Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions

Related Party Transactions

(11) Related Party Transactions

Related party balances consist of the following:

	March 31,		December 31,
	2020		2019
	(In thousands)
Due from related parties, current	$	345	$	1,125
Due to related parties, current		(4,067)		(7,325)
Due to related parties, long-term		(385)		(385)

Due from related parties, current, consists of receivables due from non-controlling interest holders of consolidated subsidiaries.

Due to related parties, current, consists of $2.8 million and $5.5 million as of March 31, 2020 and December 31, 2019, respectively, primarily due to non-controlling interest holders of consolidated subsidiaries, and $1.3 million and $1.8 million as of March 31, 2020 and December 31, 2019, respectively, representing commissions payable to unconsolidated investees of the Company.

Due to related parties, long-term, consists of ISO commission reserves.

The Company leases office space located at 515 Broadhollow Road in Melville, New York from 515 Broadhollow, LLC. 515 Broadhollow, LLC is majority owned, directly and indirectly, by the Company’s chairman. As of March 31, 2020 and December 31, 2019, the liability related to this lease amounted to $3.9 million and $4.1 million, respectively, and is included in the operating lease liabilities on the unaudited condensed consolidated balance sheets. The Company subleases a portion of this office space to an unconsolidated investee. Sublease income was less than $0.1 million for each of the three months ended March 31, 2020 and 2019.

The Company leases vehicles from the non-controlling interest holder of a consolidated subsidiary. As of March 31, 2020 and December 31, 2019, these lease liabilities amounted to $0.3 million, respectively, and are included in the operating lease liabilities on the unaudited condensed consolidated balance sheets.

A portion of the TRA obligation is payable to members of management and current employees. Refer to Note 5, “Tax Receivable Agreement”, for further information on the tax receivable agreement.

Related party commission expense incurred with unconsolidated investees of the Company amounted to $4.4 million for each of the three months ended March 31, 2020 and 2019. The sale of equipment and services to these unconsolidated investees amounted to $0.1 million for each of three months ended March 31, 2020 and 2019.

The Company provides certain professional 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. Blueapple is controlled by entities affiliated with the Company’s founder and chairman, Rafik R. Sidhom. The expense related to these services was less than $0.1 million for each of the three months ended March 31, 2020 and 2019. 

The Company, through two wholly owned subsidiaries and one unconsolidated investee, conducts business under ISO agreements with a relative of the Company’s founder and chairman pursuant to which the relative of the Company’s founder and chairman provides certain marketing services and equipment in exchange for a commission based on the volume of transactions processed for merchants acquired by the relative of the Company’s founder and chairman. For each of the three months ended March 31, 2020 and 2019, the Company paid commissions of $0.1 million related to this activity.

NFP is the Company’s benefit and insurance broker and 401(k) manager. NFP is a portfolio company of MDP and one of the Company’s executive officers owns a minority interest in NFP. For each of the three months ended March 31, 2020 and 2019, the Company paid $0.1 million in commissions and other expenses to NFP.

On April 21, 2020, the Company issued 152,250 shares of series A convertible preferred stock to an affiliate of MDP for a purchase price of $985.221685 per share. The Company also reimbursed MDP for $0.8 million of expenses in connection with the offer and sale of the preferred stock. Refer to Note 21, “Subsequent Events”, for additional details regarding the transaction and the terms of the preferred stock.