Debt and Line of Credit

6 Months Ended

Feb. 26, 2017

Debt Disclosure [Abstract]

Debt and Line of Credit

4.

DEBT AND LINE OF CREDIT:

During the quarter ended February 26, 2017, the Company entered into a new mortgage agreement with a new bank. The new mortgage paid off the prior mortgage of $3.6 million in its entirety and released all obligations in connection with that mortgage including the requirement to maintain a restricted cash balance of $1.25 million. The new mortgage was for $3.7 million and carries an interest rate of 3.99% fixed for five years after which the interest rate will reset at a fixed rate for the subsequent five years. The mortgage requires monthly payments of $22,511 based on a 20 year amortization schedule and matures in February 2027. The mortgage is secured by all assets of the Company.

The Company also entered into a revolving credit agreement with the new bank. The revolving credit agreement provides for a maximum loan of $1,500,000 with interest at the thirty day LIBOR rate plus 2.0% with a base rate of 2.75%. The revolver has a maturity date of February 15, 2018. There were no amounts borrowed on the revolver at February 26, 2017.

Both agreements provide for certain restrictive covenants including a minimum tangible net worth and a minimum working capital to be tested monthly beginning March 31, 2017. At February 26, 2017, the Company was in compliance with these covenants.