AMSS

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Key Facts

• Created 35,000 shares of Series C Convertible Preferred Stock with stated value of $1,086.96 per share, representing ~$38.0M aggregate potential liquidation preference.
• Direct listing on Nasdaq completed May 20, 2026 — no new common shares issued, no capital raised for the company.
• Series C preferred ranks senior to common and all other equity; holders have veto rights over M&A, asset sales >$500K, reverse splits, new preferred issuances, and capital structure changes.
• Conversion price for Series C preferred after 6 months or trigger events is the lower of Fixed Price (Nasdaq Valuation Price) or Market Price (90% of lowest 10-day VWAP), with a floor of the greater of 40% of Nasdaq minimum price or $4.00 per share.
• Convertible preferred holders are capped at 9.99% beneficial ownership of common stock upon conversion — but the defined conversion price formula could result in significant dilution at low stock prices.
• Preferred Return of 2% per quarter (8% annually) compounding daily, payable in cash or additional preferred shares at company's election.
• Trigger events (market cap <$100M, equity <$3M, 50% price drop from IPO opening, Nasdaq non-compliance) cause conversion price to drop to Market Price, potentially triggering massive dilution.
• Event of Default penalty adds 15% to stated value, applies up to 3 times, and holders can force redemption at stated value plus accrued preferred return.

Financial Impact

Series C preferred creates a liquidation preference of ~$38.0M at stated value, senior to common equity. Conversion terms imply deep-discount potential at current low stock price — if company fails to maintain $100M+ market cap or $3M+ equity, conversion price drops to market-based floor, enabling holders to convert at potentially 40% of Nasdaq minimum price (floor $4.00). Direct listing raised no capital; company is an emerging growth pre-profit beverage company with reliance on this financing structure.

Risk Factors

• Massive potential dilution to common equity if trigger events cause conversion at market price (floor $4.00 vs. stated value $1,086.96 per preferred share)
• Series C preferred holders control key corporate actions — veto over M&A, asset sales, reverse splits, and capital structure changes — essentially a governance lock-up
• Direct listing raised no capital; company's liquidity and solvency depend entirely on operating cash flow and existing balance sheet
• Preferred Return of 8% annually compounds — if paid in kind (additional preferred shares), the liquidation preference grows automatically, increasing senior claims on corporate assets
• Event of Default provisions allow holders to force redemption at stated value (up to 3 x 15% penalty increases) — a cash drain the company cannot likely absorb given no IPO proceeds
• Nasdaq minimum listing standards compliance risk — reverse split requires preferred holder consent, creating leverage for holders to demand conversion at favorable terms
• Section 12 covenants require AMSS to maintain Nasdaq listing, timely SEC filings — any lapse triggers Event of Default with penalty and redemption rights

Documents Analyzed

This report is based on 6 SEC documents filed with EDGAR.

US Market Status