Related Party Transactions

6 Months Ended

Aug. 31, 2019

Note 8. – Related Party Transactions

On March 30, 2016, the Company entered into an assignment with recourse of the note receivable from

Z-Axis

Inc.

(Z-Axis)

with Ronald D. Ordway, CEO, and Jonathan R. Ordway, related parties, for the sum of $912 thousand. The note receivable is collateralized by a security interest in the shares of

Z-Axis

as well as a personal guaranty of its majority shareholder.

Z-Axis

is current on all scheduled payments regarding this note. The Company retains the right to repurchase the note at any time for 80% of the outstanding principle balance. Also, in the event of default by

Z-Axis,

the Company is obligated to repurchase the note for 80% of the remaining principle balance plus any accrued interest. Accordingly, the Company has recognized this transaction as a secured borrowing

The $ 0.9 million, 9% interest rate, note originated on March 30, 2016, with payments beginning on April 16, 2016 and continuing for 56 months thereafter. The balance of the note was $296 thousand with $219 thousand classified as current as of August 31, 2019 and $398 thousand with $209 thousand classified as current as of February 28, 2019, respectively.

For the six months ending August 31, 2019, the Company owed $16 thousand to Ronald D. Ordway, the CEO of the Company for funds borrowed during the previous fiscal year 2019. This is a

non-interest

bearing loan as repayment is expected in the short-term. See Note 7 for a discussion of leases with related parties.

On July 3, 2017, the Company and Ordway Properties, LLC purchased Honeyhill Properties, LLC which is the owner of the building at 510 Henry Clay Blvd. in Lexington, KY for $1,500,000. Video Display Corporation invested $500,000 towards the purchase price and accounted for the investment under the cost method since Ordway Properties, LLC was the majority owner. During the period ending November 30, 2017 the Company reduced its share in the LLC by $125,000, selling to Ordway Properties, LLC. In addition, during the period ending August 31, 2018, the Company’s sold its remaining $375,000 ownership interest to Ordway Properties, LLC receiving $166,457 in cash and $208,543 in forgiveness of rent that was accrued and owed. There was no gain or loss on the sale.