Convertible Notes

12 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Convertible Notes

14.Convertible Notes

On February 26, 2020, the Company issued Convertible Notes at par with an aggregate principal balance of $30 million due February 26, 2030 (the Convertible Notes). In addition, on March 10, 2021, the Company issued additional Convertible Notes to MAST Capital in an aggregate principal amount of $2.3 million. As of June 30, 2022, the total principal balance of Convertible Notes outstanding was $36.1 million, including cumulative interest paid-in-kind. The Convertible Notes are held by a consortium of investors, including $15.1 million issued to certain related parties. As of June 30, 2022, such Convertible Notes issued to related parties include:

▪$6.7 million issued to entities associated with Matthew A. Drapkin, including funds managed by Northern Right Capital Management, L.P. (Northern Right), a significant shareholder. Mr. Drapkin, a member of the Company’s Board of Directors, is the Chief Executive Officer of Northern Right.

▪$7.2 million issued to entities associated with Jason W. Reese, including funds managed by ICAM, a significant shareholder.

▪$0.7 million issued to entities associated with Eric J. Scheyer, a member of the Company’s Board of Directors.

▪$0.5 million issued to MAST Capital.

The Convertible Notes accrue interest at 5.0% per annum, payable semiannually in arrears on June 30 and December 31, commencing June 30, 2020, in cash or in kind at the option of the Company. Each $1,000 principal amount of the Convertible Notes are convertible into 288.0018 shares of the Company’s common stock, subject to the terms therein, prior to maturity at the option of the holder.

The Company may, subject to compliance with the terms of the Convertible Notes, effect the conversion of some or all of the Convertible Notes into shares of common stock, subject to certain liquidity and pricing requirements, as specified in the Convertible Notes.

The embedded conversion feature in the Convertible Notes qualifies for the scope exception to derivative accounting in ASC Topic 815, Derivatives and Hedging, for certain contracts involving a reporting entity’s own equity. The Company incurred $1.2 million in issuance costs on the original issuance. The debt issuance costs are being amortized over the 10-year Convertible Notes term and are netted with the principal balance within convertible debt on our consolidated balance sheet.

The Company incurred interest expense of $1.8 million and $1.7 million related to the Convertible Notes for the years ended June 30, 2022 and 2021, respectively, inclusive of non-cash interest related to amortization of discount. Interest payments were paid-in-kind by issuing $1.7 million and $1.6 million of additional Convertible Notes to holders for the years ended June 30, 2022 and 2021, respectively.

	As of June 30,
(in thousands)	2022			2021
Convertible Notes principal	$	36,085		$	34,346
Unamortized issuance costs		(898	)		(1,013	)
Total Convertible Notes		35,187			33,333