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LEGAL PROCEEDINGS
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6 Months Ended |
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Oct. 31, 2012
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| Commitments and Contingencies Disclosure [Abstract] | |
| LEGAL PROCEEDINGS |
LEGAL PROCEEDINGS
In July 2011 a claim was filed by Cornerstone Bank (“Cornerstone”) against Freedom-2, Inc., a wholly owned subsidiary of the Company, for amounts due under a promissory note (the “Note”), in the original principal amount of $1.6 million (collectively the “Obligations”). The bank also sought to foreclose its mortgage on the property securing the Note, which is located in Cherry Hill, New Jersey (the “Property”). Given the passage of time and the Company having made no payments toward the Obligations for several years, as of May 2012, the amount due was approximately $2.0 million.
The Company has resolved all matters related to Cornerstone’s claims (the “Settlement”) and has performed its Obligations thereunder as follows: (i) the parties stipulated to judgment in the amount of the Obligations, as defined in the Settlement ($1,975,889, as of May 16, 2012, with interest on the judgment amount to accrue at the contract rate of 7.75% per annum) with a stay of execution for 2 years pending the Company satisfying the Obligations in any of several ways, including direct payments of cash and discounts of up to 30% for early payments, or a combination thereof; (ii) the Company conveys the Property to Cornerstone, which will sell the Property and apply the net proceeds to reduce the Obligations (in the event the Property is not sold and the Obligations satisfied as otherwise described herein, the Property will be reconveyed to the Company); and (iii) the Company reaffirms the pledge of 14,605,614 shares of the Company’s common stock as security for payment of the Obligations (the “Stock Collateral”), which can be liquidated by Cornerstone from time to time in accordance with a SEC Rule 10b5-1 plan, with the proceeds being applied to reduce the Obligations and with any excess Stock Collateral being returned to the Company upon payment of the Obligations in full.
When the property is sold and any and all remaining payments, if any, are made by Nuvilex directly or through liquidation of the transferred stock collateral sold over time, they will be used to eliminate the Obligations. As neither the property nor the collateral stock has been sold and until such time as they have, the assets and liabilities will continue to be reported within the financial statements. The name of the asset is “Settlement Obligation Asset” and the liabilities are termed “Settlement Obligation Liabilities.” All assets and amounts due under the Settlement, including the building, principal, interest and all applicable fees are therefore fully reported herein.
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