On January 15, 2016, Dr. Winson Tang (“Plaintiff”) filed a Complaint against the Company in the Superior Court of the State of California, County of Los Angeles. Winson Tang v. Lindsay Rosenwald et al., Case No. BC607346. As amended, the Complaint requested a declaration that Plaintiff was a 15% owner of the Company’s outstanding shares, and alleged two claims for breach of contract against other Defendants. On November 3, 2017, Plaintiff and Defendants entered into a Settlement Agreement. The Settlement Agreement did not require issuance of any new shares of the Company.

 

In connection with the legal settlement, above, Fortress is required to deliver 200,000 Mustang common shares, held by Fortress, to Plaintiff in accordance with this settlement arrangement. At September 30, 2017, the Company recorded this transaction as a capital contribution from Fortress and a corresponding expense of approximately $2.1 million based upon the closing share price of Mustang shares as of the date of the Settlement Agreement. In addition to the share issuance the Company paid, in November 2017, a $0.1 million cash settlement to the plaintiff, such amount was accrued as of September 30, 2017 and recorded in general and administrative expenses on the Condensed Consolidated Statements of Operations.