What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-03-23 compared with 2021-03-24 · 191 added, 253 removed, 722 unchanged (38% of the section changed)

3 unchanged sentences

Disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) are designed only to provide reasonable assurance that they will meet their objectives.

and operation of our disclosure controls and procedures, as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e).

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness, as of December 31, 2021, of the design and operation of our disclosure controls and procedures, as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e).

Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

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Other Information

Disclosure Regarding Foreign Jurisdiction that Prevents Inspections.

Directors, Executive Officers and Corporate Governance

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The following financial statements are filed as part of this Form 10-K:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm ( KPMG LLP , New York, NY ;

Report of Independent Registered Public Accounting Firm ( BDO USA, LLP , Boston, MA ;

Financial Statements:

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Filed as Exhibit 3.1 on the Company’s Form 8K filed on December 4, 2020.

Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Mustang Bio, Inc., dated June 17,

Filed as Exhibit 3.1 on the Company’s Form 8-K filed on June 22, 2021.

Bylaws of Mustang Bio, Inc.

61 unchanged sentences

Filed as Exhibit 10.1 on the Company’s Form 10-Q filed on August 9, 2019.

Consent of Independent Registered Public Accounting Firm, BDO USA, LLP

Second Amendment to the Mustang Bio, Inc.

2016 Equity Incentive Plan.

Filed as Exhibit 10.1 on the Company’s Form 8-K filed on June 22, 2021.

Amendment to the Mustang Bio, Inc.

2019 Employee Stock Purchase Plan.

Filed as Exhibit 10.2 on the Company’s Form 8-K filed on June 22, 2021.

Letter from BDO USA, LLP to the Securities and Exchange Commission dated September 22, 2021, incorporated by

reference to the Form 8-K filed on September 24, 2021.

Consent of Independent Registered Public Accounting Firm, BDO USA, LLP, Boston, Massachusetts.

Consent of Independent Registered Public Accounting Firm, KPMG, LLP, Hartford, Connecticut.

Power of Attorney (included on signature page).

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INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (KPMG LLP, New York, NY;

Report of Independent Registered Public Accounting Firm (BDO USA, LLP, Boston, MA;

Balance Sheets as of December 31, 2021 and 2020

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Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

To the Stockholders and Board of Directors

Mustang Bio, Inc.

New York, New York

Worcester, Massachusetts

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Mustang Bio, Inc.

(the “Company”) as of December 31, 2020 and 2019, the related statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying balance sheet of Mustang Bio, Inc.

(the Company) as of December 31, 2021, the related statements of operations, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year then ended, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on these financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We have served as the Company’s auditor since 2021.

Hartford, Connecticut

March 23, 2022

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Mustang Bio, Inc.

Worcester, Massachusetts

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Mustang Bio, Inc.

(the “Company”) as of December 31, 2020, the related statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ BDO USA, LLP

1 unchanged sentence

March 24, 2021

We have served as the Company's auditor from 2016 to 2021.

MUSTANG BIO, INC.

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Payables and accrued expenses - related party

Short-term notes payable

Operating lease liabilities - short-term

Total current liabilities

Notes payable

Deferred income

Operating lease liabilities - long-term

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Stockholders’ Equity

Preferred stock ($ 0.0001 par value), 2,000,000 shares authorized, 250,000 shares of Class A preferred stock issued and outstanding as of December 31, 2020 and December 31, 2019, respectively

Common Stock ($ 0.0001 par value), 125,000,000 shares authorized

Class A common shares, 845,385 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively

Common shares, 70,920,693 and 39,403,519 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively

Common stock issuable, 2,103,122 and 1,206,667 shares as of December 31, 2020 and December 31, 2019, respectively

Preferred stock ($ 0.0001 par value), 2,000,000 shares authorized, 250,000 shares of Class A preferred stock issued and outstanding as of December 31, 2021 and 2020, respectively

Common Stock ($ 0.0001 par value), 150,000,000 and 125,000,000 shares authorized as of December 31, 2021 and 2020, respectively

Class A common shares, 845,385 shares issued and outstanding as of December 31, 2021 and 2020, respectively

Common shares, 93,582,991 and 70,920,693 shares issued and outstanding as of December 31, 2021 and 2020, respectively

Common stock issuable, 2,536,607 and 2,103,122 shares as of December 31, 2021 and 2020, respectively

Additional paid-in capital

2 unchanged sentences

Total Liabilities and Stockholders’ Equity

The accompanying notes are an integral part of these financial statements.

See accompanying notes to financial statements.

MUSTANG BIO, INC.

14 unchanged sentences

Weighted average number of common shares outstanding, basic and diluted

The accompanying notes are an integral part of these financial statements.

See accompanying notes to financial statements.

MUSTANG BIO, INC.

8 unchanged sentences

Issuance of common shares - Founders Agreement

Issuance of common shares - Equity fee on Horizon Notes to Fortress Biotech

Issuance of warrants - Horizon Notes

Conversion of Class A common shares to common shares

Issuance of common shares, net of offering costs - At-the-Market Offering

2 unchanged sentences

Issuance of common shares - Equity fee on Public Offering

Issuance of common shares under ESPP

Stock-based compensation expenses

5 unchanged sentences

Issuance of common shares - Equity fee on At-the-Market Offering

Issuance of common shares, net of offering costs - Public Offering

Issuance of common shares - Equity fee on Public Offering

Issuance of common shares under ESPP

Correction to previously issued shares

Stock-based compensation expenses

1 unchanged sentence

Balances at December 31, 2021

The accompanying notes are an integral part of these financial statements.

See accompanying notes to financial statements.

MUSTANG BIO, INC.

4 unchanged sentences

Adjustments to reconcile net loss to net cash used in operating activities:

Accretion of debt discount

Issuance of common shares - Equity fee on At-the-Market Offering to Fortress Biotech

Issuance of common shares - Equity fee on Public Offering to Fortress Biotech

Issuance of common shares - Equity fee on Horizon Notes to Fortress Biotech

Common shares issuable for Founders Agreement

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Depreciation expense

Accretion of debt discount

Amortization of operating lease right-of-use assets

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

Prepaid expenses and other assets

Other receivables - related party

1 unchanged sentence

Payable and accrued expenses - related party

Deferred income

Lease liabilities

1 unchanged sentence

Cash Flows from Investing Activities:

Maturity of certificate of deposit

Purchase of research and development licenses

Purchase of fixed assets

Net cash (used in) provided by investing activities

Net cash used in investing activities

Cash Flows from Financing Activities:

Proceeds from Horizon Notes

Debt issuance costs

Proceeds from issuance of common shares - At-the-Market Offering

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Issuance of common shares - Founders Agreement

Offering costs for the issuance of common shares - At-the-Market Offering, in accounts payable and accrued expenses

Issuance of warrants - Horizon Notes

The accompanying notes are an integral part of these financial statements.

Research and development licenses included in accounts payable and accrued expenses

Lease liabilities arising from obtaining right-of-use assets

Offering costs for the issuance of common shares - Public Offering, in accounts payable and accrued expenses

See accompanying notes to financial statements.

Notes to Financial Statements

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As of December 31, 2021, the Company had an accumulated deficit of $ 251.8 million.

The Company has funded its operations to date primarily through the sale of equity and its venture debt financing agreement (the "Loan Agreement") with Horizon Technology Finance Corporation ("Horizon"), herein referred to as the "Horizon Notes."

In September 2020, we repaid the Horizon Notes in full all amounts that were outstanding under the loan agreement, which was comprised of $ 15.0 million face value of the outstanding notes, $ 112,500 accrued and unpaid interest, a $ 750,000 loan termination fee and prepayment penalties of $ 550,000 .

The Company has funded its operations to date primarily through the sale of equity, its Loan Agreement with Runway and its venture debt financing agreement (the "Horizon Loan Agreement") with Horizon Technology Finance Corporation ("Horizon"), herein referred to as the "Horizon Notes."

In September 2020, we repaid the Horizon Notes in full all amounts that were outstanding under the Horizon Loan Agreement, which was comprised of $15.0 million face value of the outstanding notes, $112,500 accrued and unpaid interest, a $750,000 loan termination fee and prepayment penalties of $550,000.

The Company expects to continue to use the proceeds from previous financing transactions primarily for general corporate purposes, including financing the Company’s growth, developing new or existing product candidates, and funding capital expenditures, acquisitions and investments.

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The Company will be required to expend significant funds in order to advance the development of its product candidates.

The Company will require additional financings through equity and debt offerings, collaborations and licensing arrangements or other sources to fully develop, prepare regulatory filings, obtain regulatory approvals and commercialize its existing and any new product candidates.In addition to the foregoing, based on the Company’s current assessment, the Company does not expect any material impact on its long-term development timeline and its liquidity due to the worldwide spread of the COVID-19 virus.

However, the Company is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the actions implemented to combat the virus throughout the world.

In addition to the foregoing, based on the Company’s current assessment, the Company does not expect any material impact on its long-term development timeline and its liquidity due to the worldwide spread of the COVID-19 virus.

However, the Company is continuing to assess the effect on its operations by monitoring the impact of COVID-19 and the actions implemented to combat the virus throughout the world.

Note 2 - Significant Accounting Policies

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Cash and cash equivalents at December 31, 2021 and 2020, consisted of cash and money market funds in institutions in the United States.

Balances at certain institutions have exceeded Federal Deposit Insurance Corporation (“FDIC”) insured limits.

Balances at certain institutions have exceeded Federal Deposit Insurance Corporation insured limits.

Other Receivables – Related Party

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In June 2018, in connection with the Amended and Restated Articles of Incorporation, the Company amended the annual stock dividend due date from March 13th to January 1st.

Pursuant to the Amended and Restated Articles of Incorporation, the Company issued 1,206,667 shares of common stock to Fortress for the Annual Stock Dividend, representing 2.0 %, on a pro rata basis, of the fully-diluted outstanding equity of Mustang on January 1, 2020.

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.

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

Effective January 1, 2019, the Company accounts for its leases under ASC 842, Leases .

Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company's incremental borrowing rate.

Arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the balance sheet as both a right of use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company's incremental borrowing rate.

Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term.

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The Company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards and forfeiture rates.

For stock-based compensation awards to non-employees, prior to the adoption of ASU 2018-07 on January 1, 2019, the Company remeasured the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award.

Changes in the estimated fair value of these non-employee awards were recognized as compensation expense in the period of change.

Subsequent to the adoption of ASU 2018-07, the Company recognizes non-employee compensation costs over the requisite service period based on a measurement of fair value for each stock award.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model or 409a valuations, as applicable.

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The Company has no components of other comprehensive loss, and therefore, comprehensive loss equals net loss.

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes” , which is intended to simplify various aspects related to accounting for income taxes.

The ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

The Company’s adoption of this standard on January 1, 2020, did not have a material impact on its financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, “ Fair Value Measurement (Topic 820), - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” , which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The Company’s adoption of this standard on January 1, 2020, did not have a material impact on its financial statements and related disclosures.

In June 2018, the FASB issued ASU 2018-07, “ Improvements to Nonemployee Share-Based Payment Accounting” , which simplifies the accounting for share-based payments granted to nonemployees for goods and services.

Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees.

The changes take effect for public companies for fiscal years starting after December 15, 2018, including interim periods within that fiscal year.

For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606.

The Company adopted ASU No.

2018-07 as of January 1, 2019.

The adoption of this update did not have a material impact on the Company’s financial statements.

In July 2017, the FASB issued ASU 2017-11, “ Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815):

Accounting for Certain Financial Instruments with Down Round Features;

Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” .

Part I of this update addresses the complexity of accounting for certain financial instruments with down round features.

Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings.

Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option.

Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification.

This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests.

The amendments in Part II of this update do not have an accounting effect.

is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018.

The adoption of this ASU on January 1, 2019, did not have a material impact on the Company’s financial statements.

In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842)” in order to increase transparency and comparability among organizations by, among other provisions, recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP.

For public companies, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods), using a modified retrospective approach and early adoption is permitted.

In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the adoption date, unless the lease is modified, and permits entities to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, as of the adoption date, which effectively allows entities to carry forward accounting conclusions under previous U.S.

In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842):

Targeted Improvements, which provides entities an optional transition method to apply the guidance under Topic 842 as of the adoption date, rather than as of the earliest period presented.

The Company adopted Topic 842 on January 1, 2019, using the optional transition method to apply the new guidance as of January 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above.

Based on the analysis, on January 1, 2019, the Company recorded right of use assets of approximately $ 1.2 million, lease liability of approximately $ 2.0 million and eliminated deferred rent of approximately $ 0.7 million.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” .

The ASU sets forth a “current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures.

This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted.

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption will be permitted.

The Company is currently evaluating the impact of this standard on its financial statements.

In June 2016, FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” .

ASU 2016-13 requires that expected credit losses relating to financial assets are measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses.

ASU 2016-13 limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases.

Recently, the FASB issued the final ASU to delay adoption for smaller reporting companies to calendar year 2023.

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CSL Behring (Calimmune)

Leiden University Medical Centre

Fred Hutchinson Cancer Research Center - CD20

Nationwide Children's Hospital - C134

SIRION Biotech LentiBOOST TM

4 unchanged sentences

Pursuant to this agreement, the Company and COH acknowledged that an upfront fee was previously paid.

In addition, COH is eligible to receive an annual maintenance fee of $ 25,000 and milestone payments totaling $ 14.5 million upon the achievement of certain milestones.

In addition, COH is eligible to receive an annual maintenance fee

of $ 25,000 and milestone payments totaling $ 14.5 million upon the achievement of certain milestones.

Royalty payments in the mid-single digits are due on net sales of licensed products.

For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.3 million in connection with our public underwritten offerings.

For the year ended December 31, 2019, the Company expensed a non-refundable milestone payment of $ 0.3 million upon the twelfth patient dosed in a Phase 1 clinical study of the CD123-directed CAR T.

For the year ended December 31, 2021, the Company expensed a non-refundable milestone payment of $ 0.3 million for the 24th patient treated in the Phase 1 clinical study for MB-102 at COH.

For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.3 million in connection with Mustang’s public underwritten offerings .

CS1 License (MB-104)

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For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.2 million upon issuance of the first patent related to the CS1 CAR T technology.

For the year ended December 31, 2019, the Company expensed a non-refundable milestone payment of $ 0.2 million upon the first patient dosed in a Phase 1 clinical study of the CS1-directed CAR T.

I L13Rα2 License (MB-101)

4 unchanged sentences

For the year ended, December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.3 million in connection with Mustang’s public underwritten offerings.

There was no expense recorded for the year ended December 31, 2019.

IV/ICV License

On February 17, 2017, the Company entered into an exclusive license agreement (the “IV/ICV Agreement”) with COH to acquire intellectual property rights in patent applications related to the intraventricular and intracerebroventricular methods of delivering T cells that express CARs.

Pursuant to the IV/ICV Agreement, we paid COH an upfront fee of $ 0.1 million in March 2017.

COH is eligible to receive up to approximately $ 0.1 million in milestone payments upon the achievement of a certain milestone as well as an annual maintenance fee.

Royalty payments in the low-single digits are due on net sales of licensed products and services.

During the years ended December 31, 2020 and 2019, there was no expense in connection with the IV/ICV Agreement.

Spacer License

2 unchanged sentences

For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.3 million in connection with Mustang’s public underwritten offerings.

There was no expense recorded for the year ended December 31, 2019.

PSCA License (MB-105)

2 unchanged sentences

Additional payments are due for the achievement of ten development milestones totaling $ 14.9 million, and royalty payments in the mid-single digits are due on net sales of licensed products.

For the year ended December 31, 2021, the Company expensed a non-refundable milestone payment of $ 0.3 million for the twelfth patient treated in the Phase 1 clinical study of MB-105 at COH.

For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.2 million upon issuance of the first patent related to the PCSA CAR T technology.

For the year ended December 31, 2019, the Company expensed a non-refundable milestone payment of $ 0.2 million upon the first patient dosed in a Phase 1 clinical study of PSCA.

HER2 License (MB-103)

On May 31, 2017, the Company entered into an exclusive license agreement with the COH for the use of human epidermal growth factor receptor 2 (“HER2”) CAR T technology, which will initially be applied in the treatment of glioblastoma multiforme.

Pursuant to this agreement, the Company paid an upfront fee of $ 0.6 million and pays an annual maintenance fee of $ 50,000 (which began in 2019).

Additional payments are due for the achievement of ten development milestones totaling $ 14.9 million, and royalty payments in the mid-single digits are due on net sales of licensed products.

For the year ended, December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.5 million in connection with the 12 th patient treated in the Phase 1 clinical study of HER2 CAR T technology at COH.

There was no expense recorded for the year ended December 31, 2019.

For the year ended, December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.5 million in connection with the twelfth patient treated in the Phase 1 clinical study of HER2 CAR T technology at COH.

CSL Behring (Calimmune) License

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Royalty payments in the low-single digits are due on net sales of licensed products.

For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.2 million due upon the first anniversary of the Calimmune license.

For the year ended December 31, 2019, upon the execution of the Calimmune License, the Company recorded research and development expense of $ 0.2 million.

University of California Los Angeles License

On March 17, 2017, the Company entered into an exclusive license agreement with the Regents of the University of California at Los Angeles (“UCLA License”) to acquire intellectual property rights in patent applications related to engineered anti-prostate stem cell antigen antibodies for cancer targeting and detection.

In September 2019, COH commenced its Phase 1 clinical trial resulting in the achievement of a development milestone, and the Company recorded an expense of $ 0.3 million in the Statements of Operations for the year ended December 31, 2019.

There was no expense recorded for the year ended December 31, 2020.

For the year ended December 31, 2021 and 2020, the Company expensed a non-refundable milestone payments of $ 30,000 and $ 0.2 million, respectively, in connection with the Calimmune license.

Leiden University Medical Centre License (MB-110)

On September 8, 2021, the Company entered into an exclusive, worldwide licensing agreement with Leiden University Medical Centre (“Leiden”) for the use of a gene therapy under development for the treatment of severe immunodeficiency caused by RAG1 deficiency (the “Leiden License”).

Pursuant to the Leiden License, the Company expensed an upfront fee of $ 0.4 million.

Additional payments are due for the achievement of certain development milestones totaling up to $ 31 million and royalty payments in the low to mid-single digits as a percentage of revenue are due on net sales of licensed products.

For the year ended December 31, 2021, the Company expensed an upfront payment of $ 0.4 million in connection with the Leiden License.

Fred Hutchinson Cancer Research Center - CD20 License (MB-106)

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For the year ended December 31, 2020, the Company expensed a non-refundable milestone payment of $ 0.3 million in connection with the twelfth patient treated in the Phase 1 clinical study of CD20 CAR T technology at Fred Hutch.

There was no expense recorded for the year ended December 31, 2019.

Nationwide Children’s Hospital – C134 License (MB-108)

In February 2019, the Company announced that it partnered and entered into an exclusive worldwide license agreement with Nationwide Children’s Hospital (“Nationwide”) to develop their C134 oncolytic virus (MB-108) for the treatment of glioblastoma multiforme (“GBM”).

We intend to combine MB-108 with MB-101 (IL13Rα2-specific CAR T) to potentially enhance efficacy in treating GBM.

The Company paid $ 0.2 million in consideration for the license to exclusive, worldwide rights to develop and commercialize products that incorporate data, know-how and/or patents related to MB-108 that were developed at Nationwide.

Additional payments are due to Nationwide upon achievement of development and commercialization milestones totaling $ 152.8 million.

Royalty payments in the low-single digits are due on net sales of licensed products.

For the year ended December 31, 2019, the Company recorded an expense of $ 0.2 million in connection with this license.

There was no expense recorded for the year ended December 31, 2020.

Mayo Clinic - CAR T Technology License

On April 1, 2021, the Company entered into an exclusive license agreement with the Mayo Foundation for Medical Education and Research (the “Mayo Clinic”) for a novel technology that may be able to transform the administration of CAR T therapies and has the potential to be used as an off-the shelf therapy.

Pursuant to this agreement, the Company paid an upfront fee of $ 0.8 million and will pay an annual maintenance fee of $ 25,000 .

Additional payments are due for each of two licensed products for the achievement of eleven development and commercial milestones totaling up to $ 92.6 million per product, and royalty payments in the mid-single digits as a percentage of revenue are due on net sales of licensed products.

For the year ended December 31, 2021, the Company expensed an upfront payment of $ 0.8 million pursuant to the terms of the license agreement.

SIRION Biotech GmbH - LentiBOOST TM

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Additional milestone payments totaling up to $ 3.9 million (€ 3.5 million) in the aggregate are due in connection with the achievement of three commercial milestones and low- to mid-single digit royalties are due on aggregate cumulative worldwide net sales of licensed products.

For the year ended December 31, 2020, the Company expensed an up-front payment of $ 0.1 million.

There was no expense recorded for the year ended December 31, 2019.

Jude Children’s Research Hospital License (MB-107 and MB-207)

On August 2, 2018, the Company entered into an exclusive worldwide license agreement with St.

Jude for the development of a first-in-class ex vivo lentiviral gene therapy for the treatment of X-linked severe combined immunodeficiency (“XSCID”).

The Company paid $ 1.0 million in consideration for the exclusive license in addition to an annual maintenance fee of $ 0.1 million (which began in 2019).

Jude is eligible to receive payments totaling $ 13.5 million upon the achievement of five development and commercialization milestones.

Royalty payments in the mid-single digits are due on net sales of licensed products.

During the years ended December 31, 2020 and 2019, there were no expenses recorded in connection with this license.

Harvard College License

On November 20, 2017, the Company entered into an exclusive, worldwide license agreement with the President and Fellows of Harvard College (the “Harvard Agreement”) for the use of gene editing, via the use of CRISPR/Cas9, to be used in enhancing the efficacy of CAR T cell therapies for solid tumor indications and to generate universal off the shelf CAR T cell therapies for both liquid and solid tumor indications.

Pursuant to the Harvard Agreement, we paid Harvard College an upfront fee of $ 0.3 million and will owe an annual maintenance fee of $ 25,000 and $ 50,000 for calendar years 2018 and 2019, respectively, and $ 100,000 for each subsequent calendar year during the term of the agreement.

Additional payments are due for the achievement of seven development milestones totaling $ 16.7 million and royalty payments in the low-single digits are due on the net sales of licensed products.

During the years ended December 31, 2020 and 2019, we recorded no expense in connection with the Harvard Agreement.

The Harvard Agreement was terminated in January 2020.

In December 2021 this licensing agreement was amended to include CD20-directed CAR Ts.

SIRION is eligible to receive additional payments totaling up to approximately $9.1 million upon the achievement of certain development and commercialization milestones for the additional product.

For the year ended December 31, 2020, the Company expensed an up-front payment of $ 0.1 million pursuant to the terms of the license agreement.

Research and Development Expenses - Sponsored Research and Clinical Trial Agreements

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City of Hope National Medical Center

Manufacturing

Fred Hutchinson Cancer Research Center - CD20

Jude Children's Research Hospital - XSCID

Beth Israel Deaconess Medical Center - CRISPR

LUMC - RAGI SCID

Sponsored Research Agreement

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The research covered under this arrangement is for IL13Rα2, CD123 and the Spacer technology.

For the years ended December 31, 2020 and 2019, the Company recorded $ 0.5 million and $ 2.0 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

For the year ended December 31, 2020, the Company recorded $ 0.5 million in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

CD123 (MB-102) Clinical Research Support Agreement

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Pursuant to the terms of the CD123 CRA the Company made an upfront payment of $ 19,450 and will contribute an additional $ 97,490 per patient in connection with the on-going investigator-initiated study.

Further, the Company agreed to fund approximately $ 0.2 million over three years pertaining to the clinical development of CD123.

Further, the Company agreed

to fund approximately $ 0.2 million over three years pertaining to the clinical development of CD123.

For the years ended December 31, 2021 and 2020, the Company recorded $ 0.3 million and $ 0.4 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

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Further, the Company agreed to fund approximately $ 0.2 million annually pertaining to the clinical development of the IL13Rα2-directed CAR T therapy.

In March 2021, the Company entered into a clinical research support agreement for an Institutional Review Board-approved, investigator-initiated protocol entitled:

“Single Patient Treatment with Intraventricular Infusions of IL13Rα2-targeting and HER2-targeting Chimeric Antigen Receptor (CAR)-T cells for a Single Patient (UPN 181) with Recurrent Multifocal Malignant Glioma.” Pursuant to the terms of this agreement, the Company will contribute up to $ 0.2 million in connection with the ongoing investigator-initiated study.

CS1 (MB-104) Clinical Research Support Agreement

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“Phase I Study to Evaluate Cellular Immunotherapy Using Memory-Enriched T Cells Lentivirally Transduced to Express a CS1-Targeting, Hinge-Optimized, 41BB-Costimulatory Chimeric Antigen Receptor and a Truncated EGFR Following Lymphodepleting Chemotherapy in Adult Patients with CS1+ Multiple Myeloma.” The CAR T being studied under this protocol has been designated as MB-104.

Under the terms of the agreement we will reimburse COH for costs associated with this trial not to exceed $ 2.4 million.

Under the terms of the agreement the Company will reimburse COH for costs associated with this trial not to exceed $ 2.4 million.

The agreement will expire upon the delivery of a final study report or earlier.

During the year ended December 31, 2020, the Company recorded $ 0.9 million in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

For the years ended December 31, 2021 and 2020, the Company recorded $ 0.6 million and $ 0.9 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

HER2 (MB-103) Clinical Research Support Agreement

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The agreement will expire upon the delivery of a final study report or earlier.

For the year ended December 31, 2020, the Company recorded $ 1.5 million in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

For the year ended December 31, 2021 and 2020, the Company recorded $ 0.7 million and $ 1.5 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

PSCA (MB-105) Clinical Research Support Agreement

In October 2020, the Company entered into a clinical research support agreement with COH in connection with an Investigator-sponsored study conducted under an Institutional Review Board-approved, investigator-initiated protocol entitled:

“A Phase 1b study to evaluate PSCA-specific chimeric antigen receptor (CAR)-T cells for patients with metastatic

castration resistant prostate cancer.” The CAR T being studied under this protocol has been designated as MB-105.

“A Phase 1b study to evaluate PSCA-specific chimeric antigen receptor (CAR)-T cells for patients with metastatic castration resistant prostate cancer.” The CAR T being studied under this protocol has been designated as MB-105.

Under the terms of the agreement the Company will pay COH $ 33,000 upon execution and will reimburse COH for costs associated with this trial not to exceed $ 2.3 million.

The agreement will expire upon the delivery of a final study report or earlier.

For the year ended December 31, 2020, the Company recorded $ 0.2 million in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

Sponsored Research Agreement - Manufacturing

On January 3, 2018, the Company entered into an SRA with COH to optimize and develop CAR T cell processing procedures.

Pursuant to the SRA, the Company will fund continued research in the amount of $ 0.9 million for the program, which has an initial term of two (2) years.

For the year ended December 31, 2020 and 2019, the Company recorded nil and $ 0.5 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

For the years ended December 31, 2021 and 2020, the Company recorded $ 0.1 million and $ 0.2 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

Fred Hutchinson Cancer Research Center

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In connection with the CD20 CTA, the Company agreed to fund up to $ 5.3 million of costs associated with the clinical trial, which commenced during the fourth quarter of 2017.

In November 2020, the CD20 CTA was amended to include additional funding of approximately $ 0.8 million for the treatment of five patients with chronic lymphocytic leukemia.

In November 2020, the CD20 CTA was amended to include additional funding of approximately $ 1.8 million for the treatment of five patients with chronic lymphocytic leukemia and other research costs.

For the years ended December 31, 2021 and 2020, the Company recorded $ 2.0 million and $ 1.8 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

Sponsored Research Agreement - Manufacturing

On March 17, 2018, the Company entered into an SRA with Fred Hutch related to developing and optimizing processes and systems associated with CD20 cell processing.

Pursuant to the SRA, the Company funded research in the amount of $ 0.6 million during the term of the SRA, which expired in March 2019.

For the years ended December 31, 2020 and 2019, the Company recorded expense of nil and $ 0.2 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

XSCID (MB-107) Data Transfer Agreement with St.

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Jude’s clinical trial for the treatment of infants with XSCID.

Pursuant to the terms of this agreement we paid an upfront fee of $ 1.1 million in July 2020, and will continue to reimburse St.

Pursuant to the terms of this agreement the Company paid an upfront fee of $ 1.1 million in July 2020, and will continue to reimburse St.

Jude for costs incurred in connection with this clinical trial.

For the years ended December 31, 2020 and 2019, the Company recorded $ 1.8 million and nil , respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

XSCID (MB-107) Non-Interventional Services Agreement with Children’s CGMP

In December 2019, Mustang entered into a Non-Interventional Services Agreement with Children's CGMP, LLC ("Children’s"), an affiliate of St.

Jude Children's Research Hospital, pursuant to which Children’s provides lentiviral vector for non-clinical XSCID research purposes, as well as related advisory services.

We agreed to fund approximately $ 0.8 million upon execution of the agreement, which was recorded in research and development expenses for the year ended December 31, 2019, in the Company's Statements of Operations pursuant to the terms of this agreement.

CRISPR Sponsored Research Agreement with Beth Israel Deaconess Medical Center, Inc.

On November 28, 2017, the Company entered into an SRA with Beth Israel Deaconess Medical Center Inc.

(“BIDMC”) to perform research relating to gene editing, via the use of CRISPR/Cas9, to be used in enhancing the efficacy of CAR T cell therapies for solid tumor indications and to generate universal off-the-shelf CAR T cell therapies for both liquid and solid tumor indications.

The Company agreed to fund approximately $ 0.8 million over a three-year period.

For the year ended December 31, 2020 and 2019, the Company recorded approximately nil and $ 0.1 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

In January 2019, the Company terminated the SRA with BIDMC due to the departure of key personnel from BIDMC.

For the years ended December 31, 2021 and 2020, the Company recorded $ 0.9 million and $ 1.8 million, respectively, in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

RAG1-SCID (MB-110) Sponsored Research Support Agreement with Leiden University Medical Centre

On September 8, 2021, in connection with the Leiden License, the Company entered into an SRA with Leiden under which the Company will fund research in the amount of approximately $ 0.5 million annually over a period of 5 years .

The research performed pursuant to this agreement will support technology the Company has licensed from Leiden for the use of a gene therapy under development for the treatment of severe immunodeficiency caused by RAG1.

For the year ended December 31, 2021, the Company recorded $ 0.2 million in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

Sponsored Research Support Agreement with Mayo Clinic

In June 2021, the Company entered into an SRA with Mayo Clinic under which the Company will fund research in the amount of $ 2.1 million over a period of two years .

The research performed pursuant to this agreement will support technology the Company has licensed from Mayo Clinic for a novel technology that may be able to transform the administration of CAR T therapies and has the potential to be used as an off-the-shelf therapy.

For the year ended December 31, 2021, the Company recorded $ 0.7 million in research and development expenses in the Statements of Operations pursuant to the terms of this agreement.

Note 4 - Related Party Agreements

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Class A Preferred Stock is identical to common stock other than as to voting rights, conversion rights and the PIK Dividend right (as described below).

Each share of Class A Preferred Stock will be entitled to vote the number of votes that is equal to one and one-tenth ( 1.1 ) times a fraction, the numerator of which is the sum of (A) the shares of outstanding Mustang common stock and (B) the whole shares of Mustang common stock into which the shares of outstanding Class A Common Stock and Class A Preferred Stock are convertible and the denominator of which is the number of shares of outstanding Class A Preferred Stock.

Each share of Class A Preferred Stock is entitled to vote the number of votes that is equal to one and one-tenth ( 1.1 ) times a fraction, the numerator of which is the sum of (A) the shares of outstanding Mustang common stock and (B) the whole shares of Mustang common stock into which the shares of outstanding Class A Common Stock and Class A Preferred Stock are convertible and the denominator of which is the number of shares of outstanding Class A Preferred Stock.

Thus, the Class A Preferred Stock will at all times constitute a voting majority.

Each share of Class A Preferred Stock is convertible, at Fortress’ option, into one fully paid and nonassessable share of Mustang common stock, subject to certain adjustments.

As holders of Class A Preferred Stock, Fortress will receive on each January 1 (each a “PIK Dividend Payment Date”) until the date all outstanding Class A Preferred Stock is converted into common stock or redeemed (and the purchase price is paid in full), pro rata per share dividends paid in additional fully paid and nonassessable shares of common stock (“PIK Dividends”) such that the aggregate number of shares of common stock issued pursuant to such PIK Dividend is equal to two and one-half percent ( 2.5 %) of Mustang’s fully-diluted outstanding capitalization on the date that is one (1) business day prior to any PIK Dividend Payment Date.

As holders of Class A Preferred Stock, Fortress will receive on each January 1 (each a “PIK Dividend Payment Date”) until the date all outstanding Class A Preferred Stock is converted into common stock, pro rata per share dividends paid in additional fully paid and nonassessable shares of common stock (“PIK Dividends”) such that the aggregate number of shares of common stock issued pursuant to such PIK Dividend is equal to two and one-half percent ( 2.5 %) of Mustang’s fully-diluted outstanding capitalization on the date that is one (1) business day prior to any PIK Dividend Payment Date.

As additional consideration under the Mustang Founders Agreement, Mustang will also:

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Services provided under the MSA may include, without limitation, (i) advice and assistance concerning any and all aspects of the Company’s operations, clinical trials, financial planning and strategic transactions and financings and (ii) conducting relations on behalf of the Company with accountants, attorneys, financial advisors and other professionals (collectively, the “Services”).

The Company is obligated to utilize clinical research services, medical education, communication and

marketing services and investor relations/public relation services of companies or individuals designated by Fortress, provided those services are offered at market prices.

The Company is obligated to utilize clinical research services, medical education, communication and marketing services and investor relations/public relation services of companies or individuals designated by Fortress, provided those services are offered at market prices.

However, the Company is not obligated to take or act upon any advice rendered from Fortress and Fortress shall not be liable for any of its actions or inactions based upon their advice.

Fortress and its affiliates, including all members of the Company’s Board of Directors, have been contractually exempt from fiduciary duties to the Company relating to corporate opportunities.

Pursuant to the MSA and the Company’s Certificate of Incorporation, Fortress and its affiliates, including all members of the Company’s Board of Directors, will have no fiduciary or other duty to communicate or present any corporate opportunities to the Company or to refrain from engaging in business that is similar to that of the Company.

In consideration for the Services, the Company will pay Fortress an annual consulting fee of $ 0.5 million (the “Annual Consulting Fee”), payable in advance in equal quarterly installments on the first business day of each calendar quarter in each year, provided, however, that such Annual Consulting Fee shall be increased to $ 1.0 million for each calendar year in which the Company has net assets in excess of $ 100 million at the beginning of the calendar year.

The Company records fifty percent of the Annual Consulting Fee in research and development expense and fifty percent in general and administrative expense in

the Statement of Operations.

For the years ended December 31, 2021 and 2020, the Company recorded expense of $ 0.5 million and $ 0.5 million, respectively, related to this agreement.

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The Company recorded an expense of approximately $ 1.9 million in general and administrative expenses related to these shares for the year ended December 31, 2021.

For the year ended December 31, 2020, the Company issued 286,390 shares of common stock to Fortress, which equaled 2.5 % of the gross proceeds of $ 37.2 million from the sale of shares of common stock, before deducting underwriting discounts and commissions and offering expenses under Mustang’s Public Offering.

For the year ended December 31, 2020, the Company issued 342,773 shares of common stock and recorded 101,632 shares issuable to Fortress, which equaled 2.5 % of the gross proceeds of $ 59.8 million from the sale of shares of common stock under Mustang’s At-the-Market Offering.

The Company recorded an expense of approximately $ 1.5 million in general and administrative expenses related to these shares for the year ended December 31, 2020.

Under the terms of the Second Amended and Restated 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.

In March 2019, the Company issued 108,069 shares of common stock to Fortress, which equaled 2.5 % of the gross funded amount of the Horizon Notes.

The Company recorded an expense of approximately $ 0.4 million in general and administrative expenses related to these shares during the year ended December 31, 2019.

For the year ended December 31, 2019, the Company issued 87,656 shares of common stock to Fortress, which equaled 2.5 % of the gross proceeds of $ 22.5 million from the sale of shares of common stock under Mustang’s At-the-Market Offering.

The Company recorded an expense of approximately $ 0.5 million in general and administrative expenses related to these shares during the year ended December 31, 2019.

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Rosenwald will receive a cash fee of $ 50,000 per year paid quarterly and an annual stock award of the greater of (i) a number of shares of common stock having a fair market value on the grant date of $ 50,000 or (ii) 10,000 shares of common stock, which shares shall vest and become non-forfeitable on the third anniversary of the grant date, subject to continued service on the Board on such date.

For the year ended December 31, 2020, the Company recognized $ 113,000 in expense in its Statements of Operations related to the director compensation, including approximately $ 63,000 in expense related to equity incentive grants of 50,000 restricted shares.

For the year ended December 31, 2019, the Company recognized $ 102,000 in expense in its Statements of Operations

related to the director compensation, including approximately $ 52,000 in expense related to equity incentive grants of 34,000 restricted shares.

For the year ended December 31, 2021, the Company recognized $ 106,000 in expense in its Statements of Operations related to the director compensation, including approximately $ 56,000 in expense related to equity incentive grants.

The company issued Dr.

Rosenwald 13,774 and 16,611 restricted stock awards for the years ended December 31, 2021 and 2020, respectively.

Weiss - Advisory Agreement with Caribe BioAdvisors, LLC

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Pursuant to the Advisory Agreement, the Advisor will be paid an annual cash fee of $ 60,000 , paid quarterly and an annual stock award of the greater of (i) a number of shares of common stock having a fair market value on the grant date of $ 50,000 or (ii) 10,000 shares of common stock, which shares shall vest and become non-forfeitable on the third anniversary of the grant date, subject to continued service on the Board on such date.

For the year ended December 31, 2020, the Company recognized $ 122,000 in expense in its Statements of Operations related to the advisory agreement, including approximately $ 62,000 in expense related to equity incentive grants of 50,000 restricted shares.

For the year ended December 31, 2019, the Company recognized $ 105,000 in expense in its Statements of Operations related to the advisory agreement, including approximately $ 45,000 in expense related to equity incentive grants of 34,000 restricted shares.

For the year ended December 31, 2021, the Company recognized $ 116,000 in expense in its Statements of Operations related to the advisory agreement, including approximately $ 56,000 in expense related to equity incentive grants.

The company issued Mr.

Weiss 13,774 and 16,611 restricted stock awards for the years ended December 31, 2021 and 2020, respectively.

Note 5 - Property and Equipment

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On October 27, 2017, the Company entered into a lease agreement with WCS - 377 Plantation Street, Inc., a Massachusetts nonprofit corporation.

Pursuant to the terms of the lease agreement, we agreed to lease 27,043 square feet from the landlord, located at 377 Plantation Street in Worcester, MA (the “Facility”), through November 2026, subject to additional extensions at the Company’s option.

Pursuant to the terms of the lease agreement, the Company agreed to lease 27,043 square feet from the landlord, located at 377 Plantation Street in Worcester, MA (the “Facility”), through November 2026, subject to additional extensions at the Company’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.

The terms of the lease also require that we 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 increased to $ 1.3 million ($ 1.0 million letter of credit, $ 0.3 million in cash) on November 1, 2019.

The terms of the lease also require that the Company 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 increased to $ 1.3 million ($ 1.0 million letter of credit, $ 0.3 million in cash) on November 1, 2019.

After the fifth lease year, the letter of credit obligation is subject to reduction.

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The Company leases office space and copiers under agreements classified as operating leases that expire on various dates through 2026.

The Company’s lease liabilities result from the lease of its Facility in Massachusetts, which expires in 2026, and its copier, which expires in 2021.

The Company’s lease liabilities result from the lease of its Facility in Massachusetts, which expires in 2026, and its copiers, which expire in 2024.

Such leases do not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees.

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renewal options have not been included in the calculation of the lease liabilities and right of use assets as the Company is not reasonably certain to exercise the options.

The Company does not act as a lessor or have any leases classified as financing leases.

The Company does not act as a lessor or have any leases

classified as financing leases.

At December 31, 2021, the Company had operating lease liabilities of $ 2.0 million and right of use assets of $ 1.1 million, which were included in the Balance Sheet.

At December 31, 2020, the Company had operating lease liabilities of $ 2.2 million and right of use assets of $ 1.1 million, which were included in the Balance Sheet.

The following summarizes quantitative information about the Company’s operating leases:

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In accordance with the Loan Agreement, $ 15.0 million of the $ 20.0 million loan was funded on the Closing Date, with the remaining $ 5.0 million fundable upon the Company achieving certain predetermined milestones.

Each advance under the Horizon Loan Agreement will mature 42 months from the first day of the month following the funding of the advance.

The first three advances will mature on October 1, 2022 (the “Loan Maturity Date”).

Each advance accrues interest at a per annum rate of interest equal to 9.00 % plus the amount by which the one-month LIBOR Rate, as reported in the Wall Street Journal, exceeds 2.50 %.

The Loan Agreement provides for interest-only payments commencing May 1, 2019, through and including October 1, 2020.

The interest-only period may be extended to April 1, 2021, if the Company satisfies the Interest Only Extension Milestone (as defined in the Loan Agreement).

Thereafter, commencing May 1, 2021, amortization payments will be payable monthly in eighteen installments of principal and interest.

At its option, upon ten business days’ prior written notice to Horizon, the Company may prepay all or any portion greater than or equal to $ 500,000 of each of the outstanding advances by paying the entire principal balance (or portion thereof) and all accrued and unpaid interest, subject to a prepayment charge of 4.0 % of the then outstanding principal balance of each advance if such advance is prepaid on or before the Loan Amortization Date (as defined in the Loan Agreement), 3 % if such advance is prepaid after the Loan Amortization Date applicable to such Loan, but on or prior to twelve months following the Loan Amortization Date, and 2 % thereafter.

In addition, a final payment equal to $ 250,000 for each advance (i.e., $ 750,000 in aggregate with respect to the initial $ 15.0 million) is due on the maturity date or other date of payment in full.

Amounts outstanding during an event of default shall be payable on demand and shall accrue interest at an additional rate of 5.0 % per annum of the past due amount outstanding.

Each advance of the loan is secured by a lien on substantially all of the assets of the Company, other than Intellectual Property and Excluded Collateral (in each case as defined in the Loan Agreement), and contains customary covenants and representations, including a liquidity covenant, financial reporting covenant and limitations on dividends, indebtedness, collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, deposit accounts, and subsidiaries.

The events of default under the Loan Agreement include, among other things, without limitation, and subject to customary grace periods, (1) the Company's failure to make any payments of principal or interest under the Loan Agreement, promissory notes or other loan documents, (2) the Company’s breach or default in the performance of any covenant under the Loan Agreement, (3) the occurrence of a material adverse change, (4) the Company making a false or misleading representation or warranty in any material respect, (5) the Company’s insolvency or bankruptcy, (6) certain attachments or judgments on the Company’s assets, (7) the occurrence of any material default under certain agreements or obligations of the Company involving indebtedness in excess of $ 250,000 , or (8) failing to maintain certain minimum monthly cash balances which range from approximately $ 8 to $ 13 million over the term of the loan ($ 13.0 million as of December 31, 2020).

If an event of default occurs, Horizon is entitled to take enforcement action, including acceleration of amounts due under the Loan Agreement.

The Loan Agreement also contains warrant coverage of 5 % of the total amount funded.

Four warrants (the “Warrants”) were issued by the Company to Horizon to purchase a combined 288,184 shares of the Company’s common stock with an exercise price of $ 3.47 and a fair value of $ 0.9 million.

The Warrants are exercisable for ten years from the date of issuance.

Horizon may exercise the Warrants either by (a) cash or check or (b) through a net issuance conversion.

The shares of the Company’s common stock will, upon request by Horizon, be registered and freely tradable following a period of six months after issuance.

The Company paid Horizon an initial commitment fee of $ 0.2 million and reimbursed Horizon for $ 30,000 of legal fees in connection with the Loan Agreement.

The Company incurred approximately $ 1.2 million of legal and other direct costs in connection with the Loan Agreement.

All fees, warrants and costs paid to Horizon and all direct costs incurred by the Company are recognized as a debt discount to the funded loans and are amortized to interest expense using the effective interest method over the term of the Loan Agreement.

Amortization of the debt discount associated with the funded loans was approximately $ 2.3 million and $ 0.7 million for the years ended December 31, 2020 and 2019, respectively, and was included in interest expense in the Statements of Operations.

Amortization of the debt discount associated with the funded loans was approximately $ 2.3 million for the year ended December 31, 2020, and was included in interest expense in the Statements of Operations.

On September 30, 2020, the Company repaid the amount outstanding under the Horizon Notes in full, which was comprised of $ 15.0 million face value of the outstanding notes, $ 0.1 million in accrued and unpaid interest, a $ 0.8 million final payment fee and prepayment penalties of $ 0.6 million.

For the year ended December 31, 2020, the Company recorded interest expense of approximately $ 2.1 million related to the early repayment of the Horizon Notes.

($ in thousands)

Interest Rate

Horizon Notes (1)(2)

October - 2022

Discount on notes payable

Total notes payable

current portion

Long-term notes payable

(1) Balance includes $ 0.75 million final payment fee

(2) Interest rate is 9.00 % plus one-month LIBOR Rate in excess of 2.5 %

Note 9 - Stockholders’ Equity

The Company, in accordance with its certificate of incorporation, as amended in November 2020, which was retroactively applied, is authorized to issue (i) 125,000,000 common shares with a par value of $ 0.0001 per share, of which 1,000,000 shares are designated as Class A Common Stock and the remainder are undesignated Common Stock, and (ii) 2,000,000 shares of Preferred Stock, 250,000 of which are designated as Class A Preferred Stock and the remainder are undesignated Preferred Stock (see below Stock Issuances to Fortress and Note 4).

The Company, in accordance with its certificate of incorporation, as amended in November 2020 and June 2021, which was retroactively applied, is authorized to issue (i) 150,000,000 common shares with a par value of $ 0.0001 per share, of which 1,000,000 shares are designated as Class A Common Stock and the remainder are undesignated Common Stock, and (ii) 2,000,000 shares of Preferred Stock, 250,000 of which are designated as Class A Preferred Stock and the remainder are undesignated Preferred Stock (see below Stock Issuances to Fortress and Note 4).

In connection with the Company’s formation, Fortress subscribed for 7,000,000 shares of the Class B Common Stock and 2,000,000 shares of the Company’s Common Stock, pursuant to the Founders Agreement.

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The Class B Common Stockholders are entitled, for each share of Class B Common Stock held, to a number of votes equal to 1.1 times a fraction, the numerator of which is the sum of (A) the shares of outstanding Common Stock and (B) the whole shares of Common Stock into which the shares of outstanding Class A Common Stock and the Class B Common Stock are convertible and the denominator of which is the number of shares of outstanding Class B common shares.

In April 2019, COH converted 137,608 shares of the Company’s Class A common stock to 137,608 shares of the Company’s common stock.

In November 2019, COH converted 17,007 shares of the Company’s Class A common stock to 17,007 shares of the Company’s common stock for a total of 154,615 Class A common stock converted into the Company’s common stock in 2019.

On August 16, 2019, the Company’s Board adopted resolutions of the Board to ratify, approve and recommend stockholder approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, to revise Article IV, Section A thereof in order to effect an increase in the authorized number of shares of the Company’s common stock, par value $ 0.0001 , from 50,000,000 to 85,000,000 (the “Amendment”).

On August 16, 2019, the Company received approval of the Amendment by written consent in lieu of a meeting from the holders of a majority of issued and outstanding shares of the Company’s common and preferred stock.

The increase in authorized shares to 85,000,000 became effective on September 30, 2019.

There was no Class B Common Stock outstanding as of December 31, 2021.

On November 11, 2020, the Company’s Board adopted resolutions of the Board to ratify, approve and recommend stockholder approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, to revise Article IV, Section A thereof in order to effect an increase in the authorized number of shares of the Company’s common stock, par value $ 0.0001 , from 85,000,000 to 125,000,000 (the “Amendment”).

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The increase in authorized shares to 125,000,000 became effective on December 4, 2020.

On June 17, 2021, the stockholders of the Company voted at the 2021 Annual Meeting to approve an amendment to Mustang’s Amended and Restated Certificate of Incorporation to increase the number of shares of common stock authorized for issuance by 25,000,000 shares, bringing the total number of authorized shares of common stock to 150,000,000 shares.

The increase in authorized shares to 150,000,000 became effective on June 17, 2021.

At-the-Market Offering of Common Stock

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The offering closed on June 15, 2020, and the over-allotment closed on June 25, 2020.

On April 30, 2019, the Company announced the pricing of an underwritten public offering, whereby we sold 6,875,000 shares of common stock, (plus a 30-day option to purchase up to an additional 1,031,250 shares of common stock, which was fully exercised) at a price of $ 4.00 per share for gross proceeds of approximately $ 31.6 million, before deducting underwriting discounts and commissions and offering expenses.

In connection with the public offering, the Company paid aggregate fees of approximately $ 2.1 million for net proceeds of approximately $ 29.5 million.

The shares were sold under the 2018 S-3, filed with the Securities and Exchange Commission.

The offering closed on May 2, 2019, and the over-allotment closing was on May 8, 2019.

Registration Statements

On April 23, 2021, the Company filed a shelf registration statement No.

333-255476 on Form S-3 (the “2021 S-3”), which was declared effective on May 24, 2021.

Under the 2021 S-3, the Company may sell up to a total of $ 200.0 million of its securities.

As of December 31, 2021, there have been no sales of securities under the 2021 S-3.

On October 23, 2020, the Company filed a shelf registration statement No.

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As of December 31, 2021, approximately $ 14.6 million of the 2020 S-3 remains available for sales of securities.

On August 16, 2019, the Company filed a shelf registration statement No.

333-233350 on Form S-3 (the “2019 S-3”), which was declared effective on September 30, 2019.

Under the 2019 S-3, the Company may sell up to a total of $ 75.0 million of its securities.

As of December 31, 2020, the 2019 S-3 is no longer available for sales of securities.

Stock Issuances to Fortress

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For the year ended December 31, 2021, the Company issued 576,157 shares of common stock and recorded 51,295 shares issuable to Fortress, which equaled 2.5 % of the gross proceeds of $ 71.9 million from the sale of shares of common stock under Mustang’s At-the-Market Offering.

For the year ended December 31, 2019, the Company issued 108,069 shares of common stock to Fortress, which equaled 2.5 % of the gross funded amount of the Horizon Notes.

For the year ended December 31, 2019, the Company issued 197,656 shares of common stock to Fortress, which equaled 2.5 % of the gross proceeds of $ 31.6 million from the sale of shares of common stock under Mustang’s Public Offering.

Equity Incentive Plan

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In June 2018, the Company’s stockholders approved an amendment to the Incentive Plan to increase the number of authorized shares issuable by 3,000,000 shares, for a total of 5,000,000 shares.

Total shares available for the issuance of stock-based awards under the Incentive Plan was 1,180,085 shares at December 31, 2020.

In June 2021, the Company’s stockholders approved an amendment to the Incentive Plan to increase the number of authorized shares issuable by 3,000,000 shares, for a total of 8,000,000 shares.

As of December 31, 2021, 2,823,838 shares are available for issuance of stock-based awards under the Incentive Plan.

Stock Options

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Outstanding at December 31, 2019

Options granted

Outstanding at December 31, 2019

Options forfeited

Outstanding at December 31, 2020

Outstanding at December 31, 2021

Options vested and exercisable at December 31, 2021

As of December 31, 2020, the Company had unrecognized stock-based compensation expense related to options of $ 0.1 million, which is expected to be recognized over a weighted average period of approximately 0.8 year .

Effective on January 1, 2017, the Company elected to account for forfeited awards as they occur as permitted by ASU 2016-09.

Ultimately, the actual expenses recognized over the vesting period will be for those shares that vested.

Prior to making this election, the Company estimated a forfeiture rate for awards at 0 %, as the Company did not have a significant history of forfeitures.

As of December 31, 2021, the Company had no unrecognized stock-based compensation expense related to options.

The Company accounts for forfeited awards as they occur as permitted.

Restricted Stock Awards

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Outstanding as of December 31, 2019

Cashless exercised

Outstanding as of December 31, 2020

( 2,093,878 )

Cashless exercised

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Startup costs

Debt issuance costs

Total deferred tax assets

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Approximately $ 168.1 million and $ 94,000 of the federal and state net operating loss carryforwards, respectively, can be carried forward indefinitely.

The remaining $ 23.7 million and $ 263.5 million of federal and state net operating loss carryforwards will begin to expire, if not utilized, by 2035 and 2029 , respectively.

As of December 31, 2020, the Company had federal and state income tax credits of approximately $ 4.8 million and $ 1.2

million, respectively, which will begin to expire in 2033 .

Under the provisions of Section 382 of the Internal Revenue Code, a corporation that undergoes an “ownership change”, as defined therein, is subject to limitations on its use of pre-change NOLs and income tax credits carryforwards to offset future tax liabilities.

The Company is currently evaluating the impact of Section 382 on its tax attributes.

As of December 31, 2021, the Company had federal and state income tax credits of approximately $ 8.3 million and $ 1.8 million, respectively, which will begin to expire in 2033 .

to offset future tax liabilities.

Certain tax attributes may be subject to an annual limitation as a result of the Company’s January 2017 capital raise, as it appears to constitute an ownership change under Section 382.

The Company has recorded a full valuation allowance on all of its deferred tax assets as it believes that it is more likely than not that the deferred tax assets will not be realized regardless of whether an “ownership change” has occurred.

There are no significant items determined to be unrecognized tax benefits taken or expected to be taken in a tax return, in accordance with ASC 740 “Income Taxes” (“ASC 740”), which clarifies the accounting for uncertainty in income taxes recognized in the financial statements, that have been recorded on the Company’s financial statements for the period ended December 31, 2020.

The Company does not anticipate a material change to unrecognized tax benefits in the next twelve months.

Additionally, ASC 740 provides guidance on the recognition of interest and penalties related to income taxes.

There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the period ended December 31, 2020.

The federal and state tax returns for the years ended December 31, 2017, 2018, and 2019 are currently open for examination under the applicable federal and state income tax statutes of limitations.

There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the periods ended December 31, 2021 and 2020.

The company is subject to U.S.

federal and various state taxes.

As of December 31, 2021, the earliest federal tax year open for the assessment of income taxes under the applicable statutes of limitations is its 2018 tax year.

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law on March 27, 2020.

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The Consolidated Appropriations Act did not have a material impact to the Company’s income tax provision for 2021.

Note 11 – Subsequent Events

On March 8, 2022, the Company announced completion of a $ 75 million long-term debt facility with Runway Growth Capital LLC (“Runway”).

Of the $ 75 million, $ 30 million was funded upon closing, and the additional $ 45 million available under the facility may be funded upon Mustang’s achieving certain predetermined milestones.

The loan will be repaid in sixty monthly payments consisting of 24 monthly payments of interest only, followed by 36 monthly payments of principal and accrued interest, payable monthly in arrears, with all repayments ending on the same date as the initial tranche.

The interest-only period may be extended to 36 months contingent upon Mustang achieving certain milestones.

In connection with the debt financing, Mustang issued to Runway warrants to purchase up to 748,036 of its common shares at an exercise price of $ 0.8021 per share.

Proceeds from the facility will be used to support the ongoing clinical development of key investigational product candidates within Mustang’s pipeline and for general working capital purposes.

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures