Note 13 – Related Party Transactions

Debt with Street Capital

Until the second quarter of 2014, as discussed below, Street Capital was the Company’s majority shareholder. Street Capital remained a related party following the distribution of its investment in HGI to Street Capital shareholders as a result of the Services Agreement and the relationship of the Company’s Chairman of the Board discussed below. The Services Agreement terminated on August 31, 2015, however subsequent to its termination Street Capital remained a related party as a result of the Street Capital Loan as well as the Company’s Chairman of the Board, who is also a significant shareholder of the Company, is also the chairman of the board of Street Capital. At December 31, 2016 and 2015, the Company reported amounts owed to Street Capital of $1.0 million and $1.7 million, respectively, as related party debt (see Note 9). Total interest of $0.5 million has been accrued to the principal balance of the debt through December 31, 2016, and remains unpaid.

Street Capital Services Provided to Company

Beginning in 2004, HGI and Street Capital entered into successive annual management services agreements (collectively, the “Agreement”). Under the terms of the Agreement, HGI agreed to pay Street Capital for ongoing services provided to HGI by Street Capital personnel. These services included preparation of the Company’s financial statements and regulatory filings, taxation matters, stock-based compensation administration, Board administration, patent portfolio administration and litigation matters.

In 2013, Street Capital announced its plan to dispose of its interest in HGI, and on March 20, 2014, Street Capital declared a dividend in kind, consisting of Street Capital’s distribution of its majority interest in HGI to Street Capital shareholders. The dividend was paid on April 30, 2014 to shareholders of record as of April 1, 2014.

Following this disposition, the Company and Street Capital entered into a replacement management services agreement (the “Services Agreement”). Under the terms of the Services Agreement, Street Capital remained as external manager and continued to provide the same services, at similar rates, until the Services Agreement was terminated effective August 31, 2015, as described more fully in the Current Report on Form 8-K filed with the SEC on September 1, 2015.

The amounts charged by Street Capital, which are included in selling, general and administrative expenses and have been added to the Street Capital Loan balance, are detailed below (in thousands):

	Year ended December 31,
	2016		2015
Management fees	$	—	$	240
Other charges		—		50
Total	$	—	$	290

Transactions with Other Related Parties

Through April 2016, as part of the operations of HGP the Company leased office space in Foster City, CA that is owned by an entity jointly controlled by Ross Dove and Kirk Dove, the Company’s Chief Executive Officer and President and Chief Operating Officer, respectively. The Company terminated the lease agreement in the second quarter of 2016. The total amount paid to the related party for the lease is outlined in the table below. Both Ross Dove and Kirk Dove shared equally in the payments in both 2016 and 2015.

As part of the operations of NLEX, the Company leases office space in Edwardsville, IL that is owned by the President of NLEX, David Ludwig. The total amount paid to the related party is outlined in the table below. All of the payments were made to David Ludwig.

The lease amounts paid by the Company to the related parties, which are included in selling, general and administrative expenses during the year ended December 31, 2016 and 2015, are detailed below (in thousands):

	Year ended December 31,
Leased premises location	2016		2015
Foster City, CA	$	76	$	228
Edwardsville, IL		99		97
Total	$	175	$	325

In 2016 the Company entered into multiple related party loan agreements with certain executive officers of the Company. These related party loans are described more fully in Note 9 to the consolidated financial statements. Both Ross Dove and Kirk Dove, who were parties to the related party loans, shared equally in all payments made by the Company to satisfy obligations under the loan agreements.

During 2016 the Company paid David Ludwig $0.8 million for his second earn-out provision payment.