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 $36,000 and $5,000 for the three months ended September 30, 2023 and 2022, respectively, and $86,000 and $16,000 for the nine months ended September 30, 2023 and 2022, respectively. As of both September 30, 2023, and December 31, 2022, the accounts receivable balance due from this customer was approximately $13,000, and is included in accounts receivable - net in the consolidated balance sheets.

The Company leases its corporate office 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 the three months ended September 30, 2023 and 2022 was approximately $69,000 and $49,000, respectively, and was approximately $186,000 and $149,000 for the nine months ended September 30, 2023 and 2022, respectively, and is included in direct operating costs, general and administrative expense, selling and marketing expense and research and development expense in the consolidated statements of operations. During the nine months ended September 30, 2023 and 2022, the Company spent approximately $1.8 million and $633,000 to upgrade the related party leased facilities. During the nine months ended September 30, 2023 and 2022, the Company temporarily advanced the Executive Chairman approximately $330,000 and $42,000, respectively, to purchase vacant land surrounding the Bagh facility for the sole use and benefit of the Company in order to expedite the purchase on the Company’s behalf as only local individuals are allowed to purchase land in this region. 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 September 30, 2023 and December 31, 2022. Also at September 30, 2023, there is approximately $34,000 included in current assets-related party as a result of an advance to the Executive Chairman for the purchase of vacant land surrounding the Bagh facility for the benefit of the Company. All amounts advanced were subsequently repaid shortly after the advance was made. The Company also leases two facilities used for temporary housing from a management employee for approximately $6,200 per month.

Included in the ROU asset at September 30, 2023 is approximately $388,000 applicable to the related party leases. Included in the current and non-current operating lease liability at September 30, 2023 is approximately $207,000 and $172,000, 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 former non-independent directors whereby that director received 10,000 shares of the Company’s 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 former director received 14,000 shares of Series B Preferred Stock in February 2023 and will receive an additional 14,000 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 2014 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 that former director. There were no transaction fees through September 30, 2023.