On March 17, 2015, the Company entered into an exclusive license agreement with COH to acquire intellectual property rights pertaining to CAR-T (the “Original Agreement”). Pursuant to the agreement, the Company paid COH an upfront fee of $2.0 million, in April 2015 (included in research and development-licenses acquired expenses on the Statements of Operations), and granted COH 1,000,000 shares of Mustang’s Class A Common Stock, representing 10% ownership of Mustang, as of such date.  The Company valued the stock grant to COH utilizing a discounted cash flow model to determine the weighted market value of invested capital, discounted by a lack of marketability of 44.8% and a weighted average cost of capital of 30%, resulting in a $0.147 value per share or approximately $147,000 and is included in research and development-licenses acquired expenses on the Statements of Operations.

 

In February 2017, COH was granted 293,588 additional shares of the Company’s Common Stock, the shares were valued utilizing a weighted market model at approximately $5.73 per share or approximately $1.7 million as of October 2016, the effective date of the grant. The price per share was derived by utilizing the Option Pricing Method for allocating the enterprise value to the differing security holders, using a volatility of 77.0%, no discount for lack of marketability and a risk free rate of return of 1.93%. This additional grant was made pursuant to the terms of the agreement, which maintained COH ownership at 10% until the Company raised net proceeds of $10.0 million from third party investors. At December 31, 2016, since the Company did not have sufficient authorized Class A Common Shares available to issue this grant it was recorded on the balance sheet as a current liability in common share issuable. In February 2017, COH executed a waiver and acknowledgement agreement permitting issuance of the COH Anti-Dilution Shares in the form of Mustang Common Stock rather than Class A Common Stock as originally required, and such shares were issued. 

 

In December 2016, the Company entered into two consulting agreements, one with two City of Hope scientists, whereby effective January 1, 2017, in exchange for services provided to the Company each consultant shall be paid $60,000 per year, paid quarterly, through January 31, 2019. Further each consultant has agreed to serve on our Scientific Advisory Board on an as needed basis, and will receive additional compensation for those services. In addition, for services provided during the fourth quarter of 2016, pursuant to the terms of the agreement each consultant earned $60,000, which was paid in the first quarter of 2017. As of December 31, 2016, the City of Hope owns 1,000,000 Class A common shares representing approximately 6.1% of ownership and has the right to appoint a director to our Board of Directors. At December 30, 2015 the City of Hope owned approximately 10% of the Company.