The Company maintains a controlling interest in National Holdings Corporation, a diversified independent brokerage company.  One of National’s subsidiaries, National Securities Corporation, is an independent broker-dealer offering retail and institutional advisory, investment, insurance and tax planning services. From time to time, NSC provides services to the Company and its affiliates.

 

 

TGTX and the Company entered into an arrangement to share the cost of certain research and development employees. The Company’s Executive Vice Chairman, Strategic Development, is Executive Chairman and Interim Chief Executive Officer of TGTX. Under the terms of the Agreement, TGTX will reimburse the Company for the salary and benefit costs associated with these employees based upon actual hours worked on TGTX related projects. For the three months ended September 30, 2018 and 2017, the Company invoiced TGTX $0.2 million and $0.2 million, respectively. For the nine months ended September 30, 2018 and 2017, the Company invoiced TGTX $1.2 million and $0.8 million, respectively. At September 30, 2018, the amount receivable from TGTX related to this arrangement approximated $0.1 million.

 

In connection with the Company’s Desk Space Agreements with TGTX and Opus Point Partners Management, LLC (“OPPM”), as of September 30, 2018, the Company had paid $1.8 million in rent under the Desk Space Agreements, and invoiced OPPM and TGTX approximately $162,000 and $0.7 million, respectively, for their prorated share of the rent base. In addition, for the nine months ended September 30, 2018, the Company had incurred approximately $96,000 in connection with the build out of the space and recorded a receivable of $43,000 due from TGTX and $10,000 due from OPPM. At September 30, 2018, the amount due from TGTX approximated a credit of $48,000 and the amount due from OPPM approximated $162,000.

 

On March 12, 2018, the Company and OPHIF amended and restated the Opus Credit Facility (the “A&R Opus Credit Facility”). The A&R Opus Credit Facility extends the maturity date of the notes issued under the Opus Credit Facility from September 14, 2018 by one year to September 14, 2019. The A&R Opus Credit Facility also permits the Company to make portions of interest and principal repayments in the form of shares of the Company’s common stock and/or in common stock of the Company’s publicly-traded subsidiaries, subject to certain conditions. Fortress retains the ability to prepay the Notes at any time without penalty. The notes payable under the A&R Opus Credit Facility continue to bear interest at 12% per annum (see Note 11). For the nine months ended September 30, 2018 and 2017, the Company paid $0.3 million and $0.8 million, respectively. The Q2 interest payment due May 31, 2018 was paid in 86,289 shares of Company stock. The Q3 interest payment due August 31, 2018 was paid in 147,741 shares of

.

 

NSC, a subsidiary of National (of which the Company owns 56.3%), served as the sole book running manager in connection with Checkpoint’s 2018 equity offering, which closed on March 12, 2018. As the Sole Book Running Manager, NSC received a fee of approximately $1.8 million, or 8% on the gross proceeds raised of $23.0 million. The fees were eliminated in consolidation.

 

On February 2, 2018, Mustang entered into an Option Agreement the (“TGTX Mustang Option”) with TG Therapeutics, Inc. (“TGTX”), a related party, whereby TGTX was granted the option to enter into a global collaboration on the joint development and commercialization of product candidates pertaining to Mustang’s CD20 license agreement with the Fred Hutchinson Cancer Research Center. In consideration of the TGTX Mustang Option, TGTX

an option fee of $50,000, which was recorded by Mustang as Collaboration Revenue Related Party in the Condensed Consolidated Statement of Operations. The TGTX Option expired on August 1, 2018 without action. Mr. Weiss, the Company’s Executive Vice Chairman, Strategic Development, serves as the Chief Executive Officer of TGTX.

 

For the nine-month period ended

 30, 2018, the Company raised approximately $21.7 million in promissory notes. National Securities Corporation (“NSC”), a wholly-owned subsidiary of National, and a related party as a result of the Company’s ownership of National, acted as the sole placement agent for the 2018 Venture Notes. The Company paid NSC a fee of $1.7 million during the nine months ended September 30, 2018, in connection with the 2018 Venture Notes. At September 30, 2018, the fee, which was recorded as debt discount on the Company’s Condensed Consolidated Balance Sheet and will be amortized over the life of the 2018 Venture Notes, was eliminated in consolidation.

 

 

The Company has entered into Founders Agreements and, in some cases, Exchange Agreements, with certain of its subsidiaries as described in the Company’s Form 10-K for the year ended December 31, 2017, filed with the SEC on March 16, 2018. The following table summarizes, by subsidiary, the effective date of the Founders Agreements and PIK dividend or equity fee payable to the Company in accordance with the terms of the Founders Agreements, Exchange Agreements and the subsidiaries’ certificates of incorporation.

 

 

 

 

 

The Company has entered in Management Services Agreements (the “MSAs”) with certain of its subsidiaries as described in the Company’s Form 10-K for the year ended December 31, 2017, filed with the SEC on March 16, 2018. The following table summarizes, by subsidiary, the effective date of the MSA and the annual consulting fee payable by the subsidiary to the Company in quarterly installments:

 

 

 

On June 12, 2018, Michael S. Weiss, the Company’s Executive Vice Chairman, Strategic Development, resigned from his position on the National board of directors. As of September 30, 2018, the Company owns approximately 56.3% of National.

 

Additionally, the Company’s Chairman, President and Chief Executive Officer and the Company’s Executive Vice Chairman, Strategic Development are both Co-Portfolio Managers and Partners of OPPM, which owns approximately

of National. In the normal course, National has occasionally provided the Company and the Company’s subsidiaries with placement agent services in connection with third party raises. These fees are eliminated in consolidation.