(7)Related Party Transactions

Some of the board members and officers of EVO, Inc. have partial ownership interests in certain related companies. The Company advances funds to and receives funds from these related companies, incurs commission expense, and sells equipment and services to these companies. The related party commission expense amounted to $4.3 million and $9.8 million for the three months ended September 30, 2018 and 2017, respectively. The related party commission expense amounted to $13.8 million and $30.6 million for the nine months ended September 30, 2018 and 2017, respectively. The sale of equipment and services amounted to less than $0.1 million and $0.1 million for the three months ended September 30, 2018 and 2017. The sale of equipment and services amounted to $0.2 million and $0.4 million for the nine months ended September 30, 2018 and 2017, respectively.

Related party balances consist of the following:


	September 30,		December 31,
	2018		2017
	(In thousands)
Receivables from sale of POS devices and peripherals	$	1,447	$	1,609
Receivables from related companies		876		974
Notes receivable, short term		8		42
Due from related parties, short term	$	2,331	$	2,625

Notes receivable, long term		923		109
Due from related parties, long term	$	923	$	109

Liabilities to related companies		4,597		7,847
Due to related parties, short term	$	4,597	$	7,847

ISO commission reserve		385		675
Due to related parties, long term	$	385	$	675

Madison Dearborn Partners, LLC (“MDP”), a member of EVO, LLC and shareholder of EVO, Inc., provides the Company with consulting services on an as needed basis. In addition, the Company will reimburse MDP for certain out of pocket expenses. MDP primarily provides consulting services related to business development, financing matters, and potential acquisition activities. The Company reimbursed less than $0.1 million in expenses to MDP for the three and nine months ended September 30, 2018 and less than $0.1 million and $5.7 million for the three and nine months ended September 30, 2017, respectively.

Additionally, the Company provides certain treasury, payroll, tax preparation and other services to Blueapple Inc. (“Blueapple”), a member of EVO, LLC and owner of all outstanding shares of Class B common stock of EVO, Inc. The expense related to these services was less than $0.1 million and $0.1 million for the three months ended September 30, 2018 and 2017, respectively. The expense related to these services was $0.1 million and $0.2 million for the nine months ended September 30, 2018 and 2017. In connection with the IPO, the Company paid Blueapple $2.4 million in satisfaction of obligation to pay any further commissions to Blueapple and all such future revenue will be retained by the Company.

The Company provided card-based processing services and risk assessment to Federated Payment Systems, LLC (“Federated US”) in the ordinary course of business. The Company also held a one-third ownership position in Federated US, while JGRG Equities, LLC, an entity wholly owned by relatives of the Company’s chairman, and an unrelated third party each also held a one-third ownership position prior to the Federated acquisition as described in Footnote 4. The Company received a nominal fee for providing services to Federated US. The Company had a right to hold a reserve on Federated US’s merchant transaction proceeds to secure potential losses the Company may have incurred in connection with the services it provided to Federated US. For the three months ended September 30, 2018 and 2017, the Company received $0.1 million in revenues in connection with providing services to Federated US. For the nine months ended September 30, 2018 and 2017, the Company received $0.4 million in revenues in connection with providing services to Federated US.

EVO, LLC also relied on Federated Canada to provide certain marketing services to the Company’s business in Canada. While the Company did not hold a direct ownership interest in Federated Canada, the Company’s chairman held a one third interest in Federated Canada position prior to the Federated acquisition as described in Footnote 4. For the three months ended September 30, 2018 and 2017, the Company paid $1.9 million and $2.3 million, respectively in fees to Federated Canada for these services. For the nine months ended September 30, 2018 and 2017, the Company paid $5.8 million and $6.4 million, respectively in fees to Federated Canada for these services.

Due to the acquisition of Federated on September 28, 2018, all accrued liabilities have been excluded from the schedule above as this activity will now eliminate in consolidation. Prior period amounts continue to reflect balances between the Company and Federated as related party.

The Company leases office space located at 515 Broadhollow Road in Melville, New York for $0.1 million per month from 515 Broadhollow, LLC. 515 Broadhollow, LLC is majority owned, directly and indirectly, by the Company’s chairman.

Receivables from related companies include amounts receivable from members of EVO, LLC and shareholders of the Company of $0.6 million and $0.8 million and receivables from minority held affiliates of $0.7 million and $0.3 million as of September 30, 2018 and December 31, 2017, respectively. In connection with the vesting of the Class A restricted shares, the Company issued loans to certain employees for the purposes of paying withholding taxes. As of September 30, 2018, the amount outstanding for loans to certain employees was $0.9 million.

The Company, through one wholly owned subsidiary and one minority held affiliate, conducts business under ISO agreements with a relative of the Company’s chairman pursuant to which the relative provides certain marketing services and equipment in exchange for a commission based on the volume of transactions processed for merchants acquired by the related party. For the three months ended September 30, 2018 and 2017, the Company paid $0.1 million for commissions paid related to this activity. For the nine months ended September 30, 2018 and 2017, the Company paid $0.4 million and $0.2 million, respectively, for commissions paid related to this activity.

NFP is the Company’s benefit broker and 401(k) manager. NFP is a portfolio company of MDP and one of the Company’s executive officers maintains a minority ownership interest in NFP. For the three months ended September 30, 2018 and 2017, the Company paid less than $0.1 million in commissions and other expenses to NFP. For the nine months ended September 30, 2018 and 2017, the Company paid $0.1 million and $0.2 million, respectively, in commissions and other expenses to NFP.