Related Party Transactions

9 Months Ended

Sep. 30, 2018

15.

Related Party Transactions

Certain facilities leased by Spectrum are owned by the former owner of Spectrum, who currently holds greater than 10% of the Company’s outstanding common stock. The lease amounts paid to this shareholder were negotiated in connection with the Spectrum Acquisition. The Company has incurred rent expense totaling $555,000 for the nine-month period ended September 30, 2018 related to these leases.

As part of the Spectrum Acquisition, the Company is responsible for filing all tax returns for Spectrum for the period from January 1, 2017 through July 31, 2017, the day before the Spectrum Acquisition. The Company is responsible for collecting any tax refunds from federal and state authorities and remitting these refunds to the former shareholders of Spectrum, including the former owner of Spectrum who currently holds greater than 10% of the Company’s outstanding common stock. As of September 30, 2018, the Company has accrued $1,728,000 of these refunds payable to the Spectrum shareholders, net of $207,000 of expenses paid by the Company on behalf of Spectrum for tax preparation and other fees. These amounts are included in accrued liabilities on the Company’s consolidated balance sheet.