NOTE

—DEBT

The Trust Line of Credit Agreement

June 29, 2018,

the Company and the Trust entered into the Credit Agreement. Pursuant to the terms of the Credit Agreement, the Company has access to borrow up to

$5.0

million of funds (“Commitment Amount”) from the Trust. The maturity date (the “Maturity Date”) of the Credit Agreement occurs as of the earlier of: (i)

years from the date of the closing of the Credit Agreement; or (ii) the date the Trust accelerates the Company’s obligations under the Credit Agreement because of the occurrence of an event of default (as defined in the Credit Agreement). The interest rate on amounts borrowed by the Company are at a fixed rate of

per annum with interest only payments due by the Company on a quarterly basis. The obligations of the Company under the Credit Agreement shall be unsecured obligations that will rank

pari passu

with all other unsecured obligations of the Company.

The principal amount of sums that are borrowed by the Company under the Credit Agreement

may

be converted by the Trust into shares of Common Stock (“Conversion Shares”) at any time prior to the Maturity Date at a conversion price of

$1.00

per share of Common Stock (“Conversion Price”). The Conversion Price is subject to downward adjustment in the event that future issuances of Common Stock by the Company are below

$1.00

per share, subject to certain exceptions for stock options, restricted stock or other securities granted under Company incentive plans, non-qualified stock options granted by the Board and securities sold in public offerings by the Company. In the event the full Commitment Amount has been advanced to the Company and subsequently converted by the Trust, then the Credit Agreement will terminate upon all the then accrued and unpaid interest having been paid to the Trust by the Company.

Immediately after the execution of the Credit Agreement, the Company borrowed an initial advance under the Credit Agreement in the amount of

$2.0

million, which principal amount

may

be converted into Conversion Shares at any time by the Trust. Additional advances under the Credit Agreement

may

be drawn by the Company in increments of

$250,000

and up to

$1.0

million in a quarterly period, provided that the Company satisfies the pre-conditions to funding an advance, which conditions include (i) satisfying the financial covenant that requires the Company’s EBITDA (as defined in the Credit Agreement) to

not

be below the target EBITDA, which is negative

$1.0

million, (ii) the Company’s representations and warranties in the Credit Agreement being true and correct in all material respects, (iii)

event having occurred that would be an Event of Default (as defined in the Credit Agreement), and (iv) being in compliance with the other terms of the Credit Agreement at such time.

During the term of the Credit Agreement, the Company agreed to comply with certain covenants that relate to its financial performance and the conduct of the Company’s and its subsidiaries’ businesses. The covenant relating to the Company’s financial performance requires the Company to have EBITDA (as defined in the Credit Agreement) that is

not

less than negative

$1.0

million as of the last day of each fiscal quarter and as of the date of each advance of funds under the Credit Agreement. The Company and its subsidiaries are subject to certain covenants that provide restrictions on: (

) certain indebtedness or liens that the Company or its subsidiaries

may

incur; (y) certain transactions that the Company or its subsidiaries

may

enter into or (z) amendments or modifications to the Company’s or its subsidiaries’ organizational documents that are adverse to the Trust.

The terms of the Credit Agreement provide for acceleration of the principal and accrued interest in an Event of Default, as defined in the Credit Agreement, which includes events such as (i) failure to timely pay the quarterly interest due; (ii) failure to timely pay a material liability where such default would reasonably be expected to have a material adverse effect on the Company; (iii) any acceleration of the Action Capital Line of Credit or any other default on any other indebtedness by the Company in excess of

$500,000;

(iv) failure to perform material covenants set forth in the Credit Agreement; (v) breach of representations and warranties; or (vi) payment of a final judgment or order against the Company that is

not

covered by insurance in excess of

$500,000.

Such Events of Default as well as the referenced to Material Adverse Effect in the Events of Default (as defined in the Credit Agreement) are construed to be subjective acceleration clause that can be triggered if the lenders determine that we have experienced a material adverse change. If triggered by the lenders, this clause would create an Event of Default which in turn would permit the lenders to accelerate repayment of outstanding obligations. As of

June 29, 2018,

the Company has met the required EBITDA minimum as defined in the Credit Agreement.

The foregoing description of the Credit Agreement does

not

purport to be complete and is qualified in their entirety by reference to the Credit Agreement, which is attached hereto as

Exhibit

10.2

and is incorporated herein by reference.

Euston House Financing

In connection with a lease assignment agreement entered into on

August 15, 2017

by Learning Tree International Limited, a company incorporated under the laws of the United Kingdom (“Learning Tree Limited”) and a subsidiary of the Company, Learning Tree Limited released

two

floors in the Euston House building in London, England, but continued to occupy and lease the ground and the basement floors. To continue to offer training courses at the Euston House location, Learning Tree Limited renovated the ground and basement floors in the Euston House to provide sufficient classrooms and support facilities (“Euston House Renovation”). The Euston House Renovation cost approximately

£0.5

million (

$0.7

million), which amount was financed by Learning Tree Limited by entering into a series of five, substantially identical lease financing agreements with

third

party lenders (“Euston Financing Agreement(s)”). The financing provided by each Euston Financing Agreement is in each case for a minimum of

months (the “Minimum Period”) with annual interest rates of approximately

7.5%.

Under the terms of each Euston Financing Agreement, the Minimum Period

may

be extended beyond the initial

-month period at the monthly payment rate applicable to such agreement, unless written notice of cancellation is provided by Learning Tree Limited

one

month prior to the end of the Minimum Period. In addition, each Euston Financing Agreement

may

be terminated prior to the end of the Minimum Period by providing at least

one

month’s prior written notice or if there occurs a default of a Euston Financing Agreement. In the event of an early termination or a default of a Euston Financing Agreement, a termination payment will be payable to the lender under the terms of a Euston Financing Agreement. A default and termination under the terms of each Euston Financing Agreement

may

occur if the applicable lender provides written notice to Learning Tree Limited of such matters as: (i) a failure to timely make a monthly payment or payment of any other sum due under the Financing Agreement; (ii) an untrue statement, representation, warranty or false statement has been provided to the lender; (iii) failure to comply with the terms of the Euston Financing Agreements; (iv) equipment or materials are taken to settle a debt or judgment or another event happens that prejudices the lenders interest in the equipment and materials financed; (v) a bankruptcy petition or administration order is presented against Learning Tree Limited or other insolvency proceedings or liquidation occurs; or (vi) a change in voting control of Learning Tree Limited or any holding party occurs.

Under the terms of the Euston Financing Agreements, the equipment and other materials for the Euston House Renovation were purchased from suppliers with financing received by Learning Tree Limited from the lenders with such lenders retaining ownership of the purchased equipment and materials financed. Learning Tree Limited provides each lender with indemnification in each Euston Financing Agreement from and against losses, damage, claims and demands that a lender

may

incur that arises out of the possession or use of the equipment and materials financed or such Euston Financing Agreement, except where such losses arise from death or personal injury caused by the lender’s negligence. The Euston Financing Agreement liabilities are recorded as current and non-current loan payable in the consolidated balance sheets.

	June 29,			September 29,
	2018			2017

Balance at beginning of period	$	532		$	0

Additions:
Euston House financing agreements		166			536
Convertible debt		2,000			0
Unamortized debt issuance cost		(204	)		0
		1,962			536

Payments:
Euston House financing agreements		(159	)		(4	)
		(159	)		(4	)

Foreign currency translation		(8	)		0

Balance at end of period	$	2,327		$	532

	June 29,		September 29,
	2018		2017
Current	$	220	$	167
Long Term		2,107		365
	$	2,327	$	532

Action Capital Financing Agreement

January 12, 2017,

the Company entered into the AC Financing Agreement with Action Capital that provides the Company with access to borrow up to a maximum aggregate principal amount of

$3.0

million (the “Maximum Amount”). Pursuant to the AC Financing Agreement, the amount advanced to the Company is based on an advance rate of up to

85%

of the net amount of certain customer accounts receivable of the Company’s U.S. subsidiary as approved by Action Capital and assigned to it as collateral (the “Acceptable Accounts”). The AC Financing Agreement is in full force and effect until such time as either party terminates the AC Financing Agreement by providing written notice. Following termination, the Company will remain liable for all outstanding indebtedness owed to Action Capital under the AC Financing Agreement.

Under the AC Financing Agreement, the Company is required to pay Action Capital: (i) interest on the outstanding advances at a rate equal to the prime rate of Wells Fargo Bank, N.A. in effect on the last business day of the prior month plus

1.75%;

(ii) a monthly fee equal to

0.70%

of the outstanding advances as of the last day of the month; and (iii) a fee of

0.25%

of the Maximum Amount, which was payable to Action Capital on the date the AC Financing Agreement is signed and every

days thereafter until the AC Financing Agreement is terminated and all amounts advanced and other obligations to Action Capital have been fully paid and satisfied. The Company’s obligations under the AC Financing Agreement are secured by Acceptable Accounts, accounts receivable due from U.S. based account debtors and any contract rights, chattel paper, documents, instruments, general intangibles (excluding general intangibles consisting of intellectual property or intellectual property rights), reserves, reserve accounts, deposit and demand accounts, rebates, and books and records pertaining to any Acceptable Accounts that are assigned to Action Capital and all proceeds of the foregoing property. As of

June 29, 2018,

the Company has

not

drawn from the AC Financing Agreement.