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MarketScreener Homepage  >  Equities  >  Nasdaq  >  AMCI Acquisition Corp.    AMCI

AMCI ACQUISITION CORP.

(AMCI)
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AMCI ACQUISITION : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

11/12/2020 | 04:53pm EST

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.



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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;

? 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.

Recent Developments

On October 12, 2020, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with AMCI Merger Sub Corp., a Delaware corporation and newly formed wholly-owned subsidiary of the Company ("Merger Sub"), AMCI Sponsor LLC, a Delaware limited liability company (the "Sponsor"), solely in the capacity as the representative from and after the effective time of the Merger (as defined below) (the "Effective Time") for the shareholders of the Company (other than the Advent stockholders) (the "Purchaser Representative"), Advent Technologies, Inc., a Delaware corporation ("Advent"), and Vassilios Gregoriou, solely in his capacity as the representative from and after the Effective Time for the Advent stockholders (the "Seller Representative").

Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein, upon the consummation of the transactions contemplated by the Merger Agreement (the "Closing"), Merger Sub will merge with and into Advent (the "Merger" and, together with the Warrant Amendment and the other transactions contemplated by the Merger Agreement, the "Transactions"), with Advent continuing as the surviving corporation in the Merger and a wholly-owned subsidiary of the Company. In the Merger, (i) all shares of Advent common stock and Advent preferred stock (together, "Advent Stock") issued and outstanding immediately prior to the Effective Time (other than those properly exercising any applicable dissenters rights under Delaware law) will be converted into the right to receive the Merger Consideration (as defined below) (with Advent preferred stock treated on an as-converted to Advent common stock basis); and (ii) all outstanding options, warrants or rights to subscribe for or purchase any capital stock of Advent or securities convertible into or exchangeable for, or that otherwise confer on the holder any right to acquire any capital stock of Advent that have not been exercised or converted prior to the Effective Time will be cancelled, retired and terminated without any liability to Advent with respect thereto. At the Closing, the Company will amend its charter to, among other matters, change its name to "Advent Technologies Holdings Inc.".


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The aggregate merger consideration to be paid pursuant to the Merger Agreement to holders of Advent Stock as of immediately prior to the Effective Time ("Advent Stockholders") will be an amount equal to (the "Merger Consideration") (i) $250 million, minus (ii) the estimated consolidated indebtedness of Advent and its subsidiaries as of the Closing, net of their estimated consolidated cash and cash equivalents ("Closing Net Indebtedness"). The Merger Consideration to be paid to Advent Stockholders will be paid solely by the delivery of new shares of the Company's Class A Common Stock, each valued at $10.00 per share. The Closing Net Indebtedness (and the resulting Merger Consideration) is based solely on estimates determined shortly prior to the Closing and is not subject to any post-Closing true-up or adjustment. The Merger Consideration will be allocated among holders of Advent Stock (including holders based on their pro rata ownership in Advent as of immediately prior to the Effective Time (treating Advent preferred stock on an as-converted to common stock basis for such purposes and including Advent Convertible Securities that have exercised or converted prior to the Effective Time).

For further information on Advent, the Merger Agreement, and the Transactions, please see the Form 8-K filed by the Company with the SEC on October 16, 2020 and Form S-4 filed by the Company on November 9, 2020.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception to September 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 September 30, 2020, we had net loss of $617,905, which consists of dividend and interest income on marketable securities held in the trust account of $39,434, offset by operating costs of $464,612 and a provision for income taxes of $192,727.

For the nine months ended September 30, 2020, we had net loss of $671,595, which consists of dividend and interest income on marketable securities held in the trust account of $832,809, offset by operating costs of $1,083,536 and a provision for income taxes of $420,868.

For the three months ended September 30, 2019, we had net income of $815,158, which consists of dividend and interest income on marketable securities held in the trust account of $1,179,253, offset by operating costs of $164,179 and a provision for income taxes of $199,916.

For the nine months ended September 30, 2019, we had net income of $2,448,343, which consists of dividend and interest income on marketable securities held in the trust account of $3,710,334, offset by operating costs of $558,936 and a provision for income taxes of $703,055.

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 nine months ended September 30, 2020, cash used in operating activities was $2,640,235, consisting primarily of net loss of $671,595, offset by dividends earned on marketable securities held in the trust account of $832,809. Changes in operating assets and liabilities used $1,135,831 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. On October 20, 2020, an additional 5,864,053 shares were redeemed, and $60,404,995 was withdrawn from the Trust Account for the additional redemption shares. As of September 30, 2020, proceeds of $1,865,648 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 September 30, 2020, the outstanding amount is $2,330,304. On November 5, 2020, the Company borrowed an additional $35,344.

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 September 30, 2020, we had cash of $109,940 held outside the trust account, working capital of $(2,263,355), and $4,529,378 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 February 22, 2021. 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.


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Off-balance Sheet Financing Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 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.

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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