Consolidated ~~Statement o~~fStatements of Stockholders’~~Equity (~~~~Deficit~~ Equity) (Deficit) (continued)

1.	Summary of Significant Accounting Policies

Basis of Presentation: The information presented as of September 30, ~~2017~~2020 and for the three-month and nine-month periods ended September 30, ~~2017~~2020 and ~~2016~~2019 is unaudited, but includes all adjustments (which consist only of normal recurring adjustments) that the management of Navidea Biopharmaceuticals, Inc. (“~~Navidea,”~~Navidea”, the “Company,” or “we”) believes to be necessary for the fair presentation of results for the periods presented. ~~Certain~~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, ~~2017~~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, ~~2016,~~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

Our consolidated financial statements include the accounts of Navidea and our wholly owned subsidiaries, Navidea Biopharmaceuticals Limited and Cardiosonix Ltd, as well as those of our majority-owned subsidiary, Macrophage Therapeutics, Inc. (“MT”). All significant inter-company accounts were eliminated in consolidation. Cardiosonix was legally dissolved in September 2017. Prior to termination of Navidea’s joint venture with R-NAV, LLC (“R-NAV”) in May 2016, Navidea's investment in R-NAV was being accounted for using the equity method of accounting and was therefore not consolidated.

On March 3, 2017, pursuant to an Asset Purchase Agreement dated November 23, 2016, (the “Purchase Agreement”), the Company completed its previously announced sale to Cardinal Health 414, LLC (“Cardinal Health 414”) of its assets used, held for use, or intended to be used in operating its business of developing, manufacturing and commercializing a product used for lymphatic mapping, lymph node biopsy, and the diagnosis of metastatic spread to lymph nodes for staging of cancer (the “Business”), including the Company~~’s radioactive diagnostic agent marketed under the Lymphoseek~~^® trademark for current approved indications by the U.S. Food and Drug Administration (“FDA”) and similar indications approved by the FDA in the future (the “Product”), in Canada, Mexico and the United States (the “Territory”) (giving effect to the License-Back described below and excluding certain assets specifically retained by the Company) (the “Asset Sale”). Such assets sold in the Asset Sale consist primarily of, without limitation, (i) intellectual property used in or reasonably necessary for the conduct of the Business, (ii) inventory of, and customer, distribution, and product manufacturing agreements related to, the Business, (iii) all product registrations related to the Product, including the new drug application approved by the FDA for the Product and all regulatory submissions in the United States that have been made with respect to the Product and all Health Canada regulatory submissions and, in each case, all files and records related thereto, (iv) all related clinical trials and clinical trial authorizations and all files and records related thereto, and (v) all rights, title and interest in and to the Product, as specified in the Purchase Agreement (the “Acquired Assets”).

Upon closing of the Asset Sale, the Supply and Distribution Agreement, dated November 15, 2007 (as amended, the “Supply and Distribution Agreement”), between Cardinal Health 414 and the Company was terminated and, as a result, the provisions thereof are of no further force or effect (other than any indemnification, payment, notification or data sharing obligations which survive the termination).

Our consolidated balance sheets and statements of operations have been reclassified, as required, for all periods presented to reflect the Business as a discontinued operation. Cash flows associated with the operation of the Business have been combined with operating, investing and financing cash flows, as appropriate, in our consolidated statement~~s of cash flows. See Note 3.~~

Financial Instruments and Fair Value: In accordance with current accounting standards, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

~~Level 1~~ ~~– Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;~~

~~Level 2~~ ~~– Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and~~

~~Level 3~~ ~~– Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.~~

~~A financial instrument~~’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining the appropriate levels, we perform a detailed analysis of the assets and liabilities whose fair value is measured on a recurring basis. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3. See Note 4.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

(1)

Cash ~~restricted~~ and cash ~~available-for-sale securities, accounts~~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: At The carrying value of our debt as of September 30, ~~2017~~2020 and December 31, ~~2016, the conversion option of certain notes payable was required to be recorded at fair value. The estimated fair value~~2019 primarily consisted of the ~~conversion option was calculated using a Monte Carlo simulation. This valuation method includes Level 3 inputs such as~~face amount of the ~~estimated current market interest rate for similar instruments with similar creditworthiness. Unrealized gains~~notes plus accrued interest. As of September 30, 2020 and ~~losses on~~December 31, 2019, the fair value of our notes payable was approximately $366,000 and $306,000, both amounts equal to the ~~conversion option are classified in other expenses as a change in the fair value of financial instruments in the consolidated statements of operations. At September 30, 2017, the fair~~carrying value of the ~~conversion option is approximately zero.~~notes payable. See Note ~~10.~~

~~(3)~~

Derivative liabilities: Derivative liabilities are related to certain outstanding warrants which are recorded at fair value. Derivative liabilities totaling $63,000 as of September 30, 2017 and December 31, 2016 were included in other liabilities on the consolidated balance sheets. The assumptions used to calculate fair value as of September 30, 2017 and December 31, 2016 included volatility, a risk-free rate and expected dividends. In addition, we considered non-performance risk and determined that such risk is minimal. Unrealized gains and losses on the derivatives are classified in other expenses as a change in the fair value of financial instruments in the statements of operations. See Note 4.

~~(4)~~

Warrants: In March 2017, in connection with the Asset Sale, the Company granted to each of Cardinal Health 414 and the University of California, San Diego, (“UCSD”), a five-year warrant to purchase up to 10 million shares and 1 million shares, respectively, of the Company’s common stock at an exercise price of $1.50 per share, each of which warrant is subject to anti-dilution and other customary terms and conditions (the “Series NN warrants”). The assumptions used to calculate fair value at the date of issuance included volatility, a risk-free rate and expected dividends. The Series NN warrants granted to Cardinal Health 414 had an estimated fair value of $3.3 million, which was recorded as a reduction of the gain on sale in the consolidated statement of operations for the three-month period ended March 31, 2017. The Series NN warrants granted to UCSD had an estimated fair value of $334,000, which was recorded as an intangible asset related to the UCSD license in the consolidated balance sheet during the three-month period ended March 31, 2017. See Note 14.8.

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.

We also earn revenues related to our licensing and distribution agreements. The terms of these agreements may include payment to us of non-refundable upfront license fees, funding or reimbursement of research and development efforts, milestone payments if specified objectives are achieved, and/or royalties on product sales. We evaluate all deliverables within an arrangement to determine whether or not they provide value on a stand-alone basis. We recognize a contingent milestone payment as revenue in its entirety upon our achievement of a substantive milestone if the consideration earned from the achievement of the milestone (i) is consistent with performance required to achieve the milestone or the increase in value to the delivered item, (ii) relates solely to past performance and (iii) is reasonable relative to all of the other deliverables and payments within the arrangement. We received a non-refundable upfront cash payment of $2.0 million from SpePharm AG upon execution of the SpePharm License Agreement in March 2015. We determined that the license and other non-contingent deliverables did not have stand-alone value because the license could not be deemed to be fully delivered for its intended purpose unless we performed our other obligations, including specified development work. Accordingly, they did not meet the separation criteria, resulting in these deliverables being considered a single unit of account. As a result, revenue relating to the upfront cash payment was deferred and was being recognized on a straight-line basis over the estimated obligation period of two years. However, the remaining deferred revenue of $417,000 was recognized upon obtaining European approval of a reduced-mass vial in September 2016, several months earlier than originally anticipated.

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 ~~March 2016,~~August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2016-09,~~2018-13, ~~Compensation – Stock Compensation~~Fair Value Measurement (Topic ~~178)~~820): ~~Improvements~~Disclosure Framework—Changes to ~~Employee Share-Based Payment Accounting~~the Disclosure Requirements for Fair Value Measurement. ASU ~~2016-09 simplifies several aspects~~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 ~~share-based payment transactions, including~~income taxes. ASU 2019-12 removes certain exceptions to the ~~income tax consequences, classification~~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 ~~awards as either equity or~~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 ~~classification on~~equity. ASU 2020-06 reduces the ~~statement~~number of ~~cash flows.~~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 ~~2016-09~~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, ~~2016,~~2021, and for annual and interim reporting periods ~~within those annual periods. Methods of~~beginning after December 15, 2023 for all other entities. Early adoption ~~vary according to each~~is permitted, but the guidance must be adopted as of the ~~amendment provisions.~~ 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 ~~adoption~~Company has also been engaged in ongoing litigation with Capital Royalty Partners II L.P. (“CRG”) and pursuing recovery of ~~ASU 2016-09 on~~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 ~~1, 2017 did not have~~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 ~~material impact~~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 ~~Company’s financial statements because:~~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:

●

AsJubilant to provide Navidea with an additional $19.0 million in the form of December 31, 2016, $15.3 million of our U.S. net operating loss carryforwards related to stock-based compensation tax deductions in excess of book compensation expense (“APIC NOLs”), that will be credited to additional paid-in capital when such deductions reduce taxes payable as determined on a "with-and-without" basis. Accordingly, these APIC NOLs will reduce federal taxes payable if realized in future periods. As of December 31, 2016, we have also recorded a full valuation allowance against these APIC NOLs. This resulted in a zero cumulative effect adjustment to accumulated deficit as a result of the adoption of ASU 2016-09.

●

~~Due~~stock purchases and license fees, subject to the full valuation allowance for the Company’s tax provision, these APIC NOLs have never been recorded in additional paid-in-capital. The Company does not anticipate any impact going forward, as any amountsachievement of certain milestones, to be ~~recorded in the consolidated statements of operations would be fully offset by the valuation allowance, nor would they result in a related classification in cash flows for operating activities.~~used to fund Navidea’s upcoming NAV3-32 (Phase 2b) and NAV3-33 (Phase 3) trials.

●

~~The Company~~Jubilant will ~~continue~~pay license fees and sales-based royalties to ~~recognize forfeitures through estimates consistent with our past practices as opposed to when they occur.~~Navidea based on revenue generated from the sale of TRA in the licensed territory.

●

~~The Company already classifies cash paid to taxing authorities arising from~~Jubilant will serve as the ~~withholding of shares from employees~~exclusive commercial and distribution partner for TRA in ~~cash flows from financing activities.~~the United States, Canada, Mexico, and Latin America. Jubilant will be responsible for all commercialization efforts within the licensed territory.

e.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.

~~Recent Accounting Standards:~~ ~~In May 2014, the FASB issued ASU No. 2014-09,~~ Revenue from Contracts with Customers ~~(Topic 606)~~, which will supersede existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process that requires companies to exercise more judgment and make more estimates than under the current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. Since the issuance of ASU 2014-09, several additional ASUs have been issued and incorporated within Topic 606 to clarify various elements of the guidance. ASU 2014-09 allows a choice of transition methods: (a) a full retrospective adoption in which the standard is applied to all of the periods presented, or (b) a modified retrospective adoption in which the standard is applied only to the most current period presented in the financial statements with a cumulative-effect adjustment reflected in retained earnings. ASU 2014-09 also requires significantly expanded disclosures regarding the qualitative and quantitative information of an entity’s nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those periods.

~~Following~~Navidea is focused on the ~~sale~~development and commercialization of ~~the Business to Cardinal Health 414 in March 2017,~~ ~~we generate revenue primarily from grants to support certain~~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 ~~product~~Manocept platform, and (ii) therapeutic development programs. Such grant revenues are recognized only after expenses reimbursable under the grants have been paid. 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 will require separate assessment using the five-step process under ASU 2014-09. Management is working to complete its evaluation of the impact of adopting ASU 2014-09, however we currently do not anticipate that it will have a material effect on our consolidated financial statements. We will adopt ASU 2014-09 along with additional related ASUs effective January 1, 2018. We currently plan to use the modified retrospective method of adoption.

~~In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic~~ ~~805), Clarifying the Definition of a Business~~~~. ASU 2017-01 provides a screen to determine when a set of assets and activities (collectively, a “set”) is not a business. The screen requires that when substantially~~programs, including all of the fair market value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, ASU 2017-01 (1) requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output, and (2) removes the evaluation of whether a market participant could replace missing elements. ASU 2017-01 is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those periods. ASU 2017-01 should be applied prospectively on or after the effective date. No disclosures are required at transition. Early adoption is permitted for certain transactions as described in ASU 2017-01. Management is currently evaluating the impact that the adoption of ASU 2017-01 will have on our consolidated financial statements.

~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting~~. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless all of the following criteria are met: (1) The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. Disclosure requirements remain unchanged. ASU 2017-09 is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted as described in ASU 2017-09. Management is currently evaluating the impact that the adoption of ASU 2017-09 will have on our consolidated financial statements.

~~In September 2017, the FASB issued ASU No. 2017-13,~~ ~~Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842)~~. ASU 2017-13 adds SEC paragraphs pursuant to an SEC Staff Announcement made in July 2017 and clarifies several issues related to transition and implementation of the covered topics, including clarification of the definition of a public business entity, the effect of a change in tax law or rates on leveraged leases, and related amendments to the eXstensible Business Reporting Language (“XBRL”) taxonomy. Management is currently evaluating the impact that the adoption of ASU 2017-13 will have on our consolidated financial statements.

2.	~~Liquidity~~

~~Prior to the Asset Sale to Cardinal Health 414 in March 2017, all~~therapeutic applications of our ~~material assets were pledged as collateral for our borrowings under~~ our Term Loan Agreement with Capital Royalty Partners II L.P. and certain of its affiliates (collectively, “CRG”) (the “CRG Loan Agreement”). In addition to the security interest in our assets, the CRG Loan Agreement included covenants that imposed significant requirements on us. An event of default would have entitled CRG to accelerate the maturity of our indebtedness, increase the interest rate from 14% to the default rate of 18% per annum, and invoke other remedies available to CRG 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. 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.

On March 3, 2017, the Company entered into a Global Settlement Agreement with MT, CRG, and Cardinal Health 414 to effectuate the terms of the settlement previously entered into by the parties on February 22, 2017. In accordance with the Global Settlement Agreement, on March 3, 2017, the Company repaid $59 million (the “Deposit Amount”) of its alleged indebtedness and other obligations outstanding under the CRG Term Loan. Concurrently with payment of the Deposit Amount, CRG released all liens and security interests granted under the CRG Loan Documents and the CRG Loan Documents were terminated and are of no further force or effect; provided, however, that, notwithstanding the foregoing, the Company and CRG agreed to continue with their proceeding pending in The District Court of Harris County, Texas to fully and finally determine the actual amount owed by the Company to CRG under the CRG Loan Documents (the “Final Payoff Amount”). The Company and CRG further agreed that the Final Payoff Amount would be no less than $47 million (the “Low Payoff Amount”) and no more than $66 million (the “High Payoff Amount”). In addition, concurrently with the payment of the Deposit Amount and closing of the Asset Sale, (i) Cardinal Health 414 posted a $7 million letter of credit in favor of CRG (at the Company’s cost and expense to be deducted from the closing proceeds due to the Company, and subject to Cardinal Health 414’s indemnification rights under the Purchase Agreement) as security for the amount byManocept platform. Tc99m tilmanocept, which the High Payoff Amount exceeds the Deposit Amount in the event the Company is unable to pay all or a portion of such amount, and (ii) CRG posted a $12 million letter of credit in favor of the Company as security for the amount by which the Deposit Amount exceeds the Low Payoff Amount. If, on the one hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents exceeds the Deposit Amount, the Company will pay such excess amount, plus the costs incurred by CRG in obtaining CRG’s letter of credit, to CRG and if, on the other hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents is less than the Deposit Amount, CRG will pay such difference to the Company and reimburse Cardinal Health 414 for the costs incurred by Cardinal Health 414 in obtaining its letter of credit. Any payments owing to CRG arising from a final determination that the Final Payoff Amount is in excess of $59 million shall first be paid by the Company without resort to the letter of credit posted by Cardinal Health 414, and such letter of credit shall only be a secondary resource in the event of failure of the Company to make payment to CRG. The Company will indemnify Cardinal Health 414 for any costs it incurs in payment to CRG under the settlement, and the Company and Cardinal Health 414 further agree that Cardinal Health 414 can pursue all possible remedies, including offset against earnout payments (guaranteed or otherwise) under the Purchase Agreement, warrant exercise, or any other payments owed by Cardinal Health 414, or any of its affiliates, to the Company, or any of its affiliates, if Cardinal Health 414 incurs any cost associated with payment to CRG under the settlement. The $2 million being held in escrow pursuant to court order in the Ohio case and the $3 million being held in escrow pursuant to court order in the Texas case were released to the Company following the closing of the Asset Sale.

In addition, the Company previously was a party to a Loan Agreement with Platinum-Montaur Life Sciences LLC (“Platinum-Montaur”), an affiliate of Platinum Management (NY) LLC, Platinum Partners Value Arbitrage Fund L.P., Platinum Partners Liquid Opportunity Master Fund L.P., Platinum Liquid Opportunity Management (NY) LLC, and Montsant Partners LLC (collectively, “Platinum”) (the “Platinum Loan Agreement”) and a Third Amended and Restated Promissory Note (“Platinum Note”) given by Navidea in favor of Platinum-Montaur.

In connection with the closing of the Asset Sale to Cardinal Health 414, the Company repaid to Platinum Partners Credit Opportunities Master Fund, LP (“PPCO”) an aggregate of approximately $7.7 million in partial satisfaction of the Company’s liabilities, obligations and indebtedness under the Platinum Loan Agreement between the Company and Platinum-Montaur, which was purportedly transferred by Platinum-Montaur to PPCO. The Company was informed by Platinum Partners Value Arbitrage Fund LP (“PPVA”) that it was the owner of the balance of the Platinum Note. Such balance of approximately $1.9 million was due upon closing of the Asset Sale but withheld by the Company and not paid to anyone as it is subject to competing claims of ownership by both Dr. Michael Goldberg, the Company’s President and Chief Executive Officer, and PPVA.

On March 2, 2017, PPCO provided a payoff letter (the “Payoff Letter”). In the Payoff Letter, PPCO defined “Indebtedness” to include all amounts due under the Platinum Note, indicated that upon payment of the Payoff Amount, all “Indebtedness owed to Lender” shall have been satisfied in full, and that the “Loan Documents,” which included the Platinum Loan Agreement and the Platinum Note, “shall terminate and have no further force or effect.” The letter also confirmed that as of the date that payment was made by Navidea, the Receiver was providing a release and indemnification in favor of Navidea based on any claims made by any affiliate of PPCO. The Payoff Amount was paid pursuant to the Payoff Letter.

~~The remaining balance of the Platinum Note would have matured under its terms in September 2017, however~~ the Company has ~~not paid the balance as it is still subject~~a license to ~~ongoing competing claims~~distribute outside of ~~ownership. The Company intends to pay the balance of the debt if it is determined to be due and owing to PPVA or Dr. Goldberg.~~

~~Based on our~~ current working capital and our projected cash burn, including the potential for the Company to pay up to an additional $7 million to CRG depending upon the outcome of the Texas litigation, management believes that the Company will be able to continue as a going concern for at least twelve months following the issuance of this Quarterly Report on Form 10-Q. Our projected cash burn also factors in certain cost cutting initiatives that have been implemented and approved by the board of directors, including reductions in the workforce and a reduction in facilities expenses. Additionally, we have considerable discretion over the extent of development project expenditures and have the ability to curtail the related cash flows as needed. We believe all of these factors are sufficient to alleviate substantial doubt about the Company’s ability to continue as a going concern.

3.	~~Discontinued Operations~~

~~On March 3, 2017, the Company completed~~ the sale to Cardinal Health 414 of its assets used, held for use, or intended to be used in operating its business of developing, manufacturing and commercializing a product used for lymphatic mapping, lymph node biopsy, and the diagnosis of metastatic spread to lymph nodes for staging of cancer, including the Company’s radioactive diagnostic agent marketed under the Lymphoseek^® ~~trademark for current approved indications by the FDA and similar indications approved by the FDA in the future, in~~ Canada, Mexico and the United ~~States.~~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.

~~In exchange~~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 ~~Acquired Assets, Cardinal Health 414 (i) made a cash payment~~development and commercialization of NAV4694 in Australia, Canada, China, and Singapore. Meilleur also has an option to commercialize worldwide.

Currently, the Company ~~at closing of approximately $80.6 million~~recognizes revenue from up-front license fees and pre-market milestones after ~~adjustments based on inventory being transferred~~the cash has been received from its customers and ~~an advance of $3 million of guaranteed earnout payments as part of~~ the ~~CRG settlement, (ii) assumed certain liabilities of~~performance obligations have been met. Payments for sales-based royalties and milestones are generally received after the ~~Company associated~~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 ~~the Product as specified in the Purchase Agreement, and (iii) agreed to make periodic earnout payments (to consist of contingent payments~~each contract.

Up-front and milestone payments ~~which, if paid,~~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 ~~treated as additional purchase price)~~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, ~~derived~~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 ~~purchased Product subject, in each case,~~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 ~~Cardinal Health 414’s right to off-set. In no event will the sum of all earnout payments, as further described~~be included in the ~~Purchase Agreement, exceed $230 million over a period of ten years, of which $20.1 million~~transaction price, those amounts will be recognized as revenue in future periods.

Up-front fees, milestones and royalties are guaranteed payments of $6.7 million per year for each of the three years immediately after closing of the Asset Sale. At the closing of the Asset Sale, $3 million of such earnout payments were advanced by Cardinal Health 414 togenerally non-refundable. Therefore, the Company does not estimate expected refunds nor do we adjust revenue downward. The Company will evaluate and ~~paid to CRG as part~~update the estimated transaction prices of its contracts with customers at the ~~Deposit Amount paid to CRG. This advance is to be applied to the third year~~end of ~~guaranteed payments.~~each reporting period.

~~We recorded a net gain on~~During the ~~sale of the~~ ~~Business of $86.9 million for the nine months~~three-month periods ended September 30, ~~2017, including $16.5~~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 ~~guaranteed consideration,~~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 ~~was discounted~~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 ~~present value~~potential market size in each territory. In the case of ~~future cash flows.~~Tc99m tilmanocept, royalty rates for Europe have been lower than rates in India but higher than in China.

Status of Regulatory Approval: The ~~proceeds were offset~~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 ~~$3.3 million~~market. Tc99m tilmanocept has been approved for sale in ~~estimated fair value~~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 ~~warrants issued to Cardinal Health 414, $2.0 million in legal and other fees~~any revenue related to that product will be dependent on the ~~sale, $800,000~~regulatory pathways and timelines in ~~net balance sheet dispositions and write-offs, and $6.4 million~~each market in ~~estimated taxes.~~which Meilleur seeks regulatory approval.

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

~~As a result of the~~ ~~Asset Sale, we reclassified certain assets and liabilities as assets and liabilities associated with discontinued operations.~~ The following ~~assets and~~table summarizes the changes in contract liabilities, ~~have been segregated and~~the current portion of which is included in ~~assets associated with discontinued operations or~~accrued liabilities ~~associated with discontinued operations, as appropriate,~~and other in the consolidated balance ~~sheets:~~

September 30,
2017

December 31,
2016

Accounts and other receivables
$ — $ 1,598,994
Inventory, net
— 1,374,618
Prepaid expenses
— 170,635
Assets associated with discontinued operations, current
— 3,144,247
Property and equipment, net of accumulated depreciation
— 70,973
Patents and trademarks, net of accumulated amortization
— 34,282
Assets associated with discontinued operations, noncurrent
— 105,255
Total assets associated with discontinued operations
$ — $ 3,249,502

Accounts payable
$ 232 $ 1,957,938
Accrued liabilities
32,909 607,659
Deferred revenue
— 2,300,000
Liabilities associated with discontinued operations, current
$ 33,141 $ 4,865,597

~~In addition, we reclassified certain revenues and expenses related to the Business to discontinued operations for all periods presented~~, including interest expense related to the CRG and Platinum debt obligations as required by current accounting guidance. The following amounts have been segregated from continuing operations and included in discontinued operations in the consolidated statements of operations:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

Revenue:

Lymphoseek sales revenue
$ — $ 6,672,489 $ 2,917,213 $ 14,673,689
Grant and other revenue
— 385 — 575
Total revenue
— 6,672,874 2,917,213 14,674,264
Cost of goods sold
— 918,928 364,192 2,012,301
Gross profit
— 5,753,946 2,553,021 12,661,963
Operating expenses:

Research and development
(5,951
)
356,612 382,070 1,450,231
Selling, general and administrative
— 1,129,093 805,464 4,092,951
Total operating expenses
(5,951
)
1,485,705 1,187,534 5,543,182
Income from discontinued operations
5,951 4,268,241 1,365,487 7,118,781
Interest expense
— (2,566,330
)
(1,718,506
)
(12,286,093
)
Income (loss) before income taxes
5,951 1,701,911 (353,019
)
(5,167,312
)
Benefit from (provision for) income taxes
(552 ) — 20,181 —
Income (loss) from discontinued operations
$ 5,399 $ 1,701,911 $ (332,838
)
$ (5,167,312
)

4.	~~Fair Value~~

~~The Company~~ has been informed by PPVA that it is the owner of the balance of the Platinum Note. Such balance of approximately $1.9 million was due upon closing of the Asset Sale but withheld by the Company and not paid to anyone because it is subject to competing claims of ownership by both Dr. Michael Goldberg, the Company’s President and Chief Executive Officer, and PPVA. The remaining balance of the Platinum Note would have matured under its terms in September 2017, however the Company has not paid the balance as it is still subject to ongoing competing claims of ownership. The Company intends to pay the balance of the debt if it is determined to be due and owing to PPVA or Dr. Goldberg.

~~If determined to be the obligee under the Platinum Note,~~ Platinum or Dr. Goldberg would have had the right to convert all or any portion of the unpaid principal or unpaid interest accrued on all draws under the Platinum credit facility, under certain circumstances. The Platinum embedded option to convert such debt into common stock is recorded at fair value on the consolidated balance sheets, and deemed to be a derivative instrument as the amount of shares to be issued upon conversion is indeterminable. The estimated fair value of the conversion option of the Platinum Note payable is approximately $0 and $153,000 on September 30, 2017 and December 31, 2016, respectively. Subsequent to its maturity in September 2017, the Platinum Note no longer has an embedded conversion option.

MT issued warrants to purchase MT Common Stock with certain characteristics including a net settlement provision that require the warrants to be accounted for as a derivative liability at fair value on the consolidated balance sheets. The estimated fair value of the MT warrants is $63,000 at ~~both September 30, 2017 and December 31, 2016, and will continue to be measured on a recurring basis. See Note 1(b)(3).~~

~~The following tables set forth, by level, financial liabilities measured at fair value on a recurring basis:~~

Liabilities Measured at Fair Value on a Recurring Basis as of September 30, 2017

Description

Quoted Prices in
Active Markets for Identical
Liabilities
(Level 1)

Significant
Other
Observable
Inputs (Level 2)

Significant
Unobservable
Inputs (Level 3)

Total

Platinum conversion option
$ — $ — $ — $ —
Liability related to MT warrants
— — 63,000 63,000

Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2016

Description

Quoted Prices in
Active Markets for Identical
Liabilities
(Level 1)

Significant
Other
Observable
Inputs (Level 2)

Significant
Unobservable
Inputs (Level 3)

Total

Platinum conversion option
$ — $ — $ 153,357 $ 153,357
Liability related to MT warrants
— — 63,000 63,000

~~Valuation Processes-Level 3 Measurements:~~ The Company utilizes third-party valuation services that use complex models such as Monte Carlo simulation to estimate the value of our financial liabilities. Each reporting period, the Company provides significant unobservable inputs to the third-party valuation experts based on current internal estimates and forecasts.

~~The assumptions used~~ ~~in the Monte Carlo simulation as of September 30, 2017 and December 31, 2016 are summarized in the following table:~~

September 30,
2017

December 31,
2016

Estimated volatility
0 % 76 %
Expected term (in years)
0 4.75
Debt rate
8.125 % 8.125 %
Beginning stock price
$ 0.42 $ 0.64

~~Sensitivity Analysis-Level 3 Measurements:~~ Changes in the Company’s current internal estimates and forecasts were likely to cause material changes in the fair value of the Platinum conversion option. The significant unobservable inputs used in the fair value measurement of the liability included the amount and timing of future draws expected to be taken under the Platinum Loan Agreement based on then-current internal forecasts and management’s estimate of the likelihood of actually making those draws as opposed to obtaining other sources of financing. Significant increases (decreases) in any of the significant unobservable inputs would result in a higher (lower) fair value measurement. A change in one of the inputs would not necessarily result in a directionally similar change in the others.

~~There were no Level 1~~ ~~or Level 2 liabilities outstanding at any time~~ during the three-month and nine-month periods ended September 30, ~~2017~~2020 and ~~2016. There were~~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 ~~transfers~~longer have any right in, nor claim to, any intellectual property owned by the Company or ~~out of our Level 1 or Level 2 liabilities~~its affiliates anywhere in the world. SpePharm also agreed to perform certain wind-down activities (the “Wind-Down Activities”) during the ~~three-month~~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 ~~nine-month periods ended September 30, 2017 or 2016. Changes~~selling the Products in the ~~estimated fair value~~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 ~~our Level 3 liabilities relating~~the Termination Agreement, Norgine, an affiliate of SpePharm, agreed to ~~unrealized gains (losses) are recorded as changes in fair value~~guarantee SpePharm’s performance of ~~financial instruments in~~its obligations under the consolidated statements of operations. The change in the estimated fair value of our Level 3 liabilities during the three-month periods ended September 30, 2017 and 2016 was $0 and an increase of $839,000, respectively. The change in the estimated fair value of our Level 3 liabilities during the nine-month periods ended September 30, 2017 and 2016 was decreases of $153,000 and $1.8 million, respectively.Termination Agreement.

For the three-month periods ended September 30, ~~2017~~2020 and ~~2016,~~2019, our total stock-based compensation expense, which includes reversals of expense for certain forfeited or cancelled awards, was approximately ~~$64,000~~$63,000 and $50,000, respectively. For the nine-month periods ended September 30, ~~2017~~2020 and ~~2016,~~2019, our total stock-based compensation expense, which includes reversals of expense for certain forfeited or cancelled awards, was approximately ~~$320,000~~$136,000 and ~~$311,000,~~$178,000, respectively. We have not recorded any income tax benefit related to stock-based compensation in any of the three-month or nine-month periods ended September 30, ~~2017~~2020 and ~~2016.~~2019.

A summary of the status of our stock options as of September 30, ~~2017,~~2020, and changes during the nine-month period then ended, is presented ~~below:~~below.

A summary of the status of our unvested restricted stock as of September 30, ~~2017,~~2020, and changes during the nine-month period then ended, is presented ~~below:~~below.

As of September 30, ~~2017,~~2020, there was approximately ~~$181,000~~$332,000 of total unrecognized compensation expense related to unvested stock-based awards, which we expect to recognize over the remaining weighted average vesting term of ~~approximately 1 year.~~1.6 years.

Basic ~~earnings (loss)~~loss per share is calculated by dividing net ~~income (loss)~~loss attributable to common stockholders by the weighted-average number of common ~~shares and, except for periods with a~~shares. Diluted loss ~~from operations, participating securities outstanding during the period. Diluted earnings (loss)~~ per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company include convertible debt, convertible preferred stock, options and warrants.

~~The following table sets forth the reconciliation of the~~ ~~weighted average number of~~Diluted loss per common ~~shares outstanding used to compute basic and diluted earnings (loss) per~~ share for the ~~three-month and~~ nine-month periods ended September 30, ~~2017~~2020 and ~~2016:~~

~~Diluted earnings (loss) per common share for the~~ ~~nine-month periods ended September 30, 2017 and 2016~~2019 excludes the effects of ~~15.1 million~~1,106,744 and ~~14.5 million~~1,490,531 common share equivalents, respectively, since such inclusion would be anti-dilutive. The excluded shares consist of common shares issuable upon exercise of outstanding stock options and ~~warrants, and upon the conversion of convertible debt and convertible preferred stock.~~warrants.

The ~~Company~~’sCompany’s unvested restricted stock awards contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid (referred to as “participating securities”). Therefore, the unvested restricted stock awards are required to be included in the number of shares outstanding for both basic and diluted earnings per share calculations. However, due to our loss from continuing operations, ~~200,000~~60,000 and ~~257,000~~15,000 shares of unvested restricted stock for the nine-month periods ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively, were excluded in determining basic and diluted loss per share from continuing operations because such inclusion would be anti-dilutive.

76.	~~Inventory~~

~~All components of inventory are valued at the lower of cost (first-in, first-out) or~~ net realizable value. We adjust inventory to net realizable value if the net realizable value is lower than the carrying cost of the inventory. Net realizable value is determined based on estimated sales activity and margins. We estimate a reserve for obsolete inventory based on management’s judgment of probable future commercial use, which is based on an analysis of current inventory levels, estimated future sales and production rates, and estimated shelf lives.

~~The components of inventory as of~~ ~~September 30, 2017 and December 31, 2016 are as follows:~~

September 30,
2017

December 31,
2016

(unaudited)

Materials
$ — $ 94,500
Work-in-process
— 1,708
Finished goods
748 —
Reserves
(748
)
—
Total
$ — $ 96,208

8.	Investment in Macrophage Therapeutics, Inc.

In ~~March 2015,~~ ~~Platinum~~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 ~~(collectively,~~entered into an Agreement (the “Goldberg Agreement”), with the ~~“MT Investors”) invested $300,000 and $200,000, respectively, in~~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 ~~in exchange for shares~~board of ~~MT’s Series A Convertible Preferred Stock (“~~directors that he had, without MT ~~Preferred Stock”) and warrants to purchase common shares~~board of directors or shareholder approval, created a subsidiary of MT, (“transferred all of the assets of MT ~~Common Stock”).~~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 ~~Preferred Stock~~board of directors then appointed Jed A. Latkin to serve as President and ~~warrants are convertible into,~~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 ~~exercisable~~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 ~~Common Stock.~~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 ~~December 2015~~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 ~~May 2016, Platinum~~ ~~made~~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 ~~investments~~advancement from Navidea for fees in ~~MT totaling $200,000. MT~~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 ~~obligated~~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 ~~provide anything in return, although it was considered likely that~~advancement for the MT Board of Directors would ultimately authorize some form of compensation to Platinum. During the year ended December 31, 2016, the Company recorded the entire additional $200,000 investment as a current liability pending determinationdefense of the ~~form~~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 ~~compensation.~~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.

~~In 2016,~~Delaware Litigation Involving Dr. Goldberg

On February 20, 2019, MT~~’s Board~~ initiated a suit against Dr. Goldberg in the Court of ~~Directors authorized modification~~Chancery of the ~~original~~State of Delaware (the “Delaware Court”), alleging, among other things, breach of fiduciary duty as a director and officer of MT ~~Preferred Stock~~and conversion, and to obtain a ~~convertible preferred stock~~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 ~~10% paid-in-kind (“PIK”) coupon retroactive~~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 ~~time~~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 ~~initial investments were made. The conversion price~~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 ~~Preferred Stock will remain at~~in the ~~$500 million initial market cap but~~District Court against Dr. Claudine Bruck, Y. Michael Rice, and Jed Latkin alleging a ~~full ratchet was added to enable the adjustment~~claim for breach of ~~conversion price, warrant number and exercise price~~fiduciary duty based on the ~~valuation of~~actions alleged in the ~~first institutional investment round. In addition,~~demands. On April 3, 2020, Dr. Goldberg dismissed the ~~MT Board of Directors authorized issuance of additional MT Preferred Stock with~~derivative action in New York without prejudice and retains the ~~same terms~~ability to ~~Platinum as compensation for~~re-file the ~~additional $200,000 of investments made~~action in ~~December 2015~~Delaware. Dr. Goldberg has not yet re-filed his derivative complaint. See Notes 2 and May 2016. Based on the decision to issue equity for the additional $200,000 of investments made by Platinum, the liability was reclassified to additional paid-in-capital in January 2017. As of the date of filing of this Quarterly Report on Form 10-Q, final documents related to the above transactions authorized by the MT Board have not been completed.10.

108.

Notes Payable

~~Platinum~~

~~In July 2012, we entered into an agreement with Platinum~~-Montaur to provide us with a credit facility of up to $50 million. In connection with the closing of the Asset Sale to Cardinal Health 414, the Company repaid to PPCO an aggregate of approximately $7.7 million in partial satisfaction of the Company’s liabilities, obligations and indebtedness under the Platinum Loan Agreement, which was purportedly transferred by Platinum-Montaur to PPCO. The Company was informed by PPVA that it was the owner of the balance of the Platinum Note. Such balance of approximately $1.9 million was due upon closing of the Asset Sale but withheld by the Company and not paid to anyone as it is subject to competing claims of ownership by both Dr. Michael Goldberg, the Company’s President and Chief Executive Officer, and PPVA. The remaining balance of the Platinum Note would have matured under its terms in September 2017, however the Company has not paid the balance as it is still subject to ongoing competing claims of ownership. The Company intends to pay the balance of the debt if it is determined to be due and owing to PPVA or Dr. Goldberg.

~~During the~~ nine-month periods ended September 30, 2017 and 2016, $211,000 and $814,000 of interest was compounded and added to the balance of the Platinum Note, respectively. As of September 30, 2017, the remaining outstanding principal balance of the Platinum Note was approximately $2.0 million.

~~Until such time as there is a legal determination regarding liability under the Platinum Note, it is~~ reflected as a liability on the consolidated balance sheets at its unpaid principal and interest balance of $1,981,676 and $9,487,822 at September 30, 2017 and December 31, 2016, respectively. Additionally, the estimated fair value of the embedded conversion option of approximately $0 and $153,000 at September 30, 2017 and December 31, 2016, respectively, is included in notes payable on the consolidated balance sheets. Changes in the estimated fair value of the Platinum conversion option were $0 and an increase of $839,000, respectively, and were recorded as non-cash changes in fair value of the conversion option during the three-month periods ended September 30, 2017 and 2016. Changes in the estimated fair value of the Platinum conversion option were decreases of $153,000 and $1.8 million, respectively, and were recorded as non-cash changes in fair value of the conversion option during the nine-month periods ended September 30, 2017 and 2016.

~~Capital Royalty Partners II, L.P.~~

~~In May 2015, Navidea and its subsidiary Macrophage Therapeutics, Inc., as guarantor, executed a Term Loan Agreement (the~~ “CRG Loan Agreement”) with Capital Royalty Partners II L.P. (“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 million (the “CRG Term Loan”), with an additional $10 million in loans to be made available upon the satisfaction of certain conditions stated in the CRG Loan Agreement. During the three-month period ended March 31, 2016, $519,000 of interest was compounded and added to the balance of the CRG Term Loan.

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. As of December 31, 2016, $5.8 million of accrued interest related to the CRG Term Loan is included in accrued liabilities and other on the consolidated balance sheets. As of December 31, 2016, the outstanding principal balance of the CRG Term Loan was $51.7 million.

On March 3, 2017, the Company entered into a Global Settlement Agreement with MT, CRG, and Cardinal Health 414 to effectuate the terms of the settlement previously entered into by the parties on February 22, 2017. In accordance with the Global Settlement Agreement, on March 3, 2017, the Company repaid $59 million of its alleged indebtedness and other obligations outstanding under the CRG Term Loan. Concurrently with payment of the Deposit Amount, CRG released all liens and security interests granted under the CRG Loan Documents and the CRG Loan Documents were terminated and are of no further force or effect; provided, however, that, notwithstanding the foregoing, the Company and CRG agreed to continue with their proceeding pending in The District Court of Harris County, Texas to fully and finally determine the actual amount owed by the Company to CRG under the CRG Loan Documents. The Company and CRG further agreed that the Final Payoff Amount would be no less than $47 million and no more than $66 million. In addition, concurrently with the payment of the Deposit Amount and closing of the Asset Sale, (i) Cardinal Health 414 posted a $7 million letter of credit in favor of CRG as security for the amount by which the High Payoff Amount exceeds the Deposit Amount in the event the Company is unable to pay all or a portion of such amount, and (ii) CRG posted a $12 million letter of credit in favor of the Company as security for the amount by which the Deposit Amount exceeds the Low Payoff Amount. If, on the one hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents exceeds the Deposit Amount, the Company will pay such excess amount, plus the costs incurred by CRG in obtaining CRG’s letter of credit, to CRG and if, on the other hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents is less than the Deposit Amount, CRG will pay such difference to the Company and reimburse Cardinal Health 414 for the costs incurred by Cardinal Health 414 in obtaining its letter of credit. Any payments owing to CRG arising from a final determination that the Final Payoff Amount is in excess of $59 million shall first be paid by the Company without resort to the letter of credit posted by Cardinal Health 414, and such letter of credit shall only be a secondary resource in the event of failure of the Company to make payment to CRG. The Company will indemnify Cardinal Health 414 for any costs it incurs in payment to CRG under the settlement, and the Company and Cardinal Health 414 further agree that Cardinal Health 414 can pursue all possible remedies, including offset against earnout payments (guaranteed or otherwise) under the Purchase Agreement, warrant exercise, or any other payments owed by Cardinal Health 414, or any of its affiliates, to the Company, or any of its affiliates, if Cardinal Health 414 incurs any cost associated with payment to CRG under the settlement.

IPFS Corporation

In ~~December 2016,~~November 2018, we prepaid ~~$348,000~~$393,000 of insurance premiums through the issuance of a note payable to IPFS Corporation (“IPFS”) with an interest rate of ~~8.99%~~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 note payable totaled $1,000 and $6,000 during the three-month and nine-month periods ended September 30, 2019, respectively.

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 was payable in eight monthly installments of ~~$45,000,~~$44,000, with the final payment ~~due on~~made in July ~~10, 2017. As of~~2020.

Interest expense related to the FIF note payable totaled $0 and $5,000 during the three-month and nine-month periods ended September 30, ~~2017 and December 31, 2016, the remaining outstanding principal~~2020, respectively. The balance of the ~~IPFS~~FIF note ~~payable is~~was approximately $0 and $306,000 as of September 30, 2020 and December 31, 2019, respectively, and iswas included in notes payable, current in the consolidated balance sheets.

Payroll Protection Program

The CARES Act was enacted on March 27, 2020. Among the provisions contained in the CARES Act is the creation of the PPP that provides for 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, the Lender funded the PPP Loan in the amount of $366,000. The interest rate on the PPP Loan is a fixed rate of 1% per annum. The amount that will be forgiven will be calculated in part with reference to the Company’s full-time headcount during the eight-week or twenty-four-week period following the funding of 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. To the extent that the amounts owed under the PPP Loan, or a portion of them, are not forgiven, the Company will be required to make principal and interest payments in monthly installments beginning ten months from the end of the loan forgiveness covered period, or May 12, 2021. The PPP Loan matures on May 1, 2022. The PPP Loan includes events of default. Upon the occurrence of an event of default, the Lender will have the right to exercise remedies against the Company, including the right to require immediate payment of all amounts due under the PPP Note.

Summary

During the three-month periods ended September 30, ~~2017~~2020 and ~~2016,~~2019, we recorded interest expense of ~~$26,000~~$0 and ~~$2.6 million,~~$1,000, respectively, related to our notes payable. ~~Of these amounts, $29,000 and $190,000, respectively, was compounded and added to the balance of our notes payable during the three-month periods ended September 30, 2017 and 2016, respectively.~~ During the nine-month periods ended September 30, ~~2017~~2020 and ~~2016,~~2019, we recorded interest expense of ~~$1.8 million~~$5,000 and ~~$12.3 million,~~$6,000, respectively, related to our notes payable. ~~Of these amounts, $0~~

110.	~~Terminated Lease Liability~~

~~Effective~~ June 1, 2017, Navidea relocated its Dublin, Ohio headquarters from 5600 Blazer Parkway (“Blazer”) to a smaller space at 4995 Bradenton Avenue. The Company concurrently executed a sublease arrangement (“Sublease”) for the Blazer space because there is no early termination provision in the Blazer lease. The Blazer lease and the Sublease end simultaneously in October 2022.

~~In accordance with current accounting guidance, the Company recorded a total liability of $~~1.0 million, which is equal to the fair value of the remaining payments due under the Blazer Lease, net of the fair value of the payments to be received by the Company under the Sublease, and including a finder’s fee. The Company also recorded a loss on contract termination of $429,000 and a loss on disposal of assets, primarily leasehold improvements and furniture and fixtures, related to the Blazer space of $706,000. Both losses are included in selling, general and administrative expenses for the nine-month periods ended September 30, 2017.

~~A summary of the~~ ~~changes in our terminated lease liability during the nine-month period ended September 30, 2017 is presented below:~~

Terminated
Lease
Liability

Total liability, June 1, 2017 (date of sublease)
$ 943,675
Additional finder’s fees required by contract
80,371
Payment of finder’s fees
(152,584
)
Payments under Blazer lease
(188,847
)
Receipts from subtenant
78,248
Accretion of liability
12,813
Total liability, September 30, 2017
$ 773,676

~~12.~~

Commitments and Contingencies

We are subject to legal proceedings and claims that arise in the ordinary course of business.

~~Sinotau Litigation~~ ~~– NAV4694~~

~~On August 31, 2015, Hainan Sinotau Pharmaceutical Co., Ltd. (“~~Sinotau”) filed a suit for damages, specific performance, and injunctive relief against the Company in the U.S. District Court for the District of Massachusetts alleging breach of a letter of intent for licensing to Sinotau of the Company’s NAV4694 product candidate and technology (the “Sinotau Litigation”). In September 2016, the Court denied the Company’s motion to dismiss. The Company filed its answer to the complaint and on July 20, 2017, the parties filed a joint motion to stay the case for 60 days pending settlement discussion. On October 26, 2017, the Company executed a letter of intent with Sinotau and Cerveau Technologies, Inc. (“Cerveau”), outlining a plan to sublicense to Cerveau the worldwide rights to conduct research using NAV4694, as well as grant to Cerveau an exclusive license for the development, marketing and commercialization of NAV4694 in Australia, Canada, China and Singapore. The letter of intent includes a provision stating that Sinotau will release all claims in the Sinotau Litigation upon the parties’ execution of a definitive agreement; the commercial rights agreement contemplated by the letter of intent would also include a release of such claims and a covenant not to sue on such claims.

~~CRG Litigation~~

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. 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 to effectuate the terms of a settlement previously entered into by the parties on February 22, 2017. In accordance with the Global Settlement Agreement, on March 3, 2017, the Company repaid the $59 million Deposit Amount of its alleged indebtedness and other obligations outstanding under the CRG Term Loan. Concurrently with payment of the Deposit Amount, CRG released all liens and security interests granted under the CRG Loan Documents and the CRG Loan Documents were terminated and are of no further force or effect; provided, however, that, notwithstanding the foregoing, the Company and CRG agreed to continue with their proceeding pending in The District Court of Harris County, Texas to fully and finally determine the Final Payoff Amount. The Company and CRG further agreed that the Final Payoff Amount would be no less than $47 million and no more than $66 million. In addition, CRG agreed that Navidea had the right to assert all affirmative defenses to its claim of default. In the underlying case the district court had entered summary judgment in favor of CRG finding unspecified events of default but refusing to consider affirmative defenses raised by Navidea as not before the Court. Subsequent to the settlement CRG moved again for entry of judgment in its favor; Navidea objected that the Settlement Agreement specifically allowed it to raise affirmative defenses and the district court agreed with Navidea setting the case for trial in December 2017. CRG once again moved for summary judgment and the motion was heard by the Court on October 30, 2017. The Court did not indicate when it intends to rule on the motion. The trial is currently scheduled for December 11, 2017.

Concurrently with the payment of the Deposit Amount and closing of the Asset Sale, (i) Cardinal Health 414 posted a $7 million letter of credit in favor of CRG (at the Company’s cost and expense to be deducted from the closing proceeds due to the Company, and subject to Cardinal Health 414’s indemnification rights under the Purchase Agreement) as security for the amount by which the High Payoff Amount exceeds the Deposit Amount in the event the Company is unable to pay all or a portion of such amount, and (ii) CRG posted a $12 million letter of credit in favor of the Company as security for the amount by which the Deposit Amount exceeds the Low Payoff Amount. If, on the one hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents exceeds the Deposit Amount, the Company will pay such excess amount, plus the costs incurred by CRG in obtaining CRG’s letter of credit, to CRG and if, on the other hand, it is finally determined by the Texas Court that the amount the Company owes to CRG under the Loan Documents is less than the Deposit Amount, CRG will pay such difference to the Company and reimburse Cardinal Health 414 for the costs incurred by Cardinal Health 414 in obtaining its letter of credit. Any payments owing to CRG arising from a final determination that the Final Payoff Amount is in excess of $59 million shall first be paid by the Company without resort to the letter of credit posted by Cardinal Health 414, and such letter of credit shall only be a secondary resource in the event of failure of the Company to make payment to CRG. The Company will indemnify Cardinal Health 414 for any costs it incurs in payment to CRG under the settlement, and the Company and Cardinal Health 414 further agree that Cardinal Health 414 can pursue all possible remedies, including offset against earnout payments (guaranteed or otherwise) under the Purchase Agreement, warrant exercise, or any other payments owed by Cardinal Health 414, or any of its affiliates, to the Company, or any of its affiliates, if Cardinal Health 414 incurs any cost associated with payment to CRG under the settlement. The $2 million being held in escrow pursuant to court order in the Ohio case and the $3 million being held in escrow pursuant to court order in the Texas case were released to the Company at closing of the Asset Sale. See Notes 2 and 10.

~~Former CEO Arbitration~~

~~On May 12, 2016 the Company received a demand for arbitration through the American Arbitration Association, Columbus, Ohio, from Ricardo J. Gonzalez, the Company~~’s then Chief Executive Officer, claiming that he was terminated without cause and, alternatively, that he resigned in accordance with Section 4G of his Employment Agreement pursuant to a notice received by the Company on May 9, 2016. On May 13, 2016, the Company notified Mr. Gonzalez that his failure to undertake responsibilities assigned to him by the Board of Directors and otherwise work after being ordered to do so on multiple occasions constituted an effective resignation, and the Company accepted that resignation. The Company rejected the resignation of Mr. Gonzalez pursuant to certain provisions in his Employment Agreement. Also, the Company notified Mr. Gonzalez that, alternatively, his failure to return to work after the expiration of the cure period provided in his Employment Agreement constituted cause for his termination under his Employment Agreement. Mr. Gonzalez was seeking severance and other amounts claimed to be owed to him under his Employment Agreement. In response, the Company filed counterclaims against Mr. Gonzalez alleging malfeasance by Mr. Gonzalez in his role as Chief Executive Officer. Mr. Gonzalez withdrew his claim for additional severance pursuant to his Employment Agreement, and the Company withdrew its counterclaims. On May 12, 2017, the Company received a ruling in favor of Mr. Gonzalez finding that he was terminated by the Company without cause on April 7, 2016. Mr. Gonzalez was awarded salary, bonus, and benefits in the aggregate amount of $481,039 plus interest, attorneys’ fees, and other costs. The arbitration award is final and binding on the parties. The Company paid an aggregate of $617,880 to Mr. Gonzalez on May 16, 2017.

~~FTI Consulting, Inc. Litigation~~

On October 11, 2016, FTI Consulting, Inc. (“FTI”) commenced an action against the Company in the Supreme Court of the State of New York, County of New York, seeking damages in excess of $782,600 comprised of: (i) $730,264 for investigative and consulting services FTI alleges to have provided to the Company pursuant to an Engagement Agreement between FTI and the Company, and (ii) in excess of $52,337 for purported interest due on unpaid invoices, plus attorneys’ fees, costs and expenses. On November 14, 2016, the Company filed an Answer and Counterclaim denying the allegations of the Complaint and seeking damages on its Counterclaim, in an amount to be determined at trial, for intentional overbilling by FTI. On February 7, 2017, a preliminary conference was held by the Court at which time a scheduling order governing discovery was issued. On June 26, 2017, the Company and FTI entered into a settlement agreement. According to FTI, as of June 2017, FTI was owed $862,165 including interest charges and legal fees. Under the terms of the settlement agreement, the Company paid an aggregate of $435,000 to FTI on June 30, 2017.

~~Sinotau Litigation~~ – ~~Tc99m Tilmanocept~~

~~On February 1, 2017, Navidea filed suit against Sinotau~~ in the U.S. District Court for the Southern District of Ohio. The Company's complaint included claims seeking a declaration of the rights and obligations of the parties to an agreement regarding rights for the Tc99m tilmanocept product in China and other claims. The complaint sought a temporary restraining order ("TRO") and preliminary injunction to prevent Sinotau from interfering with the Company’s Asset Sale to Cardinal Health 414. On February 3, 2017, the Court granted the TRO and extended it until March 6, 2017. The Asset Sale closed on March 3, 2017. On March 6, the Court dissolved the TRO as moot. Sinotau also filed a suit against the Company and Cardinal Health 414 in the U.S. District Court for the District of Delaware on February 2, 2017. On July 12, 2017, the District of Delaware case was transferred to the Southern District of Ohio. On July 27, 2017 the Ohio Court determined that both cases in the Southern District of Ohio are related and the case was stayed for 60 days pending settlement discussions. Both cases remain open because all issues raised in the complaints have not been resolved but the parties have continued settlement discussions and the Court extended the stays in both cases.

~~Platinum-Montaur Life Sciences LLC~~

On November 2, 2017, Platinum-Montaur commenced an action against the Company in the Supreme Court of the State of New York, County of New York, seeking damages in the amount of $1,914,827 purportedly due as of March 3, 2017, plus interest accruing thereafter. The claims asserted are for breach of contract and unjust enrichment in connection with funds received by the Company under the Platinum Loan Agreement (discussed above). The Company has not yet been served with process in the action. Because the funds sought by Platinum-Montaur are subject to claims of competing ownership, the Company intends to defend itself in the action and seek a determination as to whether any funds are due and owing to the plaintiff.

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. In the case of the CRG litigation, we could still be required to pay up to an additional $7 million to CRG depending upon the outcome of the Texas litigation, which would have a material negative impact on our financial position. Although the outcome of any litigation is uncertain, in our opinion, the amount of ultimate liability, if any, with respect to ~~any of~~ these actions, ~~other than CRG~~ 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.

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 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.

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

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 6.

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.

131.	Equity ~~Instruments~~

~~During~~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. In accordance with current accounting guidance, the $812,000 of stock subscriptions receivable was included in stock subscriptions and other receivables in the consolidated balance sheet as of December 31, 2019.

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 ~~periods~~period ended September 30, ~~2017~~2020. See Note 1(e). These 420,000 shares were subsequently converted into 1,425,076 shares of Common Stock during the second and ~~2016,~~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 ~~16,406 and 72,649~~94,159 shares of our common stock valued at ~~approximately $10,500 and $56,609~~$172,000 to ~~certain members of~~ our ~~Board of Directors as payment in lieu of cash for their retainer fees.~~

~~Also during the~~ ~~nine-month period ended September 30, 2017, we issued 710,353 shares of our common stock valued at $369,342 to our~~full-time employees as partial payment in lieu of cash for their ~~2015 and 2016~~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.

~~In addition, at~~ ~~September 30, 2017, there are 300 warrants outstanding to purchase MT Common Stock. The warrants are exercisable at $2,000 per share.~~

164.

Segments

We report information about our operating segments using the “management approach” in accordance with current accounting standards. This information is based on the way management organizes and reports the segments within the enterprise for making operating decisions and assessing performance. Our reportable segments are identified based on differences in products, services and markets served. There were no inter-segment sales. 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, ~~our R-NAV joint venture (terminated on May 31, 2016),~~and NAV4694 ~~and NAV5001 (license terminated~~(sublicensed in April ~~2015)~~2018), and (ii) therapeutic development programs, including therapeutic applications of our Manocept ~~platform and all development programs undertaken by Macrophage Therapeutics, Inc.~~platform.

The information in the following tables is derived directly from each reportable ~~segment~~’ssegment’s financial reporting.

Three Months Ended September 30, 2017

Diagnostics

Therapeutics

Corporate

Total

Tc99m tilmanocept sales revenue:

United States
$ — $ — $ — $ —
International
— — — —
Tc99m tilmanocept license revenue
— — — —
Grant and other revenue
210,479 13,190 — 223,669
Total revenue
210,479 13,190 — 223,669
Cost of goods sold, excluding depreciation and amortization
— — — —
Research and development expenses, excluding depreciation and amortization
734,539 140,008 — 874,547
Selling, general and administrative expenses, excluding depreciation and amortization ⁽¹⁾
— 13,359 1,671,022 1,684,381
Depreciation and amortization ⁽²⁾
— — 50,326 50,326
Loss from operations ⁽³⁾
(524,060
)
(140,177
)
(1,721,348
)
(2,385,585
)
Other income ⁽⁴⁾
— — 69,071 69,071
Income tax benefit
175,496 46,942 553,312 775,750
Net loss from continuing operations
(348,564
)
(93,235
)
(1,098,965
)
(1,540,764
)
Income from discontinued operations, net of tax
5,399 — — 5,399
Gain on sale of discontinued operations, net of tax
145,877 — — 145,877
Net loss
(197,288
)
(93,235
)
(1,098,965
)
(1,389,488
)
Total assets, net of depreciation and amortization:

United States
14,675,489 10,591 7,835,426 22,521,506
International
82,334 — 1,867 84,201
Capital expenditures
— — 23,247 23,247

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			15,402
(Loss) income from operations ⁽³⁾		(1,268,605	)		28,272		(1,784,907	)		(2,898,625	)
Other expense ⁽⁴⁾		—			—		(713	)		(713	)
Net (loss) income		(1,141,990	)		28,272		(1,785,620	)		(2,899,338	)
Total assets, net of depreciation and amortization:
United States	$	1,000		$	38,320	$	5,839,733		$	5,879,053
International		116,782			—		—			116,782
Capital expenditures		120,810			—		—			120,810

Three Months Ended September 30, 2016

Diagnostics

Therapeutics

Corporate

Total

Tc99m tilmanocept sales revenue:

United States
$ — $ — $ — $ —
International
17,601 — — 17,601
Tc99m tilmanocept license revenue
1,295,625 — — 1,295,625
Grant and other revenue
500,628 10,346 — 510,974
Total revenue
1,813,854 10,346 — 1,824,200
Cost of goods sold, excluding depreciation and amortization
2,889 — — 2,889
Research and development expenses, excluding depreciation and amortization
671,777 247,664 — 919,441
Selling, general and administrative expenses, excluding depreciation and amortization ⁽¹⁾
— 27,758 1,694,073 1,721,831
Depreciation and amortization ⁽²⁾
— — 89,849 89,849
Income (loss) from operations ⁽³⁾
1,139,188 (265,076
)
(1,783,922
)
(909,810
)
Other expenses ⁽⁴⁾
— — (851,637
)
(851,637
)
Net income (loss) from continuing operations
1,139,188 (265,076
)
(2,635,559
)
(1,761,447
)
Income from discontinued operations, net of tax
1,701,911 — — 1,701,911
Net income (loss)
2,841,099 (265,076
)
(2,635,559
)
(59,536
)
Total assets, net of depreciation and amortization:

United States
4,950,756 9,356 6,080,567 11,040,679
International
148,224 — 697 148,921
Capital expenditures
— — — —

Three Months Ended September 30, 2019	Diagnostics			Therapeutics		Corporate			Total
Royalty revenue	$	4,895		$	—	$	—		$	4,895
Grant and other revenue		77,049			154,867		—			231,916
Total revenue		81,944			154,867		—			236,811
Cost of revenue		195			—		—			195
Research and development expenses		1,678,423			123,135		—			1,801,558
Selling, general and administrative expenses, excluding depreciation and amortization ⁽¹⁾		—			1,052		1,484,155			1,485,207
Depreciation and amortization ⁽²⁾		—			—		34,289			34,289
(Loss) income from operations ⁽³⁾		(1,596,674	)		30,680		(1,518,444	)		(3,084,438	)
Other income ⁽⁴⁾		—			—		10,334			10,334
Income tax (expense) benefit		(72	)		16		55			—
Net (loss) income		(1,596,746	)		30,696		(1,508,055	)		(3,074,104	)
Total assets, net of depreciation and amortization:
United States	$	36,811		$	93,860	$	4,688,379		$	4,819,050
International		2,606			—		—			2,606

Nine Months Ended September 30, 2017

Diagnostics

Therapeutics

Corporate

Total

Tc99m tilmanocept sales revenue:

United States
$ — $ — $ — $ —
International
— — — —
Tc99m tilmanocept license revenue
100,000 — — 100,000
Grant and other revenue
1,200,216 115,082 — 1,315,298
Total revenue
1,300,216 115,082 — 1,415,298
Cost of goods sold, excluding depreciation and amortization
— — — —
Research and development expenses, excluding depreciation and amortization
2,255,842 509,853 — 2,765,695
Selling, general and administrative expenses, excluding depreciation and amortization ⁽¹⁾
— 19,342 8,789,728 8,809,070
Depreciation and amortization ⁽²⁾
— — 197,655 197,655
Loss from operations ⁽³⁾
(955,626
)
(414,113
)
(8,987,383
)
(10,357,122
)
Other expenses ⁽⁴⁾
— — (1,061,190
)
(1,061,190
)
Income tax benefit
323,149 140,034 3,397,972 3,861,156
Net loss from continuing operations
(632,477
)
(274,079
)
(6,650,601
)
(7,557,156
)
Loss from discontinued operations, net of tax
(332,838
)
— — (332,838
)
Gain on sale of discontinued operations, net of tax
86,894,000 — — 86,894,000
Net income (loss)
85,928,685 (274,079
)
(6,650,601
)
79,004,006
Total assets, net of depreciation and amortization:

United States
14,675,489 10,591 7,835,426 22,521,506
International
82,334 — 1,867 84,201
Capital expenditures
— — 31,417 31,417

Nine Months Ended September 30, 2020	Diagnostics			Therapeutics			Corporate			Total
Royalty revenue	$	26,188		$	—		$	—		$	26,188
License revenue		4,726			—			—			4,726
Grant and other revenue		381,103			283,745			—			664,848
Total revenue		412,017			283,745			—			695,762
Cost of revenue		1,048			—			—			1,048
Research and development expenses		3,402,160			256,886			—			3,659,046
Selling, general and administrative expenses, excluding depreciation and amortization ⁽¹⁾		—			(550	)		4,895,328			4,894,778
Depreciation and amortization ⁽²⁾		4,027			—			47,474			51,501
(Loss) income from operations ⁽³⁾		(2,995,218	)		27,409			(4,942,802	)		(7,910,611	)
Other income ⁽⁴⁾		—			—			12,045			12,045
Net (loss) income		(2,995,218	)		27,409			(4,930,757	)		(7,898,566	)
Total assets, net of depreciation and amortization:
United States	$	1,000		$	38,320		$	5,839,733		$	5,879,053
International		116,782			—			—			116,782
Capital expenditures		120,810			—			8,406			129,216

Nine Months Ended September 30, 2016	Diagnostics			Therapeutics			Corporate			Total
Tc99m tilmanocept sales revenue:
United States	$	—		$	—		$	—		$	—
International		30,800			—			—			30,800
Tc99m tilmanocept license revenue		1,795,625			—			—			1,795,625
Nine Months Ended September 30, 2019													Diagnostics				Therapeutics			Corporate			Total
Royalty revenue													$	13,985			$	—		$	—		$	13,985
License revenue														9,953				—			—			9,953
Grant and other revenue		2,051,622			61,798			—			2,113,420			309,670				204,919			—			514,589
Total revenue		3,878,047			61,798			—			3,939,845			333,608				204,919			—			538,527
Cost of goods sold, excluding depreciation and amortization		5,185			—			—			5,185
Research and development expenses, excluding depreciation and amortization		4,410,133			600,790			—			5,010,923
Cost of revenue														6,559				—			—			6,559
Research and development expenses														3,194,468				418,315			—			3,612,783
Selling, general and administrative expenses, excluding depreciation and amortization ⁽¹⁾		—			31,590			5,542,034			5,573,624			—				15,828			4,985,990			5,001,818
Depreciation and amortization ⁽²⁾		—			—			258,999			258,999			—				—			107,794			107,794
Loss from operations ⁽³⁾		(537,271	)		(570,582	)		(5,801,033	)		(6,908,886	)		(2,867,419	)			(229,224	)		(5,093,784	)		(8,190,427	)
Other income, excluding equity in loss of R-NAV, LLC ⁽⁴⁾		—			—			1,664,265			1,664,265
Equity in loss of R-NAV, LLC		—			—			(15,159	)		(15,159	)
Other income ⁽⁴⁾														—		��		—			17,456			17,456
Provision for income tax														(248	)			(20	)		(439	)		(707	)
Net loss from continuing operations		(537,271	)		(570,582	)		(4,151,927	)		(5,259,780	)		(2,867,667	)			(229,244	)		(5,076,767	)		(8,173,678	)
Loss from discontinued operations, net of tax		(5,167,312	)		—			—			(5,167,312	)		(2,665	)			—			—			(2,665	)
Net loss		(5,704,583	)		(570,582	)		(4,151,927	)		(10,427,092	)		(2,870,332	)			(229,244	)		(5,076,767	)		(8,176,343	)
Total assets, net of depreciation and amortization:
United States		4,950,756			9,356			6,080,567			11,040,679		$	36,811			$	93,860		$	4,688,379		$	4,819,050
International		148,224			—			697			148,921			2,606				—			—			2,606
Capital expenditures		—			—			1,847			1,847

⁽¹⁾

General and administrative expenses, excluding depreciation and amortization, represent costs that relate to the general administration of the Company and as such are not currently allocated to our individual reportable ~~segments.~~segments, other than those expenses directly incurred by MT.

⁽⁽²⁾²⁾

Depreciation and amortization isare reflected in selling, general and administrative expenses ($~~50,326~~15,402 and ~~$89,849~~$34,289 for the three-month periods ended September 30, ~~2017~~2020 and ~~2016~~2019, and ~~$197,655~~$51,501 and ~~$258,999~~$107,794 for the nine-month periods ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively).

⁽⁽³⁾³⁾

~~Income (loss)~~Loss from operations does not reflect the allocation of certain selling, general and administrative expenses, excluding depreciation and amortization, to our individual reportable ~~segments.~~segments, other than those expenses directly incurred by MT.

⁽⁽⁴⁾⁴⁾

Amounts consist primarily of ~~changes in fair value of financial instruments~~interest income and ~~losses on debt extinguishment,~~interest expense, which are not currently allocated to our individual reportable segments.

During the nine-month periods ended September 30, ~~2017~~2020 and ~~2016,~~2019, we paid interest aggregating ~~$7.4 million $4.2 million,~~$5,000 and $6,000, respectively. Interest paid during the nine-month period ended September 30, 2016 includes collection fees of $778,000 and a prepayment premium of $2.1 million, both of which were withdrawn by CRG from a bank account under their control. During the nine-month period ended September 30, ~~2017,~~2020, we issued ~~1 million Series NN warrants~~94,159 shares of our common stock valued at $172,000 to ~~UCSD with an estimated fair value~~our employees as partial payment in lieu of ~~$334,000. As discussed in Note 8, the liability~~cash for ~~the additional $200,000 of investments made by Platinum was reclassified to additional paid-in-capital in January 2017.~~their 2019 bonuses. During the ~~nine month-periods~~nine-month periods ended September 30, ~~2017~~2020 and ~~2016,~~2019, we issued ~~105,308~~32,651 and ~~67,002~~8,128 shares of our common stock as matching contributions to our 401(k) Plan which were valued at ~~$53,707~~$40,000 and ~~$120,800,~~$20,000, respectively. During the nine-month period ended September 30, 2020, 411,000 Series OO warrants to purchase the Company’s common stock were exercised on a cashless basis in exchange for issuance of 300,595 shares of Navidea common stock. During the nine-month period ended September 30, 2020, the Company recorded a deemed dividend of approximately $467,000 related to the BCF on 420,000 shares of Series C Preferred Stock, and 420,000 shares of Series C Preferred Stock were converted into 1,425,076 shares of Common Stock. Also during the nine-month period ended September 30, 2020, the Company recorded a deemed dividend of approximately $17,000 related to the BCF on 1,500 shares of Series D Preferred Stock, and 1,500 shares of Series D Preferred Stock were converted into 56,497 shares of Common Stock.

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

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, ~~among other things:~~but not limited to:

In addition, in this report, we use words such as “anticipate,” “believe,” ~~“plan,~~“estimate,” “expect,” “future,” “intend,” “plan,” “project,” and similar expressions to identify forward-looking statements.

We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this report. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

Navidea Biopharmaceuticals, Inc. ~~(“Navidea,” the “Company,” or “we”)~~, a Delaware corporation (NYSE ~~MKT:~~American: NAVB), is a biopharmaceutical company focused on the development and commercialization of precision immunodiagnostic agents and immunotherapeutics. Navidea is developing multiple precision-targeted products based on our Manocept™ platform to enhance patient care by identifying the sites and pathways of undetected disease and enable better diagnostic accuracy, clinical decision-making and targeted treatment.

~~Navidea~~’sNavidea’s Manocept platform is predicated on the ability to specifically target the CD206 mannose receptor expressed on activated macrophages. The Manocept platform serves as the molecular backbone of ~~Lymphoseek~~^® ~~(technetium~~ Tc99m ~~tilmanocept) injection,~~tilmanocept, the first product developed and commercialized by Navidea based on the platform.

OnIn March 3, 2017, ~~pursuant to~~ ~~an Asset Purchase Agreement, dated November 23, 2016 (the “Purchase Agreement”),~~ the Company completed ~~its previously announced~~the sale to Cardinal Health 414, LLC (“Cardinal Health 414”) of its assets ~~used, held for use, or intended~~related to ~~be used in operating its business of developing, manufacturing and commercializing a product~~the Company’s radioactive diagnostic agent Tc99m tilmanocept, marketed under the Lymphoseek^® trademark, used for lymphatic mapping, lymph node biopsy, and the diagnosis of metastatic spread to lymph nodes for staging of cancer, ~~(the “Business”), including the Company’s radioactive diagnostic agent marketed under the Lymphoseek~~^® ~~trademark for current approved indications by the U.S. Food and Drug Administration (“FDA”) and similar indications approved by the FDA in the future (the “Product”),~~ in Canada, Mexico and the United States (the “Territory”) (giving effect to the License-Back described below and excluding certain assets specifically retained by the Company) (the “Asset Sale”). Such assets sold in the Asset Sale consist primarily of, without limitation, (i) intellectual property used in or reasonably necessary for the conduct of the Business, (ii) inventory of, and customer, distribution, and product manufacturing agreements related to, the Business, (iii) all product registrations related to the Product, including the new drug application approved by the FDA for the Product and all regulatory submissions in the United States that have been made with respect to the Product and all Health Canada regulatory submissions and, in each case, all files and records related thereto, (iv) all related clinical trials and clinical trial authorizations and all files and records related thereto, and (v) all right, title and interest in and to the Product, as specified in the Purchase Agreement (the “Acquired Assets”).States.

Other than Tc99m tilmanocept, which the Company has a license to distribute outside of Canada, Mexico and the United States, none of the Company’s drug product candidates have been approved for sale in any market.

Our business is focused on two primary types of drug products: (i) diagnostic substances, including Tc99m tilmanocept and other diagnostic applications of our Manocept platform, and NAV4694 (sublicensed in April 2018), and (ii) therapeutic development programs, including therapeutic applications of our Manocept platform. See Note 14 to the accompanying consolidated financial statements for more information about our business segments.

Our primary development efforts over the last ~~few~~several years ~~have been~~were focused on diagnostic products, including Lymphoseek, which was sold to Cardinal Health 414 in March ~~2017, as well as other~~2017. Our more recent initiatives have been focused exclusively on diagnostic and therapeutic line extensions based on our Manocept platform.

TheDuring 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 hard 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. Navidea has completed enrollment into Arms 1, 2 and 3 of the Company’s ongoing Phase 2b clinical trial (NAV3-31) and delivered interim data. The Company’s pivotal Phase 3 trial for rheumatoid arthritis (NAV3-33) also remains on track for a second-half 2020 launch as previously communicated. The second Phase 2b trial (NAV3-32) correlating Tc99m tilmanocept uptake in rheumatoid arthritis (“RA”)-involved joints with CD206 immunohistochemistry findings from synovial biopsies has received approval in the United Kingdom and will start recruiting in the coming months. In addition, the investigator-initiated Phase 2 cardiovascular (“CV”) study is ongoing at Massachusetts General Hospital. Results provided to Navidea thus far have paralleled data in our earlier published article, and these data are supportive of Navidea’s hypothesis that tilmanocept can provide marked signal to background in a host of CV disease applications. Navidea continues to anticipate meeting with the FDA in the coming months to discuss upcoming clinical trial designs.

Navidea’s Manocept platform is predicated on the ability to specifically target the CD206 mannose receptor expressed primarily on activated macrophages. This flexible and versatile ~~Manocept~~ platform ~~acts~~serves as ~~an engine~~a molecular backbone for ~~the design of~~purpose-built targeted imaging molecules that may significantly impact patient care by providing enhanced diagnostic accuracy, clinical decision-making, and target-specific treatment. This CD206-targeted drug platform is applicable to a range of diagnostic modalities, including single photon emission computed tomography (“SPECT”), positron emission tomography (“PET”), gamma-scanning ~~(both imaging and topical)~~ and intra-operative and/or optical-fluorescence ~~detection; active clinical~~detection, as well as delivery of therapeutic compounds that target macrophages, and their role in a variety of immune- and inflammation-involved diseases. The FDA-approved sentinel node/lymphatic mapping agent, Tc99m tilmanocept, is representative of the ability to successfully exploit this mechanism to develop powerful new products and to expand this technology into additional diagnostic ~~programs in four diseases representing both major macrophage activation states are ongoing.~~and therapeutic applications.

Activated macrophages play important roles in many disease states and are an emerging target in many diseases where diagnostic uncertainty exists. Impairment of the macrophage-driven disease mechanisms is an area of increasing and proven focus in medicine. The number of people affected by all the inflammatory diseases combined is estimated at more than 40 million in the United States and up to 700 million worldwide, making macrophage-mediated diseases an area of remarkable clinical importance. There are many recognized disorders having macrophage involvement, including RA, atherosclerosis/vulnerable plaque, nonalcoholic steatohepatitis (“NASH”), inflammatory bowel disease, systemic lupus erythematosus, Kaposi’s sarcoma (“KS”), leishmaniasis, and others that span general clinical areas in oncology, autoimmunity, infectious diseases, cardiology, central nervous system (“CNS”) diseases, and inflammation. For the near term, we have selected target diseases that may, if successfully developed, benefit from this technology.

The Company has developed processes for producing the first two therapeutic Manocept immuno-construct series, MT-1000 series, which is designed to specifically target and kill or modify activated CD206+ macrophages by delivering doxorubicin, and MT-2000 series, which is designed to inhibit the inflammatory activity of activated CD206+ macrophages by delivering a potent anti-inflammatory agent, dexamethasone. We have contracted with independent facilities to improve chemical syntheses and to produce sufficient quantities of the MT-1000 series and MT-2000 series agents along with the concomitant analytical standards, to provide material for planned preclinical animal studies and future clinical trials.

Two Tc99m tilmanocept dose escalation studies in RA have been completed. The first study was completed and included 18 subjects (nine with active disease and nine healthy subjects) dosed subcutaneously with 50 and 200 µg/2mCi Tc99m tilmanocept (ClinicalTrials.gov NCT02683421). The results of this study were presented at five international meetings, including Biotechnology Innovation Organization, Society of Nuclear Medicine and Molecular Imaging (“SNMMI”), and The American College of Rheumatology (“ACR”). In addition, based on completion of extensive preclinical dosing studies pursuant to our dialog with the FDA, we have completed a Phase 1/2 study involving intravenous (“IV”) dosing of 39 subjects with IV-administered Tc99m tilmanocept (ClinicalTrials.gov NCT02865434). In conjunction with this study, we have completed pharmacokinetic, pharmacodynamics and radiation dosimetry phases in human subjects as well. The majority of the costs of these studies have been supported through a Small Business Innovation Research (“SBIR”) grant (NIH/NIAMSD Grant 1 R44 AR067583-01A1). Results of this Phase 1/2 study were presented at the June 2018 and June 2019 SNMMI meetings, the 2018 European League Against Rheumatism (“EULAR”) meeting and the 2018 ACR meeting. These studies have been combined and submitted for peer review publication and full published results will follow.

In June 2019, the results of the Company’s NAV3-21 clinical study were presented at the SNMMI Annual Meeting in Anaheim, California. The presentation, titled “A Phase 1/2 Study of Intravenously Administered Tc99m Tilmanocept to Determine Safety, Tolerability, Optimal Clinical Dose Selection, and Imaging Timepoint in Patients Clinically Diagnosed with Rheumatoid Arthritis,” was delivered by Arash Kardan, M.D. In addition, an abstract of the presentation was published in the Journal of Nuclear Medicine (2019, Volume 60, Supplement 1). The NAV3-21 study enrolled subjects with active, moderate-to-severe RA, and healthy controls. Results from the completed trial demonstrate that Tc99m tilmanocept is well-tolerated with no serious adverse events, adverse drug reactions, or drug-related adverse events observed. Additionally, static planar images revealed joint-specific Tc99m tilmanocept localization in RA subjects to disease-involved joints of the shoulders, knees, hands, and feet, but no joint-specific localization in healthy control subjects, revealing potentially significant immunodiagnostic information about CD206-expressing synovial macrophage involvement in RA. An optimal imaging time window post-Tc99m tilmanocept IV administration, as well as optimal dosing, were also determined.

In April 2019, the Company received feedback from the FDA regarding the Company’s planned clinical studies that will evaluate joint disease in patients with RA and monitor patient response to therapy. The Company’s proposed RA studies were discussed with the FDA during an in-person meeting and through follow-up collaborative efforts. The FDA has communicated that the first study, a Phase 2b trial, is aligned with expectations for the studies and that they will continue to work with Navidea as we progress into a second Phase 2b trial correlating Tc99m tilmanocept uptake in RA-involved joints with CD206 immunohistochemistry findings from synovial biopsies and into the planned Phase 3 clinical trial. In May 2019, we began enrolling patients into the first Phase 2b study, entitled “Evaluation of the Precision and Sensitivity of Tilmanocept Uptake Value (“TUV”) on Tc99m Tilmanocept Planar Imaging” (ClinicalTrials.gov MCT03938636). This study will provide confirmatory support necessary to initiate Navidea’s Phase 3 study program. In October 2019, the Company performed its first interim analysis of this trial, covering subjects enrolling into Arms 1 and 2. The results of this interim analysis were in line with the Company’s hypotheses that Tc99m tilmanocept can provide robust, stable imaging in healthy subjects as well as in patients with active RA, and provide the fundamental information needed to keep moving forward into the Phase 3. A summary of these results was presented at the 2020 EULAR meeting. In May 2020, the Company announced the results of its second interim analysis, covering Arm 3 of the trial. This Arm mirrors the upcoming Phase 3 in design and provided information relevant for sample size calculation for the Phase 3 as well as support for the hypothesis that Tc99m tilmanocept imaging can provide an early indicator of treatment efficacy of anti-tumor necrosis factor (“TNF”) alpha therapeutics. These interim results were presented at the 2020 ACR meeting. In June 2020, the Company announced full enrollment into this trial, with imaging events ongoing in patients in Arm 3. The pivotal Phase 3 study program will assess joint disease status and monitor patient response to therapy.

In collaboration with researchers at Massachusetts General Hospital, Navidea has completed one and has initiated a second investigator-initiated clinical study evaluating Tc99m tilmanocept’s ability to enable imaging of atherosclerotic plaques. Results of these studies provide strong preliminary evidence of the potential of Tc99m tilmanocept to accumulate specifically in and enable imaging of non-calcified atherosclerotic plaques. Non-calcified atherosclerotic plaques include plaques with morphologies indicating a high risk of rupture. Rupture of such plaques causes myocardial infarctions (heart attacks) and a significant portion of ischemic strokes. The studies compared aortic Tc99m tilmanocept uptake imaged by SPECT/CT in clinically asymptomatic subjects with intermediate Framingham Risk Scores (“~~CV”~~FRS”) – who were infected with Human Immunodeficiency Virus (“HIV”) as compared to healthy, uninfected, FRS and age-matched subjects. Tc99m tilmanocept SPECT/CT images were compared to aortic images of the same subjects obtained by contrast enhanced coronary computed tomography angiography and/or [18F]NaF PET/CT.

A nine-subject study to evaluate diagnostic imaging of emerging atherosclerosis plaque with the Tc99m tilmanocept product dosed subcutaneously ~~was completed~~is complete (ClinicalTrials.gov NCT02542371). The results of this study were ~~recently~~presented at two major international meetings (Conference on Retroviruses and Opportunistic Infections and SNMMI, 2017) and published in early release in the Journal of Infectious Diseases in January 2017 (published in the circulated version, ~~J Infect Dis~~Journal of Infectious Diseases (2017) 215 (8): 1264-1269), confirming that the Tc99m tilmanocept product can both quantitatively and qualitatively target non-calcified plaque in the aortic arch ~~(NIH/~~of Acquired Immunodeficiency Syndrome (“AIDS”) patients (supported by NIH/NHLBI Grant 1 R43 HL127846-01). ~~We have applied for follow-on NIH/NHLBI support to fund additional clinical studies. These studies are currently under development and design for both Phase 1 and Phase 2 trials.~~

~~Rheumatoid Arthritis (“RA”)~~ ~~– Two~~We have also commenced a second Phase 1/2 investigator-initiated study in cooperation with Massachusetts General Hospital in subjects with HIV that expands the original study in both the scope of the drug administration as well as the diagnostic assessment of the subjects. This study will enroll up to 24 AIDS subjects and healthy controls in imaging non-calcified plaque using IV and SC-administered Tc99m tilmanocept ~~dose escalation studies~~and will expand the initial investigation to the assessment of aortic plaque as well as carotid and coronary arteries. Subjects continue to be enrolled in ~~RA have~~this study and initial images are currently being evaluated.

Navidea has also been initiated. The first study, now complete (ClinicalTrials.gov NCT02683421), included 18 subjects (9 with active disease and 9 healthy subjects) dosed subcutaneously with 50 and 200 µg/2mCi Tc99m tilmanocept. In addition, based on completion of extensive preclinical dosing studies pursuant to our dialog with the FDA, we have initiated and nearly completedawarded a ~~study involving intravenous (“IV”) dosing of Tc99m tilmanocept (ClinicalTrials.gov NCT02865434). These studies have been supported through a~~$225,000 phase 1 Small Business ~~Innovation Research (“SBIR”)~~Technology Transfer grant ~~(NIH/NIAMSD Grant 1 R44 AR067583-01A1)~~(1R41HL147640-01A1) entitled Gallium 68 Tilmanocept for PET Imaging of Atherosclerosis Plaques. This grant will support a research collaboration between Navidea and Dr. Suzanne Lapi of the University of Alabama Birmingham. These efforts will evaluate [68]gallium tilmanocept for imaging plaques in an animal model of atherosclerosis and began activities in the fourth quarter of 2019.

We initiated and completed a study of KS in 2015 (ClinicalTrials.gov NCT022201420)~~, we~~ and received additional funding from the National Institutes of Health (“NIH”) in 2016 to continue diagnostic studies in this disease. The new support not only continues the imaging of the cutaneous form of this disease but expands this to imaging of visceral disease via IV administration of Tc99m tilmanocept (NIH/NCI 1 R44 CA192859-01A1; ClinicalTrials.gov NCT03157167). ~~Additionally, we~~This now-escalated study includes a pathology/biopsy component as well as an imaging component to determine pathology concordance with image assessment. We received ~~funding to support the therapeutic initiative for KS employing a select form~~Institutional Review Board approval of the ~~MT-1002 agent under current evaluation. The Company~~clinical protocol and initiated a Phase 1/2 clinical study in KS in 2017. This trial has ~~already~~ completed ~~a portion of the Phase 1 SBIR portion of~~enrollment and imaging. Data and image analysis for this ~~award (1 R44 CA206788-01).~~study are ongoing.

During ~~the first quarter of~~ 2017, we initiated an imaging study in subjects with CRC and liver metastases via IV administration of Tc99m tilmanocept. This study ~~is ongoing and will~~was supported through a SBIR grant (NIH/NCI 1 R44 CA1962783-01A1; ClinicalTrials.gov NCT03029988). The trial intended to enroll up to 12 subjects with dose modification. ~~This~~After an interim analysis of the first three completed subjects, a decision was made to not continue with the trial and the study is ~~supported through a SBIR grant (1 R44 CA1962783-01A1; ClinicalTrials.gov NCT03029988).~~now closed. An initial presentation took place at SNMMI in June of 2018. An additional report has been submitted to the National Cancer Institute (“NCI”) on the early results of this study. The final study report has been completed and submitted to the FDA.

We have concluded a clinical study (ClinicalTrials.gov NCT03332940) that was originally designed to enroll 12 subjects with IV administration of Tc99m tilmanocept and an imaging comparator to identify and quantify the extent of NASH lesions in human patients. A semiquantitative evaluation of the images from the first six subjects indicated that imaging the remaining six subjects planned in the study may not sufficiently further our knowledge of Tc99m tilmanocept imaging in individuals with NASH to justify continuing the study using the current protocol. The study is now complete. Ongoing quantitative analyses of the images from the first six subjects will determine if future studies in subjects with NASH are likely to be productive. Initial results were presented at the NASH Summit in Boston in April 2018, and the results are available on ~~performance~~Navidea’s website.

In April 2019, we announced that Professor Mike Sathekge, MBChB, M. Med (Nuclear Medicine), PhD, Professor and Head of the Department of Nuclear Medicine in ~~these very large imaging market opportunities~~the Faculty of Health Sciences at the University of Pretoria/Steve Biko Academic Hospital, planned to initiate a comparative study evaluating the use of tilmanocept in patients with TB. The purpose of this ongoing study is to explore using 68Ga tilmanocept as an aid in TB patient management while contributing to the better understanding of the biology of TB granulomas. CD206+ macrophages constitute one of the most abundant cell types in TB granulomas. Therefore, a molecular probe such as 68Ga-labeled tilmanocept targeting mannose receptor CD206 expressed on macrophages holds great promise not only in understanding the biology of TB granulomas, but may also support future development of a tilmanocept-like drug delivery vehicle for delivering therapeutic interventions to TB granulomas. Navidea has provided tilmanocept for use in this study, and several subjects have been injected and imaged to date. Successful completion of this study could support an extended claim of 68Ga-tilmanocept.

In November 2017, the Company ~~anticipates continued investment~~commenced the qualification of the biomarker CD206 with the FDA Biomarker Section of The Center for Drug Evaluation and Research (“CDER”). As per FDA protocol, Navidea submitted a draft letter of intent (“LOI”) to CDER prior to the November 2017 meeting. According to the CDER directive, “the Biomarker Qualification Program was established to support the CDER’s work with external stakeholders to develop biomarkers that aid in ~~these programs including initiating studies designed~~the drug development process. Through the FDA’s Biomarker Qualification Program, an entity may request regulatory qualification of a biomarker for a particular context of use (“COU”) in drug development.” Following the meeting with the FDA, and because of Navidea’s data sets and the general external publication database, Navidea, in conjunction with FDA, is now reviewing the LOI with the FDA’s recommended consultants. Navidea has revised the LOI draft strategy in order to ~~obtain new approvals~~expedite the application process. In March 2018, Navidea had a follow-up meeting with the FDA’s assigned strategist, during which the potential to further narrow the LOI elements was reviewed. Navidea is continuing the process of finalizing the COU LOI and providing the background data sets for qualification review with the ~~Tc99m tilmanocept product.~~FDA/CDER. Additional meetings have taken place and the pursuit of this qualification is ongoing.

The ~~Company has completed p~~reclinical studies employing both MT 1000-class and 2000-class therapeutic conjugates of Manocept. The highly positive results from these studies are indicative of Manocept’s specific targeting supported by its notable binding affinity to CD206 receptors. This high specificity is a foundation of the potential for this technology to be useful in treating diseases linked to the over-activation of macrophages. This includes various cancers as well as autoimmune, infectious, CV, and central nervous system (“CNS”) diseases. Our efforts in this area were further supported by the 2015 formation of MT, a majority-owned subsidiary that was formed specifically to explore therapeutic applications for the Manocept platform.

~~MT has been set up to pursue the~~ therapeutic drug delivery ~~model. This~~ model enables the Company to leverage its technology over many potential disease applications and with multiple partners simultaneously without significant capital outlays. To date, the Company has developed two lead families of therapeutic products. The MT-1000 ~~class~~series is designed to deplete activated macrophages via ~~apoptosis.~~apoptosis and/or alter the phenotype of macrophages. The MT-2000 ~~class~~series is designed to modulate activated macrophages from a classically activated phenotype to the alternatively activated phenotype. Both families have been tested in a number of disease models in rodents.

We have already reported on the peripheral infectious disease aspects of KS, including HIV and HHV8 (CROI, Boston 2016, and KS HHV8 Summit Miami 2015). As noted, we continue this work funded by the NIH/NIAID and NCI. The Company has completed preclinical studies employing both MT 1000-class and 2000-class therapeutic conjugates of Manocept. The positive results from these studies are indicative of Manocept’s specific targeting supported by its strong binding affinity to ~~seek~~CD206 receptors. This high degree of specificity is a foundation of the potential for this technology to ~~partner or out-license NAV4694. On October 26, 2017,~~be useful in treating diseases linked to the ~~Company executed a letter~~over-activation of ~~intent with Sinotau and Cerveau Technologies, Inc. (“Cerveau”), outlining a plan to sublicense to Cerveau the worldwide rights to conduct research using NAV4694,~~macrophages. This includes various cancers as well as ~~grant to Cerveau an exclusive license for the development, marketing~~autoimmune, infectious, CV, and commercialization of NAV4694 in Australia, Canada, China and Singapore. The letter of intent includes a provision stating that Sinotau will release all claims in the Sinotau Litigation upon the parties’ execution of a definitive agreement; the commercial rights agreement contemplated by the letter of intent would also include a release of such claims and a covenant not to sue on such claims. See Part II – Item 1 – Legal Proceedings.

~~Navidea~~’s Manocept platform is predicated on the ability to specifically target the CD206 mannose receptor expressed on activated macrophages. Activated macrophages play important roles in many disease states and are an emerging target in many diseases where diagnostic uncertainty exists. This flexible and versatile platform serves as an engine for purpose-built molecules that may significantly impact patient care by providing enhanced diagnostic accuracy, clinical decision-making, and target-specific treatment. This disease-targeted drug platform provides the capability to utilize a breadth of diagnostic modalities, including SPECT, PET, gamma-scan (both imaging and topical), intra-operative and/or optical-fluorescence detection, as well as delivery of therapeutic compounds that target macrophages, and their role in a variety of immune- and inflammation-based disorders. The FDA-approved sentinel node/lymphatic mapping agent, Tc99m tilmanocept, is representative of the ability to successfully exploit this mechanism to develop powerful new products.

~~Impairment of the macrophage-driven disease mechanisms is an area of increasing~~ and proven focus in medicine. The number of people affected by all the inflammatory diseases combined is estimated at more than 40 million in the United States and perhaps 700 million worldwide, making macrophage-mediated diseases an area of remarkable clinical importance. There are many recognized disorders having macrophage involvement, including RA, atherosclerosis/vulnerable plaque, nonalcoholic steatohepatitis (“NASH”), inflammatory bowel disease, systemic lupus erythematosus, KS, and others that span clinical areas in oncology, autoimmunity, infectious diseases, cardiology, CNS ~~diseases, and inflammation.~~

~~In conjunction with the agreed submission of an~~ investigational new drug (“IND”) amendment for IV administration of tilmanocept to the FDA, we initiated a multi-center Phase 1/2 registrational trial employing IV administration to evaluate tilmanocept for the primary diagnosis of RA and to aid in the differential diagnosis of RA from other types of inflammatory arthritis. The first subject was dosed and imaged in February 2017. This study will enroll up to 33 subjects with dose escalation (ClinicalTrials.gov NCT02865434; Study supported by NIH/NIAMSD Grant 1 R44 AR067583-01A1).

~~Results~~ of our studies to date (ClinicalTrials.gov NCT02542371) provide strong evidence of the potential of Tc99m tilmanocept to accumulate in high risk morphology plaques, the ability to make preliminary comparisons of aortic Tc99m tilmanocept uptake by SPECT/CT in clinically symptomatic patients vs. healthy age-matched subjects, and to evaluate the ability of Tc99m tilmanocept to identify the same aortic atherosclerotic plaques that are identified by contrast enhanced coronary computed tomography angiography and/or PET/CT.

The Company has initiated a clinical study examining the safety and efficacy of Tc99m radiolabel escalation of IV-injected Tc99m tilmanocept in SPECT/CT imaging studies to identify and quantify the extent of nonalcoholic steatohepatitis (“NASH”) lesions in human patients. We have received Institutional Review Board (“IRB”) approval of the clinical protocol, and we plan to initiate this Phase 1 clinical study in NASH in late 2017.

~~The Company has received an award for a Fast Track SBIR grant providing for up to $1.8 million from the NIH~~’s National Cancer Institute to fund preclinical studies examining the safety of IV injection of Tc99m tilmanocept, a Manocept platform product, followed by a clinical study providing the initial evaluation of the safety and efficacy of SPECT/CT imaging studies with IV Tc99m tilmanocept to identify and quantify both skin- and organ-associated KS lesions in human patients. The grant is awarded in two parts with the potential for total grant money of up to $1.8 million over two and a half years. The first six-month funding segment of $300,000, which has already been awarded, enabled Navidea to secure necessary collaborations and Institutional Review Board approvals. We have now been awarded the remaining portion of the second funding segment, which provided an additional $1.5 million to accrue participants, perform the Phase 1/2 study and perform data analyses to confirm the safety and effectiveness of intravenously administered Tc99m tilmanocept. We have received IRB approval of the clinical protocol, and we plan to initiate a Phase 1/2 clinical study in KS in late 2017.

~~MT has developed processes for producing the first two therapeutic Manocept~~ immuno-constructs, MT-1002, designed to specifically target and kill activated CD206+ macrophages by delivering doxorubicin, and MT-2002, designed to inhibit the inflammatory activity of activated CD206+ macrophages by delivering a potent anti-inflammatory agent. MT has contracted with independent facilities to produce sufficient quantities of the MT-1002 and MT-2002 agents along with the concomitant analytical standards, to provide material for planned preclinical animal studies and future clinical trials.

~~Manocept Platform~~ – ~~In-Vitro and Pre-Clinical~~ ~~Immuno~~t~~herapeutics Data~~

The novel ~~MT-1002 construct is~~MT-1000 class constructs are designed to specifically deliver doxorubicin, a chemotoxin, which can kill KS tumor cells and their tumor-associated macrophages, potentially altering the course of cancer. ~~KS is a serious and potentially life threatening illness in persons infected with HIV and the third leading cause of death~~We have received additional funding to continue therapeutic studies in this population worldwide. The prognosis for patients with KS is poor with high probabilities for mortality and greatly diminished quality of life. The funds for this Fast Track grant will be released in three parts, which together have the potential to provide up to $1.8 million in resources over 2.5 yearsdisease with the goal of completing an ~~IND~~investigational new drug (“IND”) submission for a Manocept construct (MT-1000 class of compounds) consisting of tilmanocept linked to doxorubicin for the treatment of KS. The first part of the grant, ~~provided $232,000 to support~~now complete, supported analyses including in vitro and cell culture studies, ~~now complete and will~~to be followed by ~~Part~~Parts 2 and 3 FDA-required preclinical animal testing studies. The information from these studies will be combined with other information in an IND application that will be submitted to the FDA requesting permission to begin testing the compound in selected KS ~~subjects.~~subjects (supported by NIH/NCI 1 R44 CA206788-01).

The Company continues to evaluate emerging data in other disease states to define areas of focus, development pathways and partnering options to capitalize on the Manocept platform, including ongoing studies in KS,, RA and infectious diseases. The immuno-inflammatory process is remarkably complex and tightly regulated with indicators that initiate, maintain and shut down the process. Macrophages are immune cells that play a critical role in the initiation, maintenance, and resolution of inflammation. They are activated and deactivated in the inflammatory process. Because macrophages may promote dysregulation that accelerates or enhances disease progression, diagnostic and therapeutic interventions that target macrophages may open new avenues for controlling inflammatory diseases. There can be no assurance that further evaluation or development will be successful, that any Manocept platform product candidate will ultimately achieve regulatory approval, or if approved, the extent to which it will achieve market acceptance.

~~Navidea and MT have already reported on the peripheral infectious disease aspects of KS, including HIV and HHV8 (CROI, Boston 2016, and KS HHV8 Summit Miami 2015).~~ ~~As noted Navidea and MT continue this work funded by the NIH/NIAID and NCI.~~

~~Nonalcoholic fatty liver disease (~~“NAFLD”) is a spectrum of liver disorders and is defined by the presence of steatosis in more than 5% of hepatocytes with little or no alcohol consumption. NASH is the most extreme form of NAFLD. A major characteristic of NASH involves cells undergoing lipotoxicity, releasing endogenous signals prompting the accumulation of various macrophages to assess the damage. Studies have shown that levels of endogenous molecular inflammatory signals positively correlate with inflammation, hepatocyte ballooning, and other NAFLD symptoms. Navidea and MT have developed a molecular delivery technology capable of targeting only the disease-causing macrophages by selectively binding to the CD206 receptor. Selective binding and efficient delivery of this agent mitigates the potential of affecting the neighboring cells or interfering more broadly with the normal function of the immune system.

We have completed four in vivo studies employing our MT-1002 and MT-2002 Manocept conjugates in a well-established mouse model of NAFLD/NASH and liver fibrosis. The NALFD scores, which correlate to the agents’ effectiveness, were significantly reduced, with all the activity related to inflammation and “ballooning” scores. Fibrosis decreased significantly when compared to the control in the later dosing arm of the study. Liver weights did not differ during any phase of the study between control and agent-treated groups, nor was there any evidence of damage to the roughly 30% of the liver made up of un-activated macrophages called Kupffer cells. MT-1002 and MT-2002 both significantly reduced key disease assessment parameters in the in vivo STAM^TM ~~NASH model. We believe these agents present themselves as potential clinically effective candidates for further evaluation. We continue to use this model to further assess the activity of our agents.~~

~~Navidea and MT have already reported on the peripheral infectious disease aspects of KS, including HIV and HHV8 (CROI, Boston 2016, and KS HHV8 Summit Miami 2015). As noted Navidea and~~ ~~MT continue this work funded by the NIH/NIAID and NCI.~~

~~We have~~ now completed an expanded series of predictive in vitro screening tests of the MT-1002 and MT-2002 therapeutic conjugates against the Zika and Dengue viruses, which included infectivity and viral replication inhibition effectiveness as well as dose finding studies and mechanisms of action, the latter based on conjugate structures. We have also completed a series of predictive in vivo screening tests of the MT-1002 and MT-2002 therapeutic conjugates against Leishmaniosis, which included host cell targeting and killing effectiveness as well as dose finding studies and mechanisms of action. A portion of the results from the ~~in vivo~~ ~~Leishmaniosis study, completed in conjunction with the National Institute of Allergy and Infectious Diseases/NIH, was recently accepted for publication in the~~ ~~Journal of Experimental Medicine.~~~~The results from all evaluations were positive and have provided a basis for moving forward with additional~~ ~~in vivo~~ ~~testing of the selected conjugates. We have selected collaborators for these~~ ~~in vivo~~ ~~studies, which we expect will take place over the next four to six months. We will provide updates as information becomes available on future testing.~~

~~NAV4694 is a fluorine-18 (“F-18”) labeled PET imaging agent being developed as an aid in the imaging and evaluation of patients with signs or symptoms of Alzheimer~~’s disease (“AD”) and mild cognitive impairment (“MCI”). NAV4694 binds to beta-amyloid deposits in the brain that can then be imaged in PET scans. Amyloid plaque pathology is a required feature of AD and the presence of amyloid pathology is a supportive feature for diagnosis of probable AD. Patients who are negative for amyloid pathology do not have AD. NAV4694 has been studied in rigorous pre-clinical studies and clinical trials in humans. Clinical studies through Phase 3 have included subjects with MCI, suspected AD patients, and healthy volunteers. Results suggest that NAV4694 has the potential ability to image patients quickly and safely with high sensitivity and specificity.

~~In May 2014, the Board of Directors made the decision to refocus the Company's resources to better align the funding of our pipeline programs with the expected growth in Tc99m tilmanocept revenue.~~ This realignment primarily involved reducing our near-term support for our neurological product candidates, including NAV4694, as we sought a development partner or partners for these programs. The Company is currently engaged in discussions related to the potential partnering or divestiture of NAV4694. We continue to have active interest from potential partners or acquirers; however, our negotiations have experienced delays due in large part to litigation brought by Sinotau, one of the potential partners. In September 2016, the Court denied the Company’s motion to dismiss. The Company filed its answer to the complaint and on July 20, 2017, the parties filed a joint motion to stay the case for 60 days pending settlement discussion. On October 26, 2017, the Company executed a letter of intent with Sinotau and Cerveau Technologies, Inc. (“Cerveau”), outlining a plan to sublicense to Cerveau the worldwide rights to conduct research using NAV4694, as well as grant to Cerveau an exclusive license for the development, marketing and commercialization of NAV4694 in Australia, Canada, China and Singapore. The letter of intent includes a provision stating that Sinotau will release all claims in the Sinotau Litigation upon the parties’ execution of a definitive agreement; the commercial rights agreement contemplated by the letter of intent would also include a release of such claims and a covenant not to sue on such claims.

~~NAV5001 is an iodine-123 (I-123) labeled SPECT imaging agent being developed as an aid in the diagnosis of Parkinson~~’s disease (“PD”) and other movement disorders, with potential use as a diagnostic aid in dementia. The agent binds to the dopamine transporter (“DAT”) on the cell surface of dopaminergic neurons in the striatum and substantia nigra regions of the brain. Loss of these neurons is a hallmark of PD. In addition to its potential use as an aid in the differential diagnosis of PD and movement disorders, NAV5001 may also be useful in the diagnosis of Dementia with Lewy Bodies, one of the most common forms of dementia after AD.

~~In May 2014, the Board of Directors~~ decided to refocus the Company's resources to better align the funding of our pipeline programs with the expected growth in Lymphoseek revenue. This realignment primarily involved reducing our near-term support for our neurological product candidates, including NAV5001.

~~In April 2015, the Company entered into an agreement with Alseres~~ Pharmaceuticals, Inc. (“Alseres”) to terminate the sub-license agreement, dated July 31, 2012, for research, development and commercialization of NAV5001. Under the terms of this agreement, Navidea transferred all regulatory, clinical and manufacturing-related data related to NAV5001 to Alseres. Alseres agreed to reimburse Navidea for any incurred maintenance costs of the contract manufacturer retroactive to March 1, 2015. In addition, Navidea has supplied clinical support services for NAV5001 on a cost-plus reimbursement basis. However, to this point, Alseres has been unsuccessful in raising the funds necessary to restart the program and reimburse Navidea. As a result, we have taken steps to end our obligations under the agreement and notified Alseres that we consider them in breach of the agreement. We are in the process of trying to recover the funds we expended complying with our obligations under the termination agreement.

Our operating expenses in recent years have been focused primarily on support of ~~Tc99m tilmanocept,~~both diagnostic and therapeutic applications of our Manocept platform, and ~~NAV4694 and NAV5001 product development.~~Tc99m tilmanocept. We incurred approximately ~~$2.8~~$3.7 million and ~~$5.0~~$3.6 million in total on research and development activities during the nine-month periods ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively. Of the total amounts we spent on research and development during those periods, excluding costs related to our internal research and development headcount and our general and administrative staff which we do not currently allocate among the various development programs that we have underway, we incurred out-of-pocket charges by program as follows:

We expect to continue the advancement of our efforts with our Manocept platform during the remainder of 2017 and into 2018. The divestiture of NAV5001 and the suspension of active patient accrual in our NAV4694 trials have decreased our development costs over the past year, however, we continue to incur costs to maintain the NAV4694 trials while we complete our partnering/divestiture activities.2020. We currently expect our total research and development expenses, including both out-of-pocket charges as well as internal headcount and support costs, to be ~~lower~~higher in ~~2017~~2020 than in ~~2016.~~2019. However, COVID-19 continues to spread globally, 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, there has been no appreciable impact to the Company’s clinical development and regulatory timelines resulting from COVID-19. However, it is still possible that the COVID-19 outbreak may delay enrollment in our clinical trials due to prioritization of hospital resources toward the outbreak, and some patients may be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, which would delay our ability to conduct clinical trials or release clinical trial results. The spread of an infectious disease, including COVID-19, may also result in the inability of our suppliers to deliver clinical drug supplies on a timely basis or at all. In addition, hospitals may reduce staffing and reduce or postpone certain treatments in response to the spread of an infectious disease. Such events may result in a period of business disruption, and in reduced operations, or doctors and medical providers may be unwilling to participate in our clinical trials, any of which could materially affect our business, financial condition and results of operations.

The extent to which the global COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and spread of COVID-19, the actions taken by federal, state and local governmental authorities, both domestic and foreign, as well as private parties, to contain or treat its impact, and other events outside of our control. 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 below in “Liquidity and Capital Resources” 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.

Tc99m tilmanocept is approved by the ~~EMA~~European Medicines Agency for use in imaging and intraoperative detection of sentinel lymph nodes draining a primary tumor in adult patients with breast cancer, melanoma, or localized squamous cell carcinoma of the oral cavity in the EU. Following the January 2017 transfer of the Tc99m tilmanocept Marketing Authorization to SpePharm, we transferred responsibility for manufacturing the reduced-mass vial for the EU market to SpePharm. During the second quarter of 2017, SpePharm launched Tc99m tilmanocept in select EU markets, providing a number of early adopters with sample doses to provide exposure to the product. EU sales commenced during the third quarter of 2017, however SpePharm has not yet reported or remitted any related revenue to the Company.European Union (“EU”). We anticipate that we will incur costs related to supporting our product, regulatory, manufacturing and commercial activities related to the potential marketing registration and sale of Tc99m tilmanocept in markets other than the EU. There can be no assurance that Tc99m tilmanocept will achieve regulatory approval in any market other than the EU, or if approved in those markets, that it will achieve market acceptance in the EU or any other market.

We continue to evaluate existing and emerging data on the potential use of Manocept-related agents in the diagnosis, disease-staging and ~~disease-staging~~treatment of disorders in which macrophages are involved, such as RA, KS, ~~RA, vulnerable plaque/atherosclerosis, TB~~NASH and other disease states, to define areas of focus, development pathways and partnering options to capitalize on the Manocept platform. We ~~are~~will also be evaluating potential funding and other resources required for continued development, regulatory approval and commercialization of any Manocept platform product candidates that we identify for further development, and potential options for advancing development. There can be no assurance of obtaining funding or other resources on terms acceptable to us, if at all, that further evaluation or development will be successful, that any Manocept platform product candidate will ultimately achieve regulatory approval, or if approved, the extent to which it will achieve market acceptance.

~~In March 2017, Navidea completed the Asset Sale to Cardinal Health 414~~, as discussed previously under “The Company.” In exchange for the Acquired Assets, Cardinal Health 414 (i) made a cash payment to the Company at closing of approximately $80.6 million after adjustments based on inventory being transferred and an advance of $3.0 million of guaranteed earnout payments as part of the CRG settlement, (ii) assumed certain liabilities of the Company associated with the Product as specified in the Purchase Agreement, and (iii) agreed to make periodic earnout payments (to consist of contingent payments and milestone payments which, if paid, will be treated as additional purchase price) to the Company based on net sales derived from the purchased Product subject, in each case, to Cardinal Health 414’s right to off-set. In no event will the sum of all earnout payments, as further described in the Purchase Agreement, exceed $230 million over a period of ten years, of which $20.1 million are guaranteed payments for the three years immediately after closing of the Asset Sale. At the closing of the Asset Sale, $3.0 million of such earnout payments were advanced by Cardinal Health 414 to the Company, and paid to CRG as part of the Deposit Amount paid to CRG.

We recorded a net gain on the sale of the Business of $86.9 million for the nine months ended September 30, 2017, including $16.5 in guaranteed consideration, which was discounted to the present value of future cash flows. The proceeds were offset by $3.3 million in estimated fair value of warrants issued to Cardinal Health 414, $2.0 million in legal and other fees related to the sale, $800,000 in net balance sheet dispositions and write-offs, and $6.4 million in estimated taxes.

This discussion of our Results of Operations focuses on describing results of our operations as if we had not operated the discontinued operations discussed above during the periods being disclosed. In addition, since our remaining pharmaceutical product candidates are not yet generating commercial revenue, the discussion of our revenue focuses on ~~the~~ grant and other revenue and our operating variances focus on our ~~remaining~~ product development programs and the supporting general and administrative expenses.

~~Tc99m~~Royalty Revenue. During the third quarters of 2020 and 2019, we recognized royalty revenue of $2,000 and $5,000, respectively, related to our license agreement with SpePharm in Europe.

~~Tilmanocept~~License Revenue. During the third quarter of ~~2016,~~2020, we recognized ~~$667,000~~license revenue of ~~the $2.0 million non-refundable upfront payment received by the Company~~$5,000 related to the Lymphoseek license and distribution agreement for Europe. The Company had been recognizing this revenue on a straight-line basis over two years, however the remaining deferred revenue of $417,000 was recognized upon obtaining European approval of a reduced-mass vialtransitional sales from SpePharm in September 2016, five months earlier than originally anticipated. During the third quarter of 2016, we also recognized $500,000 of milestone revenue upon obtaining European approval of the reduced-mass vial, as well as $127,000 reimbursement of certain clinical development costs, in accordance with the terms of the Lymphoseek distribution agreement for Europe. No license revenue was recognized during the third quarter of ~~2017.~~2019.

Grant and Other Revenue. During the third ~~quarter~~quarters of ~~2017,~~2020 and 2019, we recognized ~~$224,000 of~~ grant and other revenue ~~compared to $511,000 in the third quarter~~ of ~~2016. Grant revenue during the third quarter of 2017 was~~$262,000 and $232,000, respectively, primarily related to SBIR grants from the NIH supporting Manocept development. ~~Grant revenue during the third quarter of 2016 was primarily related to SBIR grants from the NIH supporting Manocept, Tc99m tilmanocept and NAV4694 development.~~

Research and Development Expenses. Research and development expenses decreased ~~$45,000,~~$424,000, or 5%24%, to $875,000 during the third quarter of 2017 from $919,000 during the same period in 2016. The decrease was primarily due to decreased net compensation costs of $86,000 including salaries and incentive-based awards due to net decreased headcount and net decreases in other support costs such as travel of $25,000; offset by net increases in drug project expenses related to (i) increased Manocept development costs of $279,000 including increased clinical trial costs and pre-clinical testing; offset by (ii) decreased therapeutics development costs of $125,000 including decreased consulting costs, manufacturing-related activities and pre-clinical testing; (iii) decreased NAV4694 development costs of $61,000 including decreased manufacturing-related activities and clinical trial costs while we continued our efforts to divest the program; and (iv) decreased NAV5001 development costs of $35,000 related to decreased manufacturing-related activities.

~~Selling, General and Administrative Expenses.~~ ~~Selling, general and administrative expenses decreased $77,000, or 4%, to $1.7~~$1.4 million during the third quarter of ~~2017~~2020 from $1.8 million during the same period in 2016. The net decrease was primarily due to net decreases in general support costs of $139,000 including rent and other office-related costs and depreciation, and decreased net compensation costs of $13,000 including decreased salaries and fringe benefits; offset by net increased legal and professional services of $74,000.

~~Other Income (Expense).~~ Other income, net, was $69,000 during the third quarter of 2017 compared to other expenses, net of $852,000 during the same period in 2016. During the third quarter of 2017, we recognized interest income of $102,000 primarily related to the guaranteed consideration due from Cardinal Health 414, which was discounted to present value at the closing date of the Asset Sale. Also during the third quarter of 2017, $29,000 of interest expense was compounded and added to the balance of our note payable to Platinum. During the third quarter of 2016, we recorded non-cash losses of $839,000 related to changes in the estimated fair value of financial instruments.

~~Tc99m Tilmanocept License Revenue.~~ During the first nine months of 2017, we recognized license revenue of $100,000 for a non-refundable upfront payment related to the Tc99m tilmanocept license and distribution agreement with Sayre Therapeutics in India. During the same period in 2016, we recognized $1.2 million of the $2.0 million non-refundable upfront payment received by the Company related to the Tc99m tilmanocept license and distribution agreement for Europe. The Company had been recognizing this revenue on a straight-line basis over two years, however the remaining deferred revenue of $417,000 was recognized upon obtaining European approval of a reduced-mass vial in September 2016, five months earlier than originally anticipated. During the first nine months of 2016, we also recognized $500,000 of milestone revenue upon obtaining European approval of the reduced-mass vial, as well as $127,000 reimbursement of certain clinical development costs, in accordance with the terms of the Tc99m tilmanocept distribution agreement for Europe.

~~Grant and Other Revenue.~~ During the first nine months of 2017, we recognized $1.3 million of grant and other revenue compared to $2.1 million in the same period in 2016. Grant revenue during the first nine months of 2017 was primarily related to SBIR grants from the NIH supporting Manocept and Tc99m tilmanocept development. Grant revenue during the first nine months of 2016 was primarily related to SBIR grants from the NIH supporting NAV4694, Manocept and Tc99m tilmanocept development. Other revenue for the first nine months of 2017 and 2016 included $31,000 and $85,000, respectively, of revenue from our marketing partners in Europe and China related to development work performed at their request.

~~Research and Development Expenses.~~ ~~Research and development expenses decreased $2.2 million, or 45%, to $2.8 million during the first nine months of 2017 from $5.0 million during the same period in 2016.~~2019. The decrease was primarily due to net decreases in drug project expenses related to (i) decreased ~~NAV4694~~Manocept diagnostic development costs of ~~$1.7 million~~$189,000 including decreased ~~manufacturing-related activities,~~ clinical trial costs offset by increased manufacturing-related activities and ~~licensing costs while we continued our efforts to divest the program;~~license fees; and (ii) decreased Tc99m tilmanocept development costs of ~~$533,000~~$144,000 including decreased ~~manufacturing-related activities~~license fees. The net decrease in research and ~~regulatory costs; (iii)~~development expenses also included decreased ~~NAV5001 development costs~~employee compensation including incentive-based awards of ~~$130,000~~$78,000 related to decreased manufacturing-related activities and clinical trial costs; and (iv) decreased therapeutics development costs of $125,000 including decreased consulting costs offset by increased internal time; offset by (v) increased Manocept development costs of $674,000 including increased clinical trial costs and pre-clinical testing, offset by decreased licensing costs. The decrease was also due to decreased net compensation costs of $331,000 including salaries and incentive-based awards due to net decreased headcount and net decreases in other support costs of $67,000 including general office expenses and travel.reduced headcount.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased ~~$3.2 million,~~$269,000, or ~~54%~~18%, to ~~$9.0~~$1.8 million during the third quarter of 2020 from $1.5 million during the same period in 2019. Increased legal and professional services of $286,000 and increased employee compensation including incentive-based awards of $65,000 were offset by decreased travel of $33,000, decreased insurance costs of $19,000, and decreased depreciation and amortization of $19,000.

Other Income (Expense). Other expense, net, was $1,000 during the third quarter of 2020 compared to other income, net of $10,000 during the same period in 2019. During the third quarters of 2020 and 2019, we recognized interest income of $0 and $12,000, respectively. During the third quarters of 2020 and 2019, we recognized interest expense of $0 and $1,000 respectively.

Royalty Revenue. During the first nine months of 2020 and 2019, we recognized royalty revenue of $26,000 and $14,000, respectively, related to our license agreement with SpePharm in Europe.

License Revenue. During the first nine months of 2020, we recognized license revenue of $5,000 related to transitional sales from SpePharm in Europe. During the first nine months of 2019, we recognized license revenue of $10,000 related to the sublicense of NAV4694 to Meilleur.

Grant and Other Revenue. During the first nine months of 2020 and 2019, we recognized grant and other revenue of $665,000 and $515,000, respectively. Grant revenue of $665,000 and $497,000 during the first nine months of 2020 and 2019, respectively, was primarily related to SBIR grants from the NIH supporting Manocept development. Other revenue of $18,000 during the first nine months of 2019 was related to development work performed at the request of our European marketing partner.

Research and Development Expenses. Research and development expenses increased $46,000, or 1%, to $3.7 million during the first nine months of ~~2017~~2020 from ~~$5.8~~$3.6 million during the same period in ~~2016.~~2019. The ~~net~~ increase was primarily due to ~~increased legal and professional services of $1.2 million, a loss on disposal of assets~~net increases in drug project expenses related to ~~our previous office space~~(i) increased Manocept diagnostic development costs of ~~$720,000, termination~~$282,000 including increased manufacturing-related activities and license fees, offset by decreased clinical trial costs; and (ii) increased NAV4694 development costs of $15,000 resulting from the reversal of certain clinical development cost accruals in the first nine months of 2019; offset by (iii) decreased Manocept therapeutic development costs of $161,000 including decreased preclinical and clinical development costs; and (iv) decreased Tc99m tilmanocept development costs of $139,000 including decreased license fees offset by increased stability testing. The net increase in research and development expenses also included increased employee compensation including incentive-based awards of $85,000 related to ~~the arbitration award to Mr. Gonzalez~~increased highly skilled headcount and salaries, and decreased travel of ~~$481,000, loss on termination of our previous office lease of $429,000,~~$12,000.

Selling, General and ~~increased~~Administrative Expenses. Selling, general and administrative ~~net compensation costs of $416,000 including increased incentive-based awards offset by~~expenses decreased ~~salaries and fringe benefits.~~

~~Other Income (Expense).~~ ~~Other expense, net, was $1.1~~$163,000, or 3%, to $4.9 million during the first nine months of ~~2017 as~~2020 from $5.1 million during the same period in 2019. Decreased travel of $73,000, decreased legal and professional services of $59,000, decreased insurance costs of $58,000, decreased depreciation and amortization of $56,000, and decreased investor relations costs of $31,000 were offset by increased employee compensation including incentive-based awards of $117,000, and increased franchise taxes of $52,000.

Other Income (Expense). Other income, net, was $12,000 during the first nine months of 2020 compared to other income, net of ~~$1.6 million~~$17,000 during the same period in 2016. We recorded a loss on extinguishment of the CRG debt of $1.3 million during the first nine months of 2017. Also during the first nine months of 2017, we recognized interest income of $236,000 primarily related to the guaranteed consideration due from Cardinal Health 414, which was discounted to present value at the closing date of the Asset Sale.2019. During the first nine months of ~~2017, $68,000 of~~2020 and 2019, we recognized interest ~~expense was compounded and added to the balance of our note payable to Platinum. For the first nine months of 2017 and 2016, we recorded non-cash~~ income of ~~$153,000~~$18,000 and ~~$1.8 million, respectively, related to changes in the estimated fair value of financial instruments.~~$29,000, respectively. During the first nine months of ~~2016,~~2020 and 2019, we ~~recorded a non-cash loss on the disposal~~recognized interest expense of ~~our investment in R-NAV, LLC (“R-NAV”) of $40,000.~~$5,000 and $6,000, respectively.

Cash balances increased to ~~$4.6~~$3.7 million atas of September 30, ~~2017~~2020 from ~~$1.5~~$1.0 million atas of December 31, ~~2016.~~2019. The net increase was primarily due to net ~~cash received for the Asset Sale to Cardinal Health 414,~~proceeds from issuance of common stock of $4.3 million, net proceeds from issuance of preferred stock of $4.3 million, and proceeds from notes payable of $366,000, offset by ~~payments made on the CRG and Platinum debts and investments in available-for-sale securities coupled with~~ cash used to fund our ~~operations.~~

~~All~~operations of ~~our material assets~~ were pledged as collateral for our borrowings under the CRG Loan Agreement. In addition to the security interest in our assets, the CRG Loan Agreement carried covenants that imposed significant requirements$5.6 million, principal payments on ~~us. An event~~notes payable of ~~default entitled CRG to accelerate the maturity~~$306,000, patent and trademark costs of ~~our indebtedness, increase the interest rate from 14% to the default rate~~$202,000, and purchases of ~~18% per annum,~~property and ~~invoke other remedies available to it under the loan agreement and the related security agreement.~~

~~As previously described, on March 3, 2017, the Company entered into a Global Settlement Agreement with MT, CRG, and Cardinal Health 414 to effectuate the terms~~equipment of a settlement previously entered into by the parties on February 22, 2017. In accordance with the Global Settlement Agreement, on March 3, 2017, the Company repaid $59 million of its alleged indebtedness and other obligations outstanding under the CRG Term Loan. Concurrently with payment of the Deposit Amount, CRG released all liens and security interests granted under the CRG Loan Documents and the CRG Loan Documents were terminated and are of no further force or effect; provided, however, that, notwithstanding the foregoing, the Company and CRG agreed to continue with their proceeding pending in The District Court of Harris County, Texas to fully and finally determine the Final Payoff Amount. The Texas hearing is currently set for early December 2017.

~~In connection with the closing of the Asset Sale to Cardinal Health 414, the Company repaid to~~ PPCO an aggregate of approximately $7.7 million in partial satisfaction of the Company’s liabilities, obligations and indebtedness under the Platinum Loan Agreement between the Company and Platinum-Montaur, which, to the extent of such payment, were transferred by Platinum-Montaur to PPCO. The Company was informed by PPVA that it was the owner of the balance of the Platinum-Montaur loan. Such balance of approximately $1.9 million was due upon closing of the Asset Sale but withheld by the Company and not paid to anyone as it is subject to competing claims of ownership by both Dr. Michael Goldberg, the Company’s President and Chief Executive Officer, and PPVA.

~~As of~~ ~~September 30, 2017, the outstanding principal balance of the Platinum Note was approximately $2.0 million.~~

~~Following the completion of the Asset Sale to Cardinal Health 414 and the repayment of a majority of our indebtedness, we believe that substantial doubt about the Company~~’s financial position and ability to continue as a going concern has been alleviated. Based on our current working capital and our projected cash burn, including the potential for the Company to pay up to an additional $7 million to CRG depending upon the outcome of the Texas litigation, management believes that the Company will be able to continue as a going concern for at least twelve months following the issuance of this Quarterly Report on Form 10-Q. Our projected cash burn also factors in certain cost cutting initiatives that have been implemented and approved by the board of directors, including reductions in the workforce and a reduction in facilities expenses. Additionally, we have considerable discretion over the extent of development project expenditures and have the ability to curtail the related cash flows as needed. We believe all of these factors are sufficient to alleviate substantial doubt about the Company’s ability to continue as a going concern.$129,000.

Operating Activities. Cash ~~provided by~~used in operations was ~~$59.7~~$5.6 million during the first nine months of ~~2017~~2020 compared to ~~$1.3~~$6.6 million ~~provided~~used during the same period in ~~2016.~~2019.

~~In connection with the Asset Sale~~, Cardinal Health 414 (i) made a cash payment to the Company at closing of approximately $80.6 million after adjustments based on inventory being transferred and an advance of $3 million of guaranteed earnout payments as part of the CRG settlement, (ii) assumed certain liabilities of the Company associated with the Product as specified in the Purchase Agreement, and (iii) agreed to make periodic earnout payments (to consist of contingent payments and milestone payments which, if paid, will be treated as additional purchase price) to the Company based on net sales derived from the purchased Product subject, in each case, to Cardinal Health 414’s right to offset. In no event will the sum of all earnout payments, as further described in the Purchase Agreement, exceed $230 million over a period of ten years, of which $20.1 million are guaranteed payments for the three years immediately after closing of the Asset Sale. At the closing of the Asset Sale, $3 million of such earnout payments were advanced by Cardinal Health 414 to the Company, and paid to CRG as part of the Deposit Amount paid to CRG.

~~We recorded a net gain on the sale of the Business of $~~86.9 million for the nine months ended September 30, 2017, including $16.5 in guaranteed consideration, which was discounted to the present value of future cash flows. The proceeds were offset by $3.3 million in estimated fair value of warrants issued to Cardinal Health 414, $2.0 million in legal and other fees related to the sale, $800,000 in net balance sheet dispositions and write-offs, and $6.4 million in estimated taxes.

~~Accounts~~Stock subscriptions and other receivables ~~increased~~decreased to ~~$8.0 million at~~$820,000 as of September 30, ~~2017~~2020 from ~~$203,000 at~~$901,000 as of December 31, 2016, primarily related to the current portion of the guaranteed earnout due from Cardinal Health 414, which was discounted and recorded at present value. The change in accounts and other receivables also reflects a decrease in receivables from our European distribution partner.

~~Inventory levels~~ ~~decreased to $0 at September 30, 2017 from $96,000 at December 31, 2016,~~2019, primarily due to ~~the use~~net decreased stock subscriptions receivable of ~~materials for European manufacturing development~~$112,000 and ~~production. We expect inventory levels to remain minimal during the remainder~~decreased grant reimbursements receivable of ~~2017 as European manufacturing has been transitioned to our distribution partner.~~$46,000, offset by increased sublease rent receivable of $80,000.

Prepaid expenses and other current assets decreased to ~~$505,000 at June~~$250,000 as of September 30, ~~2017~~2020 from ~~$842,000 at~~$967,000 as of December 31, ~~2016,~~2019, primarily due to ~~decreased legal retainers and~~the receipt of an AMT tax credit refund coupled with normal amortization of prepaid ~~insurance, offset by increased prepaid investor relations and other services and increased interest receivable related to the guaranteed earnout due from Cardinal Health 414.~~insurance.

Accounts payable ~~decreased to $1.2~~remained steady at $1.1 million atas of September 30, ~~2017 from $5.2 million at~~2020 and December 31, ~~2016,~~2019, primarily driven by net ~~decreased~~increased payables due tofor manufacturing-related activities and legal and professional services, ~~NAV4694, regulatory and operations vendors.~~offset by decreased payables due for clinical development activities. Accrued liabilities and other current liabilities ~~decreased~~increased to ~~$2.5~~$2.2 million atas of September 30, ~~2017~~2020 from ~~$7.9~~$2.1 million atas of December 31, ~~2016, primarily driven by decreased accruals for interest, NAV4694, bonuses and Macrophage Therapeutics costs, offset by~~2019, as increased accruals for ~~taxes~~legal and professional services and Manocept development ~~costs.~~costs were offset by decreased compensation-related accruals. Our payable and accrual balances will continue to fluctuate but will likely ~~decrease~~increase overall as we ~~continue to decrease~~increase our ~~level of development activity related to NAV4694, offset by planned increases in~~ development activity related to the Manocept platform.

~~Assets associated with discontinued operations decreased to $0 at~~ September 30, 2017 from $3.1 million at December 31, 2016, and liabilities associated with discontinued operations decreased to $33,000 at September 30, 2017 from $4.9 million at December 31, 2016. Decreases in both assets and liabilities associated with discontinued operations were primarily due to the Asset Sale to Cardinal Health 414 in March 2017.

Investing Activities. Investing activities used ~~$2.0~~$330,000 during the first nine months of 2020 compared to $828,000 provided during the same period in 2019. Patent and trademark costs used $202,000, and purchases of equipment used $129,000, primarily for Manocept production and computer equipment, during the first nine months of 2020. Sales of available-for-sale securities provided $400,000, maturities of available-for-sale securities provided $400,000, and the return of previously-purchased equipment provided $27,000 during the first nine months of 2019.

Financing Activities. Financing activities provided $8.6 million during the first nine months of ~~2017~~2020 compared to ~~$39,000~~$5.2 million provided during the same period in ~~2016. Investing activities during the first nine months of 2017 included purchases of available-for-sale securities of $2.2~~2019. The $8.6 million and capital expenditures of $31,000, primarily for computer equipment and leasehold improvements, offset by maturities of available-for-sale securities of $200,000. Investing activities during the first nine months of 2016 included net payments related to the disposal of our investment in R-NAV of $82,000 and capital expenditures of $2,000, primarily for computer equipment, offset by proceeds from sales of capital equipment of $45,000. We expect our overall capital expenditures for the remainder of 2017 will be higher than for the same period in 2016 related to our office move.

~~Financing Activities.~~ ~~Financing activities used $54.6 million during the first nine months of 2017 compared to $7.6 million during the same period in 2016. The $54.6 million used~~provided by financing activities in the first nine months of ~~2017~~2020 consisted primarily of ~~principal payments on the CRG, Platinum and IPFS notes payable of $59.7 million, offset by the release of restricted cash of $5.0 million and~~net proceeds from issuance of common stock of ~~$54,000.~~$4.3 million, net proceeds from issuance of preferred stock of $4.3 million, and proceeds from notes payable of $366,000, offset by principal payments of financed insurance premiums of $306,000. The ~~$7.6~~$5.2 million ~~used~~provided by financing activities in the first nine months of ~~2016~~2019 consisted primarily of ~~payment~~proceeds from issuance of ~~debt-related~~common stock of $6.0 million, offset by stock issuance costs of ~~$3.9 million, restrictions placed on cash in an account controlled by CRG of $3.5 million,~~$572,000 and principal payments on ~~notes payable~~financed insurance premiums of ~~$189,000, all related to the CRG debt.~~$316,000.

On ~~March~~ February 14, 2020, we executed an agreement with an investor to purchase approximately 1.6 million shares of our Common Stock at a price of $0.85 per share for aggregate gross proceeds to Navidea of $1.4 million. The offering was made pursuant to our shelf registration statement on Form S‑3 (Registration No. 333-222092), which was declared effective by the Securities and Exchange Commission (the “SEC”) on December 27, 2017, including the prospectus contained therein, as well as a prospectus supplement filed with the SEC on February 18, 2020. We intend to use the net proceeds from this offering to fund our research and development programs, including continued advancement of our 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. See Notes 2 and 11 to the accompanying consolidated financial statements.

On February 13, 2020, we executed a stock purchase agreement with John K. Scott, Jr. to purchase approximately 2.4 million shares of Common Stock for aggregate gross proceeds of approximately $2.0 million. We intend to use the net proceeds from this private placement to fund our research and development programs, including continued advancement of our 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. A registration statement on Form S-3 (Registration No. 333-248404) covering the resale of the shares of Common Stock issued to Mr. Scott was declared effective by the SEC on September 16, 2020. See Notes 2 and 11 to the accompanying consolidated financial statements.

On August 30, 2020, the Company entered into a ~~Global Settlement~~Common Stock Purchase Agreement with ~~MT,~~each of the Investors named therein, pursuant to which the Investors agreed to purchase from the Company up to $25.0 million of the Company’s Common Stock. The Initial Closing of 1,000,000 shares of Common Stock at a purchase price of $5.00 per share must occur within forty-five (45) business days after the date on which the NYSE American approves the Company’s listing application for the Common Stock. See Notes 2 and 11 to the accompanying consolidated financial statements.

On August 31, 2020, the Company entered into a 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 agreed to 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. The Series D Preferred Stock will be convertible into a maximum of 5,147,000 shares of Common Stock. See Notes 2, 11 and 16 to the accompanying consolidated financial statements.

On August 9, 2020, the Company entered into a binding MOU with Jubilant. The MOU outlines the terms and framework for a potential ELDA for Navidea’s Tc99m-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, pursuant to which Jubilant purchased $1.0 million in shares of the Company’s Common Stock in exchange for exclusivity of negotiations while due diligence efforts are completed.

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

The execution of the ELDA is subject to certain conditions, including negotiation of a ~~settlement previously entered into by~~definitive agreement in mutually acceptable form and Jubilant’s completion of its due diligence. See Notes 2 and 11 to the ~~parties~~accompanying consolidated financial statements.

The CARES Act was enacted on ~~February 22, 2017.~~March 27, 2020. Among the provisions contained in the CARES Act is the creation of the PPP that provides for 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, the Lender funded the PPP Loan in the amount of $366,000. The amount that will be forgiven will be calculated in part with reference to the Company’s full-time headcount during the eight-week period following the funding of the PPP loan. In accordance with the ~~Global Settlement Agreement, on March 3, 2017,~~loan forgiveness requirements of the CARES Act, the Company ~~repaid~~intends to use the ~~$59 million Deposit Amount of its alleged indebtedness~~proceeds from the PPP Loan primarily for payroll costs, rent and ~~other obligations outstanding under~~utilities, thus the ~~CRG Term Loan. Concurrently with payment~~Company anticipates that 100% of the ~~Deposit Amount, CRG released all liens~~loan will be forgiven. See Notes 2 and security interests granted under the CRG Loan Documents and the CRG Loan Documents were terminated and are of no further force or effect; provided, however, that, notwithstanding the foregoing, the Company and CRG agreed to continue with their proceeding pending in The District Court of Harris County, Texas to fully and finally determine the Final Payoff Amount. The Company and CRG further agreed that the Final Payoff Amount would be no less than $47 million and no more than $66 million. In addition, CRG agreed that Navidea had the right to assert all affirmative defenses to its claim of default. In the underlying case the district court had entered summary judgment in favor of CRG finding unspecified events of default but refusing to consider affirmative defenses raised by Navidea as not before the Court. Subsequent8 to the settlement CRG moved again for entry of judgment in its favor; Navidea objected that the Settlement Agreement specifically allowed it to raise affirmative defenses and the district court agreed with Navidea setting the case for trial in December 2017. CRG has once again indicated it intends to move for summary judgment, a motion Navidea intends to vigorously dispute.

~~In connection with the closing of the Asset Sale to Cardinal Health 414~~, the Company repaid to PPCO an aggregate of approximately $7.7 million in partial satisfaction of the Company’s liabilities, obligations and indebtedness under the Platinum Loan Agreement between the Company and Platinum-Montaur, which was purportedly transferred by Platinum-Montaur to PPCO. The Company was informed by PPVA that it was the owner of the balance of the Platinum Note. Such balance of approximately $1.9 million was due upon closing of the Asset Sale but withheld by the Company and not paid to anyone as it is subject to competing claims of ownership by both Dr. Michael Goldberg, the Company’s President and Chief Executive Officer, and PPVA.

~~As of~~ ~~September 30, 2017, the outstanding principal balance of the Platinum Note was approximately $2.0 million.~~accompanying consolidated financial statements.

Our future liquidity and capital requirements will depend on a number of factors, including ~~the final outcome of the CRG litigation which could potentially result in payment of up to an additional $7 million to CRG,~~ the ability of our distribution partners to achieve market acceptance of our products, our ability to complete the development and commercialization of new products, ~~our ability to monetize our investment in non-core technologies,~~ our ability to obtain milestone or development funds from potential development and distribution partners, regulatory actions by the FDA and international regulatory bodies, the ability to procure required financial resources, the outcome of any pending litigation, and intellectual property protection.

We plan to focus our resources ~~for~~ during the remainder of ~~2017~~2020 and into 2021 primarily on ~~defending our position related to CRG’s claims of default and~~ development of products based on the Manocept platform. Although management believes that it will be able to achieve ~~these objectives, they are~~this objective, it is subject to a number of variables beyond our control, including ~~the outcome of the remaining CRG litigation,~~ the nature and timing of any partnering opportunities, the ability to modify contractual commitments made in connection with these programs, and the timing and expense associated with suspension or alteration of clinical trials, and consequently ~~there can be no assurance that we will be able to achieve our objective of bringing our expenses in line with our revenues, and~~ we may need to seek additional ~~debt or equity~~ financing ~~if we cannot achieve that objective~~ in ~~a timely manner.~~

~~During 2016 and~~ ~~2017~~order to ~~date, we continued making limited investment in the NAV4694 clinical trial process based on~~support our expectation that we will ultimately be successful in securing a partnership that will provide us some level of return on this investment which is incremental to the carrying costs we are presently incurring. However, there can be no assurance that the partnership discussions in which we are engaged will yield the level of return we are anticipating.

Based on our current working capital and our projected cash burn, including the potential for the Company to pay up to an additional $7 million to CRG depending upon the outcome of the Texas litigation, management believes that the Company will be able to continue as a going concern for at least twelve months following the issuance of this Quarterly Report on Form 10-Q. Our projected cash burn also factors in certain cost cutting initiatives that have been implemented and approved by the board of directors, including reductions in the workforce and a reduction in facilities expenses. Additionally, we have considerable discretion over the extent ofplanned development project expenditures and have the ability to curtail the related cash flows as needed. We believe all of these factors are sufficient to alleviate substantial doubt about the Company’s ability to continue as a going concernprograms.

We will continue to evaluate our ~~time lines,~~timelines, strategic needs, and balance sheet requirements. ~~There can be no assurance that if~~If we attempt to raise additional capital through debt, royalty, equity or otherwise, we ~~will~~may not be successful in doing so on terms acceptable to the Company, orif at all. Further, ~~there can be no assurance that~~ we ~~will~~may not be able to gain access and/or be able to ~~execute on securing~~secure new sources of funding, identify new development opportunities, successfully obtain regulatory approval for and commercialize new products, achieve significant product revenues from our products, or achieve or sustain profitability in the future.

The Company is currently engaged in litigation with Dr. Goldberg, CRG and Platinum-Montaur. In addition, 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 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. However, COVID-19 continues to spread globally, 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. 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 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 August 2020 transactions may potentially provide up to an additional $60.0 million of working and growth capital, $20.0 million of which is fully committed. 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. See Note 2 to the accompanying consolidated financial statements.

In addition, the COVID-19 pandemic may negatively impact the Company’s operations, including possible effects on its financial condition, ability to access the capital markets on attractive terms or at all, liquidity, operations, suppliers, industry, and workforce. The Company will continue to evaluate the impact that these events could have on the operations, financial position, and the results of operations and cash flows during fiscal year 2020 and beyond.

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~, which will supersede existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process that requires companies to exercise more judgmentSee Notes 1(f) and make more estimates than under the current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. Since the issuance of ASU 2014-09, several additional ASUs have been issued and incorporated within Topic 606 to clarify various elements of the guidance. ASU 2014-09 allows a choice of transition methods: (a) a full retrospective adoption in which the standard is applied to all of the periods presented, or (b) a modified retrospective adoption in which the standard is applied only1(g) to the ~~most current period presented in the~~accompanying consolidated financial statements ~~with~~for a ~~cumulative-effect adjustment reflected in retained earnings. ASU 2014-09 also requires significantly expanded disclosures regarding the qualitative and quantitative information~~summary of an entity’s nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those periods.all recent accounting standards.

Following the sale of the Business to Cardinal Health 414 in March 2017, we generate revenue primarily from grants to support certain of our product development programs. Such grant revenues are recognized only after expenses reimbursable under the grants have been paid. 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 will require separate assessment using the five-step process under ASU 2014-09. Management is working to complete its evaluation of the impact of adopting ASU 2014-09, however we currently do not anticipate that it will have a material effect on our consolidated financial statements. We will adopt ASU 2014-09 along with additional related ASUs effective January 1, 2018. We currently plan to use the modified retrospective method of adoption.

~~In January 2017, the FASB issued ASU No. 2017-01,~~ ~~Business Combinations (Topic 805), Clarifying the Definition of a Business~~. ASU 2017-01 provides a screen to determine when a set of assets and activities (collectively, a “set”) is not a business. The screen requires that when substantially all of the fair market value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, ASU 2017-01 (1) requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output, and (2) removes the evaluation of whether a market participant could replace missing elements. ASU 2017-01 is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those periods. ASU 2017-01 should be applied prospectively on or after the effective date. No disclosures are required at transition. Early adoption is permitted for certain transactions as described in ASU 2017-01. Management is currently evaluating the impact that the adoption of ASU 2017-01 will have on our consolidated financial statements.

~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Compensation-Stock Compensation (Topic 718), Scope of Modification~~Critical Accounting. ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity should account for the effects of a modification unless all of the following criteria are met: (1) The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. Disclosure requirements remain unchanged. ASU 2017-09 is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted as described in ASU 2017-09. Management is currently evaluating the impact that the adoption of ASU 2017-09 will have on our consolidated financial statements.

~~In September 2017, the FASB issued ASU No. 2017-13,~~ ~~Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842)~~. ASU 2017-13 adds SEC paragraphs pursuant to an SEC Staff Announcement made in July 2017 and clarifies several issues related to transition and implementation of the covered topics, including clarification of the definition of a public business entity, the effect of a change in tax law or rates on leveraged leases, and related amendments to the eXtensible Business Reporting Language (“XBRL”) taxonomy. Management is currently evaluating the impact that the adoption of ASU 2017-13 will have on our consolidated financial statements.

We base our ~~management~~’smanagement’s discussion and analysis of financial condition and results of operations, as well as disclosures included elsewhere in this Quarterly Report on Form 10-Q, upon our consolidated financial statements, which we have prepared in accordance with U.S. generally accepted accounting principles. We describe our significant accounting policies in the notes to the audited consolidated financial statements contained in our Annual Report on Form 10-K. We include within these policies our “critical accounting policies.” Critical accounting policies are those policies that are most important to the preparation of our consolidated financial statements and require management’s most subjective and complex judgment due to the need to make estimates about matters that are inherently uncertain. Changes in estimates and assumptions based upon actual results may have a material impact on our results of operations and/or financial condition.

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~~additional~~ revenues related to our licensing and distribution agreements. The ~~terms of these~~consideration we are eligible to receive under our licensing and distribution agreements ~~may include payment to us of non-refundable~~typically includes upfront ~~license fees, funding or~~payments, reimbursement offor research and development ~~efforts,~~costs, milestone payments, if specified objectives are achieved, and/or royalties on product sales. We evaluate all deliverables within an arrangement to determine whether or not they provide value on a stand-alone basis. We recognize a contingent milestone payment as revenueand royalties. Each licensing and distribution agreement is unique and requires separate assessment in ~~its entirety upon our achievement of a substantive milestone if the consideration earned from the achievement of the milestone (i) is consistent~~accordance with performance required to achieve the milestone or the increase in value to the delivered item, (ii) relates solely to past performance and (iii) is reasonable relative to all of the other deliverables and payments within the arrangement.current accounting standards.

Research and Development. Research and development (“R&D”) expenses include both internal R&D activities and external contracted services. Internal R&D activity expenses include salaries, benefits, and stock-based compensation, as well as travel, supplies, and other costs to support our R&D staff. External contracted services include clinical trial activities, chemistry, manufacturing and control-related activities, and regulatory costs. R&D expenses are charged to operations as incurred. We review and accrue R&D expenses based on services performed and rely upon estimates of those costs applicable to the stage of completion of each project.

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 the Series C and Series D Preferred Stock are not mandatorily redeemable financial instruments 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 options nor the embedded call options meet the criteria to be separated from the Series C and Series D Preferred stock and thus these features should not be bifurcated and accounted for as derivatives. Additionally, the Series C and Series D Preferred Stock each 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 discounts on the Series C and Series D Preferred Stock are considered to be fully amortized at the date of issuance because the Series C and Series D Preferred Stock is 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 C Preferred Stock could result in the Company being required to redeem a portion of the shares converted, thus the Series C Preferred Stock should be classified in mezzanine equity. The Series D Preferred Stock does not include such features and should not be classified in mezzanine equity.

Use of Estimates. The preparation of financial statements in conformity with ~~accounting principles generally accepted in the United States of America~~U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base these estimates and assumptions upon historical experience and existing, known circumstances. Actual results could differ from those estimates. Specifically, management may make significant estimates in the following areas:

We estimate the expected term based on the contractual term of the awards and employees' exercise and expected post-vesting termination behavior. Restricted stock awards are valued based on the closing stock price on the date of grant and amortized ratably over the estimated life of the award.

Since stock-based compensation is recognized only for those awards that are ultimately expected to vest, we have applied an estimated forfeiture rate to unvested awards for the purpose of calculating compensation cost. These estimates will be revised, if necessary, in future periods if actual forfeitures differ from estimates. Changes in forfeiture estimates impact compensation cost in the period in which the change in estimate occurs.

Item 3. Quantitative and ~~Qualitative~~Qualitative Disclosures About Market Risk

~~Interest Rate Risk.~~ ~~As of September 30, 2017, our $4.6 million in cash was primarily invested in interest-bearing money market accounts. Due~~Not applicable to the low interest rates being realized on these accounts, we believe that a hypothetical 10% increase or decrease in market interest rates would not have a material impact on our consolidated financial position, results of operations or cash flows.smaller reporting companies.

~~We also have exposure to changes in interest rates on our variable-rate debt obligations. As of~~ September 30, 2017, the interest rate on certain of our debt obligations was the greater of: (a) the U.S. prime rate as reported in The Wall Street Journal plus 6.75%, and (b) 10.0%; both of the above rates reduced by 600 basis points (effective interest rate as of September 30, 2017 was 8.125%). Based on the amount of our variable-rate borrowings at September 30, 2017, which totaled approximately $2.0 million, an immediate one percentage point increase in the U.S. prime rate would increase our annual interest expense by approximately $20,000. This estimate assumes that the amount of variable rate borrowings remains constant for an annual period and that the interest rate change occurs at the beginning of the period. Because our debt obligations are currently subject to the minimum interest rates defined in the loan agreement, a decrease in the U.S. prime rate would not affect our annual interest expense.

~~Foreign Currency Exchange Rate Risk.~~ We do not currently have material foreign currency exposure related to our assets as the majority are denominated in U.S. currency and our foreign-currency based transaction exchange risk is not material. For the nine-month periods ended September 30, 2017 and 2016, we recorded foreign currency transaction (losses) gains of approximately $(39,000) and $43,000, respectively.

~~Equity Price Risk.~~ We do not use derivative instruments for hedging of market risks or for trading or speculative purposes. Derivative instruments embedded in contracts, to the extent not already a free-standing contract, are bifurcated and accounted for separately. All derivatives are recorded on the consolidated balance sheet at fair value in accordance with current accounting guidelines for such complex financial instruments. The fair value of certain of our warrant liabilities is determined using various inputs and assumptions, several of which are based on a survey of peer group companies since the warrants are exercisable for common stock of a non-public subsidiary company. As of September 30, 2017, we had approximately $63,000 of derivative liabilities recorded on our balance sheet related to outstanding MT warrants. Due to the relatively low valuation of the MT warrants, a hypothetical 50% change in our stock price would not have a material effect on the consolidated financial statements.

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized, and reported within the specified time periods. As a part of these controls, our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act.

Under the supervision and with the participation of our management, including Mr. Latkin, who serves as our Chief Executive Officer, ~~and our~~ Chief Operating Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of September 30, ~~2017.~~2020, and concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. ~~Based on our evaluation, our management has concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are adequately designed and are effective.~~

Our management, including ~~our~~ ~~Chief Executive Officer and Chief Operating Officer and Chief Financial Officer,~~Mr. Latkin, understands that our disclosure controls and procedures do not guarantee that all errors and all improper conduct will be prevented. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, ~~the~~a design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of improper conduct, if any, have been detected. These inherent limitations include the realities that judgments and decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more persons, or by management override of the control. Further, the design of any system of controls is also based in part upon assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations of a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with ~~U.S.~~ generally accepted accounting principles, and includes those policies and procedures that:

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company~~’s annual or interim financial statements will not be prevented or detected on a timely basis. As of December 31, 2016, we identified the following material weaknesses:~~

~~Following identification of these material weaknesses, we have worked diligently to improve communication between management and the Board of Directors, including committees. We~~ have taken steps to (i) ensure adequate communication between management, the Board of Directors, and its committees, and (ii) educate the Board of Directors, including its committees, about their role in maintaining effective oversight of the Company’s financial reporting processes. As a result, our management considers the material weaknesses to be corrected.

~~Except for the change noted above, during~~During the quarter ended September 30, ~~2017,~~2020, there were no ~~other~~ changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Sinotau Litigation~~ ~~– NAV4694~~See Note 10 to the accompanying consolidated financial statements.

~~On May 12, 2016 the Company received a demand for arbitration through the American Arbitration Association, Columbus, Ohio, from Ricardo J. Gonzalez, the Company~~’s then Chief Executive Officer, claiming that he was terminated without cause and, alternatively, that he resigned in accordance with Section 4G of his Employment Agreement pursuant to a notice received by the Company on May 9, 2016. On May 13, 2016, the Company notified Mr. Gonzalez that his failure to undertake responsibilities assigned to him by the Board of Directors and otherwise work after being ordered to do so on multiple occasions constituted an effective resignation, and the Company accepted that resignation. The Company rejected the resignation of Mr. Gonzalez pursuant to certain provisions in Section 4G of his Employment Agreement. Also, the Company notified Mr. Gonzalez that, alternatively, his failure to return to work after the expiration of the cure period provided in his Employment Agreement constituted cause for his termination under his Employment Agreement. Mr. Gonzalez was seeking severance and other amounts claimed to be owed to him under his Employment Agreement. In response, the Company filed counterclaims against Mr. Gonzalez alleging malfeasance by Mr. Gonzalez in his role as Chief Executive Officer. Mr. Gonzalez withdrew his claim for additional severance pursuant to his Employment Agreement, and the Company withdrew its counterclaims. On May 12, 2017, the Company received a ruling in favor of Mr. Gonzalez finding that he was terminated by the Company without cause on April 7, 2016. Mr. Gonzalez was awarded salary, bonus, and benefits in the aggregate amount of $481,039 plus interest, attorneys’ fees, and other costs. The arbitration award is final and binding on the parties. The Company paid an aggregate of $617,880 to Mr. Gonzalez on May 16, 2017.

On November 2, 2017, Platinum-Montaur commenced an action against the Company in the Supreme Court of the State of New York, County of New York, seeking damages in the amount of $1,914,827.22 purportedly due as of March 3, 2017, plus interest accruing thereafter. The claims asserted are for breach of contract and unjust enrichment in connection with funds received by the Company under the Platinum Loan Agreement (discussed above). The Company has not yet been served with process in the action. Because the funds sought by Platinum-Montaur are subject to claims of competing ownership, the Company intends to defend itself in the action and seek a determination as to whether any funds are due and owing to the plaintiff.

There have been no material changes to the Company's risk factors as previously reported in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016 (the “Form 10-K”),~~2019, filed with the SEC on March 18, 2020, and the Company’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, ~~2017.~~2020 and June 30, 2020, filed with the SEC on May 15, 2020 and August 14, 2020, respectively, except as described below.

A pandemic, epidemic or outbreak of an infectious disease in the United States may adversely affect our business.

If a pandemic, epidemic or outbreak of an infectious disease occurs in the United States or worldwide, our development and commercialization efforts may be adversely affected. The COVID-19 pandemic continues to spread globally, which has impacted the global economy and may impact our operations, including the potential interruption of our clinical trial activities and our supply chain. 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 hard 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. However, it is still possible that the COVID-19 outbreak, including the current resurgence of cases in the United States, may delay enrollment in our clinical trials due to prioritization of hospital resources toward the outbreak, and some patients may be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services, which would delay our ability to conduct clinical trials or release clinical trial results. The spread of an infectious disease, including COVID-19, may also result in the inability of our suppliers to deliver clinical drug supplies on a timely basis or at all. In addition, hospitals may reduce staffing and reduce or postpone certain treatments in response to the spread of an infectious disease. Such events may result in a period of business disruption, and in reduced operations, or doctors and medical providers may be unwilling to participate in our clinical trials, any of which could materially affect our business, financial condition and results of operations.

The extent to which the global COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions to contain or treat its impact, among others. 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.

In connection with the COVID-19 pandemic, the following risks could have a material effect on our business, financial condition, results of operations and prospects:

~~Items~~ 2, 3, 4 ~~and 5~~ ~~are not applicable and have been omitted.~~

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.~~

45Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

4995 Bradenton Avenue, Suite ~~240~~2,40, Dublin, Ohio		~~43017-3552~~43017-3552
(Address of ~~principal executive offices)~~Principal Executive Offices		(Zip ~~Code)~~Code

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

PART I – Financial Information

Item 1.	Financial Statements	3

	Consolidated Balance Sheets as of September 30, ~~2017~~2020 (unaudited) and December 31, ~~2016~~2019	3

	Consolidated Statements of Operations for the Three-Month and Nine-Month Periods Ended September 30, ~~2017~~2020 and ~~2016~~2019 (unaudited)	4

	Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss for the Three-Month and Nine-Month Periods Ended September 30, ~~2017~~2020 and ~~2016~~2019 (unaudited)	5

	Consolidated ~~Statement~~Statements of ~~Stockholders~~’Stockholders’ Equity (Deficit) for the Nine-Month ~~Period~~Periods Ended September 30, ~~2017~~2020 and 2019 (unaudited)	6

	Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, ~~2017~~2020 and ~~2016~~2019 (unaudited)	78

	Notes to the Consolidated Financial Statements (unaudited)	89

Item 2.	~~Management~~’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations	2629

	Forward-Looking Statements	2629

	The Company	2629

	Technology and Product ~~Line Overview~~Candidates	2830

	Outlook	31

	~~Discontinued Operations~~	3233

	Results of Operations	3234

	Liquidity and Capital Resources	3435

	Off-Balance Sheet Arrangements	38

	Recent Accounting Standards	3738

	~~Off-Balance Sheet Arrangements~~	37

	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	4241

Item 6.	Exhibits	4342

	September 30, 2017			December 31, 2016			September 30, 2020			December 31, 2019
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash	$	4,619,649		$	1,539,325
Restricted cash		—			5,001,253
Available-for-sale securities		1,998,800			—
Accounts and other receivables		8,042,691			203,016
Inventory, net		—			96,208
Cash and cash equivalents							$	3,722,852		$	1,047,159
Stock subscriptions and other receivables								820,211			901,339
Prepaid expenses and other		504,971			842,220			249,888			967,285
Assets associated with discontinued operations, current		—			3,144,247
Total current assets		15,166,111			10,826,269			4,792,951			2,915,783
Property and equipment		1,712,342			3,232,372			838,714			1,207,537
Less accumulated depreciation and amortization		1,399,040			2,051,787			704,411			1,177,327
Property and equipment, net		313,302			1,180,585			134,303			30,210
Patents, trademarks and license agreements		480,404			146,685
Right-of-use lease assets								458,280			404,594
Less accumulated amortization		14,832			—			178,003			122,906
Patents, trademarks and license agreements, net		465,572			146,685
Guaranteed earnout receivable		6,445,390			—
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		215,332			202,882			227,192			537,812
Assets associated with discontinued operations		—			105,255
Total assets	$	22,605,707		$	12,461,676		$	5,995,835		$	4,150,906
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	1,231,075		$	5,165,385		$	1,115,871		$	1,112,069
Accrued liabilities and other		2,494,115			7,872,893			2,246,634			2,150,974
Notes payable, current		1,981,676			51,957,913
Terminated lease liability, current		144,231			—
Liabilities associated with discontinued operations, current		33,141			4,865,597
Notes payable								366,000			305,955
Lease liabilities, current								285,913			250,553
Total current liabilities		5,884,238			69,861,788			4,014,418			3,819,551
Notes payable		—			9,641,179
Terminated lease liability		629,445			—
Other liabilities		76,850			624,922
Lease liabilities								380,236			512,344
Deferred revenue								700,000			700,000
Total liabilities		6,590,533			80,127,889			5,094,654			5,031,895
Commitments and contingencies (Note 12)
Stockholders’ equity (deficit):
Preferred stock; $.001 par value; 5,000,000 shares authorized; no shares issued or outstanding at September 30, 2017 and December 31, 2016		—			—
Common stock; $.001 par value; 300,000,000 shares authorized; 162,206,646 and 155,762,729 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		162,207			155,763
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		331,036,285			326,564,148			375,154,360			345,847,676
Accumulated deficit		(315,850,836	)		(394,855,034	)		(356,053,002	)		(347,671,102	)
Accumulated other comprehensive loss		(1,200	)		—
Total Navidea stockholders' equity (deficit)		15,346,456			(68,135,123	)
Total Navidea stockholders' equity (deficit)								169,877			(1,612,292	)
Noncontrolling interest		668,718			468,910			731,304			731,303
Total stockholders’ equity (deficit)		16,015,174			(67,666,213	)
Total liabilities and stockholders’ equity (deficit)	$	22,605,707		$	12,461,676
Total stockholders’ equity (deficit)								901,181			(880,989	)
Total liabilities and stockholders’ equity (deficit)							$	5,995,835		$	4,150,906

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

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenue:
Tc99m tilmanocept sales revenue	$	—		$	17,601		$	—		$	30,800
Tc99m tilmanocept license revenue		—			1,295,625			100,000			1,795,625
Grant and other revenue		223,669			510,974			1,315,298			2,113,420
Total revenue		223,669			1,824,200			1,415,298			3,939,845
Cost of goods sold		—			2,889			—			5,185
Gross profit		223,669			1,821,311			1,415,298			3,934,660
Operating expenses:
Research and development		874,547			919,441			2,765,695			5,010,923
Selling, general and administrative		1,734,707			1,811,680			9,006,725			5,832,623
Total operating expenses		2,609,254			2,731,121			11,772,420			10,843,546
Loss from operations		(2,385,585	)		(909,810	)		(10,357,122	)		(6,908,886	)
Other income (expense):
Interest income (expense), net		76,050			159			144,811			(2,076	)
Equity in loss of R-NAV, LLC		—			—			—			(15,159	)
Loss on disposal of investment in R-NAV, LLC		—			—			—			(39,732	)
Change in fair value of financial instruments		—			(839,298	)		153,357			1,755,989
Loss on extinguishment of debt		—			—			(1,314,102	)		—
Other, net		(6,979	)		(12,498	)		(45,256	)		(49,916	)
Total other income (expense), net		69,071			(851,637	)		(1,061,190	)		1,649,106
Loss before income taxes		(2,316,514	)		(1,761,447	)		(11,418,312	)		(5,259,780	)
Benefit from income taxes		775,750			—			3,861,156			—
Loss from continuing operations		(1,540,764	)		(1,761,447	)		(7,557,156	)		(5,259,780	)
Discontinued operations, net of tax effect:
Income (loss) from discontinued operations		5,399			1,701,911			(332,838	)		(5,167,312	)
Gain on sale		145,877			—			86,894,000			—
Net income (loss)		(1,389,488	)		(59,536	)		79,004,006			(10,427,092	)
Less loss attributable to noncontrolling interest		(23	)		(159	)		(192	)		(516	)
Net income (loss) attributable to common stockholders	$	(1,389,465	)	$	(59,377	)	$	79,004,198		$	(10,426,576	)
Income (loss) per common share (basic):
Continuing operations	$	(0.01	)	$	(0.01	)	$	(0.05	)	$	(0.03	)
Discontinued operations	$	—		$	0.01		$	0.54		$	(0.04	)
Attributable to common stockholders	$	(0.01	)	$	—		$	0.49		$	(0.07	)
Weighted average shares outstanding (basic)		162,006,646			155,481,278			161,437,276			155,390,911
Income (loss) per common share (diluted):
Continuing operations	$	(0.01	)	$	(0.01	)	$	(0.05	)	$	(0.03	)
Discontinued operations	$	—		$	0.01		$	0.52		$	(0.04	)
Attributable to common stockholders	$	(0.01	)	$	—		$	0.47		$	(0.07	)
Weighted average shares outstanding (diluted)		162,006,646			155,481,278			165,914,473			155,390,911

	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

	Common Stock				Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Non-controlling			Total Stockholders' Equity
	Shares		Amount		Capital		Deficit			Loss			Interest			(Deficit)
Balance, December 31, 2016		155,762,729	$	155,763	$	326,564,148	$	(394,855,034	)	$	—		$	468,910		$	(67,666,213	)
Issued stock in payment of Board retainers		16,406		17		10,483		—			—			—			10,500
Issued stock in payment of employee bonuses		710,353		710		368,632		—			—			—			369,342
Issued stock upon exercise of warrants		5,411,850		5,412		48,707		—			—			—			54,119
Issued warrants in connection with Asset Sale		—		—		3,337,187		—			—			—			3,337,187
Issued warrants for extension of license agreement		—		—		333,719		—			—			—			333,719
Issued stock to 401(k) plan		105,308		105		53,602		—			—			—			53,707
Issued restricted stock		200,000		200		—		—			—			—			200
Stock compensation expense		—		—		319,807		—			—			—			319,807
Comprehensive income (loss)
Net income		—		—		—		79,004,198						(192	)		79,004,006
Unrealized loss on available-for-sale securities		—		—		—		—			(1,200	)		—			(1,200	)
Total comprehensive income		—		—		—		—			—			—			79,002,806
Reclassification of funds invested (see Note 8)		—		—		—		—			—			200,000			200,000
Balance, September 30, 2017		162,206,646	$	162,207	$	331,036,285	$	(315,850,836	)	$	(1,200	)	$	668,718		$	16,015,174

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	)

Liabilities Measured at Fair Value on a Recurring Basis as of September 30, 2017
Description	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Platinum conversion option	$	—	$	—	$	—	$	—
Liability related to MT warrants		—		—		63,000		63,000

	September 30, 2017			December 31, 2016
Estimated volatility		0	%		76	%
Expected term (in years)		0			4.75
Debt rate		8.125	%		8.125	%
Beginning stock price	$	0.42		$	0.64

	Nine Months Ended September 30, 2017								Nine Months Ended September 30, 2020
	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value		Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at beginning of period		3,380,615		$	2.00					238,470		$	17.38		7.2	$	—
Granted		1,390,000			0.75					295,000			2.29
Exercised		—			—					—			—
Canceled and Forfeited		(756,601	)		1.64					(3,000	)		1.06
Expired		—			—					(500	)		30.80
Outstanding at end of period		4,014,014		$	1.63	6.6	$	2,650		529,970		$	9.06		8.1	$	314,880
Exercisable at end of period		2,519,780		$	2.11	4.9	$	2,650		114,870		$	25.20		5.3	$	—

	Nine Months Ended September 30, 2017
	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested at beginning of period		207,000		$	1.17
Granted		200,000			0.51
Vested		(207,000	)		1.17
Forfeited		—			—
Unvested at end of period		200,000		$	0.51

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	%

	Terminated Lease Liability
Total liability, June 1, 2017 (date of sublease)	$	943,675
Additional finder’s fees required by contract		80,371
Payment of finder’s fees		(152,584	)
Payments under Blazer lease		(188,847	)
Receipts from subtenant		78,248
Accretion of liability		12,813
Total liability, September 30, 2017	$	773,676

	Nine Months Ended September 30,
Development Program ^(a)	2017			2016
Tc99m Tilmanocept (Lymphoseek)	$	187,829		$	1,060,459
Manocept Platform		1,209,024			663,536
Macrophage Therapeutics		436,277			561,601
NAV4694 ^(b)		(399,146	)		1,332,369
NAV5001 ^(b)		(28,176	)		101,997

	Nine Months Ended September 30,
Development Program ^(a)	2020		2019
Manocept Platform – Diagnostics	$	2,199,437	$	1,917,503
Manocept Platform – Therapeutics		256,886		418,315
Tc99m Tilmanocept		26,168		165,035

	●	Stock-Based Compensation. Stock-based payments to employees and directors, including grants of stock options and restricted stock, are recognized in the statements of operations based on their estimated fair values on the date of grant, subject to an estimated forfeiture rate. The fair value of each option award with time-based vesting provisions is estimated on the date of grant using the Black-Scholes option pricing model to value such stock-based payments and the portion that is ultimately expected to vest is recognized as compensation expense over either (1) the requisite service period or (2) the estimated performance period. The determination of fair value using the Black-Scholes option pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option behaviors. The fair value of each option award with market-based vesting provisions is estimated on the date of grant using a Monte Carlo simulation to value such stock-based payments and the portion that is ultimately expected to vest is recognized as compensation expense over either (1) the requisite service period or (2) the estimated performance period. The determination of fair value using a Monte Carlo simulation is affected by our stock price as well as assumptions regarding a number of complex and subjective variables, including expected stock price volatility, risk-free interest rate, expected dividends and projected employee stock option behaviors.

		~~We estimate the expected term based on the contractual term of the awards and employees' exercise and expected post-vesting termination behavior.~~ ~~Restricted stock awards are valued based on the closing stock price on the date of grant and amortized ratably over the estimated life of the award.~~

~~31.1~~3.1		~~Certification~~Certificate of ~~Chief Executive Officer pursuant~~Elimination of Navidea Biopharmaceuticals, Inc. (incorporated by reference to ~~Section 302 of~~ the Sarbanes-Oxley Act of 2002.*Current Report on Form 8-K filed by the Company on September 2, 2020).

~~31.2~~3.2		~~Certification~~Certificate of ~~Chief Operating Officer~~Designation of Preferences, Rights and ~~Chief Financial Officer pursuant~~Limitations of Series D Preferred Stock (incorporated by reference to ~~Section 302 of~~ the Sarbanes-Oxley Act of 2002.*Current Report on Form 8-K filed by the Company on September 2, 2020).

~~32.1~~10.1		~~Certification~~Stock Purchase Agreement and Letter of ~~Chief Executive Officer of Periodic Financial Reports pursuant~~Investment Intent by and between the Company and Keystone Capital Partners, LLC (incorporated by reference to ~~Section 906 of~~ the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.**Current Report on Form 8-K filed by the Company on September 2, 2020).

~~32.2~~10.2		~~Certification~~Form of ~~Chief Operating Officer and Chief Financial Officer of Periodic Financial Reports pursuant~~Stock Purchase Agreement (incorporated by reference to ~~Section 906 of~~ the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.**Current Report on Form 8-K filed by the Company on September 2, 2020).

~~101.INS~~		XBRL Instance Document*

~~101.SCH~~		XBRL Taxonomy Extension Schema Document*

~~101.CAL~~		XBRL Taxonomy Extension Calculation Linkbase Document*

~~101.DEF~~		XBRL Taxonomy Extension Definition Linkbase Document*

~~101.LAB~~		XBRL Taxonomy Extension Label Linkbase Document*

~~101.PRE~~		XBRL Taxonomy Extension Presentation Linkbase Document*

	~~NAVIDEA BIOPHARMACEUTICALS, INC.~~
	~~(the Company)~~
	~~November~~ ~~9, 2017~~

	~~By:~~	~~/s/ Jed A. Latkin~~

	~~Jed A. Latkin~~
	~~Chief Operating Officer~~ ~~and Chief Financial Officer~~
	~~(Authorized Officer; Principal Financial and Accounting Officer)~~

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

~~31.2~~		Certification of Chief Operating Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1		Certification of Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.**

~~32.2~~		~~Certification of Chief Operating Officer and Chief Financial~~ Officer of Periodic Financial Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.**

101.INS		XBRL Instance Document*

101.SCH		XBRL Taxonomy Extension Schema Document*

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document*

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB		XBRL Taxonomy Extension Label Linkbase Document*

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document*

	NAVIDEA BIOPHARMACEUTICALS, INC.
	(the Company)
	November 13, 2020

	By:	/s/ Jed A. Latkin

	Jed A. Latkin
	Chief Executive Officer, Chief Operating Officer and Chief Financial Officer
	(Authorized Officer; Principal Executive, Financial and Accounting Officer)