Replies to post #95224 on Amarantus Bioscience Holdings Inc (AMBS)

[Solantey]

The average price per share derived from the conversion of all the warrants related to today's news is .086/share.

I think the current share price is higher than that.

Just saying!!!

p.s. Do you understand what I'm saying?

[WarpCore61]

Doc, the only error I found in my earlier analysis is in one of the paragraphs near the end. The total number of shares issued in the old vs. new deal is correct in my earlier analysis. I'm following exactly what was described in the press release.

You're saying the old warrants do not go away, but $3M of them (50M shares) are exercised to bring the $3M to the company now, instead of waiting for the forced conversion provision to occur. This leaves $2M worth of the old warrants (33.333M shares) left to be exercised either at the investor's discretion, or by forced execution by VWAP share price over $0.10 for 20 consecutive trading days. The new agreement changes nothing in the old agreement. It only encourages investors to exercise some of their existing warrants to generate capital for the company.

The agreements call for such investors to deliver gross proceeds of $3M to the Company in exchange for the exercise of warrants for 50 million common shares of Amarantus. The solicitation was oversubscribed.

This clearly states the $3M is from the partial exercise of the old warrants. So yes, some of the old warrants DO go away when the $3M is delivered to the company. The exercise of 50M of the old warrants cause them to go away, leaving 33.333M old warrant shares to be exercised later.

In the new deal, investors are given new warrants with an exercise price of $0.12 at a ratio of ¾ of the old warrants exercised. This means 50M warrants exercised gives them 37.5M of these new warrants. These new warrants come at the expense of having to exercise 50M of the old warrants.

In exchange for exercising their warrants (the "Old Warrants"), the investors will receive warrants to purchase three shares of common stock at an exercise price of $0.12 (the "New Warrants") for every four warrants exercised.

When this deal is done and the company has their $3M in capital, the investors will have 33.333M old warrants and 37.5M new warrants.

My analysis compared maximum execution of warrants in the old deal vs. maximum execution of warrants in the new deal, looking at both capital raised and total shares issued. I'll summarize it again. I don't include the $3M in the initial funding because it is the same in both cases. I only include the warrant shares. The initial $3M is not relevant in this comparison because it is a factor that doesn't change.

OLD DEAL

Assuming total execution of the 83.333M warrants @ $0.06, this would raise $5M for the company. So 83.333M shares are issued for warrant execution under the old deal.

NEW DEAL

50M of old warrants are exercised @ $0.06, raising $3M for the company. In exchange for exercising these 50M shares, investors are awarded 37.5M new warrants.

This leaves 33.333M old warrants remaining, which when exercised @ $0.06, would raise $2M for the company.

The new 37.5M warrants @ $0.12 will raise $4.5M when exercised.

The total raised from warrants will be $3M + $2M + $4.5M = $9.5M

Here's where I made the mistake in the original analysis. I reported $8M raised in the original deal, which should have been only $5M because I didn't include the initial $3M in non-warrant funding. I should have stated:

The original funding would provide a total warrant funding of $5 MM, while the new funding will provide a total warrant funding of $9.5 MM. This additional $4.5 MM / 37.5 MM additional shares = $0.12/share

I acknowledge that mistake, but I believe the rest of my calculations are correct based on how this deal was described in the press release.

It is essentially the same old deal with additional warrants added as an incentive to cause exercise of some of the original warrants. 50M of the old warrants will be exercised now, and the remaining 33.333M warrants will be exercised at some point. In addition, 37.5M new warrants will be exercised at some point. This totals 120.833M new shares issued from warrant exercise, where only 83.333M shares would have been issued from warrant exercise in the old deal. So I don't see this as a swap of warrants at all, but an added incentive to exercise those old warrants. In essence, it is just a new funding arrangement, since all of the existing warrants will be exercised under their original terms, with the new warrants having different terms. Overall there will be 37.5M more shares issued than in the earlier deal.

I'm thinking management intentions were that LymPro partnering news would easily move the share price above the $0.10 needed to trigger forced execution of the earlier warrants. But with the change in strategy resulting from the CPT code and now the re-evaluation of the Phase 1 AD patients from 7 years ago, this has delayed their partnership efforts for LymPro because both of these can significantly increase LymPro value. Thus, the company has decided to hold off on immediate partnering for LymPro until the revaluation is done. Therefore, a new stimulus was needed to cause execution of the earlier warrants, and today's announcement was it. Now, in my view, the company has the cash they need for the rest of the year, and when the LymPro partnering news does come, it will drive the forced execution of the rest of these warrants, old and new. With LymPro revenues starting around end of 2014, this seems like an excellent strategy and it only cost us 37.5M additional shares. This is not a concern of mine for the benefit we obtained.

My apologies for the long post.