Note 3. Debt

The Company has a $10,000,000 line of credit agreement with Community Bank. Borrowings under this agreement bear interest at either the 30, 60, or 90 day London Inter-Bank Offered Rate (“LIBOR”) (0.24% and 0.26% for the 90 day LIBOR at November 30, 2013 and August 31, 2013, respectively) plus 1.75% and/or the bank’s reference rate (3.25% at November 30, 2013 and August 31, 2013). Borrowings are secured by substantially all assets of Bisco and are guaranteed by the Company’s Chief Executive Officer, Chairman of the Board and majority shareholder, Glen F. Ceiley. The agreement expires on March 1, 2015.

The amounts outstanding under this line of credit as of November 30, 2013 and August 31, 2013 were $6,412,000 and $6,479,000, respectively. Availability under the line of credit was $3,588,000 and $3,521,000 at November 30, 2013 and August 31, 2013, respectively.

The line of credit agreement contains nonfinancial and financial covenants, including the maintenance of certain financial ratios. As of November 30, 2013 and August 31, 2013, the Company was in compliance with all covenants.

In October 2013, the Company modified its mortgage on the Sylmar Properties with Community Bank. As amended, principal and interest payments totaling $26,627 are due monthly and interest is fixed at 3.75%. As of November 30, 2013, the outstanding balance due on this loan with Community Bank, collateralized by the Sylmar Properties, was $5,000,000.