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Convertible Notes | 6 Months Ended
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Dec. 31, 2020
Debt Disclosure [Abstract] |
Convertible Notes | 12. 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). As of December 31, 2020 the total principal balance of Convertible Notes outstanding was $31.3 million including cumulative interest paid-in-kind. The Convertible Notes are held by a consortium of investors, including $13.6 million issued to certain related parties. Such Convertible Notes issued to related parties include:
| ▪ | $6.3 million issued to entities associated with Matthew A. Drapkin, including funds managed by Northern Right Capital Management, L.P, a significant shareholder. Mr. Drapkin, a member of the Company’s board of directors, is the Chief Executive Officer of Northern Right Capital Management, L.P. |
| ▪ | $6.7 million issued to entities associated with Jason W. Reese, including funds managed by ICAM, a significant shareholder. Jason W. Reese, the Executive Chairman of the Company’s board of directors, is the Chief Executive Officer of ICAM. |
| ▪ | $0.7 million issued to entities associated with Eric J. Scheyer, a member of the Company’s board of directors. |
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. However, due to a Company option to settle any conversion request by holders prior to July 1, 2020 in either cash or in shares, the conversion option is bifurcated and recorded to additional paid-in-capital within equity, creating a debt discount. In valuing the conversion option, we estimated that the yield on an identical non-convertible instrument would be 12.5%, resulting in a debt discount of $12.6 million. The Company incurred $1.2 million in issuance costs, which were allocated ratably between the debt and equity portions of the instrument. Both the debt discount and 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 condensed consolidated balance sheet. The Company incurred interest expense of $0.6 million and $1.1 million related to the convertible notes for the three and six months ended December 31, 2020.

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