BANK INDEBTEDNESS

6 Months Ended

Feb. 28, 2023

Income Tax Disclosure [Abstract]

BANK INDEBTEDNESS

6. DEFERRED INCOME TAXES

Deferred income tax asset as of February 28, 2023 of $397,990 (August 31, 2022 - $24,998) reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

7. BANK INDEBTEDNESS

Bank indebtedness under the Company’s $10,000,000 line of credit as of February 28, 2023 was $8,500,000 (August 31, 2022 - $7,000,000).

Bank indebtedness, when it exists, is secured by an assignment of accounts receivable and inventory. Interest was previously calculated solely on the one-month LIBOR rate plus 175 basis points. Beginning with the monthly interest payment due March 31, 2022, the Company’s Bank Line of Credit agreement was revised to change the calculation of the interest rate from the one-month LIBOR rate to the one-month Secured Overnight Financing Rate (SOFR). Interest is now calculated based on the one-month SOFR plus 157 basis points, which as of February 28, 2023 was 6.12% (4.55% + 1.57%).