Note M - Certain Relationships and Related Party Transactions

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

Note M — Certain Relationships and Related Party Transactions

From 

2016

to

2020,

we conducted business with Wipro, whereby

Wipro provided us with a variety of technology-related services. 

We have since terminated all service agreements. 

Effective

January 30, 2018,

Wipro became a related party when it purchased

9,926

shares of our Series A Preferred Stock (which are convertible at Wipro's option into

1,001,614

shares, or

16%

of our Common Stock), for aggregate consideration of

$9.9

million. For information pertaining to the Company's preferred stock, See Note E,

Convertible Preferred Stock

.

During the

three

and

six

months ended

June 30, 2020,

we recorded

no

revenue from services we provided to Wipro.  During the

three

and

six

months ended

June 30, 2019,

we recorded an immaterial amount of revenue for services we provided to Wipro.

During the

three

months ended

June 30, 2020

and

2019

, we recorded

$77,000

 and

$2.4

 million of expense, respectively, in technology-related services Wipro provided to us. During the

three

months ended

June 30, 2020,

we came to an agreement with Wipro regarding a termination fee which resulted in a

$0.3

 million credit to a previously accrued amount and agreethe termination of all services provided to us by Wipro. During the

six

months ended

June 30, 2020,

we recorded

$0.3

million expense which was offset by a

$0.3

million credit arising from the reduction of the previously accrued termination amount mentioned above. During the

six

months ended

June 30, 2019,

we recorded

$8.6

million of expense in technology-related services and lease expense for a facility Wipro provided to us. 

As of

June 30, 2020

and

December 31, 2019

, we had trade payables due to Wipro of

$0.7

 million and

$1.5

million respectively.  As of

June 30, 2020

and

December 31, 2019

, we had an immaterial amount in trade receivables due from Wipro.

In the

third

 quarter of

2019,

we entered into a business relationship with Snap Kitchen, the founder of which is a

9%

owner of Harte Hanks.  We recorded

$13,000

 and

$337,000

 o

f revenue earned from th

em in the

three

and

six

months ended 

June 30, 2020.

As described in Note F,

Long-Term Debt

, the Company's Texas Capital Credit Facility is secured by HHS Guaranty, LLC, an entity formed to provide credit support for the Company by certain members of the Shelton family (descendants of

one

of our founders). Pursuant to the Amended and Restated Fee, Reimbursement and Indemnity Agreement, dated

January 9, 2018,

between HHS Guaranty, LLC and the Company, HHS Guaranty, LLC has the right to appoint

one

representative director to the Board. Currently, David L. Copeland serves as the HHS Guaranty, LLC representative on the Board.