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Fair Value Of Financial Instruments
 12 Months Ended
Aug. 31, 2022
Fair Value Of Financial Instruments [Abstract]  
Fair Value Of Financial Instruments 11. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The accounting standards related to fair value measurements include a hierarchy for information and valuations used in measuring fair value that is broken down into the following three levels based on reliability:

Level 1 valuations are based on quoted prices in active markets for identical instruments that the Company can access at the measurement date.

Level 2 valuations are based on inputs other than quoted prices included in Level 1 that are observable for the instrument, either directly or indirectly, for substantially the full term of the asset or liability including the following:

a.quoted prices for similar, but not identical, instruments in active markets;

b.quoted prices for identical or similar instruments in markets that are not active;

c.inputs other than quoted prices that are observable for the instrument; or

d.inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 valuations are based on information that is unobservable and significant to the overall fair value measurement.

The book values of our financial instruments at August 31, 2022 and 2021 approximated their fair values. The assessment of the fair values of our financial instruments is based on a variety of factors and assumptions. Accordingly, the fair values may not represent the actual values of the financial instruments that could have been realized at August 31, 2022 or 2021, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement. The following methods and assumptions were used to determine the fair values of our financial instruments, none of which were held for trading or speculative purposes.

Cash, Cash Equivalents, and Accounts Receivable – The carrying amounts of cash, cash equivalents, and accounts receivable approximate their fair values due to the liquidity and short-term maturity of these instruments.

Other Assets – Our other assets, including notes receivable, were recorded at the net realizable value of estimated future cash flows from these instruments.

Debt Obligations – At August 31, 2022, our debt obligations consisted primarily of variable-rate term notes payable and a note payable to the former owners of Strive. Our term notes payable and revolving line of credit are negotiated components of our 2019 Credit Agreement, which was completed in August 2019 and modified in April 2021. Since the interest rate for any obligation on our 2019 Credit Agreement is variable, the applicable interest rates on the term loan and revolving line of credit are reflective of current market conditions, and the carrying value of term loan and revolving line of credit (when applicable) obligations therefore approximate their fair value.

Contingent Consideration Liabilities from Business Acquisitions

We have a contingent consideration liability arising from a previous business acquisition. We measure the fair value of our contingent consideration liability at each reporting date based on the valuation model described below. Changes to the fair value of the contingent consideration liabilities are recorded in selling, general, and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss) in the period of adjustment. The fair value of the contingent consideration liability from the acquisition of Jhana Education (Jhana) changed as follows during the fiscal year ended August 31, 2022 (in thousands):

Change in

AUGUST 31,

2021

Fair Value

Payments

2022

Jhana contingent liability

$

2,095 

$

68

$

(1,434)

$

729

At each quarterly reporting date, we estimate the fair value of our contingent consideration liability for the acquisition of Jhana through the use of a Monte Carlo simulation. The Jhana purchase price included potential contingent consideration of $7.2 million through the measurement period, which ends in July 2026. The fair value of the Jhana contingent consideration is a Level 3 measurement because we estimate projected consolidated Company and AAP sales over the measurement period. Changes in expected qualifying revenues over the measurement period influence the timing and amount of these contingent payments to the former owners of Jhana. Based on the timing of expected payments, all of the Jhana contingent consideration liability is recorded as a component of accrued liabilities at August 31, 2022. Adjustments to the fair value of our contingent consideration liability are included in selling, general, and administrative expense in the accompanying consolidated statements of operations and comprehensive income (loss).