Teuza: Why 3% in Tyto Is Worth Far Less than 3% of Company Value

3% Is a Headline, Not a Value

The main article established that Tyto is the most important asset in Teuza's portfolio, but also that paper value is not the same thing as value that is actually reachable at the listed-company layer. This follow-up isolates Tyto's valuation mechanics because one of the easiest reading mistakes sits exactly here: take a 3% ownership headline, multiply it by $144.4 million, and assume that is the value of Teuza's holding.

That is wrong for three reasons. First, note 7 already says Teuza holds 3.0% of Tyto's share capital, but only 2.5% on a fully diluted basis. Second, the valuation does not split company value evenly across all shares. It uses OPM, which allocates value across different capital layers and rights. Third, Tyto provided only part of the requested information to Teuza, so public investors see a valuation conclusion and a selected set of operating datapoints, not a full disclosure package.

The numbers make this clear immediately. The valuation report sets Tyto's equity value at $144.378 million, but Teuza's holding is valued at only $2.951 million. A simple 3% times company value calculation would have produced $4.331 million. Even a more careful 2.5% fully diluted calculation still gets to $3.609 million. So the gap is not just about the ownership headline. It is also about how value is distributed inside the cap table.

The gap versus the naive reading is not marginal. The booked holding value is about 31.9% below the simple 3% calculation, and still about 18.2% below the fully diluted arithmetic. That is the core of the issue. 3% in Tyto is not 3% of the $144.4 million in any economically straight line.

The $144.4 Million Is Not a Spot Cash Price

To understand why, it helps to look first at what the valuation report is actually giving the reader. The summary page shows a 6.12 revenue multiple applied to 2025 revenue of $22.5 million. That produces an enterprise value of $137.668 million. Net cash of $6.710 million is then added on top, which gets the equity value to $144.378 million.

That sounds clean, but it is only the first layer. On the next page, the appraiser explicitly says it did not use a current-value method because no near-term liquidity event through a sale or dissolution is expected, and did not use a scenario method because there was not enough information to project expected future values with adequate confidence. Instead, it chose OPM, which means the company value is being allocated across capital layers as a set of options on future outcomes.

The assumptions behind that model make it clear that this is not an equal same-day cash split. The report assumes a 5-year path to a liquidity event, a 3.73% risk-free rate, and 74.97% volatility derived from comparable public companies. In other words, the model is not answering how much each shareholder would receive today in a clean cash exit. It is answering how a possible future outcome should be distributed through a multi-layered capital structure.

The analytical takeaway is straightforward: the $144.4 million is a real number, but not one that can be divided evenly across all holders. It is the start of an allocation model, not the end of the story.

The Rights Stack Matters More than the Ownership Headline

This is where Tyto's cap table becomes decisive. According to the valuation report, as of the end of 2025 the company had eight preferred share classes, an Original Investors layer, an Ordinary layer, and employee options. The liquidation order is D-3, then D-2, then D-1, then C-2, C-1, C, B, A, and only after that Original Investors and Ordinary.

The rights table says most of the preferred classes are non-participating, with liquidation preference based on original issue price plus 6% annual compounded interest, while Series A carries 8%. The cumulative liquidation preference amount reaches $394.299 million by December 2030. That is an extreme number versus Tyto's $144.378 million equity value. It is not a small mismatch. It is a preference stack that is about 2.7 times the appraised company value.

That logic shows up clearly in the breakpoint pages. Up to $394.3 million, the model does not look like a simple pro rata split across the whole cap table. It moves through the preferred layers and Original Investors according to the rights ladder. Only above $394.3 million does the Ordinary layer start to participate. And only above $803.88 million does the model reach the point where all shareholders participate fully pro rata.

That is exactly why a $144.4 million company value is not high enough to make every slice of ownership look alike. At that valuation level, the Ordinary and lower-ranking layers still carry mostly option value rather than full distribution value. So an investor who sees a company value and multiplies it by an ownership percentage is missing the most important feature of Tyto's capital structure: not every share meets the same dollar at the same point.

What Teuza Actually Owns

Another common mistake is to think Teuza owns one uniform slice of Tyto. In practice, the valuation report shows a mixed basket: D-1 shares, two C-2 layers, A shares, Original Investors shares, and Ordinary shares. Each layer carries a different per-share value because each one meets the rights stack at a different point.

Two conclusions matter here. First, Teuza is not sitting only in the lowest-ranking layer. It does own preferred paper, especially D-1, which is valued at $16.87 per share, well above the value assigned to Ordinary. Second, even that is not enough to bring the holding back to the simple 3% times company value arithmetic. The total basket is worth $2.951 million, not $4.331 million.

In other words, even when the company owns some of the more senior layers, it still does not economically own a flat 3% of everything. It owns a collection of rights with different values, and together they are worth less than the headline suggests.

The Discount Is Also About the Limits of Disclosure

There is no need to accuse the appraiser in order to see that confidence here is bounded. Teuza's annual report says Tyto is a very material holding and therefore broad disclosure is required, but it also says explicitly that Tyto agreed to provide only part of the requested information and refused to disclose additional financial data. The report then gives several useful datapoints, while also stating that they were provided by Tyto and were not audited or reviewed.

That matters because the disclosed numbers paint a mixed picture: revenue of $22.5 million in 2025 versus $24.35 million in 2024, operating loss of $20.5 million versus $24.095 million, an improvement in average monthly cash burn to $925 thousand, but also a sharp drop in cash to only $6.7 million and an estimate that cash is sufficient only through July 2026. That is important information, but it is not the same thing as a full disclosure package that would let outside investors independently rebuild the whole valuation judgment.

So the right way to read the $144.4 million is as a reasonable number inside a reasonable model, but not as an overly hard number. It sits on a revenue multiple and a complex allocation mechanism, while the public information Teuza itself was able to obtain remained partial. That does not make the number wrong. It simply makes it less linear and less certain than a 3% ownership headline may imply.

The Bottom Line

The reading mistake around Tyto is not just an arithmetic mistake. It is a structural one. The 3% is not 3% of company value in any simple sense because there is full dilution first, then a deep rights hierarchy, and then an OPM framework that allocates value across capital layers as options on a future liquidity event.

That is why the right way to think about Teuza's Tyto position has three floors. On the first floor there is the 3% headline. On the second there is the 2.5% fully diluted slice. On the third, which is the only one that actually reaches the accounts, there is a holding value of just $2.951 million. Anyone who jumps from the first floor straight to the conclusion gets a bigger number, but a worse understanding of the value that actually belongs to Teuza.

For a holding company, that is a material distinction. Teuza does not only need Tyto to be worth a lot. It needs that value to travel through the cap table, through a future liquidity event, and through a still-partial disclosure envelope in a way that leaves enough for Teuza's own shareholders. That is exactly why 3% in Tyto is worth far less than 3% of company value.