Debt	3 Months Ended
Nov. 30, 2019
Debt
Debt	Note 3. Debt The Company currently has a $15,000,000 line of credit agreement with Citizen’s Business Bank (the “Bank”). On December 4, 2019, the Company entered into a Change in Terms Agreement dated November 27, 2019 with the Bank (the “Amendment”), which modified the Company’s $10,000,000 line of credit between the Company and the Bank to increase the maximum amount that may be borrowed there under from $10.0 million to $15.0 million. In addition, the interest rate provisions under the line of credit were modified so that in no event would such interest rate be less than 3.5% per annum or the maximum interest rate permitted under law. The expiration date of the line of credit under the agreement is July 5, 2021 and has a variable interest rate option that the Company may select (subject to the requirements in the Amendment and provided that the Company is not in default under the line of credit agreement): to (A) The default variable interest index rate, which is Citizens Business Bank Prime Rate of Interest, which is the prime rate ( 4.75% and 5.25% at November 30, 2019 and August 31, 2019, respectively) less 0.500%; or (B) One Hundred Eighty (180) day Libor Rate plus a margin of 1.550%; and (v) replace the preferred rate of interest with a discounted rate. The amounts outstanding under this line of credit as of November 30, 2019 and August 31, 2019 is currently all under the default variable interest index rate of 4.25% and 4.75%, respectively. Borrowings are secured by substantially all of the assets of the Company and its subsidiary. The amounts outstanding under this line of credit as of November 30, 2019 and August 31, 2019 were $6,534,000 and $6,114,000, respectively. The line of credit agreement contains certain nonfinancial and financial covenants, including the maintenance of certain financial ratios. As of November 30, 2019 and August 31, 2019, the Company was in compliance with all such covenants. In September 2019, Bisco entered into Commercial Lease Agreement (the “Hunter Lease”) with the Glen F. Ceiley and Barbara A. Ceiley Revocable Trust (the “Trust”), which is the grantor trust of Glen Ceiley, our Chief Executive Officer, Chairman of the Board and the Company’s majority shareholder. Under this Commercial Lease Agreement, Bisco has leased from the Trust, approximately 80,000 square feet of office and warehouse space located at 5037 and 5065 East Hunter Avenue, Anaheim, California (the “Hunter Property”), which will serve as the Company’s new corporate headquarters, and has a term that expires on August 31, 2029. The Company also entered into a new Loan Agreement with the Bank to borrow up to $5 million (the “Construction Loan”) for the primary purpose of financing tenant improvements at the Hunter Property. The Construction Loan is a line of credit evidenced by a Promissory Note in the principal amount of up to $5,000,000 with a maturity date of May 15, 2027. The terms of the Construction Loan provide that the Company may only request advances through July 15, 2020, and thereafter, the Construction Loan will convert to a term loan. Interest on the Construction Loan is payable monthly, subject to variable interest rate based on the Bank’s internal prime rate (4.75% and 5.25% at November 30, 2019 and August 31, 2019). Concurrent with the execution of this Construction Loan, Bisco entered into a Commercial Security Agreement, dated July 12, 2019, with the Bank, pursuant to which Bisco granted the Lender a security interest in substantially all of Bisco’s personal property to secure Bisco’s obligations under the Loan Agreement. The balance of the Construction Loan at November 30, 2019 and August 31, 2019 was $2,152,000 and $342,000, respectively. On May 15, 2017, the Company entered into a $5,400,000 loan agreement with the Bank (the “Lakeview Loan”). The proceeds of the loan were used to purchase the building that houses the Company’s current corporate headquarters and distribution center located in Anaheim, California (the “Lakeview Property”). This loan was payable in 35 regular monthly payments of $27,142 and one irregular last payment of $5,001,607 due on the maturity of the loan on May 16, 2020. The Lakeview Loan is secured by a deed of trust to the Lakeview Property and had a variable interest rate, which was 1.70% plus one year LIBOR (2.0% at November 30, 2019 and August 31, 2019). EACO entered into a commercial guaranty agreement, pursuant to which EACO is the guarantor for the Lakeview Loan. In September 2019, Bisco entered into a Purchase Agreement to sell the Lakeview Property for a cash sale price of $7,075,000, which closed on November 19, 2019. Upon the closing, Bisco used the proceeds from the sale to repay all of the outstanding principal and accrued interest on the Lakeview Loan. No amounts were outstanding on the Lakeview Loan at November 30, 2019. The Company leased back the building from the buyer until the Hunter Property is ready for occupancy.

Note 3. Debt

The Company currently has a $15,000,000 line of credit agreement with Citizen’s Business Bank (the “Bank”). On December 4, 2019, the Company entered into a Change in Terms Agreement dated November 27, 2019 with the Bank (the “Amendment”), which modified the Company’s $10,000,000 line of credit between the Company and the Bank to increase the maximum amount that may be borrowed there under from $10.0 million to $15.0 million. In addition, the interest rate provisions under the line of credit were modified so that in no event would such interest rate be less than 3.5% per annum or the maximum interest rate permitted under law. The expiration date of the line of credit under the agreement is July 5, 2021 and has a variable interest rate option that the Company may select (subject to the requirements in the Amendment and provided that the Company is not in default under the line of credit agreement): to (A) The default variable interest index rate, which is Citizens Business Bank Prime Rate of Interest, which is the prime rate ( 4.75% and 5.25% at November 30, 2019 and August 31, 2019, respectively) less 0.500%; or (B) One Hundred Eighty (180) day Libor Rate plus a margin of 1.550%; and (v) replace the preferred rate of interest with a discounted rate. The amounts outstanding under this line of credit as of November 30, 2019 and August 31, 2019 is currently all under the default variable interest index rate of 4.25% and 4.75%, respectively. Borrowings are secured by substantially all of the assets of the Company and its subsidiary. The amounts outstanding under this line of credit as of November 30, 2019 and August 31, 2019 were $6,534,000 and $6,114,000, respectively. The line of credit agreement contains certain nonfinancial and financial covenants, including the maintenance of certain financial ratios. As of November 30, 2019 and August 31, 2019, the Company was in compliance with all such covenants.

In September 2019, Bisco entered into Commercial Lease Agreement (the “Hunter Lease”) with the Glen F. Ceiley and Barbara A. Ceiley Revocable Trust (the “Trust”), which is the grantor trust of Glen Ceiley, our Chief Executive Officer, Chairman of the Board and the Company’s majority shareholder. Under this Commercial Lease Agreement, Bisco has leased from the Trust, approximately 80,000 square feet of office and warehouse space located at 5037 and 5065 East Hunter Avenue, Anaheim, California (the “Hunter Property”), which will serve as the Company’s new corporate headquarters, and has a term that expires on August 31, 2029. The Company also entered into a new Loan Agreement with the Bank to borrow up to $5 million (the “Construction Loan”) for the primary purpose of financing tenant improvements at the Hunter Property. The Construction Loan is a line of credit evidenced by a Promissory Note in the principal amount of up to $5,000,000 with a maturity date of May 15, 2027. The terms of the Construction Loan provide that the Company may only request advances through July 15, 2020, and thereafter, the Construction Loan will convert to a term loan. Interest on the Construction Loan is payable monthly, subject to variable interest rate based on the Bank’s internal prime rate (4.75% and 5.25% at November 30, 2019 and August 31, 2019). Concurrent with the execution of this Construction Loan, Bisco entered into a Commercial Security Agreement, dated July 12, 2019, with the Bank, pursuant to which Bisco granted the Lender a security interest in substantially all of Bisco’s personal property to secure Bisco’s obligations under the Loan Agreement. The balance of the Construction Loan at November 30, 2019 and August 31, 2019 was $2,152,000 and $342,000, respectively.

On May 15, 2017, the Company entered into a $5,400,000 loan agreement with the Bank (the “Lakeview Loan”). The proceeds of the loan were used to purchase the building that houses the Company’s current corporate headquarters and distribution center located in Anaheim, California (the “Lakeview Property”). This loan was payable in 35 regular monthly payments of $27,142 and one irregular last payment of $5,001,607 due on the maturity of the loan on May 16, 2020. The Lakeview Loan is secured by a deed of trust to the Lakeview Property and had a variable interest rate, which was 1.70% plus one year LIBOR (2.0% at November 30, 2019 and August 31, 2019). EACO entered into a commercial guaranty agreement, pursuant to which EACO is the guarantor for the Lakeview Loan. In September 2019, Bisco entered into a Purchase Agreement to sell the Lakeview Property for a cash sale price of $7,075,000, which closed on November 19, 2019. Upon the closing, Bisco used the proceeds from the sale to repay all of the outstanding principal and accrued interest on the Lakeview Loan. No amounts were outstanding on the Lakeview Loan at November 30, 2019. The Company leased back the building from the buyer until the Hunter Property is ready for occupancy.