Note 12. Related Parties

The Company’s major related party entities are: ESW LLC, a Florida limited liability company partially owned by the Company’s Chief Executive Officer and Chief Operating Officer, VS, an importer and installer based in Panama owned by related party family members, and Union Temporal ESW (“UT ESW”), a temporary contractual joint venture under Colombian law with Ventanar S. A. managed by related parties that expires at the end of its applicable contracts.

The following is a summary of assets, liabilities, and income and expense transactions with all related parties, shareholders, directors and managers:

	(in thousands)
	September 30, 2015		December 31, 2014
Assets
Due from ESW LLC	$	20,477	$	13,814
Due from VS		8,351		7,979
Due from UT ESW		-		2,000
Due from other related parties		3,277		4,771
	$	32,055	$	28,564

Long term payment agreement from VS	$	2,536	$	4,220

Liabilities
Due to A Construir S.A.	$	550	$	995
Due to other related parties		1,204		1,004
	$	1,754	$	1,999

	(in thousands)
	Three months ended September 30,				Nine months ended September 30,
	2015		2014		2015		2014
Revenues
Sales to ESW LLC	$	14,366	$	8,872	$	37,264	$	27,023
Sales to VS		1,229		1,662		3,828		8,898
Sales to other related parties		149		503		818		1,992
Sales to related parties	$	15,744	$	11,037	$	41,910	$	37,913

Expenses
Fees paid to directors and officers	$	235	$	32	$	1,012	$	653
Payments to other related parties*		385		(34)		1,250		1,137

Sales to other related parties were less than $0.7 million and $0.4 million in the three months and the nine months ended September 30, 2015 and less than $0.1 million for the three- and nine-month periods ended September 30, 2014, respectively.

Payments to other related parties in 2015 and 2014 consists of donations to Fundación Tecnoglass and sales commissions.

In December 2014, the Company and VS executed a three-year payment agreement for recovery of trade receivables outstanding for $6.6 million with an interest rate of Libor + 4.7% paid semiannually. The payment agreement was accounted for at fair value.

In 2013, the Company guaranteed a loan for $0.2 million used to develop a lot adjacent to the Alutions plant into a related party fuel service station Santa Maria del Mar S.A. At September 30, 2015, the guarantee was in good standing and no liabilities have been recorded, and the Company was in the process of restructuring the guarantee to exclude the involvement of Tecnoglass, S.A., as required by the merger agreement.

In December 2014, ESW LLC, an entity controlled by related parties, guaranteed a mortgage loan for $3.9 million for the acquisition of real properties in Miami-Dade County, Florida in favor of Tecnoglass RE, a wholly owned subsidiary of the Company.

Analysis of Variable Interest Entities

The Company conducted an evaluation as a reporting entity of its involvement with certain significant related party business entities as of September 30, 2015 in order to determine whether these entities were variable interest entities requiring consolidation or disclosures in the financial statements of the Company. The Company evaluated the purpose for which these entities were created and the nature of the risks in the entities as required by the guidance under ASC 810-10-25 - Consolidation and related Subsections.

From all the entities analyzed, only two entities, ESW LLC and VS, resulted in having variable interests. However, as of the date of the initial evaluation and for the three and six months ended September 30, 2015, the Company concluded that both entities are not deemed VIEs and as such these entities should not be consolidated within the Company’s consolidated financial statements.

The Company’s analysis that was performed previously for the preparation of the financial statements as of December 31, 2014 concluded that these entities were VIEs. However, further analysis of the facts and circumstances surrounding the Company’s accounting of ESW LLC and VS performed during 2015 determined that the prior analysis was in error. The Company considered a quantitative and qualitative materiality assessment of the disclosure error and concluded it was not material to the Company’s previously reported financial statements.