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Related Party Transactions
6 Months Ended
Jun. 30, 2016
Related Party Transactions [Abstract]  
Related Party Transactions
10. Related Party Transactions
The Company purchased software development services pursuant to a technology services agreement with a company controlled by a non-management investor in the Company during the three months ended June 30, 2016 and 2015 in the amount of $570,000 and $450,000 and during the six months ended June 30, 2016 and 2015 in the amount of $1,100,000 and $875,000, respectively. Refer to Note 7 for a description of purchase commitments to this company.
When the Company receives requested services as detailed by statements of work pursuant to the software development agreement, it determines whether such software development costs should be capitalized as either internally-used software or software to be sold or otherwise marketed. If such costs are not capitalizable, the Company expenses such costs as the services are received. If the Company anticipates that it will not utilize the full amount of the annual minimum fee, the estimated unused portion of the annual minimum fee is expensed at that time.
The Company also purchased approximately $532,000 and $578,000 in services from a company controlled by a non-management investor in the Company during the three and six months ended June 30, 2016. There are no purchase commitments with this company, and the Company continues to use their services in 2016.
The Company has an arrangement with a former subsidiary to provide management, human resource/payroll and administrative services, the fees for which during 2015 totaled $360,000 and are expected to be similar in 2016, and these fees during the three and six months ended June 30, 2016 and 2015 totaled $90,000 and $180,000, respectively, in both periods.
On March 14, 2016, Upland completed its purchase of substantially all of the assets of Hipcricket, Inc., a
cloud-based mobile messaging software provider, and completed the transfer of its EPM Live product business. Prior to the transaction, Hipcricket was owned by an affiliate of ESW Capital, LLC, which is a shareholder of Upland. Raymond James & Co. provided a fairness opinion to Upland in connection with the transaction. Refer to Note 3 for a description of the transaction. Relating to this transaction, the Company is providing certain transition services to and receiving certain transition services from the affiliate. The cost offsets earned by the Company for these services during the three and six months ended June 30, 2016 totaled $554,000 and $706,000 and the fees owed to the affiliate by the Company for these services during the three and six months ended June 30, 2016 totaled $114,000 and $144,000, respectively.