Note 3. Debt

The Company has a $10,000,000 line of credit agreement with Community Bank, N.A. Borrowings under this agreement bear interest at either the 30, 60 or 90 day London Inter-Bank Offered Rate (“LIBOR”) (1.04% and 0.81% for the 90 day LIBOR at February 28, 2017 and August 31, 2016, respectively) plus 1.75% and/or the bank’s reference rate (3.75% and 3.5% at February 28, 2017 and August 31, 2016, respectively). Borrowings are secured by substantially all of the assets of the Company and are guaranteed by the Company’s Chief Executive Officer and Chairman of the Board, Glen F. Ceiley. The line of credit agreement expires on March 1, 2018.

The amounts outstanding under this line of credit as of February 28, 2017 and August 31, 2016 were $4,016,000 and $0, respectively. Availability under the line of credit was $5,984,000 and $10,000,000 at February 28, 2017 and August 31, 2016, respectively.

The line of credit agreement contains certain covenants, including the maintenance of certain financial ratios. As of February 28, 2017 and August 31, 2016, the Company was in compliance with all financial covenants.