10Q--was full $1.5mm loan (B.Sheet adjusted to $720k for accounting amortization), plus partner sou | NAVB Message Board Posts


Navidea Biopharmaceuticals, Inc.

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Msg  37771 of 38281  at  8/15/2022 5:17:05 PM  by

moneyonomics

The following message was updated on 8/16/2022 3:31:00 AM.

 In response to msg 37770 by  FIRAC
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Re: 10Q--was full $1.5mm loan (B.Sheet adjusted to $720k for accounting amortization), plus partner source of reimbursement

  
amortization of value benefit provided to preferred for loan inducement  

 

Bridge Note from John K. Scott, Jr.

 

On April 10, 2022, the Company entered into a Purchase Agreement with John K. Scott, Jr., the current Vice Chairman of our Board of Directors, pursuant to which Mr. Scott agreed to make a loan to the Company in the principal amount of up to $2.5 million, of which $1.5 million was funded on the closing date. Mr. Scott funded an additional $1.0 million on July 1, 2022. The outstanding balance of the loan, which is evidenced by a Bridge Note, bears interest at a rate of 8% per annum, with payments of interest only to be made monthly over a period of two years. All outstanding principal and accrued and unpaid interest under the Bridge Note is due and payable on the second anniversary of the Purchase Agreement. The Company’s obligations under the Bridge Note are secured by a first priority security interest in all of the Company’s assets and personal property pursuant to a Security Agreement. See Notes 11 and 16.

 

As consideration and partial inducement for Mr. Scott to enter into the Bridge Note, the Company exchanged all 50,000 shares of Mr. Scott’s Series E Redeemable Convertible Preferred Stock (“Series E Preferred Stock”) for 1,740 shares of Series F Preferred Stock and 3,260 shares of Series G Preferred Stock. In accordance with current accounting guidance, the Company recorded a debt discount of $835,876 including $821,250 related to the difference in the value of Mr. Scott’s Series E Preferred Stock and the Series F and Series G Preferred Stock and $14,626 of debt issuance costs. The debt discount is being amortized as non-cash interest expense using the effective interest method over the term of the Bridge Note. The balance of the debt discount was $779,695 as of June 30, 2022.

 

Interest expense related to the Bridge Note totaled $83,182 during the three-month and six-month periods ended June 30, 2022. The principal balance of the Bridge Note was $1.5 million as of June 30, 2022.

 

8.

Notes Payable

 

The Company has evaluated events and transactions subsequent to June 30, 2022 and through the date these condensed consolidated financial statements were included in this Quarterly Report on Form 10-Q and filed with the SEC.

 

Bridge Note

 

On July 1, 2022, Mr. Scott funded an additional $1.0 million under the Bridge Note, bringing the total outstanding principal balance to $2.5 million.

 

Rights Offering

 

On August 4, 2022, the Company commenced its previously announced Rights Offering. Under the terms of the Rights Offering, the Company distributed non-transferable subscription rights to each of its holders of Common Stock, and its holders of certain warrants, Series D Preferred Stock and Series F Preferred Stock, in each case held as of August 3, 2022. The subscription rights will expire on August 17, 2022, unless the Company extends the expiration date. Each subscription right entitles the holder to purchase one Unit at a subscription price of $1,000 per Unit, consisting of one share of Series I Preferred Stock (which is immediately convertible into 1,538 shares of Common Stock) and warrants to purchase an additional 1,538 shares of our Common Stock. The Rights Offering may result in aggregate gross proceeds of up to $35.0 million to the Company. Certain participants in the Rights Offering have the ability to pay the subscription price for their Units by cancelling or exchanging their shares of Series D Preferred Stock, Series F Preferred Stock and/or Series G Preferred Stock and the Company’s indebtedness evidenced by the Bridge Note, instead of paying by check or wire transfer of funds. The fair market value of the shares of each series of preferred stock and the Bridge Note to be cancelled or exchanged in the Rights Offering has been determined by the Company’s Board of Directors based on an independent appraisal obtained by the Company. The total amount of cash proceeds received by the Company in the Rights Offering will be reduced to the extent any such series of preferred stock and/or the Bridge Note are exchanged or cancelled in the Rights Offering. Net proceeds after deducting fees and expenses related to the Rights Offering will be used to fund our pivotal Phase 3 clinical trial for RA, obtaining regulatory approvals, working capital, and for general corporate purposes.

 

Research and Development Expense Reimbursement

 

The Company has previously entered into an agreement with a strategic partner for assistance with the development and supply of the active pharmaceutical ingredient (“API”) used to manufacture Lymphoseek (technetium Tc 99m tilmanocept) that is sold by the Company in countries other than the United States, Canada and Mexico. Under the agreement, among other things, the strategic partner agreed to reimburse the Company for up to a total of $1.85 million of the Company’s out-of-pocket costs associated with such development, in two installments, subject to specified commercial and regulatory milestones. On August 11, 2022, the Company received the first installment in the amount of $800,000, which is subject to clawback if the Company does not satisfy certain commercial and regulatory milestones on or before March 31, 2023. The strategic partner is obligated, subject to certain conditions, to pay the remaining reimbursement amount upon the later of July 1, 2023 or satisfaction of specified commercial and regulatory milestones.

 

16.

Subsequent Events

 
 
 
 
 
 
 
 
 
 


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