Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

v3.8.0.1
Commitments and Contingencies
12 Months Ended
Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]
Note 7 - Commitments and Contingencies
 
Leases
 
On October 27, 2017, Mustang entered into a lease agreement with WCS - 377 Plantation Street, Inc., a Massachusetts nonprofit corporation. Pursuant to the terms of the lease agreement, Mustang agreed to lease 27,043 sf from the Landlord, located at 377 Plantation Street in Worcester, MA, through November 2026, subject to additional extensions at Mustang’s option. Base rent, net of abatements of $0.6 million over the lease term, totals approximately $3.6 million, on a triple-net basis. Mustang plans to make improvements to the facility of approximately $3.5 million.
 
The terms of the lease also require that Mustang post an initial security deposit of $0.8 million, in the form of $0.5 million letter of credit and $0.3 million in cash, which shall increase to $1.3 million ($1.0 million letter of credit, $0.3 million in cash) when the Facility is fully occupied by Mustang. After the fifth lease year, the letter of credit obligation is subject to reduction.
 
The Facility is expected to be operational for the production of personalized CAR T therapies in 2018.
 
Total future minimum lease payments under the lease are:
 
($ in thousands)
 
 
 
 
2018
 
$
38
 
2019
 
 
264
 
2020
 
 
448
 
2021
 
 
462
 
2022
 
 
476
 
Beyond
 
 
1,947
 
Total minimum lease payments
 
$
3,635
 
  
Litigation
 
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 by us.
 
In connection with the legal settlement, above, Fortress delivered 200,000 Mustang common shares, held by Fortress, to Plaintiff. During the year ended December 31, 2017, the Company recorded this transaction as a capital contribution from Fortress and a corresponding expense of approximately $2.0 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 $0.2 million cash settlement to the plaintiff, such amount was recorded in general and administrative expenses on the Statements of Operations.