bioa-10q_20150930.htm

 

 

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, 2015

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 4310

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

 

x

 

 

 

 

Non-accelerated filer

 

¨  (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 9, 2015, there were 25,857,671 shares of the registrant’s Common Stock, $0.01 par value per share, outstanding.

 

 

1

 


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains or incorporates by reference statements that are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements may contain projections of our future results of operations or of our financial position or state other forward-looking information. In some cases you can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” “would,” “plan,” “projected” or the negative of such words or other similar words or phrases. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You are cautioned not to unduly rely on forward-looking statements because they involve risks and uncertainties, and actual results may differ materially from those discussed as a result of various factors, including, but not limited to:

 

 

 

the expected funding sources of our Sarnia, Ontario plant and our other planned manufacturing facilities and the expected timing of the completion of construction and the start of commercial operations at each of these facilities;

 

 

 

our joint venture with Mitsui & Co. Ltd., or Mitsui;

 

 

 

our take-or-pay agreements with Vinmar International Ltd., or Vinmar, related to bio-based 1,4-butanediol(1,4 BDO or BDO), tetrahydrofuran (THF), and bio-based succinic acid, and with PTTMCC Biochem for bio-succinic acid;

 

 

 

the expected market applications for our products and the sizes of these addressable markets;

 

 

 

our ability to gain market acceptance for bio-succinic acid, its derivatives including 1,4 BDO and THF and other building block chemicals;

 

 

 

the benefits of our transition from our E. coli bacteria to our yeast;

 

 

 

our ability to commence commercial sales and execute on our commercial expansion plan, including the timing and volume of our future production and sales;

 

 

 

the expected cost-competitiveness and relative performance attributes of our bio-succinic acid and the products derived from it;

 

 

 

our ability to cost-effectively produce and commercialize bio-succinic acid, its derivatives and other building block chemicals;

 

 

 

customer qualification, approval and acceptance of our products;

 

 

 

our ability to maintain and advance strategic partnerships and collaborations and the expected benefits and accessible markets related to those partnerships and collaborations;

 

 

 

the impact of our off-take agreements on our business with our customers, our distributors and our current and future equity partners;

 

 

 

our ability to economically obtain feedstock and other inputs;

 

 

 

the achievement of advances in our technology platform;

 

 

 

our ability to obtain and maintain intellectual property protection for our products and processes and not infringe on others’ rights;

 

 

 

government regulatory and industry certification approvals for our facilities and products; and

 

 

 

government policymaking and incentives relating to bio-chemicals;

and other risks and uncertainties referenced under “Risk Factors” in this Report and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. You should not place undue reliance on our forward-looking statements. These forward-looking statements speak only as of the date on which the statements were made and are not guarantees of future performance. Except as may be required by applicable law, we do not undertake or intend to update any forward-looking statements after the date of this prospectus supplement or the respective dates of documents incorporated by reference herein or therein that include forward-looking statements.

 

 

 

2

 


BIOAMBER INC.

Form 10-Q

Table of Contents

 

 

 

 

  

Page

 

 

 

Special Note Regarding Forward-looking Statements

  

2

 

Part I—Financial Information

 

Item 1.

 

 

Condensed Consolidated Financial Statements (Unaudited)

  

4

 

 

 

Consolidated Statements of Operations (Unaudited)

  

4

 

 

Consolidated Statements of Comprehensive Loss (Unaudited)

  

5

 

 

Consolidated Balance Sheets (Unaudited)

  

6

 

 

Consolidated Statements of Shareholders’ Equity (Unaudited)

  

7

 

 

Consolidated Statements of Cash Flows (Unaudited)

  

8

 

 

Notes to Consolidated Financial Statements (Unaudited)

  

9

 

Item 2.

 

 

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

  

26

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

  

37

Item 4.

 

Controls and Procedures

  

38

 

Part II—Other Information

  

 

 

Item 1.

 

 

Legal Proceedings

  

39

Item 1A.

 

Risk Factors

  

39

Item 2.

 

Use of Proceeds

  

41

Item 5.

 

Other Information

  

41

Item 6.

 

Exhibits

  

42

 

Signatures

  

43

 

 

 

3


PART I—FINANCIAL INFORMATION

 

Item 1.

Condensed Consolidated Financial Statements

BIOAMBER INC.

Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

 

$

 

 

$

 

 

$

 

 

$

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

 

351,695

 

 

 

469,315

 

 

 

1,060,844

 

 

 

1,234,576

 

Cost of goods sold excluding depreciation and amortization

 

 

366,854

 

 

 

1,447,819

 

 

 

1,429,266

 

 

 

3,978,780

 

Gross loss

 

 

(15,159

)

 

 

(978,504

)

 

 

(368,422

)

 

 

(2,744,204

)

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

2,220,429

 

 

 

2,420,584

 

 

 

7,811,701

 

 

 

8,204,822

 

Research and development

 

 

5,999,272

 

 

 

3,577,733

 

 

 

15,567,742

 

 

 

11,150,536

 

Sales and marketing

 

 

920,705

 

 

 

954,150

 

 

 

3,197,612

 

 

 

3,803,010

 

Depreciation of property and equipment and

   amortization of intangible assets

 

 

123,490

 

 

 

68,645

 

 

 

288,184

 

 

 

188,228

 

Write-off of intangible assets (Note 5)

 

 

 

 

 

 

 

 

1,141,000

 

 

 

 

Foreign exchange loss

 

 

610,086

 

 

 

287,671

 

 

 

868,219

 

 

 

75,857

 

Operating expenses

 

 

9,873,982

 

 

 

7,308,783

 

 

 

28,874,458

 

 

 

23,422,453

 

Operating loss

 

 

9,889,141

 

 

 

8,287,287

 

 

 

29,242,880

 

 

 

26,166,657

 

Amortization of deferred financing costs and debt discounts

 

 

123,370

 

 

 

72,952

 

 

 

281,430

 

 

 

217,661

 

Financial charges (income), net (Note 9 and 18)

 

 

(1,552,042

)

 

 

506,657

 

 

 

2,801,178

 

 

 

17,218,956

 

Gain on debt extinguishment (Note 7)

 

 

 

 

 

(451,450

)

 

 

 

 

 

(451,450

)

Equity participation in losses of equity method investments (Note 2)

 

 

 

 

 

216

 

 

 

 

 

 

108

 

Other expense (income), net

 

 

(515

)

 

 

 

 

 

(21,565

)

 

 

(185,000

)

Loss before income taxes

 

 

8,459,954

 

 

 

8,415,662

 

 

 

32,303,923

 

 

 

42,966,932

 

Income taxes (Note 13)

 

 

(28,651

)

 

 

18,048

 

 

 

15,272

 

 

 

52,738

 

Net loss

 

 

8,431,303

 

 

 

8,433,710

 

 

 

32,319,195

 

 

 

43,019,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BioAmber Inc. shareholders

 

 

7,050,906

 

 

 

8,128,821

 

 

 

29,428,290

 

 

 

42,521,206

 

Non-controlling interest

 

 

1,380,397

 

 

 

304,889

 

 

 

2,890,905

 

 

 

498,464

 

 

 

 

8,431,303

 

 

 

8,433,710

 

 

 

32,319,195

 

 

 

43,019,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to BioAmber Inc.

   shareholders - basic

 

$

0.27

 

 

$

0.39

 

 

$

1.23

 

 

$

2.17

 

Weighted-average of common shares

   outstanding - basic

 

 

25,857,671

 

 

 

21,054,225

 

 

 

24,007,572

 

 

 

19,405,327

 

 

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

 

4


BIOAMBER INC.

Consolidated Statements of Comprehensive Loss
(Unaudited)

 

 

Three Months ended

 

 

Nine Months ended

 

 

 

September 30,

 

 

September 30,

 

 

 

 

2015

 

 

 

2014

 

 

 

2015

 

 

 

2014

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

Net loss

 

8,431,303

 

 

 

8,433,710

 

 

 

32,319,195

 

 

 

43,019,670

 

 

Foreign currency translation adjustment

 

7,032,463

 

 

 

3,703,432

 

 

 

12,198,824

 

 

 

3,172,884

 

 

Total comprehensive loss

 

15,463,766

 

 

 

12,137,142

 

 

 

44,518,019

 

 

 

46,192,554

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive loss attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BioAmber Inc. shareholders

 

11,993,577

 

 

 

10,936,137

 

 

 

37,913,629

 

 

 

44,898,335

 

 

Non-controlling interest

 

3,470,189

 

 

 

1,201,005

 

 

 

6,604,390

 

 

 

1,294,219

 

 

 

 

15,463,766

 

 

 

12,137,142

 

 

 

44,518,019

 

 

 

46,192,554

 

 

 

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

 

 

 

5


BIOAMBER INC.

Consolidated Balance Sheets

(Unaudited)

 

 

As of

 

 

As of

 

 

September 30,

 

 

December 31,

 

 

2015

 

 

2014

 

 

$

 

 

$

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash

 

34,205,612

 

 

 

51,042,752

 

Accounts receivable

 

226,924

 

 

 

476,851

 

Inventories (Note 3)

 

1,290,564

 

 

 

1,801,826

 

Prepaid expenses and deposits

 

861,913

 

 

 

765,539

 

Valued added tax, income taxes and other receivables

 

1,453,262

 

 

 

3,005,153

 

Total current assets

 

38,038,275

 

 

 

57,092,121

 

Property and equipment, net (Note 4)

 

125,536,123

 

 

 

88,664,899

 

Investment in equity method and cost investments (Note 2)

 

447,681

 

 

 

34,817

 

Intangible assets, net (Note 5)

 

6,382,723

 

 

 

4,332,911

 

Goodwill

 

625,364

 

 

 

625,364

 

Restricted cash

 

559,725

 

 

 

646,500

 

Deferred financing costs (Note 7)

 

1,612,041

 

 

 

1,043,788

 

Total assets

 

173,201,932

 

 

 

152,440,400

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities (Note 6)

 

16,428,976

 

 

 

16,459,918

 

Income taxes payable (Note 13)

 

148,117

 

 

 

204,096

 

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

 

 

 

 

983,465

 

Deferred grants (Note 8)

 

3,738,945

 

 

 

2,274,802

 

Short-term portion of long-term debt (Note 7)

 

15,066,656

 

 

 

2,977,707

 

Total current liabilities

 

35,382,694

 

 

 

22,899,988

 

Long-term debt (Note 7)

 

40,844,312

 

 

 

34,653,101

 

Warrants financial liability (Note 12 and 18)

 

15,018,847

 

 

 

14,493,864

 

Other long-term liabilities

 

443,538

 

 

 

127,500

 

Total liabilities

 

91,689,391

 

 

 

72,174,453

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

Redeemable non-controlling interest (Note 11)

 

26,482,718

 

 

 

24,190,412

 

Shareholders’ equity

 

 

 

 

 

 

 

Share capital

 

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

 

$0.01 par value per share; 250,000,000 authorized, 25,857,671 and 21,836,046 issued and

   outstanding at September 30, 2015 and December 31, 2014, respectively

 

258,576

 

 

 

218,360

 

Additional paid-in capital

 

257,370,108

 

 

 

220,460,559

 

Warrants  (Note 18)

 

1,011,415

 

 

 

1,093,263

 

Accumulated deficit (Note 18)

 

(190,492,309

)

 

 

(161,064,019

)

Accumulated other comprehensive loss

 

(13,117,967

)

 

 

(4,632,628

)

Total BioAmber Inc. shareholders’ equity

 

55,029,823

 

 

 

56,075,535

 

Total liabilities and shareholders’ equity

 

173,201,932

 

 

 

152,440,400

 

 

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

 

 

 

6


BIOAMBER INC.

Consolidated Statements of Shareholders’ Equity

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

(Unaudited)

 

 

 

Common stock

 

 

Additional paid-in capital

 

 

Warrants

(note 18)

 

 

Accumulated deficit

(note 18)

 

 

Accumulated other comprehensive loss

 

 

Non-controlling interest

 

 

Total shareholders' equity

 

 

 

Shares

 

 

Par value

 

 

 

 

 

 

Shares

 

 

Par value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

 

$

 

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Balance at January 1, 2014

 

 

18,558,369

 

 

 

185,584

 

 

 

177,275,934

 

 

 

1,008,606

 

 

 

1,108,580

 

 

 

(114,589,995

)

 

 

(373,983

)

 

 

2,125,925

 

 

 

65,732,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation (Note 12)

 

 

 

 

 

 

 

 

6,949,205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,949,205

 

Reclassification of non-controlling

   interest to redeemable non-controlling

   interest (Note 11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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/expired

 

 

26,976

 

 

 

269

 

 

 

23,164

 

 

 

(63,175

)

 

 

(15,317

)

 

 

 

 

 

 

 

 

 

 

 

8,116

 

Stock options exercised

 

 

30,701

 

 

 

307

 

 

 

184,548

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

184,855

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(46,474,024

)

 

 

 

 

 

 

 

 

(46,474,024

)

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,258,645

)

 

 

 

 

 

(4,258,645

)

Balance at December 31, 2014

 

 

21,836,046

 

 

 

218,360

 

 

 

220,460,559

 

 

 

945,431

 

 

 

1,093,263

 

 

 

(161,064,019

)

 

 

(4,632,628

)

 

 

 

 

 

56,075,535

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation (Note 12)

 

 

 

 

 

 

 

 

3,854,675

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,854,675

 

Issuance of shares , net of issuance costs of

 

 

3,900,000

 

 

 

39,000

 

 

 

32,741,069

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32,780,069

 

Warrants exercised/expired (Note 12)

 

 

107,625

 

 

 

1,076

 

 

 

233,585

 

 

 

(107,695

)

 

 

(81,848

)

 

 

 

 

 

 

 

 

 

 

 

 

152,813

 

Stock options exercised

 

 

14,000

 

 

 

140

 

 

 

80,220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

80,360

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,428,290

)

 

 

 

 

 

 

 

 

(29,428,290

)

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,485,339

)

 

 

 

 

 

(8,485,339

)

Balance at September 30, 2015

 

 

25,857,671

 

 

 

258,576

 

 

 

257,370,108

 

 

 

837,736

 

 

 

1,011,415

 

 

 

(190,492,309

)

 

 

(13,117,967

)

 

 

 

 

 

55,029,823

 

 

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

 

 

 

7


BIOAMBER INC.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

Nine Months Ended September 30,

 

 

 

2015

 

 

2014

 

 

 

$

 

 

$

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

 

(32,319,195

)

 

 

(43,019,670

)

Adjustments to reconcile net loss to cash:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

3,854,675

 

 

 

5,565,072

 

Depreciation of property and equipment

   and amortization of intangible assets

 

 

288,184

 

 

 

188,228

 

Write-off of intangible assets (Note 5)

 

 

1,141,000

 

 

 

 

Amortization of deferred financing costs

   and debt discounts

 

 

281,430

 

 

 

217,661

 

Equity participation in losses of equity method investments

 

 

 

 

 

108

 

Other long-term liabilities

 

 

34,010

 

 

 

33,750

 

Financial charges (income), net (Note 9 and 18)

 

 

1,040,608

 

 

 

15,570,972

 

(Gain) loss on debt extinguishment (Note 7)

 

 

 

 

 

(451,450

)

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Change in accounts receivable

 

 

(474,027

)

 

 

420,393

 

Change in inventories

 

 

494,392

 

 

 

(576,969

)

Change in prepaid expenses and deposits

 

 

(145,598

)

 

 

3,111,550

 

Change in valued added tax, income taxes and other receivables

 

 

2,115,019

 

 

 

(1,228,144

)

Change in accounts payable to ARD

 

 

(983,465

)

 

 

826,640

 

Change in accounts payable and accrued liabilities

 

 

2,182,397

 

 

 

9,138,372

 

Net cash used in operating activities

 

 

(22,490,570

)

 

 

(10,203,487

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Acquisition of property and equipment and intangible asset

 

 

(62,465,211

)

 

 

(59,474,178

)

Change in restricted cash

 

 

 

 

 

(678,450

)

Capital investment in cost investment (Note 2)

 

 

(412,433

)

 

 

675,000

 

Net cash used in investing activities

 

 

(62,877,644

)

 

 

(59,477,628

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Deferred financing costs

 

 

(882,485

)

 

 

(491,462

)

Issuance of long-term debt (Note 7)

 

 

21,967,288

 

 

 

5,232,699

 

Repayment of long-term debt (Note 8)

 

 

(585,385

)

 

 

(2,846,411

)

Government grants (Note 8)

 

 

7,946,840

 

 

 

4,099,665

 

Net proceeds from issuance of common shares

 

 

33,114,136

 

 

 

36,222,070

 

Proceeds from issuance of shares by a subsidiary (Note 11)

 

 

8,896,696

 

 

 

24,608,700

 

Net cash provided by financing activities

 

 

70,457,090

 

 

 

66,825,261

 

 

 

 

 

 

 

 

 

 

Foreign exchange impact on cash

 

 

(1,926,016

)

 

 

(2,240,681

)

Decrease in cash

 

 

(16,837,140

)

 

 

(5,096,535

)

Cash, beginning of period

 

 

51,042,752

 

 

 

83,728,199

 

 

 

 

 

 

 

 

 

 

Cash, end of period

 

 

34,205,612

 

 

 

78,631,664

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Non-cash transactions:

 

 

 

 

 

 

 

 

Deferred financing costs related to the second public offering not yet paid

 

 

60,000

 

 

 

48,150

 

Construction in Progress costs not yet paid

 

 

9,626,642

 

 

 

12,984,161

 

Amortization of debt discounts  and interest capitalized to CIP

 

 

1,669,021

 

 

 

483,536

 

 

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

 

 

8


BIOAMBER INC.

Notes to Condensed Consolidated Financial Statements

for the three and nine months ended September 30, 2015 and 2014, and the year ended December 31, 2014

(Unaudited)

 

 

1. Summary of significant accounting policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Securities and Exchange (“SEC”) rules and regulations and using the same accounting policies as described in Note 2 of the audited consolidated financial statements included in BioAmber Inc. (BioAmber or the Company) Annual Report on Form 10-K for the fiscal year ended December 31, 2014. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. Company’s management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of results to be expected for the fiscal year ended December 31, 2015 or any other future period.

Risk and uncertainties

         BioAmber is an industrial biotechnology company producing sustainable chemicals and the Company has not yet commenced its planned, principal operations as of September 30, 2015. The Company’s principal operations will start once commercial production begins at the Sarnia, Ontario facility. The Company’s activities since inception have consisted principally of raising capital for performing research and development activities, developing market related to its bio-succinic acid product and derived products, acquiring technology patents, producing and selling bio-succinic acid from a large-scale demonstration facility in Pomacle, France, and building its Sarnia facility. The attainment of profitable operations is dependent upon future events, including future operation of the commercial-scale manufacturing facility in Sarnia, Ontario, further advancing its existing commercial arrangements with strategic partners to generate revenue from the sale of its products that will support the Company’s cost structure, gaining market acceptance for its bio-succinic acid, its derivatives and other building block chemicals, obtaining adequate financing to complete its development activities, and attracting and retaining qualified personnel.

 

Net loss per share

The Company computes net loss per share in accordance with FASB ASC 260, Earnings Per Share, under which basic net loss per share attributable to common shareholders is computed by dividing net loss attributable to common shareholders by the basic weighted-average number of common shares outstanding during the period. Shares issued and reacquired during the period are weighted for the portion of the period that they were outstanding. The computation of diluted earnings per share (“EPS”) is similar to the computation of the basic EPS except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if all of the potentially dilutive shares of common stock had been issued. In addition, in computing the dilutive effect of convertible securities, the numerator is adjusted to add back any convertible preferred dividends and the after-tax amount of interest recognized in the period associated with any convertible debt. The numerator is also adjusted for any other changes in income or loss that would result from the assumed conversion of those potential shares of common stock such as profit-sharing expenses. Common equivalent shares are excluded from the diluted EPS calculation if their effect is anti-dilutive. Losses have been incurred in each period since inception; accordingly, diluted loss per share is not presented.

Recently adopted and recently issued accounting guidance

In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, "Revenue Recognition - Revenue from Contracts with Customers," which is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The standard is effective for interim and annual periods beginning after December 15, 2017, and either full retrospective adoption or modified retrospective adoption is permitted. The Company is in the process of evaluating the impact of the standard.

9


In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs," ("ASU 2015-03"). ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The standard is effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnote disclosures.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (“ASU-2015-11”). ASU 2015-11 applies to inventory that is measured using first-in, first-out (“FIFO”) or average cost.  ASU 2015-11 requires inventory to be measured at the lower of cost and net realizable value.  Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.  The amendments in ASU 2015-11 more closely align the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards (“IFRS”).  ASU 2015-11 is effective for fiscal years beginning after December 31, 2016.  The Company is in the process of evaluating the impact of the standard.

 

 

 

2. Equity and Cost Investments

 

Sinoven, the Company’s wholly-owned subsidiary and a third-party, NatureWorks LLC, are both 50% holders of the joint venture AmberWorks. Amberworks had a net loss of $nil and $432, for the three months ended September 30, 2015 and 2014, respectively. Sinoven’s share of the net loss amounted to $nil and $216 for those periods, respectively.

 

AmberWorks had a net loss of $nil and $216 for the nine months ended September 30, 2015 and 2014, respectively. Sinoven’s share of the net loss amounted to $nil and $108 for those periods, respectively.

 

AmberWorks had total assets of $70,496 and $69,634 and total liabilities of $nil as of September 30, 2015 and December 31, 2014, respectively. Sinoven’s share of net assets amounted to $34,817 and $34,817 as of those periods, respectively.

 

          On May 6, 2014, AmberWorks made a capital distribution totaling $1,350,000, to Sinoven and a NatureWorks LLC, both 50% holders of the joint venture, in proportion of their respective investments in the joint venture. This distribution was in the form of cash and was recorded as a reduction of investment.

 

On February 5, 2015, the Company invested $412,434 (CAD$ 500,000) in a start-up private company, which represents a 6.6% ownership interest.

 

 

3. Inventories

 

 

 

September 30,

 

 

December 31,

 

 

 

2015

 

 

2014

 

 

 

$

 

 

$

 

Finished goods

 

 

928,173

 

 

 

1,801,826

 

Raw material

 

 

323,206

 

 

 

 

Supplies and spare parts

 

 

39,185

 

 

 

 

Total

 

 

1,290,564

 

 

 

1,801,826

 

The Company recorded an inventory reserve of approximately $nil and $300,000 in the three and nine months ended September 30, 2015. The Company recorded an inventory reserve of approximately $200,000 and $1.8 million in the three and nine months ended September 30, 2014.

 

10


4. Property and equipment

 

 

Estimated

 

 

 

 

 

 

 

 

 

Useful

 

September 30,

 

 

December 31,

 

 

Life

 

2015

 

 

2014

 

 

(years)

 

 

 

 

 

 

 

 

 

 

 

$

 

 

$

 

Land

 

 

 

251,378

 

 

 

290,349

 

Furniture and fixtures

5 - 8

 

 

125,620

 

 

 

77,448

 

Machinery and equipment

5 - 15