NOTE 8. RELATED PARTY AGREEMENTS

Shared Services Agreement with Fortress

On November 12, 2021, the Company and Fortress entered into an arrangement to share the cost of certain legal, finance, regulatory, and research and development employees. Fortress’s Executive Chairman and Chief Executive Officer is the Executive Chairman of the Company. Under the terms of the Agreement, the Company will reimburse Fortress for the salary and benefit costs associated with these employees based upon actual hours worked on Journey related projects following the completion of their initial public offering. To date, Fortress employees have provided services to the

Company totaling approximately $0.5 million. Upon completion of the Company’s initial public offering, the amount converted into 52,438 shares of Journey common stock at the initial public offering price of $10.00 per share.

In addition, In the normal course of business, the Company reimburses Fortress for various payroll related costs and selling, general and administrative costs. As of September 30, 2021 and December 31, 2020, the Company had a balance of approximately $1.0 million and $0.1 million, respectively, recorded as accounts payable and accrued expenses – related party on the condensed consolidated balance sheets.

Fortress Note

Since the Company’s inception in October 2014, Fortress has funded the Company’s operations through a working capital loan pursuant to the terms of a future advance promissory note (the “Fortress Note”). The Fortress Note matures on or before December 31, 2024.

On September 30, 2021, the Fortress increased the Journey promissory note by $9.5 million in response to a cyber incident that occurred at Journey and resulted in $9.5 million of fraudulent payments. The $9.5 million contribution was approved by the boards of directors of both the Fortress and Journey and will ensure that Journey’s accounts payable function will continue to operate smoothly. This contribution, along with $5.2 million already outstanding under the Journey Promissory Note converted into 1,476,044 shares of Journey common stock upon the consummation of the Journey IPO at the Journey IPO price of $10.00 per share.

At September 30, 2021 and December 31, 2020, the Company’s outstanding balance under the related party note was approximately $14.7 million and $5.2 million, respectively. The related party note to Fortress is recorded as a long-term note payable on the condensed consolidated balance sheets and is an interest-free note.

Fortress Income Tax

At of September 30, 2021, the Company is 93% owned by Fortress and has been filing consolidated federal tax returns and consolidated or combined state tax returns in multiple jurisdictions with Fortress. In connection with the filing of the consolidated tax return, the Company’s tax liabilities for the year ended December 31, 2020 of $1.9 million was satisfied utilizing NOLs generated by Fortress. Extinguishment of these liabilities to Fortress was recorded on the Company’s condensed consolidated balance sheets as a contribution of capital.

Additionally, see Note 17 below for a discussion of income taxes.

Avenue Secondment with Journey

Effective June 1, 2021, Avenue and the Company entered into a secondment agreement for a certain Avenue employee to be seconded to the Company. During the secondment, the Company will have the authority to supervise the Avenue employee and will reimburse Avenue for the employee’s salary and salary-related costs. The term of this agreement lasts until the approval of IV tramadol by the FDA or until the employee’s services are needed again by the Fortress. The amount reimbursable to Avenue is approximately $0.1 million for the three and nine months ended September 30, 2021.