BANK INDEBTEDNESS

6 Months Ended

Feb. 29, 2024

Bank Indebtedness

BANK INDEBTEDNESS

7. BANK INDEBTEDNESS

The Company currently has a Bank Line of Credit of $5,000,000 The line contains a number of financial covenants, and the Company is currently in compliance with all covenants. Current indebtedness under the line as of February 29, 2024 was $Nil (August 31, 2023 - $1,259,259). Bank indebtedness, when it exists, is secured by an assignment of accounts receivable and inventory. Calculation of the interest rate is based on the one-month Secured Overnight Financing Rate (SOFR) of the one-month SOFR plus 157 basis points, which as of February 29, 2024 was 6.89% (5.32% + 1.57%).

The Bank Line of Credit was $10,000,000 until February 28, 2024 when the former line was replaced with a new agreement. The new line is $5,000,000 and will expire on June 30, 2024. The new line also contains new financial covenants, including the requirement that the Company enter into a firm lending agreement with a different lender by May 31, 2024. The Company is currently in negotiations with other potential lenders to establish new credit arrangements and anticipates meeting this requirement when due.