|9 Months Ended|
Sep. 30, 2020
|Related Party Transactions [Abstract]|
|RELATED PARTIES||RELATED PARTIES
As of September 30, 2020, the Company has a payable to its founders recorded of $0.7 million. The amount is included in accrued expenses and mostly related to termination benefits associated with their separation from the Company. The termination benefits are payable via regular payroll through June 2021.
As part of the Settlement Agreement, 2,950,000 RSUs vested and were issued to Mona Jr. The vesting of the RSU's is treated as taxable compensation and thus subject to income tax withholdings. No amounts were withheld (either in cash or the equivalent of shares of common stock from the vesting of the RSU's) and included in the Company’s payroll tax filing at the time of vesting. The compensation is subject to Federal and State income tax withholding and Federal Insurance Contributions Act (“FICA”) taxes withholding estimated to be $6.4 million for the employee portions. The employer portion of the FICA taxes is $0.2 million and has been recorded as a component of selling, general and administrative expenses in the condensed consolidated statement of operations for the nine months ended September 30, 2019. During the nine months ended September 30, 2020, the Company paid the employer and employee portion of the FICA taxes of $0.2 million, respectively. Although the primary tax liability is the responsibility of the employee, the Company is secondarily liable and thus has recorded the liability on its condensed consolidated balance sheet as of September 30, 2020 in an amount of $6.2 million which was recorded as a component of accrued expenses. The Company has recorded an offsetting receivable for the total estimated Federal and State income taxes which should have been withheld. This resulted in a receivable of $6.2 million as of September 30, 2020 which was recorded in the line item Prepaid expenses and other on the condensed consolidated balance sheet. If the amount is not paid by Mona Jr., or if the Company is unsuccessful in receiving the required taxing authority documentation from him, the Company could be liable for the amount of such withholding tax due and would record an associated charge for which the Company would seek reimbursement from Mona Jr. Additionally, the Company could be subject to negligence penalties if the amounts are ultimately not paid. The Company does not believe that any such negligence penalties are probable or reasonably possible as of September 30, 2020.
Because the October 15, 2020 federal tax filing deadline has passed, the Company has requested that Mona Jr. provide it with the required taxing authority documentation. Mona Jr. has yet to comply with this request. If the Company is unable to obtain such documentation, it could result in a material adverse effect on the Company’s results of operations, financial conditions and cash flows.
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/disclosureRef