Navidea Biopharmaceuticals

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year
ended

December 31, 2018

or

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

For the transition period from to                 to                

Commission file number 001-35076                                    

NAVIDEA BIOPHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

31-1080091
(I.R.S. Employer Identification No.)

4995 Bradenton Avenue, Suite 240, Dublin, Ohio
(Address of principal executive offices)

43017-3552
(Zip Code)

Registrant's telephone number, including area
code

(614) 793-7500

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

Common Stock, par value $.001 per share
(Title of Class)

Securities registered pursuant to Section 12(g) of the Act: None

NYSE American
(Name of Each Exchange on Which Registered)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.    Yes  ☐    No  ☒

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☐

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

Large accelerated filer
Non-accelerated filer

☐   Accelerated filer
☒   Smaller reporting company
  Emerging growth company

☐
☒
☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)

Yes  ☐    No  ☒

The aggregate market value of shares of common stock held by non-affiliates of the registrant on June 30, 2018 was $35,842,392.

The number of shares of common stock outstanding on March 1, 2019 was 200,690,700.

None.

DOCUMENTS INCORPORATED BY REFERENCE

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Private Securities Litigation Reform Act of 1995 (the “PSLRA”) provides a safe harbor for forward-looking statements made by or
on behalf of the Company. Statements in this document which relate to other than strictly historical facts, such as statements about the
Company’s plans and strategies, expectations for future financial performance, new and existing products and technologies, anticipated
clinical and regulatory pathways, the ability to obtain, and timing of, regulatory approvals of the Company’s products, the timing and
anticipated results of commercialization efforts, and anticipated markets for the Company’s products, are forward-looking statements
within the meaning of the PSLRA.  The words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” “project,”
and similar expressions identify forward-looking statements that speak only as of the date hereof.  Investors are cautioned that such
statements involve risks and uncertainties that could cause actual results to differ materially from historical or anticipated results due
to many factors including, but not limited to, our history of operating losses and uncertainty of future profitability, accumulated deficit,
future capital needs, the outcome of any pending litigation, uncertainty of capital funding, dependence on royalties and grant revenue,
limited product line and distribution channels, competition, risks of development of new products, our ability to maintain effective
control over financial reporting, our ability to comply with NYSE American continued listing standards, and other risks set forth below
under Item 1A, “Risk Factors.”  The Company undertakes no obligation to publicly update or revise any forward-looking statements.

PART I

Item 1. Business

Development of the Business

Navidea Biopharmaceuticals, Inc. (“Navidea,” the “Company,” or “we”), a Delaware corporation (NYSE 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’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 Tc99m tilmanocept, the first product developed and
commercialized by Navidea based on the platform.

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”).

In connection with the closing of the Asset Sale, the Company entered into a License-Back Agreement (the “License-Back”) with
Cardinal Health 414. Pursuant to the License-Back, Cardinal Health 414 granted to the Company a sublicensable (subject to conditions)
and royalty-free license to use certain intellectual property rights included in the Acquired Assets and owned by Cardinal Health 414 as
of the closing of the Asset Sale to the extent necessary for the Company to (i) on an exclusive basis, subject to certain conditions,
develop, manufacture, market, sell and distribute new pharmaceutical and other products that are not Competing Products (as defined in
the License-Back), and (ii) on a non-exclusive basis, develop, manufacture, market, sell and distribute the Product throughout the world
other than in the Territory. Subject to the Company’s compliance with certain restrictions in the License-Back, the License-Back also
restricts Cardinal Health 414 from using the intellectual property rights included in the Acquired Assets to develop, manufacture,
market, sell, or distribute any product other than the Product or other product that (a) accumulates in lymphatic tissue or tumor-draining
lymph nodes for the purpose of (1) lymphatic mapping or (2) identifying the existence, location or staging of cancer in a body, or (b)
provides for or facilitates any test or procedure that is reasonably substitutable for any test or procedure provided for or facilitated by
the Product. Pursuant to the License-Back and subject to rights under existing agreements, Cardinal Health 414 was given a right of first
offer to market, sell and/or market any new products developed from the intellectual property rights licensed by Cardinal Health 414 to
the Company by the License-Back.

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As part of the Asset Sale, the Company and Cardinal Health 414 also entered into ancillary agreements providing for transitional
services and other arrangements. The Company amended and restated its license agreement with The Regents of the University of
California, San Diego (“UCSD”) pursuant to which UCSD granted a license to the Company to exploit certain intellectual property
rights owned by UCSD and, separately, Cardinal Health 414 entered into a license agreement with UCSD pursuant to which UCSD
granted a license to Cardinal Health 414 to exploit certain intellectual property rights owned by UCSD for Cardinal Health 414 to sell
the Product in the Territory.

Upon closing of the Asset Sale, the Supply and Distribution Agreement, dated November 15, 2007, as amended, 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).

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, and (ii) therapeutic development programs, including therapeutic
applications of our Manocept platform and all development programs undertaken by Macrophage Therapeutics, Inc. See Note 18 to the
consolidated financial statements for more information about our business segments.

Our History

We were originally incorporated in Ohio in 1983 and reincorporated in Delaware in 1988. From inception until January 2012, we
operated under the name Neoprobe Corporation. In January 2012, we changed our name to Navidea Biopharmaceuticals, Inc. in
connection with both the sale of our medical device business and our strategic repositioning as a precision medicines company focused
on the development and commercialization of precision diagnostic and therapeutic pharmaceuticals.

Since our inception, the majority of our efforts and resources have been devoted to the research and clinical development of
radiopharmaceutical technologies primarily related to the intraoperative diagnosis and treatment of cancers. From the late 1990’s
through 2011, we also devoted substantial effort towards the development and commercialization of medical devices, including a line of
handheld gamma detection devices which was sold in 2011 and a line of blood flow measurement devices which we operated from 2001
through 2009.

From our inception through August 2011, we manufactured a line of gamma radiation detection medical devices called the neoprobe ®
GDS system (the “GDS Business”). We sold the GDS Business to Devicor Medical Products, Inc. (“Devicor”) in August 2011.
Following the sale of the GDS business and the subsequent strategic repositioning as a precision medicines company, the Company in-
licensed two neuro-tracer product candidates, NAV4694 and NAV5001. The Company progressed the development of both product
candidates over the course of 2012 through 2014, moving both into Phase 3 clinical trials. However, in May 2014, the Navidea Board
announced that the Company would restructure its development efforts to focus on cost effective development of the Manocept platform
and divest its neuro-tracer product candidates. In April 2015, the Company entered into an agreement with Alseres Pharmaceuticals, Inc.
(“Alseres”) to terminate the NAV5001 sub-license agreement. In April 2018, the Company executed an agreement to provide Meilleur
Technologies, Inc. (“Meilleur”) worldwide rights to conduct research using NAV4694, as well as an exclusive license for the
development and commercialization of NAV4694 in Australia, Canada, China, and Singapore. Meilleur also has an option to
commercialize worldwide.

In December 2014, we announced the formation of a new business unit to further explore therapeutic applications for the Manocept
platform, which was incorporated as Macrophage Therapeutics, Inc. (“MT”) in January 2015 as a majority-owned subsidiary of
Navidea. Navidea also granted MT an exclusive sublicense for certain therapeutic applications of the Manocept technology.  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.

In August 2018, the Company entered into an agreement (the “Agreement”) with Dr. Michael Goldberg related to his resignation from
his positions as an executive officer and a director of Navidea.  Among other things, the Agreement provided that Dr. Goldberg would
become Chief Executive Officer of MT, and that MT would redeem all of Dr. Goldberg’s MT preferred stock and issue to Dr. Goldberg
MT super voting common stock equal to 5% of the outstanding shares of MT, subject to execution of Definitive Agreements. As of the
date of filing of this Annual Report on Form 10-K, the Definitive Agreements have not yet been signed.

On February 11, 2019, Dr. Goldberg represented to the MT Board that he had, without MT Board or shareholder approval, created a
subsidiary of MT, transferred all of the assets of MT into the subsidiary, and then issued himself stock in the subsidiary. On February
19, 2019, Navidea notified MT that it was terminating the sublicense effective March 1, 2019 because MT became insolvent in violation
of the sublicense agreement. On February 20, 2019, the Board of Directors of MT removed Dr. Goldberg as President and Chief
Executive Officer of MT and from any other office of MT to which he may have been appointed or in which he was serving. Dr.
Goldberg remains a member of the MT Board, together with Michael Rice and Dr. Claudine Bruck. Mr. Rice and Dr. Bruck remain
members of the board of directors of Navidea. The MT Board then appointed Mr. Latkin to serve as President and Chief Executive
Officer of MT.

3

 
 
 
 
 
 
 
 
 
 
 
 
 
On February 20, 2019, Navidea filed a complaint against Dr. Goldberg in the United States District Court for the Southern District of
New York, alleging breach of the Agreement, as well as a breach of the covenant of good faith and fair dealing and to obtain a
declaratory judgment that Navidea’s performance under the Agreement is excused and that Navidea is entitled to terminate the
Agreement as a result of Dr. Goldberg’s actions.  Also 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 enter into are void.  On March 13,
2019, the Court of Chancery entered an order maintaining status quo, which provided, among other things, that MT’s board of directors
may authorize any act or transaction on behalf of the Company, and that without prior written authorization of the MT board, Dr.
Goldberg shall not hold himself out as CEO of MT or purport to act or authorize any action on behalf of MT except as authorized by the
MT board.

On March 7, 2019, Dr. Goldberg filed a complaint against Navidea and MT in the United States District Court for the Southern District
of New York. The Complaint alleges a breach of contract claim against both Navidea and MT for failure to pay to Dr. Goldberg funds
allegedly due to him under the Promissory Note, dated July 25, 2012, made by the Company in favor of Platinum-Montaur Life
Sciences LLC (the “Platinum Note”). The Complaint further alleges a breach of contract claim against Navidea due to Navidea’s failure
to issue 23.5 million shares to Dr. Goldberg, to issue MT Super Voting Common Stock, by removing Dr. Greene from the MT Board of
Directors, by appointing Mr. Rice and Dr. Bruck to the MT Board of Directors, and by terminating Dr. Goldberg as CEO of MT.

Our Technology and Product Candidates

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

Manocept Platform - Diagnostics and Therapeutics Background

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 platform serves as a molecular engine for 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, 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 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 rheumatoid arthritis (“RA”), atherosclerosis/vulnerable plaque, nonalcoholic
steatohepatitis (“NASH”), inflammatory bowel disease, systemic lupus erythematosus, Kaposi’s sarcoma (“KS”), leishmaniosis, and
others that span general clinical areas in oncology, autoimmunity, infectious diseases, cardiology, CNS diseases, and inflammation. For
the near term, we have selected target diseases that may, if successfully developed, benefit from this technology.

Manocept Platform – Immuno-Diagnostics Clinical Data

Rheumatoid Arthritis

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 (“BIO”), 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 were presented at the June 2018
SNMMI meeting. These studies have been combined and submitted for peer review publication and full published results will follow.

Cardiovascular Disease (“CV”)

In collaboration with researchers at Massachusetts General Hospital, Navidea has completed one and initiated a second 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 (“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.

 
 
 
 
 
 
 
 
 
 
 
 
 
4

 
A nine-subject study to evaluate diagnostic imaging of emerging atherosclerosis plaque with the Tc99m tilmanocept product dosed
subcutaneously is complete (ClinicalTrials.gov NCT02542371). The results of this study were presented at two major international
meetings (Conference on Retroviruses and Opportunistic Infections (“CROI”) and SNMMI, 2017) and published in early release in the
Journal of Infectious Diseases in January 2017 (published in the circulated version, 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 of Acquired Immunodeficiency Syndrome (“AIDS”) patients (supported by NIH/NHLBI Grant 1 R43 HL127846-01).

We have also commenced a second Phase1/2 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-administered Tc99m tilmanocept and
will expand the initial investigation to the assessment of aortic plaque as well as carotid and coronary arteries. Initial images from this
study are currently being evaluated.

Kaposi’s Sarcoma

KS is a serious and potentially life-threatening illness, which in the United States occurs disproportionately in persons infected with HIV
and in organ transplant patients. The prognosis for patients with treatment-resistant KS is poor with high probabilities for mortality and
greatly diminished quality of life. We initiated and completed a study of KS in 2015 (ClinicalTrials.gov NCT022201420), 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). This now-escalated study
includes a pathology/biopsy component as well as an imaging component to determine pathology concordance with image assessment.
We received Institutional Review Board approval of the clinical protocol, we initiated a Phase 1/2 clinical study in KS in 2017, and the
trial is currently ongoing.

Colorectal Cancer (“CRC”) and Synchronous Liver Metastases

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 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. After an interim analysis of the first three
completed subjects, a decision was made to not continue with the trial and the study is 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.

Nonalcoholic Steatohepatitis

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 Navidea’s website.

Biomarker Application and Qualification

In November 2017, the Company 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 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 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 FDA/CDER. Additional
meetings have taken place and the pursuit of this qualification is progressing well.

5

 
 
 
 
 
 
 
 
 
 
 
 
Macrophage Therapeutics Background

In December 2014, the Company formed a new business unit to further explore therapeutic applications for the Manocept platform. In
January 2015, Navidea incorporated the business unit as MT, a majority-owned subsidiary of Navidea. 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.

See Notes 10 and 15 to the accompanying consolidated financial statements.

Manocept Platform – In-Vitro and Pre-Clinical Immunotherapeutics Data

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 is designed to deplete activated macrophages via apoptosis.
The MT-2000 class 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 CD206 receptors. This high degree of
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.

Kaposi’s Sarcoma

The novel 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. We have received additional funding to continue
therapeutic studies in this disease with the goal of completing an 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, now
complete, supported analyses including in vitro and cell culture studies, to be followed by 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 (supported by NIH/NCI 1 R44 CA206788-01).

Nonalcoholic Fatty Liver Disease (“NAFLD”)

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. We have developed a molecular delivery technology capable of targeting disease-causing macrophages by
selectively binding to the CD206 receptor. Selective binding and efficient delivery of this agent diminishes the potential of interfering
more broadly with the normal function of the immune system.

We have completed five  in vivo studies employing our MT-1002 and MT-2002 Manocept conjugates in a 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 STAMTM 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.

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Other Immunotherapeutic Applications

We have 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 published in the
Journal of Experimental Medicine (published in the circulated version Journal of Experimental Medicine 2018 Jan 2;215(1):357-375).
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.

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.

NAV4694 (Sublicensed)

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. In
April 2018, the Company executed an agreement to provide Meilleur, a wholly-owned subsidiary of Cerveau Technologies, Inc.
(“Cerveau”), worldwide rights to conduct research using NAV4694, as well as an exclusive license for the development and
commercialization of NAV4694 in Australia, Canada, China, and Singapore. Meilleur also has an option to commercialize worldwide.

Market Overview

Tc99m Tilmanocept – Cancer Market Overview

Cancer is the second leading cause of death in the United States. The American Cancer Society (“ACS”) estimates that cancer will
cause over 600,000 deaths in 2019 in the United States alone. Additionally, the ACS estimates that approximately 1.7 million new
cancer cases will be diagnosed in the United States during 2019. The Agency for Healthcare Research and Quality has estimated that the
direct medical costs for cancer in the United States for 2015 were $80.2 billion. Cancer is also the second leading cause of death in
Europe. The World Health Organization reports more than 3.7 million new cases and 1.9 million deaths in Europe each year.

Tc99m tilmanocept is approved by the FDA for use in solid tumor cancers where lymphatic mapping is a component of surgical
management and for guiding sentinel lymph node biopsy in patients with clinically node negative breast cancer, head and neck cancer,
melanoma or squamous cell carcinoma of the oral cavity. Tc99m tilmanocept has also received European approval in imaging and
intraoperative detection of sentinel lymph nodes in patients with melanoma, breast cancer or localized squamous cell carcinoma of the
oral cavity. If the potential of Tc99m tilmanocept as a radioactive tracing agent is ultimately realized, it may address not only the breast
and melanoma markets on a procedural basis, but also assist in the clinical evaluation and staging of solid tumor cancers and expanding
lymph node mapping to other solid tumor cancers such as prostate, gastric, colon, gynecologic, and non-small cell lung.

7

 
 
 
 
 
 
 
 
 
 
 
 
Manocept Diagnostics and Macrophage Therapeutics Market Overview

Impairment of the macrophage-driven disease mechanism is an area of increasing focus in medicine. There are many recognized
disorders having macrophage involvement, including RA, atherosclerosis/vulnerable plaque, Crohn’s disease, TB, systemic lupus
erythematosus, KS, and others that span clinical areas in oncology, autoimmunity, infectious diseases, cardiology, and inflammation.
The number of people affected by all the inflammatory diseases combined is estimated at more than 40 million in the United States,
making these macrophage-mediated diseases an area of significant clinical importance. The Arthritis Foundation estimates that RA
alone affects over 1.5 million people in the United States and as much as 1% of the worldwide population. Based on 2005 U.S.
Medicare/Medicaid data, total annual societal costs of RA are estimated to be $39.2 billion. Data from studies using agents from the
Manocept platform in RA, KS and TB were published in a special supplement, Nature Outlook: Medical Imaging, in Nature’s October
31, 2013 issue. The supplement included a White Paper by Navidea entitled “Innovations in receptor-targeted precision imaging at
Navidea: Diagnosis up close and personal,” focused on the Manocept platform.

NAV4694 - Alzheimer’s Disease Market Overview

The Alzheimer’s Association (“AA”) estimates that more than 5.7 million Americans had AD in 2018. On a global basis, Alzheimer’s
Disease International estimated in 2015 that there were 46.8 million people living with dementia, and this number is believed to be close
to 50 million people in 2017. This number is expected to almost double every 20 years, reaching 75 million in 2030 and over 130
million in 2050. AD is the sixth-leading cause of death in the U.S. and the only cause of death among the top 10 in the U.S. that cannot
be prevented, cured or even slowed. Based on U.S. mortality data from 2000 to 2015, deaths from AD have risen 123 percent while
deaths attributed to the number one cause of death, heart disease, decreased 11 percent during the same period. AA estimates that total
costs for AD care was approximately $259.0 billion in 2017. AA also estimates that there are over 16 million AD and dementia
caregivers providing 18.4 billion hours of unpaid care valued at over $232.0 billion.

Marketing and Distribution

In March 2017, Navidea completed the Asset Sale to Cardinal Health 414, as discussed previously under “Development of the
Business.” Pursuant to the Purchase Agreement, we sold all of our assets used, held for use, or intended to be used in operating the
Business, including the Product, in the Territory. Upon closing of the Asset Sale, the Supply and Distribution Agreement between
Cardinal Health 414 and the Company was terminated and Cardinal Health 414 has assumed responsibility for marketing Lymphoseek
in the Territory.

Unlike the United States, where institutions typically rely on radiopharmaceutical products that are compounded and delivered by
specialized radiopharmacy distributors such as Cardinal Health 414, institutions in Europe predominantly purchase non-radiolabeled
material and compound the radioactive product on-site. With respect to Tc99m tilmanocept commercialization in Europe, we have
chosen a specialty pharmaceutical strategy that should be supportive of premium product positioning and reinforce Tc99m tilmanocept's
clinical value proposition, as opposed to a commodity or a generics positioning approach. In March 2015, we entered into an exclusive
sublicense agreement for the commercialization and distribution of a 50 microgram kit for radiopharmaceutical preparation
(tilmanocept) in the European Union (“EU”) with SpePharm AG (an affiliate of Norgine BV), a European specialist pharmaceutical
company with an extensive pan-European presence. Under the terms of the exclusive license agreement, Navidea transferred
responsibility for regulatory maintenance of the Tc99m tilmanocept Marketing Authorization to SpePharm in January 2017. SpePharm
is also responsible for production, distribution, pricing, reimbursement, sales, marketing, medical affairs, and regulatory activities. In
connection with entering into the agreement, Navidea received an upfront payment of $2.0 million, and is entitled to milestones totaling
up to an additional $5.0 million and royalties on European net sales. The initial territory covered by the agreement includes all 28
member states of the European Economic Community with the option to expand into additional geographical areas. 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.

In August 2014, Navidea entered into an exclusive agreement with Sinotau, a pharmaceutical organization with a broad China focus in
oncology and other therapeutic areas, who will develop and commercialize Tc99m tilmanocept in China. In exchange, Navidea will
earn revenue based on unit sales to Sinotau, royalties based on Sinotau’s sales of Tc99m tilmanocept and milestone payments from
Sinotau, including a $300,000 non-refundable upfront payment. As part of the agreement, Sinotau is responsible for costs and conduct
of clinical studies and regulatory applications to obtain Tc99m tilmanocept approval by the China Food and Drug Administration
(“CFDA”). Upon approval, Sinotau will be responsible for all Tc99m tilmanocept sales, marketing, market access and medical affairs
activities in China and excluding Hong Kong, Macau and Taiwan. Navidea and Sinotau will jointly support certain pre-market planning
activities with a joint commitment on clinical and market development programs pending CFDA approval.

In June 2017, Navidea entered into an exclusive license and distribution agreement with Sayre Therapeutics (“Sayre”) for the
development and commercialization of Tc99m tilmanocept in India. Sayre specializes in innovative treatments and medical devices
commercialization in South Asia. Under the terms of the agreement, Navidea received a $100,000 upfront payment and is eligible to
receive milestone payments and double-digit royalties associated with the sale of Tc99m tilmanocept in India. Tc99m tilmanocept has
not yet received marketing approval in India.

8

 
 
 
 
 
 
 
 
 
 
 
Tc99m tilmanocept is in various stages of approval in other global markets and sales to this point in these markets, to the extent there
were any, have not been material. However, we believe that with international partnerships to complement our positions in the EU,
China and India, we will help establish Tc99m tilmanocept as a global leader in lymphatic mapping, as we are not aware of any other
company that has a global geographic range. However, it is possible that Tc99m tilmanocept will never achieve regulatory approval in
any market outside the United States or EU, or if approved, that it may not achieve market acceptance in any market. We may also
experience difficulty in securing collaborative partners for other global markets or radiopharmaceutical products, or successfully
negotiating acceptable terms for such arrangements. See Item 1A - “Risk Factors.”

Manufacturing

We currently use and expect to continue to be dependent upon contract manufacturers to manufacture each of our product candidates.
We have established a quality control and quality assurance program, including a set of standard operating procedures and specifications
with the goal that our products and product candidates are manufactured in accordance with current good manufacturing practices
(“cGMP”) and other applicable domestic and international regulations. We may need to invest in additional manufacturing and supply
chain resources, and may seek to enter into additional collaborative arrangements with other parties that have established manufacturing
capabilities. It is likely that we will continue to rely on third-party manufacturers for our development and commercial products on a
contract basis.

In November 2009, we completed a Manufacture and Supply Agreement with Reliable Biopharmaceutical Corporation (“Reliable”) for
the manufacture of the bulk drug substance with an initial term of 10 years. In September 2013, we entered into a Manufacturing
Services Agreement with OSO BioPharmaceuticals Manufacturing, LLC (“OsoBio”) for contract pharmaceutical development,
manufacturing, packaging and analytical services for Tc99m tilmanocept. Also in September 2013, we completed a Service and Supply
Master Agreement with Gipharma S.r.l. (“Gipharma”) for process development, manufacturing and packaging of 50-microgram vials
for sale in the EU. Upon closing of the Asset Sale to Cardinal Health 414, our contracts with Reliable and OsoBio were transferred to
Cardinal Health 414. Similarly, following the transfer of the Tc99m tilmanocept Marketing Authorization to SpePharm, our contract
with Gipharma was transferred to SpePharm. We may not be successful in completing future agreements for the supply of Tc99m
tilmanocept on terms acceptable to the Company, or at all. See Item 1A - “Risk Factors.”

Competition

Competition in the pharmaceutical and biotechnology industries is intense. We face competition from a variety of companies focused on
developing oncology and neurology diagnostic drugs. We compete with large pharmaceutical and other specialized biotechnology
companies. We also face competition from universities and other non-profit research organizations. Many emerging medical product
companies have corporate partnership arrangements with large, established companies to support the research, development, and
commercialization of products that may be competitive with our products. In addition, a number of large established companies are
developing proprietary technologies or have enhanced their capabilities by entering into arrangements with or acquiring companies with
technologies applicable to the detection or treatment of cancer and other diseases targeted by our product candidates. Smaller companies
may also prove to be significant competitors, particularly through collaborative arrangements with large pharmaceutical and established
biotechnology companies. Many of these competitors have products that have been approved or are in development and operate large,
well-funded research and development programs. Many of our existing or potential competitors have substantially greater financial,
research and development, regulatory, marketing, and production resources than we have. Other companies may develop and introduce
products and processes competitive with or superior to ours.

We expect to encounter significant competition for our pharmaceutical products. Companies that complete clinical trials, obtain required
regulatory approvals and commence commercial sales of their products before us may achieve a significant competitive advantage if
their products work through a similar mechanism as our products and if the approved indications are similar. A number of
biotechnology and pharmaceutical companies are developing new products for the treatment of the same diseases being targeted by us.
In some instances, such products have already entered late-stage clinical trials or received FDA approval and may be marketed for some
period prior to the approval of our products.

We believe that our ability to compete successfully will be based on our ability to create and maintain scientifically advanced “best-in-
class” technology, develop proprietary products, attract and retain scientific personnel, obtain patent or other protection for our products,
obtain required regulatory approvals and manufacture and successfully market our products, either alone or through third parties. We
expect that competition among products cleared for marketing will be based on, among other things, product efficacy, safety, reliability,
availability, price, and patent position. See Item 1A - “Risk Factors.”

9

 
 
 
 
 
 
 
 
 
 
Tc99m Tilmanocept Competition – Currently Approved Indications

Surgeons who practice the lymphatic mapping procedure for which Tc99m tilmanocept is intended currently use other
radiopharmaceuticals such as a sulfur colloid or other colloidal compounds. In addition, some surgeons still use vital blue dyes to assist
in the visual identification of the draining lymphatic tissue around a primary tumor. In the EU and certain Pacific Rim markets, there are
colloidal-based compounds with various levels of approved labeling for use in lymphatic mapping, although a number of countries still
employ products used “off-label.”

Rheumatoid Arthritis Competition

Currently, no single test is available to diagnose and monitor RA. Rather, a rheumatologist will make a diagnosis based on several
procedures that may include a physical exam, blood tests, and/or imaging tests, among others. The Arthritis Foundation states that the
goals of RA treatment are to relieve symptoms, stop inflammation, prevent joint and organ damage, improve physical function and well-
being, and reduce long-term complications. Medications for the treatment of RA currently fall into two categories: drugs that ease
symptoms, such as nonsteroidal anti-inflammatory drugs, and drugs that slow disease activity. Drugs that slow disease activity include
corticosteroids, disease-modifying antirheumatic drugs, biologics, and Janus kinase inhibitors. Many of these drugs are produced and
sold by large pharmaceutical companies, including AbbVie, Amgen, Bristol Meyers Squibb, Johnson & Johnson, Merck, Pfizer, and
Roche, among others.

Patents and Proprietary Rights

The patent position of biotechnology companies, including Navidea, generally is highly uncertain and may involve complex legal and
factual questions. Potential competitors may have filed applications, or may have been issued patents, or may obtain additional patents
and proprietary rights relating to products or processes in the same area of technology as that used by the Company. The scope and
validity of these patents and applications, the extent to which we may be required to obtain licenses thereunder or under other
proprietary rights, and the cost and availability of licenses are uncertain. Our patent applications or those licensed to us may not result in
additional patents being issued, and our patents or those licensed to us may not afford protection against competitors with similar
technology; these patents may be designed around by others or others may obtain patents that we would need to license or design
around.

We also rely upon unpatented trade secrets. Others may independently develop substantially equivalent proprietary information and
techniques, or otherwise gain access to our trade secrets, or disclose such technology, or we may not be able to meaningfully protect our
rights to our unpatented trade secrets.

We require our employees, consultants, advisers, and suppliers to execute a confidentiality agreement upon the commencement of an
employment, consulting or manufacturing relationship with us. The agreement provides that all confidential information developed by
or made known to the individual during the course of the relationship will be kept confidential and not disclosed to third parties except
in specified circumstances. In the case of employees, the agreements provide that all inventions conceived by the individual will be the
exclusive property of our company. However, these agreements may not provide meaningful protection for our trade secrets in the
event of an unauthorized use or disclosure of such information. We also employ a variety of security measures to preserve the
confidentiality of our trade secrets and to limit access by unauthorized persons. However, these measures may not be adequate to
protect our trade secrets from unauthorized access or disclosure. See Item 1A - “Risk Factors.”

Tilmanocept Intellectual Property

Tilmanocept is under license from UCSD to Navidea for the exclusive world-wide rights in all diagnostic and therapeutic uses of
tilmanocept, except for the diagnostic use of Tc99m tilmanocept in Canada, Mexico and the United States, which rights have been
licensed directly to Cardinal Health 414 by UCSD in connection with the Asset Sale. Navidea maintains license rights to Tc99m
tilmanocept in the rest of the world, as well as a license to the intellectual property underlying the Manocept platform.

Tc99m tilmanocept and related compositions, including the Manocept backbone composition and methods of use, are the subject
of multiple patent families totaling 44 patents and patent applications in the United States and certain major foreign markets.

The first composition of matter patent covering tilmanocept was issued in the United States in June 2002, and will expire in May 2020,
however Navidea has applied for a patent term extension under the Hatch Waxman Act that would extend the term by five years due to
time lost in regulatory review. The claims of the composition of matter patent covering tilmanocept have been allowed in the EU and
issued in the majority of major-market EU countries in 2004. These patents will expire in 2020, but a request for supplemental
protection certificates are in process to further extend the life of these patents, and some have been granted, extending the patent term to
2025. The composition of matter patent has also been issued in Japan, which will expire in 2020.

Patent applications have been filed in the U.S. and certain major foreign markets related to manufacturing processes for tilmanocept, the
first of which was issued in the U.S. in 2013. These patents and/or applications will expire between 2029 and 2034. Further patent
applications have been filed by Navidea alone or with The Ohio State Innovation Foundation related to CD206 expressing cell-related
disorders and diseases. These patents and/or applications would be expected to expire between 2034 and 2035. We have filed further
patent applications related to 2-heteroaryl substituted benzofurans. These patents and/or applications will expire between 2036 and
2038.

10

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government Regulation

The research, development, testing, manufacture, labeling, promotion, advertising, distribution and marketing, among other things, of
our products are extensively regulated by governmental authorities in the United States and other countries. In the United States, the
FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, Public Health Service Act, and their implementing regulations.
Failure to comply with applicable U.S. requirements may subject us to administrative or judicial sanctions, such as FDA refusal to
approve pending new drug applications or supplemental applications, warning letters, product recalls, product seizures, total or partial
suspension of production or distribution, injunctions and/or criminal prosecution. We also may be subject to regulation under the
Occupational Safety and Health Act, the Atomic Energy Act, the Toxic Substances Control Act, the Export Control Act and other
present and future laws of general application as well as those specifically related to radiopharmaceuticals.

Most aspects of our business are subject to some degree of government regulation in the countries in which we conduct our operations.
As a developer, manufacturer and marketer of medical products, we are subject to extensive regulation by, among other governmental
entities, the FDA and the corresponding state, local and foreign regulatory bodies in jurisdictions in which our products are intended to
be sold. These regulations govern the introduction of new products, the observance of certain standards with respect to the manufacture,
quality, safety, efficacy and labeling of such products, the maintenance of certain records, the tracking of such products, performance
surveillance and other matters.

Failure to comply with applicable federal, state, local or foreign laws or regulations could subject us to enforcement action, including
product seizures, recalls, withdrawal of marketing clearances, and civil and criminal penalties, any one or more of which could have a
material adverse effect on our business. We believe that we are in substantial compliance with such governmental regulations. However,
federal, state, local and foreign laws and regulations regarding the manufacture and sale of radiopharmaceuticals are subject to future
changes. Such changes may have a material adverse effect on our company.

For some products, and in some countries, government regulation is significant and, in general, there is a trend toward more stringent
regulation. In recent years, the FDA and certain foreign regulatory bodies have pursued a more rigorous enforcement program to ensure
that regulated businesses like ours comply with applicable laws and regulations. We devote significant time, effort and expense
addressing the extensive governmental regulatory requirements applicable to our business. To date, we have not received a
noncompliance notification or warning letter from the FDA or any other regulatory bodies of alleged deficiencies in our compliance with
the relevant requirements, nor have we recalled or issued safety alerts on any of our products. However, a warning letter, recall or safety
alert, if it occurred, could have a material adverse effect on our company. See Item 1A - “Risk Factors.”

In the early- to mid-1990s, the review time by the FDA to clear medical products for commercial release lengthened and the number of
marketing clearances decreased. In response to public and congressional concern, the FDA Modernization Act of 1997 (the “1997 Act”)
was adopted with the intent of bringing better definition to the clearance process for new medical products. While the FDA review times
have improved since passage of the 1997 Act, the FDA review processes could delay our Company's introduction of new products in
the United States in the future. In addition, many foreign countries have adopted more stringent regulatory requirements that also have
added to the delays and uncertainties associated with the development and release of new products, as well as the clinical and regulatory
costs of supporting such releases. It is possible that delays in receipt of, or failure to receive, any necessary clearance for our new
product offerings could have a material adverse effect on our business, financial condition or results of operations. See Item 1A - “Risk
Factors.”

The U.S. Drug Approval Process

None of our drugs may be marketed in the United States until such drug has received FDA approval. The steps required before a drug
may be marketed in the United States include:

●

●

●

●

●

●

preclinical laboratory tests, animal studies and formulation studies;

submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical
trials may begin;

adequate and well-controlled human clinical trials to establish the safety and efficacy of the investigational product for each
indication;

submission to the FDA of a New Drug Application (“NDA”);

satisfactory completion of FDA inspections of the manufacturing and clinical facilities at which the drug is produced, tested,
and/or distributed to assess compliance with cGMPs and current good clinical practices (“cGCP”) standards; and

FDA review and approval of the NDA.

11

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preclinical tests include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies. The conduct of
the preclinical tests and formulation of the compounds for testing must comply with federal regulations and requirements. The results of
the preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND, which
must become effective before human clinical trials may begin. An IND will automatically become effective 30 days after receipt by the
FDA unless, before that time, the FDA raises concerns or questions about issues such as the conduct of the trials as outlined in the IND.
In such a case, the IND sponsor and the FDA must resolve any outstanding FDA concerns or questions before clinical trials can
proceed. We cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin.

Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified
investigators. Clinical trials are conducted under protocols detailing the objectives of the study, the parameters to be used in monitoring
safety, and the effectiveness criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND.

Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. The study protocol and
informed consent information for study subjects in clinical trials must also be approved by an institutional review board at each
institution where the trials will be conducted. Study subjects must sign an informed consent form before participating in a clinical trial.
Phase 1 usually involves the initial introduction of the investigational product into people to evaluate its short-term safety, dosage
tolerance, metabolism, pharmacokinetics and pharmacologic actions, and, if possible, to gain an early indication of its effectiveness.
Phase 2 usually involves trials in a limited subject population to (i) evaluate dosage tolerance and appropriate dosage, (ii) identify
possible adverse effects and safety risks, and (iii) evaluate preliminarily the efficacy of the product candidate for specific indications.
Phase 3 trials usually further evaluate clinical efficacy and further test its safety by using the product candidate in its final form in an
expanded subject population. There can be no assurance that Phase 1, Phase 2 or Phase 3 testing will be completed successfully within
any specified period of time, if at all. Furthermore, we or the FDA may suspend clinical trials at any time on various grounds, including
a finding that the subjects or patients are being exposed to an unacceptable health risk.

The FDA and the IND sponsor may agree in writing on the design and size of clinical studies intended to form the primary basis of an
effectiveness claim in an NDA application. This process is known as a Special Protocol Assessment (“SPA”). These agreements may
not be changed after the clinical studies begin, except in limited circumstances. The existence of a SPA, however, does not assure
approval of a product candidate.

Assuming successful completion of the required clinical testing, the results of the preclinical studies and of the clinical studies, together
with other detailed information, including information on the manufacturing quality and composition of the investigational product, are
submitted to the FDA in the form of an NDA requesting approval to market the product for one or more indications. The testing and
approval process requires substantial time, effort and financial resources. Submission of an NDA requires payment of a substantial
review user fee to the FDA. Before approving a NDA, the FDA usually will inspect the facility or the facilities where the product is
manufactured, tested and distributed and will not approve the product unless cGMP compliance is satisfactory. If the FDA evaluates the
NDA and the manufacturing facilities as acceptable, the FDA may issue an approval letter or a complete response letter. A complete
response letter outlines conditions that must be met in order to secure final approval of the NDA. When and if those conditions have
been met to the FDA’s satisfaction, the FDA will issue an approval letter. The approval letter authorizes commercial marketing of the
drug for specific indications. As a condition of approval, the FDA may require post-marketing testing and surveillance to monitor the
product’s safety or efficacy, or impose other post-approval commitment conditions.

The FDA has various programs, including fast track, priority review and accelerated approval, which are intended to expedite or
simplify the process of reviewing drugs and/or provide for approval on the basis of surrogate endpoints. Generally, drugs that may be
eligible for one or more of these programs are those for serious or life threatening conditions, those with the potential to address unmet
medical needs and those that provide meaningful benefit over existing treatments. Our drug candidates may not qualify for any of these
programs, or, if a drug candidate does qualify, the review time may not be reduced or the product may not be approved.

After approval, certain changes to the approved product, such as adding new indications, making certain manufacturing changes or
making certain additional labeling claims, are subject to further FDA review and approval. Obtaining approval for a new indication
generally requires that additional clinical studies be conducted.

U.S. Post-Approval Requirements    

Holders of an approved NDA are required to: (i) conduct pharmacovigilance and report certain adverse reactions to the FDA,
(ii) comply with certain requirements concerning advertising and promotional labeling for their products, and (iii) continue to have
quality control and manufacturing procedures conform to cGMP. The FDA periodically inspects the sponsor’s records related to safety
reporting and/or manufacturing and distribution facilities; this latter effort includes assessment of compliance with cGMP. Accordingly,
manufacturers must continue to expend time, money and effort in the area of production, quality control and distribution to maintain
cGMP compliance. We use and will continue to use third-party manufacturers to produce our products in clinical and commercial
quantities, and future FDA inspections may identify compliance issues at our facilities or at the facilities of our contract manufacturers
that may disrupt production or distribution, or require substantial resources to correct.

12

 
 
 
 
 
 
 
 
 
 
 
Marketing of prescription drugs is also subject to significant regulation through federal and state agencies tasked with consumer
protection and prevention of medical fraud, waste and abuse. We must comply with restrictions on off-label use promotion, anti-
kickback, ongoing clinical trial registration, and limitations on gifts and payments to physicians.

Non-U.S. Regulation

Before our products can be marketed outside of the United States, they are subject to regulatory approval similar to that required in the
United States, although the requirements governing the conduct of clinical trials, including additional clinical trials that may be
required, product licensing, pricing and reimbursement vary widely from country to country. No action can be taken to market any
product in a country until an appropriate application has been approved by the regulatory authorities in that country. The current
approval process varies from country to country, and the time spent in gaining approval varies from that required for FDA approval. In
certain countries, the sales price of a product must also be approved. The pricing review period often begins after market approval is
granted. Even if a product is approved by a regulatory authority, satisfactory prices may not be approved for such product.

In Europe, marketing authorizations may be submitted at a centralized, a decentralized or national level. The centralized procedure is
mandatory for the approval of biotechnology products and provides for the grant of a single marketing authorization that is valid in all
EU member states. A mutual recognition procedure is available at the request of the applicant for all medicinal products that are not
subject to the centralized procedure.

The European Commission granted marketing authorization for Tc99m tilmanocept in the EU in November 2014, and a reduced-mass
vial developed for the EU market was approved in September 2016.

While we are unable to predict the extent to which our business may be affected by future regulatory developments, we believe that our
substantial experience dealing with governmental regulatory requirements and restrictions on our operations throughout the world, and
our development of new and improved products, should enable us to compete effectively within this environment.

Regulation Specific to Radiopharmaceuticals

Our radiolabeled targeting agents and biologic products, if developed, would require a regulatory license to market from the FDA and
from comparable agencies in foreign countries. The process of obtaining regulatory licenses and approvals is costly and time
consuming, and we have encountered significant impediments and delays related to our previously proposed biologic products.

The process of completing pre-clinical and clinical testing, manufacturing validation and submission of a marketing application to the
appropriate regulatory bodies usually takes a number of years and requires the expenditure of substantial resources, and any approval
may not granted on a timely basis, if at all. Additionally, the length of time it takes for the various regulatory bodies to evaluate an
application for marketing approval varies considerably, as does the amount of preclinical and clinical data required to demonstrate the
safety and efficacy of a specific product. The regulatory bodies may require additional clinical studies that may take several years to
perform. The length of the review period may vary widely depending upon the nature and indications of the proposed product and
whether the regulatory body has any further questions or requests any additional data. Also, the regulatory bodies require post-
marketing reporting and surveillance programs (pharmacovigilance) to monitor the side effects of the products. Our potential drug or
biologic products may not be approved by the regulatory bodies or may not be approved on a timely or accelerated basis, or any
approvals received may subsequently be revoked or modified.

The Nuclear Regulatory Commission (“NRC”) oversees medical uses of nuclear material through licensing, inspection, and enforcement
programs. The NRC issues medical use licenses to medical facilities and authorized physician users, develops guidance and regulations
for use by licensees, and maintains a committee of medical experts to obtain advice about the use of byproduct materials in medicine.
The NRC (or the responsible Agreement State) also regulates the manufacture and distribution of these products. The FDA oversees the
good practices in the manufacturing of radiopharmaceuticals, medical devices, and radiation-producing x-ray machines and accelerators.
The states regulate the practices of medicine and pharmacy and administer programs associated with radiation-producing x-ray
machines and accelerators. We may not be able to obtain all necessary licenses and permits and we may not be able to comply with all
applicable laws. The failure to obtain such licenses and permits or to comply with applicable laws would have a materially adverse
effect on our business, financial condition, and results of operations.

Corporate Information

Our executive offices are located at 4995 Bradenton Avenue, Suite 240, Dublin, OH 43017. Our telephone number is (614) 793-7500.
“Navidea” and the Navidea logo are trademarks of Navidea Biopharmaceuticals, Inc. or its subsidiaries in the United States and/or other
countries. Other trademarks or service marks appearing in this report may be trademarks or service marks of other owners.

13

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available Information

The address for our website is http://www.navidea.com. We make available free of charge on our website our Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and amendments to such filings, as soon as reasonably practicable
after each is electronically filed with, or furnished to, the Securities Exchange Commission (“SEC”). We do not charge for access to and
viewing of these reports. Information in the investor section and on our website is not part of this Annual Report on Form 10-K or any
of our other securities filings unless specifically incorporated herein by reference.

In addition, the public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street,
NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. Also, our filings with the SEC may be accessed through the SEC’s website at www.sec.gov. All statements made in
any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in which
the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we
are required to do so by law.

Financial Statements

Our consolidated financial statements and the related notes, including revenues, income (loss), total assets and other financial measures
are set forth at pages F-1 through F-36 of this Form 10-K.

Employees

As of March 1, 2019, we had 14 full-time and 5 part-time employees. None of our employees are represented by a collective bargaining
agreement, we have not experienced any work stoppages, and we believe that our relationship with our employees is good.

Item 1A. Risk Factors

An investment in our common stock is highly speculative, involves a high degree of risk, and should be made only by investors who can
afford a complete loss. You should carefully consider the following risk factors, together with the other information in this Form 10-K,
including our financial statements and the related notes, before you decide to buy our common stock. If any of the following risks
actually occur, our business, financial condition, or results of operations could be materially adversely affected, the trading of our
common stock could decline, and you may lose all or part of your investment therein.

If Cardinal Health 414, SpePharm AG, Sayre Therapeutics or Sinotau do not achieve commercial success with Tc99m tilmanocept, we
may be unable to generate significant revenue or become profitable.

In March 2017, Navidea completed the Asset Sale to Cardinal Health 414, as discussed previously under “Development of the
Business.” Pursuant to the Purchase Agreement, we sold all of our assets used, held for use, or intended to be used in operating the
Business, including Lymphoseek, in Canada, Mexico and the United States. Upon closing of the Asset Sale, the Supply and
Distribution Agreement between Cardinal Health 414 and the Company was terminated. Under the terms of the Purchase Agreement,
Navidea is entitled to receive milestone payments (which, if paid, will be treated as additional purchase price) from Cardinal Health 414
based on net sales derived from Lymphoseek, subject, in each case, to Cardinal Health 414’s right to off-set.

Under the terms of our August 2014 agreement with Sinotau, as amended, Navidea is entitled to receive royalties and milestone
payments based on Sinotau’s sales of Tc99m tilmanocept. Upon approval by the CFDA, Sinotau will be responsible for all Tc99m
tilmanocept sales, marketing, market access and medical affairs activities in China, excluding Hong Kong, Macau and Taiwan. Tc99m
tilmanocept has not yet received marketing approval in China.

Under the terms of our March 2015 exclusive sublicense agreement with SpePharm, Navidea is entitled to receive royalty and milestone
payments from SpePharm based on net sales derived from Tc99m tilmanocept. SpePharm commenced marketing of Tc99m tilmanocept
in the EU during the third quarter of 2017.

Under the terms of our June 2017 agreement with Sayre, Navidea is eligible to receive milestone payments and royalties associated with
the sale of Tc99m tilmanocept in India. Tc99m tilmanocept has not yet received marketing approval in India.

Cardinal Health 414, SpePharm, Sayre or Sinotau may never achieve commercial success in North America, the EU, India, China, or
any other global market, they may never realize sales at levels necessary for us to achieve sales-based earnout, royalty or milestone
payments, and such payments may never lead to us becoming profitable.

14

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
If we do not successfully develop any additional product candidates into marketable products, we may be unable to generate significant
revenue or become profitable.

Additional diagnostic and therapeutic applications of the Manocept platform, including diagnosis of other solid tumor cancers,
rheumatoid arthritis and cardiovascular disease, among others, are in various stages of pre-clinical and clinical development. Regulatory
approval of additional Manocept-based product candidates may not be successful, or if successful, may not result in increased sales.
Additional clinical testing for products based on our Manocept platform or other product candidates may not be successful and, even if
they are, we may not be successful in developing any of them into a commercial product which will provide sufficient revenue to make
us profitable.

Many companies in the pharmaceutical industry suffer significant setbacks in advanced clinical trials even after reporting promising
results in earlier trials. Even if our Manocept trials are viewed as successful, we may not get regulatory approval for marketing of any
Manocept product candidate. Our Manocept product candidates will be successful only if:

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●

they are developed to a stage that will enable us to commercialize them or sell related marketing rights to pharmaceutical
companies;

we are able to commercialize them in clinical development or sell the marketing rights to third parties; and

upon being developed, they are approved by the regulatory authorities.

We are dependent on the achievement of a number of these goals in order to generate future revenues. The failure to generate revenues
from our Manocept-based product candidates may preclude us from continuing our research and development of these and other product
candidates.

We may never obtain regulatory approval to manufacture or market our unapproved drug candidates and our approval to market our
products or anticipated commercial launch may be delayed as a result of the regulatory review process.

Obtaining regulatory approval to market drugs to diagnose or treat diseases is expensive, difficult and risky. Preclinical and clinical data,
as well as information related to the chemistry, manufacturing and control (“CMC”) processes of drug production, can be interpreted in
different ways that could delay, limit or preclude regulatory approval. Negative or inconclusive results, adverse medical events during a
clinical trial, or issues related to CMC processes could also delay, limit or prevent regulatory approval. Even if we receive regulatory
clearance to market a particular product candidate, the approval could be conditioned on us conducting additional costly post-approval
studies or could limit the indicated uses included in our labeling.

We may not be successful in securing and/or maintaining the necessary manufacturing, supply and/or radiolabeling capabilities for our
product candidates in clinical development.

We may not be able to secure and/or maintain agreements or other purchasing arrangements with our subcontractors on terms
acceptable to us, or that our subcontractors will be able to meet our production requirements on a timely basis, at the required levels of
performance and quality, including compliance with FDA cGMP requirements. In the event that any of our subcontractors are unable or
unwilling to meet our production requirements, we may not be able to establish an alternate source of supply without significant
interruption in product supply or without significant adverse impact to product availability or cost. Any significant supply interruption
or yield problems that we or our subcontractors experience would have a material adverse effect on our ability to manufacture our
products and, therefore, a material adverse effect on our business, financial condition, and results of operations until a new source of
supply is qualified.

Clinical trials for our product candidates will be lengthy and expensive, and their outcome is uncertain.

Before obtaining regulatory approval for the commercial sale of any product candidates, we must demonstrate through preclinical
testing and clinical trials that our product candidates are safe and effective for use in humans. Conducting clinical trials is a time
consuming, expensive and uncertain process and may take years to complete.

We expect to sponsor efforts to explore the Manocept platform, whether in potential diagnostic or therapeutic uses. We continually
assess our clinical trial plans and may, from time to time, initiate additional clinical trials to support our overall strategic development
objectives. Historically, the results from preclinical testing and early clinical trials often do not predict the results obtained in later
clinical trials. Frequently, drugs that have shown promising results in preclinical or early clinical trials subsequently fail to establish
sufficient safety and efficacy data necessary to obtain regulatory approval. At any time during the clinical trials, we, the participating
institutions, the FDA, the European Medicines Agency (“EMA”) or other regulatory authorities might delay or halt any clinical trials for
our product candidates for various reasons, including:

●

●

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●

ineffectiveness of the product candidate;

discovery of unacceptable toxicities or side effects;

development of disease resistance or other physiological factors;

delays in patient enrollment; or

other reasons that are internal to the businesses of our potential collaborative partners, which reasons they may not share
with us.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15

 
While we have achieved some level of success in our clinical trials for Tc99m tilmanocept as indicated by the FDA and EMA
approvals, the results of pending and future trials for other product candidates that we may develop or acquire, are subject to review and
interpretation by various regulatory bodies during the regulatory review process and may ultimately fail to demonstrate the safety or
effectiveness of our product candidates to the extent necessary to obtain regulatory approval, or that commercialization of our product
candidates is worthwhile. Any failure or substantial delay in successfully completing clinical trials and obtaining regulatory approval for
our product candidates could materially harm our business.

We extensively outsource our clinical trial activities and usually perform only a small portion of the start-up activities in-house. We rely
on independent third-party contract research organizations (“CROs”) to perform most of our clinical studies, including document
preparation, site identification, screening and preparation, pre-study visits, training, post-study audits and statistical analysis. Many
important aspects of the services performed for us by the CROs are out of our direct control. If there is any dispute or disruption in our
relationship with our CROs, our clinical trials may be delayed. Moreover, in our regulatory submissions, we rely on the quality and
validity of the clinical work performed by third-party CROs. If any of our CROs’ processes, methodologies or results were determined
to be invalid or inadequate, our own clinical data and results and related regulatory approvals could be adversely impacted.

Even if our drug candidates are successful in clinical trials, we may not be able to successfully commercialize them.

We have dedicated and will continue to dedicate substantially all of our resources to the research and development (“R&D”) of our
Manocept technology and related compounds. There are many difficulties and uncertainties inherent in pharmaceutical R&D and the
introduction of new products. A high rate of failure is inherent in new drug discovery and development. The process to bring a drug
from the discovery phase to regulatory approval can take 12 to 15 years or longer and cost more than $1 billion. Failure can occur at any
point in the process, including late in the process after substantial investment. As a result, most research programs will not generate
financial returns. New product candidates that appear promising in development may fail to reach the market or may have only limited
commercial success. Delays and uncertainties in the regulatory approval processes in the United States and in other countries can result
in delays in product launches and lost market opportunities. Consequently, it is very difficult to predict which products will ultimately be
approved. Due to the risks and uncertainties involved in the R&D process, we cannot reliably estimate the nature, timing, completion
dates, and costs of the efforts necessary to complete the development of our R&D projects, nor can we reliably estimate the future
potential revenue that will be generated from a successful R&D project.

Prior to commercialization, each product candidate requires significant research, development and preclinical testing and extensive
clinical investigation before submission of any regulatory application for marketing approval. The development of radiopharmaceutical
technologies and compounds, including those we are currently developing, is unpredictable and subject to numerous risks. Potential
products that appear to be promising at early stages of development may not reach the market for a number of reasons including that
they may:

●

●

●

●

●

●

be found ineffective or cause harmful side effects during preclinical testing or clinical trials;

fail to receive necessary regulatory approvals;

be difficult to manufacture on a scale necessary for commercialization;

be uneconomical to produce;

fail to achieve market acceptance; or

be precluded from commercialization by proprietary rights of third parties.

The occurrence of any of these events could adversely affect the commercialization of our product candidates. Products, if introduced,
may not be successfully marketed and/or may not achieve customer acceptance. If we fail to commercialize products or if our future
products do not achieve significant market acceptance, we will not likely generate significant revenues or become profitable.

If we fail to establish and maintain collaborations or if our partners do not perform, we may be unable to develop and commercialize
our product candidates.

We have entered into collaborative arrangements with third parties to develop and/or commercialize product candidates and are
currently seeking additional collaborations. Such collaborations might be necessary in order for us to fund our research and development
activities and third-party manufacturing arrangements, seek and obtain regulatory approvals and successfully commercialize our
existing and future product candidates. If we fail to enter into collaborative arrangements or fail to maintain our existing collaborative
arrangements, the number of product candidates from which we could receive future revenues would decline.

16

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Our dependence on collaborative arrangements with third parties will subject us to a number of risks that could harm our ability to
develop and commercialize products including that:

●

●

●

●

●

●

●

collaborative arrangements may not be on terms favorable to us;

disagreements with partners or regulatory compliance issues may result in delays in the development and marketing of
products, termination of our collaboration agreements or time consuming and expensive legal action;

we cannot control the amount and timing of resources partners devote to product candidates or their prioritization of product
candidates and partners may not allocate sufficient funds or resources to the development, promotion or marketing of our
products, or may not perform their obligations as expected;

partners may choose to develop, independently or with other companies, alternative products or treatments, including
products or treatments which compete with ours;

agreements with partners may expire or be terminated without renewal, or partners may breach collaboration agreements
with us;

business combinations or significant changes in a partner’s business strategy might adversely affect that partner's
willingness or ability to complete its obligations to us; and

the terms and conditions of the relevant agreements may no longer be suitable.

The occurrence of any of these events could adversely affect the development or commercialization of our products.

Our pharmaceutical products will remain subject to ongoing regulatory review following the receipt of marketing approval. If we fail to
comply with continuing regulations, we could lose these approvals and the sale of our products could be suspended.

Approved products may later cause adverse effects that limit or prevent their widespread use, force us to withdraw it from the market or
impede or delay our ability to obtain regulatory approvals in additional countries. In addition, any contract manufacturer we use in the
process of producing a product and its facilities will continue to be subject to FDA review and periodic inspections to ensure adherence
to applicable regulations. After receiving marketing clearance, the manufacturing, labeling, packaging, adverse event reporting, storage,
advertising, promotion and record-keeping related to the product will remain subject to extensive regulatory requirements. We may be
slow to adapt, or we may never adapt, to changes in existing regulatory requirements or adoption of new regulatory requirements.

If we fail to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities or
previously unknown problems with our products, manufacturers or manufacturing processes are discovered, we could be subject to
administrative or judicially imposed sanctions, including:

●

●

●

●

●

●

●

●

●

●

●

restrictions on the products, manufacturers or manufacturing processes;

warning letters;

civil or criminal penalties;

fines;

injunctions;

product seizures or detentions;

import bans;

voluntary or mandatory product recalls and publicity requirements;

suspension or withdrawal of regulatory approvals;

total or partial suspension of production; and

refusal to approve pending applications for marketing approval of new drugs or supplements to approved applications.

17

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
If users of our products are unable to obtain adequate reimbursement from third-party payers, or if new restrictive legislation is
adopted, market acceptance of our products may be limited and we may not achieve anticipated revenues.

Our ability to commercialize our products will depend in part on the extent to which appropriate reimbursement levels for the cost of
our products and related treatment are obtained by governmental authorities, private health insurers and other organizations such as
health maintenance organizations (“HMOs”). Generally, in Europe and other countries outside the United States, the government-
sponsored healthcare system is the primary payer of patients’ healthcare costs. Third-party payers are increasingly challenging the
prices charged for medical care. Also, the trend toward managed health care in the United States and the concurrent growth of
organizations such as HMOs which could control or significantly influence the purchase of health care services and products, as well as
legislative proposals to further reform health care or reduce government insurance programs, may all result in lower prices for our
products if approved for commercialization. The cost containment measures that health care payers and providers are instituting and the
effect of any health care reform could materially harm our ability to sell our products at a profit.

We may be unable to establish or contract for the pharmaceutical manufacturing capabilities necessary to develop and commercialize
our potential products.

We are in the process of establishing third-party clinical manufacturing capabilities for our compounds under development. We intend
to rely on third-party contract manufacturers to produce sufficiently large quantities of drug materials that are and will be needed for
clinical trials and commercialization of our potential products. Third-party manufacturers may not be able to meet our needs with respect
to timing, quantity or quality of materials. If we are unable to contract for a sufficient supply of needed materials on acceptable terms, or
if we should encounter delays or difficulties in our relationships with manufacturers, clinical trials for our product candidates may be
delayed, thereby delaying the submission of product candidates for regulatory approval and the market introduction and subsequent
commercialization of our potential products, and for approved products, any such delays, interruptions or other difficulties may render
us unable to supply sufficient quantities to meet demand. Any such delays or interruptions may lower our revenues and potential
profitability.

We and any third-party manufacturers that we may use must continually adhere to cGMPs and regulations enforced by the FDA through
its facilities inspection program and/or foreign regulatory authorities where our products will be tested and/or marketed. If our facilities
or the facilities of third-party manufacturers cannot pass a pre-approval plant inspection, the FDA and/or foreign regulatory authorities
will not grant approval to market our product candidates. In complying with these regulations and foreign regulatory requirements, we
and any of our third-party manufacturers will be obligated to expend time, money and effort on production, record-keeping and quality
control to assure that our potential products meet applicable specifications and other requirements. The FDA and other regulatory
authorities may take action against a contract manufacturer who violates cGMPs.

Our product supply and related patient access could be negatively impacted by, among other things: (i) product seizures or recalls or
forced closings of manufacturing plants; (ii) disruption in supply chain continuity including from natural or man-made disasters at a
critical supplier, as well as our failure or the failure of any of our suppliers to comply with cGMPs and other applicable regulations or
quality assurance guidelines that could lead to manufacturing shutdowns, product shortages or delays in product manufacturing; (iii)
manufacturing, quality assurance/quality control, supply problems or governmental approval delays; (iv) the failure of a sole source or
single source supplier to provide us with the necessary raw materials, supplies or finished goods within a reasonable timeframe; (v) the
failure of a third-party manufacturer to supply us with bulk active or finished product on time; and (vi) other manufacturing or
distribution issues, including limits to manufacturing capacity due to regulatory requirements, and changes in the types of products
produced, physical limitations or other business interruptions.

We may lose out to larger or better-established competitors.

The biotech and pharmaceutical industries are intensely competitive. Many of our competitors have significantly greater financial,
technical, manufacturing, marketing and distribution resources as well as greater experience in the industry than we have. The particular
medical conditions our product lines address can also be addressed by other medical procedures or drugs. Many of these alternatives are
widely accepted by physicians and have a long history of use.

To remain competitive, we must continue to launch new products and technologies. To accomplish this, we commit substantial efforts,
funds, and other resources to research and development. A high rate of failure is inherent in the research and development of new
products and technologies. We must make ongoing substantial expenditures without any assurance that our efforts will be commercially
successful. Failure can occur at any point in the process, including after significant funds have been invested. Promising new product
candidates may fail to reach the market or may only have limited commercial success because of efficacy or safety concerns, failure to
achieve positive clinical outcomes, inability to obtain necessary regulatory approvals, limited scope of approved uses, excessive costs to
manufacture, the failure to establish or maintain intellectual property rights, or infringement of the intellectual property rights of others.
Even if we successfully develop new products or enhancements or new generations of our existing products, they may be quickly
rendered obsolete by changing customer preferences, changing industry standards, or competitors' innovations. Innovations may not be
accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice or uncertainty over third-
party reimbursement. We cannot state with certainty when or whether any of our products under development will be launched, whether
we will be able to develop, license, or otherwise acquire compounds or products, or whether any products will be commercially
successful. Failure to launch successful new products or new indications for existing products may cause our products to become
obsolete, causing our revenues and operating results to suffer.

18

 
 
 
 
 
 
 
 
 
 
 
Physicians may use our competitors’ products and/or our products may not be competitive with other technologies. Tc99m tilmanocept
is expected to continue to compete against sulfur colloid in the United States and other colloidal agents in the EU and other global
markets. If our competitors are successful in establishing and maintaining market share for their products, our future earnout and royalty
receipts may not occur at the rate we anticipate. In addition, our potential competitors may establish cooperative relationships with
larger companies to gain access to greater research and development or marketing resources. Competition may result in price reductions,
reduced gross margins and loss of market share.

We may be exposed to business risk, including product liability claims for any product candidates and products that we are able to
commercialize.

The testing, manufacturing, marketing and use of any commercial products that we develop, as well as product candidates in
development, involve substantial risk of product liability claims. These claims may be made directly by consumers, healthcare
providers, pharmaceutical companies or others. In recent years, coverage and availability of cost-effective product liability insurance has
decreased, so we may be unable to maintain sufficient coverage for product liabilities that may arise. In addition, the cost to defend
lawsuits or pay damages for product liability claims may exceed our coverage. If we are unable to maintain adequate coverage or if
claims exceed our coverage, our financial condition and our ability to clinically test our product candidates and market our products will
be adversely impacted. In addition, negative publicity associated with any claims, regardless of their merit, may decrease the future
demand for our products and impair our financial condition.

The administration of drugs in humans, whether in clinical studies or commercially, carries the inherent risk of product liability claims
whether or not the drugs are actually the cause of an injury. Our products or product candidates may cause, or may appear to have
caused, injury or dangerous drug interactions, and we may not learn about or understand those effects until the product or product
candidate has been administered to patients for a prolonged period of time. We may be subject from time to time to lawsuits based on
product liability and related claims, and we cannot predict the eventual outcome of any future litigation. We may not be successful in
defending ourselves in the litigation and, as a result, our business could be materially harmed. These lawsuits may result in large
judgments or settlements against us, any of which could have a negative effect on our financial condition and business if in excess of our
insurance coverage. Additionally, lawsuits can be expensive to defend, whether or not they have merit, and the defense of these actions
may divert the attention of our management and other resources that would otherwise be engaged in managing our business.

As a result of a number of factors, product liability insurance has become less available while the cost has increased significantly. We
currently carry product liability insurance that our management believes is appropriate given the risks that we face. We will continually
assess the cost and availability of insurance; however, there can be no guarantee that insurance coverage will be obtained or, if obtained,
will be sufficient to fully cover product liabilities that may arise. If we are held liable for a claim against which we are not insured or for
damages exceeding the limits of our insurance coverage, whether arising out of product liability matters, cybersecurity matters, or from
some other matter, that claim could have a material adverse effect on our results of operations.

If any of our license agreements for intellectual property underlying our Manocept platform or any other products or potential products
are terminated, we may lose the right to develop or market that product.

We have licensed intellectual property, including patents and patent applications relating to the underlying intellectual property for our
Manocept platform, upon which all of our current product candidates are based. We may also enter into other license agreements or
acquire other product candidates. The potential success of our product development programs depend on our ability to maintain rights
under these licenses, including our ability to achieve development or commercialization milestones contained in the licenses. Under
certain circumstances, the licensors have the power to terminate their agreements with us if we fail to meet our obligations under these
licenses. We may not be able to meet our obligations under these licenses. If we default under any license agreement, we may lose our
right to market and sell any products based on the licensed technology.

We may not have sufficient legal protection against infringement or loss of our intellectual property, and we may lose rights or
protection related to our intellectual property if diligence requirements are not met, or at the expiry of underlying patents.

Our success depends, in part, on our ability to secure and maintain patent protection for our products and product candidates, to preserve
our trade secrets, and to operate without infringing on the proprietary rights of third parties. While we seek to protect our proprietary
positions by filing U.S. and foreign patent applications for our important inventions and improvements, domestic and foreign patent
offices may not issue these patents. Third parties may challenge, invalidate, or circumvent our patents or patent applications in the
future. Competitors, many of which have significantly more resources than we have and have made substantial investments in
competing technologies, may apply for and obtain patents that will prevent, limit, or interfere with our ability to make, use, or sell our
products either in the United States or abroad.

19

 
 
 
 
 
 
 
 
 
 
 
Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which
we are or may be developing products. As the biotechnology and pharmaceutical industry expands and more patents are issued, the risk
increases that we will be subject to claims that our products or product candidates, or their use, infringe the rights of others. In the
United States, most patent applications are secret for a period of 18 months after filing, and in foreign countries, patent applications are
secret for varying periods of time after filing. Publications of discoveries tend to significantly lag the actual discoveries and the filing of
related patent applications. Third parties may have already filed applications for patents for products or processes that will make our
products obsolete, limit our patents, invalidate our patent applications or create a risk of infringement claims.

Under U.S. patent law, we are currently subject to a “first to file” system of patent approval, as opposed to the former “first to invent”
system. As a consequence, delays in filing patent applications for new product candidates or discoveries could result in the loss of
patentability if there is an intervening patent application with similar claims filed by a third party, even if we or our collaborators were
the first to invent.

We or our suppliers may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property
rights alleging that our products, product candidates and/or technologies infringe their intellectual property rights or that the process of
manufacturing our products or any of their respective component materials, or the component materials themselves, or the use of our
products, product candidates or technologies, infringe their intellectual property rights. If one of these patents was found to cover our
products, product candidates, technologies or their uses, or any of the underlying manufacturing processes or components, we could be
required to pay damages and could be unable to commercialize our products or use our technologies or methods unless we are able to
obtain a license to the patent or intellectual property right. A license may not be available to us in a timely manner or on acceptable
terms, if at all. In addition, during litigation, a patent holder could obtain a preliminary injunction or other equitable remedy that could
prohibit us from making, using or selling our products, technologies or methods.

Our currently held and licensed patents expire over the next one to eleven years. Expiration of the patents underlying our technology, in
the absence of extensions or other trade secret or intellectual property protection, may have a material and adverse effect on us.

In addition, it may be necessary for us to enforce patents under which we have rights, or to determine the scope, validity and
unenforceability of other parties’ proprietary rights, which may affect our rights. There can be no assurance that our patents would be
held valid by a court or administrative body or that an alleged infringer would be found to be infringing. The uncertainty resulting from
the mere institution and continuation of any patent related litigation or interference proceeding could have a material and adverse effect
on us.

We typically require our employees, consultants, advisers and suppliers to execute confidentiality and assignment of invention
agreements in connection with their employment, consulting, advisory, or supply relationships with us. They may breach these
agreements and we may not obtain an adequate remedy for breach. Further, third parties may gain unauthorized access to our trade
secrets or independently develop or acquire the same or equivalent information.

We and our collaborators may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on all of our product candidates and products, when and if we have any, in every jurisdiction
would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we or our licensors have not obtained
patent protection to develop their own products. These products may compete with our products, when and if we have any, and may not
be covered by any of our or our licensors' patent claims or other intellectual property rights.

The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States, and
many companies have encountered significant problems in protecting and defending such rights in foreign jurisdictions. The legal
systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual
property protection, particularly those relating to biotechnology and/or pharmaceuticals, which could make it difficult for us to stop the
infringement of our patents. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert
our efforts and attention from other aspects of our business.

The intellectual property protection for our product candidates depends on third parties.

With respect to Manocept and NAV4694, we have licensed certain issued patents and pending patent applications covering the
respective technologies underlying these product candidates and their commercialization and use and we have licensed certain issued
patents and pending patent applications directed to product compositions and chemical modifications used in product candidates for
commercialization, and the use and the manufacturing thereof.

The patents and pending patent applications underlying our licenses do not cover all potential product candidates, modifications and
uses. In the case of patents and patent applications licensed from UCSD, we did not have any control over the filing of the patents and
patent applications before the effective date of the Manocept licenses, and have had limited control over the filing and prosecution of
these patents and patent applications after the effective date of such licenses. In the case of patents and patent applications licensed from
AstraZeneca, we have limited control over the filing, prosecution or enforcement of these patents or patent applications. We cannot be
certain that such prosecution efforts have been or will be conducted in compliance with applicable laws and regulations or will result in
valid and enforceable patents. We also cannot be assured that our licensors or their respective licensing partners will agree to enforce
any such patent rights at our request or devote sufficient efforts to attain a desirable result. Any failure by our licensors or any of their
respective licensing partners to properly protect the intellectual property rights relating to our product candidates could have a material
adverse effect on our financial condition and results of operation.

20

 
 
 
 
 
 
 
 
 
 
 
 
 
 
We may become involved in disputes with licensors or potential future collaborators over intellectual property ownership, and
publications by our research collaborators and scientific advisors could impair our ability to obtain patent protection or protect our
proprietary information, which, in either case, could have a significant effect on our business.

Inventions discovered under research, material transfer or other such collaborative agreements may become jointly owned by us and the
other party to such agreements in some cases and the exclusive property of either party in other cases. Under some circumstances, it
may be difficult to determine who owns a particular invention, or whether it is jointly owned, and disputes could arise regarding
ownership of those inventions. These disputes could be costly and time consuming and an unfavorable outcome could have a significant
adverse effect on our business if we were not able to protect our license rights to these inventions. In addition, our research collaborators
and scientific advisors generally have contractual rights to publish our data and other proprietary information, subject to our prior
review. Publications by our research collaborators and scientific advisors containing such information, either with our permission or in
contravention of the terms of their agreements with us, may impair our ability to obtain patent protection or protect our proprietary
information, which could significantly harm our business.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business
and reputation to suffer.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business
information and that of our suppliers and business partners, and personally identifiable information of employees and clinical trial
subjects, in our data centers and on our networks. The secure maintenance and transmission of this information is critical to our
operations and business strategy. Despite our security measures, our information technology and infrastructure may be vulnerable to
attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our
networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss
of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and
regulatory penalties, disrupt our operations, and damage our reputation, which could adversely affect our business, revenues and
competitive position.

Failure to comply with domestic and international privacy and security laws can result in the imposition of significant civil and criminal
penalties. The costs of compliance with these laws, including protecting electronically stored information from cyber-attacks, and
potential liability associated with failure to do so could adversely affect our business, financial condition and results of operations. We
are subject to various domestic and international privacy and security regulations, including but not limited to The Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”). HIPAA mandates, among other things, the adoption of uniform standards for
the electronic exchange of information in common healthcare transactions, as well as standards relating to the privacy and security of
individually identifiable health information, which require the adoption of administrative, physical and technical safeguards to protect
such information. In addition, many states have enacted comparable laws addressing the privacy and security of health information,
some of which are more stringent than HIPAA.

A security breach or privacy violation that leads to disclosure of consumer information (including personally identifiable information or
protected health information) could harm our reputation, compel us to comply with disparate state and foreign breach notification laws
and otherwise subject us to liability under laws that protect personal data, resulting in increased costs or loss of revenue.

Despite our efforts to protect against cyber-attacks and security breaches, hackers and other cyber criminals are using increasingly
sophisticated and constantly evolving techniques, and we may need to expend substantial additional resources to continue to protect
against potential security breaches or to address problems caused by such attacks or any breach of our safeguards. In addition, a data
security breach could distract management or other key personnel from performing their primary operational duties.

The interpretation and application of consumer and data protection laws in the United States, Europe and elsewhere are often uncertain,
contradictory and in flux. Among other things, foreign privacy laws impose significant obligations on U.S. companies to protect the
personal information of foreign citizens. It is possible that these laws may be interpreted and applied in a manner that is inconsistent
with our data practices, which could have a material adverse effect on our business. Complying with these various laws could cause us
to incur substantial costs or require us to change our business practices in a manner adverse to our business.

We do not currently carry cyber risk insurance. If we are subject to liability resulting from a security breach or other disruption in our
information systems, we could be exposed to significant liability that could have a material adverse effect on our results of operations.

21

 
 
 
 
 
 
 
 
 
 
 
We are subject to domestic and foreign anticorruption laws, the violation of which could expose us to liability, and cause our business
and reputation to suffer.

We are subject to the U.S. Foreign Corrupt Practices Act and similar anti-corruption laws in other jurisdictions. These laws generally
prohibit companies and their intermediaries from engaging in bribery or making other prohibited payments to government officials for
the purpose of obtaining or retaining business, and some have record keeping requirements. The failure to comply with these laws could
result in substantial criminal and/or monetary penalties. We operate in jurisdictions that have experienced corruption, bribery, pay-offs
and other similar practices from time-to-time and, in certain circumstances, such practices may be local custom. We have implemented
internal control policies and procedures that mandate compliance with these anti-corruption laws. However, we cannot be certain that
these policies and procedures will protect us against liability. If our employees or other agents engage in such conduct, we might be held
responsible and we could suffer severe criminal or civil penalties and other consequences that could have a material adverse effect on
our business, financial position, results of operations and/or cash flow, and the market value of our common stock could decline.

Our international operations expose us to economic, legal, regulatory and currency risks.

Our operations extend to countries outside the United States, and are subject to the risks inherent in conducting business globally and
under the laws, regulations, and customs of various jurisdictions. These risks include: (i) failure to comply with a variety of national and
local laws of countries in which we do business, including restrictions on the import and export of certain intermediates, drugs, and
technologies, (ii) failure to comply with a variety of U.S. laws including the Iran Threat Reduction and Syria Human Rights Act of 2012;
and rules relating to the use of certain “conflict minerals” under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, (iii) changes in laws, regulations, and practices affecting the pharmaceutical industry and the health care system,
including but not limited to imports, exports, manufacturing, quality, cost, pricing, reimbursement, approval, inspection, and delivery of
health care, (iv) fluctuations in exchange rates for transactions conducted in currencies other than the functional currency, (v) adverse
changes in the economies in which we or our partners and suppliers operate as a result of a slowdown in overall growth, a change in
government or economic policies, or financial, political, or social change or instability in such countries that affects the markets in
which we operate, particularly emerging markets, (vi) differing local product preferences and product requirements, (vii) changes in
employment laws, wage increases, or rising inflation in the countries in which we or our partners and suppliers operate, (viii) supply
disruptions, and increases in energy and transportation costs, (ix) natural disasters, including droughts, floods, and earthquakes in the
countries in which we operate, (x) local disturbances, terrorist attacks, riots, social disruption, or regional hostilities in the countries in
which we or our partners and suppliers operate and (xi) government uncertainty, including as a result of new or changed laws and
regulations. We also face the risk that some of our competitors have more experience with operations in such countries or with
international operations generally and may be able to manage unexpected crises more easily. Furthermore, whether due to language,
cultural or other differences, public and other statements that we make may be misinterpreted, misconstrued, or taken out of context in
different jurisdictions. Moreover, the internal political stability of, or the relationship between, any country or countries where we
conduct business operations may deteriorate. Changes in a country’s political stability or the state of relations between any such
countries are difficult to predict and could adversely affect our operations, profitability and/or adversely impact our ability to do
business there. The occurrence of any of the above risks could have a material adverse effect on our business, financial position, results
of operations and/or cash flow, and could cause the market value of our common stock to decline.

We may have difficulty raising additional capital, which could deprive us of necessary resources to pursue our business plans.

We expect to devote significant capital resources to fund research and development, to maintain existing and secure new manufacturing
resources, and potentially to acquire new product candidates. In order to support the initiatives envisioned in our business plan, we will
likely need to raise additional funds through the sale of assets, public or private debt or equity financing, collaborative relationships or
other arrangements. Our ability to raise additional financing depends on many factors beyond our control, including the state of capital
markets, the market price of our common stock and the development or prospects for development of competitive technology by others.
Sufficient additional financing may not be available to us or may be available only on terms that would result in further dilution to the
current owners of our common stock.

22

 
 
 
 
 
 
 
 
Our future expenditures on our programs are subject to many uncertainties, including whether our product candidates will be developed
or commercialized with a partner or independently. Our future capital requirements will depend on, and could increase significantly as a
result of, many factors, including:

●

●

●

●

●

●

●

●

●

the final outcome of the Capital Royalty Partners II L.P. (“CRG”) litigation and other litigation, including the outcome of
any litigation involving Dr. Michael Goldberg;

the costs of seeking regulatory approval for our product candidates, including any nonclinical testing or bioequivalence or
clinical studies, process development, scale-up and other manufacturing and stability activities, or other work required to
achieve such approval, as well as the timing of such activities and approval;

the extent to which we invest in or acquire new technologies, product candidates, products or businesses and the
development requirements with respect to any acquired programs;

the scope, prioritization and number of development and/or commercialization programs we pursue and the rate of progress
and costs with respect to such programs;

the costs related to developing, acquiring and/or contracting for sales, marketing and distribution capabilities and regulatory
compliance capabilities, if we commercialize any of our product candidates for which we obtain regulatory approval
without a partner;

the timing and terms of any collaborative, licensing and other strategic arrangements that we may establish;

the extent to which we may need to expand our workforce to pursue our business plan, and the costs involved in recruiting,
training, compensating and incentivizing new employees;

the effect of competing technological and market developments; and

the cost involved in establishing, enforcing or defending patent claims and other intellectual property rights.

If we are unsuccessful in raising additional capital, or the terms of raising such capital are unacceptable, we may have to modify our
business plan and/or significantly curtail our planned development activities, acquisition of new product candidates and other
operations.

There may be future sales or other dilution of our equity, which may adversely affect the market price of shares of our common stock.

Our existing warrants or other securities convertible into or exchangeable for our common stock, or securities we may issue in the
future, may contain adjustment provisions that could increase the number of shares issuable upon exercise, conversion or exchange, as
the case may be, and decrease the exercise, conversion or exchange price. The market price of our shares of common stock could
decline as a result of sales of a large number of shares of our common stock or other securities in the market, the triggering of any such
adjustment provisions or the perception that such sales could occur in the future.

Shares of common stock are equity securities and are subordinate to our existing and future indebtedness and preferred stock.

Shares of our common stock are common equity interests. This means that our common stock ranks junior to any preferred stock that we
may issue in the future, to our indebtedness and to all creditor claims and other non-equity claims against us and our assets available to
satisfy claims on us, including claims in a bankruptcy or similar proceeding. Our future indebtedness and preferred stock may restrict
payments of dividends on our common stock.

Additionally, unlike indebtedness, where principal and interest customarily are payable on specified due dates, in the case of our
common stock, (i) dividends are payable only when and if declared by our Board of Directors or a duly authorized committee of our
Board of Directors, and (ii) as a corporation, we are restricted to making dividend payments and redemption payments out of legally
available assets. We have never paid a dividend on our common stock and have no current intention to pay dividends in the future.
Furthermore, our common stock places no restrictions on our business or operations or on our ability to incur indebtedness or engage in
any transactions, subject only to the voting rights available to shareholders generally.

The continuing contentious federal budget negotiations may have an impact on our business and financial condition in ways that we
currently cannot predict, and may further limit our ability to raise additional funds.

The continuing federal budget disputes not only may adversely affect financial markets, but could also delay or reduce research grant
funding and adversely affect operations of government agencies that regulate us, including the FDA, potentially causing delays in
obtaining key regulatory approvals. Research funding for life science research has increased more slowly during the past several years
compared to previous years and has declined in some countries, and some grants have been frozen for extended periods of time or
otherwise become unavailable to various institutions, sometimes without advance notice. Government funding of research and
development is subject to the political process, which is inherently fluid and unpredictable. Other programs, such as homeland security
or defense, or general efforts to reduce the federal budget deficit could be viewed by the U.S. government as a higher priority. These
budgetary pressures may result in reduced allocations to government agencies that fund research and development activities. National
Institute of Health and other research and development allocations have been diminished in recent years by federal budget control
efforts. The prolonged or increased shift away from the funding of life sciences research and development or delays surrounding the
approval of government budget proposals may result in reduced research grant funding, which could delay development of our product
candidates.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23

 
Our failure to maintain continued compliance with the listing requirements of the NYSE American exchange could result in the delisting
of our common stock.

Our common stock has been listed on the NYSE American exchange since February 2011. The rules of NYSE American provide that
shares be delisted from trading in the event the financial condition and/or operating results of the Company appear to be unsatisfactory,
the extent of public distribution or the aggregate market value of the common stock has become so reduced as to make further dealings
on the NYSE American inadvisable, the Company has sold or otherwise disposed of its principal operating assets, or has ceased to be an
operating company, or the Company has failed to comply with its listing agreements with the Exchange. For example, the NYSE
American may consider suspending trading in, or removing the listing of, securities of an issuer that has stockholders’ equity of less
than (i) $6.0 million if such issuer has sustained losses from continuing operations and/or net losses in its five most recent fiscal years,
(ii) $4.0 million if such issuer has sustained losses from continuing operations and/or net losses in three of its four most recent fiscal
years, and (iii) $2.0 million if such issuer has sustained losses from continuing operations and/or net losses in two of its three most
recent fiscal years. As of December 31, 2018 and 2017, Navidea had stockholders’ equity of approximately $1.7 million and $11.4
million, respectively. In addition, the Company had stockholders’ deficits for several years prior to December 31, 2017, and we may not
be able to maintain stockholders’ equity in the future. 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 December 31, 2018, the Company’s total value of market capitalization was approximately $19.4
million. Therefore, we do not currently meet these exceptions and 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. The NYSE American provides for an 18-month
“cure period” for the Company to regain the minimum stockholders’ equity requirement, however if the Company is unable to do so,
the NYSE American may delist the Company’s common stock.

The NYSE American Company Guide also provides that the Exchange may suspend or remove from listing any common stock selling
for a substantial period of time at a low price per share, if the issuer shall fail to effect a reverse split of such shares within a reasonable
time after being notified that the Exchange deems such action to be appropriate under all the circumstances. The Company’s common
stock has recently traded for a price as low as $0.10 per share.

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, the Deficiency Letter stated that
Navidea is not in compliance with Section 1003(a)(ii) of the NYSE American Company Guide, which requires an issuer to have
stockholders’ equity of $4.0 million or more if it has reported losses from continuing operations and/or net losses in three of its four
most recent fiscal years. The Deficiency Letter noted that Navidea had stockholders’ equity of $2.1 million as of June 30, 2018, and has
reported net losses in four of its five most recent fiscal years ended December 31, 2017.

Navidea was required to submit a plan to the NYSE American by September 14, 2018 advising of actions it has taken or will take to
regain compliance with the continued listing standards by February 14, 2020. Navidea submitted a plan by the deadline.

On October 25, 2018, the Company received an Acceptance Letter from the NYSE American that the Company’s plan to regain
compliance was accepted. The Acceptance Letter also stated that the NYSE American had inadvertently omitted an additional
deficiency from the Deficiency Letter. Specifically, the Deficiency Letter should have stated that Navidea is not in compliance with
Section 1003(a)(iii) of the NYSE American Company Guide, which requires 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. The Acceptance Letter
noted that Navidea had stockholders’ equity of $2.1 million as of June 30, 2018, and has reported losses from continuing operations
and/or net losses in its five most recent fiscal years ended December 31, 2017.

The Company must provide quarterly updates to the NYSE American Staff concurrent with its interim/annual SEC filings. If Navidea
fails to regain compliance with the stockholders’ equity standards by February 14, 2020, the NYSE American may commence delisting
procedures.

In addition, the Deficiency Letter stated that the Staff determined that the Company’s securities have been selling for a low price per
share for a substantial period of time and, pursuant to Section 1003(f)(v) of the NYSE American Company Guide, Navidea’s continued
listing is predicated on it effecting a reverse stock split of its Common Stock or otherwise demonstrating sustained price improvement
within a reasonable period of time, which the Staff had determined to be no later than February 14, 2019. However, on January 28, 2019,
the Company received a notice from the NYSE American that it has granted the Company an extension until March 31, 2019 to regain
compliance with Section 1003(f)(v) of the NYSE American’s continued listing standards. Navidea must regain compliance with the
price standard by that date in order to be considered for continued trading through the end of February 14, 2020.

24

 
 
 
 
 
 
 
 
 
 
At the Company’s 2018 Annual Meeting of Stockholders (the “Annual Meeting”), held on August 16, 2018, stockholders approved a
reverse stock split of the Company’s common stock, as determined by the Board of Directors at its discretion, of a ratio of not less than
one-for-five and not more than one-for-twenty. The Board of Directors has not taken action to effect a reverse stock split as of the date
of filing this Annual Report on Form 10-K. There can be no assurance that the Board of Directors will take steps to implement the
reverse stock split, and if they do, such a reverse stock split may not be sufficient to enable the Company to maintain its listing on the
NYSE American. Therefore, there is a continued risk that the shares will be delisted if action is not taken to the satisfaction of the NYSE
American.

Navidea’s Common Stock will continue to be listed on the NYSE American while it attempts to regain compliance with the listing
standards noted above, subject to Navidea’s compliance with other continued listing requirements. The Common Stock will continue to
trade under the symbol “NAVB,” but will have an added designation of “.BC” to indicate that Navidea is not in compliance with the
NYSE American’s listing standards. The NYSE American notification does not affect Navidea’s business operations or its SEC
reporting requirements and does not conflict with or cause an event of default under any of Navidea’s material agreements.

The delisting of our common stock from the NYSE American likely would reduce the trading volume and liquidity in our common stock
and may lead to decreases in the trading price of our common stock. The delisting of our common stock may also materially impair our
stockholders’ ability to buy and sell shares of our common stock. In addition, the delisting of our common stock could significantly
impair our ability to raise capital.

The price of our common stock has been highly volatile due to several factors that will continue to affect the price of our stock.

Our common stock traded as low as $0.10 per share and as high as $0.42 per share during the 12-month period ended February 28, 2019.
The market price of our common stock has been and is expected to continue to be highly volatile. Factors, including announcements of
technological innovations by us or other companies, regulatory matters, new or existing products or procedures, concerns about our
financial position, operating results, litigation, government regulation, developments or disputes relating to agreements, patents or
proprietary rights, may have a significant impact on the market price of our stock. In addition, potential dilutive effects of future sales of
shares of common stock by the Company and by stockholders, and subsequent sale of common stock by the holders of warrants and
options could have an adverse effect on the market price of our shares.

Some additional factors which could lead to the volatility of our common stock include:

●

●

●

●

●

●

●

price and volume fluctuations in the stock market at large or of companies in our industry which do not relate to our
operating performance;

changes in securities analysts’ estimates of our financial performance or deviations in our business and the trading price of
our common stock from the estimates of securities analysts;

FDA or international regulatory actions and regulatory developments in the United States and foreign countries;

financing arrangements we may enter that require the issuance of a significant number of shares in relation to the number of
shares currently outstanding;

public concern as to the safety of products that we or others develop;

activities of short sellers in our stock; and

fluctuations in market demand for and supply of our products.

The realization of any of the foregoing could have a dramatic and adverse impact on the market price of our common stock. In addition,
class action litigation has often been instituted against companies whose securities have experienced substantial decline in market price.
Moreover, regulatory entities often undertake investigations of investor transactions in securities that experience volatility following an
announcement of a significant event or condition. Any such litigation brought against us or any such investigation involving our
investors could result in substantial costs and a diversion of management’s attention and resources, which could hurt our business,
operating results and financial condition.

25

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
An investor’s ability to trade our common stock may be limited by trading volume.

During the 12-month period beginning on March 1, 2018 and ending on February 28, 2019, the average daily trading volume for our
common stock on the NYSE American was approximately 450,000 shares. However, this trading volume may not be consistently
maintained in the future. If the trading volume for our common stock decreases, there could be a relatively limited market for our
common stock and the share price of our common stock would be more likely to be affected by broad market fluctuations, general
market conditions, fluctuations in our operating results, changes in the market’s perception of our business and announcements made by
us, our competitors or parties with whom we have business relationships. There may also be fewer institutional investors willing to hold
or acquire our common stock. Such a lack of liquidity in our common stock may make it difficult for us to issue additional securities for
financing or other purposes or to otherwise arrange for any financing that we may need in the future.

The market price of our common stock may be adversely affected by market conditions affecting the stock markets in general, including
price and trading fluctuations on the NYSE American exchange.

The market price of our common stock may be adversely affected by market conditions affecting the stock markets in general, including
price and trading fluctuations on the NYSE American. These conditions may result in (i) volatility in the level of, and fluctuations in,
the market prices of stocks generally and, in turn, our shares of common stock, and (ii) sales of substantial amounts of our common
stock in the market, in each case that could be unrelated or disproportionate to changes in our operating performance.

Because we do not expect to pay dividends on our common stock in the foreseeable future, stockholders will only benefit from owning
common stock if it appreciates.

We have paid no cash dividends on any of our common stock to date, and we currently intend to retain our future earnings, if any, to
fund the development and growth of our business. As a result, with respect to our common stock, we do not expect to pay any cash
dividends in the foreseeable future, and payment of cash dividends, if any, will also depend on our financial condition, results of
operations, capital requirements and other factors and will be at the discretion of our Board of Directors. Furthermore, we are subject to
various laws and regulations that may restrict our ability to pay dividends and we may in the future become subject to contractual
restrictions on, or prohibitions against, the payment of dividends. Due to our intent to retain any future earnings rather than pay cash
dividends on our common stock and applicable laws, regulations and contractual obligations that may restrict our ability to pay
dividends on our common stock, the success of your investment in our common stock will likely depend entirely upon any future
appreciation and there is no guarantee that our common stock will appreciate in value.

We may have difficulty attracting and retaining qualified personnel and our business may suffer if we do not.

Our business has experienced a number of successes and faced several challenges in recent years that have resulted in several significant
changes in our strategy and business plan, including the shifting of resources to support our current development initiatives. Our
management will need to remain flexible to support our business model over the next few years. However, losing members of the
Navidea team could have an adverse effect on our operations. Our success depends on our ability to attract and retain technical and
management personnel with expertise and experience in the pharmaceutical industry, and the acquisition of additional product
candidates may require us to acquire additional highly qualified personnel. The competition for qualified personnel in the
biotechnology industry is intense and we may not be successful in hiring or retaining the requisite personnel. If we are unable to attract
and retain qualified technical and management personnel, we will suffer diminished chances of future success.

Healthcare reform measures could hinder or prevent the commercial success of our products.

In March 2010, President Obama signed into law a legislative overhaul of the U.S. healthcare system, the Patient Protection and
Affordable Care Act (the “PPACA”), which had far-reaching consequences for many healthcare companies, including diagnostic
companies like ours. For example, if reimbursement for our products is substantially less than we or our customers expect, our business
could be materially and adversely impacted. However, the future of the PPACA is uncertain and at this juncture there will be a period of
uncertainty regarding the PPACA’s repeal, modification or replacement or the effect of the changes made to the PPACA under the Tax
Cuts and Jobs Act of 2017, any of which could have long term financial impact on the delivery of and payment for healthcare in the
United States.

Regardless of the impact of the PPACA on us, the U.S. government and other governments have shown significant interest in pursuing
healthcare reform and reducing healthcare costs. Any government-adopted reform measures could cause significant pressure on the
pricing of healthcare products and services in the United States and internationally, as well as the amount of reimbursement available
from governmental agencies and other third-party payors.

26

 
 
 
 
 
 
 
 
 
 
 
 
 
Actual and anticipated changes to the regulations of the healthcare system and U.S. tax laws may have a negative impact on the cost of
healthcare coverage and reimbursement of healthcare services and products.

The FDA and comparable agencies in other jurisdictions directly regulate many critical activities of life science, technology, and
healthcare industries, including the conduct of preclinical and clinical studies, product manufacturing, advertising and promotion,
product distribution, adverse event reporting, and product risk management. In both domestic and foreign markets, sales of products
depend in part on the availability and amount of reimbursement by third-party payors, including governments and private health plans.
Governments may regulate coverage, reimbursement, and pricing of products to control cost or affect utilization of products. Private
health plans may also seek to manage cost and utilization by implementing coverage and reimbursement limitations. Substantial
uncertainty exists regarding the reimbursement by third-party payors of newly approved healthcare products. The U.S. and foreign
governments regularly consider reform measures that affect healthcare coverage and costs. Such reforms may include changes to the
coverage and reimbursement of healthcare services and products. In particular, there have been recent judicial and Congressional
challenges to the PPACA, which could have an impact on coverage and reimbursement for healthcare services covered by plans
authorized by the PPACA, and we expect there will be additional challenges and amendments to the PPACA in the future.

In addition, various other healthcare reform proposals have emerged at the federal and state level. The recent changes to U.S. tax laws
could also negatively impact the PPACA. We cannot predict what healthcare initiatives or tax law changes, if any, will be implemented
at the federal or state level, however, government and other regulatory oversight and future regulatory and government interference with
the healthcare systems could adversely impact our business.

We may not be able to maintain compliance with our internal controls and procedures.

We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies. In
addition, we are required under the Sarbanes Oxley Act of 2002 to report annually on our internal control over financial reporting. Any
system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only
reasonable, not absolute, assurances that the objectives of the system are met. Any failure or circumvention of the controls and
procedures or failure to comply with regulation concerning control and procedures could have a material effect on our business, results
of operation and financial condition. Any of these events could result in an adverse reaction in the financial marketplace due to a loss of
investor confidence in the reliability of our financial statements, which ultimately could negatively affect the market price of our shares,
increase the volatility of our stock price and adversely affect our ability to raise additional funding. The effect of these events could also
make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors and our Board committees and as
executive officers.

The Company has experienced recurring net losses and has used significant cash to fund its operations, and we expect to continue to
incur substantial operating losses and may be unable to obtain additional financing, causing substantial doubt about our ability to
continue as a going concern over the next twelve months from the filing of this Annual Report.  The report of our independent
registered public accounting firm includes an explanatory paragraph that expresses substantial doubt about our ability to continue as a
going concern.

Our independent registered public accounting firm’s report issued in connection with our audited financial statements for the year ended
December 31, 2018 states that there is “substantial doubt about the Company’s ability to continue as a going concern.” Our ability to
continue as a going concern is dependent on a combination of several factors, including, our ability to raise capital by issuing debt or
equity securities to investors, license or sell our product candidates to other pharmaceutical companies, and generate revenues from
successfully developed products. If we are not able to continue our business as a going concern, we may be forced to liquidate our assets
for an amount less than the value at which those assets are carried on our financial statements, and it is likely that investors will lose part
or all of their investment.

The Company is currently engaged in litigation with CRG and Dr. Goldberg.  In addition, the Company has experienced recurring net
losses and has used significant cash to fund its operations. Based on our current working capital and our projected cash burn, and
without definitive agreements in place for additional funding, management believes that there is substantial doubt about the Company’s
ability to continue as a going concern for at least twelve months following the issuance of this Annual Report on Form 10-K.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We currently lease approximately 5,000 square feet of office space at 4995 Bradenton Avenue, Dublin, Ohio, as our principal offices.
The current least term expires in June 2020, at a monthly base rent of approximately $3,000. We must also pay a pro-rata portion of the
operating expenses and real estate taxes of the building. We also lease approximately 2,000 square feet of office space at 560 Sylvan
Avenue, Englewood Cliffs, New Jersey. The current lease term expires in March 2019, at a monthly base rent of approximately $3,000.
We must also pay a pro-rata portion of the electricity costs of the building. We do not intend to renew the lease on the New Jersey
office, nor do we currently intend to obtain alternative office space in the New York/New Jersey area. We believe both facilities are in
good condition.

We also currently lease approximately 25,000 square feet of office space at 5600 Blazer Parkway, Dublin, Ohio, formerly our principal
offices. The current lease term expires in October 2022, at a monthly base rent of approximately $26,000 during 2019. We must also
pay a pro-rata portion of the operating expenses and real estate taxes of the building. In June 2017, the Company executed a sublease
arrangement for the Blazer space, providing for monthly sublease payments to Navidea of approximately $39,000 through October
2022.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 3. Legal Proceedings

See Note 15 to the accompanying consolidated financial statements.

Item 4. Mine Safety Disclosure

Not applicable.

27

 
 
 
 
 
PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock trades on the NYSE American exchange under the trading symbol “NAVB.” As of March 1, 2019, we had
approximately 590 holders of common stock of record. There were no repurchases of our common stock during the year ended
December 31, 2018.

Stock Performance Graph

The following graph compares the cumulative total return on a $100 investment in each of the common stock of the Company, the
Russell 3000, and the NASDAQ Biotechnology Index for the period from December 31, 2013 through December 31, 2018. This graph
assumes an investment in the Company’s common stock and the indices of $100 on December 31, 2013 and that any dividends were
reinvested.

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*

Among Navidea Biopharmaceuticals, the Russell 3000 Index, and the NASDAQ Biotechnology Index

*

$100 invested on 12/31/2013 in stock or index, including reinvestment of dividends.

2013

Cumulative Total Return as of December 31,
2017

2015

2016

2014

2018

Navidea Biopharmaceuticals
Russell 3000
NASDAQ Biotechnology

Item 6. Selected Financial Data

Not applicable to smaller reporting companies.

  $

100.00    $
100.00     
100.00     

91.30    $
110.45     
134.10     

64.25    $
108.83     
149.42     

30.92    $
120.16     
117.02     

17.39    $
142.81     
141.66     

4.83 
132.83 
128.45 

28

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
   
   
 
   
   
 
 
 
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read together with our Consolidated Financial Statements and the Notes related to those statements,
as well as the other financial information included in this Form 10-K. Some of our discussion is forward-looking and involves risks and
uncertainties. For information regarding risk factors that could have a material adverse effect on our business, refer to Item 1A of this
Form 10-K, “Risk Factors.”

The Company

Navidea Biopharmaceuticals, Inc. 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’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 Tc99m tilmanocept, the first product developed by Navidea
based on the platform.

On March 3, 2017, the Company completed the Asset Sale to Cardinal Health 414, as discussed previously under “Development of the
Business.” Pursuant to the Purchase Agreement, we sold all of our assets used, held for use, or intended to be used in operating the
Business, including Lymphoseek, in Canada, Mexico and the United States. Upon closing of the Asset Sale, 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 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.

We manage our business based on two primary types of drug products: (i) diagnostic substances, including Tc99m tilmanocept and
other diagnostic applications of our Manocept platform and NAV4694 (through the date of sublicensing), and (ii) therapeutic
development programs, including therapeutic applications of our Manocept platform and all development programs undertaken by MT.
See Note 18 to the consolidated financial statements for more information about our business segments.

In the near term, the Company intends to continue to develop our additional imaging product candidates into advanced clinical testing
with the goal of extending the regulatory approvals for use of the Tc99m tilmanocept product. We 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.

Our Outlook

Our operating expenses in recent years have been focused primarily on support of our Manocept platform, Tc99m tilmanocept, and
NAV4694 product development. We incurred approximately $4.2 million and $4.5 million in total on research and development
activities during the years ended December 31, 2018 and 2017, 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:

Development Program (a)
Manocept Platform (b)
Macrophage Therapeutics (b)
Tc99m Tilmanocept
NAV4694 (c)

  $

2018

2017

1,291,796    $
1,203,419     
145,314     
19,105     

2,140,701 
853,294 
236,004 
(371,588)

(a) Certain development program expenditures were offset by grant reimbursement revenues totaling $761,000 and $1.7 million

during the years ended December 31, 2018 and 2017, respectively.

(b) Certain 2017 amounts have been reclassified from Manocept Platform to Macrophage Therapeutics to conform to 2018

presentation.

(c) Changes in cost estimates resulted in the reversal of certain previously accrued expenses related to the NAV4694 development

program during the year ended December 31, 2017.

We expect to continue the advancement of our efforts with our Manocept platform during 2019. The divestiture of NAV4694 has
decreased our development costs over the past year. We expect our total research and development expenses, including both out-of-
pocket charges as well as internal headcount and support costs, to be higher in 2019 than in 2018.

29

 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
   
   
   
 
 
 
 
 
 
Tc99m tilmanocept is approved by the EMA 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. 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. See Item 1A - “Risk Factors.”

We continue to evaluate existing and emerging data on the potential use of Manocept-related agents in the diagnosis, disease-staging
and treatment of disorders in which macrophages are involved, such as RA, KS, NASH and other disease states, to define areas of focus,
development pathways and partnering options to capitalize on the Manocept platform. We 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. See Item 1A - “Risk Factors.”

Discontinued Operations

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.

In April 2018, the Company entered into an Amendment to the Asset Purchase Agreement. Pursuant to the Amendment, Cardinal Health
414 paid the Company approximately $6.0 million and agreed to pay the Company an amount equal to the unused portion of the letter
of credit (not to exceed approximately $7.1 million) promptly after the earlier of (i) the expiration of the letter of credit and (ii) the
receipt by Cardinal Health 414 of evidence of the return and cancellation of the letter of credit. In exchange, the obligation of Cardinal
Health 414 to make any further contingent payments has been eliminated. Cardinal Health 414 is still obligated to make the milestone
payments in accordance with the terms of the earnout provisions of the Purchase Agreement. CRG has drawn the entire $7.1 million
available under the letter of credit.

We recorded a net gain on the sale of the Business of $89.2 million for the year ended December 31, 2017, including $16.5 million 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 $4.1 million in estimated taxes. We recorded an additional gain related to the Amendment
to the Asset Purchase Agreement of $43,000 for the year ended December 31, 2018, including $54,000 of additional consideration,
offset by $11,000 in estimated taxes.

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 statements of cash flows.

Results of Operations

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.

30

 
 
 
 
 
 
 
 
 
 
 
Years Ended December 31, 2018 and 2017

Royalty Revenue. During 2018 and 2017, we recognized royalty revenue of $15,000 and $9,000, respectively, related to our license
agreement with SpePharm in Europe.

License Revenue. During 2018, we recognized license revenue of $307,000, primarily for a non-refundable upfront payment related to
the sublicense of NAV4694 to Meilleur and the sublicense of Tc99m tilmanocept to Sinotau in China. During 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.

Grant and Other Revenue. During 2018, we recognized $847,000 of grant and other revenue compared to $1.7 million in 2017. Grant
revenue during 2018 was primarily related to SBIR grants from the NIH supporting Manocept development. Grant revenue during 2017
was primarily related to SBIR grants from the NIH supporting Manocept, therapeutic and Tc99m tilmanocept development. Other
revenue for 2018 and 2017 included $85,000 and $31,000, respectively, of revenue primarily 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 $292,000, or 6%, to $4.2 million during 2018
from $4.5 million during 2017. The decrease was primarily due to net decreases in drug project expenses related to (i) decreased
Manocept development costs of $849,000, primarily decreased clinical trial costs; and (ii) decreased Tc99m tilmanocept development
costs of $91,000 including decreased manufacturing-related activities and clinical testing, offset by increased regulatory costs; offset by
(iii) increased NAV4694 development costs of $391,000 due to reversal of certain previously accrued expenses during 2017, offset by
decreased clinical testing; (iv) increased therapeutics development costs of $350,000, including increased research consulting, regulatory
consulting, and preclinical testing, offset by decreased manufacturing-related activities; and (v) increased NAV5001 development costs
of $91,000 due to reversal of certain previously accrued expenses during 2017 . The net decrease in research and development expenses
also included decreased compensation including incentive-based awards of $309,000 related to net decreased headcount offset by
increased general office and travel expenses totaling $124,000.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $3.5 million, or 31%, to $7.7
million during 2018 from $11.2 million during 2017. The net decrease was primarily due to decreased legal and professional services of
$2.7 million primarily related to the CRG litigation, a loss on disposal of assets related to our previous office space of $706,000 and a
loss on termination of our previous office lease of $399,000, both during 2017, and decreased general office, insurance, depreciation,
rent, and travel expenses totaling $388,000. The net decrease in selling, general and administrative expenses also included net increased
compensation expense of $668,000, including termination costs related to the resignation of Dr. Goldberg of $1.1 million in 2018 and
termination costs related to the arbitration award to Mr. Gonzalez of $478,000 in 2017.

Other Income (Expense). Other expense, net, was $5.3 million during 2018 compared to other expense, net of $3.9 million during 2017.
We recorded losses on extinguishment of the CRG debt of $5.3 million and $4.2 million during 2018 and 2017, respectively. Also
during 2018 and 2017, we recognized interest income of $131,000 and $328,000, respectively, 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 in 2017.
During 2018 and 2017, $153,000 and $265,000, respectively, of interest expense was compounded and added to the balance of our note
payable to Platinum. During 2017, we recorded non-cash income of $153,000 related to changes in the estimated fair value of financial
instruments.

Gain on Discontinued Operations. We recorded a net gain related to the Amendment to the sale of the Business to Cardinal Health 414
of $43,000 in 2018, including $54,000 of payments by Cardinal Health 414 to Navidea in excess of receivables recognized, offset by
$11,000 in estimated taxes. We recorded a net gain on the sale of the Business to Cardinal Health 414 of $89.2 million in 2017,
including $16.5 million 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 $4.1 million in estimated taxes. Operating income (loss) from
discontinued operations related to the sale of the Business to Cardinal Health 414 were $1,000 and ($491,000) for 2018 and 2017,
respectively.

Liquidity and Capital Resources

Cash balances increased $681,000 to $3.5 million at December 31, 2018 from $2.8 million at December 31, 2017. The net increase was
primarily due to accelerated receipt of the guaranteed earnout receivable from Cardinal Health 414 of $5.7 million, net of CRG’s draw
on the letter of credit of $7.2 million, proceeds from a private equity placement of $3.0 million, and maturities and sales of available-for-
sale securities of $1.6 million, offset by cash used to fund our operations of $1.5 million.

Operating Activities. Cash provided by operations was $4.3 million during 2018 compared to $59.1 million during 2017.

Accounts and other receivables decreased $8.1 million to $21,000 at December 31, 2018 from $8.1 million at December 31, 2017,
primarily related to Cardinal Health 414’s payment of the entire balance of the guaranteed earnout of $12.9 million pursuant to the
Amendment executed on April 2, 2018.

31

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prepaid expenses and other current assets increased $198,000 to $1.3 million at December 31, 2018 from $1.1 million at December 31,
2017.  The increase was primarily due to a net increase in federal and state tax refunds receivable, offset by a net decrease in prepaid
insurance and decreased interest receivable related to the guaranteed earnout due from Cardinal Health 414.

Accounts payable decreased $430,000 to $425,000 at December 31, 2018 from $855,000 at December 31, 2017, primarily driven by net
decreased payables due to operations, NAV4694 and therapeutics vendors, offset by increased payables due to Manocept development
vendors. Accrued liabilities and other current liabilities increased $663,000 to $2.5 million at December 31, 2018 from $1.9 million at
December 31, 2017. Increased accruals for termination of Dr. Goldberg and Manocept development vendors were offset by decreases in
accruals for incentive-based compensation, legal and professional services. Our payable and accrual balances will continue to fluctuate
but will likely decrease overall as we work to resolve our legal disputes, offset by planned increases in development activity related to
the Manocept platform.

Investing Activities. Investing activities provided $954,000 during 2018 compared to $1.8 million used during 2017. Investing activities
during 2018 included maturities and sales of available-for-sale securities of $1.6 million, purchases of available-for-sale securities of
$600,000, and capital expenditures of $46,000, primarily for research and computer equipment. Investing activities during 2017
included purchases of available-for-sale securities of $2.2 million and capital expenditures of $34,000, primarily for computer
equipment and leasehold improvements, offset by maturities of available-for-sale securities of $400,000. We expect our overall capital
expenditures for 2019 will be higher than 2018 as we work to increase our manufacturing efficiency and maintain our technology
infrastructure.

Financing Activities. Financing activities used $4.5 million during 2018 compared to $61.0 million during 2017. The $4.5 million used
by financing activities during 2018 consisted primarily of CRG’s draw on the letter of credit of $7.1 million and principal payments on
financed insurance premiums of $396,000, offset by proceeds from a private equity placement of $3.0 million. The $61.0 million used
by financing activities in 2017 consisted primarily of principal payments on the CRG, Platinum and IPFS notes payable of $59.8 million
and payment of debt-related costs of $1.3 million, offset by proceeds from issuance of common stock of $72,000.

Cardinal Health 414 Asset Sale

On March 3, 2017, pursuant to a Purchase Agreement dated November 23, 2016, the Company completed its previously announced sale
to Cardinal Health 414 of its assets used, held for use, or intended to be used in operating the Business, including the Product, in the
Territory (giving effect to the License-Back and excluding certain assets specifically retained by the Company). 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. Upon closing of the
Asset Sale, 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.

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.

We recorded a net gain on the sale of the Business of $89.2 million for the year ended December 31, 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 $4.1 million in estimated taxes. The guaranteed consideration was recorded as a
receivable, the balance of which was being reduced as quarterly payments were received.

On April 2, 2018, the Company entered into an Amendment to the Asset Purchase Agreement. Pursuant to the Amendment, Cardinal
Health 414 paid the Company approximately $6.0 million and agreed to pay the Company an amount equal to the unused portion of the
letter of credit (not to exceed approximately $7.1 million) promptly after the earlier of (i) the expiration of the letter of credit and (ii) the
receipt by Cardinal Health 414 of evidence of the return and cancellation of the letter of credit. In exchange, the obligation of Cardinal
Health 414 to make any further contingent payments has been eliminated. Cardinal Health 414 is still obligated to make the milestone
payments in accordance with the terms of the earnout provisions of the Purchase Agreement. We recorded an additional gain related to
the Amendment to the Asset Purchase Agreement of $43,000 for the year ended December 31, 2018, including $54,000 of additional
consideration, offset by $11,000 in estimated taxes. On April 9, 2018, CRG drew approximately $7.1 million on the letter of credit. See
Note 3 to the accompanying consolidated financial statements.

32

 
 
 
 
 
 
 
 
 
 
 
Private Placement

On September 13, 2018, the Company entered into a Stock Purchase Agreement with an investor, pursuant to which the Company
issued 18,320,610 shares of the Company’s common stock in exchange for $3.0 million in cash. The Company plans to use the proceeds
from the Private Placement for general working capital purposes, including, without limitation, research and development, and other
operating expenses. See Notes 2 and 16(a) to the accompanying consolidated financial statements.

Capital Royalty Group Debt

See Notes 2, 12 and 15 to the accompanying consolidated financial statements.

Platinum Credit Facility

See Notes 2, 12 and 15 to the accompanying consolidated financial statements.

Summary

Our future liquidity and capital requirements will depend on a number of factors, including 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, and intellectual property protection.

We plan to focus our resources in 2019 primarily on development of products based on the Manocept platform. Although management
believes that it will be able to achieve this objective, it is subject to a number of variables beyond our control, including 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 financing if we
cannot achieve that objective in a timely manner.

We will continue to evaluate our time lines, strategic needs, and balance sheet requirements. If we attempt to raise additional capital
through debt, royalty, equity or otherwise, we may not be successful in doing so on terms acceptable to the Company, if at all. Further,
we may not be able to gain access and/or be able to 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 CRG and Dr. Goldberg.  In addition, the Company has experienced recurring net
losses and has used significant cash to fund its operations.  We have considerable discretion over the extent of development project
expenditures and have 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, based on our current working capital and our projected cash
burn, and without definitive agreements in place for additional funding, management believes that there is substantial doubt about the
Company’s ability to continue as a going concern for at least twelve months following the issuance of this Annual Report on Form 10-
K.  See Note 2 to the accompanying consolidated financial statements and Item 1A – “Risk Factors.”

Off-Balance Sheet Arrangements

As of December 31, 2018, we had no off-balance sheet arrangements.

Recent Accounting Standards

See Notes 1(q) and 1(r) to the accompanying consolidated financial statements.

33

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Critical Accounting Policies

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.

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.

Use of Estimates. The preparation of financial statements in conformity with 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:

●

●

●

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.

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.

Fair Value of Financial Instruments.  Certain of our notes payable included an embedded conversion option which was
required to be recorded at fair value.  The estimated fair value of the embedded conversion option was calculated using a
probability-weighted Monte Carlo simulation.  This valuation method includes Level 3 inputs such as the estimated current
market interest rate for similar instruments with similar creditworthiness.  Unrealized gains and losses on the fair value of
the embedded conversion option are classified in other expenses as a change in the fair value of financial instruments in the
consolidated statements of operations.

Fair Value of Warrants. We estimate the fair value of warrants using the Black-Scholes model, which is affected by our
stock price and warrant exercise price, as well as assumptions regarding a number of complex and subjective variables,
including expected stock price volatility and risk-free interest rate.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable to smaller reporting companies.

34

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 8. Financial Statements and Supplementary Data

Our consolidated financial statements, and the related notes, together with the report of Marcum LLP dated March 15, 2019, are set
forth at pages F-1 through F-36 attached hereto and incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

35

 
 
 
 
 
 
Item 9A. Controls and Procedures

Disclosure Controls and Procedures

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,
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 December 31, 2018, 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.

Our management, including Mr. Latkin, who serves as our Chief Executive Officer, Chief Operating Officer and Chief Financial
Officer, 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, 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.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control
system was designed to provide reasonable assurance to management and the Board of Directors regarding the preparation and fair
presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement
preparation and presentation.

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 generally accepted accounting principles,
and includes those policies and procedures that:

●

●

●

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with U.S. GAAP and that receipts and expenditures of the company are being made only in accordance
with authorization of management and directors of the Company; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of the Company's assets that could have a material effect on the financial statements.

Under the supervision and with the participation of our management, including Mr. Latkin, who serves as our Chief Executive Officer,
Chief Operating Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over
financial reporting as of December 31, 2018 based upon the criteria set forth in Internal Control – Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our assessment we concluded that,
as of December 31, 2018, our internal control over financial reporting was effective based on those criteria.

36

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in Internal Control Over Financial Reporting

During the year ended December 31, 2018, there were no changes in our internal control over financial reporting that materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

37

 
 
 
 
 
 
PART III

Item 10. Directors, Executive Officers and Corporate Governance

Directors

Set forth below are the names and committee assignments of the persons who constitute our Board of Directors.  

Name
Claudine Bruck, Ph.D. (a)
Adam D. Cutler (b)
Jed. A. Latkin (c)
Y. Michael Rice
S. Kathryn Rouan, Ph.D. (d)

Age

63
44
44
54
56

    Committee(s)
    Audit; Compensation, Nominating and Governance (Chair)
    Audit (Chair); Compensation, Nominating and Governance
    —
    Audit; Compensation, Nominating and Governance
    Compensation, Nominating and Governance

(a) Dr. Bruck was appointed to the Board of Directors effective March 5, 2018.
(b) Mr. Cutler was appointed to the Board of Directors effective December 1, 2018.
(c) Mr. Latkin was appointed to the Board of Directors effective August 14, 2018.
(d) Dr. Rouan was appointed to the Board of Directors effective December 1, 2018.

Director Qualifications

The Board of Directors believes that individuals who serve on the Board should have demonstrated notable or significant achievements
in their respective field; should possess the requisite intelligence, education and experience to make a significant contribution to the
Board and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and should have the highest ethical
standards, a strong sense of professionalism and intense dedication to serving the interests of our stockholders. The following are
qualifications, experience and skills for Board members which are important to our business and its future:

● General Management. Directors who have served in senior leadership positions bring experience and perspective in analyzing,
shaping, and overseeing the execution of important operational and policy issues at a senior level. These directors’ insights and
guidance, and their ability to assess and respond to situations encountered in serving on our Board of Directors, are enhanced by
their leadership experience developed at businesses or organizations that operated on a global scale, faced significant
competition, or involved other evolving business models.

● Industry Knowledge. Because we are a pharmaceutical development company, education or experience in our industry,

including medicine, pharmaceutical development, marketing, distribution, or the regulatory environment, is important because
such experience assists our Directors in understanding and advising our Company.

● Business Development/Strategic Planning. Directors who have a background in strategic planning, business development,
strategic alliances, mergers and acquisitions, and teamwork and process improvement provide insight into developing and
implementing strategies for growing our business.

● Finance/Accounting/Control. Knowledge of capital markets, capital structure, financial control, audit, reporting, financial

planning, and forecasting are important qualities of our directors because such qualities assist in understanding, advising, and
overseeing our Company’s capital structure, financing and investing activities, financial reporting, and internal control of such
activities.

● Board Experience/Governance. Directors who have served on other public company boards can offer advice and insights with
regard to the dynamics and operation of a board of directors, the relations of a board to the chief executive officer and other
management personnel, the importance of particular agenda and oversight matters, and oversight of a changing mix of
strategic, operational, and compliance-related matters.

Biographical Information

Set forth below is current biographical information about our directors, including the qualifications, experience and skills that make
them suitable for service as a director. Each listed director’s respective experience and qualifications described below led the
Compensation, Nominating and Governance (“CNG”) Committee of our Board of Directors to conclude that such director is qualified to
serve as a member of our Board of Directors.

38

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Directors whose terms continue until the 2019 Annual Meeting:

Y. Michael Rice has served as a director of Navidea since May 2016. Mr. Rice is a partner of LifeSci Advisors, LLC and LifeSci
Capital, LLC, companies which he co-founded in March 2010. Prior to co-founding LifeSci Advisors and LifeSci Capital, Mr. Rice was
the co-head of health care investment banking at Canaccord Adams, where he was involved in debt and equity financing. Mr. Rice was
also a Managing Director at ThinkEquity Partners where he was responsible for managing Healthcare Capital Markets, including the
structuring and execution of numerous transactions. Prior to that, Mr. Rice served as a Managing Director at Bank of America serving
large hedge funds and private equity healthcare funds. Previously, he was a Managing Director at JPMorgan/Hambrecht & Quist. Mr.
Rice currently serves on the board of directors of RDD Pharma, a specialty pharmaceuticals company. Mr. Rice received a B.A. from
the University of Maryland.

S. Kathryn Rouan, Ph.D., has served as a director of Navidea since December 2018. Dr. Rouan most recently served as the SVP and
Head of Projects, Clinical Platforms and Sciences (“PCPS”) at GlaxoSmithKline (“GSK”) from May 2016 to November 2018 following
a 29-year career at GSK. The PCPS organization within GSK encompasses the Global Clinical Operations, Statistics and Programming,
Clinical Pharmacology, GCP Quality, Third Party Resourcing and Project Management functions and includes approximately 1,800
staff in 20 countries. Dr. Rouan first joined GSK in 1989 with a background in Pharmaceutical Sciences, focusing on formulation
development of protein pharmaceuticals.  In 1993, Dr. Rouan moved into Project Leadership and Management becoming VP and Head
of Metabolism and Pulmonary Project Management in 1999. She continued to lead Projects in a number of Therapeutic areas including
Cardiovascular, Immunoinflammation and Gastroenterology Therapy areas. In 2007, Dr. Rouan led the development, submission
and approval of Arzerra (ofatumumab) in refractory chronic lymphocytic leukemia. In 2012, she became Head of Biopharmaceutical
Development responsible for delivery of GSK’s portfolio of biopharmaceutical medicines. In December 2013, Dr. Rouan was appointed
SVP and Head of R&D Stiefel, GSK’s Dermatology therapy area unit.  Dr. Rouan holds a Ph.D. in Pharmaceutical Sciences from the
University of Rhode Island, and a B.Pharm. from the University of London.

Directors whose terms continue until the 2020 Annual Meeting:

Adam D. Cutler has served as a director of Navidea since December 2018. Mr. Cutler is a biotechnology executive with over 20 years
of experience in equity research, investor relations, capital markets, business development, finance, and management consulting.  Mr.
Cutler joined Molecular Templates, Inc. as its Chief Financial Officer in November 2017. Prior to that, he was Senior Vice President of
Corporate Affairs for Arbutus Biopharma Corporation, where he was responsible for investor relations and contributed to the
company’s business development and corporate finance efforts from March 2015 to November 2017. From 2012 to 2015, he was a
Managing Director for The Trout Group LLC and Trout Capital LLC, where he executed financings and advised public and private life
science companies on investor relations and capital raising strategies.  From 2000 to 2012, Mr. Cutler worked as a biotechnology equity
research analyst with Credit Suisse, Canaccord Genuity, JMP Securities, and Bank of America Securities.  He also worked in healthcare
consulting as an Analyst at The Frankel Group and a Consultant for Ernst & Young LLP.  He currently serves on the Board of Directors
for Inmed Pharmaceuticals.  He earned his Bachelor of Arts degree in Economics from Brandeis University.

Jed A. Latkin has served as Chief Executive Officer of Navidea since October 2018, and as Chief Operating Officer and Chief
Financial Officer of Navidea since May 2017. Mr. Latkin also served as Interim Chief Operating Officer of Navidea from April 2016 to
April 2017. Mr. Latkin has more than twenty years of experience in the financial industry supporting many investments in major
markets including biotechnology and pharmaceuticals. He most recently was employed by Nagel Avenue Capital, LLC since 2010 and
in that capacity he provided contracted services as a Portfolio Manager, Asset Based Lending for Platinum Partners Value Arbitrage
Fund L.P. Mr. Latkin has been responsible for a large diversified portfolio of asset-based investments in varying industries, including
product manufacturing, agriculture, energy, and healthcare. In connection with this role, he served as Chief Executive Officer of End of
Life Petroleum Holdings, LLC and Black Elk Energy, LLC, Chief Financial Officer of Viper Powersports, Inc. and West Ventures,
LLC, and Portfolio Manager of Precious Capital, LLC. Mr. Latkin served on the Board of Directors for Viper Powersports, Inc. from
2012 to 2013 and served on the boards of directors of the Renewable Fuels Association and Buffalo Lake Advanced Biofuels. Mr.
Latkin earned a B.A from Rutgers University and a M.B.A. from Columbia Business School.

Director whose term continues until the 2021 Annual Meeting:

Claudine Bruck, Ph.D., has served as a director of Navidea since March 2018. Dr. Bruck is co-founder and has served as Chief
Executive Officer of Prolifagen LLC, a start-up company developing a microRNA-based medicine for tissue regeneration, since June
2016. She is also a course director at University of Pennsylvania’s Institute of Translational Medicine and Applied Technology, a
consultant to BioMotiv LLC and a member of the board of directors of QRPharma, a biotechnology company focused on development
of medicines for neurodegenerative diseases. Dr. Bruck joined GlaxoSmithKline (“GSK”) to build GSK’s HIV vaccine program in
1985. In her role in GSK’s vaccine group, Dr. Bruck was instrumental in the development of GSK’s HPV vaccine (Cervarix), and
headed their cancer vaccine program from inception to Phase 2 before joining the drug discovery group of GSK. She held several roles
in the drug discovery group, from Head of Clinical Immunology (2004-2005) to VP and Head of Biology for the Center of Excellence
for External Drug Discovery (2005-2008), to VP and Head of a newly formed ophthalmology R&D group (2008-2015). Dr. Bruck has a
Ph.D. in Biochemistry from the University of Brussels. She was a post-doctoral student at Harvard University Medical School and an
Assistant Professor at Tufts Medical School.

39

 
 
 
 
 
 
 
 
 
 
Directors whose terms ended during 2018:

Michael M. Goldberg, M.D. served as a director of Navidea from November 2013 to August 2018 and as President and Chief
Executive Officer of Navidea from September 2016 to August 2018. Dr. Goldberg has been a Managing Partner of Montaur Capital
Partners since January 2007. From 2007 to 2013 Dr. Goldberg managed a life science investment portfolio for Platinum Partners called
Platinum-Montaur Life Sciences, LLC. Prior to that, Dr. Goldberg served as the Chief Executive Officer of Emisphere Technologies,
Inc., from August 1990 to January 2007 and as its President from August 1990 to October 1995. He also served on Emisphere’s board of
directors from November 1991 to January 2007. Previous to that, Dr. Goldberg served as Vice President of The First Boston Corp.,
where he was a founding member of the Healthcare Banking Group. Dr. Goldberg has been a Director of Echo Therapeutics, Inc.,
AngioLight, Inc., Urigen Pharmaceuticals, Inc., Alliqua BioMedical, Inc., and ADVENTRX Pharmaceuticals, Inc. Dr. Goldberg
received a B.S. degree from Rensselaer Polytechnic Institute, an M.D. from Albany Medical College of Union University in 1982, and
an M.B.A. from Columbia University Graduate School of Business in 1985.

Mark I. Greene M.D., Ph.D., FRCP served as a director of Navidea from March 2016 to August 2018. Dr. Greene has been Director
of the Division of Immunology, Department of Pathology at University of Pennsylvania School of Medicine since 1986. Dr. Greene
was the Associate Director of the Division for Fundamental Research, University of Pennsylvania Cancer Center from 1987-2009 and
has been the John Eckman Professor of Medical Science of the University of Pennsylvania School of Medicine since 1989. From 1980
to 1986 he served as an Associate Professor of both Harvard University and Harvard Medical School. His groundbreaking work in erbB
receptor function led to the development of Herceptin (Genentech) and to the development of a proprietary method for the rapid, reliable
design of allosteric inhibitors of receptors and enzymes. Dr. Greene previously served as a scientific advisor to Navidea’s subsidiary,
Macrophage Therapeutics, Inc., Ception Therapeutics, Antisome PLC and Fulcrum Technologies and also served as a Member of the
Scientific Advisory Boards of Fulcrum Pharmaceuticals, Inc. and Tolerx, Inc. He previously served as an Emeritus Director of
Emisphere Technologies, Inc. where he also served as a Director. Additionally, Dr. Greene previously served as a Director of Ribi
Immunochem Research, Inc. and currently serves as a Consultant to Martell Biosystems, Inc. Dr. Greene also serves as an advisor to
Belgene, SternGreene and Abzed, all start-up companies. Dr. Greene has an outstanding record of contributions to cancer biology and
drug discovery that is well-documented in over 400 publications. Dr. Greene is a recipient of many awards and patents and has
collaborated with a number of pharmaceutical companies. He received his M.D. (1972) and Ph.D. (1977) from the University of
Manitoba, Canada, became a Fellow of the Royal College in 1976 and then joined the faculty of Harvard Medical School in 1976.

Eric K. Rowinsky, M.D. served as a director of Navidea from July 2010 to March 2018. Dr. Rowinsky has served as Executive
Chairman, President, and Head of the Scientific Advisory Board of RGenix, Inc, as well as the Chief Scientific Officer of Clearpath
Development Co., which rapidly advances development stage therapeutic assets to pre-defined human Proof-of-Concept milestones,
since June 2015. He has also served as the Head of Research and Development, Executive Vice President, and Chief Medical Officer of
Stemline Therapeutics, Inc. from 2012 to 2015, and was the Founder of and served as Chief Executive Officer of Primrose Therapeutics
from August 2010 to September 2011 at which time it was acquired by Stemline. From 2005 to 2009, he served as the Chief Medical
Officer and Executive Vice President of Clinical Development and Regulatory Affairs of ImClone Systems Incorporated, a life sciences
company, which was acquired by Eli Lilly. Prior to that, Dr. Rowinsky held several positions at the Cancer Therapy & Research
Center’s Institute of Drug Development, including Director of the Institute, Director of Clinical Research and SBC Endowed Chair for
Early Drug Development, and concurrently served as Clinical Professor of Medicine in the Division of Medical Oncology at the
University of Texas Health Science Center at San Antonio. Dr. Rowinsky was an Associate Professor of Oncology at the Johns Hopkins
University School of Medicine and on active staff at the Johns Hopkins School of Medicine from 1987 to 1996. Dr. Rowinsky is
currently a member of the boards of directors of Biogen Idec, Inc., Verastem, Inc. and Fortress Biotech, Inc., and has served on the
board of directors of BIND Therapeutics, Inc., all publicly-held life science companies. He is also an Adjunct Professor of Medicine at
New York University. Dr. Rowinsky has extensive research and drug development experience, oncology expertise, corporate strategy,
and broad scientific and medical knowledge.

Executive Officers

In addition to Mr. Latkin, the following individual is a senior executive officer of Navidea and serves in the position indicated below:

Name
Michael S. Rosol, Ph.D.

Age
50

  Position
  Chief Medical Officer

Michael S. Rosol, Ph.D., has served as Chief Medical Officer of Navidea since December 2018. Prior to joining Navidea, Dr. Rosol
served as Associate Director in the Clinical and Translational Imaging Group at Novartis Institutes for BioMedical Research from
November 2016 to December 2018. Before that, he held positions as Senior Director of Business Development at Elucid Bioimaging,
Inc. where he drove adoption of its Computer-Aided Phenotyping applications from May 2016 to November 2016, and as Chief
Scientific Officer of MediLumine, Inc. from October 2015 to May 2016. Prior to those roles, he was the Head of the Translational
Imaging Group at Novartis Pharmaceuticals Group from October 2012 to March 2015. His training and experience lie in the fields of
biophysics, physiology, and biological/medical imaging, and his work has focused on cardiovascular imaging, preclinical and clinical
imaging instrumentation and applications, animal models of human disease, pathophysiology, biomarkers, and imaging in toxicological
and clinical trials. He has also served as faculty in Radiology and Director of two academic research imaging facilities. Dr. Rosol holds a
Ph.D. from Boston University School of Medicine.

40

 
 
 
 
 
 
 
 
 
 
 
 
Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our officers and directors, and greater than 10% stockholders, to file reports of ownership
and changes in ownership of our securities with the Securities and Exchange Commission. Copies of the reports are required by SEC
regulation to be furnished to us. Based on our review of these reports and written representations from reporting persons, we believe that
all reporting persons complied with all filing requirements during the fiscal year ended December 31, 2018, except for: (1) Frederick O.
Cope, Ph.D., who had one late Form 4 filing related to stock issued in lieu of a portion of his annual cash bonus; (2) John K. Scott, Jr.,
who had one late Form 3 filing related to stock purchased in a private placement; (3) S. Kathryn Rouan, Ph.D., who had one late Form 3
filing resulting from delays in obtaining new EDGAR filer codes; and (4) Michael M. Goldberg, M.D., who did not file a Form 4 related
to the 18.5 million shares issued to him in November 2018. Dr. Goldberg was no longer an officer or director of Navidea at the time the
18.5 million shares were issued to him.

Code of Business Conduct and Ethics

We have adopted a code of business conduct and ethics that applies to our directors, officers and all employees. The code of business
conduct and ethics is posted on our website at www.navidea.com. The code of business conduct and ethics may also be obtained free of
charge by writing to Navidea Biopharmaceuticals, Inc., Attn: Chief Financial Officer, 4995 Bradenton Avenue, Suite 240, Dublin, Ohio
43017.

Corporate Governance

Our Board of Directors is responsible for establishing broad corporate policies and reviewing our overall performance rather than day-
to-day operations. The primary responsibility of our Board is to oversee the management of Navidea and, in doing so, serve the best
interests of the Company and our stockholders. Our Board selects, evaluates and provides for the succession of executive officers and,
subject to stockholder election, directors. It reviews and approves corporate objectives and strategies, and evaluates significant policies
and proposed major commitments of corporate resources. Our Board also participates in decisions that have a potential major economic
impact on the Company. Management keeps our directors informed of Company activity through regular communication, including
written reports and presentations at Board and committee meetings.

Board of Directors Meetings

Our Board of Directors held a total of seven meetings in the fiscal year ended December 31, 2018, and each of the directors attended at
least 75 percent of the aggregate number of meetings of the Board of Directors and committees (if any) on which he or she served,
except for Dr. Rowinsky. It is our policy that all directors attend the Annual Meeting of Stockholders. However, conflicts and
unforeseen events may prevent the attendance of a director, or directors. All then-current members of our Board of Directors attended
the 2018 Annual Meeting of Stockholders in person.

The Board of Directors maintains the following committees to assist it in its oversight responsibilities. The current membership of each
committee is indicated in the list of directors set forth under “Board of Directors” above.

Audit Committee

The Audit Committee of the Board of Directors selects our independent registered public accounting firm with whom the Audit
Committee reviews the scope of audit and non-audit assignments and related fees, the accounting principles that we use in financial
reporting, and the adequacy of our internal control procedures. The current members of our Audit Committee are: Adam D. Cutler
(Chair), Claudine Bruck, Ph.D., and Y. Michael Rice, each of whom is “independent” under Section 803A of the NYSE American
Company Guide. From August 14, 2018 through January 1, 2019, the members of our Audit Committee were: Mr. Rice (Chair) and Dr.
Bruck. From March 15, 2018 to August 14, 2018, the members of our Audit Committee were: Mr. Rice (Chair), Dr. Bruck and Dr.
Greene. From January 1, 2018 to March 15, 2018, the members of our Audit Committee were: Mr. Rice (Chair), Dr. Greene and Dr.
Rowinsky. The Board of Directors has determined that Mr. Cutler and Mr. Rice meet the requirements of an “audit committee financial
expert” as set forth in Section 407(d)(5) of Regulation S-K promulgated by the SEC. The Audit Committee held four meetings in the
fiscal year ended December 31, 2018. The Board of Directors adopted a written Amended and Restated Audit Committee Charter on
April 30, 2004. A copy of the Amended and Restated Audit Committee Charter is posted on the Company’s website at
www.navidea.com.

41

 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation, Nominating and Governance Committee

The CNG Committee of the Board of Directors discharges the Board’s responsibilities relating to the compensation of the Company's
directors, executive officers and associates, identifies and recommends to the Board of Directors nominees for election to the Board, and
assists the Board in the implementation of sound corporate governance principles and practices. With respect to its compensation
functions, the CNG Committee evaluates and approves executive officer compensation and reviews and makes recommendations to the
Board with respect to director compensation, including incentive or equity-based compensation plans; reviews and evaluates any
discussion and analysis of executive officer and director compensation included in the Company’s annual report or proxy statement, and
prepares and approves any report on executive officer and director compensation for inclusion in the Company’s annual report or proxy
statement required by applicable rules and regulations; and monitors and evaluates, at the Committee’s discretion, matters relating to the
compensation and benefits structure of the Company and such other domestic and foreign subsidiaries or affiliates, as it deems
appropriate. The members of our CNG Committee are: Claudine Bruck, Ph.D. (Chair), Adam D. Cutler, Y. Michael Rice, and S.
Kathryn Rouan, Ph.D. The CNG Committee did not hold any meetings in the fiscal year ended December 31, 2018 because
compensation- and nomination-related discussions were held by the full Board. The Board of Directors adopted a written
Compensation, Nominating and Governance Committee Charter on February 26, 2009. A copy of the Compensation, Nominating and
Governance Committee Charter is posted on the Company’s website at www.navidea.com.

Item 11. Executive Compensation

Compensation Discussion and Analysis

Overview of Compensation Program. The CNG Committee of the Board of Directors is responsible for establishing and implementing
our compensation policies applicable to senior executives and monitoring our compensation practices. The CNG Committee seeks to
maintain compensation plans that are fair, reasonable and competitive. The CNG Committee is responsible for reviewing and approving
senior executive compensation, awards under our cash bonus plan, and awards under our equity-based compensation plans.

Philosophy and Goals of Executive Compensation Plans. The CNG Committee’s philosophy for executive compensation is to:

● Pay for performance: The CNG Committee believes that our executives should be compensated based upon their ability to

achieve specific operational and strategic results. Therefore, our compensation plans are designed to provide rewards for the
individual’s contribution to our performance.

● Pay commensurate with other companies categorized as value creators: The CNG Committee has set a goal that the Company

should move toward compensation levels for senior executives that are, at a minimum, at the 40th to 50th percentile for similar
executives in the workforce while taking into account current market conditions and Company performance. This allows us to
attract, hire, reward and retain senior executives who formulate and execute our strategic plans and drive exceptional results.

To assess whether our programs are competitive, the CNG Committee reviews compensation information of peer companies, national
data and trends in executive compensation to help determine the appropriateness of our plans and compensation levels. These reviews,
and the CNG Committee’s commitment to pay for performance, become the basis for the CNG Committee’s decisions on compensation
plans and individual executive compensation payments.

The CNG Committee has approved a variety of programs that work together to provide a combination of basic compensation and strong
incentives. While it is important for us to provide certain base level salaries and benefits to remain competitive, the CNG Committee’s
objective is to provide compensation plans with incentive opportunities that motivate and reward executives for consistently achieving
superior results. The CNG Committee designs our compensation plans to:

● Reward executives based upon overall company performance, their individual contributions and creation of stockholder value;

● Encourage executives to make a long-term commitment to our Company; and

● Align executive incentive plans with the long-term interests of stockholders.

The CNG Committee reviews individual compensation levels at least annually. During the review process, the CNG Committee
addresses the following questions:

● Do any existing compensation plans need to be adjusted to reflect changes in competitive practices, different market

circumstances or changes to our strategic initiatives?

● Should any existing compensation plans be eliminated or new plans be added to the executive compensation programs?

● What are the compensation-related objectives for our compensation plans for the upcoming fiscal year?

● Based upon individual performance, what compensation modifications should be made to provide incentives for senior

executives to perform at superior levels?

42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In addressing these questions, the CNG Committee considers input from management, outside compensation experts and published
surveys of compensation levels and practices.

The CNG Committee does not believe that our compensation policies and practices for our employees give rise to risks that are
reasonably likely to have a material adverse effect on the Company. As noted below, our incentive-based compensation has historically
been tied to Company financial performance (e.g., revenue, gross margin or budgeted expense targets) or product development goals
(e.g., clinical trial progress or regulatory milestones). Following the Asset Sale to Cardinal Health 414 in March 2017, incentive-based
compensation goals have been more focused on development goals as we work to develop additional product candidates. The CNG
Committee believes that the existence of these performance incentives creates a strong motivation for Company employees to contribute
towards the achievement of strong, sustainable performance, and believes that the Company has a strong set of internal controls that
minimize the risk that financial performance can be misstated in order to achieve incentive compensation payouts.

In addition to the aforementioned considerations, the CNG Committee also takes into account the outcome of stockholder advisory
(“say-on-pay”) votes on the compensation of our Chief Executive Officer, Chief Financial Officer, and our next three highest-paid
executive officers (the “Named Executive Officers”). At the Annual Meeting of Stockholders held on June 29, 2017, approximately
75% of our stockholders voted in favor of the resolution relating to the compensation of our Named Executive Officers. The CNG
Committee believes this affirmed stockholders’ support of the Company’s executive compensation program. The CNG Committee will
continue to consider the results of future say-on-pay votes when making future compensation decisions for the executive officers. Also
at the Annual Meeting of Stockholders on June 29, 2017, approximately 40% of our stockholders, representing the most votes received,
voted in favor of holding “say-on-pay” votes every two years. In accordance with the results of this vote, the Company will hold an
advisory vote to approve the compensation of the Company’s Named Executive Officers every two years until the next required vote on
the frequency of advisory votes on executive compensation at the Company’s Annual Meeting of Stockholders to be held in 2023.

Scope of Authority of the CNG Committee. The Board of Directors has authorized the CNG Committee to establish the compensation
programs for all executive officers and to provide oversight for compliance with our compensation philosophy. The CNG Committee
delegates the day-to-day administration of the compensation plans to management (except with respect to our executive officers), but
retains responsibility for ensuring that the plan administration is consistent with the Company’s policies. Annually, the CNG Committee
sets the compensation for our executive officers, including objectives and awards under incentive plans. The Chief Executive Officer
provides input for the CNG Committee regarding the performance and appropriate compensation of the other officers. The CNG
Committee gives considerable weight to the Chief Executive Officer’s evaluation of the other officers because of his direct knowledge
of each officer’s performance and contributions. The CNG Committee also makes recommendations to the Board of Directors on
appropriate compensation for the non-employee directors. In addition to overseeing the compensation of executive officers, the CNG
Committee approves awards under short-term cash incentive and long-term equity-based compensation plans for all other employees.
For more information on the CNG Committee’s role, see the CNG Committee’s charter, which can be found on our website at
www.navidea.com.

Independent Compensation Expertise. The CNG Committee is authorized to periodically retain independent experts to assist in
evaluating executive compensation plans and in setting executive compensation levels. These experts provide information on trends and
best practices so the CNG Committee can formulate ongoing plans for executive compensation. The CNG Committee retained Board
Advisory, LLC (“Board Advisory”) as its independent consultant to assist in the determination of the reasonableness and
competitiveness of the compensation levels of its President and Chief Executive Officer for fiscal 2018, and of its Chief Executive
Officer, Chief Operating Officer, and Chief Financial Officer, Chief Medical Officer, and Board of Directors for fiscal 2019. No
conflict of interest exists that would prevent Board Advisory from serving as independent consultant to the CNG Committee.

For fiscal 2018, Board Advisory performed a benchmark compensation review of our President and Chief Executive Officer. For fiscal
2019, Board Advisory performed a benchmark compensation review of our key executive positions, including our Chief Executive
Officer, Chief Operating Officer, and Chief Financial Officer, Chief Medical Officer, and our Board of Directors. Board Advisory
utilized published survey and proxy reported data from compensation peers, with market data aged to February 1, 2018 and January 1,
2019, respectively, by an annualized rate of 3.0%, the expected pay increase in both 2018 and 2019 for executives in the life sciences
industry.

In evaluating appropriate executive compensation, it is common practice to set targets at a point within the competitive marketplace.
The CNG Committee sets its competitive compensation levels based upon its compensation philosophy. Following completion of the
Board Advisory study for 2019, the CNG Committee noted that the total cash compensation of our Chief Executive Officer, Chief
Operating Officer and Chief Financial Officer is between the 50th and 75th percentile for an established peer group of companies. The
CNG Committee also noted that the total cash compensation of our Chief Medical Officer is significantly below the market rate for this
position.

43

 
 
 
 
 
 
 
 
 
Peer Group Companies. In addition to independent survey analysis, in 2018 and 2019 the CNG Committee reviewed the compensation
levels at specific competitive benchmark companies. With input from management, the CNG Committee chose the peer companies
because they are developmental life sciences companies, have market capitalization between approximately $20 million and $350
million and have comparable key executive positions. While the specific plans for these companies may or may not be used, it is helpful
to review their compensation data to provide benchmarks for the overall compensation levels that will be used to attract, hire, retain and
motivate our executives.

As competitors and similarly situated companies that compete for the same executive talent, the CNG Committee determined that the
following peer group companies most closely matched the responsibilities and requirements of our executives:

AcelRx Pharmaceuticals, Inc.
Anthera Pharmaceuticals, Inc.
Aradigm Corporation
Argos Therapeutics, Inc.
CareDx, Inc.
Cascadian Therapeutics, Inc.
ContraFect Corporation
Curis, Inc.
CytoDyn, Inc.
Endocyte, Inc.
Genocea Biosciences, Inc.
iCad, Inc.

Idera Pharmaceuticals, Inc.
Immune Design Corporation
Innovation Pharmaceuticals, Inc.
Invitae Corporation
Invuity, Inc.
Lipocine, Inc.
Mirati Therapeutics, Inc.
Sonoma Pharmaceuticals, Inc.
Sorrento Therapeutics, Inc.
T2 Biosystems, Inc.
Utah Medical Products, Inc.

Board Advisory and the CNG Committee used the publicly available compensation information for these companies to analyze our
competitive position in the industry. Base salaries and short-term and long term incentive plans of the executives of these companies
were reviewed to provide background and perspective in analyzing the compensation levels for our executives.

Specific Elements of Executive Compensation

Base Salary. Using information gathered by Board Advisory, peer company data, national surveys, general compensation trend
information and recommendations from management, the CNG Committee approved the fiscal 2018 base salary for our President and
Chief Executive Officer. Base salaries for senior executives are set using the CNG Committee’s philosophy that compensation should
be competitive and based upon performance. Executives should expect that their base salaries, coupled with a cash bonus award, would
provide them the opportunity to be compensated at or above the competitive market at the 40th to 50th percentile.

Based on competitive reviews of similar positions, industry salary trends, overall company results and individual performance, salary
increases may be approved from time to time. The CNG Committee reviews and approves base salaries of all executive officers. In
setting specific base salaries for fiscal 2018, the CNG Committee considered published proxy data for similar positions at peer group
companies.

The following table shows the changes in base salaries for the Named Executive Officers that were approved for fiscal 2018 compared
to the approved salaries for fiscal 2017:

Named Executive Officer
Jed A. Latkin (c)
Michael M. Goldberg, M.D. (d)
Frederick O. Cope, Ph.D. (e)
Michael S. Rosol, Ph.D. (f)

Fiscal 2018
Base Salary(a)

Fiscal 2017
Base Salary(a)

Change(b)

  $

475,000    $
400,000     
279,130     
205,000     

325,000     
400,000     
279,130     
—     

46.2%
0.0%
0.0%
— 

(a) The amount shown for fiscal 2018 and 2017 is the approved annual salary of the Named Executive Officer in effect at the end
of each year, or at the date of separation. The actual amount paid to the Named Executive Officer during fiscal 2018 and 2017
is shown under “Salary” in the Summary Compensation table below.

(b) Due to the Company’s financial difficulties in 2018, Named Executive Officers did not receive salary increases in 2018, except

for Mr. Latkin.

(c) Mr. Latkin received an increase in base salary in connection with his appointment as Chief Executive Officer, Chief Operating

Officer and Chief Financial Officer of the Company effective October 1, 2018.

(d) Dr. Goldberg separated from the Company effective August 14, 2018.
(e) Dr. Cope separated from the Company effective October 30, 2018.
(f) Dr. Rosol commenced employment with the Company effective December 17, 2018.

44

 
 
 
 
 
 
 
 
 
 
 
 
   
   
 
   
   
   
 
 
 
 
 
 
 
 
The following table shows the base salaries for the Named Executive Officers that were approved for fiscal 2019 compared to the
approved salaries for fiscal 2018:

Named Executive Officer
Jed A. Latkin
Michael S. Rosol, Ph.D.

Fiscal 2019
Base Salary

Fiscal 2018
Base Salary

Change(a)

  $

475,000    $
205,000     

475,000     
205,000     

0.0%
0.0%

(a) Due to Mr. Latkin’s recent promotion and Dr. Rosol’s recent hiring, they did not receive salary increases in 2019.

Short-Term Incentive Compensation. Our executive officers, along with all of our employees, are eligible to participate in our annual
cash bonus program, which has four primary objectives:

● Attract, retain and motivate top-quality executives who can add significant value to the Company;

● Create an incentive compensation opportunity that is an integral part of the employee’s total compensation program;

● Reward participants’ contributions to the achievement of our business results; and

● Provide an incentive for individuals to achieve corporate objectives that are tied to our strategic goals.

The cash bonus compensation plan provides each participant with an opportunity to receive an annual cash bonus based on our
Company’s performance during the fiscal year. Cash bonus targets for senior executives are determined as a percentage of base salary,
based in part on published proxy data for similar positions at peer group companies. The following are the key provisions of the cash
bonus compensation plan:

● The plan is administered by the CNG Committee, which has the power and authority to establish, adjust, pay or decline to pay
the cash bonus for each participant, including the power and authority to increase or decrease the cash bonus otherwise payable
to a participant. However, the Committee does not have the power to increase, or make adjustments that would have the effect
of increasing, the cash bonus otherwise payable to any executive officer. The Committee has the right to delegate to the Chief
Executive Officer its authority and responsibilities with respect to the cash bonuses payable to employees other than executive
officers.

● All Company employees are eligible to participate, except interns.

● The CNG Committee is responsible for specifying the terms and conditions for earning cash bonuses, including establishing

specific performance objectives.

● As soon as reasonably practicable after the end of each fiscal year, the CNG Committee determines whether and to what extent

each specified business performance objective has been achieved and the amount of the cash bonus to be paid to each
participant.

In June 2018, the Board of Directors established the fiscal 2018 targets and performance measures for all Company employees. For
fiscal 2018, the cash bonus for each executive officer was a function of the designated target bonus amount and certain business
performance objectives, weighted as a percentage of the total target amount. The business performance objectives established for fiscal
2018 were as follows:

● Achievement of various development goals for diagnostic applications of the Company’s Manocept platform, subject to a

maximum 75% reduction of bonus if not achieved, including:

o Complete the Company’s IV dosing study for RA;

o Complete the Company’s IV dosing study for NASH;

o

Initiate an IV dosing study for CV; and

o Complete a development plan for imaging active M1-mediated inflammation, RA diagnosis and/or monitoring.

● Achievement of various development goals for therapeutic applications of the Company’s Manocept platform, subject to a

maximum 15% reduction of bonus if not achieved, including:

o Complete a development plan for treating active M1-mediated inflammation, demonstration for potential partners for

systemic applications;

o Complete a development plan for an orphan disease indication;

o Complete animal testing by two corporate entities for possible partnering; and

o

Pursue new backbone efforts – lower molecular weight, new polymer with range of molecular weights.

 
 
 
 
   
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
45

● Achievement of various development goals for new formulations, subject to a maximum 10% reduction of bonus if not

achieved, including:

o Get a lab up and running, all equipment acquired and on-site;

o

Pursue topical as well as oral formulations with new lower molecular weight agents; and

o Develop a new isotope for PET imaging and fluorescent probe for next generation.

For fiscal 2018, the Board of Directors determined the cash bonus targets for Named Executive Officers as follows:

Named Executive Officer
Jed A. Latkin (a)
Michael M. Goldberg, M.D. (b)
Frederick O. Cope, Ph.D. (c)
Michael S. Rosol, Ph.D. (d)

Target Cash
Bonus
(% of Salary)  

Target Cash
Bonus
($ Amount)

75.0%  $
75.0%   
35.0%   
35.0%   

356,250 
300,000 
97,696 
71,750 

(a) Mr. Latkin was promoted to Chief Executive Officer effective October 1, 2018. Any cash bonus awarded to Mr. Latkin related

to fiscal 2018 will be pro-rated based on the weighted average amount of his base salary during 2018.

(b) Dr. Goldberg separated from the Company effective August 14, 2018. Any bonus awarded for fiscal 2018 will be paid to Dr.
Goldberg in accordance with his termination agreement. Additional information regarding Dr. Goldberg’s termination
agreement, dated August 14, 2018, is disclosed in “Post-Employment Compensation,” below.

(c) Dr. Cope separated from the Company effective October 30, 2018 and therefore will not be paid a bonus for fiscal 2018.
(d) Dr. Rosol commenced employment with the Company effective December 17, 2018. Any bonus awarded for fiscal 2018 will

be pro-rated from Dr. Rosol’s effective date of employment.

On February 7, 2019, the Board of Directors determined the amounts to be awarded as 2018 bonuses to all employees, including the
Named Executive Officers. The Board of Directors recognized the achievement of all 2018 bonus goals and thus awarded bonuses at
100% of target amounts for all employees.

Long-Term Incentive Compensation. All Company employees are eligible to receive equity awards in the form of stock options or
restricted stock. Equity instruments awarded under the Company’s equity-based compensation plan are based on the following criteria:

● Analysis of competitive information for comparable positions;

● Evaluation of the value added to the Company by hiring or retaining specific employees; and

● Each employee’s long-term potential contributions to our Company.

Although equity awards may be made at any time as determined by the CNG Committee, they are generally made to all full-time
employees once per year or on the recipient’s hire date in the case of new-hire grants.

Equity-based compensation is an effective method to align the interests of stockholders and management and focus management’s
attention on long-term results. When awarding equity-based compensation the CNG Committee considers the impact the participant can
have on our overall performance, strategic direction, financial results and stockholder value. Therefore, equity awards are primarily
based upon the participant’s position in the organization, competitive necessity and individual performance. Stock option awards have
vesting schedules over several years to promote long-term performance and retention of the recipient, and restricted stock awards may
include specific performance criteria for vesting or vest over a specified period of time. We did not grant equity awards to our Named
Executive Officers in 2018.

Other Benefits and Perquisites. The Named Executive Officers are generally eligible to participate in other benefit plans on the same
terms as other employees. These plans include medical, dental, vision, disability and life insurance benefits, and our 401(k) retirement
savings plan (the “401(k) Plan”).

Our paid time off (“PTO”) policy allows employees to carry up to 40 hours of unused PTO time forward to the next fiscal year. Any
unused PTO time in excess of the amount eligible for rollover is generally forfeited.

Our Named Executive Officers are considered “key employees” for purposes of Internal Revenue Code (“IRC”) Section 125 Plan non-
discrimination testing. Based on such non-discrimination testing, we determined that our Section 125 Plan was “top-heavy” for fiscal
2017. Accordingly, our key employees were ineligible to participate in the Section 125 Plan and were unable to pay their portion of
medical, dental, and vision premiums on a pre-tax basis during fiscal 2017. As a result, the Company reimbursed its key employees an
amount equal to the lost tax benefit. For fiscal 2018, we have determined that our Section 125 Plan is no longer “top-heavy.”
Accordingly, our key employees are eligible to participate in the Section 125 Plan and may pay their portion of medical, dental and
vision premiums on a pre-tax basis beginning January 1, 2018.

46

 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
We pay group life insurance premiums on behalf of all employees, including the Named Executive Officers. The benefit provides life
insurance coverage at two times the employee’s annual salary plus $10,000, up to a maximum of $400,000.

We also pay group long-term disability insurance premiums on behalf of all employees, including the Named Executive Officers. The
benefit provides long-term disability insurance coverage at 60% of the employee’s annual salary, up to a maximum of $10,000 per
month, beginning 180 days after the date of disability and continuing through age 65.

401(k) Retirement Plan. All employees are given an opportunity to participate in our 401(k) Plan, following a new-hire waiting period.
The 401(k) Plan allows participants to have pre-tax amounts withheld from their pay and provides for a discretionary employer
matching contribution (currently, a 40% match up to 5% of salary in the form of our common stock). Participants may invest their
contributions in various fund options, but are prohibited from investing their contributions in our common stock. Participants are
immediately vested in both their contributions and Company matching contributions. The 401(k) Plan qualifies under section 401 of the
Internal Revenue Code, which provides that employee and company contributions and income earned on contributions are not taxable to
the employee until withdrawn from the Plan, and that we may deduct our contributions when made.

Employment Agreements

Jed A. Latkin. Mr. Latkin is employed under a 24-month employment agreement effective through September 30, 2020. The
employment agreement provides for an annual base salary of $475,000. For the calendar year ending December 31, 2018, the CNG
Committee determined that the maximum bonus payment to Mr. Latkin would be $356,250.

Mr. Latkin’s employment agreement also provides for post-employment compensation based on the reason for termination:

●

●

●

●

For Cause – All salary, benefits and other payments shall cease at the time of termination, and the Company shall have no
further obligations to Mr. Latkin.

Resignation – All salary, benefits and other payments shall cease at the time of termination, and the Company shall have no
further obligations to Mr. Latkin, except that the Company shall pay the value of any accrued but unused PTO, and the
amount of all accrued but previously unpaid salary through the date of termination.

Death – All salary, benefits and other payments shall cease at the time of death, provided, however, that the Company shall
pay such other benefits required to be paid or provided to Mr. Latkin’s estate under any plan, program, policy, practice,
contract, or arrangement in which Mr. Latkin is eligible to receive such payments or benefits from the Company, for the
longer of 12 months or the full unexpired term of the employment agreement. The Company shall also pay to Mr. Latkin’s
estate the value of any accrued but unused PTO and the amount of any accrued but previously unpaid salary through the
date of death.

Disability – All salary, benefits and other payments shall cease at the time of termination due to disability, provided,
however, that the Company shall pay such other benefits required to be paid or provided to Mr. Latkin under any plan,
program, policy, practice, contract, or arrangement in which Mr. Latkin is eligible to receive such payments or benefits from
the Company, for the longer of 12 months or the full unexpired term of the employment agreement. In addition, the
Company will pay the balance of Mr. Latkin’s regular salary not replaced by disability insurance coverage for six months
following the date of disability. The Company shall also pay to Mr. Latkin the value of any accrued but unused PTO and the
amount of any accrued but previously unpaid salary through the date of such termination.

● Without Cause or by Mr. Latkin for Good Reason – The Company shall pay the value of any accrued but unused PTO, and
the amount of all accrued but previously unpaid salary through the date of termination. In addition, the Company will pay a
severance equal to base salary in effect at the time of termination during the period of time from the date of termination
through the date that is 12 months following termination, plus an additional two months for every fully completed year of
employment (the “Severance Period”). The Company will also pay the unpaid bonus, if any, for the year in which the
termination occurs, prorated to the date of termination. In addition, certain share options shall vest immediately and shall be
exercisable for the Severance Period (but not beyond the original expiration date). The Company will also pay such other
benefits required to be paid or provided to Mr. Latkin under any plan, program, policy, practice, contract, or arrangement in
which Mr. Latkin is eligible to receive such payments or benefits from the Company, for the duration of the Severance
Period.

●

●

End of Term – The Company shall pay the value of any accrued but unused PTO, and the amount of all accrued but
previously unpaid salary through the date of termination.

Change in Control – The Company will pay a severance equal to: (1) base salary in effect at the time of termination during
the Severance Period; (2) a bonus equal to one year of base salary in effect at the time of termination, plus an additional two
months of base salary for every fully completed year of employment and a bonus equal to the maximum allowable bonus in
effect at the time of termination, plus an additional two months of prorated bonus for every fully completed year of
employment; and (3) without duplication to (2), the unpaid bonus, if any, for the year in which the termination occurs,
prorated to the date of termination. In addition, certain share options shall vest immediately.

47

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Report of Compensation, Nominating and Governance Committee

The CNG Committee is responsible for establishing, reviewing and approving the Company’s compensation philosophy and policies,
reviewing and making recommendations to the Board regarding forms of compensation provided to the Company’s directors and
officers, reviewing and determining cash and equity awards for the Company’s officers and other employees, and administering the
Company’s equity incentive plans.

In this context, the CNG Committee has reviewed and discussed with management the Compensation Discussion and Analysis included
in this annual report on Form 10-K. In reliance on the review and discussions referred to above, the CNG Committee recommended to
the Board, and the Board has approved, that the Compensation Discussion and Analysis be included in this annual report on Form 10-K
for filing with the SEC.

The Compensation, Nominating
and Governance Committee

Claudine Bruck, Ph.D. (Chair)
Adam D. Cutler
Y. Michael Rice
S. Kathryn Rouan, Ph.D.

Compensation, Nominating and Governance Committee Interlocks and Insider Participation

The current members of our CNG Committee are: Claudine Bruck, Ph.D. (Chair), Adam D. Cutler, Y. Michael Rice, and S. Kathryn
Rouan, Ph.D. None of these individuals were at any time during the fiscal year ended December 31, 2018, or at any other time, an
officer or employee of the Company.

No director who served on the CNG Committee during 2018 had any relationships requiring disclosure by the Company under the
SEC’s rules requiring disclosure of certain relationships and related-party transactions. None of the Company’s executive officers
served as a director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity,
the executive officers of which served as a director of the Company or member of the CNG Committee during 2018.

48

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summary Compensation Table

The following table sets forth certain information concerning the annual and long-term compensation of our Named Executive Officers
for the last three fiscal years.

Summary Compensation Table for Fiscal 2018

Salary

Stock
Awards

(a)
Option
Awards

(b)
Non-Equity
Incentive Plan
Compensation   

(c)
All Other
Compensation   

  $

362,500    $

—    $

—    $

271,875    $

5,500    $

Total
Compensation 
639,875 

316,458     

—     

125,833     

366,653     

5,429     

814,373 

163,309     

—     

39,992     

—     

—     

203,301 

  $

250,000    $
427,222     

83,077     

—    $
—     

—     

—    $
—     

—     

225,000    $
410,768     

1,017,722    $
8,067     

1,492,722 
846,057 

—     

436     

83,513 

  Year
2018

2017

2016

2018
2017

2016

2018

  $

242,409    $

—    $

—    $

—    $

5,500    $

247,909 

2017

2016

2018
2017
2016

279,130     

279,130     

  $

8,542    $
—     
—     

—     

—     

—    $
—     
—     

—     

—     

—    $
—     
—     

97,969     

6,906     

383,732 

54,710     

6,735     

340,575 

2,949    $
—     
—     

—    $
—     
—     

11,491 
— 
— 

Named Executive
Officer
Jed A. Latkin (d)
Chief Executive
Officer,
Chief Operating
Officer and
Chief Financial
Officer

Michael M. Goldberg
(e)
President and
Chief Executive
Officer

Frederick O. Cope,
Ph.D. (f)
Senior Vice President
and
Chief Scientific
Officer

Michael S. Rosol,
Ph.D. (g)
Chief Medical Officer  

(a) Amount represents the aggregate grant date fair value of stock options in accordance with FASB ASC Topic 718. Assumptions
made in the valuation of option awards are disclosed in Note 1(e) of the Notes to the Consolidated Financial Statements in this
Form 10-K.

(b) Amount represents the total non-equity incentive plan amounts which have been approved by the Board of Directors as of the

date this filing, and are disclosed for the year in which they were earned (i.e., the year to which the service relates).
● On April 25, 2017, the Board of Directors awarded a cash bonus to each of Dr. Goldberg and Mr. Latkin in recognition of

the successful closing of the Company’s sale of certain assets to Cardinal Health 414, LLC, which occurred on March 3,
2017.

● On February 20, 2018, the Board of Directors determined that fifty percent of the 2017 bonus amount payable would be

paid in stock in lieu of cash for all employees except Dr. Goldberg and Mr. Latkin, who will receive one hundred percent of
their bonuses in cash, to be paid following achievement of certain additional goals set by the Board. As such, Dr. Cope was
awarded 135,694 shares of common stock of the Company valued at $0.36 per share, the closing price of Navidea’s
common stock on February 20, 2018. On June 29, 2018, the Board of Directors determined that the remaining fifty percent
of the 2017 bonus amount payable would be paid in stock in lieu of cash for all employees except Dr. Goldberg and Mr.
Latkin. As such, Dr. Cope was awarded 212,390 shares of common stock of the Company valued at $0.23 per share, the
closing price of Navidea’s common stock on June 29, 2018. Since these shares represent incentive compensation earned in
2017, they are reported in this column, and not included in the column “Stock Awards.”

● For fiscal 2016, the Board of Directors determined that a portion of the 2016 bonus amount payable would be paid in stock
in lieu of cash. The portion of the 2016 bonus amount payable in cash is either fifty percent or thirty-three percent, as
determined by the Board of Directors. As such, Dr. Cope, Mr. Klima and Mr. Regan were awarded 70,492, 50,885 and
63,135, respectively, shares of common stock of the Company valued at $0.52 per share, the closing price of Navidea’s
common stock on February 6, 2017. Since these shares represent incentive compensation earned in 2016, they are reported
in this column, and not included in the column “Stock Awards.” The cash portion of the 2016 bonus awards was paid on
March 15, 2017. The Board of Directors did not award bonuses to Dr. Goldberg and Mr. Latkin for 2016.

(c) Amount represents additional compensation as disclosed in the All Other Compensation table below.
(d) Mr. Latkin commenced employment with the Company effective April 21, 2016.
(e) Dr. Goldberg commenced employment with the Company effective September 22, 2016, and separated from the Company

effective August 14, 2018. Additional information regarding Dr. Goldberg’s termination agreement, dated August 14, 2018, is
disclosed in “Post-Employment Compensation,” below.

(f) Dr. Cope separated from the Company effective October 30, 2018.
(g) Dr. Rosol commenced employment with the Company effective December 17, 2018.

49

 
 
 
 
 
 
   
 
   
   
 
 
   
 
   
   
     
     
 
       
     
 
       
       
 
 
   
     
     
 
       
     
 
       
       
 
 
 
   
 
   
 
   
     
     
 
       
     
 
       
       
 
 
 
   
 
   
 
   
     
     
 
       
     
 
       
       
 
 
   
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
All Other Compensation

The following table describes each component of the amounts shown in the “All Other Compensation” column in the Summary
Compensation table above.

All Other Compensation Table for Fiscal 2018

Named Executive Officer
Jed A. Latkin

Michael M. Goldberg, M.D. (c)

Frederick O. Cope, Ph.D.

Michael S. Rosol, Ph.D.

  Year
2018
2017
2016

2018
2017
2016

2018
2017
2016

2018
2017
2016

  Severance    
  $

—    $
—     
—     

  $ 1,012,552    $
—     
—     

  $

  $

—    $
—     
—     

—    $
—     
—     

(a)
Reimbursement
of Additional
Tax Liability
Related to
Insurance
Premiums

(b)
401(k) Plan
Employer
Matching
Contribution    

Total
All Other
Compensation 
5,500 
5,429 
— 

5,500    $
5,400     
—     

5,170    $
5,400     
—     

5,500    $
5,400     
5,300     

—    $
—     
—     

1,017,722 
8,067 
436 

5,500 
6,906 
6,735 

— 
— 
— 

—    $
29     
—     

—    $
2,667     
436     

—    $
1,506     
1,435     

—    $
—     
—     

(a) Amount represents reimbursement of the lost tax benefit due to the ineligibility of our Named Executive Officers to pay their

portion of medical, dental, and vision premiums on a pre-tax basis under our IRC Section 125 Plan.

(b) Amount represents the value of the common stock accrued for contribution to the Named Executive Officer’s account in our

401(k) Plan as calculated on a quarterly basis.

(c) Dr. Goldberg separated from the Company effective August 14, 2018.  Severance amount includes $978,000 of severance plus
$34,552 representing payment for 16 months of insurance premiums, in accordance with his termination agreement. Additional
information regarding Dr. Goldberg’s termination agreement, dated August 14, 2018, is disclosed in “Post-Employment
Compensation,” below.

50

 
 
 
 
 
   
 
 
 
   
 
 
   
 
   
     
     
 
     
 
       
 
 
 
 
   
 
 
   
 
   
     
     
 
     
 
       
 
 
 
 
   
 
 
   
 
   
     
     
 
     
 
       
 
 
 
 
   
 
 
   
 
 
 
 
 
Chief Executive Officer Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Item 402(u) of
Regulation S-K, we are providing the following information with respect to our last completed fiscal year. The pay ratio information
provided below is a reasonable estimate calculated in a manner consistent with applicable SEC rules.

For 2018, we calculated (i) the annual total compensation of our Chief Executive Officer, (ii) the median of the annual total
compensation of all of our employees other than the Chief Executive Officer, and (iii) the ratio of the annual total compensation of our
Chief Executive Officer to the median of the annual total compensation of all other employees, as follows:

●

●

●

The annual total compensation of our CEO, as reported in the Summary Compensation Table, was $639,875;

The median of the annual total compensation of all of our employees, excluding the Chief Executive Officer, was $99,308;
and

The ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other
employees was 6.4 to 1.

In determining the pay ratio information provided above, we first identified our median employee for 2018 by using the following
methodology:

● We selected December 31, 2018 as the date upon which we would identify our median employee, and we compiled a list of

all full-time, part-time and temporary employees who were employed on that date.

● We used base pay as a consistently applied compensation measure to identify our median employee from the employees on

the list.

Once our median employee was identified in the manner described above, we calculated the annual total compensation of the median
employee using the same methodology that we used to determine the annual total compensation of the CEO, as reported in the
Summary Compensation Table.

51

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Post-Employment Compensation

The following table sets forth the expected benefit to be received by our Chief Executive Officer in the event of his termination
resulting from various scenarios, assuming a termination date of December 31, 2018 and a stock price of $0.10, our closing stock price
on December 31, 2018.

Jed A. Latkin

  For Cause    Resignation    Death     Disability    

Without
Cause

End of
Term    

Change in
Control

Cash payments:

Severance (a)
Accrued bonus (b)
Disability supplement (c)
Paid time off (d)
2018 401(k) match (e)
Continuation of benefits (f)
Stock option vesting acceleration (g)
Total

  $

  $

—    $
—     
—     
9,135     
5,500     
—     
—     
14,635    $

—    $
—     
—     
9,135     
5,500     
—     
—     
14,635    $

—    $
—     
—      235,100     
9,135     
5,500     
960     
—     

—    $ 633,333    $
—      271,875     
—     
9,135     
5,500     
—     
—     
15,594    $ 250,694    $ 919,843    $

9,135     
5,500     
960     
—     

—    $1,741,667 
271,875 
—     
— 
—     
9,135 
9,135     
5,500 
5,500     
— 
—     
— 
—     
14,635    $2,028,176 

(a) Severance amounts are pursuant to Mr. Latkin’s employment agreement.
(b) Amount represents accrued but unpaid bonus as of December 31, 2018.
(c) During the first 6 months of disability, the Company will supplement disability insurance payments to Mr. Latkin to achieve

100% salary replacement. As of December 31, 2018, the Company’s short-term disability insurance policy pays $100 per week
for a maximum of 24 weeks.

(d) Amount represents the value of 40 hours of accrued but unused vacation time as of December 31, 2018.
(e) Amount represents the value of 18,795 shares of Company stock which was accrued during 2018 as the Company’s 401(k)

matching contribution but was unissued as of December 31, 2018.

(f) Amount represents 21 months of dental insurance premiums at rates in effect at December 31, 2018.
(g) Pursuant to Mr. Latkin’s stock option agreements, all unvested stock options outstanding will vest upon termination without
cause or a change in control. Amount represents the value of the stock at $0.10, the closing price of the Company’s stock on
December 31, 2018, less the exercise price of the options. Amount does not include stock options with an exercise price higher
than $0.10, the closing price of the Company’s stock on December 31, 2018.

Michael M. Goldberg, M.D.

Effective August 14, 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 Agreement, with the intent of entering into one
or more additional Definitive Agreements, which set forth the terms of his separation from service. The Agreement provides that Dr.
Goldberg will be entitled to receive a severance of $978,000 payable in equal installments over two years, along with a one-time
payment of approximately $35,000 which represents the cost of continuing his existing health care coverage for a period of 16
months. The Agreement also provides that Dr. Goldberg will be entitled to 23.5 million shares of common stock of Navidea,
representing in part payment of accrued bonuses and payment of the balance of the Platinum Note. A portion of the 23.5 million 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 Note to a party other than Dr. Goldberg. Further, the Agreement provides that the
Company’s subsidiary, MT, will 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. On November 20, 2018, the Company issued 18.5 million shares of common stock of
Navidea to Dr. Goldberg, 5 million of which were placed in escrow in accordance with the Agreement. As of the date of filing of this
Annual Report on Form 10-K, the Definitive Agreements have not yet been signed.

On February 20, 2019, Navidea filed a complaint against Dr. Goldberg in the United States District Court for the Southern District of
New York, alleging breach of the Agreement, as well as a breach of the covenant of good faith and fair dealing and to obtain a
declaratory judgment that Navidea’s performance under the Agreement is excused and that Navidea is entitled to terminate the
Agreement as a result of Dr. Goldberg’s actions.

On March 7, 2019, Dr. Goldberg filed a complaint against Navidea and MT in the United States District Court for the Southern District
of New York. The Complaint alleges a breach of contract claim against both Navidea and MT for failure to pay to Dr. Goldberg funds
allegedly due to him under the Platinum Note. The Complaint further alleges a breach of contract claim against Navidea due to
Navidea’s failure to issue 23.5 million shares to Dr. Goldberg, to issue MT Super Voting Common Stock, by removing Dr. Greene from
the MT Board of Directors, by appointing Mr. Rice and Dr. Bruck to the MT Board of Directors, and by terminating Dr. Goldberg as
CEO of MT.

Tax Consequences

In making compensation decisions in 2017 and prior years, the CNG Committee often sought to structure certain incentive awards with
the intention that they would be exempt from the $1 million deduction limit as “qualified performance-based compensation.” However,
the committee never adopted a policy that would have required all compensation to be deductible, because the committee wanted to
preserve the ability to pay compensation to our executives in appropriate circumstances, even if such compensation would not be
deductible under Section 162(m) of the Internal Revenue Code (“Section 162(m)”).

 
 
 
 
 
 
   
 
     
     
 
       
       
       
       
       
 
   
   
   
   
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
52

 
The Tax Cuts and Jobs Act, which was enacted on December 22, 2017, included a number of significant changes to Section 162(m),
such as the repeal of the qualified performance-based compensation exemption and the expansion of the definition of “covered
employees” (for example, by including the chief financial officer and certain former named executive officers as covered employees).
As a result of these changes, except as otherwise provided in the transition relief provisions of the Tax Cuts and Jobs Act, compensation
paid to any of our covered employees generally will not be deductible in 2018 or future years, to the extent that it exceeds $1 million.

Grants of Plan-Based Awards

The following table sets forth certain information about plan-based awards that we made to the Named Executive Officers during fiscal
2018. For information about the plans under which these awards were granted, see the discussion under “Short-Term Incentive
Compensation” and “Long-Term Incentive Compensation” in the “Compensation Discussion and Analysis” section above.

Grants of Plan-Based Awards Table for Fiscal 2018

Estimated Future
Payouts Under
Non-Equity Incentive
Plan Awards (a)

Estimated Future
Payouts Under
Equity Incentive
Plan Awards

All
Other
Stock
Awards:
Number
of

Shares    

All Other
Option
Awards:
Number of
Securities
Underlying   

Exercise
Price of
Option    

Grant
Date
Fair
Value
of Stock
and
Option  

Named
Executive
Officer
Jed A. Latkin

Michael M.
Goldberg, M.D.

Frederick O.
Cope, Ph.D.

Michael S. Rosol,
Ph.D.

Grant
Date     Threshold     Maximum    Threshold    Maximum    of Stock     Options

    N/A    $

—    $ 271,875     

—     

—     

—     

    Awards     Awards  
—    $

—    $

—(b)

    N/A    $

—    $ 225,000     

—     

—     

—     

—    $

—    $

—(c)

    N/A    $

—    $

—     

—     

—     

—     

—    $

—    $

—(d)

    N/A    $

—    $

2,949     

—     

—     

—     

—     

—    $

—(e)

(a) The threshold amount reflects the possibility that no cash bonus awards will be payable. The maximum amount reflects the

cash bonus awards payable if the Board of Directors, in their discretion, awards the maximum cash bonus.

(b) Mr. Latkin was promoted to Chief Executive Officer effective October 1, 2018. The estimated maximum cash bonus payout to
Mr. Latkin related to fiscal 2018 has been pro-rated based on the weighted average amount of his base salary during 2018.

(c) Dr. Goldberg separated from the Company during 2018. Any bonus awarded for fiscal 2018 will be paid to Dr. Goldberg in
accordance with his termination agreement.  Additional information regarding Dr. Goldberg’s termination agreement, dated
August 14, 2018, is disclosed in “Post-Employment Compensation,” above. 

(d) Dr. Cope separated from the Company during 2018, and as such will not receive a cash bonus related to fiscal 2018.
(e) The estimated maximum cash bonus payout to Dr. Rosol related to fiscal 2018 has been pro-rated from December 17, 2018, his

effective date of employment.

53

 
 
 
 
 
 
 
   
 
   
   
   
 
 
     
     
 
       
     
 
     
 
       
     
 
     
 
     
 
 
 
     
     
 
       
     
 
     
 
       
     
 
     
 
     
 
 
 
     
     
 
       
     
 
     
 
       
     
 
     
 
     
 
 
 
 
 
 
 
 
 
Outstanding Equity Awards

The following table presents certain information concerning outstanding equity awards held by the Named Executive Officers as of
December 31, 2018.

Outstanding Equity Awards Table at Fiscal 2018 Year-End

Option Awards

Stock Awards

Number of Securities
Underlying Unexercised
Options (#)

  Exercisable     Unexercisable   

Option
Exercise
Price

Option
Expiration
Date

45,000     
20,000     
—     
—     
—     

—    $
—    $
333,334    $
333,333    $
333,333    $

1.50  4/20/2026  
1.00  10/14/2026  
5/4/2027  
0.65 
5/4/2027  
0.75 
5/4/2027  
1.00 

  Note  
(a)
(b)
(c)
(d)
(e)

Market
Value of
Shares
of

Equity Incentive
Plan Awards

Number
of
Shares of
Stock
that
Have Not
Vested  

Stock 
that
Have
Not
Vested  

Number
of
Unearned
Shares

Market
Value
of
Unearned
Shares

  Note  

Named Executive
Officer
Jed A. Latkin

Michael M.
Goldberg, M.D. (f)

Frederick O. Cope,
Ph.D. (g)

Michael S. Rosol,
Ph.D. (h)

(a) Options were granted 4/20/2016 and vested as to one-sixth on the 20th day of each of the first six months following the date of

grant.

(b) Options were granted 10/14/2016 and vested as to one-half on the 20th day of each of the first two months following the date of

grant.

(c) Options were granted 5/4/2017 and vest 100% when both of the following conditions have been met: May 4, 2017 and a

closing market price of the Company’s common stock of at least $0.85.

(d) Options were granted 5/4/2017 and vest 100% when both of the following conditions have been met: December 31, 2017 and a

closing market price of the Company’s common stock of at least $1.00.

(e) Options were granted 5/4/2017 and vest 100% when both of the following conditions have been met: December 31, 2018 and a

closing market price of the Company’s common stock of at least $1.25.

(f) Dr. Goldberg separated from the Company effective August 14, 2018. Dr. Goldberg did not hold any stock options or restricted

stock on the date of separation.

(g) Dr. Cope separated from the Company effective October 30, 2018. All of Dr. Cope’s unexercised stock options expired on the

date of separation.

(h) Dr. Rosol commenced employment with the Company effective December 17, 2018. As of December 31, 2018, he did not hold

any stock options or restricted stock.

Options Exercised and Stock Vested

The following table presents, with respect to the Named Executive Officers, certain information about option exercises and restricted
stock vested during fiscal 2018.

Options Exercised and Stock Vested Table for Fiscal 2018

Named Executive Officer
Jed. A. Latkin

Michael M. Goldberg, M.D.
Frederick O. Cope, Ph.D.
Michael S. Rosol, Ph.D.

Option Awards

Stock Awards

Number of
Shares
Acquired
on Exercise    

Value
Realized on
Exercise

Number of
Shares
Acquired
on Vesting    

Value
Realized
on
Vesting

—    $
—    $

—    $
—    $

54

—     
—     

—     
—     

—    $
—    $

—    $
—    $

Note

—   
—   

—   
—   

 
 
 
 
 
 
 
 
 
 
 
     
 
   
   
   
 
 
 
 
 
   
  
   
   
   
   
 
 
   
  
   
   
   
   
 
 
   
  
   
   
   
   
 
 
   
  
   
   
   
   
 
 
   
  
   
   
   
   
 
 
     
       
     
 
   
   
   
   
   
   
   
 
     
       
     
 
   
   
   
   
   
   
   
 
 
     
       
     
 
   
   
   
   
   
   
   
 
     
       
     
 
   
   
   
   
   
   
   
 
 
     
       
     
 
   
   
   
   
   
   
   
 
     
       
     
 
   
   
   
   
   
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
 
 
   
 
 
   
 
   
 
   
 
   
 
 
Compensation of Non-Employee Directors

Each non-employee director received an annual cash retainer of $50,000 during the fiscal year ended December 31, 2018. The Chair of
the Company’s Board of Directors received an additional annual retainer of $30,000, the Chair of the Audit Committee received an
additional annual retainer of $10,000, and the Chair of the CNG Committee received an additional annual retainer of $7,500 for their
services in those capacities during 2018. Non-Chair members of the Audit Committee received an additional annual retainer of $2,500
and non-Chair members of the CNG Committee received an additional annual retainer of $2,500. We also reimbursed non-employee
directors for travel expenses for meetings attended during 2018.

Each non-employee director also received 50,000 shares of restricted stock and 50,000 options to purchase stock at $0.75 per share
during 2018 as a part of the Company’s annual stock incentive grants, in accordance with the provisions of the Navidea
Biopharmaceuticals, Inc. 2014 Stock Incentive Plan, except for Mr. Cutler and Dr. Rouan, who received their 2018 stock incentive
grants in January 2019. The restricted stock and stock options granted will vest on the first anniversary of the date of grant.

The aggregate number of equity awards outstanding at February 28, 2019 for each Director is set forth in the footnotes to the beneficial
ownership table provided in Part III, Item 12 of this Form 10-K. Directors who are also officers or employees of Navidea do not receive
any compensation for their services as directors.

The CNG Committee has noted that the total compensation of our Board of Directors, including cash and equity awards, is at
approximately the 50th percentile for our peer group of companies, while the total compensation of our Board Committee members is
less than half of the competitive market rate.

The following table sets forth certain information concerning the compensation of non-employee Directors for the fiscal year ended
December 31, 2018. 

Name
Claudine Bruck, Ph.D. (f)
Adam D. Cutler (g)
Mark I. Greene, M.D., Ph.D. (h)
Y. Michael Rice
S. Kathryn Rouan, Ph.D. (g)
Eric K. Rowinsky, M.D. (i)

(a)
Fees
  Earned or    
Paid in
Cash

(b),(c)
    Option
    Awards

(d),(e)
Stock
    Awards

  $

47,111    $
4,212     
36,486     
73,750     
4,212     
45,000     

9,659    $
—     
9,226     
9,226     
—     
9,226     

All Other

Total

    Compensation     Compensation 
75,920 
—    $
4,212 
—     
63,667 
—     
100,931 
—     
4,212 
—     
72,181 
—     

19,150    $
—     
17,955     
17,955     
—     
17,955     

(a) Amount represents fees earned during the fiscal year ended December 31, 2018 (i.e., the year to which the service relates).
Quarterly retainers and meeting attendance fees are paid during the quarter following the quarter in which they are earned.

(b) Amount represents the aggregate grant date fair value in accordance with FASB ASC Topic 718.
(c) During the year ended December 31, 2018, the non-employee directors were issued an aggregate of 200,000 options to

purchase common stock which vest as to 100% of the shares on the first anniversary of the date of grant. At December 31,
2018, the non-employee directors held an aggregate of 150,000 options to purchase common stock. Mr. Rice held 100,000
options, and Dr. Bruck held 50,000 options to purchase shares of common stock.

(d) Amount represents the aggregate grant date fair value in accordance with FASB ASC Topic 718.
(e) During the year ended December 31, 2018, the non-employee directors were issued an aggregate of 200,000 shares of

restricted stock which vest as to 100% of the shares on the first anniversary of the date of grant. At December 31, 2018, the
non-employee directors held an aggregate of 100,000 shares of unvested restricted stock. Mr. Rice and Dr. Bruck each held
50,000 shares of unvested restricted stock.

(f) Dr. Bruck was appointed to the Board of Directors effective March 15, 2018.
(g) Mr. Cutler and Dr. Rouan were appointed to the Board of Directors effective December 1, 2018, but did not receive their 2018

stock incentive grants until January 2019.

(h) Dr. Greene resigned from the Board of Directors effective August 14, 2018. His unvested stock options and restricted stock

were forfeited upon his resignation.

(i) Dr. Rowinsky retired from the Board of Directors effective March 31, 2018. All of his unvested stock options and restricted
stock vested upon his retirement, and his stock options are exercisable until June 30, 2019. The Company also paid Dr.
Rowinsky Board and committee fees through June 30, 2018 in an aggregate amount of $45,000.

55

 
 
 
 
 
 
 
 
 
 
     
 
     
 
     
 
     
 
 
 
 
     
 
     
 
     
 
     
 
 
 
   
     
 
     
 
 
 
 
   
   
   
 
 
   
   
   
   
   
 
 
 
 
 
 
 
 
 
 
 
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information

The following table sets forth additional information as of December 31, 2018, concerning shares of our common stock that may be
issued upon the exercise of options and other rights under our existing equity compensation plans and arrangements, divided between
plans approved by our stockholders and plans or arrangements not submitted to our stockholders for approval. The information includes
the number of shares covered by, and the weighted average exercise price of, outstanding options and other rights and the number of
shares remaining available for future grants excluding the shares to be issued upon exercise of outstanding options, warrants, and other
rights.

(3)
Number of
Securities
Remaining
Available
for Issuance
Under
Equity
Compensation
Plans
(Excluding
Securities
Reflected
in Column (1))  

(1)
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants
and Rights

(2)
Weighted-
Average
Exercise Price of
Outstanding
Options,
Warrants
and Rights

3,158,169    $
—     
3,158,169    $

1.24     
—     
1.24     

10,293,824 
— 
10,293,824 

Plan Category
Equity compensation plans approved by security holders (a)
Equity compensation plans not approved by security holders
Total

(a) Our stockholders ratified the 2014 Stock Incentive Plan (the “2014 Plan”) at the 2014 Annual Meeting of Stockholders held on
July 17, 2014, and amended the 2014 Plan at the 2018 Annual Meeting of Stockholders held on August 16, 2018. The total
number of shares available for awards under the 2014 Plan shall not exceed 15,000,000 shares, plus any shares subject to
outstanding awards granted under prior plans and that expire or terminate for any reason. Although instruments are still
outstanding under the Fourth Amended and Restated 2002 Stock Incentive Plan (the “2002 Plan”), the plan has expired and no
new grants may be made from it. The total number of securities to be issued upon exercise of outstanding options includes
2,454,555 issued under the 2014 Plan and 703,614 issued under the 2002 Plan.

56

 
 
 
 
 
 
   
   
   
   
   
 
 
 
Security Ownership of Principal Stockholders, Directors, Nominees and Executive Officers and Related Stockholder Matters

The following table sets forth, as of February 28, 2019, certain information with respect to the beneficial ownership of shares of our
common stock by: (i) each person known to us to be the beneficial owner of more than 5% of our outstanding shares of common stock,
(ii) each director or nominee for director of our Company, (iii) each of the Named Executive Officers (see “Executive Compensation –
Summary Compensation Table”), and (iv) our directors and executive officers as a group.

Beneficial Owner
Claudine Bruck, Ph.D.
Frederick O. Cope, Ph.D.
Adam D. Cutler
Michael M. Goldberg, M.D.
Jed A. Latkin
Y. Michael Rice
Michael S. Rosol, Ph.D.
S. Kathryn Rouan, Ph.D.
All directors and executive officers as a group (6 persons)
Cardinal Health, Inc.
John K. Scott, Jr.
Platinum-Montaur Life Sciences, LLC

Number of
Shares
Beneficially
Owned (*)

Percent
of Class (**)

(a)    
100,000 
(b)    
594,649 
(c)    
— 
(d)    
24,421,023 
(e)    
127,230 
(f)    
200,000 
(g)    
41,667 
(h)    
— 
468,897  (i)(n)   
(j)    
(k)    
(l)    

10,000,000 
22,107,207 
18,329,799 

—  (m)
—  (m)
—  (m)

12.2% 

—  (m)
—  (m)
—  (m)
—  (m)
—%(m)
5.0% 
11.0% 
9.1% 

(*) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission which generally
attribute beneficial ownership of securities to persons who possess sole or shared voting power and/or investment power with
respect to those securities. Unless otherwise indicated, voting and investment power are exercised solely by the person named
above or shared with members of such person’s household.

(**)Percent of class is calculated on the basis of the number of shares outstanding on February 28, 2019, plus the number of shares

the person has the right to acquire within 60 days of February 28, 2019.

(a) This amount includes 50,000 shares issuable upon exercise of options which are exercisable within 60 days, but does not
include 50,000 shares of unvested restricted stock and 50,000 shares issuable upon exercise of options which are not
exercisable within 60 days.

(b) Dr. Cope separated from the Company effective October 30, 2018. This amount is based on Dr. Cope’s most recent SEC
ownership filings as well as the Company’s best knowledge and belief. This amount includes 32,373 shares in Dr. Cope’s
account in the 401(k) Plan. All of Dr. Cope’s unexercised stock options expired upon his separation from employment.

(c) This amount does not include 100,000 shares of unvested restricted stock and 100,000 shares issuable upon exercise of options

which are not exercisable within 60 days.

(d) Dr. Goldberg separated from the Company effective August 14, 2018. This amount is based on Dr. Goldberg’s most recent

SEC ownership filings as well as the Company’s best knowledge and belief.

(e) This amount includes 65,000 shares issuable upon exercise of options which are exercisable within 60 days and 12,071 shares
in Mr. Latkin’s account in the 401(k) Plan, but does not include 2,000,000 shares issuable upon exercise of options which are
not exercisable within 60 days.

(f) The amount includes 100,000 shares issuable upon exercise of options which are exercisable within 60 days, but does not
include 50,000 shares of unvested restricted stock and 50,000 shares issuable upon exercise of options which are not
exercisable within 60 days.

(g) This amount includes 41,667 shares issuable upon exercise of options which are exercisable within 60 days, but does not

include 83,333 shares issuable upon exercise of options which are not exercisable within 60 days.

(h) This amount does not include 100,000 shares of unvested restricted stock and 100,000 shares issuable upon exercise of options

which are not exercisable within 60 days.

(h) This amount does not include 100,000 shares of unvested restricted stock and 100,000 shares issuable upon exercise of options

which are not exercisable within 60 days.

(i) This amount includes 256,667 shares issuable upon exercise of options which are exercisable within 60 days, and 44,444 shares
held in the 401(k) Plan on behalf of certain officers, but it does not include 300,000 shares of unvested restricted stock and
2,100,000 shares issuable upon the exercise of options which are not exercisable within 60 days. The Company’s Chief
Executive Officer, Chief Operating Officer and Chief Financial Officer, Jed A. Latkin, is the trustee of the Navidea
Biopharmaceuticals, Inc. 401(k) Plan and may, as such, share investment power over common stock held in such plan. Mr.
Latkin disclaims any beneficial ownership of shares held by the 401(k) Plan. The 401(k) Plan holds an aggregate total of
182,017 shares of common stock.

(j) The number of shares beneficially owned is based on a Schedule 13G filed by Cardinal Health, Inc. with the SEC on March 13,
2017. This amount includes 10,000,000 shares of common stock issuable upon exercise of Series NN warrants at an exercise
price of $1.50 per share. The address of Cardinal Health, Inc. is 7000 Cardinal Place, Dublin, OH 43017.

(k) The number of shares beneficially owned is based on a Schedule 13G filed by John K. Scott, Jr. with the SEC on September

24, 2018. The address of John K. Scott, Jr. is 5251 DTC Parkway, Suite 285, Greenwood Village, CO 80111.

(l) The number of shares beneficially owned is based on a Schedule 13D/A filed by Platinum and certain of its affiliates with the

SEC on June 28, 2016. This amount includes (i) 13,964,519 shares of our common stock, and (ii) 4,365,280 shares of common
stock issuable upon exercise of Series LL warrants (the “Series LL Warrants”) at an exercise price of $0.01 per share. The
Series LL Warrants provide that the holder may not exercise any portion of the warrants to the extent that such exercise would
result in the holder and its affiliates together beneficially owning more than 9.99% of the outstanding shares of common stock,
except on 61 days’ prior written notice to Navidea that the holder waives such limitation (the blocker). The address of Platinum

 
 
 
 
 
   
 
 
 
   
   
   
   
   
   
   
   
   
   
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
is c/o Otterbourg P.C., 230 Park Avenue, New York, NY 10169.

(m) Less than one percent.
(n) The address of all directors and executive officers is c/o Navidea Biopharmaceuticals, Inc., 4995 Bradenton Avenue, Suite 240,

Dublin, OH 43017.

57

 
 
 
Item 13. Certain Relationships and Related Transactions, and Director Independence

Certain Relationships and Related Transactions

We adhere to our Code of Business Conduct and Ethics, which states that no director, officer or employee of Navidea should have any
personal interest that is incompatible with the loyalty and responsibility owed to our Company. We adopted a written policy regarding
related party transactions in December 2015. When considering whether to enter into or ratify a related party transaction, the Audit
Committee considers a variety of factors including, but not limited to, the nature and type of the proposed transaction, the potential
value of the proposed transaction, the impact on the actual or perceived independence of the related party and the potential value to the
Company of entering into such a transaction. All proposed transactions with a potential value of greater than $120,000 must be approved
or ratified by the Audit Committee.

SEC disclosure rules regarding transactions with related persons require the Company to provide information about transactions with
directors and executive officers as a related persons, even though they may not have been related persons at the time the Company
entered into the transactions described below.

Dr. Michael Goldberg, our former President and Chief Executive Officer, previously managed a portfolio of funds for Platinum-
Montaur Life Sciences LLC (“Platinum-Montaur”), an affiliate of Platinum Management (NY) LLC, Platinum Partners Value Arbitrage
Fund L.P. (“PPVA”), Platinum Partners Liquid Opportunity Master Fund L.P., Platinum Liquid Opportunity Management (NY) LLC,
and Montsant Partners LLC (collectively, “Platinum”), from May 2007 until December 2013. In 2011, he made an initial investment of
$1.5 million in PPVA as a passive investor. Dr. Goldberg believes his current investment balance is approximately $1.4 million after
giving effect to prior redemptions and reinvestments. Dr. Goldberg was not a member of the management of any of the Platinum
entities; rather he solely had control over the trading activities of a portfolio of health care investments from funds allocated to him from
the Platinum funds. Dr. Goldberg was responsible for all investments made by Platinum in the Company and for the trading in the
Company’s securities up until he joined the Company’s Board of Directors in November 2013, at which time he relinquished all control
over the trading of the Company’s securities held by all of the Platinum entities. On December 13, 2013, Dr. Goldberg formally
separated from Platinum and had no further role in managing their health care portfolio. As part of his separation from Platinum, Dr.
Goldberg entered into a settlement agreement, dated March 28, 2014, and amended on June 11, 2015, with PPVA pursuant to which Dr.
Goldberg was entitled to receive a beneficial ownership interest in 15% of (1) all securities held by Platinum at the time of his separation
from Platinum which included, without limitation, warrants to purchase the Company’s Common Stock, and (2) the drawn amounts
from the Platinum debt facility. In furtherance of the foregoing, on October 17, 2016, Platinum transferred warrants to acquire an
aggregate of 5,411,850 shares of our Common Stock to Dr. Goldberg, which warrants were exercised in full by Dr. Goldberg on January
17, 2017 resulting in gross proceeds to the Company of $54,119.

In connection with the closing of the Asset Sale to Cardinal Health 414, the Company repaid to Platinum Partners Capital Opportunity
Fund L.P. (“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 were transferred by Platinum-
Montaur to PPCO.

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 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 removed to the United States District Court for the Southern District of New York
(the “District Court”) on December 6, 2017.  An initial pretrial conference was held on January 26, 2018 and a follow up status
conference was held on March 9, 2018, during which the District Court set a briefing schedule and determined that Navidea’s motion to
dismiss was due on April 6, 2018.  The Company filed its motion to dismiss in advance of the filing deadline.  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. On February 26, 2019, the Company filed its brief in
the Second Circuit. It is not known at this time whether the Second Circuit will hold oral argument on this matter or when the Second
Circuit will render its decision.

58

 
 
 
 
 
 
 
 
 
 
Effective August 14, 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 Agreement, with the intent of entering into one
or more additional Definitive Agreements, which set forth the terms of his separation from service. The Agreement provides that Dr.
Goldberg will be entitled to receive a severance of $978,000 payable in equal installments over two years, along with a one-time
payment of approximately $35,000 which represents the cost of continuing his existing health care coverage for a period of 16
months. The Agreement also provides that Dr. Goldberg will be entitled to 23.5 million shares of common stock of Navidea,
representing in part payment of accrued bonuses and payment of the balance of the Platinum Note. A portion of the 23.5 million 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 Note to a party other than Dr. Goldberg.  Further, the Agreement provides that the
Company’s subsidiary, MT, will 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. On November 20, 2018, the Company issued 18.5 million shares of common stock of
Navidea to Dr. Goldberg, 5 million of which were placed in escrow in accordance with the Agreement. As of the date of filing of this
Annual Report on Form 10-K, the Definitive Agreements have not yet been signed.

On February 20, 2019, Navidea filed a complaint against Dr. Goldberg in the United States District Court for the Southern District of
New York, alleging breach of the Agreement, as well as a breach of the covenant of good faith and fair dealing and to obtain a
declaratory judgment that Navidea’s performance under the Agreement is excused and that Navidea is entitled to terminate the
Agreement as a result of Dr. Goldberg’s actions.

On March 7, 2019, Dr. Goldberg filed a complaint against Navidea and MT in the United States District Court for the Southern District
of New York. The Complaint alleges a breach of contract claim against both Navidea and MT for failure to pay to Dr. Goldberg funds
allegedly due to him under the Platinum Note. The Complaint further alleges a breach of contract claim against Navidea due to
Navidea’s failure to issue 23.5 million shares to Dr. Goldberg, to issue MT Super Voting Common Stock, by removing Dr. Greene from
the MT Board of Directors, by appointing Mr. Rice and Dr. Bruck to the MT Board of Directors, and by terminating Dr. Goldberg as
CEO of MT.

Jed A. Latkin, our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, was an independent consultant that
served as a portfolio manager from 2011 through 2015 for two entities, namely Precious Capital and West Ventures, each of which were
during that time owned and controlled, respectively, by PPVA and PPCO. Mr. Latkin was party to a consulting agreement with each of
Precious Capital and West Ventures pursuant to which, as of April 2015, an aggregate of approximately $13 million was owed to him,
which amount was never paid and Mr. Latkin has no information as to the current value. Mr. Latkin’s consulting agreements were
terminated upon his ceasing to be an independent consultant in April 2015 with such entities. During his consultancy, Mr. Latkin was
granted a .5% ownership interest in each of Precious Capital and West Ventures, however, to his knowledge he no longer owns such
interests. In addition, PPVA owes Mr. Latkin $350,000 for unpaid consulting fees earned and expenses accrued in 2015 in respect of
multiple consulting roles with them. Except as set forth above, Mr. Latkin has no other past or present affiliations with Platinum.

Dr. Eric Rowinsky, our former Chairman, was recommended for appointment to the Company’s Board of Directors by Dr. Goldberg at
a time when Dr. Goldberg was affiliated with Platinum and was subsequently elected by the Company’s stockholders to continue to
serve as an independent director. At no time has Dr. Rowinsky been affiliated, or in any way related to, any of the Platinum entities. Dr.
Rowinsky retired from the Company’s Board of Directors effective March 31, 2018.

In March 2015, MT, our previously wholly-owned subsidiary, entered into a Securities Purchase Agreement to sell up to 50 shares of its
Series A Convertible Preferred Stock (“MT Preferred Stock”) and warrants to purchase up to 1,500 common shares of MT (“MT
Common Stock”) to Platinum and Dr. Michael Goldberg (collectively, the “MT Investors”) for a purchase price of $50,000 per unit. A
unit consisted of one share of MT Preferred Stock and 30 warrants to purchase MT Common Stock. Under the agreement, 40% of the
MT Preferred Stock and warrants are committed to be purchased by Dr. Goldberg, and the balance by Platinum. The full 50 shares of
MT Preferred Stock and warrants to be sold under the agreement are convertible into, and exercisable for, MT Common Stock
representing an aggregate 1% interest on a fully converted and exercised basis. Navidea owns the remainder of the MT Common Stock.
On March 11, 2015, definitive agreements with the MT Investors were signed for the sale of the first tranche of 10 shares of MT
Preferred Stock and warrants to purchase 300 shares of MT Common Stock to the MT Investors, with gross proceeds to MT of
$500,000.

In addition, we entered into an exchange agreement with the MT Investors providing them an option to exchange their MT Preferred
Stock for our Common Stock in the event that MT has not completed a public offering with gross proceeds to MT of at least $50 million
by the second anniversary of the closing of the initial sale of MT Preferred Stock, at an exchange rate per share obtained by dividing
$50,000 by the greater of (i) 80% of the twenty-day volume weighted average price per share of our Common Stock on the second
anniversary of the initial closing or (ii) $3.00. To the extent that the MT Investors do not timely exercise their exchange right, we have
the right to redeem their MT Preferred Stock for a price equal to $58,320 per share.

During 2018, the largest aggregate amount of principal outstanding under the Platinum credit facility was $2.2 million, and as of
December 31, 2018, the amount of principal outstanding was $0.

Director Independence

Our Board of Directors has adopted the definition of “independence” as described under the Sarbanes-Oxley Act of 2002 (Sarbanes-
Oxley) Section 301, Rule 10A-3 under the Exchange Act and Section 803A of the NYSE American Company Guide. Our Board of
Directors has determined that Drs. Bruck and Rouan, and Messrs. Cutler and Rice, meet the independence requirements. The Board had
also concluded that Drs. Greene and Rowinsky were independent during the time each served as a director until their departure in 2018.

59

 
 
 
 
 
 
 
 
 
 
 
 
Item 14. Principal Accountant Fees and Services

Audit Fees. The aggregate fees billed and expected to be billed for professional services rendered by Marcum LLP, primarily related to
the audit of the Company’s annual consolidated financial statements for the 2018 fiscal year and the reviews of the financial statements
included in the Company’s Quarterly Reports on Form 10-Q for the 2018 fiscal year were $275,850 (including direct engagement
expenses).

The aggregate fees billed and expected to be billed for professional services rendered by Marcum LLP, primarily related to the audit of
the Company’s annual consolidated financial statements for the 2017 fiscal year, the audit of the Company’s internal control over
financial reporting as of December 31, 2017, and the reviews of the financial statements included in the Company’s Quarterly Reports
on Form 10-Q for the 2017 fiscal year were $342,160 (including direct engagement expenses).

Audit-Related Fees. No fees were billed by Marcum LLP for audit-related services for the 2018 or 2017 fiscal years.

Tax Fees. No fees were billed by Marcum LLP for tax-related services for the 2018 or 2017 fiscal years.

All Other Fees. No fees were billed by Marcum LLP for services other than the audit, audit-related and tax services for the 2018 or
2017 fiscal years.

Pre-Approval Policy. The Audit Committee is required to pre-approve all auditing services and permitted non-audit services (including
the fees and terms thereof) to be performed for the Company by its independent auditor or other registered public accounting firm,
subject to the de minimis exceptions for permitted non-audit services described in Section 10A(i)(1)(B) of the Exchange Act that are
approved by the Audit Committee prior to completion of the audit. The Audit Committee, through the function of the Chairman, has
given general pre-approval for 100% of specified audit, audit-related, tax and other services.

60

 
 
 
 
 
 
 
 
 
PART IV

Item 15. Exhibits, Financial Statement Schedules

The following documents are filed as part of this report:

(1) The following Financial Statements are included in this Annual Report on Form 10-K on the pages indicated below:

Report of Independent Registered Public Accounting Firm – Marcum LLP

Consolidated Balance Sheets as of December 31, 2018 and 2017

Consolidated Statements of Operations for the years ended December 31, 2018 and 2017

Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2018 and 2017

Consolidated Statements of Stockholders’ (Deficit) Equity for the years ended December 31, 2018 and 2017

Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017

Notes to the Consolidated Financial Statements

(2) Financial statement schedules have been omitted because either they are not required or are not applicable or because the

information required to be set forth therein is not material.

61

F-2

F-3

F-4

F-5

F-6

F-7

F-8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3) Exhibits:

Exhibit
Number

3.1

3.2

4.1

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

  Exhibit Description

Amended and Restated Certificate of Incorporation of Navidea Biopharmaceuticals, Inc., as corrected February 18, 1994,
and amended June 27, 1994, July 25, 1995, June 3, 1996, March 17, 1999, May 9, 2000, June 13, 2003, July 29, 2004, June
22, 2005, November 20, 2006, December 26, 2007, April 30, 2009, July 27, 2009, August 2, 2010, January 5, 2012, June
26, 2013 and August 18, 2016) (filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed March 31, 2017,
and incorporated therein by reference).

Amended and Restated By-Laws dated July 21, 1993, as amended July 18, 1995, May 30, 1996, July 26, 2007, and
November 7, 2013 (filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed November 12, 2013, and
incorporated herein by reference).

Amended and Restated Certificate of Designations, Voting Powers, Preferences, Limitations, Restrictions, and Relative
Rights of Series B Cumulative Convertible Preferred Stock (incorporated by reference to Exhibit 4.1 to the Company’s
Current Report on Form 8-K filed June 26, 2013).

Supply and Distribution Agreement, dated November 15, 2007, between the Company and Cardinal Health 414, LLC
(portions of this Exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately
with the Commission) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed
November 21, 2007).

Manufacture and Supply Agreement, dated November 30, 2009, between the Company and Reliable Biopharmaceutical
Corporation (portions of this Exhibit have been omitted pursuant to a request for confidential treatment and have been filed
separately with the Commission) (incorporated by reference to Exhibit 10.1 to the Company’s June 30, 2010 Form 10-Q).

License Agreement, dated December 9, 2011, between AstraZeneca AB and the Company (portions of this Exhibit have
been omitted pursuant to a request for confidential treatment and have been filed separately with the U.S. Securities and
Exchange Commission) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed
April 11, 2012).

Loan Agreement, dated July 25, 2012, between the Company and Platinum-Montaur Life Sciences LLC (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 31, 2012).

Promissory Note, dated July 25, 2012, made by Navidea Biopharmaceuticals, Inc. in favor of Platinum-Montaur Life
Sciences LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed July 31,
2012).

Amendment to Loan Agreement, dated June 25, 2013, between Navidea Biopharmaceuticals, Inc. and Platinum-Montaur
Life Sciences LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K/A filed June
28, 2013).

Amended and Restated Promissory Note, dated June 25, 2013, made by Navidea Biopharmaceuticals, Inc. in favor of
Platinum-Montaur Life Sciences LLC (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form
8-K/A filed June 28, 2013).

Series HH Warrant to purchase common stock of Navidea Biopharmaceuticals, Inc. issued to GE Capital Equity
Investments, Inc., dated June 25, 2013 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on
Form 8-K/A filed June 28, 2013).

Series HH Warrant to purchase common stock of Navidea Biopharmaceuticals, Inc. issued to MidCap Financial SBIC, LP,
dated June 25, 2013 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K/A filed June
28, 2013).

Office Lease, dated August 29, 2013, by and between Navidea Biopharmaceuticals, Inc. and BRE/COH OH LLC (portions
of this Exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the
U.S. Securities and Exchange Commission) (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed September 5, 2013).

Manufacturing Services Agreement, dated September 9, 2013, by and between Navidea Biopharmaceuticals, Inc. and OSO
BioPharmaceuticals Manufacturing, LLC (portions of this Exhibit have been omitted pursuant to a request for confidential
treatment and have been filed separately with the U.S. Securities and Exchange Commission) (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 12, 2013).

62

 
 
 
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
Exhibit
Number

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

10.25

10.26

  Exhibit Description

Director Agreement, dated November 13, 2013, by and between Navidea Biopharmaceuticals, Inc. and Michael M.
Goldberg, M.D. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November
19, 2013).

Second Amendment to Loan Agreement, dated March 4, 2014, between Navidea Biopharmaceuticals, Inc. and Platinum-
Montaur Life Sciences LLC (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed
March 7, 2014).

Second Amended and Restated Promissory Note, dated March 4, 2014, made by Navidea Biopharmaceuticals, Inc. in favor
of Platinum-Montaur Life Sciences LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on
Form 8-K filed March 7, 2014).

Form of Series KK Warrants to purchase common stock of Navidea Biopharmaceuticals, Inc. issued to Oxford Finance
LLC on March 4, 2014 (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed
March 7, 2014).

Amended and Restated License Agreement, dated July 14, 2014, between the Company and the Regents of the University
of California (portions of this Exhibit have been omitted pursuant to a request for confidential treatment and have been filed
separately with the U.S. Securities and Exchange Commission) (incorporated by reference to Exhibit 10.1 to the Company’s
Quarterly Report on Form 10-Q filed August 11, 2014).

License Agreement, dated July 14, 2014, between the Company and the Regents of the University of California (portions of
this Exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the U.S.
Securities and Exchange Commission) (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on
Form 10-Q filed August 11, 2014). 

Navidea Biopharmaceuticals, Inc. 2014 Stock Incentive Plan, adopted July 17, 2014 and amended March 3, 2015
(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed May 11, 2015). ^

Form of Stock Option Agreement under the Navidea Biopharmaceuticals, Inc. 2014 Stock Incentive Plan (incorporated by
reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed November 10, 2014). ^

Form of Restricted Stock Award and Agreement under the Navidea Biopharmaceuticals, Inc. 2014 Stock Incentive Plan
(incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed November 10, 2014). ^

Securities Exchange Agreement, dated November 12, 2014, by and between Navidea Biopharmaceuticals, Inc. and Platinum
Partners Value Arbitrage Fund, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form
8-K filed November 13, 2014).

Employment Agreement between the Company and Thomas J. Klima, dated January 1, 2015 (incorporated by reference to
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed August 10, 2015).^

Securities Exchange Agreement dated as of March 11, 2015 among Macrophage Therapeutics, Inc., Platinum-Montaur Life
Sciences, LLC and Michael Goldberg, M.D. (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report
on Form 10-Q filed May 11, 2015).

Termination Agreement, dated April 21, 2015, by and between Navidea Biopharmaceuticals, Inc. and Alseres
Pharmaceuticals, Inc. (portions of this Exhibit have been omitted pursuant to a request for confidential treatment and have
been filed separately with the U.S. Securities and Exchange Commission) (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed April 27, 2015).

Term Loan Agreement, dated as of May 8, 2015, by and among Navidea Biopharmaceuticals, Inc., as borrower,
Macrophage Therapeutics, Inc. as guarantor, and Capital Royalty Partners II L.P., Capital Royalty Partners II – Parallel
Fund “A” L.P. and Parallel Investment Opportunities Partners II L.P., as lenders (incorporated by reference to Exhibit 10.1
to the Company’s Current Report on Form 8-K/A filed October 9, 2015).

Security Agreement, dated as of May 15, 2015 among Navidea Biopharmaceuticals, Inc., as borrower, Macrophage
Therapeutics, Inc. as guarantor, and Capital Royalty Partners II L.P., Capital Royalty Partners II – Parallel Fund “A” L.P.
and Parallel Investment Opportunities Partners II L.P., as lenders, and Capital Royalty Partners II L.P., as control agent
(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed May 15, 2015).

63

 
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
Exhibit
Number

10.27

10.28

10.29

10.30

10.31

10.32

10.33

10.34

10.35

10.36

10.37

10.38

10.39

10.40

  Exhibit Description

Subordination Agreement, dated as of May 8, 2015, among Platinum-Montaur Life Sciences, LLC, as subordinated
creditor, Capital Royalty Partners II L.P., Capital Royalty Partners II – Parallel Fund “A” L.P. and Parallel Investment
Opportunities Partners II L.P., as senior creditors, and Capital Royalty Partners II L.P., as senior creditor agent, and
consented to by Navidea Biopharmaceuticals, Inc. as borrower (incorporated by reference to Exhibit 10.3 to the Company’s
Current Report on Form 8-K filed May 15, 2015).

Third Amendment to Loan Agreement, dated as of May 8, 2015, by and between Navidea Biopharmaceuticals, Inc, as
borrower, and Platinum-Montaur Life Sciences, LLC, as lender (incorporated by reference to Exhibit 10.4 to the
Company’s Current Report on Form 8-K filed May 15, 2015).

Third Amended and Restated Promissory Note, dated May 8, 2015, made by Navidea Biopharmaceuticals, Inc. in favor of
Platinum-Montaur Life Sciences LLC (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form
8-K filed May 15, 2015).

Securities Exchange Agreement, dated as of August 20, 2015, among the Company, Montsant Partners LLC and Platinum
Partners Value Arbitrage Fund, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form
8-K filed August 26, 2015).

Form of Series LL Warrant issued to Montsant Partners LLC and Platinum Partners Value Arbitrage Fund, L.P.
(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed August 26, 2015).

Amendment 1 to Term Loan Agreement by and among Navidea Biopharmaceuticals, Inc., as borrower, and Capital Royalty
Partners II L.P., Capital Royalty Partners II – Parallel Fund “A” L.P. and Parallel Investment Opportunities Partners II L.P.,
as lenders, dated as of December 23, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed January 11, 2016).

Agreement dated as of March 14, 2016 by and among the Company, Platinum Partners Value Arbitrage Fund L.P.,
Platinum Partners Liquid Opportunity Master Fund L.P., Platinum-Montaur Life Sciences, LLC, Platinum Management
(NY) LLC, Platinum Liquid Opportunity Management (NY) LLC and Mark Nordlicht (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed March 18, 2016).

Director Agreement, dated March 15, 2016, by and between Navidea Biopharmaceuticals, Inc. and Mark I. Greene, M.D.,
Ph.D., FRCP (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed March 29,
2016).

Form of Director Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed May 10, 2016).

Employment Agreement, dated May 9, 2016 and effective as of April 21, 2016, between Navidea Biopharmaceuticals, Inc.
and Jed A. Latkin (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed May
10, 2016). ^

Settlement Agreement, dated June 16, 2016, by and among Navidea Biopharmaceuticals, Inc., Platinum Partners Value
Arbitrage Fund, L.P. and Platinum-Montaur Life Sciences, LLC, Cody Christopherson, and Hunter & Kmiec (incorporated
by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed June 29, 2016).

Employment Agreement, dated September 22, 2016, between Navidea Biopharmaceuticals, Inc. and Michael M. Goldberg,
M.D. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 27, 2016).
^

Asset Purchase Agreement, dated November 23, 2016, between Navidea Biopharmaceuticals, Inc. and Cardinal Health 414,
LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 30, 2016).

Global Settlement Agreement dated March 3, 2017, by and among Navidea Biopharmaceuticals, Inc., Cardinal Health 414,
LLC, Macrophage Therapeutics, Inc., Capital Royalty Partners II L.P., Capital Royalty Partners II (Cayman), L.P., Capital
Royalty Partners II – Parallel Fund “A” L.P., Parallel Investment Opportunities Partners II L.P. and Capital Royalty
Partners II – Parallel Fund “B” (Cayman) L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed March 9, 2017).

10.41

License-Back Agreement, dated March 3, 2017, between Navidea Biopharmaceuticals, Inc. and Cardinal Health 414, LLC
(incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed March 9, 2017).

64

 
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
Exhibit
Number

  Exhibit Description

10.42

10.43

10.44

10.45

10.46

10.47

10.48

10.49

10.50

21.1

23.1

24.1

31.1

32.1

Warrant, dated March 3, 2017, issued to Cardinal Health 414, LLC (incorporated by reference to Exhibit 10.4 to the
Company’s Current Report on Form 8-K filed March 9, 2017).

Warrant, dated March 3, 2017, issued to The Regents of the University of California (San Diego) (incorporated by
reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed March 9, 2017).

Amended and Restated License Agreement, dated March 3, 2017, between Navidea Biopharmaceuticals, Inc. and The
Regents of the University of California (San Diego) (portions of this Exhibit have been omitted pursuant to a request for
confidential treatment and have been filed separately with the Securities and Exchange Commission) (incorporated by
reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed March 9, 2017).

Employment Agreement, dated May 4, 2017, between Navidea Biopharmaceuticals, Inc. and Jed A. Latkin (incorporated by
reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed May 10, 2017).^

Amendment to Asset Purchase Agreement dated April 2, 2018, between Navidea Biopharmaceuticals, Inc. and Cardinal
Health 414, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed May 9,
2018).

Agreement dated August 14, 2018, by and among Navidea Biopharmaceuticals, Inc., Macrophage Therapeutics, Inc. and
Michael M. Goldberg, M.D. (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q
filed November 9, 2018).

Stock Purchase Agreement dated September 13, 2018, by and between Navidea Biopharmaceuticals, Inc. and John K. Scott,
Jr. (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed November 9, 2018).

Employment Agreement, effective October 1, 2018, by and between Navidea Biopharmaceuticals, Inc. and Jed A. Latkin
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 5, 2018).^

Navidea Biopharmaceuticals, Inc. 2014 Stock Incentive Plan (as amended and restated on August 16, 2018) (incorporated
by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 21, 2018).

  Subsidiaries of the registrant.*

  Consent of Marcum LLP.*

  Power of Attorney.*

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

Certification of Chief Executive Officer, 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 *

^
*
**

Management contract or compensatory plan or arrangement.
Filed herewith.
Furnished herewith.

65

 
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
   
 
   
 
   
 
 
   
 
 
   
 
   
 
   
 
   
 
   
 
   
 
 
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Dated: March 15, 2019

NAVIDEA BIOPHARMACEUTICALS, INC.
(the Company)

By: /s/ Jed A. Latkin
Jed A. Latkin
Chief Executive Officer, Chief Operating Officer and
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.

Signature 

Title

Date

/s/ Jed A. Latkin*
Jed A. Latkin

/s/ Y. Michael Rice*
Y. Michael Rice

/s/ Claudine Bruck*
Claudine Bruck, Ph.D.

/s/ Adam D. Cutler*
Adam D. Cutler

/s/ S. Kathryn Rouan*
S. Kathryn Rouan, Ph.D.

Chief Executive Officer, Chief Operating Officer and Chief Financial Officer,
Director
(principal executive officer, principal financial officer and principal
accounting officer)

  Chairman, Director

  Director

  Director

  Director

March 15, 2019

March 15, 2019

March 15, 2019

March 15, 2019

March 15, 2019

*By:

/s/ Jed A. Latkin
Jed A. Latkin, Attorney-in-fact

66

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
   
 
   
   
 
   
 
 
 
   
 
 
 
   
 
 
 
 
 
 
 
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

NAVIDEA BIOPHARMACEUTICALS, INC.

FORM 10-K ANNUAL REPORT

As of December 31, 2018 and 2017
and for Each of the
Two Years in the Period Ended
December 31, 2018

FINANCIAL STATEMENTS

 
 
 
 
 
 
 
 
 
 
 
 
 
NAVIDEA BIOPHARMACEUTICALS, INC. and SUBSIDIARIES

Index to Financial Statements

Consolidated Financial Statements of Navidea Biopharmaceuticals, Inc.

Report of Independent Registered Public Accounting Firm – Marcum LLP

Consolidated Balance Sheets as of December 31, 2018 and 2017

Consolidated Statements of Operations for the years ended December 31, 2018 and 2017

Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2018 and 2017

Consolidated Statements of Stockholders’ (Deficit) Equity for the years ended December 31, 2018 and 2017

Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017

Notes to the Consolidated Financial Statements

F-1

F-2

F-3

F-4

F-5

F-6

F-7

F-8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of
Navidea Biopharmaceuticals, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Navidea Biopharmaceuticals, Inc. (the “Company”) as of December
31, 2018 and 2017, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ (deficit) equity and
cash flows for each of the two years in the period ended December 31, 2018, and the related notes (collectively referred to as the
“financial statements”).  In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period
ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
As more fully described in Note 2, the Company has incurred significant losses and needs to raise additional funds to meet its
obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.

/s/ Marcum llp

We have served as the Company’s auditor since 2016.

New Haven, CT
March 15, 2019

F-2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Navidea Biopharmaceuticals, Inc. and Subsidiaries
Consolidated Balance Sheets

ASSETS
Current assets:

Cash and cash equivalents
Available-for-sale securities
Accounts and other receivables
Prepaid expenses and other
Total current assets

Property and equipment

Less accumulated depreciation and amortization

Property and equipment, net
License agreements, patents and trademarks

Less accumulated amortization

License agreements, patents and trademarks, net

Guaranteed earnout receivable
Other assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable
Accrued liabilities and other
Notes payable
Terminated lease liability, current
Accrued loss for CRG litigation
Liabilities associated with discontinued operations, current

Total current liabilities

Terminated lease liability
Deferred revenue
Other liabilities

Total liabilities
Commitments and contingencies (Note 15)
Stockholders’ equity:

Preferred stock; $.001 par value; 5,000,000 shares authorized; no shares issued or

outstanding at December 31, 2018 and 2017

Common stock; $.001 par value; 300,000,000 shares authorized; 200,390,700 and

162,206,646 shares issued and outstanding at December 31, 2018 and 2017, respectively

Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss
Total Navidea stockholders' equity

Noncontrolling interest

Total stockholders’ equity

Total liabilities and stockholders’ equity

December 31,
2018

December 31,
2017

  $

  $

  $

3,475,881    $
799,270     
21,151     
1,299,454     
5,595,756     
1,251,185     
1,089,013     
162,172     
480,404     
51,912     
428,492     
—     
835,107     
7,021,527    $

424,718    $
2,517,047     
316,074     
120,679     
—     
—     
3,378,518     
468,494     
700,000     
64,055     
4,611,067     

2,795,006 
1,797,604 
8,137,872 
1,101,923 
13,832,405 
1,206,058 
969,357 
236,701 
480,404 
22,248 
458,156 
4,809,376 
1,444,798 
20,781,436 

855,043 
1,857,848 
2,353,639 
107,215 
2,887,566 
7,092 
8,068,403 
588,092 
11,024 
65,587 
8,733,106 

—     

— 

200,391     
338,265,383     
(336,722,905)    
(730)    
1,742,139     
668,321     
2,410,460     
7,021,527    $

162,207 
331,128,787 
(319,908,968)
(2,396)
11,379,630 
668,700 
12,048,330 
20,781,436 

  $

See accompanying notes to consolidated financial statements.

F-3

 
 
 
 
 
 
   
 
     
       
 
     
       
 
   
   
   
   
   
   
   
   
   
   
   
   
     
       
 
     
       
 
   
   
   
   
   
   
   
   
   
   
     
       
 
     
       
 
   
   
   
   
   
   
   
   
 
 
Navidea Biopharmaceuticals, Inc. and Subsidiaries
Consolidated Statements of Operations

Revenue:

Royalty revenue
License revenue
Grant and other revenue
Total revenue

Cost of revenue
Gross profit
Operating expenses:

Research and development
Selling, general and administrative
Total operating expenses

Loss from operations
Other expense:

Interest (expense) income, net
Change in fair value of financial instruments
Loss on extinguishment of debt
Other income (expense), net
Total other expense, net

Loss before income taxes
Benefit from income taxes
Loss from continuing operations
Discontinued operations, net of tax effect:

Income (loss) from discontinued operations
Gain on sale
Net (loss) income
Less loss attributable to noncontrolling interest

Net (loss) income attributable to common stockholders
(Loss) income per common share (basic):

Continuing operations
Discontinued operations
Attributable to common stockholders
Weighted average shares outstanding (basic)
(Loss) income per common share (diluted):

Continuing operations
Discontinued operations
Attributable to common stockholders
Weighted average shares outstanding (diluted)

Years Ended December 31,

2018

2017

15,347    $
307,174     
846,830     
1,169,351     
96,636     
1,072,715     

4,221,881     
7,698,135     
11,920,016     
(10,847,301)    

(30,799)    
—     
(5,291,616)    
1,145     
(5,321,270)    
(16,168,571)    
9,753     
(16,158,818)    

1,449     
43,053     
(16,114,316)    
(379)    
(16,113,937)   $

9,126 
100,000 
1,701,311 
1,810,437 
3,651 
1,806,786 

4,513,842 
11,169,951 
15,683,793 
(13,877,007)

168,971 
153,357 
(4,201,668)
(33,339)
(3,912,679)
(17,789,686)
4,062,489 
(13,727,197)

(490,758)
89,163,811 
74,945,856 
(210)
74,946,066 

(0.09)   $
—    $
(0.09)   $
170,535,343     

(0.08)
0.55 
0.47 
161,592,569 

(0.09)   $
—    $
(0.09)   $
170,535,343     

(0.08)
0.53 
0.45 
166,016,458 

  $

  $

  $
  $
  $

  $
  $
  $

See accompanying notes to consolidated financial statements.

F-4

 
 
 
 
 
 
 
 
 
   
 
     
       
 
   
   
   
   
   
     
       
 
   
   
   
   
     
       
 
   
   
   
   
   
   
   
   
     
       
 
   
   
   
   
     
       
 
   
     
       
 
   
 
 
Navidea Biopharmaceuticals, Inc. and Subsidiaries
Consolidated Statements of Comprehensive (Loss) Income

Net (loss) income
Unrealized gain (loss) on available-for-sale securities
Comprehensive (loss) income

Years Ended December 31,

2018
(16,114,316)   $
1,666     
(16,112,650)   $

  $

  $

2017
74,945,856 
(2,396)
74,943,460 

See accompanying notes to consolidated financial statements.

F-5

 
 
 
 
 
 
 
 
 
   
 
   
 
 
Navidea Biopharmaceuticals, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ (Deficit) Equity

Common Stock

Additional
Paid-In
    Amount     Capital

Shares

Accumulated
Other
Compre-
hensive
Loss

Non-
controlling   
Interest

Total
Stockholders’
(Deficit)
Equity

    Accumulated    
Deficit

    155,762,729    $ 155,763    $326,564,148    $(394,855,034)   $

Balance, January 1, 2017
Issued stock in payment of
Board retainers
Issued stock in payment of
employee bonuses
Issued stock upon exercise
of warrants
Issued warrants in
connection with Asset Sale    
Issued warrants for

extension of license
agreement

Issued stock to 401(k) plan    
Issued restricted stock
Canceled forfeited
restricted stock
Issued stock upon exercise
of stock options
Stock compensation
expense
Comprehensive income
(loss):
Net income
Unrealized loss on
available-for-sale
securities

Total comprehensive
income
Reclassification of funds
invested (Note 10)
Balance, December 31,
2017
Impact of adoption of ASC
Topic 606
Issued stock in payment of

employee bonuses
Issued restricted stock
Cancelled forfeited
restricted stock
Issued stock to 401(k) plan

Issued stock pursuant to
private placement
Issued stock pursuant to
termination agreement

Stock compensation
expense
Comprehensive loss:

Net loss
Unrealized gain on
available-for-sale
securities

Total comprehensive loss
Balance, December 31,
2018

16,406     

17     

10,483     

710,353     

710     

368,632     

5,411,850     

5,412     

48,707     

3,337,187     

333,719     
53,602     

105,308     
200,000     

105     
200     

(50,000)    

(50)    

50     

50,000     

50     

18,050     

—     

—     

394,209     

—     

—     

—     

—     

—     
—     
—     

—     

—     

—     

—    $ 468,910    $ (67,666,213)

—     

—     

—     

—     

—     
—     
—     

—     

—     

—     

—     

10,500 

—     

369,342 

—     

54,119 

—     

3,337,187 

—     
—     
—     

—     

—     

333,719 
53,707 
200 

— 

18,100 

—     

394,209 

—     

—     

—     

74,946,066     

—     

(210)    

74,945,856 

—     

—     

—     

—     

—     

—     

—     

—     

—     

—     

(2,396)    

—     

(2,396)

—     

—     

—     

—     

74,943,460 

—     

200,000     

200,000 

    162,206,646    $ 162,207    $331,128,787    $(319,908,968)   $

(2,396)   $ 668,700    $ 12,048,330 

—     

—     

—     

(700,000)    

1,118,760     
200,000     

1,118     
200     

315,784     
—     

(50,000)    

(50)    

50     

94,684     

95     

35,885     

    18,320,610     

18,321     

2,981,679     

    18,500,000     

18,500     

3,496,500     

—     

—     

306,698     

—     
—     

—     

—     

—     

—     

—     

—     

—     
—     

—     

—     

—     

—     

—     

—     

(700,000)

—     
—     

—     

—     

316,902 
200 

— 

35,980 

—     

3,000,000 

—     

3,515,000 

—     

306,698 

—     

—     

—     

(16,113,937)    

—     

(379)    

(16,114,316)

—     
—     

—     
—     

—     
—     

—     
—     

1,666     
—     

—     
—     

1,666 
(16,112,650)

    200,390,700    $ 200,391    $338,265,383    $(336,722,905)   $

(730)   $ 668,321    $

2,410,460 

See accompanying notes to consolidated financial statements.

F-6

 
 
 
 
 
 
   
   
 
 
 
   
   
   
   
 
   
   
   
      
      
   
      
      
   
      
   
   
   
     
       
       
       
     
 
       
       
 
   
   
   
   
   
   
   
   
   
   
     
       
       
       
     
 
       
       
 
   
   
   
 
 
Navidea Biopharmaceuticals, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

Cash flows from operating activities:

Net (loss) income
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization of property and equipment
Amortization of patents, trademarks and license agreements
Loss on disposal and abandonment of assets
Gain on forgiveness of accounts payable
Compounded interest on long term debt
Stock compensation expense
Change in fair value of financial instruments
Loss on extinguishment of debt
Issued warrants in connection with Asset Sale
Value of stock issued to directors
Value of stock issued to employees
Value of stock issued to 401(k) plan for employer matching contributions
Changes in operating assets and liabilities:
Accounts and other receivables
Inventory

Prepaid expenses and other assets
Accounts payable
Accrued liabilities and other liabilities
Deferred revenue

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of available-for-sale securities
Proceeds from sales of available-for-sale securities
Maturities of available-for-sale securities
Purchases of equipment

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock, net
Payment of debt-related costs
Principal payments on notes payable

Net cash used in financing activities

Net increase (decrease) in cash
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period

Years Ended December 31,

2018

2017

  $

(16,114,316)   $

74,945,856 

120,721     
29,664     
—     
—     
153,390     
306,698     
—     
5,291,616     
—     
—     
616,902     
35,980     

232,339 
22,248 
807,241 
(212,656)
265,196 
394,209 
(153,357)
4,201,668 
3,337,187 
10,500 
369,342 
53,707 

12,926,097     
—     

(11,145,238)
1,470,826 

805,597     
(430,325)    
548,453     
(15,037)    
4,275,440     

(600,000)    
200,000     
1,400,000     
(46,192)    
953,808     

3,000,200     
(7,153,000)    
(395,573)    
(4,548,373)    
680,875     
2,795,006     
3,475,881    $

(934,536)
(6,017,775)
(6,248,179)
(2,315,037)
59,083,541 

(2,200,000)
— 
400,000 
(33,690)
(1,833,690)

72,419 
(1,314,102)
(59,753,740)
(60,995,423)
(3,745,572)
6,540,578 
2,795,006 

  $

See accompanying notes to consolidated financial statements.

F-7

 
 
 
 
 
 
 
 
 
   
 
     
       
 
     
       
 
   
   
   
   
   
   
   
   
   
   
   
   
     
       
 
   
   
   
   
   
   
   
     
       
 
   
   
   
   
   
     
       
 
   
   
   
   
   
   
 
 
Notes to the Consolidated Financial Statements

1. Organization and Summary of Significant Accounting Policies

a. Organization and Nature of Operations: Navidea Biopharmaceuticals, Inc. (“Navidea,” the “Company,” or “we”), a
Delaware Corporation (NYSE 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’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 Tc99m tilmanocept, the first product
developed and commercialized by Navidea based on the platform.

On March 3, 2017, pursuant to an Asset Purchase Agreement dated November 23, 2016, the Company completed its previously
announced 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 (giving effect to the License-Back described below and excluding
certain assets specifically retained by the Company). 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. Upon closing of the Asset Sale,
the Supply and Distribution Agreement, dated November 15, 2007, as amended, between Cardinal Health 414 and the
Company was terminated and, as a result, the provisions thereof are of no further force or effect.

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 statements of cash flows.

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.

In January 2015, MT, a majority-owned subsidiary, was formed specifically to explore immuno-therapeutic applications for the
Manocept platform.

In July 2011, we established a European business unit, Navidea Biopharmaceuticals Limited, to address international
development and commercialization needs for our technologies, including Tc99m tilmanocept. Navidea owns 100% of the
outstanding shares of Navidea Biopharmaceuticals Limited.

In December 2001, we acquired Cardiosonix Ltd. (“Cardiosonix”), an Israeli company with a blood flow measurement device
product line in the early stages of commercialization. In August 2009, the Company’s Board of Directors decided to
discontinue the operations and attempt to sell Cardiosonix. However, we were obligated to continue to service and support the
Cardiosonix devices through 2013. The Company did not receive significant expressions of interest in the Cardiosonix
business and it was legally dissolved in September 2017.

b. Principles of Consolidation: 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,
MT. All significant inter-company accounts were eliminated in consolidation.

c. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
d. 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 5.

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

(1) Cash and cash equivalents, available-for-sale securities, accounts and other receivables, and accounts payable: The

carrying amounts approximate fair value because of the short maturity of these instruments.

(2) Notes payable: The carrying value of our debt at December 31, 2018 and 2017 primarily consisted of the face amount of
the notes plus accrued interest. At December 31, 2018, the fair value of our notes payable was approximately $316,000,
equal to the carrying value of $316,000. At December 31, 2017, the fair value of our notes payable was approximately
$2.4 million, equal to the carrying value of $2.4 million. See Notes 5 and 12.

(3) Derivative liabilities: Derivative liabilities are related to certain outstanding warrants which are recorded at fair value.
Derivative liabilities totaling $63,000 as of December 31, 2018 and 2017 were included in other liabilities on the
consolidated balance sheets. The assumptions used to calculate fair value as of December 31, 2018 and 2017 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 5.

(4) Warrants: In March 2017, in connection with the Asset Sale, the Company granted to each of Cardinal Health 414 and
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 year ended December 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 at the time of issuance. See Note 16(b).

e. Stock-Based Compensation: At December 31, 2018, we had instruments outstanding under two stock-based compensation
plans; the Fourth Amended and Restated 2002 Stock Incentive Plan (the “2002 Plan”) and the Amended and Restated 2014
Stock Incentive Plan (the “2014 Plan”). Currently, under the 2014 Plan, we may grant incentive stock options, nonqualified
stock options, and restricted stock awards to full-time employees and directors, and nonqualified stock options and restricted
stock awards may be granted to our consultants and agents. Total shares authorized under each plan are 12 million shares and
15 million shares, respectively. Although instruments are still outstanding under the 2002 Plan, the plan has expired and no
new grants may be made from it. Under both plans, the exercise price of each option is greater than or equal to the closing
market price of our common stock on the date of the grant.

Stock options granted under the 2002 Plan and the 2014 Plan generally vest on an annual basis over one to four years.
Outstanding stock options under the plans, if not exercised, generally expire ten years from their date of grant or up to 90 days
following the date of an optionee’s separation from employment with the Company. We issue new shares of our common stock
upon exercise of stock options.

F-9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based payments to employees and directors, including grants of stock options, are recognized in the consolidated
statement of operations based on their estimated fair values. The fair value of each stock option award is estimated on the date
of grant using the Black-Scholes option pricing model. Expected volatilities are based on the Company’s historical volatility,
which management believes represents the most accurate basis for estimating expected future volatility under the current
circumstances. Navidea uses historical data to estimate forfeiture rates. The expected term of stock options granted is based on
the vesting period and the contractual life of the options. The risk-free rate is based on the U.S. Treasury yield in effect at the
time of the grant. The assumptions used to calculate the fair value of stock option awards granted during the years ended
December 31, 2018 and 2017 are noted in the following table:

Expected volatility
Weighted-average volatility
Expected dividends
Expected term (in years)
Risk-free rate

2018

2017

64%-76%    

66%-79%  

69%
—
5.5-6.0

75%
—
5.0-6.0

2.6%-2.7%    

1.8%-2.1%  

The portion of the fair value of stock-based awards that is ultimately expected to vest is recognized as compensation expense
over either (1) the requisite service period or (2) the estimated performance period. Restricted stock awards are valued based
on the closing stock price on the date of grant and amortized ratably over the estimated life of the award. Restricted stock may
vest based on the passage of time, or upon occurrence of a specific event or achievement of goals as defined in the grant
agreements. In such cases, we record compensation expense related to grants of restricted stock based on management’s
estimates of the probable dates of the vesting events. Stock-based awards that do not vest because the requisite service period
is not met prior to termination result in reversal of previously recognized compensation cost. See Note 6.

f. Cash and Cash Equivalents: Cash equivalents are highly liquid instruments such as U.S. Treasury bills, bank certificates of
deposit, corporate commercial paper and money market funds which have maturities of less than three months from the date
of purchase.

g. Available-for-Sale Securities: Available-for-sale securities are liquid instruments such as U.S. Treasury bills, bank

certificates of deposit, corporate commercial paper and money market funds which have maturities of three months or more
from the date of purchase.

h. Accounts and Other Receivables: Accounts and other receivables are recorded net of an allowance for doubtful accounts.

We estimate an allowance for doubtful accounts based on a review and assessment of specific accounts and other receivables
and write off accounts against the allowance account when deemed uncollectible.  See Note 8.

i.

j.

k.

Property and Equipment: Property and equipment are stated at cost, less accumulated depreciation and amortization.
Depreciation is generally computed using the straight-line method over the estimated useful lives of the depreciable assets.
Depreciation and amortization related to equipment under capital leases and leasehold improvements is recognized over the
shorter of the estimated useful life of the leased asset or the term of the lease. Maintenance and repairs are charged to expense
as incurred, while renewals and improvements are capitalized. See Note 9.

Intangible Assets: Intangible assets consist primarily of license agreements. Intangible assets are stated at cost, less
accumulated amortization. License agreements and patent costs are amortized using the straight-line method over the
estimated useful lives of the license agreements and patents of approximately 5 to 15 years. Patent application costs are
deferred pending the outcome of patent applications. Costs associated with unsuccessful patent applications and abandoned
intellectual property are expensed when determined to have no recoverable value. We evaluate the potential alternative uses
of all intangible assets, as well as the recoverability of the carrying values of intangible assets, on a recurring basis.

Impairment or Disposal of Long-Lived Assets: Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to
future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the
impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the
assets. No impairment was recognized during the years ended December 31, 2018 or 2017. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell.

l. Leases: Leases are categorized as either operating or capital leases at inception. Operating lease costs are recognized on a
straight-line basis over the term of the lease. An asset and a corresponding liability for the capital lease obligation are
established for the cost of capital leases. The capital lease obligation is amortized over the life of the lease. See Note 14.

m. Derivative Instruments: Derivative instruments embedded in contracts, to the extent not already a free-standing contract, are
bifurcated from the debt instrument 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. Derivative
liabilities with expiration dates within one year are classified as current, while those with expiration dates in more than one
year are classified as long term. We do not use derivative instruments for hedging of market risks or for trading or speculative
purposes.

F-10

 
 
 
 
 
   
 
 
 
   
 
 
   
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
n. 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 4.

o. Research and Development Costs: 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,
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.

p.

Income Taxes: Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment date. Due to the uncertainty surrounding the
realization of the deferred tax assets in future tax returns, all of the deferred tax assets have been fully offset by a valuation
allowance at December 31, 2018 and 2017.

Current accounting standards include guidance on the accounting for uncertainty in income taxes recognized in the financial
statements. Such standards also prescribe a recognition threshold and measurement model for the financial statement
recognition of a tax position taken, or expected to be taken, and provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. The Company believes that the ultimate deductibility of all
tax positions is highly certain, although there is uncertainty about the timing of such deductibility. As a result, no liability for
uncertain tax positions was recorded as of December 31, 2018 or 2017 and we do not expect any significant changes in the next
twelve months. Should we need to accrue interest or penalties on uncertain tax positions, we would recognize the interest as
interest expense and the penalties as a selling, general and administrative expense. As of December 31, 2018, tax years 2015-
2018 remained subject to examination by federal and state tax authorities. See Note 17.

q. Recently Adopted Accounting Standards:  In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU

2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes 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 previous 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. We adopted ASU 2014-09, along
with additional related ASUs 2016-08, 2016-10, 2016-12 and 2016-20, effective January 1, 2018, using the modified
retrospective method of adoption. The adoption of ASU 2014-09 and related ASUs resulted in increases in deferred revenue
and a corresponding offset to accumulated deficit of $700,000. See Note 4.

In November 2016, the FASB issued ASU No. 2016-18,  Statement of Cash Flows – Restricted Cash. ASU 2016-18 requires
that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and restricted cash
or equivalents. Therefore, restricted cash and restricted cash equivalents should be included with cash and cash equivalents
when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-
18 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those
fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts ASU 2016-18 in an
interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes the interim period. We
adopted ASU 2016-18 effective January 1, 2018. The adoption of ASU 2016-18 resulted in reclassification of $5.0 million of
restricted cash in the consolidated statement of cash flows for the year ended December 31, 2017.

F-11

 
 
 
 
 
 
 
 
 
 
 
 
 
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. We adopted ASU 2017-01 effective January 1, 2018. The adoption of ASU 2017-01 did not have a
material effect 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. We
adopted ASU 2017-09 effective January 1, 2018. The adoption of ASU 2017-09 did not have a material effect on our
consolidated financial statements.

In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740) – Amendments to SEC Paragraphs Pursuant to
SEC Staff Accounting Bulletin No. 118. ASU 2018-05 amends Accounting Standards Codification (“ASC”) Topic 740 to
provide guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (the “Tax Act”) pursuant to Staff Accounting
Bulletin No. 118. ASU 2018-05 addresses situations where the accounting under ASC Topic 740 is incomplete for certain
income tax effects of the Tax Act upon issuance of the entity’s financial statements for the reporting period in which the Tax
Act was enacted. The adoption of ASU 2018-05 in March 2018 did not have a material effect on our consolidated financial
statements.

r. Recently Issued Accounting Standards: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU
2016-02 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases
under previous U.S. GAAP. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that
arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease
liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. ASU 2016-02 is effective
for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal
years. Early adoption is permitted. We have completed our assessment of the impact of adopting ASU 2016-02, and expect
the adoption of ASU 2016-02 to result in an increase in right-of-use assets and related liabilities of approximately $286,000
on our balance sheet related to our leases that are currently classified as operating leases, primarily for office space.

In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) – Improvements to
Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the scope of Topic 718 to include share-based payment
transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to
nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. ASU 2018-
07 specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be
used or consumed in a grantor’s own operations by issuing share-based payment awards, and that Topic 718 does not apply to
share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling
goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers.
ASU 2018-07 is effective for public business entities for fiscal years beginning after December 15, 2018, including interim
periods within that fiscal year. The adoption of ASU 2018-07 is not expected to have a significant impact on our consolidated
financial statements.

In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements. ASU 2018-09 updates a variety of topics in
order to clarify, correct errors, or make minor improvements to the Codification, making it easier to understand and easier to
apply by eliminating inconsistencies and providing clarifications. Certain amendments in ASU 2018-09 are effective upon
issuance, others are effective for annual periods beginning after December 15, 2018 for public business entities, and some have
been made to recently issued guidance and will be subject to the effective dates within the relevant guidance. The adoption of
ASU 2018-09 is not expected to have a significant impact on our consolidated financial statements.

F-12

 
 
 
 
 
 
 
 
 
Also in July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, and ASU No. 2018-
11, Targeted Improvements to Topic 842, Leases. ASU 2018-10 updates Topic 842 in order to clarify narrow aspects of the
guidance issued in ASU 2016-02, Leases (Topic 842). ASU 2018-11 provides entities with an additional (and optional)
transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases
standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the
period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in
which it adopts the new leases standard will continue to be in accordance with current GAAP (Topic 840, Leases). An entity
that elects this transition method must prove the required Topic 840 disclosures for all periods that continue to be in accordance
with Topic 840. The amendments in ASU 2018-10 and ASU 2018-11 are effective when ASU 2016-02 is effective, for fiscal
years beginning after December 15, 2018. We do not expect the adoption of ASU 2018-10 and ASU 2018-11 to have a
significant impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for
Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements on fair value measurements in Topic 280, Fair
Value Measurement, including the consideration of costs and benefits. ASU 2018-13 removes the requirements to disclose (1)
the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of
transfers between levels, (3) the valuation processes for Level 3 fair value measurements, and (4) for nonpublic entities, the
changes in unrealized gains and losses for the period included in earnings for recurring Level 3 fair value measurements held at
the end of the reporting period. ASU 2018-13 also modifies certain disclosure requirements as follows: (1) in lieu of a
rollforward for Level 3 fair value measurements, a nonpublic entity is required to disclose transfers into and out of Level 3 and
purchase and issuances of Level 3 assets and liabilities, (2) for investments in certain entities that calculate net asset value, an
entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption
might lapse only if the investee has communicated the timing to the entity or announced the timing publicly, and (3) the
amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in
measurement as of the reporting date. Finally, ASU 2018-13 adds the requirements to disclose (1) the changes in unrealized
gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at
the end of the reporting period, and (2) the range and weighted average of significant unobservable inputs used to develop
Level 3 fair value measurements. The amendments in ASU 2018-13 are effective for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2019. We do not expect the adoption of ASU 2018-13 to have any impact on
our consolidated financial statements, however it may have an impact on our fair value disclosures.

2. Liquidity

The Company is engaged in ongoing litigation with CRG, and is currently pursuing recovery of $4.1 million and other damages.
The Company was also engaged in litigation with Platinum-Montaur, an affiliate of Platinum, in which Platinum-Montaur was
seeking damages of approximately $1.9 million plus interest.  On October 31, 2018, the Court granted judgment for Navidea and
dismissed all claims in the Platinum-Montaur case. See Notes 12 and 15.

Effective August 14, 2018, Dr. Michael Goldberg resigned as the Chief Executive Officer and President, and from the Board of
Directors, of the Company. In connection with Dr. Goldberg’s resignation, Navidea and Dr. Goldberg entered into an agreement
(the “Agreement”), with the intent of entering into one or more additional definitive agreements (the “Definitive Agreements”), that
set forth the terms of the separation from service. The Agreement provides that Dr. Goldberg will be entitled to receive a severance
of $978,000 payable in equal installments over two years, along with a one-time payment of approximately $35,000, which
represents the cost of continuing his existing health care coverage for a period of 16 months. The Agreement also provides that Dr.
Goldberg is entitled to 23.5 million shares of common stock of Navidea, representing in part payment of accrued bonuses and
payment of the balance of the Platinum Note. On November 20, 2018, the Company issued 18.5 million shares of common stock of
Navidea to Dr. Goldberg, 5.0 million of which were placed in escrow in accordance with the Agreement.  See Note 15.

On September 13, 2018, the Company entered into a Stock Purchase Agreement with an investor, pursuant to which the Company
issued 18,320,610 shares of the Company’s common stock in exchange for $3.0 million in cash (the “Private Placement”). The
Company plans to use the proceeds from the Private Placement for general working capital purposes, including, without limitation,
research and development, and other operating expenses. See Note 16(a).

The Company is currently engaged in litigation with CRG and Dr. Goldberg.  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 have 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, based on our current
working capital and our projected cash burn, and without definitive agreements in place for additional funding, management
believes that there is substantial doubt about the Company’s ability to continue as a going concern for at least twelve months
following the issuance of this Annual Report on Form 10-K.

F-13

 
 
 
 
 
 
 
 
 
 
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. 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 additions to the
purchase price) to the Company based on net sales derived from the purchased Product.

On April 2, 2018, the Company entered into an Amendment to the Asset Purchase Agreement. Pursuant to the Amendment,
Cardinal Health 414 paid the Company approximately $6.0 million and agreed to pay the Company an amount equal to the unused
portion of the letter of credit (not to exceed approximately $7.1 million) promptly after the earlier of (i) the expiration of the letter
of credit and (ii) the receipt by Cardinal Health 414 of evidence of the return and cancellation of the letter of credit. In exchange,
the obligation of Cardinal Health 414 to make any further contingent payments has been eliminated. Cardinal Health 414 is still
obligated to make the milestone payments in accordance with the terms of the earnout provisions of the Purchase Agreement. On
April 9, 2018, CRG drew approximately $7.1 million on the letter of credit. This was in addition to the $4.1 million and the $59.0
million that Navidea had previously paid to CRG.

We recorded a net gain on the sale of the Business of $89.2 million for the year ended December 31, 2017, including $16.5 million
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 $4.1 million in estimated taxes. The guaranteed consideration was
recorded as a receivable, and quarterly payments were deducted from the balance of such receivable as they were received. We
recorded an additional gain related to the Amendment to the Asset Purchase Agreement of $43,000 for the year ended December
31, 2018, which resulted from $54,000 of additional consideration, offset by $11,000 in estimated taxes.

As a result of the Asset Sale, we reclassified certain assets and liabilities as assets and liabilities associated with discontinued
operations. The following liabilities have been segregated and included in liabilities associated with discontinued operations, as
appropriate, in the consolidated balance sheets:

Accrued liabilities

Liabilities associated with discontinued operations, current

F-14

December 31,
2018

December 31,
2017

  $
  $

—    $
—    $

7,092 
7,092 

 
 
 
 
 
 
 
 
 
 
 
   
 
 
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:

Lymphoseek sales revenue
Cost of goods sold
Gross profit
Operating expenses:

Research and development
Selling, general and administrative
Total operating expenses

Income from discontinued operations
Interest expense
Income (loss) before income taxes
(Provision for) benefit from income taxes
Income (loss) from discontinued operations

4. Revenue from Contracts with Customers

Years Ended December 31,

2018

2017

—    $
—     
—     

(1,835)    
—     
(1,835)    
1,835     
—     
1,835     
(385)    
1,450    $

2,917,213 
364,192 
2,553,021 

383,446 
961,873 
1,345,319 
1,207,702 
(1,706,491)
(498,789)
8,031 
(490,758)

  $

  $

The Company adopted ASU 2014-09, along with all subsequent related ASUs impacting revenue from contracts with customers
(collectively, “the new revenue recognition standard”), effective January 1, 2018, using the modified retrospective method of
adoption. The Company has applied the new revenue recognition standard for the year ended December 31, 2018 with the
cumulative effect of initially applying the new accounting recognized on January 1, 2018 as an adjustment to opening accumulated
deficit. This adjustment reflects only contracts that were not completed as of January 1, 2018.

We earn revenues related to our licensing and distribution agreements. The terms of these agreements may include payment to us of
non-refundable up-front license fees, funding or reimbursement of research and development efforts, milestone payments if
specified objectives are achieved, and/or royalties on product sales. The new revenue recognition standard generally results in the
delay of revenue recognition for the Company, as compared to the previous guidance. Previously, the Company recognized revenue
related to non-refundable up-front license fees either immediately upon contract execution, or over the estimated period required to
fulfill the related obligations. Under the new revenue recognition standard, the Company will generally be required to defer any up-
front license fees and pre-market milestones, and recognize the revenue over the period beginning with initial product sale through
the end of the initial term of the agreement.

The cumulative effect of the change on accumulated deficit as of January 1, 2018 was an increase of $700,000, consisting of
$100,000 related to an up-front payment received upon execution of an exclusive license and distribution agreement with Sayre
Therapeutics (“Sayre”) for the development and commercialization of Tc99m tilmanocept in India in June 2017, and $600,000
related to up-front and milestone payments received pursuant to an exclusive licensing and distribution agreement with Beijing
Sinotau Medical Research Co., Ltd. (“Sinotau”) for the marketing and distribution of Tc99m tilmanocept in China executed in
August 2014. The following table compares deferred revenue as if the new revenue recognition standard had not been adopted to
the amounts in the consolidated financial statements reflecting the adoption. Deferred revenue, the current portion of which is
included in accrued liabilities and other in the consolidated balance sheets, and accumulated deficit are the only financial statement
line items that were affected by the adoption of the new revenue recognition standard.

Deferred revenue
Accumulated deficit

Pre-
Adoption

    Post-Adoption    

Change

  $

26,061    $
(319,908,968)    

726,061    $
(320,608,968)   

700,000 
(700,000)

During the year ended December 31, 2018, the Company recognized revenue from contracts with customers of approximately
$338,000. The Company did not recognize any related impairment losses during those periods.

Navidea is focused on the development and commercialization of precision immunodiagnostic agents and immunotherapeutics. We
manage our business based on two primary types of drug products: (i) diagnostic substances, including Tc99m tilmanocept and
other diagnostic applications of our Manocept platform, and (ii) therapeutic development programs, including therapeutic
applications of our Manocept platform and all development programs undertaken by MT. Tc99m tilmanocept, which the Company
has a license to distribute outside of Canada, Mexico and the United States, is the only one of the Company’s drug product
candidates that has been approved for sale in any market. The Company has license and distribution agreements in place in Europe,
India and China, however Tc99 tilmanocept has only been approved for sale in Europe.

F-15

 
 
 
 
 
 
 
 
   
 
   
   
     
       
 
   
   
   
   
   
   
   
 
 
 
 
 
 
 
 
 
   
 
 
 
In April 2018, the Company executed an agreement to provide Meilleur Technologies, Inc., (“Meilleur”), a wholly-owned
subsidiary of Cerveau Technologies, Inc. (“Cerveau”), worldwide rights to conduct research using NAV4694, as well as an
exclusive license for the development and commercialization of NAV4694 in Australia, Canada, China, and Singapore. Meilleur
also has an option to commercialize worldwide.

The following tables disaggregate the Company’s revenue from contracts with customers for the year ended December 31, 2018.

Year Ended December 31, 2018
Royalty revenue:
Europe
India
China

Total

License revenue:

NAV4694 sublicense
Tc99m tilmanocept sublicense, China

Total

Other revenue:

Additional stability studies

  Diagnostics

Therapeutics

Total

  $

  $

  $

  $

  $

15,347    $
—     
—     
15,347    $

287,569    $
19,605     
307,174    $

—    $
—     
—     
—    $

—    $
—     
—    $

15,347 
— 
— 
15,347 

287,569 
19,605 
307,174 

15,037    $

—    $

15,037 

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

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

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

The following table summarizes the changes in contract liabilities, the current portion of which is included in accrued liabilities and
other in the consolidated balance sheets, during the years ended December 31, 2018 and 2017:

Total deferred revenue, beginning of period
Impact of adoption of ASU 2014-09 and related standards
Revenue deferred related to sublicense
Revenue recognized from satisfaction of performance obligations
Total deferred revenue, end of period

Year Ended December 31,
2017

2018

  $

  $

26,061    $
700,000     
10,000     
(25,037)    
711,024    $

41,098 
— 
— 
(15,037)
26,061 

Currently, the Company recognizes revenue from up-front license fees and pre-market milestones after the cash has been received
from its customers and the performance obligations have been met. Payments for sales-based royalties and milestones are generally
received after the related revenue has been recognized and invoiced. Normal payment terms generally range from 15 to 90 days
following milestone achievement or royalty invoice, in accordance with each contract. The Company had trade receivables of
approximately $12,000 outstanding as of December 31, 2018.

F-16

 
 
 
 
   
   
 
     
     
 
       
 
   
   
 
     
     
 
       
 
     
     
 
       
 
   
 
     
     
 
       
 
     
     
 
       
 
 
 
 
 
 
 
 
 
 
 
   
 
   
   
   
 
 
During the year ended December 31, 2018, the Company did not recognize any revenue from performance obligations associated
with long-term contracts that were satisfied (or partially satisfied) in previous periods.

Up-front and milestone payments received related to our license and distribution agreements in India and China are deferred until
Tc99m tilmanocept has been approved by the regulatory authorities in each of those countries. It is not possible to determine with
any degree of certainty whether or when regulatory approval for this product will be achieved in India or China, if at all. In
addition, since sales of Tc99m tilmanocept have not yet begun in India or China, there is no basis for estimating whether, to what
degree, or the rate at which the product will be accepted and utilized in these markets. Therefore, it is not possible to determine with
any degree of certainty the expected sales in future periods in those countries. Accordingly, 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 is eight years in India and 10 years in
China.

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

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

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

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

The sublicense of NAV4694 to Meilleur provides for payments to Navidea including up-front payments, milestones, an option for
worldwide commercial rights, royalties on net sales, and reimbursement for product development assistance during the initial
transition period. In accordance with the new revenue recognition standard, the upfront payments were recognized upon contract
inception, and reimbursement for product development assistance will be recognized on a monthly basis. Should some or all of the
variable consideration from milestones, the option and royalties meet the requirements of the new revenue recognition standard to
be included in the transaction price, those amounts will be recognized as revenue in future periods.

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

Through December 31, 2018, the Company has not capitalized any contract-related costs as contract assets.

In addition to revenue from contracts from customers, we also generate revenue from NIH grants to support various product
development initiatives. The new revenue recognition standard 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 the new revenue recognition standard. Accordingly, the new revenue recognition standard
need not be applied retrospectively to the contract as of January 1, 2018.

F-17

 
 
 
 
 
 
 
 
 
 
 
 
5. Fair Value

The Company’s available-for-sale securities consist of certificates of deposit which are measured using Level 2 inputs.

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 December 31, 2018 and 2017, is included in other liabilities on the accompanying consolidated
balance sheets, and will continue to be measured on a recurring basis. See Notes 1(m) and 10.

The following table sets forth, by level, financial assets and liabilities measured at fair value on a recurring basis: 

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2018

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

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

Description
Assets:

Certificates of deposit

Liabilities:

Liability related to MT warrants

  $

  $

—    $

799,270    $

—    $

799,270 

—    $

—    $

63,000    $

63,000 

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2017

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

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

Description
Assets:

Certificates of deposit

Liabilities:

Liability related to MT warrants

  $

  $

—    $

1,797,604    $

—    $

1,797,604 

—    $

—    $

63,000    $

63,000 

a. 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.

b. Sensitivity Analysis-Level 3 Measurements: Changes in the valuation of MT as a whole may cause material changes in the

fair value of the MT warrants. Significant increases (decreases) in the valuation of MT, such as may be the result of
additional financing, could result in a higher (lower) fair value measurement. A change in the valuation of MT would not
necessarily result in a directionally similar change in the value of the MT warrants.

There were no Level 1 or Level 2 liabilities outstanding at any time during the years ended December 31, 2018 and 2017. There
were no transfers in or out of our Level 1 or Level 2 liabilities during the years ended December 31, 2018 and 2017. Changes in the
estimated fair value of our Level 3 liabilities relating to unrealized gains (losses) are recorded as changes in fair value of financial
instruments in the consolidated statements of operations. The change in the estimated fair value of our Level 3 liabilities during the
year ended December 31, 2017 was an approximate decrease of $153,000.

F-18

 
 
 
 
 
 
 
 
 
   
   
   
 
   
 
       
     
 
       
 
   
 
       
     
 
       
 
 
 
 
   
   
   
 
   
 
       
     
 
       
 
   
 
       
     
 
       
 
 
 
 
 
 
 
6. Stock-Based Compensation

For the years ended December 31, 2018 and 2017, our total stock-based compensation expense, which includes reversals of expense
for certain forfeited or cancelled awards, was approximately $307,000 and $394,000, respectively. We have not recorded any
income tax benefit related to stock-based compensation for the years ended December 31, 2018 and 2017.

A summary of the status of our stock options as of December 31, 2018, and changes during the year then ended, is presented
below: 

Year Ended December 31, 2018

Weighted
Average
Remaining
Contractual
Life
(in years)

Weighted
Average
Exercise
Price

Aggregate
Intrinsic
Value

1.50     
0.53     
—     
1.86     
0.66     
1.24     
1.87     

6.6    $
4.4    $

— 
— 

Number of
Options

3,687,679    $
470,000     
—     
(992,510)   
(7,000)   
3,158,169    $
1,502,173    $

Outstanding at beginning of year
Granted
Exercised
Canceled and forfeited
Expired
Outstanding at end of year
Exercisable at end of year

The weighted average grant-date fair value of options granted in 2018 and 2017 was $0.20 and $0.19, respectively. During 2017,
50,000 stock options with an aggregate intrinsic value of $4,400 were exercised in exchange for issuance of 50,000 shares of our
common stock, resulting in gross proceeds of $18,100. No stock options were exercised during 2018. In 2018 and 2017, the
aggregate fair value of stock options vested during the year was $0 in both years.

A summary of the status of our unvested restricted stock as of December 31, 2018, and changes during the year then ended, is
presented below:

Unvested at beginning of year
Granted
Forfeited
Vested
Unvested at end of year

Year Ended
December 31, 2018

Number of
Shares

150,000    $
200,000     
(50,000)   
(200,000)   
100,000    $

Weighted
Average
Grant-Date
Fair Value

0.51 
0.37 
0.36 
0.47 
0.37 

During 2018 and 2017, 200,000 and 207,000 shares, respectively, of restricted stock vested with aggregate vesting date fair values
of $59,000 and $99,000, respectively.

In March 2018, 100,000 shares of restricted stock held by a non-employee director with an aggregate fair value of $36,000 vested
upon his retirement from the Board. In August 2018, 50,000 shares of restricted stock held by a non-employee director with an
aggregate fair value of $7,000 were forfeited as a result of his departure from the Board. During 2018, 100,000 shares of restricted
stock held by non-employee directors with an aggregate fair value of $23,000 vested as scheduled according to the terms of the
restricted stock agreements.

In October 2017, 50,000 shares of restricted stock held by a non-employee director with an aggregate fair value of $22,000 were
forfeited as a result of his departure from the Board. During 2017, 140,000 shares of restricted stock held by non-employee
directors with an aggregate fair value of $65,000 vested as scheduled according to the terms of the restricted stock agreements.
Also during 2017, 17,000 shares of restricted stock held by a non-employee director with an aggregate fair value of $9,000, and
50,000 shares of restricted stock held by an executive officer with an aggregate fair value of $25,000, were vested by Board action
after determination that the vesting events would not occur due to changes in the Company’s development programs.

As of December 31, 2018, there was approximately $71,000 of total unrecognized compensation cost related to stock option and
restricted stock awards, which we expect to recognize over remaining weighted average vesting terms of 1.2 years. See Note 1(e).

F-19

 
 
 
 
 
 
 
 
 
 
 
   
   
   
 
   
      
  
   
      
  
   
      
  
   
      
  
   
      
  
   
   
 
 
 
 
 
 
 
 
   
 
   
   
   
   
   
 
 
 
 
 
7.

(Loss) Earnings Per Share

Basic (loss) earnings per share is calculated by dividing net (loss) income attributable to common stockholders by the weighted-
average number of common shares and, except for periods with a loss from operations, participating securities outstanding during
the period. Diluted (loss) earnings 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 common shares outstanding used to compute
basic and diluted earnings (loss) per share for the years ended December 31, 2018 and 2017:

Weighted average shares outstanding, basic
Dilutive shares related to warrants
Unvested restricted stock
Weighted average shares outstanding, diluted

2018
170,535,343     
—     
—     
170,535,343     

2017
161,592,569 
4,273,889 
150,000 
166,016,458 

Diluted (loss) earnings per common share for the years ended December 31, 2018 and 2017 excludes the effects of 17.9 million and
14.5 million 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.

The Company’s unvested stock awards contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid
(referred to as “participating securities”). Therefore, the unvested 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, 100,000
and 150,000 shares of unvested restricted stock for the years ended December 31, 2018 and 2017, respectively, were excluded in
determining basic and diluted loss per share because such inclusion would be anti-dilutive.

8. Accounts and Other Receivables and Concentrations of Credit Risk

Accounts and other receivables at December 31, 2018 and 2017 consist of the following:

Guaranteed earnout receivable, current
Trade
Other

Total accounts and other receivables

2018

2017

—    $
12,378     
8,773     
21,151    $

8,084,392 
— 
53,480 
8,137,872 

  $

  $

At December 31, 2018, approximately 47% of net accounts and other receivables were due from Meilleur. At December 31, 2017,
approximately 99% of net accounts and other receivables were due from Cardinal Health 414. As of December 31, 2018 and 2017,
there was no allowance for doubtful accounts. We do not believe we are exposed to significant credit risk related to the receivable
due from Meilleur based on the timely payment history of the entity.  We believe that we have adequately addressed credit risks in
estimating the allowance for doubtful accounts. See Note 1(h).

9. Property and Equipment

The major classes of property and equipment are as follows:  

Production machinery and equipment
Other machinery and equipment, primarily computers and

research equipment
Furniture and fixtures
Purchased software

Leasehold improvements*

Total property and equipment

Useful Life
(in years)
3 – 5

5
7
3
  Term of Lease

2018

2017

    $

575,091    $

575,091 

323,259     
4,327     
336,060     
12,448     
1,251,185    $

293,757 
4,327 
320,435 
12,448 
1,206,058 

     $

* We amortize leasehold improvements over the term of the lease, which in all cases is shorter than the estimated useful life of

the asset.

No property or equipment was under capital lease at December 31, 2018 and 2017. During 2018 and 2017, we recorded $121,000
and $232,000, respectively, of depreciation and amortization related to property and equipment. See Note 1(i).

F-20

 
 
 
 
 
 
 
 
   
 
   
   
   
   
 
 
 
 
 
 
 
 
   
 
   
   
 
 
 
 
 
 
 
   
   
 
 
 
     
 
     
 
     
     
   
 
 
 
 
 
10. Investment in Macrophage Therapeutics, Inc.

In March 2015, MT, our previously wholly-owned subsidiary, entered into a Securities Purchase Agreement to sell up to 50 shares
of its Series A Convertible Preferred Stock (“MT Preferred Stock”) and warrants to purchase up to 1,500 shares of MT Common
Stock to the MT Investors for a purchase price of $50,000 per unit. A unit consists of one share of MT Preferred Stock and 30
warrants to purchase MT Common Stock. Under the agreement, 40% of the MT Preferred Stock and warrants are committed to be
purchased by Dr. Goldberg, and the balance by Platinum. The full 50 shares of MT Preferred Stock and warrants that may be sold
under the agreement are convertible into, and exercisable for, MT Common Stock representing an aggregate 1% interest on a fully
converted and exercised basis. Navidea owns the remainder of the MT Common Stock. On March 11, 2015, definitive agreements
with the MT Investors were signed for the sale of the first 10 tranche of shares of MT Preferred Stock and warrants to purchase 300
shares of MT Common Stock to the MT Investors, with gross proceeds to MT of $500,000. The MT Common Stock held by parties
other than Navidea is reflected on the consolidated balance sheets as a noncontrolling interest.

The warrants have certain characteristics including a net settlement provision that require the warrants to be accounted for as a
derivative liability at fair value, with subsequent changes in fair value included in earnings. The fair value of the warrants was
estimated to be $63,000 at issuance and at December 31, 2018 and 2017. See Notes 1(m) and 5. In addition, certain provisions of
the Securities Purchase Agreement obligate the MT Investors to acquire the remaining MT Preferred Stock and related warrants for
$2.0 million at the option of MT. The estimated relative fair value of this put option was $113,000 at issuance based on the Black-
Scholes option pricing model and is classified within stockholders' equity.

In addition, we entered into a Securities Exchange Agreement with the MT Investors providing them an option to exchange their
MT Preferred Stock for our common stock in the event that MT has not completed a public offering with gross proceeds to MT of at
least $50 million by the second anniversary of the closing of the initial sale of MT Preferred Stock, at an exchange rate per share
obtained by dividing $50,000 by the greater of (i) 80% of the twenty-day volume weighted average price per share of our common
stock on the second anniversary of the initial closing or (ii) $3.00. To the extent that the MT Investors do not timely exercise their
exchange right, MT has the right to redeem their MT Preferred Stock for a price equal to $58,320 per share. We also granted MT an
exclusive sublicense for certain therapeutic applications of the Manocept technology.

In December 2015 and May 2016, Platinum contributed a total of $200,000 to MT. MT was not obligated to provide anything in
return, although it was considered likely that the MT Board would ultimately authorize some form of compensation to Platinum.
The Company initially recorded the entire $200,000 as a current liability pending determination of the form of compensation.

In July 2016, MT’s Board of Directors authorized modification of the original investments of $300,000 by Platinum and $200,000
by Dr. Goldberg to a convertible preferred stock with a 10% PIK coupon retroactive to the time the initial investments were made.
The conversion price of the preferred will remain at the $500 million initial market cap but a full ratchet was added to enable the
adjustment of conversion price, warrant number and exercise price based on the valuation of the first institutional investment round.
In addition, the MT Board authorized issuance of additional convertible preferred stock with the same terms to Platinum as
compensation for the additional $200,000 of investments made in December 2015 and May 2016. Based on the MT Board’s
authorization of additional equity, the Company reclassified the additional $200,000 from a current liability to equity during the
year ended December 31, 2017. As of the date of filing of this Form 10-K, final documents related to the above transactions
authorized by the MT Board have not been completed.

In August 2018, the Company entered into the Agreement with Dr. Michael Goldberg related to his resignation from his positions
as an executive officer and a director of Navidea.  Among other things, the Agreement provided that Dr. Goldberg would become
Chief Executive Officer of MT, and that MT would redeem all of Dr. Goldberg’s MT preferred stock and issue to Dr. Goldberg MT
super voting common stock equal to 5% of the outstanding shares of MT, subject to execution of Definitive Agreements.  As of the
date of filing of this Annual Report on Form 10-K, the Definitive Agreements have not yet been signed.

On February 11, 2019, Dr. Goldberg represented to the MT Board that he had, without MT Board or shareholder approval, created a
subsidiary of MT, transferred all of the assets of MT into the subsidiary, and then issued himself stock in the subsidiary. On
February 19, 2019, Navidea notified MT that it was terminating the sublicense effective March 1, 2019 because MT became
insolvent in violation of the sublicense agreement. On February 20, 2019, the Board of Directors of MT removed Dr. Goldberg as
President and Chief Executive Officer of MT and from any other office of MT to which he may have been appointed or in which he
was serving. Dr. Goldberg remains a member of the MT Board, together with Michael Rice and Dr. Claudine Bruck. Mr. Rice and
Dr. Bruck remain members of the board of directors of Navidea. The MT Board then appointed Mr. Latkin to serve as President and
Chief Executive Officer of MT.

On February 20, 2019, Navidea filed a complaint against Dr. Goldberg in the United States District Court for the Southern District
of New York, alleging breach of the Agreement, as well as a breach of the covenant of good faith and fair dealing and to obtain a
declaratory judgment that Navidea’s performance under the Agreement is excused and that Navidea is entitled to terminate the
Agreement as a result of Dr. Goldberg’s actions.  Also 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 enter into are void.  On March
13, 2019, the Court of Chancery entered an order maintaining status quo, which provided, among other things, that MT’s board of
directors may authorize any act or transaction on behalf of the Company, and that without prior written authorization of the MT
board, Dr. Goldberg shall not hold himself out as CEO of MT or purport to act or authorize any action on behalf of MT except as
authorized by the MT board.

On March 7, 2019, Dr. Goldberg filed a complaint against Navidea and MT in the United States District Court for the Southern
District of New York. The Complaint alleges a breach of contract claim against both Navidea and MT for failure to pay to Dr.

 
 
 
 
 
 
 
 
 
 
 
 
Goldberg funds allegedly due to him under the Platinum Note. The Complaint further alleges a breach of contract claim against
Navidea due to Navidea’s failure to issue 23.5 million shares to Dr. Goldberg, to issue MT Super Voting Common Stock, by
removing Dr. Greene from the MT Board of Directors, by appointing Mr. Rice and Dr. Bruck to the MT Board of Directors, and by
terminating Dr. Goldberg as CEO of MT. See Note 15.

F-21

 
11. Accounts Payable, Accrued Liabilities and Other

At December 31, 2017, approximately $96,000 of accounts payable was being disputed by the Company related to unauthorized
expenditures by a former executive, which were incurred during the year ended December 31, 2016.

Accrued liabilities and other at December 31, 2018 and 2017, including an aggregate of $1.6 million and $975,000 due to related
parties for accrued termination costs, bonuses and director fees, consist of the following:

Compensation
Contracted services
Other

Total accrued liabilities and other

2018

2017

  $

  $

1,637,337    $
866,934     
12,776     
2,517,047    $

915,672 
923,115 
19,061 
1,857,848 

12. Notes Payable

Platinum

In July 2012, we entered into an agreement with Platinum to provide us with a credit facility of up to $50.0 million. Following the
approval of Tc99m tilmanocept, Platinum was committed under the terms of the agreement to extend up to $35.0 million in debt
financing to the Company. The agreement also provided for Platinum to extend an additional $15.0 million on terms to be
negotiated. Through June 25, 2013, we drew a total of $8.0 million under the original facility.

In June 2013, in connection with entering into a Loan Agreement with General Electric Capital Corporation (“GECC”) and MidCap
Financial SBIC, LP (“MidCap”) (the “GECC/MidCap Loan Agreement”), the Company and Platinum entered into an Amendment
to the Platinum Loan Agreement (the “First Platinum Amendment”). Concurrent with the execution of the First Platinum
Amendment, the Company delivered an Amended and Restated Promissory Note (the “First Amended Platinum Note”) to Platinum,
which amended and restated the original promissory note issued to Platinum, in the principal amount of up to $35.0 million. The
First Amended Platinum Note also adjusted the interest rate to the greater of (a) the U.S. Prime Rate as reported in the Wall Street
Journal plus 6.75%; (b) 10.0%; or (c) the highest rate of interest then payable pursuant to the GECC/MidCap Loan Agreement plus
0.125%.

In connection with the First Platinum Amendment, the Company and Platinum entered into a Warrant Exercise Agreement
(“Exercise Agreement”), pursuant to which Platinum exercised its Series X Warrant and Series AA Warrant. The warrants were
exercised on a cashless basis by canceling a portion of the indebtedness outstanding under the Platinum Loan Agreement equal to
$4.8 million, the aggregate exercise price of the warrants. Pursuant to the Exercise Agreement, in lieu of common stock, Platinum
received on exercise of the warrants 2,364.9 shares of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred
Stock”), convertible into 7,733,223 shares of our common stock in the aggregate (3,270 shares of common stock per preferred
share).

In March 2014, in connection with entering into a Loan and Security Agreement (the “Oxford Loan Agreement”) with Oxford
Finance, LLC, we entered into a second amendment to the Platinum Loan Agreement (the “Second Platinum Amendment”).
Concurrent with the execution of the Second Platinum Amendment, the Company delivered an Amended and Restated Promissory
Note (the “Second Amended Platinum Note”) to Platinum, which amended and restated the First Amended Platinum Note. The
Second Amended Platinum Note adjusted the interest rate to the greater of (i) the U.S. prime rate as reported in The Wall Street
Journal plus 6.75%, (ii) 10.0%, and (iii) the highest rate of interest then payable by the Company pursuant to the Oxford Loan
Agreement plus 0.125%.

In May 2015, in connection with the execution of the CRG Loan Agreement (discussed below), the Company amended the existing
Platinum credit facility to allow this facility to remain in place in a subordinated role to the CRG Loan (the “Third Platinum
Amendment”). Among other things, the Third Platinum Amendment (i) extended the term of the Platinum Loan Agreement until a
date six months following the maturity date or earlier repayment of the CRG Term Loan; (ii) changed the interest rate to the greater
of (a) the U.S. prime rate as reported in The Wall Street Journal plus 6.75%, (b) 10.0% and (c) the highest rate of interest then
payable pursuant to the CRG Term Loan plus 0.125%; (iii) required such interest to compound monthly; and (iv) changed the
provisions of the Platinum Loan Agreement governing Platinum’s right to convert advances into common stock of the Company.
The Third Platinum Amendment provided for the conversion of all principal and interest outstanding under the Platinum Loan
Agreement, but not until such time as the average daily volume weighted average price of the Company’s common stock for the ten
preceding trading days exceeds $2.53 per share. The Third Platinum Amendment became effective upon initial funding of the CRG
Loan Agreement.

F-22

 
 
 
 
 
 
 
 
   
 
   
   
 
 
 
 
 
 
 
 
 
In accordance with the terms of a Section 16(b) Settlement Agreement, Platinum agreed to forgive interest owed on the credit
facility in an amount equal to 6%, effective July 1, 2016. During the years ended December 31, 2018 and 2017, $153,000 and
$265,000, respectively, of interest was compounded and added to the balance of the Platinum Note.

In connection with the closing of the Asset Sale to Cardinal Health 414 in March 2017, 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 were transferred by Platinum-Montaur to PPCO. See Note
15.

The Platinum Note is reflected on the consolidated balance sheets at its principal balance plus the estimated fair value of the
embedded conversion option of $0 at December 31, 2018 and 2017. During the years ended December 31, 2018 and 2017, changes
in the estimated fair value of the Platinum conversion option were $0 and a decrease of $153,000, respectively, and were recorded
as non-cash changes in the fair value of financial instruments. The balance of the Platinum Note, including the fair value of the
embedded conversion option, was $0 and $2.0 million as of December 31, 2018 and 2017, respectively.

Capital Royalty Partners II, L.P.

In May 2015, Navidea and MT, as guarantor, executed a Term Loan Agreement (the “CRG Loan Agreement”) with CRG in its
capacity as a lender and as control agent for other affiliated lenders party to the CRG Loan Agreement (collectively, the “Lenders”)
in which the Lenders agreed to make a term loan to the Company in the aggregate principal amount of $50.0 million (the “CRG
Term Loan”), with an additional $10.0 million in loans to be made available upon the satisfaction of certain conditions stated in the
CRG Loan Agreement. Closing and funding of the CRG Term Loan occurred on May 15, 2015 (the “Effective Date”). The
principal balance of the CRG Term Loan bore interest from the Effective Date at a per annum rate of interest equal to 14.0%.
Through March 31, 2019, the Company had the option of paying (i) 10.00% of the per annum interest in cash and (ii) 4.00% of the
per annum interest as compounded interest which is added to the aggregate principal amount of the CRG Term Loan. During 2015
and 2016, a total of $1.8 million of interest was compounded and added to the balance of the CRG Term Loan. In addition, the
Company began paying the cash portion of the interest in arrears on June 30, 2015. Principal was due in eight equal quarterly
installments during the final two years of the term. All unpaid principal, and accrued and unpaid interest, was due and payable in
full on March 31, 2021. Pursuant to a notice of default letter sent to Navidea by CRG in April 2016, the Company stopped
compounding interest in the second quarter of 2016 and began recording accrued interest.

The CRG Term Loan was collateralized by a security interest in substantially all of the Company's assets. In addition, the CRG
Loan Agreement required that the Company adhere to certain affirmative and negative covenants, including financial reporting
requirements and a prohibition against the incurrence of indebtedness, or creation of additional liens, other than as specifically
permitted by the terms of the CRG Loan Agreement. The Lenders could accelerate the payment terms of the CRG Loan Agreement
upon the occurrence of certain events of default set forth therein, which include the failure of the Company to make timely
payments of amounts due under the CRG Loan Agreement, the failure of the Company to adhere to the covenants set forth in the
CRG Loan Agreement, and the insolvency of the Company. The covenants of the CRG Loan Agreement included a covenant that
the Company shall have EBITDA of no less than $5.0 million in each calendar year during the term or revenues from sales of
Tc99m tilmanocept in each calendar year during the term of at least $22.5 million in 2016, with the target minimum revenue
increasing in each year thereafter until reaching $45.0 million in 2020. However, if the Company were to fail to meet the applicable
minimum EBITDA or revenue target in any calendar year, the CRG Loan Agreement provided the Company a cure right if it raised
2.5 times the EBITDA or revenue shortfall in equity or subordinated debt and deposited such funds in a separate blocked account.
Additionally, the Company was required to maintain liquidity, defined as the balance of unencumbered cash and permitted cash
equivalent investments, of at least $5.0 million during the term of the CRG Term Loan. The events of default under the CRG Loan
Agreement also included a failure of Platinum to perform its funding obligations under the Platinum Loan Agreement at any time as
to which the Company had negative EBITDA for the most recent fiscal quarter, as a result either of Platinum’s repudiation of its
obligations under the Platinum Loan Agreement, or the occurrence of an insolvency event with respect to Platinum. An event of
default would entitle 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 it under the loan agreement and the related security agreement.

During the course of 2016, CRG alleged multiple claims of default on the CRG Loan Agreement, and filed suit in the District Court
of Harris County, Texas (the “Texas Court”) on April 7, 2016. On June 22, 2016, CRG exercised control over one of the
Company’s primary bank accounts and took possession of $4.1 million that was on deposit, applying $3.9 million of the cash to
various fees, including collection fees, a prepayment premium and an end-of-term fee. The remaining $189,000 was applied to the
principal balance of the debt. Multiple motions, actions and hearings followed over the remainder of 2016 and into 2017.

F-23

 
 
 
 
 
 
 
 
 
On March 3, 2017, the Company entered into a Global Settlement Agreement with MT, CRG, and Cardinal Health 414. In
accordance with the Global Settlement Agreement, on March 3, 2017, the Company repaid $59.0 million of its indebtedness and
other obligations outstanding under the CRG Term Loan.

Following a trial in December 2017, the Texas Court ruled that the Company’s total obligation to CRG was in excess of $66.0
million, limited to $66.0 million under the Global Settlement Agreement. The Texas Court acknowledged only the $59.0 million
payment made in March 2017, concluding that the Company owed CRG another $7.0 million, however the Texas Court did not
expressly take the Company’s June 2016 payment of $4.1 million into account and awarded, as part of the $66.0 million, amounts
that had already been paid as part of the $4.1 million. In April 2018, CRG drew approximately $7.1 million on a letter of credit that
was established pursuant to the Global Settlement Agreement. This was in addition to the $4.1 million and the $59.0 million that
Navidea had previously paid to CRG. The Company believes that the $4.1 million should be credited against the $7.0 million and is
currently pursuing recovery of $4.1 million and other damages. See Note 15.

IPFS Corporation

In November 2017, we prepaid $396,000 of insurance premiums through the issuance of a note payable to IPFS Corporation
(“IPFS”) with an interest rate of 4.0%. The note was payable in ten monthly installments of $40,000, with the final payment made
in August 2018. In November 2018, we prepaid $393,000 of insurance premiums through the issuance of a note payable to IPFS
with an interest rate of 5.1%. The note is payable in ten monthly installments of $40,000, with the final payment due in August
2019.

Interest expense related to the IPFS notes payable totaled $8,000 and $12,000 during the years ended December 31, 2018 and 2017,
respectively. The balance of the IPFS note was approximately $316,000 and $318,000 as of December 31, 2018 and 2017,
respectively, and was included in notes payable, current in the consolidated balance sheets.

Summary

During the years ended December 31, 2018 and 2017, we recorded interest expense of $161,000 and $159,000, respectively, related
to our notes payable. Of those amounts, $153,000 and $134,000 was compounded and added to the balance of our notes payable
during the years ended December 31, 2018 and 2017.

Interest expense in the amount of $1,706,491 during the year ended December 31, 2017 has been reclassified to discontinued
operations. See Note 3.

Annual principal maturities of our notes payable are $316,000 in 2019.

13. 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 initially recorded a total liability of $1.0 million, which was 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 $399,000
and a loss on disposal of assets, primarily leasehold improvements and furniture and fixtures, related to the Blazer space of
$706,000. Both losses were included in selling, general and administrative expenses for the year ended December 31, 2017.

A summary of the changes in our terminated lease liability during the year ended December 31, 2018 is presented below:

Total liability, January 1, 2018
Changes in estimated future payments
Payments under Blazer lease
Receipts from subtenant
Accretion of liability
Total liability, December 31, 2018

F-24

Terminated
Lease
Liability

  $

  $

695,307 
(43,393)
(491,031)
391,242 
37,048 
589,173 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
   
 
14. Leases

We currently lease approximately 5,000 square feet of office space at 4995 Bradenton Avenue, Dublin, Ohio, as our principal
offices. The current least term expires in June 2020, at a monthly base rent of approximately $3,000. We also lease approximately
2,000 square feet of office space at 560 Sylvan Avenue, Englewood Cliffs, New Jersey. The current lease term expires in March
2019, at a monthly base rent of approximately $3,000.

In addition, we currently lease approximately 25,000 square feet of office space at 5600 Blazer Parkway, Dublin, Ohio, formerly
our principal offices. The current lease term expires in October 2022, at a monthly base rent of approximately $26,000 during 2019.
In June 2017, the Company executed a sublease arrangement for the Blazer space, providing for monthly sublease payments to
Navidea of approximately $39,000 through October 2022.

We also currently lease a vehicle. The lease term expires in September 2021, at a monthly payment of approximately $300.

As of December 31, 2018, the future minimum lease payments for the years ending December 31 are as follows:

2019
2020
2021
2022

Total future minimum lease payments

Operating
Leases

339,202 
319,034 
306,781 
253,339 
1,218,356 

  $

  $

Total rental expense was $68,000 and $139,000 for the years ended December 31, 2018 and 2017, respectively. See Note 1(l).

15. 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, 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. In September 2016, the Court denied the Company’s motion to dismiss. The
Company filed its answer to the complaint and the parties have filed multiple joint motions to stay the case pending settlement
discussion, which to date have been granted.

In October 2017, the Company executed a letter of intent with Sinotau and 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 included 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.

In April 2018, the Company executed an agreement to provide Meilleur worldwide rights to conduct research using NAV4694, as
well as an exclusive license for the development and commercialization of NAV4694 in Australia, Canada, China, and Singapore.
Meilleur also has an option to commercialize worldwide. As a result of the agreement, the litigation initiated by Sinotau was
dismissed in September 2018.

CRG Litigation

Prior to the Asset Sale to Cardinal Health 414 in March 2017, all 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 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 it
under the loan agreement and the related security agreement. During the course of 2016, CRG alleged multiple claims of default on
the CRG Loan Agreement, and filed suit in the District Court of Harris County, Texas. 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. Multiple motions,
actions and hearings followed over the remainder of 2016 and into 2017.

F-25

 
 
 
 
 
 
 
 
 
 
 
   
   
   
 
 
 
 
 
 
 
 
 
 
 
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 the $59.0 million Deposit Amount of its 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 Texas Court 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 $47.0 million and no more than $66.0 million. In addition, concurrently with the
payment of the Deposit Amount and closing of the Asset Sale, (i) Cardinal Health 414 agreed to post a $7.0 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
agreed to post a $12.0 million letter of credit in favor of the Company as security for the amount by which the Deposit Amount
exceeds the Low Payoff Amount. In accordance with the Global Settlement Agreement, on March 3, 2017, the Company repaid
$59.0 million of its indebtedness and other obligations outstanding under the CRG Term Loan. Also on March 3, 2017, Cardinal
Health 414 posted a $7.0 million letter of credit, and on March 7, 2017, CRG posted a $12.0 million letter of credit, each as required
by the Global Settlement 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; CRG disagrees.

On January 16, 2018, the Company filed an emergency motion to set supersedeas bond and to modify judgment, describing the
double recovery created by the $66.0 million award without taking into account the $4.1 million payment in June 2016, requesting
that the judgment be modified to set the supersedeas amount at $2.9 million so that the Company could stay enforcement of the
judgment pending appeal. The Texas Court refused to rule on this motion, and the court of appeals entered an order compelling the
Texas Court to set a supersedeas amount. On March 26, 2018, the Texas Court ordered the Company to put up a supersedeas bond
in the amount of $7.7 million. The Company filed for an emergency stay of the order in the appellate court in Harris County. On
April 2, 2018, the appellate court denied the Company’s emergency stay motion. The Company continues to believe that the $4.1
million paid to CRG in June 2016 should be credited as payment toward the $66.0 million total, and intends to further contest the
matter through the appellate court in Texas. The Company’s appeal on the merits is now fully briefed, and the Company expects a
ruling on the merits appeal at some point in 2019. CRG has repeatedly filed motions seeking to have the Texas Court grant an anti-
suit injunction which would purportedly restrict Navidea’s ability to proceed with litigation in Ohio. All of these motions have been
denied either by the Texas Court or by the appellate court in Texas. The last such motion was denied on November 21, 2018. The
case is fully briefed and awaiting a ruling. The Company expects a ruling sometime in 2019.

On April 9, 2018, CRG drew approximately $7.1 million on the letter of credit. This was in addition to the $4.1 million and the
$59.0 million that Navidea had previously paid to CRG.

On April 12, 2018 Navidea filed suit in the Ohio Court against the Lenders.  The suit asserts 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 suit
also asserts claims for 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. On May 22, 2018 Navidea filed
an amended complaint asserting additional claims, including claims for breach of confidentiality by CRG, and on June 26, 2018
CRG filed a motion seeking to dismiss the amended complaint. On August 16, 2018, the Ohio Court entered an Order granting in
part and overruling in part CRG’s Motion to Dismiss.  While several of the Company’s claims were dismissed, the core of the
Complaint, relating to the claimed $4.1million overpayment to CRG was permitted to proceed.  On August 27, 2018, CRG filed a
Petition with the Ohio Supreme Court seeking a Writ of Prohibition against the Trial Court and asserting that the Ohio Court’s
denial in part of CRG’s Motion to Dismiss was improper.  The Trial Court filed a motion to dismiss the writ of prohibition and the
Company, after intervening in the writ of prohibition action, moved for judgment on the pleadings. Following that, proceedings
have resumed in front of the Trial Court.  Discovery is ongoing in the case and it is anticipated that the Company will file a Motion
for Summary Judgment sometime in 2019.

F-26

 
 
 
 
 
 
 
In a related proceeding before the Ohio Court, initially filed in 2016, and under which the Global Settlement Agreement was
reached in 2017, the Ohio Court has issued preliminary findings that the settlement gave rise to a $66.0 million cap on amounts
owed to Lenders by Navidea and that Navidea might not have been properly credited for certain funds in excess of $4.1 million
previously swept by Lenders from a bank account owned by Navidea.  The Ohio Court also made a preliminary ruling that it
possessed jurisdiction to interpret the settlement agreement at issue. The Company is pursuing recovery of the $4.1 million, and
other damages, in the Ohio Court in the case filed April 12, 2018 and referenced above.

On April 11, 2018, CRG filed a new suit against the Company in the Texas Court. This new suit seeks a declaratory judgment that
CRG did not breach the Global Settlement Agreement by drawing approximately $7.1 million on the Cardinal Health 414 letter of
credit. On April 16, 2018, CRG moved the Texas Court to issue an anti-suit injunction barring the Company from litigating in the
Ohio Court. The Texas Court denied that motion on April 27, 2018. The Company moved to dismiss these claims pursuant to the
Texas Citizens Participation Act. On August 17, 2018, the Texas Court denied the Company’s Motion to Dismiss.  That same day,
the Company took an immediate appeal of its claims under the Texas Citizens Participation Act to the Fourteenth Court of Appeals
of Texas.  The appeal of the denial of the Company’s motion to dismiss CRG’s complaint under the Texas Citizens Participation
Act is now fully briefed and awaiting a ruling. The Company expects a ruling sometime in 2019.

On July 11, 2018, CRG filed a first amended petition in the new suit. This amended petition includes the prior request for
declaratory judgment that CRG did not breach the Global Settlement Agreement. In addition, the amended petition asserts a claim
against Navidea for breach of contract. CRG alleges that Navidea breached the Global Settlement Agreement and its duty of good
faith and fair dealing by seeking reconsideration in the original Texas suit, appealing the original Texas suit, and filing the Ohio
suit. The Company is contesting this issue in the Ohio Court, the Texas Court, and on appeal in Texas. See Note 12.

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 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.

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. On February 8, 2018, Navidea and Sinotau executed an amendment to
the agreement, modifying certain terms of the agreement and effectively resolving the legal dispute. On February 17, 2018,
Navidea and Sinotau executed a Settlement Agreement and Mutual Release, and on February 20, 2018, Navidea and Sinotau
voluntarily dismissed their legal cases.

F-27

 
 
 
 
 
 
 
 
 
 
 
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 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 removed to the United States District Court for the Southern
District of New York on December 6, 2017.  An initial pretrial conference was held on January 26, 2018 and a follow up status
conference was held on March 9, 2018, during which the District Court set a briefing schedule and determined that Navidea’s
motion to dismiss was due on April 6, 2018.  The Company filed its motion to dismiss in advance of the filing deadline.  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
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. On February 26, 2019, the Company filed its brief in the Second
Circuit. It is not known at this time whether the Second Circuit will hold oral argument on this matter or when the Second Circuit
will render its decision. See Note 12.

Goldberg Agreement

Effective August 14, 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 Agreement, with the intent of entering into
one or more additional Definitive Agreements, which set forth the terms of the separation from service. The Agreement provides
that Dr. Goldberg will be entitled to receive a severance of $978,000 payable in equal installments over two years, along with a one-
time payment of approximately $35,000 which represents the cost of continuing his existing health care coverage for a period of 16
months. The Agreement also provides that Dr. Goldberg will be entitled to 23.5 million shares of common stock of Navidea,
representing in part payment of accrued bonuses and payment of the balance of the Platinum Note. A portion of the 23.5 million
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 Note to a party other than Dr. Goldberg. Further, the Agreement provides
that the Company’s subsidiary, MT, will 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. On November 20, 2018, the Company issued 18.5 million shares of
common stock of Navidea to Dr. Goldberg, 5.0 million of which were placed in escrow in accordance with the Agreement. As of the
date of filing this Annual Report on Form 10-K, the Definitive Agreements have not yet been signed.

On February 11, 2019, Dr. Goldberg represented to the MT Board that he had, without MT Board or shareholder approval, created a
subsidiary of MT, transferred all of the assets of MT into the subsidiary, and then issued himself stock in the subsidiary. On
February 19, 2019, Navidea notified MT that it was terminating the sublicense effective March 1, 2019 because MT became
insolvent in violation of the sublicense agreement. On February 20, 2019, the Board of Directors of MT removed Dr. Goldberg as
President and Chief Executive Officer of MT and from any other office of MT to which he may have been appointed or in which he
was serving. Dr. Goldberg remains a member of the MT Board, together with Michael Rice and Dr. Claudine Bruck. Mr. Rice and
Dr. Bruck remain members of the board of directors of Navidea. The MT Board then appointed Mr. Latkin to serve as President and
Chief Executive Officer of MT.

On February 20, 2019, Navidea filed a complaint against Dr. Goldberg in the United States District Court for the Southern District
of New York, alleging breach of the Agreement, as well as a breach of the covenant of good faith and fair dealing and to obtain a
declaratory judgment that Navidea’s performance under the Agreement is excused and that Navidea is entitled to terminate the
Agreement as a result of Dr. Goldberg’s actions.  Also 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 enter into are void.  On March
13, 2019, the Court of Chancery entered an order maintaining status quo, which provided, among other things, that MT’s board of
directors may authorize any act or transaction on behalf of the Company, and that without prior written authorization of the MT
board, Dr. Goldberg shall not hold himself out as CEO of MT or purport to act or authorize any action on behalf of MT except as
authorized by the MT board.

On March 7, 2019, Dr. Goldberg filed a complaint against Navidea and MT in the United States District Court for the Southern
District of New York. The Complaint alleges a breach of contract claim against both Navidea and MT for failure to pay to Dr.
Goldberg funds allegedly due to him under the Platinum Note. The Complaint further alleges a breach of contract claim against
Navidea due to Navidea’s failure to issue 23.5 million shares to Dr. Goldberg, to issue MT Super Voting Common Stock, by
removing Dr. Greene from the MT Board of Directors, by appointing Mr. Rice and Dr. Bruck to the MT Board of Directors, and by
terminating Dr. Goldberg as CEO of MT. See Note 22.

F-28

 
 
 
 
 
 
 
 
 
 
NYSE American Continued Listing Standards

On August 14, 2018, the Company received a notification (the “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, the
Deficiency Letter stated that Navidea is not in compliance with Section 1003(a)(ii) of the NYSE American Company Guide, which
requires an issuer to have stockholders’ equity of $4.0 million or more if it has reported losses from continuing operations and/or
net losses in three of its four most recent fiscal years. The Deficiency Letter noted that Navidea had stockholders’ equity of $2.1
million as of June 30, 2018, and has reported net losses in four of its five most recent fiscal years ended December 31, 2017.

Navidea was required to submit a plan to the NYSE American by September 14, 2018 advising of actions it has taken or will take to
regain compliance with the continued listing standards by February 14, 2020. Navidea submitted a plan by the deadline.

On October 25, 2018, the Company received a notification (the “Acceptance Letter”) from the NYSE American that the Company’s
plan to regain compliance was accepted. The Acceptance Letter also stated that the NYSE American had inadvertently omitted an
additional deficiency from the Deficiency Letter. Specifically, the Deficiency Letter should have stated that Navidea is not in
compliance with Section 1003(a)(iii) of the NYSE American Company Guide, which requires 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. The
Acceptance Letter noted that Navidea had stockholders’ equity of $2.1 million as of June 30, 2018, and has reported losses from
continuing operations and/or net losses in its five most recent fiscal years ended December 31, 2017.

The Company must provide quarterly updates to the NYSE American staff (the “Staff”) concurrent with its interim/annual SEC
filings. If Navidea fails to regain compliance with the stockholders’ equity standards by February 14, 2020, the NYSE American
may commence delisting procedures.

In addition, the Deficiency Letter stated that the Staff determined that the Company’s securities have been selling for a low price
per share for a substantial period of time and, pursuant to Section 1003(f)(v) of the NYSE American Company Guide, Navidea’s
continued listing is predicated on it effecting a reverse stock split of its common stock, par value $0.001 per share (“Common
Stock”) or otherwise demonstrating sustained price improvement within a reasonable period of time. The Staff initially granted
Navidea a plan period through February 14, 2019 to regain compliance with Section 1003(f)(v) by effecting a reverse stock split or
otherwise demonstrating sustained price improvement.

In August 2018, Navidea’s stockholders voted to approve a potential amendment to the Company’s amended and restated certificate
of incorporation to effect a reverse split of the Company’s common stock, as determined by the Board of Directors at its discretion,
of a ratio of not less than one-for-five and not more than one-for-twenty.

On January 28, 2019, the Company received a notice from the NYSE American that they had granted the Company an extension
until March 31, 2019 to regain compliance with Section 1003(f)(v) of the NYSE American’s continued listing standards. Navidea
must regain compliance with the price standard by that date in order to be considered for continued trading through the end of
February 14, 2020.

In accordance with ASC Topic 450, Contingencies, we make a provision for a liability when it is both probable that a liability has
been incurred and the amount of the loss can be reasonably estimated. Although the outcome of any litigation is uncertain, in our
opinion, the amount of ultimate liability, if any, with respect to these actions, will not materially affect our financial position.

16. Equity Instruments

a. Common Stock Issued: During September 2018, the Company entered into a Stock Purchase Agreement with an investor,

pursuant to which the Company issued to the investor in a private placement (the “Private Placement”) 18,320,610 shares (the
“Securities”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a purchase price of $3.0
million (the “Purchase Price”). The Company plans to use the proceeds from the Private Placement for general working
capital purposes, including, without limitation, research and development, and other operating expenses.

During November 2018, the Company issued 18,500,000 shares of common stock to Dr. Goldberg in connection with the
August 2018 Agreement. Of those shares, 5,000,000 are being held in escrow pursuant to the Agreement. See Note 15.

During the years ended December 31, 2018 and 2017, we issued 1,118,760 and 710,353 shares of our common stock valued at
$317,000 and $369,000, respectively, to our employees as payments in lieu of cash for their 2017, 2016 and 2015 bonuses.

During the years ended December 31, 2018 and 2017, we issued 94,684 and 105,308 shares of our common stock as matching
contributions to our 401(k) Plan which were valued at $36,000 and $54,000, respectively.

During the year ended December 31, 2017, we issued 16,406 shares of our common stock valued at $10,500 to certain
members of our Board of Directors as payment in lieu of cash for their retainer fees. We did not make any such stock payments
to our directors during the year ended December 31, 2018.

F-29

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
b. Stock Warrants: At December 31, 2018, there are 16.4 million warrants outstanding to purchase our common stock. The

warrants are exercisable at prices ranging from $0.01 to $2.50 per share with a weighted average exercise price per share of
$1.15. The warrants have remaining outstanding terms ranging from 0.7 to 16.6 years.

The following table summarizes information about our outstanding warrants at December 31, 2018:

Series HH
Series KK
Series LL
Series MM
Series MM
Series NN

Total warrants

* Weighted average exercise price.

  $

Exercise
Price

Number of
Warrants

  Expiration Date

2.49     
1.918     
0.01     
2.50     
2.50     
1.50     
1.15*   

301,205 
391,032 
4,365,280 
150,000 
150,000 
11,000,000 
16,357,517   

June 2023
March 2021
August 2035
September 2019
October 2019
March 2022

In addition, at December 31, 2018, there are 300 warrants outstanding to purchase MT Common Stock. The warrants are
exercisable at $2,000 per share.

In January 2017, Dr. Goldberg, then the Company’s President and CEO, exercised 5,411,850 of his Series LL warrants in
exchange for 5,411,850 shares of our common stock, resulting in proceeds to the Company of $54,119.

In March 2017, in connection with the Asset Sale, the Company granted to each of Cardinal Health 414 and UCSD, a five-year
Series NN 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 fair value of the Series NN warrants was calculated using the Black-Scholes model using our five-year historical weekly
volatility of 77.0% and a risk-free rate equal to the five-year treasury constant maturity rate of 2.0%. 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 year ended December 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 year ended December 30, 2017.

c. Common Stock Reserved: As of December 31, 2018, we have reserved 19,515,686 shares of authorized common stock for
the exercise of all outstanding stock options and warrants. An additional 5,000,000 shares of common stock have been
reserved for issuance to Dr. Goldberg related to the August 2018 Agreement. See Note 15.

17. Income Taxes

As of December 31, 2018 and 2017, our deferred tax assets (“DTAs”) were approximately $41.6 million and $39.7 million,
respectively. The components of our deferred tax assets are summarized as follows:

Deferred tax assets:

Net operating loss carryforwards
R&D credit carryforwards
AMT credit carryforward
Stock compensation
Intangibles
Gain/loss from discontinued operations
Disallowed interest expense
Temporary differences

Deferred tax assets before valuation allowance
Valuation allowance

Net deferred tax assets

F-30

  $

As of December 31,

2018

2017

29,597,313    $
9,067,874     
621,240     
375,731     
550,797     
—     
878,929     
480,888     
41,572,772     

29,570,581 
10,043,714 
1,229,979 
576,024 
591,651 
(2,510,699)
— 
207,447 
39,708,697 

(40,951,532)   
621,240    $

(38,478,718)
1,229,979 

  $

 
 
 
 
 
 
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
     
       
 
   
   
   
   
   
   
   
   
   
 
Current accounting standards require a valuation allowance against DTAs if, based on the weight of available evidence, it is more
likely than not that some or all of the DTAs may not be realized. Due to the uncertainty surrounding the realization of these DTAs
in future tax returns, all of the DTAs have been fully offset by a valuation allowance at December 31, 2018 and 2017 except the
alternative minimum tax (“AMT”) credit carryforward amount described below.

In assessing the realizability of DTAs, management considers whether it is more likely than not that some portion or all of the
DTAs will not be realized. The ultimate realization of DTAs is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax
liabilities (including the impact of available carryback and carryforward periods) and projected future taxable income in making this
assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which
the DTAs are deductible, management believes it is more likely than not that the Company will not realize the benefits of these
deductible differences or tax carryforwards as of December 31, 2018, except for the AMT credit carryforward.

The Tax Cuts and Jobs Act (the “Tax Act”) was signed into law on December 22, 2017.  The Tax Act reduced the U.S. federal
corporate tax rate from 35% to 21%, effective January 1, 2018. Consequently, we recorded a decrease related to DTAs of $26.4
million with a corresponding net adjustment to a valuation allowance of $26.4 million for the year ended December 31, 2017. The
Tax Act repeals the AMT for corporations, and permits any existing AMT credit carryforwards to be used to reduce the regular tax
obligation in 2018, 2019 and 2020.  Companies may continue using AMT credits to offset any regular income tax liability in years
2018 through 2020, with 50% of remaining AMT credits refunded in each of the 2018, 2019 and 2020 tax years, and all remaining
credits refunded in tax year 2021. This results in full realization of an existing AMT credit carryforward irrespective of future
taxable income. Accordingly, the Company recorded AMT credit carryforwards of $1.2 million in other noncurrent assets in the
consolidated balance sheet as of December 31, 2017. The Company reclassified 50% of the $1.2 million noncurrent DTA to
income tax receivable, which is included in prepaid and other current assets as of December 31, 2018.

As of December 31, 2018 and 2017, we had U.S. net operating loss carryforwards of approximately $130.9 million and $131.8
million, respectively. Of those amounts, $15.1 million relates to stock-based compensation tax deductions in excess of book
compensation expense (“APIC NOLs”) as of December 31, 2018, 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, but NOLs related to such benefits are not included in the table above. As of December 31,
2017, we adopted ASU 2016-09 and thereby eliminated all APIC NOLs with a full offset to a valuation allowance.

As of December 31, 2018 and 2017, we also had state net operating loss carryforwards of approximately $20.3 million and $20.4
million, respectively. The state net operating loss carryforwards will begin expiring in 2032.

At December 31, 2018 and 2017, we had U.S. R&D credit carryforwards of approximately $8.7 million and $9.7 million,
respectively.

F-31

 
 
 
 
 
 
 
 
There were no expirations of U.S. NOL carryforwards during 2018 or 2017. U.S. R&D credit carryforwards of $1.2 million expired
during 2018. There were no expirations of U.S. R&D credit carryforwards during 2017. The details of our U.S. net operating loss
and federal R&D credit carryforward amounts and expiration dates are summarized as follows:

Generated
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Total carryforwards

  Expiration
  2019
  2020
  2021
  2022
  2023
  2024
  2025
  2026
  2027
  2028
  2029
  2030
  2031
  2032
  2033
  2034
  2035
  2036
  2037
  2038

As of December 31, 2018

U.S. Net
Operating
Loss
Carryforwards

U.S. R&D
Credit
Carryforwards

  $

  $

—    $
—     
—     
—     
—     
—     
—     
—     
—     
—     
—     
—     
—     
18,684,249     
37,450,522     
34,088,874     
25,073,846     
15,581,209     
—     
—     
130,878,700    $

130,359 
71,713 
39,128 
5,350 
2,905 
22,861 
218,332 
365,541 
342,898 
531,539 
596,843 
1,094,449 
1,950,744 
468,008 
681,772 
816,116 
492,732 
262,257 
387,892 
197,547 
8,678,986 

During the year ended December 31, 2017, Cardiosonix recorded losses for financial reporting purposes of $5,000. As of December
31, 2016, Cardiosonix had tax loss carryforwards in Israel of approximately $7.7 million. Under Israeli tax law, net operating loss
carryforwards do not expire. Due to the uncertainty surrounding the realization of the related deferred tax assets in future tax
returns and the Company’s intent to dissolve Cardiosonix in the near term, all of the deferred tax assets were fully offset by a
valuation allowance at December 31, 2016. Cardiosonix was legally dissolved in September 2017 and as a result we eliminated all
tax loss carryforwards with a full offset to a valuation allowance.

Under Sections 382 and 383 of the IRC of 1986, as amended, the utilization of U.S. net operating loss and R&D tax credit
carryforwards may be limited under the change in stock ownership rules of the IRC. The Company completed a Section 382
analysis in 2017 and does not believe a Section 382 ownership change has occurred since then that would impact utilization of the
Company’s net operating loss and R&D tax credit carryforwards.

Reconciliations between the statutory federal income tax rate and our effective tax rate for continuing operations are as follows:

Benefit at statutory rate
Adjustments to valuation allowance
Adjustments to R&D credit carryforwards
Tax law changes
Permanent items and other
Benefit per financial statements

See Note 1(p).

2018

2017

%

  Amount

%

(21.0)%  $
15.3%    
6.1%    
— 
(0.3)%   
  $

(6,048,423)   
(26,080,051)   
(291,745)   
28,731,045     
(373,315)   
(4,062,489)   

(34.0)%
(146.6)%
(1.6)%
161.5%
(2.2)%

  Amount
  $

(3,383,491)   
2,458,580     
975,840     
—     
(60,682)   
(9,753)   

  $

F-32

 
 
 
 
   
 
 
 
   
 
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
 
 
 
 
 
 
 
 
 
 
   
 
   
 
   
   
   
   
   
  
  
 
 
18. 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, and NAV4694
(sublicensed in April 2018), and (ii) therapeutic development programs, including therapeutic applications of our Manocept
platform and all development programs undertaken by MT.

The information in the following tables is derived directly from each reportable segment’s financial reporting. Certain revenue and
expense amounts in the year ended December 31, 2017 have been reclassified to discontinued operations. See Note 3.

Year Ended December 31, 2018
Royalty revenue
License revenue
Grant and other revenue
Total revenue

Cost of revenue
Research and development expenses
Selling, general and administrative expenses, excluding
depreciation and amortization (a)
Depreciation and amortization (b)
Loss from operations (c)
Other expense (d)
Benefit from income taxes
Loss from continuing operations
Income from discontinued operations, net of tax effect
Gain on sale of discontinued operations, net of tax effect
Net loss
Total assets, net of depreciation and amortization:

United States
International
Capital expenditures

  Diagnostics     Therapeutics    Corporate    
  $

15,347    $
307,174     
494,997     
817,518     
96,636     
3,064,115     

—    $
—     
351,833     
351,833     
—     
1,157,766     

Total

15,347 
307,174 
846,830 
1,169,351 
96,636 
4,221,881 

—    $
—     
—     
—     
—     
—     

—     
—     
(2,343,233)    
—     
1,413     
(2,341,820)    
1,449     
43,053     
(2,297,318)    

7,469,144     
150,385     

7,547,750 
150,385 

78,606     
—     
(884,539)    
—     
534     

(7,619,529)     (10,847,301)
(5,321,270)
(5,321,270)    
9,753 
7,806     
(884,005)     (12,932,993)     (16,158,818)
1,449 
43,053 
(884,005)     (12,932,993)     (16,114,316)

—     
—     

—     
—     

91,425     
14,330     
—     

24,763     

—     

6,878,129     
381     
46,192     

6,994,317 
14,711 
46,192 

  $

F-33

 
 
 
 
 
 
 
   
   
   
   
   
   
   
   
   
   
   
   
   
   
     
       
       
       
 
   
      
   
 
Year Ended December 31, 2017
Royalty revenue
License revenue
Grant and other revenue
Total revenue

Cost of revenue
Research and development expenses, excluding depreciation

and amortization

Selling, general and administrative expenses, excluding

depreciation and amortization (a)
Depreciation and amortization (b)
Loss from operations (c)
Other income (expense) (d)
Benefit from income taxes
Loss from continuing operations
Income from discontinued operations, net of tax effect
Net income (loss)
Total assets, net of depreciation and amortization:

  Diagnostics     Therapeutics     Corporate    
  $

9,126    $
100,000     
1,506,232     
1,615,358     
3,651     

—    $
—     
195,079     
195,079     
—     

Total

9,126 
100,000 
1,701,311 
1,810,437 
3,651 

—    $
—     
—     
—     
—     

3,784,255     

729,587     

—     

4,513,842 

—     
—     
(2,172,548)    
—     
496,127     
(1,676,421)    
    88,673,053     
    86,996,632     

—     

34,484      10,895,301      10,929,785 
240,166 
240,166     
(568,992)     (11,135,467)     (13,877,007)
(3,912,679)
(3,912,679)    
—     
129,936     
4,062,489 
3,436,426     
(439,056)     (11,611,720)     (13,727,197)
—      88,673,053 
(439,056)     (11,611,720)     74,945,856 

—     

United States
International
Capital expenditures

  $ 13,065,871    $
30,476     
—     

49,001    $
—     
—     

7,634,237    $ 20,749,109 
32,327 
33,690 

1,851     
33,690     

(a) 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. Marketing and
selling expenses are allocated to our individual reportable segments.

(b) Depreciation and amortization is reflected in selling, general and administrative expenses ($150,385 and $240,166 for the

years ended December 31, 2018 and 2017, respectively).

(c) Loss from operations does not reflect the allocation of certain selling, general and administrative expenses, excluding

depreciation and amortization, to our individual reportable segments.

(d) Amounts consist primarily of interest income, interest expense, changes in fair value of financial instruments, and losses on

debt extinguishment, which are not currently allocated to our individual reportable segments.

19. Agreements

a. Supply Agreements: In November 2009, we entered into a manufacture and supply agreement with Reliable

Biopharmaceutical Corporation (“Reliable”) for the manufacture and supply of the Tc99m tilmanocept drug substance. The
initial ten-year term of the agreement expires in November 2019, with options to extend the agreement for successive three-
year terms. Either party had the right to terminate the agreement upon mutual written agreement, or upon material breach by
the other party if not cured within 60 days from the date of written notice of the breach. Total purchases under the
manufacture and supply agreement were $0 for the years ended December 31, 2018 and 2017. Upon closing of the Asset Sale
to Cardinal Health 414, our contract and open purchase order with Reliable were transferred to Cardinal Health 414.

In September 2013, we entered into a manufacturing services agreement with OSO BioPharmaceuticals Manufacturing, LLC
(“OsoBio”) for contract pharmaceutical development, manufacturing, packaging and analytical services for Tc99m
tilmanocept. Either party had the right to terminate the agreement upon mutual written agreement, or upon material breach by
the other party if not cured within 60 days from the date of written notice of the breach. During the term of agreement, OsoBio
was the primary supplier of manufacturing services for Tc99m tilmanocept. In consideration for these services, the Company
paid a unit pricing fee. In addition, the Company also paid OsoBio a fee for regulatory and other support services. Total
purchases under the manufacturing services agreement were $0 and $250,000 for the years ended December 31, 2018 and
2017, respectively. Upon closing of the Asset Sale to Cardinal Health 414, our contract and open purchase orders with OsoBio
were transferred to Cardinal Health 414.

Also in September 2013, we completed a service and supply master agreement with Gipharma S.r.l. (“Gipharma”) for process
development, manufacturing and packaging of reduced-mass vials to be sold in the EU. The agreement had an initial term of
three years and automatically renewed for an additional one-year periods. In consideration for these services, the Company
paid fees as defined in the agreement. Total purchases under the service and supply master agreement were $0 and $14,000 for
the years ended December 31, 2018 and 2017, respectively. Following the transfer of the Tc99m tilmanocept Marketing
Authorization to SpePharm, our contract with Gipharma was transferred to SpePharm.

F-34

 
 
 
   
   
   
   
   
   
   
   
   
   
   
     
       
       
       
 
   
   
 
 
 
 
 
 
 
 
 
 
 
 
b. Research and Development Agreements In January 2002, we completed a license agreement with UCSD for the exclusive
world-wide rights to Tc99m tilmanocept. The license agreement was effective until the later of the expiration date of the
longest-lived underlying patent. In July 2014, we amended the license agreement to extend the agreement until the third
anniversary of the expiration date of the longest-lived underlying patent. Under the terms of the license agreement, UCSD
granted us the exclusive rights to make, use, sell, offer for sale and import licensed products as defined in the agreement and
to practice the defined licensed methods during the term of the agreement. We could also sublicense the patent rights, subject
to certain sublicense terms as defined in the agreement. In consideration for the license rights, we agreed to pay UCSD a
license issue fee of $25,000 and license maintenance fees of $25,000 per year. We also agreed to make payments to UCSD
upon successfully reaching certain clinical, regulatory and cumulative sales milestones, and a royalty on net sales of licensed
products subject to a $25,000 minimum annual royalty. In addition, we agreed to reimburse UCSD for all patent-related costs
and to meet certain diligence targets. Total costs related to the UCSD license agreement for net sales and royalties of Tc99m
tilmanocept outside the Territory were $1,000 and $4,000 in 2018 and 2017, respectively, and were recorded in cost of
revenue.

In connection with the March 2017 closing of the Asset Sale to Cardinal Health 414, the Company amended and restated its
Tc99m tilmanocept license agreement with UCSD pursuant to which UCSD granted a license to the Company to exploit certain
intellectual property rights owned by UCSD and, separately, Cardinal Health 414 entered into a license agreement with UCSD
pursuant to which UCSD granted a license to Cardinal Health 414 to exploit certain intellectual property rights owned by
UCSD for Cardinal Health 414 to sell the Product in the Territory. Pursuant to the Purchase Agreement, in 2017 the Company
granted to UCSD a five (5)-year warrant to purchase up to 1 million shares of the Company’s common stock, par value $.001
per share, at an exercise price of $1.50 per share. Total costs related to the amended and restated UCSD license agreement for
annual maintenance fees and patent-related costs were $35,000 and $34,000 in 2018 and 2017, respectively, and were recorded
in research and development expenses.

In July 2014, the Company executed an expanded license agreement for the exclusive world-wide rights to all diagnostic and
therapeutic uses of tilmanocept (other than Tc99m tilmanocept). The license agreement is effective until the third anniversary
of the expiration date of the longest-lived underlying patent. Under the terms of the license agreement, UCSD has granted us
the exclusive rights to make, use, sell, offer for sale and import licensed products as defined in the agreement and to practice
the defined licensed methods during the term of the agreement. We may also sublicense the patent rights, subject to certain
sublicense terms as defined in the agreement. As consideration for the license rights, we agreed to pay UCSD a license issue
fee of $25,000 and license maintenance fees of $25,000 per year. We also agreed to make payments to UCSD upon
successfully reaching certain clinical, regulatory and cumulative sales milestones, and a royalty on net sales of licensed
products subject to a $25,000 minimum annual royalty. In addition, we agreed to reimburse UCSD for all patent-related costs
and to meet certain diligence targets. Total costs related to the UCSD license agreement for tilmanocept were $250,000 and
$253,000 in 2018 and 2017, respectively, and were recorded in research and development expenses.

In December 2011, we executed a license agreement with AstraZeneca AB for NAV4694, a proprietary compound that is
primarily intended for use in diagnosing Alzheimer’s disease and other CNS disorders. The license agreement is effective until
the later of the tenth anniversary of the first commercial sale of NAV4694 or the expiration of the underlying patents. Under
the terms of the license agreement, AstraZeneca granted us an exclusive worldwide royalty-bearing license for NAV4694 with
the right to grant sublicenses. In consideration for the license rights, we paid AstraZeneca a license issue fee of $5.0 million
upon execution of the agreement. We also agreed to pay AstraZeneca up to $6.5 million in contingent milestone payments
based on the achievement of certain clinical development and regulatory filing milestones, and up to $11.0 million in
contingent milestone payments due following receipt of certain regulatory approvals and the initiation of commercial sales of
the licensed product. In addition, we agreed to pay AstraZeneca a royalty on net sales of licensed and sublicensed products.
Total costs (adjustments) related to the AstraZeneca license agreement were $0 and $(70,000) in 2018 and 2017, respectively,
and were recorded in research and development expenses.

c. Employment Agreements: As of December 31, 2018, we had an employment agreement with one of our senior officers. The
employment agreement contains termination and/or change in control provisions that would entitle the officer to 4.25 times
his annual salary and vest outstanding restricted stock and options to purchase common stock if there is a termination without
cause or change in control of the Company (as defined) and his employment terminates. As of December 31, 2018, our
maximum contingent liability under this agreement in such an event is approximately $2.0 million. The employment
agreement generally also provides for severance, disability and death benefits.

20. Employee Benefit Plan

We maintain an employee benefit plan under Section 401(k) of the IRC. The plan allows employees to make contributions and we
may, but are not obligated to, match a portion of the employee’s contribution with our common stock, up to a defined maximum.
We also pay certain expenses related to maintaining the plan. We recorded expenses related to our 401(k) plan of $40,000 and
$12,000 during 2018 and 2017, respectively.

F-35

 
 
 
 
 
 
 
 
 
 
 
 
21. Supplemental Disclosure for Statements of Cash Flows

During 2018 and 2017, we paid interest aggregating $8,000 and $7.4 million, respectively. During 2017, we issued 1 million Series
NN warrants to UCSD with an estimated fair value of $334,000. During 2018 and 2017, we issued 94,684 and 105,308 shares of our
common stock, respectively, as matching contributions to our 401(k) Plan which were valued at $36,000 and $54,000, respectively.
In November 2018, we prepaid $393,000 of insurance premiums through the issuance of a note payable to IPFS with an interest rate
of 5.1%. In November 2017, we prepaid $396,000 of insurance premiums through the issuance of a note payable to IPFS with an
interest rate of 4.0%. As discussed in Note 9, the liability for the additional $200,000 of investments made by Platinum was
reclassified to additional paid-in-capital in January 2017. As discussed in Note 15, in November 2018, the Company issued 18.5
million shares of common stock of Navidea to Dr. Goldberg, of which approximately 16.4 million shares valued at $3.2 million
were applied as payment of the Platinum debt, including principal and accrued interest of $2.2 million and loss on extinguishment
of debt of $1.0 million.

22. Subsequent Events

On February 11, 2019, Dr. Goldberg represented to the MT Board that he had, without MT Board or shareholder approval, created a
subsidiary of MT, transferred all of the assets of MT into the subsidiary, and then issued himself stock in the subsidiary. On
February 19, 2019, Navidea notified MT that it was terminating the sublicense effective March 1, 2019 because MT became
insolvent in violation of the sublicense agreement. On February 20, 2019, the Board of Directors of MT removed Dr. Goldberg as
President and Chief Executive Officer of MT and from any other office of MT to which he may have been appointed or in which he
was serving. Dr. Goldberg remains a member of the MT Board, together with Michael Rice and Dr. Claudine Bruck. Mr. Rice and
Dr. Bruck remain members of the board of directors of Navidea. The MT Board then appointed Mr. Latkin to serve as President and
Chief Executive Officer of MT.

On February 20, 2019, Navidea filed a complaint against Dr. Goldberg in the United States District Court for the Southern District
of New York, alleging breach of the Agreement, as well as a breach of the covenant of good faith and fair dealing and to obtain a
declaratory judgment that Navidea’s performance under the Agreement is excused and that Navidea is entitled to terminate the
Agreement as a result of Dr. Goldberg’s actions.  Also 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 enter into are void.  On March
13, 2019, the Court of Chancery entered an order maintaining status quo, which provided, among other things, that MT’s board of
directors may authorize any act or transaction on behalf of the Company, and that without prior written authorization of the MT
board, Dr. Goldberg shall not hold himself out as CEO of MT or purport to act or authorize any action on behalf of MT except as
authorized by the MT board.

On March 7, 2019, Dr. Goldberg filed a complaint against Navidea and MT in the United States District Court for the Southern
District of New York.  The Complaint alleges a breach of contract claim against both Navidea and MT for failure to pay to Dr.
Goldberg funds allegedly due to him under the Platinum Note.  The Complaint further alleges a breach of contract claim against
Navidea due to Navidea’s failure to issue 23.5 million shares to Dr. Goldberg, to issue MT Super Voting Common Stock, by
removing Dr. Greene from the MT Board of Directors, by appointing Mr. Rice and Dr. Bruck to the MT Board of Directors, and by
terminating Dr. Goldberg as CEO of MT. See Note 15.

Except as described above, the Company has evaluated events and transactions subsequent to December 31, 2018 and through the
date these consolidated financial statements were included in this Annual Report on Form 10-K and filed with the SEC.

F-36

 
 
 
 
 
 
 
 
 
 
 
 
Subsidiaries of Navidea Biopharmaceuticals, Inc.

Subsidiaries
Navidea Biopharmaceuticals Limited
Macrophage Therapeutics, Inc.

Jurisdiction of Incorporation
United Kingdom
Delaware, United States

Percentage Owned by Registrant
100%
99.9%

Exhibit 21.1

 
 
 
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT

Exhibit 23.1

We consent to the incorporation by reference in the Registration Statement of Navidea Biopharmaceuticals, Inc. on Form S-3 (File Nos.
333-222092, 333-195806, 333-193330, 333-184173, 333-173752, 333-168485, 333-76151, and 333-15989) and Form S-8 (Nos. 333-
228960, 333-217814, 33-81410, 333-119219, 333-130636, 333-130640, 333-153110, 333-158323, 333-183317, 333-05143, 333-21053,
and 333-198716) of our report, which includes an explanatory paragraph as to the company’s ability to continue as a going concern,
dated  March  15,  2019,  with  respect  to  our  audits  of  the  consolidated  financial  statements  of  Navidea  Biopharmaceuticals,  Inc.  as  of
December 31, 2018 and 2017 and for the years then ended, which report is included in this Annual Report on Form 10-K of Navidea
Biopharmaceuticals, Inc. for the year ended December 31, 2018.

/s/ Marcum LLP

New Haven, Connecticut
March 15, 2019

 
 
 
 
 
 
 
 
 
 
 
 
 
POWER OF ATTORNEY

Exhibit 24.1

Each of the undersigned officers and directors of Navidea Biopharmaceuticals, Inc., a Delaware corporation (the “Company”), does
hereby constitute and appoint Jed A. Latkin as his or her agent and lawful attorney-in-fact, in his or her name and on his or her behalf,
and in any and all capacities stated below:

●

●

To sign and file with the United States Securities and Exchange Commission the Annual Report of the Company on Form 10-K
(the “Annual Report”) for the fiscal year ended December 31, 2018, and any amendments or supplements to such Annual Report;
and
To execute and deliver any instruments, certificates or other documents which they shall deem necessary or proper in connection
with the filing of such Annual Report, and generally to act for and in the name of the undersigned with respect to such filing as fully
as could the undersigned if then personally present and acting.

Each agent named above is hereby empowered to determine in his discretion the times when, the purposes for, and the names in which,
any power conferred upon him herein shall be exercised and the terms and conditions of any instrument, certificate or document which
may be executed by him pursuant to this instrument.

This Power of Attorney shall not be affected by the disability of any of the undersigned or the lapse of time.

The validity, terms and enforcement of this Power of Attorney shall be governed by those laws of the State of Ohio that apply to
instruments negotiated, executed, delivered and performed solely within the State of Ohio.

This Power of Attorney may be executed in any number of counterparts, each of which shall have the same effect as if it were the
original instrument and all of which shall constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney effective as of March 15, 2019.

Signature

Title                                                         

/s/ Jed A. Latkin
Jed A. Latkin

/s/ Y. Michael Rice
Y. Michael Rice

/s/ Claudine Bruck
Claudine Bruck, Ph.D.

/s/ Adam D. Cutler
Adam D. Cutler

/s/ S. Kathryn Rouan
S. Kathryn Rouan, Ph.D.

Chief Executive Officer, Chief Operating Officer and Chief Financial
Officer
(principal executive officer, principal financial officer and principal
accounting officer)

  Chairman of the Board of Directors

  Director

  Director

  Director

 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
   
 
 
 
   
 
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
 
   
 
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 31.1

I, Jed A. Latkin, certify that:

1. I have reviewed this annual report on Form 10-K of Navidea Biopharmaceuticals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all

material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be

designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the

registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting

which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

March 15, 2019

/s/ Jed A. Latkin
Jed A. Latkin
Chief Executive Officer, Chief Operating Officer, and Chief
Financial Officer

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 32.1

CERTIFICATION OF PERIODIC FINANCIAL REPORT PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, 18 U.S.C. SECTION 1350

The undersigned hereby certifies that he is the duly appointed and acting Chief Executive Officer of Navidea

Biopharmaceuticals, Inc. (the “Company”) and hereby further certifies as follows:

(1) The periodic report containing financial statements to which this certificate is an exhibit fully complies with the

requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the periodic report to which this certificate is an exhibit fairly presents, in all material

respects, the financial condition and results of operations of the Company.

In witness whereof, the undersigned has executed and delivered this certificate as of the date set forth opposite his signature

below.

March 15, 2019

/s/ Jed A. Latkin
Jed A. Latkin
Chief Executive Officer, Chief Operating Officer, and Chief
Financial Officer