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Post by rozale on Jan 9, 2016 20:39:38 GMT -5
Hey guys, I am just trying to do a rough valuation of MNKD's assets (and thus the company). One piece of information I am missing is MNKD's balance of carry forward losses. I think this is pretty critical in valuing MNKD since an acquirer could use those losses as a tax shield of sorts... and perhaps treat those losses as cash (loss balance * acquiring companies tax rate). So, does anyone know what their carry forward loss balance is? Some rough numbers would do fine  . Thanks in advance! |
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Post by james on Jan 10, 2016 2:39:25 GMT -5
The reported NOL is $2.6B, but you will need a tax lawyer to figure out what that is worth. It's worth a whole lot if MNKD becomes profitable in it's current form, not so much if it changes ownership. There are considerable limitations on how much of that could be applied by an acquiring party according to section 382 of the code. I'm not qualified to describe that or give any reliable estimate. But if you want a weakly informed opinion, I would say it's worth less than $100M. I think it will be highly dependent on a valuation of the company at time of acquisition as well as the specific situation of the company acquiring. There is also a federally published factor to be applied which changes monthly, so timing would influence this. Nevertheless, it is something to consider as there is a tangible value there.
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Post by chuck on Jan 10, 2016 2:53:57 GMT -5
What James says is correct. In a buyout scenario the losses probably aren't worth much. The sale of dendreon is a good example whereby the buyer paid them roughly half a penny for each dollar of NOL. They are probably worth much more if mnkd can become profitable. Of course their worth is limited to mnkd's profits, up to a max of 2.6 billion * tax rate, discounted.
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Post by lakers on Sept 25, 2016 13:36:00 GMT -5
The "section 382 limitation" is generally the value ofthe loss corporation multiplied by the "long-term tax-exempt rate" for the month in which the owrtership change occurs. I.R.C. § 382(b)(1). For ownership changes occurring in October 2010, the "long-term tax-exempt rate" was 3.98%. Rev. Rul. 2010-24, 2010-40 I.R.B. 400.
Example15. Company anownershipchangeonOctober10,2010. Immediately before the ownership change, the value of Company's outstanding stock is $100 million. The "section 382 limitation" for each following year is $3.98 million. Section 382 Limitation Reduced to·Zero. A loss corporation's section 382 limitation will be reduced to zero ifthe loss corporation does not continue the "business enterprise ofthe old loss corporation" at all times during the two- yearperiodbeginningonthedateoftheownershipchange. I.RC. §382(c)(1). Thisisthesamestandardasthe"continuityofbusiness enterprise" requirement that applies in the context oftax-deferred reorganizations. 1986 Conference Report, at II-189. Under that standard, the loss corporation is generally required to either (1) continue the historic business ofthe loss corporation or (2) use a significant portion oftlie loss corporation's assets in a business following the ownership change. Treas. Reg. § 1.368-1(d)(1). scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1005&context=taxRules for Applying an NOL A business may carry the taxable amount back to the two previous years and apply it against taxable income for a refund. For example, an NOL occurring in 2015 may be used for lowering tax payments in 2013 or 2014. Because the time value of money shows that tax savings at that time is more valuable than in the future, this is the more beneficial choice. However, if the business did not pay taxes in prior years, or the owner’s income is expected to substantially increase in the future and raise the company’s tax rate, the business may also carry the amount forward over the next 20 years, reducing the amount of taxable income during that time. If a business creates NOLs in more than one year, they are to be drawn down completely in the order they are created before drawing down another NOL. Because any remaining NOL is canceled after 20 years, this reduces the risk of the NOL not being used. Section 382 Limitation An NOL may be considered a valuable asset because it can lower a company’s amount of taxable income. For this reason, the Internal Revenue Service (IRS) has a restriction on using an acquired company simply for its NOL’s tax benefits. Section 382 of the Internal Revenue Code states that if a company with a NOL has at least a 50% ownership change, the acquiring company may use only that part of the NOL in each concurrent year that is based on the long-term tax-exempt bond rate multiplied by the stock of the acquired company. However, purchasing a business with a substantial NOL may mean an increased amount of money going to the acquired company’s shareholders than if the business possessed a smaller NOL. Read more: Net Operating Loss - NOL www.investopedia.com/terms/n/netoperatingloss.asp#ixzz4LIIYxvPP |
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Post by Deleted on Sept 25, 2016 14:24:41 GMT -5
The "section 382 limitation" is generally the value ofthe loss corporation multiplied by the "long-term tax-exempt rate" for the month in which the owrtership change occurs. I.R.C. § 382(b)(1). For ownership changes occurring in October 2010, the "long-term tax-exempt rate" was 3.98%. Rev. Rul. 2010-24, 2010-40 I.R.B. 400.
Example15. Company anownershipchangeonOctober10,2010. Immediately before the ownership change, the value of Company's outstanding stock is $100 million. The "section 382 limitation" for each following year is $3.98 million. Section 382 Limitation Reduced to·Zero. A loss corporation's section 382 limitation will be reduced to zero ifthe loss corporation does not continue the "business enterprise ofthe old loss corporation" at all times during the two- yearperiodbeginningonthedateoftheownershipchange. I.RC. §382(c)(1). Thisisthesamestandardasthe"continuityofbusiness enterprise" requirement that applies in the context oftax-deferred reorganizations. 1986 Conference Report, at II-189. Under that standard, the loss corporation is generally required to either (1) continue the historic business ofthe loss corporation or (2) use a significant portion oftlie loss corporation's assets in a business following the ownership change. Treas. Reg. § 1.368-1(d)(1). scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1005&context=taxRules for Applying an NOL A business may carry the taxable amount back to the two previous years and apply it against taxable income for a refund. For example, an NOL occurring in 2015 may be used for lowering tax payments in 2013 or 2014. Because the time value of money shows that tax savings at that time is more valuable than in the future, this is the more beneficial choice. However, if the business did not pay taxes in prior years, or the owner’s income is expected to substantially increase in the future and raise the company’s tax rate, the business may also carry the amount forward over the next 20 years, reducing the amount of taxable income during that time. If a business creates NOLs in more than one year, they are to be drawn down completely in the order they are created before drawing down another NOL. Because any remaining NOL is canceled after 20 years, this reduces the risk of the NOL not being used. Section 382 Limitation An NOL may be considered a valuable asset because it can lower a company’s amount of taxable income. For this reason, the Internal Revenue Service (IRS) has a restriction on using an acquired company simply for its NOL’s tax benefits. Section 382 of the Internal Revenue Code states that if a company with a NOL has at least a 50% ownership change, the acquiring company may use only that part of the NOL in each concurrent year that is based on the long-term tax-exempt bond rate multiplied by the stock of the acquired company. However, purchasing a business with a substantial NOL may mean an increased amount of money going to the acquired company’s shareholders than if the business possessed a smaller NOL. Read more: Net Operating Loss - NOL www.investopedia.com/terms/n/netoperatingloss.asp#ixzz4LIIYxvPP whats the bottom line? care to do some short explanation? |
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Post by lakers on Sept 25, 2016 14:35:54 GMT -5
It's more beneficial for the backers of RLS (Vulcan Capital, Bezos Expedition) to pump cash into Mnkd for < 50% stake, and merge RLS into Mnkd. Of course the majority owner would want to nominate their own Dirs, and install their own CEO.
This way when Mnkd becomes profitable, it will not pay a dime in tax for many years (20 yr limit for each NOL year) using $2.6 B NOL carry forward.
The backers need to keep Mnkd alive to take full advantage of $2.6B NOL if they truly believe in TS platform.
Obviously, the backers believe in TS. Otherwise, RLS would not sign a deal with Mnkd. Flushed with new funding, Mnkd would develop multiple TS drugs which should have been carried out a few years ago had Al pumped more money. Al put all eggs in one basket. That and being over-confidence on Afrezza came back to bite him.
Al should have quadruple-downed on TS, not Afrezza alone, i.e., diversifying.
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Post by peppy on Sept 25, 2016 14:42:36 GMT -5
It's more beneficial for the backers of RLS (Vulcan Capital, Bezos Expedition) to pump cash into Mnkd for < 50% stake, and merge RLS into Mnkd. Of course the majority owner would want to nominate their own Dirs, and install their own CEO. This way when Mnkd becomes profitable, it will not pay a dime in tax for many years (20 yr limit for each NOL year) using $2.6 B NOL carry forward. The backers need to keep Mnkd alive to take full advantage of $2.6B NOL if they truly believe in TS platform. Tell me more and say again. Please. |
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Post by Deleted on Sept 25, 2016 14:43:13 GMT -5
It's more beneficial for the backers of RLS (Vulcan Capital, Bezos Expedition) to pump cash into Mnkd for < 50% stake, and merge RLS into Mnkd. Of course the majority owner would want to nominate their own Dirs, and install their own CEO.This way when Mnkd becomes profitable, it will not pay a dime in tax for many years (20 yr limit for each NOL year) using $2.6 B NOL carry forward. The backers need to keep Mnkd alive to take full advantage of $2.6B NOL if they truly believe in TS platform. Would the BoD of mannkind and Matt allow that? ( not that they are great anyways ) |
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Post by lakers on Sept 25, 2016 14:55:08 GMT -5
It's more beneficial for the backers of RLS (Vulcan Capital, Bezos Expedition) to pump cash into Mnkd for < 50% stake, and merge RLS into Mnkd. Of course the majority owner would want to nominate their own Dirs, and install their own CEO.This way when Mnkd becomes profitable, it will not pay a dime in tax for many years (20 yr limit for each NOL year) using $2.6 B NOL carry forward. The backers need to keep Mnkd alive to take full advantage of $2.6B NOL if they truly believe in TS platform. Would the BoD of mannkind and Matt allow that? ( not that they are great anyways ) Of course, if BoD wants to keep their promise with Al to make Afrezza a success and proliferate the TS platform. $2.6B NOL is a huge carrot to the backers if they think RLS will be a runaway success. No tax for the foreseeable future. Profit goes straight to the bottom line. Then, they can pay dividends. |
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Post by peppy on Sept 25, 2016 15:13:32 GMT -5
Would the BoD of mannkind and Matt allow that? ( not that they are great anyways ) Of course, if BoD wants to keep their promise with Al to make Afrezza a success and proliferate the TS platform. $2.6B NOL is a huge carrot to the backers if they think RLS will be a runaway success. No tax for the foreseeable future. Profit goes straight to the bottom line. Then, they can pay dividends. Is this a rabbit out of a hat? Have emails been exchanged? What? Sounds good to me.
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Post by Deleted on Sept 25, 2016 15:19:19 GMT -5
Of course, if BoD wants to keep their promise with Al to make Afrezza a success and proliferate the TS platform. $2.6B NOL is a huge carrot to the backers if they think RLS will be a runaway success. No tax for the foreseeable future. Profit goes straight to the bottom line. Then, they can pay dividends. Is this a rabbit out of a hat? Have emails been exchanged? What? Sounds good to me.
thats just lakers speculation. @ your own risk |
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Post by peppy on Sept 25, 2016 15:24:43 GMT -5
Is this a rabbit out of a hat? Have emails been exchanged? What? Sounds good to me.
thats just lakers speculation. @ your own risk With the caveat speculation: is it sweet speculation? Does it potentially problem solve to a high degree and iF it, could it potentially happen to an advantage to all?
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Post by peppy on Sept 25, 2016 15:33:08 GMT -5
It's more beneficial for the backers of RLS (Vulcan Capital, Bezos Expedition) to pump cash into Mnkd for < 50% stake, and merge RLS into Mnkd. Of course the majority owner would want to nominate their own Dirs, and install their own CEO. This way when Mnkd becomes profitable, it will not pay a dime in tax for many years (20 yr limit for each NOL year) using $2.6 B NOL carry forward. The backers need to keep Mnkd alive to take full advantage of $2.6B NOL if they truly believe in TS platform. Obviously, the backers believe in TS. Otherwise, RLS would not sign a deal with Mnkd. Flushed with new funding, Mnkd would develop multiple TS drugs which should have been carried out a few years ago had Al pumped more money. Al put all eggs in one basket. That and being over-confidence on Afrezza came back to bite him. Al should have quadruple-downed on TS, not Afrezza alone, i.e., diversifying. let's look at it again. MNKD's patent portfolio beats the band. added: matts swagger changed after al's death. RLS came in. Matt came out and said we are going to do this. Just the facts. A rabbit out of the hat. speculation. I love you for this one lakers. (good conquers evil?)
patentscope.wipo.int/search/en/result.jsf?currentNavigationRow=prev&prevCurrentNavigationRow=2&query=FP:(Mannkind)&office=&sortOption=Pub%20Date%20Desc&prevFilter=&maxRec=708&viewOption=All Liane, Holden, Nylefty, Compound, all??? Kc? James? Matt? Denise? Kanstances? All? bio, sports?
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Post by gonetotown on Sept 25, 2016 15:56:46 GMT -5
The "section 382 limitation" is generally the value ofthe loss corporation multiplied by the "long-term tax-exempt rate" for the month in which the owrtership change occurs. I.R.C. § 382(b)(1). For ownership changes occurring in October 2010, the "long-term tax-exempt rate" was 3.98%. Rev. Rul. 2010-24, 2010-40 I.R.B. 400.
Example15. Company anownershipchangeonOctober10,2010. Immediately before the ownership change, the value of Company's outstanding stock is $100 million. The "section 382 limitation" for each following year is $3.98 million. Section 382 Limitation Reduced to·Zero. A loss corporation's section 382 limitation will be reduced to zero ifthe loss corporation does not continue the "business enterprise ofthe old loss corporation" at all times during the two- yearperiodbeginningonthedateoftheownershipchange. I.RC. §382(c)(1). Thisisthesamestandardasthe"continuityofbusiness enterprise" requirement that applies in the context oftax-deferred reorganizations. 1986 Conference Report, at II-189. Under that standard, the loss corporation is generally required to either (1) continue the historic business ofthe loss corporation or (2) use a significant portion oftlie loss corporation's assets in a business following the ownership change. Treas. Reg. § 1.368-1(d)(1). scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1005&context=taxRules for Applying an NOL A business may carry the taxable amount back to the two previous years and apply it against taxable income for a refund. For example, an NOL occurring in 2015 may be used for lowering tax payments in 2013 or 2014. Because the time value of money shows that tax savings at that time is more valuable than in the future, this is the more beneficial choice. However, if the business did not pay taxes in prior years, or the owner’s income is expected to substantially increase in the future and raise the company’s tax rate, the business may also carry the amount forward over the next 20 years, reducing the amount of taxable income during that time. If a business creates NOLs in more than one year, they are to be drawn down completely in the order they are created before drawing down another NOL. Because any remaining NOL is canceled after 20 years, this reduces the risk of the NOL not being used. Section 382 Limitation An NOL may be considered a valuable asset because it can lower a company’s amount of taxable income. For this reason, the Internal Revenue Service (IRS) has a restriction on using an acquired company simply for its NOL’s tax benefits. Section 382 of the Internal Revenue Code states that if a company with a NOL has at least a 50% ownership change, the acquiring company may use only that part of the NOL in each concurrent year that is based on the long-term tax-exempt bond rate multiplied by the stock of the acquired company. However, purchasing a business with a substantial NOL may mean an increased amount of money going to the acquired company’s shareholders than if the business possessed a smaller NOL. Read more: Net Operating Loss - NOL www.investopedia.com/terms/n/netoperatingloss.asp#ixzz4LIIYxvPP So right now, that rate is 2%: pmstax.com/afr/exemptAFR.shtmlMNKD's stock is worth about 300 million at the current price. So the section 382 limitation is $6,000,000? So an acquirer could write off 6 million a year for 433 years? Sounds like something the IRS would come up with. |
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Post by peppy on Sept 25, 2016 16:05:26 GMT -5
now that you mention taxes, the peoples who's names were associated with RLS did some work for tax firms was it.
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