Debt |
6 Months Ended |
|---|---|
Oct. 31, 2019 | |
| Debt Disclosure [Abstract] | 听 |
| Debt | Debt Convertible Note
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. The amount due under this note has been reserved for payment upon the note being tendered to the Company by the note holder. However, this $50,000 note is derived from $200,000 of loans made to Aspen University prior to 2011. No disclosure was made of these loans in connection with the merger of Aspen University and EGC, the acquisition vehicle led by Michael Mathews, the Company鈥檚 current Chairman and Chief Executive Officer. The bankruptcy judge in the HEMG bankruptcy proceedings has recently ruled that the Company may pursue remedies for these undisclosed loans.
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 October听31, 2019, 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.
The Company鈥檚 obligations under the Loan Agreements 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).
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 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.
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