Related Party Transactions

12 Months Ended

Aug. 31, 2018

Note 9. Related Party Transactions

On November 21, 2017, the Company entered into a Commercial and Industrial Lease Agreement (the “Lease”) with the Trust, which is the grantor trust of Glen Ceiley, our Chief Executive Officer, Chairman of the Board and the Company’s majority shareholder, 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. The foregoing description of the Lease does not purport to be complete and is qualified in the entirety by reference to the Lease as filed as Exhibit 10.33 hereto and incorporated herein by reference.

The Company leases buildings under operating lease agreements with the Trust, which is a grantor trust of Glen Ceiley, the Company’s Chief Executive Officer, Chairman of the Board and majority shareholder. During fiscal 2018 and fiscal 2017, the Company incurred approximately $271,000 and $492,000, respectively, of rental expense related to these leases.

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.