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Line of Credit

12 Months Ended

Aug. 31, 2013

Note 5. Line of Credit

The Company has a revolving credit agreement with Community Bank, which currently provides for borrowings of up to $10.0 million and bears interest at either the 30, 60 or 90 day London Inter-Bank Offered Rate (“LIBOR”) (the 90 day LIBOR at August 31, 2013 and 2012 was 0.26% and 0.43%, respectively) plus 1.75% and/or the bank’s reference rate (3.25% at August 31, 2013 and 2012). Borrowings are secured by substantially all assets of the Company and are guaranteed by the Company’s Chief Executive Officer, Chairman of the Board and majority shareholder Glen F. Ceiley. The agreement, as amended in March 2013, expires in March 2015. The amount outstanding under this line of credit as of August 31, 2013 and 2012 was $6,479,000 and $7,450,000, respectively. Availability under the line of credit was $3,521,000 and $2,550,000 at August 31, 2013 and 2012, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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