Notes Receivable and Payable to Officers and Directors (Related Party Transactions)

12 Months Ended

Feb. 28, 2021

Notes Receivable and Payable to Officers and Directors (Related Party Transactions)

Note 4. Notes Receivable and Payable to Officers and Directors (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.

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 paid off in December 2020.

In January 2020, to assist the Company in funding the debt assumed resulting from the acquisition of Jaco Displays, LLC, the Company borrowed $505,180 from Ronald D. Ordway, CEO, comprised of cash proceeds received of $148,330 with the remaining $356,850 in debt assumed as the CEO personally funded certain liabilities resulting from the acquisition. The Company combined this amount borrowed with another $438,832 owed to Mr. Ordway in back rent along with $82,838 from previous borrowings, and signed a promissory note for the aggregate balance of $1,026,850 at a six percent interest rate due on or before July 24, 2020 with Mr. Ordway. The Company made a $35,000 payment to

Mr. Ordway in March 2020 and borrowed another

$200,000 in

August 2020 leaving a balance of

$1,191,850 at August 31, 2020. This note was paid in full on September 11, 2020 with part of the proceeds from the sale of a building the Company owned in Pennsylvania as disclosed in

Note 9. From November 2020 through January 2021, the Company borrowed an additional

$400,000

from the CEO which was paid in full in February 2021. The CEO also forgave approximately

$36,000

in accrued interest on these loans.

As of February 28, 2021, there are no notes receivables or notes payables outstanding with officers and directors.