Related Party Transactions

6 Months Ended

Feb. 28, 2018

Note 5. Related Party Transactions

The Company leases buildings under operating lease agreements from a grantor trust that is beneficially owned by the Company’s majority shareholder, who is also the Company’s Chairman and CEO. During the three months ended February 28, 2018 and 2017, the Company incurred approximately $45,000 and $163,000, respectively, of expense related to these leases.

On November 21, 2017, the Company entered into a Commercial and Industrial Lease Agreement (the “Lease”) with the Trust, for the lease of a facility in Glendale Heights, Illinois. The Company relocated its Chicago sales office and distribution center to this facility in December 2017. The Lease is a ten year lease with an initial monthly rental rate of $22,600, which is subject to annual rent increases of approximately 2.5% as set forth in the Lease.

Within the next two years, the Company plans to relocate its corporate headquarters and Anaheim distribution center to an 80,000 square foot facility in Anaheim, California that is owned by the Trust. The Company plans to enter into a new lease with the Trust in the near future concerning such facility.