(17) RELATED PARTY TRANSACTIONS

The Company’s corporate offices are leased from an entity in which the Company’s former Chief Financial Officer, now the Company’s Chief Administrative Officer (“CAO”) has an investment interest. This lease expires in October 2028 and contains a five-year extension option. Expenses incurred under this lease were approximately $39,000 for both of the three-month periods ended June 30, 2022 and 2021, and approximately $78,000 for both of the six-month periods ended June 30, 2022 and 2021.

The Company procures nutrients, lab equipment, cultivation supplies, furniture, and tools from an entity owned by the family of the Company’s Chief Operating Officer (“COO”). Purchases from this entity totaled $1.4 million and $2.3 million in the three and six months ended June 30, 2022, respectively, and $1.2 million and $2.0 million in the three and six months ended June 30, 2021, respectively.

The Company pays royalties on the revenue generated from its Betty’s Eddies product line to an entity owned by the Company’s COO and its Senior Vice President of Sales (“SVP Sales”) under a royalty agreement. This agreement was amended effective January 1, 2021 whereby, among other modifications, the royalty percentage changed from 2.5% on all sales of Betty’s Eddies products to (i) 3.0% and 10.0% of wholesale sales of existing products within the product line if sold directly by the Company, or licensed by the Company for sale by third parties, respectively, and (ii) 0.5% and 1.0% of wholesale sales of future developed products within the product line if sold directly by the Company, or licensed by the Company for sale by third-parties, respectively. The aggregate royalties due to this entity were approximately $53,000 and $109,000 for the three and six months ended June 30, 2022, respectively, and approximately $79,000 and $162,000 for the three and six months ended June 30, 2021, respectively.

During the three and six months ended June 30, 2022, one of the Company’s majority-owned subsidiaries paid aggregate distributions of $12,600 and $23,100, respectively, to the Company’s Chief Executive Officer (“CEO”) and its CAO, who own minority equity interests in such subsidiary. During the three and six months ended June 30, 2021, this majority-owned subsidiary paid aggregate distributions of approximately $12,000 and $21,000 to the Company’s CEO and CAO, respectively.

During the three and six months ended June 30, 2022, one of the Company’s majority-owned subsidiaries paid distributions of $8,000 and $11,000, respectively, to a current employee who owns a minority equity interest in such subsidiary.

During the three and six months ended June 30, 2022, the Company purchased fixed assets and consulting services aggregating $267,000 and $659,000, respectively, from two entities owned by two of the Company’s general managers. During the three and six months ended June 30, 2021, the Company purchased fixed assets and consulting services from these entities aggregating approximately $308,000 and $573,000, respectively.

During the three and six months ended June 30, 2022, the Company purchased fixed assets of $278,000 and $360,000, respectively, from an entity owned by an employee. During the three and six months ended June 30, 2021, the Company purchased fix assets of approximately $156,000 and $466,000, respectively, from this employee.

The Company’s mortgages with Bank of New England, DuQuoin State Bank, and South Porte Bank are personally guaranteed by the Company’s CEO and the Company’s CAO.