Fantex, Inc.

During this quarter, we have decided to cease the acquisition of new brand contracts. This decision was made due to the difficulty we encountered in securing financing from unaffiliated parties through the offering of tracking stocks to pay the purchase price for our brand contracts. Since our inception in September, 2012, we have purchased 20 brand contracts at a cost of approximately $69.5 million. Our parent and certain directors, officers and related persons of our parent have provided (through the purchase of our securities in public and private offerings) approximately $33.6 million (48%) of the financing required to purchase these brand contracts. We have taken steps to streamline the business so that we can effectively manage and administer our existing 20 brand contracts. In the coming months, we intend to:

The brand contracts mentioned above had changes to their observable inputs during the nine months ended September 30, 2016 resulting from our reassessments of future cash flow projections under such brand contracts due to either new player contracts entered into during the period or to player injuries. These changes to observable inputs in our fair value determinations of our brand contracts with Mohamed Sanu, Vernon Davis, Andrew Heaney, Alshon Jeffery and Michael Brockers resulted in an unrealized loss, with respect to such brand contracts, of approximately $1.2 million for the nine months ended September 30, 2016, and is shown net of the increase in present value of expected cash flows in the Unrealized Gain (Loss) column above.

In our initial valuation of the Alshon Jeffery Brand Contract, we estimated that Alshon Jeffery would renegotiate his contract prior to the 2015 NFL season and receive a six year, $79.4 million contract including a $17.8 million signing bonus and that in 2021, he would sign a two year, $20.7 million contract with a $1.5 million signing bonus. During the second quarter of 2015, we concluded he would not renegotiate his contract prior to the beginning of the 2015 NFL season. As a result of this change, we performed a revaluation of Alshon Jeffery’s comparable contracts as of June 30, 2015. The decrease in the value of comparable NFL player contracts resulted in a decrease in the fair value of Alshon Jeffery’s Brand Contract. As of June 30, 2015, we estimated that Alshon Jeffery would sign a six year, $76.8 million contract with an $18.3 million signing bonus before the beginning of the 2016 NFL season and in 2022, he would sign a one year, $7.5 million contract with a $1.6 million signing bonus. See Note 4, “Investment In Brand Contracts, At Fair Value in the Notes to Condensed Financial Statements,” for the effects of changes of unobservable inputs on the fair values of brand contracts.

During the three months ended September 30, 2016, the Board of Directors and the majority holder of our common stock, Fantex Holdings, Inc. approved amendments to the Company’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Company’s Common Stock par value $0.0001 per share (“Common Stock”), at an exchange ratio of 1-for-200 shares of outstanding Common Stock (the “Reverse Split”), promptly followed by a forward stock split of the Company’s outstanding Common Stock, at an exchange ratio of 200-for-1 shares of outstanding Common Stock (the “Forward Split” and together with the Reverse Split, the “Reverse/Forward Split”).

If given effect, the Reverse/Forward Split would affect any registered stockholder that holds fewer than 200 shares of a specific series of Tracking Stock in his, her or its account immediately prior to the effective time of the Reverse Split. However, holders of the Company’s Units would not be affected by the Reverse/Forward Split. In addition, such amendments would not change the par value per share or the number of authorized shares of Common Stock. Holders of less than one share of Fantex Series Vernon Davis Convertible Tracking Stock, Fantex Series EJ Manuel Convertible Tracking Stock, Fantex Series Mohamed Sanu Convertible Tracking Stock, Fantex Series Alshon Jeffery Convertible Tracking Stock, Fantex Series Michael Brockers Convertible Tracking Stock and Fantex Series Jack Mewhort Convertible Tracking Stock as a result of the Reverse Split would be cashed out at the fair value as determined by the Board of Directors using an independent valuation firm.

We do not know if or when the Reverse/Forward Split will become effective nor if or when we will terminate the registration of our Common Stock under the Exchange Act and cease to be a reporting company. We also do not know if we will be able to realize any of the anticipated cost savings if we cease to be a reporting company under the Exchange Act. In addition, if given effect, the Reverse/Forward Split may be on different terms than what we currently anticipate, as disclosed above.