References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to AMCI Acquisition Corp. References to our "management" or our
"management team" refer to our officers and directors, references to the
"sponsor" refer to AMCI Sponsor LLC. 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 Quarterly Report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act
that are not historical facts, and involve risks and uncertainties that could
cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Form 10-Q
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's annual report on Form 10-K filed with the U.S.
Securities and Exchange Commission (the "SEC"). The Company's securities filings
can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except
as expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated on June 18, 2018 as a Delaware
corporation 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 effectuate our initial business combination
using cash from the proceeds of our initial public offering and the sale of the
private placement warrants that occurred simultaneously with the completion of
our initial public offering, our capital stock, debt or a combination of cash,
stock and debt.
The issuance of additional shares of our stock in a business combination:
? may significantly dilute the equity interest of investors, which dilution would
increase if the anti-dilution provisions in the Class B common stock resulted
in the issuance of Class A shares on a greater than one-to-one basis upon
conversion of the Class B common stock;
? may subordinate the rights of holders of our common stock if preferred stock is
issued with rights senior to those afforded our common stock;
? could cause a change in control if a substantial number of shares of our common
stock is issued, which may affect, among other things, our ability to use our
net operating loss carry forwards, if any, and could result in the resignation
or removal of our present officers and directors;
? may have the effect of delaying or preventing a change of control of us by
diluting the stock ownership or voting rights of a person seeking to obtain
control of us; and
? may adversely affect prevailing market prices for our Class A common stock
and/or warrants.
Similarly, if we issue debt securities or otherwise incur significant
indebtedness, it could result in:
? default and foreclosure on our assets if our operating revenues after our
initial business combination are insufficient to repay our debt obligations;
? acceleration of our obligations to repay the indebtedness even if we make all
principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if the
debt security is payable on demand;
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? our inability to obtain necessary additional financing if the debt security
contains covenants restricting our ability to obtain such financing while the
debt security is outstanding;
? our inability to pay dividends on our common stock;
? using a substantial portion of our cash flow to pay principal and interest on
our debt, which will reduce the funds available for dividends on our common
stock if declared, our ability to pay expenses, make capital expenditures and
acquisitions, and fund other general corporate purposes;
? limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation;
? limitations on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, and execution of our
strategy; and
? other purposes and other disadvantages compared to our competitors who have
less debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete an initial
business combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception to June 30, 2020 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 incur 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 three months ended June 30, 2020, we had net loss of $418,925, which
consists of dividend and interest income on marketable securities held in the
trust account of $97,645, offset by operating costs of $443,205 and a provision
for income taxes of $73,365.
For the six months ended June 30, 2020, we had net loss of $53,690, which
consists of dividend and interest income on marketable securities held in the
trust account of $793,375, offset by operating costs of $618,924 and a provision
for income taxes of $228,141. Included in the operating costs of $618,924 are
deal expenses of $210,470.
For the three months ended June 30, 2019, we had net income of $842,931, which
consists of dividend and interest income on marketable securities held in the
trust account of $1,270,690, offset by operating costs of $153,620 and a
provision for income taxes of $274,139.
For the six months ended June 30, 2019, we had net income of $1,633,185, which
consists of dividend and interest income on marketable securities held in the
trust account of $2,531,081, offset by operating costs of $394,757 and a
provision for income taxes of $503,139.
Liquidity and Capital Resources
On November 20, 2018, the Company consummated its initial public offering
("IPO") 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 IPO (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.
On November 20, 2018, simultaneously with the consummation of the IPO, 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.
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A total of $220,520,770, (or $10.00 per Unit) comprised of $216,110,354 of the
proceeds from the IPO (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 six months ended June 30, 2020, cash used in operating activities was
$1,999,261, consisting primarily of net loss of $53,690, offset by dividends
earned on marketable securities held in the trust account of $793,375. Changes
in operating assets and liabilities used $1,152,196 of cash from operating
activities. On May 20, 2020, 7,126,888 shares were redeemed, and $72,585,441 was
withdrawn from the Trust Account for the redemption shares. As of June 30, 2020,
proceeds of $746,259 from the Note were deposited into the Trust Account.
On May 20, 2020, the Company issued the Note in the principal amount of up to
$2,365,649 to the Lender. As of June 30, 2020, the outstanding amount is
$746,259.
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 June 30, 2020, we had cash of $118,170 held outside the trust account,
working capital of $75,472, and $3,538,643 of interest available to pay for our
tax obligations. We intend to 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 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 agreement exist with respect to such loans. We do not
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.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business through October 20, 2020.
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 our initial public 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.
Based on the foregoing, management believes that the Company has sufficient
liquidity to meet its anticipated obligations through the earlier of the
Company's consummation of a Business Combination and its liquidation from the
date of issuance of the financial statements.
Off-balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of June 30, 2020. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
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 our sponsor a monthly fee of $10,000 for office
space, utilities and administrative support to us. 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 our liquidation.
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Critical Accounting Policies
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
We account for 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. Our common stock features
certain redemption rights that are considered to be outside of our 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 our condensed balance
sheets.
Net loss per common share
We apply the two-class method in calculating earnings per share. Shares of
common stock subject to possible redemption which are not currently redeemable
and are not redeemable at fair value, have been excluded from the calculation of
basic net loss per share since such shares, if redeemed, only participate in
their pro rata share of the trust account earnings. Our net income is adjusted
for the portion of income that is attributable to common stock subject to
possible redemption, as these shares only participate in the earnings of the
trust account and not our income or losses.
Recent accounting standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on the
Company's condensed financial statements.
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