Amyris Inc (fka AMRSQ)

[finesand]

Found missing T-1 Equity & Liabilities Reduction.

(got this from a ST thread, nice DD)

Everybody might have expected a much better looking balance sheet 2Q17 due to the T-1 offering already and were disappointed.

Up until 7/7:
- DSM got 7.936M shares @ $7.425/sh $58.95M.
- Doerr/Naxos payed $65.2M = $25M + $40.2M debt for a not yet disclosed amount of shares and Cash Warrant conversion.

Maximum theoretical funding via T-1 and T-2 is:
T-1 Total: 27.73M @ $7.43/sh for $205.90M
T-2 Total: 12.38M @ $5.87/sh for $ 72.72M
Total: 40.11M @ $6.95/sh for $278.62M

The 10-Q states that only $31.20M cash and $40.20M debt reduction, total $71.4M, has been accounted in 2Q17 with OS 25.27M. Subsequently they mention $50M has been accounted for T-2 within 3Q17 with OS 37.61M.

The conversions hasn't been completed yet, not all Cash Warrants have been converted - more cash to come.

10-Q balance sheet didn't show an equity raise of anything close to $71.4M, but just some $12M.
The big question arises: Where is the money?

As mentioned above most of the shares to be offered were not yet converted.

The T-1 deal in May was structured in a very complicated manner. Shares couldn't be just issued, since they exceed the 20% threshold and a post deal SH meeting on 7/7 had to approve it. To secure the investor's ROI, a promise in dividend payments had to be given in case they had to keep the notes (preferred shares). Dividend payment would then be performed in common shares if conversion failed, hence more shares given if stock price goes lower.
This construct had to be modeled into the balance sheet as a level-3 derivative liability, see FAS 157 - Derivative valuation insights.

10-Q shows an increment of $51.128M in level-3 derivative liabilities, adding $58.606M to Total Liabilities due to some potential event of anti-dilutive conversion modeled.

The 2Q17 PR especially hints to the resolution

Included within other income for the second quarter was a gain of $35.8 million arising from the change in fair value of derivative liabilities recognized primarily in connection with the closing of the company's Series A and B financing rounds in May 2017. The net loss attributable to common stockholders included non-cash items such as a gain from changes in fair value of embedded derivatives, stock-based compensation expense, accretion of convertible preferred stock, and deemed and cumulative dividends to convertible preferred stockholders.

Possibly the whole difference of $59M or more has been dropped as derivative liabilities in regards to the T-1 offering, reducing Equity and increasing Total Liabilities and hence EV.
However, in the followup financials only $45M were being used.

In the 2Q17 CC, CFO emphasized

As a reminder, the preferred stock sold in both tranches will be automatically converted to common stock October 7, which is 90 days following our shareholder approval, July 7

."

Meaning on 10/7 all T-1 and T-2 conversion at the fixed price of $6.95/sh average will be performed, the whole amount of cash booked, OS stated and last but not least the level-3 derivative liabilities removed from the book. That day will allow to make 4Q17 balance sheet look much nicer, we just cannot see it yet due to these regulations - but the mechanics are already planned and signed off.

The adjustment of $45M shows an equity raise of around $57M, voila, as mentioned above, this is a lower figure.
This also reduced EV @ $2.40 from $356M to $313M, which is essential for the revenue multiple evaluation!

Compared to T-1 and T-2 cash inflow of around $200M or more, the stock's MCAP is less than half and EV just 2/3.
Further, this is the lowest ever EV recorded for this company (taking out it's high bankruptcy risk within 3Q16).

The company is in a better position than it ever was, especially with DSM on board as a partner and BOD. Vivo as a new long time investor also gives a high level of confidence.

This stock is at the very least worth double it's current trading price to match the new capitalization. Actually triple, since there was a value before the new investment.


Also have a look at the previously mentioned blog contemplating about the fair bottom value.

The adjusted Fundamental sheet:


The original Fundamental sheet: