Note 4 - Related Party Agreements

Founders Agreement and Management Services Agreement with Fortress

In connection with the Company’s Management Services Agreement (the “MSA”) with Fortress for the three and nine months ended September 30, 2022 and 2021, respectively, expenses related to the MSA are recorded 50% in research and development expenses and 50% in general and administrative expenses in the Unaudited Statements of Operations. For the three months ended September 30, 2022 and 2021, the Company recorded expense of $0.2 million and $0.1 million, respectively, related to the MSA. For the nine months ended September 30, 2022 and 2021, the Company recorded expense of $0.8 million and $0.4 million, respectively, related to the MSA

Under the terms of the Second Amended and Restated Founders Agreement (the “Founders Agreement”), which became effective July 22, 2016, Fortress will receive a grant of shares of our common stock equal to two and one-half percent (2.5%) of the gross amount of any equity or debt financing.  For the nine months ended September 30, 2022, the Company issued 1,196,187 shares of common stock to Fortress, which equaled 2.5% of the gross proceeds of $6.6 million from the sale of shares of common stock under Mustang’s at-the-market offering and $30 million from the Runway Growth Capital Term Loan.  For the three months ended September 30, 2022 and 2021, the Company recorded expense of approximately $18,000 and $0.1 million, respectively, in general and administrative expenses related to these shares. For the nine months ended September 30, 2022 and 2021, the Company recorded expense of approximately $0.9 million and $1.7 million, respectively, in general and administrative expenses related to these shares.

Annual Stock Dividend

​

Pursuant to the Amended and Restated Articles of Incorporation, the Company issued 2,536,607 shares of common stock to Fortress for the Annual Stock Dividend, representing 2.5% of the fully-diluted outstanding equity of Mustang on January 1, 2022. This was shown in the Statement of Stockholders’ Equity at December 31, 2021, as Common stock issuable – Founders Agreement. The Company recorded an expense of approximately $4.2 million in research and development – licenses acquired related to these issuable shares during the year ended December 31, 2021.

Payables and Accrued Expenses Related Party

​

In the normal course of business Fortress pays for certain expenses on behalf of the Company. Such expenses are recorded as payables and accrued expenses - related party and are reimbursed to Fortress in the normal course of business.