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Notes Payable And Secured Credit Agreement | 12 Months Ended
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Aug. 31, 2021
Notes Payable And Secured Credit Agreement [Abstract] |
Notes Payable And Secured Credit Agreement | 6.NOTES PAYABLE AND SECURED CREDIT AGREEMENT Notes Payable At August 31, 2021, our notes payable consisted of term notes payable from our amended and secured credit agreement and $4.2 million payable in connection with the acquisition of Strive Talent, Inc. (Note 3) during fiscal 2021. The note payable to the former owners of Strive is recorded at net present value and accrues interest at 3.6 percent until the balance is paid in full. The balances and classification of our notes payable at August 31, 2021 were as follows (in thousands):
|  |  | Current Portion of |  |  | Notes Payable, less |  |  |
Description |  |  | Notes Payable |  |  | Current Portion |  |  | Total
Term notes payable |  | $ | 5,000 |  | $ | 10,000 |  | $ | 15,000
Strive acquisition note payable |  |  | 835 |  |  | 2,975 |  |  | 3,810
|  | $ | 5,835 |  | $ | 12,975 |  | $ | 18,810
Principal payments of $1.25 million on our term notes payable are due and payable on the first day of each January, April, July, and October until the term loans obligation is repaid in 2024. Interest on the term loans accrues at LIBOR plus 1.85 percent and is payable on the first day of each month. Under the terms of the Strive acquisition, we pay the former principal owner of Strive $0.8 million each April for the first five years following the acquisition. Principal payments on these notes payable are as follows for the next five years (in thousands):
YEAR ENDING |  | Term Notes |  |  | Strive Note |  |  |
AUGUST 31, |  | Payable |  |  | Payable |  |  | Total
2022 | $ | 5,000 |  | $ | 835 |  | $ | 5,835
2023 |  | 5,000 |  |  | 835 |  |  | 5,835
2024 |  | 5,000 |  |  | 835 |  |  | 5,835
2025 |  | - |  |  | 835 |  |  | 835
2026 |  | - |  |  | 835 |  |  | 835
| $ | 15,000 |  | $ | 4,175 |  | $ | 19,175
Secured Credit Agreement On August 7, 2019, we entered into a new credit agreement (the 2019 Credit Agreement) with our existing lender, which replaced the amended and restated credit agreement dated March 2011 (the Original Credit Agreement). The 2019 Credit Agreement provides up to $25.0 million in term loans and a $15.0 million revolving line of credit. Upon entering into the 2019 Credit Agreement, we borrowed $20.0 million of the available term loan and used the proceeds to repay all indebtedness under the Original Credit Agreement. During November 2019, we borrowed the remaining $5.0 million of available term loan capacity on the 2019 Credit Agreement. The 2019 Credit Agreement is secured by substantially all of the assets of the Company and certain of our subsidiaries, and contains customary representations, warranties, and covenants. We incurred approximately $0.1 million of legal fees to obtain the 2019 Credit Agreement. Second Modification Agreement To address potential covenant compliance issues associated with the uncertainties surrounding the economic recovery from the COVID-19 pandemic, on July 8, 2020, we entered into the First Modification Agreement to the 2019 Credit Agreement. The primary purpose of the First Modification Agreement was to provide temporary alternative borrowing covenants for the fiscal quarters ending August 31, 2020 through May 31, 2021. In connection with the acquisition of Strive, we entered into a Consent and Second Modification Agreement to the 2019 Credit Agreement. The primary purposes of the Consent and Second Modification Agreement are to: Consent to the purchase of Strive Talent, Inc. Reinstate the original debt covenants of the 2019 Agreement which were temporarily replaced by alternate debt covenants in the First Modification Agreement to the 2019 Agreement. Reduce the interest rate for borrowings from LIBOR plus 3.0 percent to LIBOR plus 1.85 percent, which was the original rate on the 2019 Credit Agreement. The unused credit commitment fee also returns to the previously established 0.2 percent. The Consent and Second Modification Agreement did not change any repayment or credit availability terms on the 2019 Credit Agreement. Our reinstated debt covenants consist of the following: (i) a Funded Indebtedness to Adjusted EBITDAR Ratio of less than 3.00 to 1.00; (ii) a Fixed Charge Coverage ratio not less than 1.15 to 1.00; (iii) an annual limit on capital expenditures (excluding capitalized curriculum development costs) of $8.0 million; and (iv) consolidated accounts receivable of not less than 150% of the aggregate amount of the outstanding borrowings on the revolving line of credit, the undrawn amount of outstanding letters of credit, and the amount of unreimbursed letter of credit disbursements. In the event of noncompliance with these financial covenants and other defined events of default, the lender is entitled to certain remedies, including acceleration of the repayment of any amounts outstanding on the 2019 Credit Agreement. At August 31, 2021, we believe that we were in compliance with the terms and covenants applicable to the 2019 Credit Agreement and subsequent modifications. Interest on all borrowings under the 2019 Credit Agreement is due and payable on the first day of each month. The effective interest rate on our term loan obligations was 2.4 percent at August 31, 2021 and 3.5 percent at August 31, 2020. Revolving Line of Credit The key terms and conditions of our revolving line of credit associated with the 2019 Credit Agreement are as follows: Available Credit – $15.0 million less outstanding standby letters of credit, which totaled $10,000 at August 31, 2021. Maturity Date – August 7, 2024. Interest Rate – The effective interest rate is LIBOR plus 1.85 percent per annum and the unused commitment fee on the line of credit is 0.2 percent per annum. We did no t have any borrowings on the revolving line of credit at either August 31, 2021 or 2020.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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