RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2016

Note 8.

RELATED PARTY TRANSACTIONS

For each of the three and nine months ended September 25, 2015, Kohlberg & Company, L.L.C. (the “Kohlberg Manager”), whose affiliate held all 1,131,551 shares of the Company’s convertible preferred stock and provided management oversight and advisory services to the Company until August 11, 2016. On August 11, 2016, the Kohlberg Manager’s ongoing management oversight and advisory services were terminated upon the consummation of the transactions contemplated by the SPA (as defined in Note 12), and all amounts owed to the Kohlberg Manager (other than limited indemnification rights) were waived in connection with the mutual release described in Note 12.

At December 31, 2015, the Company owed the Kohlberg Manager $3.8 million for management oversight and advisory services, which is recorded in noncurrent liabilities on the Condensed Consolidated Balance Sheets. Prior to the termination of the Kohlberg Manager’s management oversight and advisory services on August 11, 2016, the Company incurred an annual expense of $0.5 million in respect of these services. On August 11, 2016, the Kohlberg Manager agreed to waive payment of these management fees (which totaled $4.0 million) as part of the mutual release agreement (see Note 12). The Company capitalized the waiver of the related party payable of $4.0 million, which is recorded in additional paid-in capital in the Condensed Consolidated Balance Sheets as of September 30, 2016. For the three and nine months ended September 30, 2016, $38,000 and $288,000, respectively, is recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss for these services. For the three and nine months ended September 25, 2015, $0.1 million and $0.4 million, respectively, are recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss for these services.

In February 2014, loans of $0.1 million each were received from two individuals who were then serving as directors of the Company, and a loan of $0.2 million was received from the Kohlberg Manager. In connection with these loans, the Company entered into subordinated promissory notes with these individuals and the Kohlberg Manager, respectively. These notes were used to finance the acquisition of FTW Holdings, Inc. and were amended in the year ended December 31, 2015 to mature on December 31, 2019. The notes accrue interest at a rate of 15% per year, which will be paid by capitalizing such interest and adding such capitalized interest to the principal amount of the subordinated notes.

As part of the August 11, 2016 mutual release agreement, the Kohlberg Manager agreed to release the Company from repaying the promissory notes due to the Kohlberg Manager. The Company capitalized $0.2 million for funds previously received and $0.1 million for the waived PIK interest to additional paid-in capital in the Condensed Consolidated Balance Sheets as of September 30, 2016. The PIK interest attributable to these notes was $59,000 as of December 31, 2015. The promissory notes totaling $0.2 million from the two former directors of the Company (who resigned in August 2016 in connection with the transactions described in Note 12) remain outstanding as of September 30, 2016. The PIK interest attributable to these notes was $0.1 million as of September 30, 2016 and $59,000 as of December 31, 2015. The loans and PIK interest are recorded in noncurrent liabilities on the Condensed Consolidated Balance Sheets as of September 30, 2016.

The Company owes $0.2 million to Victory Park Capital Advisors as of September 30, 2016 for financing costs associated with the Second Lien Credit Facility. The payable is recorded in accrued expenses on the Condensed Consolidated Balance Sheets as of September 30, 2016.