It is inconceivable to me that this lack of cash was not anticipated as a possibility at the time they conducted their optimistic March 29, 2016 conference call. These are not stupid people. I believe that they were hoping that the stock would rally.
When it did not, they were forced to go to a Plan B. It would appear to me that they are keeping Yield 10 and selling off what used to be the core business.
With $7MM in the bank ($5M +$2MM Tepha) and a burn rate of about $2.5MM per month--this will be decided sooner rather than later.
How much are those biopolymer patents worth? That's the question I don't have the answser for.
At this point, it's quite simple to figure out what's going on. They are now talking about "patent estates" and no longer talking about manufacturing pilot facilities or what not.
As far as I know, they are moving to Woburn next week. An expensive corporate move does not sound like a company that is winding down.
Those smarter than I am have indicated that Yield 10 is the potential monster. My gut tells me that they want to keep this one. Especially in light of the rapid consolidation that is taking place within the seed industry.
So it boils down to, "How much is the biopolymer business worth?" On the bright side, you have business titans like Schuler and Scully owning about 2/3 of the company. Schuler paid double the current stock price. Scully not only paid double in 2014 but triple in 2016! Go figure. So these guys--guys who know more than either Normey, myself or Pelosi--put big bucks into this not so long ago. At prices that are higher than today.
The downside? You can do all the due diligence in the world on this one and there is no possible way that you can ascertain the level of interest in the biopolymer business let alone how much somebody is willing to pay for it. Could there been a customer who abandoned ship thus destroying the financing? Maybe. Could it be that they were expecting a higher share price that didn't materialize? Maybe. The definitive answer is that there isn't a public shareholder who knows what's going on. That's the risk. And that's why it's less than 80 cents a share.
The good news is that there is no debt. We all know that this won't go to zero. We know that there are smart guys at the helm--both in management and ownership. But what will this fetch? If any of us knew and were trading on it I can state for certain that there would be criminal exposure. I can state unequivocally that I don't know.
I have read Normey for years and have never heard him pump MBLX stock. He gave informed opinions.
I will be the first to admit that MBLX stock has been a major disappointment. But at no time did Normey pump up its prospects.
Keep in mind that insiders poured a ton of their own money into MBLX at almost $4 per share less than a year ago. And they were closer to the situation than Normey.
MBLX is a victim of bad prior management, declining oil prices and "bad luck" (the Honeywell-microbeads should have been its savior but legislation killed it.) How much the biopolymer business is worth is anyone's guess. Likely it will depend on how many parties are bidding.
Yield 10 still has a bunch of potential. But I'll be the first to admit that I have no idea where this ship is going.
What gives? Why are you so mean? Especially to somebody who is as cordial and nice and informative as Normey.
Hiding behind the cloak of anonymity belies the likelihood that you would never be so discourteous to someone as gentlemanly as Normey in person.
Look in the mirror and ask yourself if you would want your kids to know that you behave this way.
Let's make the assumption that Schuler, Shaulson and CJ are all more than reasonably smart business people. If you make that your foundation--I think that we can see a possibility as to what is occurring:
1. Let's make a couple of more assumptions. One is that MBLX has always had perpetual cash burn problems. Let's also concede that the intellectual property that they have is valuable. Let's also assume that Shaulson put a lot of his personal money in this company and basically worked for free for more than a year. Let's also assume that Yield 10 has the possibility of being revolutionary or useless.
2. One more important fact. The move to Woburn is coming in a week or two. Would a reasonable businessman like Schuler or Shaulson permit an expensive move days before the entire company will be dismantled?
3. So now let's focus on CJ. CJ spent almost $400MM for that factory in Fort Dodge. During MBLX's last conference call, the deal seemed almost too good to be true. CJ was going to retrofit their factory to produce product for MBLX to sell. I kept scratching my head on this one. "Why would a company go through the expense of retrofitting their factory when MBLX had going concern issues?"
4. The MOU details were never released. But let's make the assumption that someone at CJ spoke up and said, "Hey guys. No offense here. But you might not be around. We need an option to buy these polymers at X dollars if you aren't able to turn this puppy around."
5. At that point, it was entirely reasonable for Shaulson to have said, "Hey guys, I can compel Aspire to buy stock! The mere announcement of this deal will propel the price per share. I can raise a bunch of cash from Aspire at prices triple of what we have now!"
6. Alas, the market didn't react the way Shaulson had hoped that it would.
7. Does anybody out there actually believe that this "Plan B" was not originally contemplated as a possibility? It had to.
The timing of the lease indicates to me that they plan to "sell the core" and "Keep the spin".
I am guessing (emphasis on the word "guess") that Shaulson sees the big potential in Yield 10. They sell the core business to fund the venture with more potential.
Of course, these guys are pros and they're not going to breach their fiduciary duty--hence everything is publicly on the table.
I suspect that this was a Plan B for quite some time. They had just signed a long term lease for the entire company in Woburn.
My gut tells me that CJ was never going to retrofit a property without the guaranty that the raw material and the licensing would some day not be available. The MOU was never publicly released. My gut tells me that their had to be some flexibility in the deal during this 90 day period. In my mind, there is 100% chance that CJ will be the ultimate buyer of this IP. The price? Either it is somewhat predetermined or it is not.
Yield 10? That's the interesting part. Shaulson's financial well being is based upon it. Can he get enough money for the polymer business to make this a go as an independent company? That's where he'll get his financial home run if he does. Seems like Lassner was the deal maker.
Again...Almost certain that this was decided long ago. They have given new meaning to the word opaque.
That my friends is the critical question. There are 27MM shares outstanding--I don't know about dilutive provisions. But let's say it's 27MM shares for argument's sake.
Yield 10 supposed is potentially revolutionary. The polymer business has to be worth something. But is there any reasonable potential buyer other than CJ? Could a newish company be formed much like Schuler did with HNSN?
So many unknowns here. Believe that something will happen very fast. It took HNSN several weeks/months and I don't think that this will take as long.
Think that it's a matter of the share price didn't move when the CJ deal was announced and they weren't able to do a capital raise.
Does anyone actually believe that anyone other than CJ wants the polymer business? This could be a Yahoo type situation where the core business is not as enticing as the something new.
Yield 10 is where there might be some huge potential. My gut tells me that Shaulson/Schuler/Scully want to sell the polymer business to CJ and see where Yield 10 takes them.
Today news is one in which they are throwing in the towel. This company is no more.
Presently they have no debt. So the question becomes, how much can they sell this for. Schuler and Scully still own more than 50%.
At this juncture, my guess is that virtually everything that is going on in the company can be deemed to be "material". I speak to a lot of companies with whom I own stock. MBLX is the prize winner for being the most closed mouthed about even the most innocuous subject.
In about six weeks they will once again be compelled to issue financials and a conference call. My gut tells me we'll have to wait until then unless there is startling news that they wish to announce early,
I share your frustration and thoughts.
Let's be blunt. If Shaulson were to leave the company I would be out the door more quickly than Usain Bolt. He's the main reason to stay invested. I don't think he anticipated the hurdles that he signed on for. If he is able to capitalize upon MBLX's assets he will be a VERY wealthy man and, in my opinion, deserving of every penny.
There is little question that they need cash badly. There is also little question that the "Big Two" (Schuler and Scully) have veto power over every action that Joe does.
Shaulson is that rare breed who has a scientific background along with an M&A pedigree from Skadden Arps. He certainly doesn't need the advice of a novice like me. Until we know where that next round of cash is coming from we'll be in this no man's land.
I wasn't as sanguine about the Aspire deal as others. I won't say anything more on that topic.
If MBLX had $50MM in the bank I would have my questions answered. The problem is that they don't have $50MM in the bank and I don't know the roadmap.
We do know that the majority owners do own about 70% of the company. We do know that insiders were buying in 2015. I think that it's also safe to know that Shaulson is well aware of what is going on and is not publicly tipping his hand.
Thus, during this period of time, the public shareholders are in the dark and we have to hope for a favorable roadmap to be executed. The doubt that such a roadmap exists is why the stock is at $1.50.
As usual, you provide the most enlightening posts on this board. A few thoughts:
1. MBLX's immediate hurdle is its cash position. Speculation abounds that they had hoped that the CJ announcement would propel the stock significantly and that they could raise money via Aspire. The stock price obviously has not gone as high as one had hoped. So right now we're in a "Now what?" scenario.
2. MBLX's two largest shareholders own almost 2/3 of the company. It is safe to say that they have a significant say--if not veto power--regarding anything that affects their ownership interest. One of the shareholders just orchestrated a sale of another company within the last 30 days (HNSN).
3. MBLX's future would be significantly brighter if they had the luxury of cash to be patient as this CJ deal unfolds. As far as I can tell, all of the CJ's news is positive. The problem that I foresee is how do they get from May 3, 2016 to finished, revenue generating products to be sold sometime in the future?
4. I anxiously want the company to succeed. And we have not yet even touched upon Yield 10. Right now it's all about the cash burn. When I see that they have enough money without our shares being hit or even more diluted I will breathe a sigh of relief. I understand the future prospects. I don't understand how we get there.
I just did a Google search. CJ spent $300MM on this plant in 2012-2014. Hardly "dirt cheap"--but it's obvious that they have excess capcity.
They are not running out of cash. They have virtually no cash burn. No more expenses for 401.
Have to believe that this is good news--but not certain given cash constraints. Would love Normey's input here.
So now we know why they moved earnings up a week. They secured a 2% $4MM loan from the state of CT--a portion of which is forgivable based upon hiring goals and objectives. Fortunately, no capital raise. A pleasant surprise.
Hope that you're right jd. I want them to succeed but I question what they are doing.
Disagree. Look at their cash on hand and then take a look at their burn. Trying to cut expenses. They need to sell the company but unlikely to happen.