Note 4.

Long-Term Debt

The Company has a note payable with BMW Bank of North America, secured by an automobile, with a monthly principal and interest payment of $901. The note accrues interest at a rate of 0.9% per annum and matures in June 2018 but was repaid in full in February 2016. The outstanding balance at August 31, 2016 and 2015 was $0 and $33,000, respectively.

The Company has a revolving credit agreement with Community Bank, N.A., which currently provides for borrowings of up to $10,000,000 and bears interest at either the 30, 60 or 90 day LIBOR (the 90 day LIBOR at August 31, 2016 and 2015 was 0.81% and 0.31%, respectively) plus 1.75% or the bank’s reference rate (3.25% at August 31, 2016 and 2015). Borrowings are secured by substantially all assets of the Company. The credit agreement, as amended in March 2015, expires in March 2017. There was a zero balance outstanding as of August 31, 2016 and 2015. The agreement contains certain nonfinancial and financial covenants, including the maintenance of certain financial ratios. As of August 31, 2016 and 2015, the Company was in compliance with all such covenants.