bioa-10q_20160930.htm

è 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

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

For the quarterly period ended September 30, 2016

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      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      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

 

  (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  

As of November 7, 2016, there were 28,836,983 shares of the registrant’s Common Stock, $0.01 par value per share, outstanding.

 

 

 


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 future 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 offtake agreements with Vinmar International Ltd., or Vinmar, related to bio-based 1,4-butanediol, which we refer to as 1,4 BDO or BDO, tetrahydrofuran, which we refer to as THF, and bio-based succinic acid, and with PTTMCC Biochem Company Limited, or 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;

 

 

 

our ability to ramp up 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;

 

 

 

government policymaking and incentives relating to bio-chemicals; and

 

 

 

 

our ability to maintain an effective system of internal controls and prevent future material weaknesses or significant deficiencies from occurring;

 

 

our ability to maintain and secure adequate funding for our current business activities;

 


and other risks and uncertainties referenced under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. 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 Quarterly Report on Form 10-Q or the respective dates of documents incorporated by reference herein or therein that include forward-looking statements.

 

 

 

3

 


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)

 

5

 

 

 

Consolidated Statements of Operations (Unaudited)

 

5

 

 

Consolidated Statements of Comprehensive Loss (Unaudited)

 

6

 

 

Consolidated Balance Sheets (Unaudited)

 

7

 

 

Consolidated Statements of Shareholders’ Equity (Unaudited)

 

8

 

 

Consolidated Statements of Cash Flows (Unaudited)

 

9

 

 

Notes to Consolidated Financial Statements (Unaudited)

 

10

 

Item 2.

 

 

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

 

26

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

38

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

 

39

Item 5.

 

Other Information

 

39

Item 6.

 

Exhibits

 

41

 

Signatures

 

42

 

 

 

4


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,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

 

3,661,454

 

 

 

351,695

 

 

 

7,641,036

 

 

 

1,060,844

 

Cost of goods sold excluding depreciation and amortization

 

 

5,034,580

 

 

 

366,854

 

 

 

11,577,961

 

 

 

1,429,266

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

1,767,342

 

 

 

2,220,429

 

 

 

7,376,461

 

 

 

7,811,701

 

Research and development, net

 

 

1,773,117

 

 

 

5,999,272

 

 

 

5,144,760

 

 

 

15,567,742

 

Sales and marketing

 

 

479,382

 

 

 

920,705

 

 

 

2,219,097

 

 

 

3,197,612

 

Depreciation of property and equipment and amortization of intangible assets

 

 

1,208,444

 

 

 

123,490

 

 

 

3,600,306

 

 

 

288,184

 

Write-off of intangible assets (Note 5)

 

 

 

 

 

 

 

 

 

 

 

1,141,000

 

Foreign exchange (gain) loss

 

 

(28,912

)

 

 

610,086

 

 

 

117,067

 

 

 

868,219

 

Operating expenses

 

 

5,199,373

 

 

 

9,873,982

 

 

 

18,457,691

 

 

 

28,874,458

 

Operating loss

 

 

(6,572,499

)

 

 

(9,889,141

)

 

 

(22,394,616

)

 

 

(29,242,880

)

Amortization of debt discounts

 

 

1,037,600

 

 

 

123,370

 

 

 

2,478,045

 

 

 

281,430

 

Financial charges (income), net (Note 9)

 

 

3,190,146

 

 

 

(1,552,042

)

 

 

(4,660,254

)

 

 

2,801,178

 

Grant income

 

 

(4,046,532

)

 

 

 

 

 

(4,046,532

)

 

 

 

Other (income) expense, net

 

 

(34,261

)

 

 

(515

)

 

 

137,836

 

 

 

(21,565

)

Loss before income taxes

 

 

(6,719,452

)

 

 

(8,459,954

)

 

 

(16,303,711

)

 

 

(32,303,923

)

Income taxes (Note 13)

 

 

 

 

 

(28,651

)

 

 

18,379

 

 

 

15,272

 

Net loss

 

 

(6,719,452

)

 

 

(8,431,303

)

 

 

(16,322,090

)

 

 

(32,319,195

)

Net loss attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BioAmber Inc. shareholders

 

 

(6,158,414

)

 

 

(7,050,906

)

 

 

(12,293,434

)

 

 

(29,428,290

)

Non-controlling interest

 

 

(561,038

)

 

 

(1,380,397

)

 

 

(4,028,656

)

 

 

(2,890,905

)

 

 

 

(6,719,452

)

 

 

(8,431,303

)

 

 

(16,322,090

)

 

 

(32,319,195

)

Net loss per share attributable to BioAmber Inc. shareholders - basic

 

$

(0.21

)

 

$

(0.27

)

 

$

(0.43

)

 

$

(1.23

)

Weighted-average of common shares outstanding -  basic

 

 

28,811,169

 

 

 

25,857,671

 

 

 

28,592,360

 

 

 

24,007,572

 

 

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

 

5


BIOAMBER INC.

Consolidated Statements of Comprehensive Loss
(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

Net loss

 

 

(6,719,452

)

 

 

(8,431,303

)

 

 

(16,322,090

)

 

 

(32,319,195

)

 

Foreign currency translation adjustment

 

 

(637,801

)

 

 

(7,032,463

)

 

 

6,124,414

 

 

 

(12,198,824

)

 

Total comprehensive loss

 

 

(7,357,253

)

 

 

(15,463,766

)

 

 

(10,197,676

)

 

 

(44,518,019

)

 

Total comprehensive loss attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BioAmber Inc. shareholders

 

 

(6,535,317

)

 

 

(11,993,577

)

 

 

(8,254,388

)

 

 

(37,913,629

)

 

Non-controlling interest

 

 

(821,936

)

 

 

(3,470,189

)

 

 

(1,943,288

)

 

 

(6,604,390

)

 

 

 

 

(7,357,253

)

 

 

(15,463,766

)

 

 

(10,197,676

)

 

 

(44,518,019

)

 

 

 

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

 

 

 

6


BIOAMBER INC.

Consolidated Balance Sheets

(Unaudited)

 

 

 

As of

 

 

As of

 

 

 

September 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

 

$

 

 

$

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

15,939,611

 

 

 

6,973,591

 

Accounts receivable

 

 

3,973,067

 

 

 

978,634

 

Inventories (Note 3)

 

 

2,545,253

 

 

 

1,749,224

 

Prepaid expenses and deposits

 

 

525,567

 

 

 

579,864

 

Valued added tax, income taxes and other receivables

 

 

429,879

 

 

 

562,800

 

Total current assets

 

 

23,413,377

 

 

 

10,844,113

 

Property and equipment, net (Note 4)

 

 

125,821,203

 

 

 

122,542,688

 

Investment in equity method and cost investments (Note 2)

 

 

447,035

 

 

 

447,035

 

Intangible assets, net (Note 5)

 

 

6,184,360

 

 

 

6,352,091

 

Goodwill

 

 

625,364

 

 

 

625,364

 

Restricted cash

 

 

572,850

 

 

 

540,975

 

Deferred financing costs

 

 

545,894

 

 

 

434,941

 

Total assets

 

 

157,610,083

 

 

 

141,787,207

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities (Note 6)

 

 

5,478,275

 

 

 

15,834,274

 

Income taxes payable

 

 

117,932

 

 

 

112,256

 

Deferred grants (Note 8)

 

 

 

 

 

3,437,791

 

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

 

 

23,750,206

 

 

 

10,297,542

 

Total current liabilities

 

 

29,346,413

 

 

 

29,681,863

 

Long-term debt (Note 7)

 

 

30,715,257

 

 

 

28,491,549

 

Warrants financial liability (Note 12)

 

 

4,231,012

 

 

 

12,231,906

 

Other long-term liabilities

 

 

261,999

 

 

 

443,135

 

Total liabilities

 

 

64,554,681

 

 

 

70,848,453

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

Redeemable non-controlling interest (Note 11)

 

 

40,366,347

 

 

 

24,583,636

 

Equity

 

 

 

 

 

 

 

 

Share capital

 

 

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

 

 

$0.01 par value per share; 250,000,000 authorized, 28,836,983 and 26,181,753

   issued and outstanding at September 30, 2016 and December 31, 2015,

   respectively

 

 

288,369

 

 

 

261,817

 

Additional paid-in capital

 

 

273,399,458

 

 

 

258,792,171

 

Warrants (Note 12)

 

 

702,562

 

 

 

748,075

 

Accumulated deficit

 

 

(210,583,331

)

 

 

(198,289,897

)

Accumulated other comprehensive loss

 

 

(11,118,003

)

 

 

(15,157,048

)

Total BioAmber Inc. shareholders’ equity

 

 

52,689,055

 

 

 

46,355,118

 

Total liabilities and equity

 

 

157,610,083

 

 

 

141,787,207

 

 

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

 

 

 

7


BIOAMBER INC.

Consolidated Statements of Shareholders’ Equity

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

(Unaudited)

 

 

 

Common stock

 

 

Additional paid-in capital

 

 

Warrants

 

 

Accumulated deficit

 

 

Accumulated other comprehensive loss

 

 

Total shareholders' equity

 

 

 

Shares

 

 

Par value

 

 

 

 

 

 

Shares

 

 

Par value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

 

$

 

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

Balance at December 31, 2015

 

 

26,181,753

 

 

 

261,817

 

 

 

258,792,171

 

 

 

491,236

 

 

 

748,075

 

 

 

(198,289,897

)

 

 

(15,157,048

)

 

 

46,355,118

 

Stock-based compensation (Note 12)

 

 

 

 

 

 

 

 

2,686,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,686,065

 

Issuance of shares, net of issuance costs

 

 

2,600,000

 

 

 

26,000

 

 

 

11,917,683

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,943,683

 

Warrants exercised/expired /cancelled

 

 

55,230

 

 

 

552

 

 

 

3,539

 

 

 

(59,885

)

 

 

(45,513

)

 

 

 

 

 

 

 

 

(41,422

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,293,434

)

 

 

 

 

 

(12,293,434

)

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,039,045

 

 

 

4,039,045

 

Balance at September 30, 2016

 

 

28,836,983

 

 

 

288,369

 

 

 

273,399,458

 

 

 

431,351

 

 

 

702,562

 

 

 

(210,583,331

)

 

 

(11,118,003

)

 

 

52,689,055

 

 

 

 

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

 

 

 

8


BIOAMBER INC.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

Nine Months Ended September 30,

 

 

 

 

2016

 

 

2015

 

 

 

 

$

 

 

$

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

Net loss

 

 

(16,322,090

)

 

 

(32,319,195

)

 

Adjustments to reconcile net loss to cash:

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

2,686,065

 

 

 

3,854,675

 

 

Depreciation of property and equipment

   and amortization of intangible assets

 

 

3,600,306

 

 

 

288,184

 

 

Write-off intangible assets

 

 

 

 

 

1,141,000

 

 

Loss on disposals of property and equipment

 

 

133,141

 

 

 

 

 

Amortization of debt discounts

 

 

2,478,045

 

 

 

281,430

 

 

Other long-term liabilities

 

 

(16,858

)

 

 

34,010

 

 

Financial charges (income), net (Note 9)

 

 

(8,102,915

)

 

 

1,040,608

 

 

Grant income

 

 

(4,046,532

)

 

 

 

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

 

Change in accounts receivable

 

 

(2,903,292

)

 

 

(474,027

)

 

Change in inventories

 

 

(738,843

)

 

 

494,392

 

 

Change in prepaid expenses and deposits

 

 

108,152

 

 

 

(145,598

)

 

Change in value added tax, income taxes and other receivables

 

 

215,989

 

 

 

2,115,019

 

 

Change in accounts payable to ARD

 

 

 

 

 

(983,465

)

 

Change in accounts payable and accrued liabilities

 

 

(10,191,943

)

 

 

2,182,397

 

 

Net cash used in operating activities

 

 

(33,100,775

)

 

 

(22,490,570

)

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

Acquisition of property and equipment and intangible asset, net of disposals

 

 

(540,411

)

 

 

(62,465,211

)

 

Investment in equity method and cost investments (Note 2)

 

 

 

 

 

(412,433

)

 

Net cash used in investing activities

 

 

(540,411

)

 

 

(62,877,644

)

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

Deferred financing costs

 

 

(1,369,476

)

 

 

(882,485

)

 

Issuance of short-term and long-term debt (Note 7)

 

 

26,929,000

 

 

 

21,967,288

 

 

Repayment of long-term debt (Note 7)

 

 

(14,080,737

)

 

 

(585,385

)

 

Government grants (Note 8)

 

 

1,108,262

 

 

 

7,946,840

 

 

Net proceeds from issuance of common shares

 

 

11,918,373

 

 

 

33,114,136

 

 

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

 

 

17,726,000

 

 

 

8,896,696

 

 

Net cash provided by financing activities

 

 

42,231,422

 

 

 

70,457,090

 

 

Foreign exchange impact on cash and cash equivalents

 

 

375,784

 

 

 

(1,926,016

)

 

Increase (decrease) in cash and cash equivalents

 

 

8,966,020

 

 

 

(16,837,140

)

 

Cash and cash equivalents, beginning of period

 

 

6,973,591

 

 

 

51,042,752

 

 

Cash and cash equivalents, end of period

 

 

15,939,611

 

 

 

34,205,612

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

 

Non-cash transactions:

 

 

 

 

 

 

 

 

 

Deferred financing costs related to the second public offering not

   yet paid

 

 

 

 

 

60,000

 

 

Construction in-progress costs and fixed assets not yet paid

 

 

 

 

 

9,626,642

 

 

Amortization of debt discounts capitalized to fixed assets

 

 

 

 

 

1,669,021

 

 

Interest paid

 

 

1,716,727

 

 

 

2,001,533

 

 

 

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

 

 

9


BIOAMBER INC.

Notes to Condensed Consolidated Financial Statements

(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, 2015, except for the adoption of the Accounting Standard Update 2015-03, as referenced in paragraph Retrospective changes below. 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, 2015.

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“US 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. The 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, 2016 are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2016 or any other future period.

Risk and uncertainties

BioAmber is an industrial biotechnology company producing sustainable chemicals. The Company’s activities since inception have consisted principally of raising capital for performing research and development activities, developing markets 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 from its Sarnia facility, and building its Sarnia facility. The attainment of profitable operations is dependent upon future events, including 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.

 

Retrospective changes

The Company adopted Accounting Standards Update ("ASU") 2015-03 Simplifying the Presentation of Debt Issuance Costs, on a retrospective basis in the three months ended March 31, 2016. In accordance with the adoption of this guidance, prior year amounts related to deferred debt issuance costs associated with long-term debt have been adjusted for the retrospective change in accounting principle. As of December 31, 2015, the Company has reclassified $1.3 million of deferred financing costs associated with long-term debt in the consolidated balance sheet, against the long-term debt. Refer to Note 7 for further information.

 

Cost of Goods Sold

Cost of goods sold includes costs directly associated with finish goods production, such as direct materials, direct labor, utilities and certain plant overhead. Cost of goods sold also includes abnormal production costs from the Sarnia facility production volume ramp-up.

 

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, at the exception of the previous quarter; accordingly, diluted loss per share is not presented.

10


Recently adopted and recently issued accounting guidance

In May 2014, the FASB issued 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 on its consolidated financial statements.

 

In August 2014, the FASB issued ASU No. 2014-15 Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). This ASU requires management to assess and evaluate whether conditions or events exist, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the financial statements issue date. The provisions of ASU 2014-15 are effective for reporting periods beginning after December 15, 2016; early adoption is permitted. Based on the outcome of our financial initiatives, additional disclosures may be required upon application of the ASU.

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 on its consolidated financial statements.

 

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which among other changes in accounting and disclosure requirements, replaces the cost method of accounting for non-marketable equity securities with a model for recognizing impairments and observable price changes, and also eliminates the available-for-sale classification for marketable equity securities. Under the new guidance, other than when the consolidation or equity method of accounting is utilized, changes in the fair value of equity securities are to be recognized in earnings. This guidance will be effective for interim and annual reporting periods beginning after December 15, 2017. The Company is in the process of evaluating the impact of the standard on its consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of the standard on its consolidated financial statements.

 

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718). This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The Company is in the process of evaluating the impact of the standard on its consolidated financial statements.

 

In August 2016, the FASB issued ASU 2016-15 “Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments” to address diversity in practice on certain specific cash flow issues. The ASU will be effective for the Company for the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of evaluating the impact of the standard on its consolidated financial statements.

 

 

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 for the three and nine months ended September 30, 2016 and 2015, respectively. Sinoven’s share of the net loss amounted to $nil for those periods.

 

11


AmberWorks had total assets of $69,202 and total liabilities of $nil as of September 30, 2016 and December 31, 2015, respectively. Sinoven’s share of net assets amounted to $34,601 as of those periods, respectively.

 

On February 5, 2015, the Company invested $412,434 (CAD$ 500,000) in Comet Biorefining Inc., a start-up private company, which represented a 6.6% ownership interest. This investment is recorded using the cost investment method.  

 

 

3. Inventories

 

 

 

September 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

 

$

 

 

$

 

Finished goods

 

 

1,690,504

 

 

 

904,846

 

Work in progress

 

 

77,201

 

 

 

94,675

 

Raw material

 

 

615,807

 

 

 

610,773

 

Supplies and spare parts

 

 

161,741

 

 

 

138,930

 

Total

 

 

2,545,253

 

 

 

1,749,224

 

The company recorded an inventory reserve of approximately $nil and $300,000 in the three and nine months ended September 30, 2015, respectively, and $nil in the three and nine months ended September 30, 2016.

 

4. Property and equipment

 

 

 

Estimated

 

 

 

 

 

 

 

 

 

 

Useful

 

September 30,

 

 

December 31,

 

 

 

Life

 

2016

 

 

2015

 

 

 

(years)

 

 

 

 

 

 

 

 

 

 

 

 

$

 

 

$

 

Land

 

 

 

 

272,663

 

 

 

242,957

 

Building

 

40

 

 

89,491,026

 

 

 

85,597,851

 

Machinery and equipment

 

5 - 20

 

 

33,461,595

 

 

 

31,407,524

 

Furniture and fixtures

 

5 - 8

 

 

116,432

 

 

 

122,285

 

Computers, office equipment and peripherals

 

3 - 7

 

 

188,583

 

 

 

182,720

 

Leasehold improvement

 

10

 

 

336,675

 

 

 

330,283

 

Construction in-progress

 

 

 

 

6,431,376

 

 

 

5,902,054

 

 

 

 

 

 

130,298,350

 

 

 

123,785,674

 

Less: accumulated depreciation

 

 

 

 

(4,477,147

)

 

 

(1,242,986

)

Property and equipment, net

 

 

 

 

125,821,203

 

 

 

122,542,688

 

 

Depreciation expense is recorded as an operating expense in the consolidated statements of operations and amounted to $1,155,707 and $105,411 for the three months ended September 30, 2016 and 2015, respectively and to $3,441,217 and $238,329 for the nine months ended September 30, 2016 and 2015 respectively.

 

During the three months ended September 30, 2016, a portion of the holdback received from Sustainable Development Technology Canada grant for an amount of $703,793 was reclassified against the property and equipment. Refer to note 8 for details.

 

 

12


5. Intangible assets

 

 

 

September 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

License with indefinite-lived

 

 

3,106,767

 

 

 

3,106,767

 

Acquired licenses with definite-lived

 

 

3,017,550

 

 

 

3,017,550

 

Computer software and licenses

 

 

390,918

 

 

 

398,048

 

Less: accumulated amortization

 

 

(330,875

)

 

 

(170,274

)

Intangible assets, net

 

 

6,184,360

 

 

 

6,352,091

 

 

Amortization expense is recorded as an operating expense in the consolidated statements of operations and amounted to $52,737 and $18,079 for the three months ended September 30, 2016 and 2015, respectively and to $159,089 and $49,855 for the nine months ended September 30, 2016 and 2015 respectively.

On April 20, 2015, the Company elected to terminate its license with DuPont for their catalysts following the decision to pursue with the BDO technology licensed from Davy for all future plants, in addition to the planned 100,000 ton per year capacity plant. As a result, the carrying value of the DuPont license of $1,141,000 was written off during the three months ended September 30, 2015.

 

6. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities consisted of the following:

 

 

September 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

 

$

 

 

$

 

Trade accounts payable

 

 

3,568,194

 

 

 

12,006,592

 

Accrued payroll and bonus

 

 

867,858

 

 

 

1,049,637

 

Consulting and legal fees

 

 

407,067

 

 

 

2,021,858

 

Accrued interest

 

 

342,836

 

 

 

282,506

 

Other

 

 

292,320

 

 

 

473,681

 

Total

 

 

5,478,275

 

 

 

15,834,274

 

 

7. Short-term and Long-term debt

 

i)

Sustainable Jobs and Investment Fund (“SJIF”)

On September 30, 2011, BioAmber Sarnia and the Minister of Economic Development and Trade of Ontario, Canada (Sustainable Jobs Innovation Fund) entered into an agreement pursuant to which a loan in the amount of CAD$15,000,000, was granted to BioAmber Sarnia, according to the following principal terms:

 

 

the loan is interest free during the first five years provided BioAmber Sarnia creates or retains an average of 31 jobs per year, calculated on an annual basis;

 

the loan will bear interest from the fifth anniversary date of its disbursement at an annual rate of 3.98% (or 5.98% if BioAmber Sarnia does not fully achieve the cumulative job target for the first five years);

 

the principal will be repayable in five annual equal installments from the sixth anniversary date of the disbursement of the loan;

 

the loan is secured by a guarantee from BioAmber and Mitsui & Co., Ltd., the non-controlling shareholder of BioAmber Sarnia (the guarantee being limited to its percentage of ownership held in BioAmber Sarnia); and

 

the loan is secured by (i) a general security agreement representing a valid charge on BioAmber Sarnia’s present and future accounts receivable, inventory, equipment and other personal property and (ii) a valid charge against the leasehold interest on the portion of the real property located in Sarnia Ontario, Canada and leased to BioAmber Sarnia.

As of September 30, 2016, all disbursements were received. The fair value of the loan was calculated using the method of the discounted future cash payments of principal and interest over the term of the loan. The discount rate used was between 12% and 15%, being the interest rates a loan with similar terms and conditions would carry.

The difference between the face value of the loan and the discounted amount of the loan was recorded as a short-term deferred grant and subsequently reclassified to reduce the cost of construction in-progress.

13


The discounted loan is being accreted to its face value through a charge in the consolidated statement of operations using the effective interest method over the term of the loan.

 

ii)

Sustainable Chemistry Alliance (“SCA”)

In November 2011, BioAmber Sarnia entered into a loan agreement with SCA in the amount of CAD$500,000. The loan was interest free until November 30, 2013, and the unpaid balance of the loan subsequently bears interest at the rate of 5% per annum compounded monthly. The loan’s principal is repayable in 20 equal quarterly installments of CAD$25,000 from November 2015 to November 2020. The loan agreement contains various legal and financial covenants including i) third party credit facilities which could not exceed originally CAD$45 million in the aggregate as long as any principal of the loan remains outstanding, and ii) dividends may not be declared or paid without the consent of the lender. The loan agreement was amended to increase the third party credit facilities from CAD$45 million to CAD$60 million in the aggregate in June 2014, and subsequently from CAD$60 million to CAD$67.5 million in the aggregate in March 2016. These covenants were met as of September 30, 2016.

The loan was originally recorded at the discounted amount of the future cash payments of principal and interest over the term of the loan. The discount rate used was 15%, being the interest rate a loan with similar terms and conditions would carry.

The difference between the face value of the loan and the discounted amount of the loan was recorded as a deferred grant, and subsequently reclassified against operating expenses during the period ended December 31, 2015.

The discounted loan is being accreted to its face value through a charge in the consolidated statement of operations using the effective interest method over the term of the loan.

 

iii)

Federal Economic Development Agency (“FEDDEV”)

On September 30, 2011, BioAmber Sarnia and FEDDEV entered into a contribution agreement pursuant to which a loan of up to a maximum amount of CAD$12 million, was granted to BioAmber Sarnia. The loan is non-interest bearing with original repayment of principal from October 2013 to October 2018 in 60 monthly installments. The repayment terms were later modified as described below.

The loan agreement contains various legal and financial covenants ordinarily found in such government agency loan agreements. In addition, the following specific covenants also apply:

 

(a)

the Company will carry appropriate amounts of liability and casualty insurance during the duration of the loan agreement;  

 

(b)

the Company will not allow change of control without prior written consent of the Minister.

These covenants were met as of September 30, 2016.

On March 20, 2013, BioAmber Sarnia agreed with FEDDEV to amend the repayment of principal from the period October 2013 to October 2018, to the period October 2014 to October 2019. In May 2014, the repayment of principal was subsequently amended to the period October 2015 to October 2020.  The Company recorded the impact of the amendments in accordance with FASB ASC 470-50, Debt Modifications and Extinguishments. Accordingly, the amendments were recorded as a debt extinguishment and the issuance of new debt, with new terms.

As of September 30, 2016, all disbursements were received. The fair value of the loan was calculated using the method of the discounted future cash payments of principal and interest over the term of the loan. The discount rate used was between 12% and 15%, being the interest rates a loan with similar terms and conditions would carry.

 

iv)

Minister of Agriculture and Agri-Food of Canada (“AAFC”)

On March 10, 2014, BioAmber Sarnia entered into a repayable contribution agreement in the form of a non-interest bearing loan with the Minister of Agriculture and Agri-Food of Canada in the amount of CAD$10 million, for the AgriInnovation Program. This loan provided progressive disbursements as eligible costs were incurred for building construction, installation of equipment and start-up and commissioning of the Sarnia facility. The loan is repayable in equal, monthly installments beginning March 31, 2016 through March 31, 2026 and it contains various legal and financial covenants ordinarily found in such government agency loan agreements. These covenants were met as of September 30, 2016.

As of September 30, 2016, all disbursements were received. The fair value of the loan was calculated using the method of the discounted future cash payments of principal and interest over the term of the loan. The discount rate used was 12%, being the interest rate a loan with similar terms and conditions would carry.

14


 

v)

Comerica Bank, Export Development Canada and Farm Credit Canada (“EDC”)

 

On June 20, 2014, BioAmber Sarnia signed a loan agreement with a financial consortium, comprised of Comerica Bank, Export Development Canada and Farm Credit Canada for a senior secured loan in the principal amount of CAD$20.0 million, which was disbursed on May 12, 2015. The loan’s principal is repayable in 26 equal, quarterly installments beginning on September 30, 2015, and at floating interest rate per annum based on the greater of (i) the Canadian prime rate and (ii) the Canadian dealer offered rate plus 1%, in either case plus an interest spread of 5%. There was an initial interest-only period from draw down of the term loan until the first payment of principal. The disbursement of the loan, net of a 2.5% upfront loan fee of CAD$500,000, was recorded as debt discount and is amortized over the estimated term of the loan using the effective interest method. BioAmber Sarnia paid a 1.0% per annum commitment fee on the undrawn amount, until the drawdown.

 

The loan was originally recorded at the discounted amount of the future cash payments of principal and interest over the term of the loan. The discount rate used was 12%, being the interest rate a loan with similar terms and conditions would carry. The difference between the face value of the loan and the discounted amount of the loan was recorded as a grant applied as reduction of the cost of construction in-progress.

 

BioAmber Sarnia may prepay all or a portion of the loan outstanding from and after the date of the first principal repayment, without penalty.

 

BioAmber Sarnia’s obligations under the loan are secured by (i) a security interest on all of BioAmber Sarnia’s assets and (ii) a pledge of all the shares of BioAmber Sarnia. In addition, the Company provides the lenders with a guarantee representing 70% of the secured obligations under the loan, and Mitsui & Co., Ltd. provides a guarantee representing 30% of the secured obligations under the loan that is capped at CAD$6.0 million plus all accrued interest on the secured obligations and fees and expenses. The proceeds of the loan were used by BioAmber Sarnia to complete the ongoing construction of the Sarnia Plant and fund its startup and commissioning.

 

The loan agreement contains certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings, including in connection with the disbursement of the loan. On August 9, 2016, the loan agreement was amended, to adjust the financial covenants to require BioAmber Sarnia to maintain a minimum debt service ratio of 1.75 on a historical basis, at all times, to be certified monthly, during the term of the loan starting September 30, 2017. Financial covenants also include a minimum cash balance requirement of CAD$4.0 million, and a minimum gross revenue from product sales covenant. The agreement also contains customary events of default (subject, in certain instances, to specified grace periods) including, but not limited to, the failure to make payments of interest or premium, if any, on, or principal under the loan, the failure to comply with certain covenants and agreements specified in the agreement, the occurrence of a material adverse effect, defaults in respect of certain other indebtedness and agreements, and certain events of insolvency. If an event of default occurs, the principal, premium, if any, interest and any other monetary obligations on all the then outstanding amounts under the loan may become due and payable immediately. All applicable covenants as of September 30, 2016 have been met.

 

 

vi)

Tennenbaum Capital Partners, LLC (“TCP”)

On December 17, 2014, the Company entered into a Loan and Security Agreement (the “Agreement”) with funds managed by TCP. The proceeds received were used to repay in full, the Loan and Security Agreement with Hercules Technology Growth Capital Inc. (“HTGC”) that was entered into on June 27, 2013, and for general corporate purposes.

The senior secured term loan of $25 million (the “Facility”) was funded on December 18, 2014, net of a 2.0% commitment fee. The term loan is repayable over 36 months after closing at a floating interest rate per annum that is the greater of 9.50% or the 3 month LIBOR rate plus 9.27%, and is subject to an end of term charge of 8.25% based on the $25 million loaned payable on the date on which the term loan is paid or becomes due and payable in full. There was an initial interest-only period until September 30, 2015.  At its option, the Company may prepay some or all of the loan balance, subject to a prepayment fee equal to 3% of the amount prepaid during the term of the Agreement (and a pro rata portion of the end of term charge if the prepayment is less than the full amount of the Facility). 

The loan obligations are secured by a security interest on substantially all of the Company’s assets (subject to certain exceptions), including its intellectual property, but excluding certain identified licenses from third parties and its equity interest in its subsidiary, BioAmber Sarnia subject to the conditions specified in the Agreement. The security interest does not apply to any assets owned by BioAmber Sarnia, the entity that owns the Company’s Sarnia facility.

On July 29, 2015, the Company signed an amendment to the TCP loan agreement (the “TCP Amendment”) to increase the permitted investment in BioAmber Sarnia from $10 million to $25 million after July 29, 2015. In exchange, the restricted cash balance requirement increased from $12.5 million to $15 million from July 29, 2015 to December 31, 2015. Pursuant the TCP Amendment, a fee of $250,000 was paid during the three months ended September 30, 2015, and during the three months ended March 31, 2016.

15


 

On December 16, 2015, the Company signed another amendment to the TCP loan agreement to prepay approximately $12.5 million of the outstanding principal amount of the loan (the “Early Paydown”), bringing the principal outstanding balance of the loan to $10.0 million as of that date.  Pursuant to the amendment, the requirement that the Company maintain a minimum cash balance was eliminated.  

 

In addition, in connection with the Early Paydown, the Company paid half of the end of term charge of $514,781, and the prepayment fee of $374,386 and the remaining other half of the end of term fee associated with the Early Paydown was deferred, interest free, until the closing of the public offering in January 2016. Beginning with the payment due on February 1, 2016, the outstanding principal balance of the loan is payable in equal monthly installments so that all principal and interest accrued thereon shall be repaid on the maturity date, which is December 1, 2017. In addition, pursuant to this amendment, the amount of indebtedness that the Company is permitted to allow BioAmber Sarnia to incur increased to CAD $72.5 million less the aggregate repayments of principal on such indebtedness.

On September 9, 2016, the Company voluntarily paid off the outstanding balance and terminated the TCP loan agreement. The payoff amount of $8.0 million included the outstanding principal amount of $6.7 million, an end of term charge of $1.0 million, a prepayment fee of $202,116, accrued interest of $14,591, and other legal fees. The remaining debt issuance costs of $392,757 was written off and recorded as financial charges in the Consolidated Statement of Operations. In connection with such repayment, TCP terminated its security interest in the assets of the Company which were subject to the TCP Loan Agreement.

 

 

vii)

BDC Capital Inc. (“BDC”)

 

On April 20, 2016, BDC, a wholly owned subsidiary of Business Development Bank of Canada, accepted to enter into a binding Letter of Offer of financing (the “Letter of Offer”) with BioAmber Sarnia.  The proceeds will be used to fund the working capital of the BioAmber Sarnia’s facility.

Pursuant to the Letter of Offer, the Lender has agreed to make a secured term loan (“BDC Loan”) of CAD$10 million to BioAmber Sarnia which will be disbursed to BioAmber Sarnia following the fulfillment of certain customary conditions more fully described in the Letter of Offer.  The Loan is repayable in 59 equal, monthly installments of CAD$165,000 from April 15, 2017 until February 15, 2022, and by way of one balloon payment of CAD$265,000, payable on March 15, 2022. The Loan will bear interest at a fixed interest rate of 13% per annum, payable monthly on the 15th day of the month commencing on the next occurring payment date following the first advance on the Loan. The Lender may cancel any portion of the Loan not disbursed after six months from February 16, 2016.

On May 12, 2016, an amendment to the BDC Loan was signed to modify the commencement instalment repayment date from April 15, 2017 to October 15, 2017 and continuing monthly until September 15, 2022. On July 22, 2016, a second amendment was signed to modify certain debt covenants, including the term debt to tangible equity ratio of maximum of 0.85:1, and the debt service ratio of at least 1.10:1 commencing on the quarter ending December 31, 2017, and increasing to 1.50:1 for the quarter ending June 30, 2019. In addition, pursuant to this amendment, the fixed interest rate was adjusted to 14.90% per year, which can vary upon achievement of certain milestones. All applicable covenants as of September 30, 2016 have been met.

The BDC Loan proceeds were received on August 10, 2016, and recorded as long-term debt, net of debt issuance costs of $378,108.

 

viii) Bridging Finance Inc. (“Bridging”)

On September 9, 2016, the “Company” entered into an agreement for a demand non-revolving credit facility (the “Facility”) with Bridging. The proceeds were used to repay in full the outstanding principal amount of its loan with TCP and will be used to fund general corporate expenses.

Pursuant to the Agreement, Bridging has provided CAD$25 million to the Company, net of 1.50% of financing fees paid at the time of the disbursement. The Facility is repayable at the earlier of the date of demand or September 30, 2017. The Facility will bear interest at an annual interest rate of the Bank of Montreal prime rate plus 10.8%, calculated on a daily outstanding balance of the Facility and compounded monthly, payable on the last business day of each month.  Subject to (i) the right of the Lender to demand the payment of the loan at any time (subject to a grace period of 15 days) or (ii) the occurrence of an event of default, the principal of the loan will be reimbursable in one lump-sum payment at its maturity date.  On the occurrence of an event of default, as more fully described in the agreement, interest shall be calculated at annual rate of 21% per annum calculated and compounded as aforesaid.  

16


After April 1, 2017, the Company may prepay a portion or all of the Facility outstanding at any time, (i) without any fee or penalty upon at least 90 days prior written notice to the Lender, or (ii) with a prepayment penalty of up to 90 days of interest if the Company provides the lender with a prepayment notice of less than 90 days.

The loan obligations are secured by a security interest on substantially all of the Company’s assets (subject to certain exceptions), including its intellectual property, but excluding certain identified licenses from third parties and its equity interest in its subsidiary, BioAmber Sarnia Inc.

The Facility contains certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings. Covenants include a requirement on the part of the Company to, within two business days, use all proceeds received from (i) the exercise of any of the Company’s outstanding warrants issued in connection with its initial public offering completed in May 2013, and (ii) the issuance of shares in connection with any equity financing, to repay all or a portion of the then outstanding Facility. The Agreement also contains customary events of default including, but not limited to, the failure to make interest payments, the failure to comply with certain covenants specified in the Agreement, the occurrence of a material adverse effect, defaults in respect of certain other indebtedness and agreements, and certain events of insolvency.  

 

17


The balance of the outstanding long-term debt is as follows:

 

 

September 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

 

$

 

 

$

 

Sustainable Chemistry Alliance:

 

 

 

 

 

 

 

 

Face value (CAD $465,519)

 

 

355,564

 

 

 

342,618

 

Less: debt discount

 

 

(184,774

)

 

 

(174,493

)

Amortization of debt discount

 

 

128,123

 

 

 

106,312

 

Less: short-term portion of debt

 

 

(76,380

)

 

 

(72,130

)

 

 

 

222,533

 

 

 

202,307

 

 

 

 

 

 

 

 

 

 

Sustainable Jobs and Investment Fund: