Related Party Transactions
|3 Months Ended|
Mar. 31, 2017
|Related Party Transactions [Abstract]|
|Related Party Transactions||
Note 8 – Related Party Transactions
Related Party Sales and Accounts Receivable
The Company generates a portion of its revenue from a related entity transfer station, owned by the majority shareholder of the Company. This related entity uses the Company’s landfill (Sand/Land) as its primary source of disposal for construction and demolition debris. Sand/Land also trucks the disposal costs from the Company’s site, either directly or through a third party and bills the Company accordingly for trucking services. Total revenue generated from the related entity during the three months ended March 31, 2017 and 2016 were $167,618 and $181,535 or 10% and 12% of total consolidated revenue, respectively. Total related party accounts receivable as of March 31, 2017 and December 31, 2016 related to these sales were $50,780 and $93,450, respectively, or 7% and 16% of total net accounts receivable, respectively.
Gateway disposes a portion of its construction and debris collected in the related entities transfer station. Total expenses incurred from the related entity during the three months ended March 31, 2017 and 2016, were $36,183 and $34,779 respectively. Total related party accounts payable due to the related entity as of March 31, 2017 and December 31, 2016 were approximately $24,000 and $21,000, respectively.
Related Party Shareholder Loan
The Company had a note due the largest shareholder of the Company. This note was unsecured, had a maturity date of December 31, 2016 and carried a 1% interest rate. On January 1, 2016, the Note was converted to Series B, 10% cumulative preferred stock and the note was cancelled. The total converted debt was $2,000,000. Total related party Series B preferred stock outstanding at March 31, 2017 and December 31, 2016 was $2,000,000. Total related party accrued dividends at March 31, 2017 and December 31, 2016 were $250,000 and $200,000 respectively.
Related Party Acquisitions
On December 31, 2016, the Company closed on the acquisition of Northeast Data Destruction and Recycling, LLC (“Northeast Data”). This acquired entity was owned 50% by the majority shareholder of the Company prior to the acquisition. A second, non-related party owner owned the second 50% of the acquired entity. Northeast was acquired for $100,000 in cash and 1,425,000 shares of the Company’s restricted common stock. The majority shareholder of the Company received only restricted common stock consideration of 1,025,000 shares and the second Member of the acquired LLC received 400,000 shares of the Company’s restricted common stock and $100,000 cash. The restricted common stock was valued at $0.077 per share, equivalent with the closing price of the quoted market price of NWMH on December 30, 2016, the last trading business day of 2016. Total consideration paid for the acquisition was $209,725, including the $100,000 cash payment and $109,725 in restricted common stock. See note 10, “Acquisitions” for further information related to the acquisitions and the purchase price allocation for acquired entity.
Related Party Consulting Agreement
The Chairman of the Board is a consultant for the Company and meets with each subsidiary general manager on a regular basis, consulting on matters such as acquisitions and integration, growth plan objectives, operating effectiveness, organization structure, and equipment and financing requirements, among other matters. Total related party consulting expenses incurred and paid to the Chairman for the three months ended March 31, 2017 and 2016 was $33,000 and $23,000, respectively.
Related Party Consolidated Workers Compensation Policy and Receivables Due from Related Party Transfer Station for Advances and Expenses Paid on Behalf of the Transfer Station
The Company has a consolidated workers compensation policy with a related entity transfer station company (the “Transfer Station”). The related party receivable for the workers compensation payments at March 31, 2017 and December 31, 2016 were $4,985 and $2,279, respectively. The Company loaned the Transfer Station $8,400 for equipment purchase needs in 2014. The receivable carries 0% interest. The balance of the related party receivable was $8,400 at March 31, 2017 and December 31, 2016. The Company engaged an appraiser for the Transfer Station, which Sandland paid for on behalf of the Transfer Station; $6,075 is due from the related party at March 31, 2017 for the appraisal. Total due from the Related Entity related to the equipment advance, workers compensation consolidated policy and the appraisal costs at March 31, 2017 and December 31, 2016 were $19,460 and $16,754, respectively.
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/presentationRef