UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to              

Commission file number: 001-35905

 

BIOAMBER INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

98-0601045

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

Jean-François Huc

President and Chief Executive Officer

BioAmber Inc.

1250 Rene Levesque West, Suite 4110

Montreal, Quebec, Canada H3B 4W8

Telephone: (514) 844-8000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

¨

  

Accelerated filer

 

¨

 

 

 

 

Non-accelerated filer

 

x  (Do not check if a smaller reporting company)

  

Smaller reporting company

 

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No   x

As of November 12, 2014, there were 21,835,721 shares of the registrant’s Common Stock, $0.01 par value per share, outstanding.

 

 

 

 

 


BIOAMBER INC.

Form 10-Q

For the Quarter Ended September 30, 2014

Table of Contents

 

 

 

 

  

Page

 

Part I—Financial Information

 

Item 1.

 

 

Condensed Financial Statements

  

3

 

 

 

Consolidated Statements of Operations (Unaudited)

  

3

 

 

Consolidated Statements of Comprehensive Loss (Unaudited)

  

4

 

 

Consolidated Balance Sheets (Unaudited)

  

5

 

 

Consolidated Statements of Shareholders’ Equity (Unaudited)

  

6

 

 

Consolidated Statements of Cash Flows (Unaudited)

  

7

 

 

Notes to Consolidated Financial Statements (Unaudited)

  

9

 

Item 2.

 

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

27

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

  

41

Item 4.

 

Controls and Procedures

  

41

 

Part II—Other Information

  

 

 

Item 1.

 

 

Legal Proceedings

  

42

Item 1A.

 

Risk Factors

  

42

Item 2.

 

Use of Proceeds

  

43

Item 5.

 

Other Information

  

44

Item 6.

 

Exhibits

  

44

 

Signatures

  

45

 

 

 

2


PART I—FINANCIAL INFORMATION

 

Item 1.

Financial Statements

BIOAMBER INC.

Consolidated Statements of Operations

for the three and nine months ended September 30, 2014 and 2013

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

$

 

 

$

 

 

$

 

 

$

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

469,315

 

 

 

866,529

 

 

 

1,234,576

 

 

 

2,225,640

 

Total revenues

 

469,315

 

 

 

866,529

 

 

 

1,234,576

 

 

 

2,225,640

 

Cost of goods sold excluding depreciation and amortization (Note 17)

 

1,447,819

 

 

 

655,175

 

 

 

3,978,780

 

 

 

2,264,916

 

Gross profit (loss)

 

(978,504

)

 

 

211,354

 

 

 

(2,744,204

)

 

 

(39,276

)

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

2,420,584

 

 

 

2,296,293

 

 

 

8,204,822

 

 

 

6,926,688

 

Research and development, net

 

3,577,733

 

 

 

2,760,006

 

 

 

11,150,536

 

 

 

13,079,726

 

Sales and marketing

 

954,150

 

 

 

1,073,723

 

 

 

3,803,010

 

 

 

3,821,455

 

Depreciation of property and equipment and

   amortization of intangible assets

 

68,645

 

 

 

40,321

 

 

 

188,228

 

 

 

1,112,486

 

Impairment loss and write-off of property and

   equipment and of intangible assets

 

 

 

 

 

 

 

 

 

 

8,619,405

 

Foreign exchange (gain) loss

 

287,671

 

 

 

(111,482

)

 

 

75,857

 

 

 

(228,169

)

Operating expenses

 

7,308,783

 

 

 

6,058,861

 

 

 

23,422,453

 

 

 

33,331,591

 

Operating loss

 

8,287,287

 

 

 

5,847,507

 

 

 

26,166,657

 

 

 

33,370,867

 

Amortization of deferred financing costs and debt

   discounts

 

72,952

 

 

 

191,289

 

 

 

217,661

 

 

 

377,722

 

Financial charges (income), net (Note 10)

 

539,138

 

 

 

2,905,722

 

 

 

16,762,658

 

 

 

(7,711,078

)

Gain on debt extinguishment (Note 8)

 

(451,450

)

 

 

 

 

 

(451,450

)

 

 

(314,305

)

Equity participation in (income) losses of equity method

   investments (Note 3)

 

216

 

 

 

52

 

 

 

108

 

 

 

15,442

 

Other expense (income), net

 

 

 

 

 

 

 

(185,000

)

 

 

 

Loss before income taxes

 

8,448,143

 

 

 

8,944,570

 

 

 

42,510,634

 

 

 

25,738,648

 

Income taxes (Note 14)

 

18,048

 

 

 

22,186

 

 

 

52,738

 

 

 

68,757

 

Net loss

 

8,466,191

 

 

 

8,966,756

 

 

 

42,563,372

 

 

 

25,807,405

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BioAmber Inc. shareholders

 

8,161,302

 

 

 

8,833,499

 

 

 

42,064,908

 

 

 

25,390,632

 

Non-controlling interest

 

304,889

 

 

 

133,257

 

 

 

498,464

 

 

 

416,773

 

 

 

8,466,191

 

 

 

8,966,756

 

 

 

42,563,372

 

 

 

25,807,405

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to BioAmber Inc.

   shareholders - basic

$

0.39

 

 

$

0.48

 

 

$

2.17

 

 

$

1.74

 

Weighted-average of common shares

   outstanding - basic

 

21,054,225

 

 

 

18,419,267

 

 

 

19,405,327

 

 

 

14,620,923

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

3


BIOAMBER INC.

Consolidated Statements of Comprehensive Loss

For the three and nine months ended September 30, 2014 and 2013

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months ended

 

 

Nine Months ended

 

 

September 30,

 

 

September 30,

 

 

 

2014

 

 

 

2013

 

 

 

2014

 

 

 

2013

 

 

$

 

 

$

 

 

$

 

 

$

 

Net loss

 

8,466,191

 

 

 

8,966,756

 

 

 

42,563,372

 

 

 

25,807,405

 

Foreign currency translation adjustment

 

3,703,432

 

 

 

(446,718

)

 

 

3,172,884

 

 

 

172,483

 

Total comprehensive loss

 

12,169,623

 

 

 

8,520,038

 

 

 

45,736,256

 

 

 

25,979,888

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive loss attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BioAmber Inc. shareholders

 

10,968,618

 

 

 

8,100,295

 

 

 

44,442,037

 

 

 

25,570,994

 

Non-controlling interest

 

1,201,005

 

 

 

419,743

 

 

 

1,294,219

 

 

 

408,894

 

 

 

12,169,623

 

 

 

8,520,038

 

 

 

45,736,256

 

 

 

25,979,888

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

4


BIOAMBER INC.

Consolidated Balance Sheets

September 30, 2014 and December 31, 2013

(Unaudited)

 

 

As of

 

 

As of

 

 

September 30,

 

 

December 31,

 

 

2014

 

 

2013

 

 

$

 

 

$

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash (Note 8 iv))

 

78,631,664

 

 

 

83,728,199

 

Accounts receivable

 

334,594

 

 

 

754,987

 

Inventories (Note 4)

 

2,992,371

 

 

 

2,415,402

 

Prepaid expenses and deposits (Note 4)

 

1,459,255

 

 

 

5,131,367

 

Valued added tax, income taxes and other receivables

 

3,243,162

 

 

 

2,262,139

 

Deferred financing costs

 

 

 

 

671,270

 

Total current assets

 

86,661,046

 

 

 

94,963,364

 

Property and equipment, net (Note 5)

 

69,093,600

 

 

 

13,554,279

 

Investment in equity method investments (Note 3)

 

34,925

 

 

 

710,033

 

Intangible assets, net (Note 6)

 

4,304,687

 

 

 

4,158,550

 

Goodwill

 

634,917

 

 

 

692,788

 

Restricted cash

 

669,675

 

 

 

 

Deferred financing costs (Note 8)

 

1,044,227

 

 

 

 

Total assets

 

162,443,077

 

 

 

114,079,014

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities (Note 7)

 

16,993,440

 

 

 

7,081,471

 

Income taxes payable (Note 14)

 

1,008,090

 

 

 

1,120,669

 

Accounts payable Agro-industries Recherches et Développements (“ARD”) (Note 17)

 

859,358

 

 

 

29,497

 

Deferred grants (Note 9)

 

2,907,138

 

 

 

3,061,140

 

Short-term portion of long-term debt (Note 8)

 

12,153,558

 

 

 

6,520,263

 

Total current liabilities

 

33,921,584

 

 

 

17,813,040

 

Long-term debt (Note 8)

 

20,372,612

 

 

 

23,209,629

 

Warrants financial liability (Note 13)

 

20,239,200

 

 

 

5,840,000

 

Other long-term liabilities

 

116,250

 

 

 

82,500

 

Total liabilities

 

74,649,646

 

 

 

46,945,169

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

Redeemable non-controlling interest (Note 12)

 

25,440,406

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

Share capital

 

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

 

$0.01 par value per share; 250,000,000 authorized, 21,809,099 and 18,558,369 issued and

   outstanding at September 30, 2014 and December 31, 2013, respectively

 

218,091

 

 

 

185,584

 

Additional paid-in capital

 

219,045,886

 

 

 

177,275,934

 

Warrants

 

2,949,018

 

 

 

2,964,335

 

Accumulated deficit

 

(157,108,858

)

 

 

(115,043,950

)

Accumulated other comprehensive income (loss)

 

(2,751,112

)

 

 

(373,983

)

Total BioAmber Inc. shareholders’ equity

 

62,353,025

 

 

 

65,007,920

 

Non-controlling interest (Note 12)

 

 

 

 

2,125,925

 

Total shareholders’ equity

 

62,353,025

 

 

 

67,133,845

 

Total liabilities and equity

 

162,443,077

 

 

 

114,079,014

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

5


BIOAMBER INC.

Consolidated Statements of Shareholders’ Equity

for the period from January 1, 2013 to September 30, 2014

(in U.S. dollars, except for shares data)

(Unaudited)

 

 

 

Common stock

 

 

Additional paid-in capital

 

 

Warrants

 

 

Accumulated deficit

 

 

Accumulated other comprehensive loss

 

 

Non-controlling interest

 

 

Total shareholders' equity

 

 

 

Shares

 

 

Par value

 

 

 

 

 

 

Shares

 

 

Par value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

 

$

 

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Balance at January 1, 2013

 

 

10,349,815

 

 

 

103,498

 

 

 

113,780,846

 

 

 

1,457,855

 

 

 

3,074,957

 

 

 

(81,826,192

)

 

 

(94,969

)

 

 

2,759,435

 

 

 

37,797,575

 

Release of shares - Sinoven

 

 

63,000

 

 

 

630

 

 

 

(630

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancelation of shares - Sinoven

 

 

 

 

 

 

 

 

(140,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(140,000

)

Stock-based compensation (Note 13)

 

 

 

 

 

 

 

 

6,731,539

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,731,539

 

IPO proceeds

 

 

8,000,000

 

 

 

80,000

 

 

 

79,920,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

80,000,000

 

IPO costs

 

 

 

 

 

 

 

 

(7,136,291

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,136,291

)

Warrants issued at IPO

 

 

 

 

 

 

 

 

 

 

(16,148,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,148,000

)

Warrants exercised

 

 

145,554

 

 

 

1,456

 

 

 

268,470

 

 

 

(145,554

)

 

 

(110,622

)

 

 

 

 

 

 

 

 

 

 

 

159,304

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33,217,758

)

 

 

 

 

 

(573,524

)

 

 

(33,791,282

)

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(279,014

)

 

 

(59,986

)

 

 

(339,000

)

Balance at December 31, 2013

 

 

18,558,369

 

 

 

185,584

 

 

 

177,275,934

 

 

 

1,312,301

 

 

 

2,964,335

 

 

 

(115,043,950

)

 

 

(373,983

)

 

 

2,125,925

 

 

 

67,133,845

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2013

 

 

18,558,369

 

 

 

185,584

 

 

 

177,275,934

 

 

 

1,312,301

 

 

 

2,964,335

 

 

 

(115,043,950

)

 

 

(373,983

)

 

 

2,125,925

 

 

 

67,133,845

 

Stock-based compensation (Note 13)

 

 

 

 

 

 

 

 

5,565,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,565,072

 

Reclassification of non-controlling

   interest to redeemable non-controlling

   interest (Note 12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,125,925

)

 

 

(2,125,925

)

Issuance of shares , net of issuance costs

 

 

3,220,000

 

 

 

32,200

 

 

 

36,027,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36,059,908

 

Warrants exercised

 

 

6,930

 

 

 

69

 

 

 

38,698

 

 

 

(6,930

)

 

 

(15,317

)

 

 

 

 

 

 

 

 

 

 

 

23,450

 

Stock options exercised

 

 

23,800

 

 

 

238

 

 

 

138,474

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

138,712

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(42,064,908

)

 

 

 

 

 

 

 

 

(42,064,908

)

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,377,129

)

 

 

 

 

 

(2,377,129

)

Balance at September 30, 2014

 

 

21,809,099

 

 

 

218,091

 

 

 

219,045,886

 

 

 

1,305,371

 

 

 

2,949,018

 

 

 

(157,108,858

)

 

 

(2,751,112

)

 

 

 

 

 

62,353,025

 

 

The accompanying notes are integral part of the consolidated financial statements.

 

 

 

6


BIOAMBER INC.

Consolidated Statements of Cash Flows

for three and nine months ended September 30, 2014 and 2013

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2014

 

 

2013

 

 

2014

 

 

2013

 

 

 

$

 

 

$

 

 

$

 

 

$

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(8,466,191

)

 

 

(8,966,756

)

 

 

(42,563,372

)

 

 

(25,807,405

)

Adjustments to reconcile net loss to cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

1,043,431

 

 

 

986,153

 

 

 

5,565,072

 

 

 

5,462,744

 

Depreciation of property and equipment

   and amortization of intangible assets

 

 

68,645

 

 

 

40,321

 

 

 

188,228

 

 

 

1,112,486

 

Impairment loss and write-off of property

   and equipment and of intangible assets

 

 

 

 

 

 

 

 

 

 

 

8,619,405

 

Amortization of deferred financing costs

   and debt discounts

 

 

72,952

 

 

 

191,289

 

 

 

217,661

 

 

 

377,722

 

Equity participation in losses of equity method investments

 

 

216

 

 

 

52

 

 

 

108

 

 

 

15,442

 

Other long-term liabilities

 

 

11,250

 

 

 

11,250

 

 

 

33,750

 

 

 

33,750

 

Financial charges (income), net (Note 10)

 

 

312

 

 

 

2,251,595

 

 

 

15,114,674

 

 

 

(9,496,405

)

(Gain) loss on debt extinguishment (Note 8)

 

 

(451,450

)

 

 

 

 

 

(451,450

)

 

 

(314,305

)

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in accounts receivable

 

 

292,914

 

 

 

53,154

 

 

 

420,393

 

 

 

22,030

 

Change in inventories

 

 

985,289

 

 

 

(481,957

)

 

 

(576,969

)

 

 

(903,148

)

Change in prepaid expenses and deposits

 

 

1,859,474

 

 

 

424,042

 

 

 

3,111,550

 

 

 

(2,970,633

)

Change in research and development

   tax credits receivable, value added tax,

   income taxes and other receivables

 

 

18,272

 

 

 

617,551

 

 

 

(1,228,144

)

 

 

529,475

 

Change in accounts payable to ARD

 

 

(1,779,822

)

 

 

162,657

 

 

 

826,640

 

 

 

43,786

 

Change in accounts payable and accrued liabilities

 

 

4,092,090

 

 

 

(631,267

)

 

 

9,138,372

 

 

 

564,407

 

Net cash used in operating activities

 

 

(2,252,618

)

 

 

(5,341,916

)

 

 

(10,203,487

)

 

 

(22,710,649

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of property and equipment and intangible assets

 

 

(26,745,899

)

 

 

(2,494,138

)

 

 

(59,474,178

)

 

 

(4,606,597

)

Change in restricted cash

 

 

 

 

 

 

 

 

(678,450

)

 

 

Capital distribution from equity method investments (Note 3)

 

 

 

 

 

 

 

 

675,000

 

 

 

Net cash used in investing activities

 

 

(26,745,899

)

 

 

(2,494,138

)

 

 

(59,477,628

)

 

 

(4,606,597

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred financing costs

 

 

69,638

 

 

 

49,190

 

 

 

(491,462

)