Affinity Media AFMI.OB
June 04, 2008 - 4:52pm EST by
scrooge833
2008 2009
Price: 5.85 EPS
Shares Out. (in M): 0 P/E
Market Cap (in $M): 25 P/FCF
Net Debt (in $M): 0 EBIT 0 0
TEV ($): 0 TEV/EBIT

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Description

AFMI gives you a potential double in 2 years or you get an annualized IRR of 20% on the downside. And since the deal vote is this Friday, the catalyst is soon. Buying a share of AFMI now gives you a cost of $3.84 a share (I will explain later), and the stock could reach as high as $7.60 by end of 2009 using reasonable valuation multiples.


Warning: I do not recommend buying the warrants here because I am not sure if the deal will go through. I am recommending the stock in this case.

AFMI is a SPAC that is buying Hotels at Home. If the deal goes through, investors buying AFMI now get to buy Hotels-at-Home(referred to as HAH in the writeup), a fast-growing company with a zero-capex, negative working capital business model with little advertising and marketing expense at a p/e valuation of 10 times 2008 free cash flow that is growing at least 20-25 % a year.

Hotels-at-Home(HAH) is a leading independent provider of retail publishing programs to the world’s premier hotels, enabling the world’s top hotel brands to market products directly to their guests through published in-room catalogues and hotel branded websites.

Simply put, their business narrows down to this: You stay at Marriott and you love the bedding, pillows, etc. You pick up the catalog that sits in the room and you call an 800 number to order the exact same things you have in the room. Alternatively you go to Marriott’s web site and click on “Shop Marriott”. The trained customer rep at Hotels-at-Home takes your credit card order and the products are delivered to your home.

Why is this a good business?

  1. Exclusive product offerings – available only via Hotels at Home. Products include: Beds, pillows, bedding, towels, robes, artwork, toiletries, linens, spa amenities and other specialty items.
  2. No advertising and marketing expenses. The hotels spend billions of dollars annually in advertising. Hotels at Home leverages off the brand names of Marriott, Westin, Sofitel, etc.
  3. Enjoy economies of scale without having to spend the time and money to get there. Hotels at Home gets to piggy-back the Hotels for volume discounts and enjoys the same pricing advantages from the suppliers.
  4. Low return rates. Hotel guests “try before they buy”. Since the hotel guests have tried the product, the return rates are very low.
  5. No capex. Once you have a call center, a web site, a bunch of catalogs, warehouses and information systems, there is no annual capex needs. In fact, since customers pay on credit card first and pays manufacturers on terms, this business requires negative working capital.
  6. Demand for your services. The Hotels(who are the partners of Hotels at Home) love their guests to get comfortable with their beds at home because it creates loyalty. Hotels figure a guest is worth tens of thousands of dollars to them over the lifetime.

Competitive Advantages

HAH is the market leader with 39 partner programs, 1.4 million rooms under management and catalog penetration of 500,000 rooms. Has European headquarters in Paris. Tight relationship with hotels because of management’s previous experience (more on this later). HAH has a higher ROI because it does not have 3 primary expenses that catalogue publishers/direct marketers have:

1. Identifying and reaching targeted customers – HAH avoids the average 10% postage expenditure because it distributes catalogues at low-cost, and only to potential buyers who have sampled the merchandise in a comfortable environment.

2. Minimal product returns – HAH buyers have already tested the merchandise

3. Purchasing excessive inventory to achieve strong margins – HAH utilizes partners buying power and pays bulk prices for small quantities. HAH maintains only 60 days of inventory; suffers from almost no excess.

Growth opportunities

Hotels at Home’s current hotel partners have total of 1.4 million total rooms and the products are only in 500,000 rooms right now. Furthermore, there are 8.9 million total rooms in the world, 5.5 million rooms owned by all hotel brand chains, and 3.8 million owned by 10 largest hotel brands. And there’s more hotel rooms being built … in the U.S. alone, 136,000 hotel rooms were built in 2006. Existing hotel partners are expanding and there is room for international expansion, casino hotels, cruise lines and guest point redemption programs.

As HAH grows, it enjoys several advantages including an increasing cash float, incurring almost no bad debt, very few customer returns, no additional working capital required.

Management team

  1. Michael Ware, CEO and President, co-founder. 30 years marketing in hospitality industry. Co – founded Essential Amenities (the little shampoo bottles that you see in the hotels)
  2. Robin Ware, COO, and co-founder. 21 years in the marketing/hospitality industry Also co-founded Essential Amenitis
  3. Ray Romano, CFO. 29 years marketing in hospitality. Co-founder and former CFO of Guest Supply sold to Sysco for $190 Million.
You can look at press releases to see the gross margins, inventory turnover, etc to see how good the business is. I won't bore you with the details. Instead I'd focus on valuation, especially dealing with the shares outstanding and the warrants since this is the tricky part with SPACs.

Valuation

AFMI is currently trading at 5.85 and deal vote is this Friday. If deal does not go through they get a little over 6 dollars back for an annualized 20 percent IRR. That’s simple

If deal goes through, this is how I valued it.


Shares outstanding :

The deal has been restructured and a lot of the promoters’ shares are being dividended to the public shareholders and a cash dividend is also being given to the public after the deal. A net amount of 2,106,571 shares of AFMI will be issued to the HAH owners, in addition to $15 million at the closing. Promoters and underwriters get 337,719 shares. There are currently 3,162,500 shares publicly available and the public shareholders will get a 0.84 cash dividend per share and another $1.23 dividend in stock per share (a share becomes 1.308 shares). That gives you basic shares outstanding of 6.5 million. In addition, there are earn-outs to be given to management of HAH in the following amounts from 2008-2010 (more on this later). In effect, the cost basis of a shareholder who buys now at 5.85 is 3.825 per share. (5.85 less 0.84 in cash dividend divided by 1.308 shares)


There are earn-out clauses. In one way, it is good because management is obviously comfortable with them or they would not have agreed to the deal. But in another way, share dilution hurts.

Earn out targets

2008. 750,000 shares for net income of 2.8 million

2009. 750,000 shares for net income of 3.3 million

2010. 750,000 shares for net income of 3.9 million

Valuation using 2 methods

For my valuations, I will assume the net income numbers until 2010 will be met (otherwise management would not have agreed to it) and looking at the quarterly and historical annual numbers (this company grew even in the face of 9/11 and has just signed on more new hotel partners last month), I am convinced they are quite doable. I will assume that all these shares will be issued, but in my past experience, I would speculate that these earn-out share issuances will be restructured in favor of shareholders (to get the deal done), but I am assuming worst case scenario, which is all shares issued.

The tricky part is how to deal with the warrants. I will present 2 methods.

The first method uses the treasury method, which has its merits and drawbacks.

Capital Structure

Shares

Promote

250,000

Promote Transferred to Public

500,000

Public Shares

3,162,500

Private Placement Common

125,000

Private Placement Transferred to Public

125,000

U/W Stock Conversion

87,719

Hotels @ Home Share Issuance

2,281,571

Hotels @ Home Share Issuance Transferred to Public

175,000

Basic

6,706,790

Warrants Outstanding

6,825,000

Estimated Warrant Strike Price

$4.50

Sensitivity Across Various Multiples

2008

Basic Shares

6,706,790

6,706,790

6,706,790

6,706,790

Accumulated Earnout Shares

750,000

750,000

750,000

750,000

F-D Warrant Shares

150,022

792,619

1,322,356

1,766,566

Net Income

2,800,000$

2,800,000$

2,800,000$

2,800,000$

EPS

$0.37

$0.34

$0.32

$0.30

Mutliple

12.50x

15.00x

17.50x

20.00x

Implied Stock Price

$4.60

$5.09

$5.58

$6.07

2009

Basic Shares

6,706,790

6,706,790

6,706,790

6,706,790

Accumulated Earnout Shares

1,500,000

1,500,000

1,500,000

1,500,000

F-D Warrant Shares

409,661

1,069,490

1,606,248

2,051,430

Net Income

3,300,000$

3,300,000$

3,300,000$

3,300,000$

EPS

$0.38

$0.36

$0.34

$0.32

Mutliple

12.50x

15.00x

17.50x

20.00x

Implied Stock Price

$4.79

$5.34

$5.89

$6.43

2010

Basic Shares

6,706,790

6,706,790

6,706,790

6,706,790

Accumulated Earnout Shares

2,250,000

2,250,000

2,250,000

2,250,000

F-D Warrant Shares

725,290

1,391,925

1,927,203

2,366,467

Net Income

3,900,000$

3,900,000$

3,900,000$

3,900,000$

EPS

$0.40

$0.38

$0.36

$0.34

Mutliple

12.50x

15.00x

17.50x

20.00x

Implied Stock Price

$5.04

$5.65

$6.27

$6.89







The 2nd method simply assumes all warrants will be exercised, and I do an estimate of the cash on the balance sheet, cash from the warrant exercised and do an EV/FCF analysis.

By 2010, balance sheet will have around 38 to 41 million in cash (Exercise of warrants is 31 million plus 7 to 10 million of free cash generated.) For argument sake, I use 40.

Using FCF by 2010 of 3.9M and applying a 12.5, 15, 20 multiple. A 20 multiple is not unusual for this business model. I get valuations in the range of:

2010 FCF 3.9M 3.9M 3.9M

2010 FCF multiple 12.5 15 20

Cash on B.S. (millions) 40 40 40

Fully dil shares outst 15.5M 15.5M 15.5M

2010 Implied stock price 5.73 6.35 7.61

IRR 22% 28% 40%

Since the market tends to look out a year ahead, I won’t be surprised if the stock price reaches these targets by end of 2009 in which case the IRRs go much higher.

However, there is a lot of future upside optionality:

  1. Warrants – After the deal gets done, several SPACS have made deals to reduce the warrants or the shares outstanding. (See Star Maritime, Navios, etc). If there is upside, the above IRRs go up.
  2. Earn-outs – To get this deal done, I would expect another restructuring to reduce the number of shares issues to management. But this is pure speculation on my part at this point but if so, IRRs will go up.
  3. Business model – The margin of safety in the business model is superior to many other investment ideas and I won’t be surprised that this company far exceeds the target net income numbers. After all, management, I suspect, low-balled the net income targets to make sure they get the share bonuses.

Warning: I do not recommend buying the warrants here because I am not sure if the deal will go through. I am recommending the stock in this case.

Catalysts:

Deal vote on Friday

Analyst coverage after deal vote

Company quarterly results after deal vote


Catalyst

Catalysts:

Deal vote on Friday. Analyst coverage after deal vote. Company quarterly results after deal vote
    sort by    

    Description

    AFMI gives you a potential double in 2 years or you get an annualized IRR of 20% on the downside. And since the deal vote is this Friday, the catalyst is soon. Buying a share of AFMI now gives you a cost of $3.84 a share (I will explain later), and the stock could reach as high as $7.60 by end of 2009 using reasonable valuation multiples.


    Warning: I do not recommend buying the warrants here because I am not sure if the deal will go through. I am recommending the stock in this case.

    AFMI is a SPAC that is buying Hotels at Home. If the deal goes through, investors buying AFMI now get to buy Hotels-at-Home(referred to as HAH in the writeup), a fast-growing company with a zero-capex, negative working capital business model with little advertising and marketing expense at a p/e valuation of 10 times 2008 free cash flow that is growing at least 20-25 % a year.

    Hotels-at-Home(HAH) is a leading independent provider of retail publishing programs to the world’s premier hotels, enabling the world’s top hotel brands to market products directly to their guests through published in-room catalogues and hotel branded websites.

    Simply put, their business narrows down to this: You stay at Marriott and you love the bedding, pillows, etc. You pick up the catalog that sits in the room and you call an 800 number to order the exact same things you have in the room. Alternatively you go to Marriott’s web site and click on “Shop Marriott”. The trained customer rep at Hotels-at-Home takes your credit card order and the products are delivered to your home.

    Why is this a good business?

    1. Exclusive product offerings – available only via Hotels at Home. Products include: Beds, pillows, bedding, towels, robes, artwork, toiletries, linens, spa amenities and other specialty items.
    2. No advertising and marketing expenses. The hotels spend billions of dollars annually in advertising. Hotels at Home leverages off the brand names of Marriott, Westin, Sofitel, etc.
    3. Enjoy economies of scale without having to spend the time and money to get there. Hotels at Home gets to piggy-back the Hotels for volume discounts and enjoys the same pricing advantages from the suppliers.
    4. Low return rates. Hotel guests “try before they buy”. Since the hotel guests have tried the product, the return rates are very low.
    5. No capex. Once you have a call center, a web site, a bunch of catalogs, warehouses and information systems, there is no annual capex needs. In fact, since customers pay on credit card first and pays manufacturers on terms, this business requires negative working capital.
    6. Demand for your services. The Hotels(who are the partners of Hotels at Home) love their guests to get comfortable with their beds at home because it creates loyalty. Hotels figure a guest is worth tens of thousands of dollars to them over the lifetime.

    Competitive Advantages

    HAH is the market leader with 39 partner programs, 1.4 million rooms under management and catalog penetration of 500,000 rooms. Has European headquarters in Paris. Tight relationship with hotels because of management’s previous experience (more on this later). HAH has a higher ROI because it does not have 3 primary expenses that catalogue publishers/direct marketers have:

    1. Identifying and reaching targeted customers – HAH avoids the average 10% postage expenditure because it distributes catalogues at low-cost, and only to potential buyers who have sampled the merchandise in a comfortable environment.

    2. Minimal product returns – HAH buyers have already tested the merchandise

    3. Purchasing excessive inventory to achieve strong margins – HAH utilizes partners buying power and pays bulk prices for small quantities. HAH maintains only 60 days of inventory; suffers from almost no excess.

    Growth opportunities

    Hotels at Home’s current hotel partners have total of 1.4 million total rooms and the products are only in 500,000 rooms right now. Furthermore, there are 8.9 million total rooms in the world, 5.5 million rooms owned by all hotel brand chains, and 3.8 million owned by 10 largest hotel brands. And there’s more hotel rooms being built … in the U.S. alone, 136,000 hotel rooms were built in 2006. Existing hotel partners are expanding and there is room for international expansion, casino hotels, cruise lines and guest point redemption programs.

    As HAH grows, it enjoys several advantages including an increasing cash float, incurring almost no bad debt, very few customer returns, no additional working capital required.

    Management team

    1. Michael Ware, CEO and President, co-founder. 30 years marketing in hospitality industry. Co – founded Essential Amenities (the little shampoo bottles that you see in the hotels)
    2. Robin Ware, COO, and co-founder. 21 years in the marketing/hospitality industry Also co-founded Essential Amenitis
    3. Ray Romano, CFO. 29 years marketing in hospitality. Co-founder and former CFO of Guest Supply sold to Sysco for $190 Million.
    You can look at press releases to see the gross margins, inventory turnover, etc to see how good the business is. I won't bore you with the details. Instead I'd focus on valuation, especially dealing with the shares outstanding and the warrants since this is the tricky part with SPACs.

    Valuation

    AFMI is currently trading at 5.85 and deal vote is this Friday. If deal does not go through they get a little over 6 dollars back for an annualized 20 percent IRR. That’s simple

    If deal goes through, this is how I valued it.


    Shares outstanding :

    The deal has been restructured and a lot of the promoters’ shares are being dividended to the public shareholders and a cash dividend is also being given to the public after the deal. A net amount of 2,106,571 shares of AFMI will be issued to the HAH owners, in addition to $15 million at the closing. Promoters and underwriters get 337,719 shares. There are currently 3,162,500 shares publicly available and the public shareholders will get a 0.84 cash dividend per share and another $1.23 dividend in stock per share (a share becomes 1.308 shares). That gives you basic shares outstanding of 6.5 million. In addition, there are earn-outs to be given to management of HAH in the following amounts from 2008-2010 (more on this later). In effect, the cost basis of a shareholder who buys now at 5.85 is 3.825 per share. (5.85 less 0.84 in cash dividend divided by 1.308 shares)


    There are earn-out clauses. In one way, it is good because management is obviously comfortable with them or they would not have agreed to the deal. But in another way, share dilution hurts.

    Earn out targets

    2008. 750,000 shares for net income of 2.8 million

    2009. 750,000 shares for net income of 3.3 million

    2010. 750,000 shares for net income of 3.9 million

    Valuation using 2 methods

    For my valuations, I will assume the net income numbers until 2010 will be met (otherwise management would not have agreed to it) and looking at the quarterly and historical annual numbers (this company grew even in the face of 9/11 and has just signed on more new hotel partners last month), I am convinced they are quite doable. I will assume that all these shares will be issued, but in my past experience, I would speculate that these earn-out share issuances will be restructured in favor of shareholders (to get the deal done), but I am assuming worst case scenario, which is all shares issued.

    The tricky part is how to deal with the warrants. I will present 2 methods.

    The first method uses the treasury method, which has its merits and drawbacks.

    Capital Structure

    Shares

    Promote

    250,000

    Promote Transferred to Public

    500,000

    Public Shares

    3,162,500

    Private Placement Common

    125,000

    Private Placement Transferred to Public

    125,000

    U/W Stock Conversion

    87,719

    Hotels @ Home Share Issuance

    2,281,571

    Hotels @ Home Share Issuance Transferred to Public

    175,000

    Basic

    6,706,790

    Warrants Outstanding

    6,825,000

    Estimated Warrant Strike Price

    $4.50

    Sensitivity Across Various Multiples

    2008

    Basic Shares

    6,706,790

    6,706,790

    6,706,790

    6,706,790

    Accumulated Earnout Shares

    750,000

    750,000

    750,000

    750,000

    F-D Warrant Shares

    150,022

    792,619

    1,322,356

    1,766,566

    Net Income

    2,800,000$

    2,800,000$

    2,800,000$

    2,800,000$

    EPS

    $0.37

    $0.34

    $0.32

    $0.30

    Mutliple

    12.50x

    15.00x

    17.50x

    20.00x

    Implied Stock Price

    $4.60

    $5.09

    $5.58

    $6.07

    2009

    Basic Shares

    6,706,790

    6,706,790

    6,706,790

    6,706,790

    Accumulated Earnout Shares

    1,500,000

    1,500,000

    1,500,000

    1,500,000

    F-D Warrant Shares

    409,661

    1,069,490

    1,606,248

    2,051,430

    Net Income

    3,300,000$

    3,300,000$

    3,300,000$

    3,300,000$

    EPS

    $0.38

    $0.36

    $0.34

    $0.32

    Mutliple

    12.50x

    15.00x

    17.50x

    20.00x

    Implied Stock Price

    $4.79

    $5.34

    $5.89

    $6.43

    2010

    Basic Shares

    6,706,790

    6,706,790

    6,706,790

    6,706,790

    Accumulated Earnout Shares

    2,250,000

    2,250,000

    2,250,000

    2,250,000

    F-D Warrant Shares

    725,290

    1,391,925

    1,927,203

    2,366,467

    Net Income

    3,900,000$

    3,900,000$

    3,900,000$

    3,900,000$

    EPS

    $0.40

    $0.38

    $0.36

    $0.34

    Mutliple

    12.50x

    15.00x

    17.50x

    20.00x

    Implied Stock Price

    $5.04

    $5.65

    $6.27

    $6.89







    The 2nd method simply assumes all warrants will be exercised, and I do an estimate of the cash on the balance sheet, cash from the warrant exercised and do an EV/FCF analysis.

    By 2010, balance sheet will have around 38 to 41 million in cash (Exercise of warrants is 31 million plus 7 to 10 million of free cash generated.) For argument sake, I use 40.

    Using FCF by 2010 of 3.9M and applying a 12.5, 15, 20 multiple. A 20 multiple is not unusual for this business model. I get valuations in the range of:

    2010 FCF 3.9M 3.9M 3.9M

    2010 FCF multiple 12.5 15 20

    Cash on B.S. (millions) 40 40 40

    Fully dil shares outst 15.5M 15.5M 15.5M

    2010 Implied stock price 5.73 6.35 7.61

    IRR 22% 28% 40%

    Since the market tends to look out a year ahead, I won’t be surprised if the stock price reaches these targets by end of 2009 in which case the IRRs go much higher.

    However, there is a lot of future upside optionality:

    1. Warrants – After the deal gets done, several SPACS have made deals to reduce the warrants or the shares outstanding. (See Star Maritime, Navios, etc). If there is upside, the above IRRs go up.
    2. Earn-outs – To get this deal done, I would expect another restructuring to reduce the number of shares issues to management. But this is pure speculation on my part at this point but if so, IRRs will go up.
    3. Business model – The margin of safety in the business model is superior to many other investment ideas and I won’t be surprised that this company far exceeds the target net income numbers. After all, management, I suspect, low-balled the net income targets to make sure they get the share bonuses.

    Warning: I do not recommend buying the warrants here because I am not sure if the deal will go through. I am recommending the stock in this case.

    Catalysts:

    Deal vote on Friday

    Analyst coverage after deal vote

    Company quarterly results after deal vote


    Catalyst

    Catalysts:

    Deal vote on Friday. Analyst coverage after deal vote. Company quarterly results after deal vote

    Messages


    Subjectquestion on pro forma numbers
    Entry06/04/2008 07:05 PM
    Memberdanarb860
    HAH showed over $3mm of net income last year. Why are the pro forma numbers so much lower? Interesting idea. thanks.

    SubjectRE: question on pro forma numb
    Entry06/04/2008 10:34 PM
    Memberscrooge833
    danarb, That was why I thought they were low-balling the estimates. I did not get a great answer when I asked the same question. They mentioned there were a few lumpy orders in 07, FYI.

    Subjectdetails
    Entry06/05/2008 09:36 AM
    Membernumc911
    Scrooge,

    Thanks for the idea: always nice to see a SPAC posted. [incidentally, whatever happened to steve308, the undisputed SPAC master?]

    Could you provide some more info on:
    1. % voting threshold for deal getting done
    2. who are large holders? are they the cash arbitrage blockers who have prevented recent deals from closing?
    3. how much is held-in-trust per share?
    4. when would this actually be paid out?

    The warrants are trading as though there is a low probability that the deal closes: 10c versus presumably around $1 held-in-trust. While this has been a good indicator of whether or not deals close in the past, it hasn't been 100%. So if you think this deal is so good that it'll probably close, why wouldn't you buy a small position in the warrants given that you'll make >10x if it goes through and lose 1x if it doesn't?

    Also, if you can really lock in a completely riskless >20% IRR why not do so by voting against the deal? Perhaps that's why the warrants are trading so low.

    Slightly cynically, if recent SPAC experience is anything to go by (and given that the common is trading at levels consistent with holders waiting for a cash payout rather than excited about the deal) then I would guess the common sells off if the deal goes through.

    If you think the deal will probably close it might actually be better to buy the warrants than the stock at these prices.

    Thanks in advance for any info you can offer.

    numc

    SubjectAssumptions
    Entry06/06/2008 12:45 PM
    Memberroc924
    Hi, Thanks for the write-up. What are the assumptions to go from $1M in proforma 2007 net income to $2.8m in 2008 and $3.3m in 2009? What does Baupost typically do with SPACs? Are they invested for the deal and hold their shares, for the arb, any thoughts? Do they usually vote for or against the deal? roc

    SubjectRE: Assumptions
    Entry06/07/2008 05:47 PM
    Memberscrooge833
    Where did you get 1 Million? I get 3 million. Page 25 of the proxy shows the historical numbers of HAH. Audited Net Income Sales 2007 3,325,000 24,878,000 2006 2,771,000 20,800,000 2005 1,650,000 16,210,000

    SubjectRE: RE: Assumptions
    Entry06/08/2008 11:40 AM
    Memberroc924
    14A dated 5/12/08 page 27 and 129 It looks like the major difference (between pro forma and HAH standalone) is public company / AFMI management expenses and taxes. The ramp from 1M in pro forma 2007 to $3m seem aggressive to someone that doesn't know the story, but with these things it is obviously easy to go from 1 to 3. Just curious of the assumptions to get there (cost cuts, margin expansion, revenue growth, etc). Thanks.

    SubjectRE: RE: RE: Assumptions
    Entry06/08/2008 11:17 PM
    Memberscrooge833
    Oh yeah. I will get back to you on the exact reason on the tax rates. I think it will be lower than the 39% but left the notes in the office. As far as growing net income, they are going to improve their margins with cost cuts, growth. They will also improve their cash flow with better working capital management. I am confident they would not have signed the earn-out if they were not very sure they can achieve it.

    Subjectstupid question
    Entry06/11/2008 08:28 PM
    Memberdanarb860
    without the deal, why is a company with $13mm in equity trading for $25mm? thanks.

    SubjectRE: stupid question
    Entry06/12/2008 06:37 AM
    Membernumc911
    without the deal:
    (1) the # shares outstanding effectively falls by 20% because dilution won't occur - so market cap is really $19m not $24m.
    (2) most of the liabilities in the balance sheet disappear, as they were contingent on the deal. in particular, $5m in "common stock subject to conversion" - i.e. the dilution if the deal went through; and a further $0.8m in contingent underwriting fees. So the equity is really $19m not $13m.
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