References to the "Company," "our," "us" or "we" refer to AMCI Acquisition Corp.
The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this Report. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We
have based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are subject to
known and unknown risks, uncertainties and assumptions about us that may cause
our actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "could," "would," "expect," "plan," "anticipate," "believe,"
"estimate," "continue," or the negative of such terms or other similar
expressions. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other Securities and
Exchange Commission ("SEC") filings.
Overview
We are an early stage blank check company incorporated as a Delaware corporation
on June 18, 2018 and formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses, which we refer to as our initial
business combination. We intend to complete our initial business combination
using cash from the proceeds of this offering and the private placements of the
private placement warrants, our capital stock, debt or a combination of cash,
stock and debt. Our sponsor is AMCI Sponsor LLC, a Delaware limited liability
company (the "Sponsor").
We consummated our initial public offering on November 20, 2018.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception to December 31, 2019 were organizational
activities, those necessary to prepare for the initial public offering described
below, and identifying a target company for a business combination. We do not
expect to generate any operating revenues until after the completion of our
business combination. We generate non-operating income in the form of interest
and dividend income on our marketable securities. We have incurred and expect
that we will continue to incur increased expenses as a result of being a public
company (for legal, financial reporting, accounting and auditing compliance), as
well as for due diligence expenses in connection with completing a business
combination.
For the year ended December 31, 2019, we had net income of $2,872,889, which
consists of dividend income on marketable securities held in the trust account
of $4,638,361, offset by operating costs of $696,557, and a provision for income
taxes of $1,068,915.
For the period from June 18, 2018 (inception) through December 31, 2018, we had
net income of $307,638, which consists of dividend income on marketable
securities held in the Trust Account of $539,275, offset by formation costs of
$118,637, and a provision for income taxes of $113,000.
Going Concern Consideration and Capital Resources
On November 20, 2018, the Company consummated its initial public offering of
20,000,000 units (the "Units"). Each Unit consists of one share of Class A
common stock of the Company, par value $0.0001 per share (the " Class A Common
Stock"), and one warrant of the Company ("Warrant"), with each Warrant entitling
the holder thereof to purchase one share of Class A Common Stock for $11.50 per
share. The Units were sold at a price of $10.00 per Unit, generating gross
proceeds to the Company of $200,000,000. The Company had granted the
underwriters for the initial public offering (the "Underwriters") a 45-day
option to purchase up to 3,000,000 additional Units to cover over-allotments, if
any ("Over-Allotment Units"). On November 27, 2018, the Underwriters exercised
the option in part and purchased an aggregate of 2,052,077 Over-Allotment Units,
which were sold at an offering price of $10.00 per Unit, generating gross
proceeds of $20,520,770.
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On November 20, 2018, simultaneously with the consummation of the initial public
offering, the Company completed the private sale (the "Private Placement") of an
aggregate of 5,500,000 warrants (the "Private Placement Warrants") to AMCI
Sponsor LLC (the "Sponsor") at a purchase price of $1.00 per Private Placement
Warrant, generating gross proceeds to the Company of $5,500,000. On November 27,
2018, in connection with the sale of Over-Allotment Units, the Company
consummated a private sale of an additional 410,416 Private Placement Warrants
to the Sponsor, generating gross proceeds of $410,416.
A total of $220,520,770, (or $10.00 per Unit) comprised of $216,110,354 of the
proceeds from the initial public offering (including the Over-Allotment Units)
and $4,410,416 of the proceeds of the sale of the Private Placement Warrants,
was placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A.,
maintained by Continental Stock Transfer & Trust Company, acting as trustee.
For the year ended December 31, 2019, cash used in operating activities was
$630,914, consisting primarily of net income of $2,872,889, offset by dividends
earned on marketable securities held in the trust account of $4,638,361. Changes
in operating assets and liabilities provided $1,134,558 of cash from operating
activities.
We intend to use substantially all of the funds held in the trust account
(excluding deferred underwriting fees) to complete our business combination. To
the extent that our capital stock or debt is used, in whole or in part, as
consideration to complete our business combination, the remaining proceeds held
in the trust account will be used as working capital to finance the operations
of the target business or businesses, make other acquisitions and pursue our
growth strategies.
As of December 31, 2019, we had cash of $520,422 held outside the trust account.
We use the funds held outside the trust account primarily to identify and
evaluate target businesses, perform business due diligence on prospective target
businesses, travel to and from the offices, plants or similar locations of
prospective target businesses or their representatives or owners, review
corporate documents and material agreements of prospective target businesses,
and structure, negotiate and complete a business combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a business combination, our sponsor or an affiliate of our
sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we complete a business combination, we
would repay such loaned amounts. In the event that a business combination does
not close, we may use a portion of the working capital held outside the trust
account to repay such loaned amounts but no proceeds from our trust account
would be used for such repayment. Up to $1,500,000 of such working capital loans
may be convertible into Private Placement Units at a price of $10.00 per unit at
the option of the lender.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business a year from the date that the
financial statements are issued. However, if our estimates of the costs of
identifying a target business, undertaking in-depth due diligence and
negotiating a business combination are less than the actual amount necessary to
do so, we may have insufficient funds available to operate our business prior to
our business combination. Moreover, we may need to obtain additional financing
either to complete our business combination or because we become obligated to
redeem a significant number of public shares upon completion of our business
combination, in which case we may issue additional securities or incur debt in
connection with such business combination. In addition, we intend to target
businesses larger than we could acquire with the net proceeds of this offering
and the sale of the private placement units, and may as a result be required to
seek additional financing to complete such proposed initial business
combination. Subject to compliance with applicable securities laws, we would
only complete such financing simultaneously with the completion of our business
combination. If we are unable to complete our initial business combination
because we do not have sufficient funds available to us, we will be forced to
cease operations and liquidate the trust account. In addition, following our
business combination, if cash on hand is insufficient, we may need to obtain
additional financing in order to meet our obligations.
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Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations, purchase obligations or long-term liabilities, other than an
agreement to pay an affiliate of the sponsor a monthly fee of $10,000 for office
space, utilities and administrative support to the Company. We began incurring
these fees on November 16, 2018 and will continue to incur these fees monthly
until the earlier of the completion of the Business Combination and the
Company's liquidation.
Related Party Transactions
Founder Shares
In June 2018, the Company's sponsor purchased 5,750,000 shares of Class B common
stock (the "founder shares") for an aggregate price of $25,000. As used herein,
unless the context otherwise requires, founder shares shall be deemed to include
the shares of Class A Common Stock issuable upon conversion thereof. The founder
shares are identical to the Class A Common Stock included in the Units sold in
the initial public offering except that the founder shares automatically convert
into shares of Class A Common Stock at the time of our initial business
combination and are subject to certain transfer restrictions, as described in
more detail below. Holders of founder shares may also elect to convert their
shares of Class B common stock ("Class B Common Stock") into an equal number of
shares of Class A Common Stock, subject to adjustment as provided above, at any
time. The Sponsor agreed to forfeit up to 750,000 founder shares to the extent
that the over-allotment option was not exercised in full by the underwriters so
that the founder shares will represent 20% of our issued and outstanding shares
after the initial public offering. In October 2018, our sponsor transferred
35,000 founder shares to each of Messrs. Uren, Clark and Grant, our independent
directors, and 100,000 each to Messrs. Hunter, Beem and Patel, our officers. On
November 27, 2018, we were advised by the Underwriters that they had elected to
exercise a portion of the over-allotment option for 2,052,077 additional Units
for additional gross proceeds of $20,520,770. The partial exercise resulted in a
reduction of 236,981 shares of Class B Common Stock subject to forfeiture held
by the Sponsor and are considered as forfeited in the accompanying balance sheet
as of December 31, 2019.
Our initial stockholders have agreed, subject to limited exceptions, not to
transfer, assign or sell any of their founder shares until the earlier to occur
of: (A) one year after the completion of the initial business combination or (B)
subsequent to the initial business combination, (x) if the last sale price of
our Class A Common Stock equals or exceeds $12.00 per share (as adjusted for
stock splits, stock dividends, reorganizations, recapitalizations and the like)
for any 20 trading days within any 30-trading day period commencing at least 150
days after the initial business combination, or (y) the date on which we
complete a liquidation, merger, stock exchange or other similar transaction that
results in all of our stockholders having the right to exchange their shares of
common stock for cash, securities or other property.
Private Placement
Simultaneously with the closing of the initial public offering, on November 20,
2018, our sponsor paid us $5.5 million for 5,500,000 private placement warrants
at a price of $1.00 per warrant. Each private placement warrant is exercisable
for one share of our Class A Common Stock at a price of $11.50 per share.
Thereafter, on November 27, 2018, simultaneously with the closing of the
over-allotment option, our sponsor paid us an additional $410,416 for 410,416
private placement warrants. A portion of the purchase price of the private
placement warrants has been added to the proceeds from the initial public
offering held in the trust account. If our initial business combination is not
completed by May 20, 2020, the proceeds from the sale of the private placement
warrants held in the trust account will be used to fund the redemption of the
public shares (subject to the requirements of applicable law) and the private
placement warrants will expire worthless. The private placement warrants will be
non-redeemable and exercisable on a cashless basis so long as they are held by
our sponsor or its permitted transferees.
Our sponsor and our officers and directors have agreed, subject to limited
exceptions, not to transfer, assign or sell any of their private placement
warrants until 30 days after the completion of the initial business combination.
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Registration Rights
The holders of founder shares, Private Placement Warrants, securities issuable
pursuant to the contingent forward purchase contract and warrants that may be
issued upon conversion of working capital loans, if any, are entitled to
registration rights (in the case of the founder shares, only after conversion of
such shares to shares of Class A Common Stock) pursuant to a registration rights
agreement signed on November 15, 2018. These holders are entitled to certain
demand and "piggyback" registration rights. However, the registration rights
agreement provides that we will not permit any registration statement filed
under the Securities Act to become effective until termination of the applicable
lock-up period for the securities to be registered. We will bear the expenses
incurred in connection with the filing of any such registration statements.
Related Party Loans
Our sponsor had loaned us an aggregate of $218,610 to cover expenses related to
the initial public offering pursuant to a promissory note. This loan was
non-interest bearing and payable on the earlier of December 31, 2018 or the
completion of the initial public offering. We repaid this amount in full in
November 2018 and there was no balance outstanding as of December 31, 2019 with
regard to such loan.
In order to fund working capital deficiencies or finance transaction costs in
connection with an initial business combination, our sponsor or an affiliate of
our sponsor or certain of our officers and directors may, but are not obligated
to, loan us funds as may be required. If we complete our initial business
combination, we would repay such loaned amounts. In the event that our initial
business combination does not close, we may use a portion of the working capital
held outside the trust account to repay such loaned amounts but no proceeds from
our trust account would be used for such repayment. Up to $1,500,000 of such
loans may be convertible into warrants, at a price of $1.00 per warrant at the
option of the lender. The warrants would be identical to the private placement
warrants, including as to exercise price, exercisability and exercise period.
The terms of such loans by our officers and directors, if any, have not been
determined and no written agreements exist with respect to such loans. We do not
expect to seek loans from parties other than our sponsor or an affiliate of our
sponsor as we do not believe third parties will be willing to loan such funds
and provide a waiver against any and all rights to seek access to funds in our
trust account.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. The Company has identified the following critical accounting policy:
Common Stock subject to possible redemption
The Company accounts for its common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Common stock subject to mandatory
redemption is classified as a liability instrument and is measured at fair
value. Conditionally redeemable common stock (including common stock that
features redemption rights that are either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within
the Company's control) is classified as temporary equity. At all other times,
common stock is classified as stockholders' equity. The Company's common stock
features certain redemption rights that are considered to be outside of the
Company's control and subject to occurrence of uncertain future events.
Accordingly, common stock subject to possible redemption is presented at
redemption value as temporary equity, outside of the stockholders' equity
section of the Company's balance sheet.
Net loss per common share
Net loss per common share is computed by dividing net loss by the weighted
average number of common shares outstanding for the period. The Company applies
the two-class method in calculating earnings per share. An aggregate of
20,846,454 and 20,869,316 shares of common stock subject to possible redemption
at December 31, 2019 and December 31, 2018, respectively, which are not
currently redeemable and are not redeemable at fair value, have been excluded
from the calculation of basic loss per share since such shares, if redeemed,
only participate in their pro rata share of the Trust Account earnings. The
Company has not considered the effect of warrants sold in the Initial Public
Offering and private placement to purchase 27,962,493 shares of common stock,
since the exercise of the warrants are contingent upon the occurrence of future
events.
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Off-Balance Sheet Arrangements; Commitments and Contractual Obligations;
Quarterly Results
As of December 31, 2019, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments
or contractual obligations other than obligations disclosed herein.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We will qualify as an "emerging growth company" and
under the JOBS Act will be allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As a result, our financial statements may not
be comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.
As an "emerging growth company", we are not required to, among other things, (i)
provide an auditor's attestation report on our system of internal controls over
financial reporting pursuant to Section 404, (ii) provide all of the
compensation disclosure that may be required of non-emerging growth public
companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act,
(iii) comply with any requirement that may be adopted by the PCAOB regarding
mandatory audit firm rotation or a supplement to the auditor's report providing
additional information about the audit and the financial statements (auditor
discussion and analysis), and (iv) disclose certain executive compensation
related items such as the correlation between executive compensation and
performance and comparisons of the CEO's compensation to median employee
compensation. These exemptions will apply for a period of five years following
the completion of this offering or until we are no longer an "emerging growth
company," whichever is earlier.
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