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Note 9 - Corporate Debt
 6 Months Ended
Feb. 28, 2022
Notes to Financial Statements  
Debt Disclosure [Text Block]

9.         CORPORATE DEBT

 

The Company has a revolving line of credit with PNC Bank, National Association (PNC Bank) of $5,000,000 as of February 28, 2022. On August 31, 2021, in connection with the Company’s acquisition of Zerust India, the Company and PNC Bank entered into an Amended and Restated Revolving Line of Credit Note, which increased the Company’s line of credit from $3,000,000 to $5,000,000 until February 22, 2022. Additionally, on January 4, 2022, the Company and PNC Bank entered into an Amended and Restated Revolving Line of Credit Note, which extended the maturity date to January 7, 2023 and revised the rate at which amounts outstanding under the line of credit bear interest to equal a per annum rate equal to the daily Bloomberg Short-Term Bank Yield Index plus 250 basis points (2.50%) and maintained the line of credit’s capacity at $5,000,000 during the period from January 4, 2022 until February 22, 2022 and $3,000,000 at all other times. Subsequently, to maintain future financial flexibility, the Company and PNC Bank agreed to keep the line of credit at $5,000,000. A 30-day extension was provided by PNC Bank on February 23, 2022 in order to ensure line of credit capacity between February 23, 2022 and March 1, 2022. On March 1, 2022, the Company and PNC Bank entered into an Amended and Restated Revolving Line of Credit Note, which established a line of credit of $5,000,000 during the period from February 23, 2022 until April 23, 2022 and $3,000,000 at all other times. The other material terms of the line of credit were not affected by these amendments.

 

Borrowings of $4,200,000 were outstanding under the line of credit as of February 28, 2022 and no amounts were outstanding as of August 31, 2021. The weighted average interest rate during each of the three and six months ended February 28, 2022 was 2.57%.

 

The line of credit is governed under an Amended and Restated Loan Agreement dated August 31, 2021. The obligations of the Company under the loan agreement are secured by a lien on all of the Company’s personal property, excepting certain liens consented to in writing by PNC. The loan agreement contains covenants, including affirmative financial covenants, such as the maintenance of a minimum fixed charge coverage ratio of 1.10:1.00, and negative covenants, which, among other things, limit the incurrence of additional indebtedness, loans and equity investments, disposition of assets, mergers and consolidations and other matters customarily restricted in such agreements. As of February 28, 2022, the Company was in compliance with all debt covenants.

 

As of February 28, 2022 and August 31, 2021, the Company did not have any letters of credit outstanding with respect to the letter of credit sub-facility available under the revolving line of credit with PNC Bank. As of February 28, 2022 and August 31, 2021, the Company had $72,418 of letters of credit with JP Morgan Chase Bank that are performance based and set to expire between 2021 and 2022.