royalties and milestones. Similarly, NAV4694 has not yet been approved for sale in any market, thus the timing of any revenue related to that product will be dependent on the regulatory pathways and timelines in each market in which Meilleur seeks regulatory approval.

Through September 30, 2020, the Company has not capitalized any contract-related costs as contract assets.

The following table summarizes the changes in contract liabilities, the current portion of which is included in accrued liabilities and other in the consolidated balance sheets, during the three-month and nine-month periods ended September 30, 2020 and 2019.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Total deferred revenue, beginning of period	$	860,000		$	1,195,000		$	700,000		$	711,024
Revenue deferred related to sublicense		—			—			160,000			495,000
Refund of deferred revenue related to sublicense		(160,000	)		(495,000	)		(160,000	)		(495,000	)
Revenue recognized from satisfaction of performance obligations		—			—			—			(11,024	)
Total deferred revenue, end of period	$	700,000		$	700,000		$	700,000		$	700,000

The Company had trade receivables of approximately $0 outstanding as of September 30, 2020 and December 31, 2019.

In addition to revenue from contracts from customers, we also generate revenue from National Institutes of Health (“NIH”) grants to support various product development initiatives. ASC 606 applies to revenue from contracts with customers. A customer is defined as a party that has contracted with an entity to obtain goods or services that are an output of the entity’s ongoing major or central operations in exchange for consideration. The Company’s ongoing major or central operations consist of the development and commercialization of precision immunodiagnostic agents and immunotherapeutics. The NIH and its various institutes are responsible for biomedical and public health research and provide major biomedical research funding to non-NIH research facilities and entities such as Navidea. While the Company will directly benefit from any knowledge gained from the project, there is also a public health benefit provided, which justifies the use of public funds in the form of the grants. Based on the nature of the Company’s operations and the terms of the grant awards, Navidea and the NIH do not have a vendor-customer relationship and the grant awards are outside the scope of ASC 606. Accordingly, ASC 606 need not be applied to NIH grants.

On May 11, 2020 (the “Termination Date”), the Company entered into a Termination Agreement (the “Termination Agreement”) with SpePharm AG (“SpePharm”) and Norgine BV (“Norgine”) which terminated that certain Exclusive License Agreement dated March 5, 2015 (as amended to date, the “License Agreement”). Under the License Agreement, SpePharm had the exclusive right to develop, manufacture and commercialize the Company’s products approved for radiolabeling with Tc99m and containing Lymphoseek® (collectively, the “Products”) in several jurisdictions abroad, including the United Kingdom, France, Germany, Australia and New Zealand (collectively, the “Licensed Territory”). In exchange for such rights, the Company was entitled to certain royalty payments.

Pursuant to the Termination Agreement, the parties agreed that neither owed the other any payments due under the License Agreement as of the Termination Date and that, among other things, SpePharm will no longer have any right in, nor claim to, any intellectual property owned by the Company or its affiliates anywhere in the world. SpePharm also agreed to perform certain wind-down activities (the “Wind-Down Activities”) during the six-month period following the Termination Date (the “Transition Period”), which Transition Period may be extended by up to ninety days. The Wind-Down Activities include, without limitation, SpePharm transferring to the Company or its designee(s) the regulatory approvals controlled by SpePharm or its affiliates for the purpose of marketing, distributing and selling the Products in the Licensed Territory. SpePharm will also transfer to the Company certain tenders and other customer and sales contracts related to the Products. Subject to the terms of the Termination Agreement, Norgine, an affiliate of SpePharm, agreed to guarantee SpePharm’s performance of its obligations under the Termination Agreement.

6.	Investment in Macrophage Therapeutics, Inc.

In August 2018, 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 an Agreement (the “Goldberg Agreement”), with the intent of entering into one or more additional definitive agreements, which set forth the terms of the separation from service. On February 11, 2019, Dr. Goldberg represented to the MT board of directors that he had, without MT board of directors 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 in accordance with its terms, effective March 1, 2019, due to MT’s insolvency. On February 20, 2019, the MT board of directors removed Dr. Goldberg as President and Chief Executive Officer of MT and from any other office of MT to which he may have been appointed or in which he was serving. Dr. Goldberg remains a member of the MT board of directors, together with Y. Michael Rice and Dr. Claudine Bruck. Mr. Rice and Dr. Bruck also remain members of Navidea’s Board of Directors. The MT board of directors then appointed Jed A. Latkin to serve as President and Chief Executive Officer of MT.

New York Litigation Involving Dr. Goldberg

On February 20, 2019, Navidea filed a complaint against Dr. Goldberg in the United States District Court, Southern District of New York (the “District Court”), alleging breach of the Goldberg 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 Goldberg Agreement is excused and that Navidea is entitled to terminate the Goldberg 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 Goldberg Agreement, wrongful termination, injunctive relief, and quantum meruit.

On December 26, 2019, the District Court ruled on several motions related to Navidea and MT and Dr. Goldberg that substantially limited the claims that Dr. Goldberg can pursue against Navidea and MT. Specifically, the District Court found that certain portions of Dr. Goldberg’s counterclaims against Navidea and third-party claims against MT failed to state a claim upon which relief can be granted. Additionally, the Court ruled that actions taken by Navidea and MT, including reconstituting the MT board of directors, replacing Dr. Goldberg with Jed A. Latkin as Chief Executive Officer of MT, terminating the sublicense between Navidea and MT, terminating certain research projects, and allowing MT intellectual property to revert back to Navidea, were not breaches of the Goldberg Agreement.

The District Court also rejected Dr. Goldberg’s claim for wrongful termination as Chief Executive Officer of MT. In addition, the District Court found that Dr. Goldberg lacked standing to seek injunctive relief to force the removal of Dr. Claudine Bruck and Y. Michael Rice from MT’s board of directors, to invalidate all actions taken by the MT board of directors on or after November 29, 2018 (the date upon which Dr. Bruck and Mr. Rice were appointed by Navidea to the MT board of directors), or to reinstate the terminated sublicense between Navidea and MT.

In addition, the District Court found Navidea’s breach of fiduciary duty claim against Dr. Goldberg for conduct occurring more than three years prior to the filing of the complaint to be time-barred and that Dr. Goldberg is entitled to an advancement of attorneys’ fees solely with respect to that claim. The parties are in the process of submitting the issue to the District Court for resolution on how much in fees Dr. Goldberg is owed under the District Court’s order.

On January 27, 2020, Dr. Goldberg filed a motion seeking additional advancement from Navidea for fees in connection with the New York Action and the Delaware Action. Navidea has opposed the motion and the District Court referred the matters to a Magistrate Judge. On July 9, 2020, the Magistrate Judge issued her Report and Recommendation which recommended that: (1) the District Court decline to exercise jurisdiction over Dr. Goldberg’s motion as it pertained to expenses and fees incurred in defense of the Delaware Action; (2) the District Court decline to award any fees to Dr. Goldberg for the breach of fiduciary duty without additional motion practice on the issue; (3) the District Court find that Dr. Goldberg is entitled to advancement of his expenses and fees reasonably incurred in the defense of the remainder of the New York action subject to Dr. Goldberg’s posting of an undertaking; and (4) establish a protocol by which Dr. Goldberg could establish the amounts due for advancement.

On January 31, 2020, Dr. Goldberg filed a motion for leave to amend his complaint to add back in claims for breach of contract, breach of the implied covenant of good faith and fair dealing, quantum meruit and injunctive relief. On April 1, 2020, the District Court denied Dr. Goldberg’s motion for leave to amend in its entirety.

On August 24, 2020, in connection with Dr. Goldberg’s motion for advancement, the District Court adopted the Magistrate Judge’s report and recommendation and found that while Dr. Goldberg was not being granted advancement of fees and expenses incurred in connection with either the Delaware Action or the assertion of third-party claims against MT, the Court ruled that Dr. Goldberg was entitled to advancement for the defense of the remaining claims asserted against him by Navidea in the New York action. The Court adopted a protocol by which additional motion practice will occur to determine the appropriate amount of fees to be advanced. Such briefing is anticipated to be concluded by November 13, 2020. Once that decision is made by the Magistrate Judge, subject to review by the District Court, Navidea will need to advance those fees to Dr. Goldberg conditioned upon Dr. Goldberg agreeing to pay those fees back to Navidea if it is determined that he is not entitled to indemnification. Dr. Goldberg is also asking the Court to accelerate the timeline by which advancement will occur.

The fact discovery deadline in the New York Action was set to expire in September 2020, but is anticipated to be extended in light of a few remaining discovery disputes between the parties. Thereafter, the parties will engage in expert discovery for a period of 60 days.

Delaware Litigation Involving Dr. Goldberg

On 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, the Delaware Court found that Dr. Goldberg’s actions were not authorized in compliance with the Delaware General Corporation 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, 2019 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 sublicense between itself and MT, all of the intellectual property related to the Manocept platform is now directly controlled by Navidea. A trial on MT’s claims against Goldberg for breach of fiduciary duty and conversion is presently scheduled for December 1 through December 3, 2020.

Derivative Action Involving Dr. Goldberg

On July 26, 2019, Dr. Goldberg served shareholder demands on the boards of directors of Navidea and MT repeating many of the claims made in the lawsuits described above. On or about November 20, 2019, Dr. Goldberg commenced a derivative action purportedly on behalf of MT in the District Court against Dr. Claudine Bruck, Y. Michael Rice, and Jed Latkin alleging a claim for breach of fiduciary duty based on the actions alleged in the demands. On April 3, 2020, Dr. Goldberg dismissed the derivative action in New York without prejudice and retains the ability to re-file the action in Delaware. Dr. Goldberg has not yet re-filed his derivative complaint. See Notes 2 and 10.

10.	Commitments and Contingencies

We are subject to legal proceedings and claims that arise in the ordinary course of business. In accordance with ASC Topic 450, Contingencies, 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 not materially affect our financial position.

CRG Litigation

As disclosed in the Company’s Annual Report on Form 10-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 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. The Company believes that this $4.1 million should be credited against the $7.0 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.

On April 9, 2018, CRG drew approximately $7.1 million on the Cardinal Health 414 letter of credit. These were funds to which Navidea would otherwise have been entitled. This was in addition to the $4.1 million and the $59.0 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 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 2017, pursuant to which Navidea agreed to pay up to $66.0 million to Lenders, as well as through actions and misrepresentations by CRG after the Global Settlement Agreement was executed. The claims in that suit are for breach of contract, conversion and unjust enrichment against the Lenders for their collection of more than $66.0 million, the maximum permitted under the Global Settlement Agreement, and their double recovery of amounts paid as part of the $4.1 million paid in June 2016 and recovered again as part of the $66.0 million. CRG’s double recovery and recovery of more than $66.0 million are due to CRG drawing the entire $7.1 million on the Cardinal Health 414 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 resumed in front of the Ohio Court. Following an unsuccessful mediation on May 7, 2019, Navidea moved for summary judgment on June 28, 2019. On November 27, 2019, the Ohio Court found that when CRG collected more than $66.0 million, they took an excess recovery and breached the Global Settlement Agreement. The Ohio Court awarded approximately $4.3 million to Navidea, plus statutory interest from April 9, 2018, the date CRG drew on the Cardinal Health 414 letter of credit. The Ohio Court also found that there was no unjust enrichment or conversion by CRG since this was a matter of contract and only contract damages were appropriate. The decision is a final appealable order and terminates the case before the Ohio Court. On December 5, 2019, CRG filed a notice of appeal with Ohio’s 10th District Court of Appeals regarding the judgment in favor of Navidea. The briefing of the appeal concluded on March 27, 2020, and oral argument on the appeal was held on September 23, 2020. A decision on the appeal could come at any time, but is expected in the first half of 2021.

CRG filed another lawsuit in the Texas Court in April 2018. This suit seeks a declaratory judgment that CRG did not breach the Global Settlement Agreement by drawing the entire $7.1 million on the Cardinal Health 414 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. The Court of Appeals affirmed the Texas Court’s refusal to dismiss CRG’s claim on August 28, 2020. The Company has filed a petition for review with the Texas Supreme Court seeking to reverse the Texas Court’s ruling. The Texas Supreme Court has not yet ruled on the Company’s petition. See Note 2.

Platinum Litigation

In November 2017, Platinum-Montaur commenced an action against the Company in the Supreme Court of the State of New York, County of New York (the “New York Supreme Court”), seeking damages of approximately $1.9 million purportedly due as of March 3, 2017, 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 October 31, 2018, the District Court granted judgment for Navidea and dismissed all claims in the case. The District Court stated that Platinum-Montaur had no 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 November 30, 2018, Platinum-Montaur filed a notice of appeal with the United States Court of Appeals for the Second Circuit (the “Second Circuit”) claiming that the District Court erred in dismissing Platinum-Montaur’s claims for breach of contract and unjust enrichment. On January 22, 2019, 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. The Second Circuit held oral argument in this matter on September 5, 2019. On November 25, 2019, the Second Circuit issued a decision which remanded the case to the District Court for further consideration of whether the District Court had jurisdiction over the case following removal from the New York Supreme Court. The Second Circuit did not address the merits of Platinum-Montaur’s allegations against Navidea. By agreement of the parties, the case was remanded from the District Court to the New York Supreme Court. A preliminary conference was set for April 28, 2020 but was cancelled due to the COVID-19 pandemic. After a delay due to the New York Supreme Court not accepting non-emergency filings due to the pandemic, Navidea filed a Motion to Dismiss on June 4, 2020. On September 2, 2020, the New York Supreme Court granted the Motion to Dismiss. Platinum-Montaur filed a Notice of Appeal of the New York Supreme Court’s decision on September 23, 2020 and the appeal is now docketed with the Appellate Department-First Division. However, Platinum-Montaur has not yet perfected that appeal. Until Platinum-Montaur perfects the appeal, a timeline for resolution of the appeal, including briefing and potential oral argument, is unknown. See Note 2.

Goldberg Agreement and Litigation

In August 2018, 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 Goldberg Agreement, with the intent of entering into one or more additional definitive agreements, which set forth the terms of the separation from service. Among other things, the Goldberg Agreement provided that Dr. Goldberg would be entitled to 1,175,000 shares of our Common Stock, representing in part payment of accrued bonuses and payment of the balance of the Platinum debt. A portion of the 1,175,000 shares to be issued to Dr. Goldberg will be held in escrow for up to 18 months in order to reimburse Navidea in the event that Navidea is obligated to pay any portion of the Platinum debt to a party other than Dr. Goldberg. Further, the Goldberg 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 5% of the outstanding shares of MT. In November 2018, the Company issued 925,000 shares of our Common Stock to Dr. Goldberg, 250,000 of which were placed in escrow in accordance with the Goldberg Agreement.

On February 11, 2019, Dr. Goldberg represented to the MT board of directors that he had, without MT board of directors 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 in accordance with its terms, effective March 1, 2019, due to MT’s insolvency. On February 20, 2019, the MT board of directors removed Dr. Goldberg as President and Chief Executive Officer of MT and from any other office of MT to which he may have been appointed or in which he was serving. Dr. Goldberg remains a member of the MT board of directors, together with Y. Michael Rice and Dr. Claudine Bruck. Mr. Rice and Dr. Bruck remain members of the board of directors of Navidea. The MT board of directors then appointed Jed A. Latkin to serve as President and Chief Executive Officer of MT.

New York Litigation Involving Dr. Goldberg

On February 20, 2019, Navidea filed a complaint against Dr. Goldberg in the United States District Court, Southern District of New York, alleging breach of the Goldberg 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 Goldberg Agreement is excused and that Navidea is entitled to terminate the Goldberg 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 Goldberg Agreement, wrongful termination, injunctive relief, and quantum meruit.

On December 26, 2019, the District Court ruled on several motions related to Navidea and MT and Dr. Goldberg that substantially limited the claims that Dr. Goldberg can pursue against Navidea and MT. Specifically, the District Court found that certain portions of Dr. Goldberg’s counterclaims against Navidea and third-party claims against Macrophage failed to state a claim upon which relief can be granted. Additionally, the District Court ruled that actions taken by Navidea and MT, including reconstituting the MT board of directors, replacing Dr. Goldberg with Mr. Latkin as Chief Executive Officer of MT, terminating the sublicense between Navidea and MT, terminating certain research projects, and allowing MT intellectual property to revert back to Navidea, were not breaches of the Goldberg Agreement.

Delaware Litigation Involving Dr. Goldberg

On February 20, 2019, MT initiated a suit against Dr. Goldberg in the Court of Chancery of the State of Delaware, 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, the Delaware Court found that Dr. Goldberg’s actions were not authorized in compliance with the Delaware General Corporation 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, 2019 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 sublicense between itself and MT, all of the intellectual property related to the Manocept platform is now directly controlled by Navidea. A trial on MT’s claims against Goldberg for breach of fiduciary duty and conversion is presently scheduled for December 1 through December 3, 2020.

Derivative Action Involving Dr. Goldberg

NYSE American Continued Listing Standards

On August 14, 2018, the Company received a Deficiency Letter from the NYSE American stating that Navidea was not in compliance with certain NYSE American continued listing standards relating to stockholders’ equity. Specifically, Navidea was not in compliance with Sections 1003(a)(i), (ii) and (iii) of the NYSE American Company Guide (the “Guide”), the highest of such standards requiring an issuer to have stockholders’ equity of $6.0 million or more if it has reported losses from continuing operations and/or net losses in its five most recent fiscal years. In addition, the Deficiency Letter stated that the NYSE American staff (the “Staff”) determined that the Company’s securities had been selling for a low price per share for a substantial period of time and, pursuant to Section 1003(f)(v) of the Guide, Navidea’s continued listing was predicated on it effecting a reverse stock split of our Common Stock or otherwise demonstrating sustained price improvement within a reasonable period of time.

The Company regained compliance with the minimum trading price standard following a one-for-twenty reverse split of its issued and outstanding Common Stock on April 26, 2019.

On February 14, 2020, the Company announced the execution of several funding transactions resulting in stockholders’ equity of $6.0 million, which brought the Company back into compliance with Sections 1003(a)(i), (ii) and (iii) of the Guide within the timeframe permitted by the NYSE American. However, much of the funding from these transactions has been delayed, due in part to the COVID-19 pandemic and its devastating impact on global financial markets. The Company is working closely with the parties to these transactions to complete the funding as soon as possible. The Company had stockholders’ equity of approximately $170,000 as of September 30, 2020.

Even if an issuer has a stockholders’ deficit, the NYSE American will not normally consider delisting securities of an issuer that fails to meet these requirements if the issuer has (1) average global market capitalization of at least $50,000,000; or total assets and revenue of $50,000,000 in its last fiscal year, or in two of its last three fiscal years; and (2) the issuer has at least 1,100,000 shares publicly held, a market value of publicly held shares of at least $15,000,000 and 400 round lot shareholders. As of September 30, 2020, the Company’s total market capitalization was approximately $71.2 million. Therefore, we currently meet these exceptions and do not believe that there is a risk that our common stock may be delisted as a result of our failure to meet the minimum stockholders' equity requirement for continued listing.

11.	Equity

In February 2020, the Company executed agreements with two existing investors to purchase approximately 4.0 million shares of the Company’s Common Stock for aggregate gross proceeds to Navidea of approximately $3.4 million. The entire $3.4 million was received and the related 4,020,588 shares of Common Stock were issued during the first three quarters of 2020.

On May 6, 2020, the Company entered into a Stock Purchase Agreement and Letter of Investment Intent with Keystone pursuant to which the Company agreed to issue to Keystone 420,000 shares of newly-designated Series C Preferred Stock for an aggregate purchase price of $4.2 million. Pursuant to the Stock Purchase Agreement, Keystone agreed to purchase shares of Series C Preferred Stock in amounts to be determined by Keystone in one or more closings on or before November 6, 2020, provided that all of the Series C Preferred Stock must be purchased by such date. Holders of the Series C Preferred Stock had the option to convert some or all of the Series C Preferred Stock into shares of the Company’s Common Stock at a 10% discount to market (the “Series C Conversion Shares”), provided that the Company could not issue such Series C Conversion Shares in excess of 19.99% of the number of shares of Common Stock outstanding as of the date of the investment (the “Series C Exchange Cap”) without shareholder approval, which the Company was not required to seek. The entire $4.2 million was received and the related 420,000 shares of Series C Preferred Stock were issued during the second and third quarters of 2020. In accordance with current accounting guidance, the Company recorded a deemed dividend of approximately $467,000 related to the BCF of the 420,000 shares of Series C Preferred Stock that were issued during the nine-month period ended September 30, 2020. See Note 1(e). These 420,000 shares were subsequently converted into 1,425,076 shares of Common Stock during the second and third quarters of 2020.

On August 9, 2020, Company entered into a binding MOU with Jubilant. The MOU outlines the terms and framework for a potential Exclusive License and Distribution Agreement for Navidea’s Tc99m-Tilmanocept Rheumatoid Arthritis diagnostic application in the United States, Canada, Mexico, and Latin America. In connection with the MOU, the Company entered into a Stock Purchase Agreement with Jubilant, pursuant to which Jubilant purchased 209,205 shares of Common Stock for gross proceeds of $1.0 million in exchange for exclusivity of negotiations while due diligence efforts are completed. The investment was priced “at market,” which was the closing price of Navidea’s Common Stock on the NYSE American on the trading day immediately preceding the investment. See Note 2.

On August 30, 2020, the Company entered into a Common Stock Purchase Agreement with each of the Investors named therein, pursuant to which the Investors agreed to purchase from the Company, up to $25.0 million in shares of the Company’s Common Stock. The initial closing of the sale and purchase of the Common Stock (the “Initial Closing”) must occur within forty-five (45) business days after the date on which the NYSE American approved the Company’s listing application for the Common Stock. The Investors have agreed to purchase an aggregate of 1,000,000 shares of Common Stock at the Initial Closing, at a purchase price of $5.00 per share. Subsequent closings of the sale and purchase of the Common Stock (each a “Subsequent Closing”) will occur from time to time after the Initial Closing on such dates and times as agreed upon by the Company and the Investors, but in any event no later than ninety (90) business days after the Initial Closing; provided that the closing price of the Common Stock on the NYSE American exchange shall have closed at or above $5.00 for five consecutive trading days. The Investors will purchase the Common Stock at such Subsequent Closing at a price per share equal to market value within the meaning of Section 713 of the NYSE American Company Guide; provided that in no event shall the Investors be obligated to purchase Common Stock at a Subsequent Closing at a price greater than $5.75 per share. The Company has the right to terminate the Common Stock Purchase Agreement upon written notice to the Investors if (a) the Initial Closing has not occurred within ninety (90) days of the date of the agreement or (b) if the Investors have not purchased an aggregate of $25.0 million in Common Stock as of the date that is ninety (90) business days after the Initial Closing. Notwithstanding the foregoing, no Investor is obligated to purchase any Common Stock if such shares proposed to be purchased, when aggregated with all other shares of Common Stock then owned beneficially by such Investor and its affiliates, would result in the beneficial ownership by such Investor and its affiliates of more than 4.99% of the then issued and outstanding shares of Common Stock. One of the Company’s existing investors, John K. Scott, Jr., is a party to the Common Stock Purchase Agreement and agreed to purchase $25,000 of Common Stock. In accordance with current accounting guidance, $5.0 million of stock subscriptions receivable was included in common stock subscriptions receivable in the consolidated balance sheet as of September 30, 2020. Additionally, as of September 30, 2020, Mr. Scott had paid for his shares but those shares had not yet been issued, therefore $25,000 was included in other current liabilities on the consolidated balance sheet. See Note 2.

On August 31, 2020, the Company entered into the Series D Preferred Stock Purchase Agreement with Keystone pursuant to which the Company agreed to issue to Keystone 150,000 shares of newly-designated Series D Preferred Stock for an aggregate purchase price of $15.0 million. Pursuant to the Series D Preferred Stock Purchase Agreement, Keystone will purchase Series D Preferred Stock in amounts to be determined by Keystone in one or more closings during the nine-month period following the date on which the prospectus supplement to register the underlying Common Stock was filed with the SEC, provided that all of the Series D Preferred Stock must be purchased by such date. Holders of the Series D Preferred Stock will have the option to convert some or all of the Series D Preferred Stock into shares of the Company’s Common Stock at a 10% discount to market (the “Series D Conversion Shares”), provided that the Company may not issue such Series D Conversion Shares in excess of 19.99% of the number of shares of Company common stock outstanding as of the date of the investment (the “Series D Exchange Cap”) without shareholder approval, which the Company is not required to seek. See Notes 2 and 16.

In the event of the liquidation or dissolution of the Company, after payment of the debts and other liabilities of the Company, the holders of Series D Preferred Stock then outstanding shall be entitled to receive, out of the assets of the Company and before any payment may be made to the holders of Common Stock or any other junior stock, an amount per share of Series D Preferred Stock calculated by taking the total amount available for distribution to holders of all outstanding Common Stock before deduction of any preference payments for the Series D Preferred Stock, divided by the total of (x) all of the then outstanding shares of Common Stock plus (y) all of the shares of Common Stock into which the outstanding shares of Series D Preferred Stock can be converted, and then (z) multiplying the sum so obtained by the number of shares of Common Stock into which such share of Series D Preferred Stock could then be converted (the “Series D Preferred Liquidation Preference Amount”).

Of the $15.0 million, $150,000 was received and the related 1,500 shares of Series D Preferred Stock were issued during the third quarter of 2020. The Company recorded a deemed dividend of approximately $17,000 related to the BCF of the 1,500 shares of Series D Preferred Stock that were issued during the three-month period ended September 30, 2020. See Note 1(e). These 1,500 shares were subsequently converted into 56,497 shares of Common Stock during the third quarter of 2020. An additional $700,000 was received and the related 7,000 shares of Series D Preferred Stock were issued during the period beginning on October 1, 2020 and ending on the date of filing of this Quarterly Report on Form 10-Q. These 7,000 shares of Series D Preferred Stock were subsequently converted into 313,290 shares of Common Stock during the period beginning on October 1, 2020 and ending on the date of filing of this Quarterly Report on Form 10-Q. In accordance with current accounting guidance, $700,000 of stock subscriptions receivable was included in stock subscriptions and other receivables, and approximately $14.2 million was included in preferred stock subscriptions receivable in the consolidated balance sheet as of September 30, 2020.

During the nine-month period ended September 30, 2020, we issued 94,159 shares of our common stock valued at $172,000 to our full-time employees as partial payment in lieu of cash for their 2019 bonuses.

During the nine-month periods ended September 30, 2020 and 2019, we issued 32,651 and 8,128 shares of our common stock as matching contributions to our 401(k) Plan which were valued at $40,000 and $20,000, respectively.

13.	Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with Accounting Standards Codification 740, Income Taxes. Deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. DTAs and DTLs are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on DTAs and DTLs of a change in tax rates is recognized in income in the period that includes the enactment date.

Current accounting standards require a valuation allowance against DTAs if, based on the weight of available evidence, it is more likely than not that some or all of the DTAs may not be realized. Due to the uncertainty surrounding the realization of these DTAs in future tax returns, all of the DTAs have been fully offset by a valuation allowance as of September 30, 2020 and December 31, 2019, except the alternative minimum tax (“AMT”) credit carryforward amount described below.

In assessing the realizability of DTAs, management considers whether it is more likely than not that some portion or all of the DTAs will not be realized. The ultimate realization of DTAs is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods) and projected future taxable income in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the DTAs are deductible, management believes it is more likely than not that the Company will not realize the benefits of these deductible differences or tax carryforwards as of September 30, 2020, except for the AMT credit carryforward.

The Tax Cuts and Jobs Act (the “Tax Act”) was signed into law on December 22, 2017. The Tax Act repealed the AMT for corporations, and permits any existing AMT credit carryforwards to be used to reduce the regular tax obligation in 2018, 2019 and 2020. Under the Tax Act, companies may continue using AMT credits to offset any regular income tax liability in years 2018 through 2020, with 50% of remaining AMT credits refunded in each of the 2018, 2019 and 2020 tax years, and all remaining credits refunded in tax year 2021. This results in full realization of an existing AMT credit carryforward irrespective of future taxable income. Accordingly, the Company recorded AMT credit carryforwards of $621,000 as of December 31, 2019, 50% of which was included in prepaid expenses and other current assets, and 50% of which was included in other noncurrent assets as of December 31, 2019. The CARES Act was signed into law on March 27, 2020. Under the CARES Act, corporate AMT credits are now 100% refundable as early as the 2018 tax year. Accordingly, the Company filed for and received the refund of all $621,000 of AMT credit carryforwards during the second quarter of 2020.

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, no liability for uncertain tax positions was recorded as of September 30, 2020 or December 31, 2019 and we do not expect any significant changes in the next twelve months. 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 September 30, 2020, tax years 2016-2019 remained subject to examination by federal and state tax authorities.

As of September 30, 2020, we had approximately $142.2 million of federal and $20.1 million of state net operating loss carryforwards, as well as approximately $8.8 million of federal research and development (“R&D”) credit carryforwards.

PART I – Financial Information

Item 1.	Financial Statements	3

	Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019	3

	Consolidated Statements of Operations for the Three-Month and Nine-Month Periods Ended September 30, 2020 and 2019 (unaudited)	4

	Consolidated Statements of Comprehensive Loss for the Three-Month and Nine-Month Periods Ended September 30, 2020 and 2019 (unaudited)	5

	Consolidated Statements of Stockholders’ Equity (Deficit) for the Nine-Month Periods Ended September 30, 2020 and 2019 (unaudited)	6

	Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 2020 and 2019 (unaudited)	8

	Notes to the Consolidated Financial Statements (unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

	Forward-Looking Statements	29

	The Company	29

	Technology and Product Candidates	30

	Outlook	33

	Results of Operations	34

	Liquidity and Capital Resources	35

	Off-Balance Sheet Arrangements	38

	Recent Accounting Standards	38

	Critical Accounting Policies	38

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39

	Disclosure Controls and Procedures	39

	Changes in Control Over Financial Reporting	40

PART II – Other Information

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 6.	Exhibits	42

	Nine Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(7,898,566	)	$	(8,176,343	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		51,501			107,794
(Gain) loss on disposal and abandonment of assets		(1,042	)		1,672
Stock compensation expense		136,349			178,179
Value of stock issued in payment of employee bonuses		171,522			—
Value of stock issued in payment of services		70,201			—
Value of stock issued to 401(k) plan for employer matching contribution		39,834			19,588
Changes in operating assets and liabilities:
Stock subscriptions and other receivables		781,128			(124,665	)
Prepaid expenses, right-of-use lease assets, and other assets		1,029,427			753,034
Accounts payable		3,802			414,250
Accrued, lease and other liabilities		8,269			216,180
Deferred revenue		(9,355	)		(11,024	)
Net cash used in operating activities		(5,616,930	)		(6,621,335	)
Cash flows from investing activities:
Proceeds from sales of available-for-sale securities		—			400,000
Maturities of available-for-sale securities		—			400,000
(Payments for purchases) proceeds from disposal of equipment		(129,216	)		28,382
Proceeds from sale of equipment		1,042			—
Patent and trademark costs		(202,078	)		—
Net cash (used in) provided by investing activities		(330,252	)		828,382
Cash flows from financing activities:
Proceeds from issuance of preferred stock		4,350,000			—
Payment of preferred stock issuance costs		(54,730	)		—
Proceeds from issuance of common stock		4,417,560			6,046,915
Payment of common stock issuance costs		(150,000	)		(572,271	)
Proceeds from note payable		366,000			—
Principal payments on notes payable		(305,955	)		(316,074	)
Net cash provided by financing activities		8,622,875			5,158,570
Net increase (decrease) in cash and cash equivalents		2,675,693			(634,383	)
Cash and cash equivalents, beginning of period		1,047,159			3,475,881
Cash and cash equivalents, end of period	$	3,722,852		$	2,841,498

	Nine Months Ended September 30, 2020
	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at beginning of period		238,470		$	17.38		7.2	$	—
Granted		295,000			2.29
Exercised		—			—
Canceled and Forfeited		(3,000	)		1.06
Expired		(500	)		30.80
Outstanding at end of period		529,970		$	9.06		8.1	$	314,880
Exercisable at end of period		114,870		$	25.20		5.3	$	—

	Nine Months Ended September 30, 2020
	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested at beginning of period		15,000		$	2.75
Granted		60,000			2.90
Vested		(15,000	)		2.75
Forfeited		—			—
Unvested at end of period		60,000		$	2.90

Maturity of Lease Liabilities	Operating Lease Payments
2020 (remaining)	$	92,711
2021		344,552
2022		291,111
2023		19,699
2024		1,355
Total undiscounted operating lease payments		749,428
Less imputed interest		83,279
Present value of operating lease liabilities	$	666,149

Balance Sheet Classification
Current lease liabilities	$	285,913
Noncurrent lease liabilities		380,236
Total operating lease liabilities	$	666,149

Other Information
Weighted-average remaining lease term for operating leases (in years)	2.1
Weighted-average discount rate for operating leases	10.9	%

Three Months Ended September 30, 2020	Diagnostics		Therapeutics		Corporate			Total
Royalty revenue	$	2,047	$	—	$	—		$	2,047
License revenue		4,726		—		—			4,726
Grant and other revenue		106,729		154,887		—			261,616
Total revenue		113,502		154,887		—			268,389
Cost of revenue		82		—		—			82
Research and development expenses		1,251,383		126,615		—			1,377,998
Selling, general and administrative expenses, excluding depreciation and amortization ⁽¹⁾		—		—		1,773,532			1,773,532
Depreciation and amortization ⁽²⁾		4,027		—		11,375	&n