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9. RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2018

The Company leases an office building and equipment from Areth, LLC (“Areth”) pursuant to an agreement for services effective as of January 1, 2016, as amended from time to time. Effective October 1, 2017, monthly rent on this facility was reduced to $10,000. On September 27, 2018, the agreement was amended to extend the term of the agreement through September 30, 2019. Rent expense amounted to $0.1 million and $0.2 million for the years December 31, 2018 and 2017, respectively, and includes fees for the use of such office space and for other information technology, general warehousing and administrative services. Areth is a company controlled by Dr. Jerrold B. Grossman, the Company’s Vice Chairman, and Adam S. Grossman, the Company’s President and Chief Executive Officer. The Company also reimburses Areth for office and building related (common area) expenses, equipment and certain other operational expenses, which were not material to the consolidated financial statements for the years ended December 31, 2018 and 2017.

As of December 31, 2018 and 2017, the Company has a $15.0 million subordinated note payable to Biotest (see Note 7), and the Company recognized interest expense on this note for the years ended December 31, 2018 and 2017 in the amount of $0.9 million and $0.5 million, respectively.

For the years ended December 31, 2018 and 2017, the Company recognized revenues under its out-licensing agreement with Biotest of $0.1 million. Deferred revenue of $2.5 million and $2.7 million as of December 31, 2018 and 2017, respectively, is related to this agreement.

Biotest is the Company’s largest customer for the sale of normal source plasma. Plasma sales to Biotest for the years ended December 31, 2018 and 2017 were $9.6 million and $10.7 million, respectively. Accounts receivable includes $1.0 million and $1.2 million due from Biotest as of December 31, 2018 and 2017, respectively. Additionally, Biotest is a supplier of plasma to ADMA, with the Company purchasing approximately $7.8 million and $2.8 million of plasma in the years ended December 31, 2018 and 2017, respectively. Included in accounts payable is approximately $2.0 million and $0.1 million due to Biotest as of December 31, 2018 and 2017, respectively. The following table summarizes the related party balances with Biotest:

	Year Ended December 31,
	2018		2017

Sale and purchase of plasma
Product revenue	$	9,564,388	$	10,664,456
Purchases		7,822,226		2,776,959

License revenue		142,834		142,834

Interest expense		912,500		520,000

	December 31,		December 31,
	2018		2017
Accounts receivable	$	961,145	$	1,245,677
Accounts payable		2,010,774		139,939
Accrued expenses		10,659		314,820
Note payable, net of discount		14,874,184		14,842,396
Accrued interest		65,000		65,000
Deferred revenue		2,547,199		2,690,033

In connection with the acquisition of the Biotest Assets, the Company entered into a Transition Services Agreement with BPC pursuant to which each of the Company and BPC agreed to provide transition services to the other party, including services related to finance, human resources, information technologies, leasing of equipment and clinical and regulatory services for a period of up to 24 months after the June 6, 2017 closing date, as well as agreements to lease certain laboratory space within the Boca Facility to BPC for a period of up to 24 months after the closing date of the acquisition transaction. As of December 31, 2018 and 2017, approximately $11,000 and $0.3 million, respectively, was payable by the Company to BPC for expenses incurred on behalf of the Company and services related to these agreements. This amount is reflected in accrued expenses in the accompanying consolidated balance sheets. The services component of amounts billed to the Company by BPC for the year ended December 31, 2018 and 2017 was not material to the Company’s consolidated financial statements.

Under the terms of the Biotest Transaction, the Company transferred ownership of two plasma collection centers to BPC on January 1, 2019 (see Note 17). The Company has estimated the fair value of these assets to be $12.6 million, and the obligation to transfer these assets to Biotest is reflected in non-current liabilities in the accompanying consolidated balance sheets as of December 31, 2018 and 2017. The Company has also entered into several plasma supply agreements with BPC (see Note 10).