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7. RELATED PARTY TRANSACTIONS
3 Months Ended
May 31, 2017
Notes to Financial Statements  
RELATED PARTY TRANSACTIONS

 

NOTE 7:    RELATED PARTY TRANSACTIONS

 

During the three month periods ended May 31, 2017 and 2016, the Company incurred $0 and $12,500, respectively, for consulting services from TAM Irrevocable Trust ("TAM"), in which Cari Beck is the trustee and current Board member, as well as a daughter of Carl Palmer, an officer and Board member. These amounts are included as a component of selling, general and administrative expenses on the condensed consolidated statements of operations.

 

During the three months ended May 31, 2016, TAM purchased on behalf of the Company, $7,740 of raw materials from a vendor with which it already had a business relations.  All amounts due to TAM had been paid in full as of May 31, 2016.

 

The Company utilizes the services of an individual, who is a related party, to source materials and provide the manufacturing of component parts with third-party vendors in China. For the three months ended May 31, 2017 and 2016, purchases facilitated through the related party accounted for approximately 13% and 38%, respectively, of total raw material purchases. The Company paid approximately $14,000 and $900 in direct commissions to the related party consultant during the three months ended May 31, 2017 and 2016, respectively.

 

As of May 31, 2017 and 2016, the Company had receivables due from its CEO of approximately $0 and $17,000 respectively.  In addition, the Company had advanced amounts to employees of approximately $27,050 and $28,000 as of May 31, 2017 and 2016, respectively. These amounts are being repaid through direct payroll withdrawals.