|3 Months Ended|
Mar. 31, 2023
|Related Party Transactions [Abstract]|
8. RELATED PARTIES
The Company had sales to a related party, a physician who is the wife of the Executive Chairman. Revenues from this customer were approximately $19,000 and $5,000 for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, and December 31, 2022, the accounts receivable balance due from this customer was approximately $ and $ , respectively, and is included in accounts receivable - net in the consolidated balance sheets.
The Company leases its corporate offices in New Jersey, a temporary housing apartment for foreign visitors, a storage facility, its operations center in Bagh, Pakistan and an apartment for temporary housing in Dubai, the UAE, from the Executive Chairman. The related party rent expense for both the three months ended March 31, 2023 and 2022 was approximately $51,000, and is included in direct operating costs, general and administrative expense and research and development expense in the consolidated statements of operations. During the three months ended March 31, 2023 and 2022, the Company spent approximately $502,000 and $288,000 to upgrade the related party leased facilities. Current assets-related party in the consolidated balance sheets includes security deposits related to the leases of the Company’s corporate offices in the amount of approximately $16,000 as of both March 31, 2023 and December 31, 2022.
Included in the ROU asset at March 31, 2023 is approximately $390,000 applicable to the related party leases. Included in the current and non-current operating lease liability at March 31, 2023 is approximately $154,000 and $229,000, respectively, applicable to the related party leases.
Included in the ROU asset at December 31, 2022 is approximately $467,000 applicable to the related party leases. Included in the current and non-current operating lease liability at December 31, 2022 is approximately $158,000 and $301,000, respectively, applicable to the related party leases.
During June 2022, the Company entered into a one-year consulting agreement with an entity owned and controlled by one of its non-independent directors whereby the director received 8.75% Series B Cumulative Redeemable Perpetual Preferred Stock (“Series B Preferred Stock”) in exchange for assisting the Company to identify and acquire additional companies, including performing due diligence. In addition, the Company may make additional payments under the agreement for any successful acquisitions by the Company based on the purchase price of the transaction. No such additional payments were made in 2022. During February 2023, the agreement was amended and extended through December 2024 whereby the director received shares of Series B Preferred Stock in February 2023 and will receive an additional shares in January 2024. All of the payments made were capitalized and are being amortized over the service period. The amortization is recorded as stock compensation in General and Administrative expense in the consolidated statement of operations. All such shares of the Series B Preferred Stock are or will be issued in accordance with the Company’s Amended and Restated Equity Incentive Plan. In addition to the extension of the consulting agreement, the amendment provides that any transaction fees due will be offset against the last two above payments before any amounts are due to the director. shares of the Company’s
During 2020, a New Jersey corporation, talkMD Clinicians, PA (“talkMD”), was formed by the wife of the Executive Chairman, who is a licensed physician, to provide telehealth services. talkMD was determined to be a variable interest entity (“VIE”) for financial reporting purposes because the entity will be controlled by the Company. As of March 31, 2023, talkMD had not yet commenced operations. Through March 31, 2023, the Company has paid approximately $4,000 on behalf of talkMD for income taxes.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef