Debt |
9 Months Ended |
|---|---|
Jan. 31, 2020 | |
| Debt Disclosure [Abstract] | 听 |
| Debt | Debt Convertible Notes Due January 22, 2023
On January 23, 2020, 桃汁影院, Inc. (the 鈥淐ompany鈥) issued $5听million convertible notes (鈥淐onvertible Notes鈥) to each of two lenders in exchange for the two $5听million notes due under senior secured term loans entered into in 2019 (the 鈥淭erm Loans鈥). The Company recorded a beneficial conversion feature on these Convertible Notes of $1,692,309.
The closing of the refinancing was conditioned upon the Company conducting an equity financing resulting in gross proceeds to the Company of at least $10听million. On January 22, 2020, the Company closed on an underwritten offering under which the net proceeds were approximately $16听million and the condition precedent to the closing of the refinancing was satisfied. The key terms of the Convertible Notes are as follows:
鈥After six months from the issuance date, the lenders have the right to convert the principal into our shares of the Company鈥檚 common stock at a conversion price of $7.15 per share;
鈥The Convertible Notes automatically convert into shares of the Company鈥檚 common stock if the average closing price of our common stock is at least $10.725 over a 20 consecutive trading day period;
鈥The Convertible Notes are due January 22, 2023 or approximately three years from the closing;
鈥The interest rate of the Convertible Notes is 7% per annum (payable monthly in arrears); and
鈥The Convertible Notes are secured.
The former notes under the Term Loans were due in September 2020 and were subject to a -year extension and the payment of an extension fee for each note of $50,000 (total of $100,000). The Company also paid each lender $40,400 at closing of the Convertible Notes to cover taxes they will incur as part of the note exchange and will pay their legal fees arising from the re-financing. In connection with refinancing of the Term Loans, on January 22, 2020, the Company also entered into an Investors/Registration Rights Agreement with the lenders whereby, upon request of the lenders on or after June 22, 2020, the Company must file and obtain and maintain the effectiveness of a registration statement registering the shares of common stock issued or issuable upon conversion of the Convertible Notes.
The Company鈥檚 obligations under the Convertible Notes are secured by a first priority lien in certain deposit accounts of the Company, all current and future accounts receivable of Aspen University and USU, certain of the deposit accounts of Aspen University and USU, and all of the outstanding capital stock of Aspen University and USU (the 鈥淐ollateral鈥).
On March 6, 2019, in connection with entering into the Loan Agreements, the Company also entered into an intercreditor agreement (the 鈥淚ntercreditor Agreement鈥) among the Company, the Lenders and the Foundation, individually. The Intercreditor Agreement provides among other things that the Company鈥檚 obligations under this agreement, and the security interests in the Collateral granted pursuant to, the Loan Agreements and the Amended and Restated Facility Agreement shall rank pari passu to one another. The Security Agreement was amended on January 22, 2020 to give effect to the Convertible Note issuances.
Convertible Note Payable
On February 29, 2012, a loan payable of $50,000 was converted into a two-year convertible promissory note, interest of 0.19% per annum. Beginning March 31, 2012, the note was convertible into shares of common stock of the Company at the conversion price of $12.00 per share (taking into account the one-for-12 reverse stock split of the Company鈥檚 common stock). The Company evaluated the convertible note and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the common stock on the note issue date. This loan (now a convertible promissory note) was due in February 2014. See Note 11. Subsequent Events Note for additional information on this debt extinguishment in fiscal fourth quarter 2020.听
Revolving Credit Facility
On November 5, 2018, the Company entered into a loan agreement (the 鈥淐redit Facility Agreement鈥) with the Leon and Toby Cooperman Family Foundation (the 鈥淔oundation鈥). The Credit Facility Agreement provides for a $5,000,000 revolving credit facility (the 鈥淔acility鈥) evidenced by a revolving promissory note (the 鈥淩evolving Note鈥). Borrowings under the Credit Facility Agreement will bear interest at 12% per annum. The Facility matures on November 4, 2021.
Pursuant to the terms of the Credit Facility Agreement, the Company paid to the Foundation a $100,000 one-time upfront Facility fee. The Company also is paying the Foundation a commitment fee, payable quarterly at the rate of 2% per annum on the undrawn portion of the Facility. As of January听31, 2020, the Company has not borrowed any sum under the Facility.
The Credit Facility Agreement contains customary representations and warranties, events of default and covenants. Pursuant to the Loan Agreement and the Revolving Note, all future or contemporaneous indebtedness incurred by the Company, other than indebtedness expressly permitted by the Credit Facility Agreement and the Revolving Note, and the senior term loans described below will be subordinated to the Facility.
Pursuant to the Credit Facility Agreement, on November 5, 2018 the Company issued to the Foundation warrants to purchase 92,049 shares of the Company鈥檚 common stock exercisable for five years from the date of issuance at the exercise price of $5.85 per share which were deemed to have a relative fair value of $255,071. The relative fair value of the warrants along with the Facility fee were treated as debt issue costs, as the facility has not been drawn on, assets to be amortized over the term of the loan.
On March 6, 2019, in connection with entering into the Senior Secured Loans, the Company amended and restated the Credit Facility Agreement (the 鈥淎mended and Restated Facility Agreement鈥) and the Revolving Note. The Amended and Restated Facility Agreement provides among other things that the Company鈥檚 obligations thereunder are secured by a first priority lien in the Collateral, on a pari passu basis with the Lenders.
Senior Secured Term Loans
On March 6, 2019, the Company entered into two loan agreements (each a 鈥淟oan Agreement鈥 and together, the 鈥淟oan Agreements鈥) with the Foundation, of which Mr. Leon Cooperman, a stockholder of the Company, is the trustee, and another stockholder of the Company (each a 鈥淟ender鈥 and together, the 鈥淟enders鈥). Each Loan Agreement provides for a $5,000,000 term loan (each a 鈥淟oan鈥 and together, the 鈥淟oans鈥), evidenced by a term promissory note and security agreement (each a 鈥淭erm Note鈥 and together, the 鈥淭erm Notes鈥), for combined total proceeds of $10,000,000 million. The Company borrowed $5,000,000 from each Lender that day. The Term Notes bear interest at 12% per annum and mature on September 6, 2020, subject to one 12-month extension upon the Company鈥檚 option, and upon payment of a 1% one-time extension fee.
Pursuant to the Loan Agreements and the Term Notes, all future or contemporaneous indebtedness incurred by the Company, other than indebtedness expressly permitted by the Loan Agreements and the Term Notes, will be subordinated to the Loans.
Pursuant to the Loan Agreements, on March 6, 2019 the Company issued to each Lender warrants to purchase 100,000 shares of the Company鈥檚 common stock exercisable for five years from the date of issuance at the exercise price of $6.00 per share. The two warrants were deemed to have a combined relative fair value of $360,516. The relative fair value along with closing costs of $33,693 were treated as debt discounts to be amortized over the term of the Loans. On January 23, 2020, the Term Loans were cancelled and exchanged for convertible notes as discussed above. In connection with this transaction, the Company wrote off approximately $182,000 of unamortized debt issuance costs as the transaction qualified as a debt extinguishment.
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