Advent(ADN) - 2020 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the company's unaudited condensed financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements This section presents AMCI Acquisition Corp.'s unaudited condensed financial statements, including balance sheets, operations, equity changes, cash flows, and detailed notes Condensed Balance Sheets This statement details the company's assets, liabilities, and stockholders' equity as of March 31, 2020, and December 31, 2019 Table: Condensed Balance Sheets | ASSETS / LIABILITIES AND STOCKHOLDERS' EQUITY | March 31, 2020 (Unaudited) (USD) | December 31, 2019 (USD) | | :-------------------------------------------- | :------------------------------- | :---------------------- | | ASSETS | | | | Cash | $377,064 | $520,422 | | Prepaid expenses and other current assets | $82,473 | $57,109 | | Total Current Assets | $459,537 | $577,531 | | Cash and cash equivalents held in Trust Account | $225,920,285 | $225,433,349 | | Total Assets | $226,379,822 | $226,010,880 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Accounts payable | $40,157 | $25,496 | | Accrued expenses | $9,270 | $25,000 | | Franchise tax payable | $50,050 | $200,050 | | Income tax payable | $1,188,436 | $1,033,660 | | Total Current Liabilities | $1,287,913 | $1,284,206 | | Deferred underwriting fees | $7,718,227 | $7,718,227 | | Total Liabilities | $9,006,140 | $9,002,433 | | Common stock subject to possible redemption | $212,373,680 | $212,008,440 | | Total Stockholders' Equity | $5,000,002 | $5,000,007 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $226,379,822 | $226,010,880 | Condensed Statements of Operations This statement details the company's financial performance, including operating expenses, other income, and net income, for the three months ended March 31, 2020 and 2019 Table: Condensed Statements of Operations | Operating Expenses / Income | Three Months Ended March 31, 2020 (USD) | Three Months Ended March 31, 2019 (USD) | | :-------------------------- | :-------------------------------------- | :-------------------------------------- | | Operating costs | $116,925 | $133,847 | | Franchise tax expense | $58,794 | $107,290 | | Loss from operations | $(175,719) | $(241,137) | | Other Income – dividends and interest | $695,730 | $1,260,391 | | Income before provision for income tax | $520,011 | $1,019,254 | | Provision for income tax | $(154,776) | $(229,000) | | Net income | $365,235 | $790,254 | | Weighted average number of common shares outstanding, basic and diluted | 6,718,698 | 6,695,829 | | Basic and diluted net loss per share | $(0.01) | $(0.01) | - Net income decreased from $790,254 in Q1 2019 to $365,235 in Q1 2020, primarily due to a reduction in dividend and interest income from the Trust Account[10] Condensed Statements of Changes in Stockholders' Equity This statement illustrates movements in the company's equity components for the three months ended March 31, 2020, and 2019 Table: Condensed Statements of Changes in Stockholders' Equity | Equity Component | Balance at Jan 1, 2020 (USD) | Change in common stock subject to possible redemption (USD) | Net income (USD) | Balance at Mar 31, 2020 (USD) | | :--------------- | :--------------------------- | :---------------------------------------------------------- | :--------------- | :---------------------------- | | Class A Common Stock (Shares) | 1,205,623 | 5,072 | - | 1,210,695 | | Class A Common Stock (Amount) | $121 | - | - | $121 | | Class B Common Stock (Shares) | 5,513,019 | - | - | 5,513,019 | | Class B Common Stock (Amount) | $551 | - | - | $551 | | Additional paid-in capital | $1,818,808 | $(365,240) | - | $1,453,568 | | Retained earnings | $3,180,527 | - | $365,235 | $3,545,762 | | Total Stockholders' Equity | $5,000,007 | $(365,240) | $365,235 | $5,000,002 | - Total Stockholders' Equity slightly decreased from $5,000,007 at January 1, 2020, to $5,000,002 at March 31, 2020, influenced by changes in common stock subject to possible redemption and net income[12] Condensed Statements of Cash Flows This statement presents cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2020, and 2019 Table: Condensed Statements of Cash Flows | Cash Flow Activity | Three Months Ended March 31, 2020 (USD) | Three Months Ended March 31, 2019 (USD) | | :----------------- | :-------------------------------------- | :-------------------------------------- | | Net income | $365,235 | $790,254 | | Dividends and interest on Trust Account | $(695,730) | $(1,260,391) | | Net cash used in operating activities | $(352,152) | $(150,701) | | Trust Account withdrawals for franchise taxes | $208,794 | $- | | Net cash provided by investing activities | $208,794 | $- | | Net Change in Cash | $(143,358) | $(150,701) | | Cash – Beginning | $520,422 | $886,279 | | Cash – Ending | $377,064 | $735,578 | - Net cash used in operating activities increased significantly from $(150,701) in Q1 2019 to $(352,152) in Q1 2020, primarily due to lower net income and higher negative adjustments for dividends and interest on the Trust Account[16] - The company had net cash provided by investing activities of $208,794 in Q1 2020, mainly from Trust Account withdrawals for franchise taxes, compared to no investing activities in Q1 2019[16] Notes to Condensed Financial Statements These notes provide essential context and detailed explanations for the unaudited condensed financial statements, covering company formation, accounting policies, and financial instruments Note 1 - Description of Organization and Business Operations This note describes AMCI Acquisition Corp.'s formation as a blank check company, its IPO, Trust Account, and the deadline for completing a business combination - AMCI Acquisition Corp. was incorporated on June 18, 2018, as a blank check company (SPAC) to pursue a business combination, specifically targeting the global natural resource infrastructure, value chain, and logistics-related sectors[19] - The company completed its Initial Public Offering (IPO) on November 20, 2018, raising $200,000,000, and an additional $20,520,770 from an over-allotment option, with proceeds primarily placed in a Trust Account[20][21][22] - As of March 31, 2020, the company had $377,064 in cash outside the Trust Account and $225,920,285 in the Trust Account, with a deadline of May 20, 2020, to consummate a Business Combination, which may be extended to October 20, 2020, pending stockholder approval[23][29][30][43] - Management believes current cash and working capital are insufficient for planned activities through the Combination Period, raising substantial doubt about the company's ability to continue as a going concern without additional financing[34] Note 2 - Summary of Significant Accounting Policies This note outlines the key accounting principles and policies applied in preparing the condensed financial statements, including basis of presentation, equity classification, and income tax policies - The financial statements are prepared in conformity with GAAP for interim financial information and reflect the company's status as an 'emerging growth company' under the JOBS Act, allowing for an extended transition period for new accounting standards[37][39][40] - Common stock subject to possible redemption is classified as temporary equity at redemption value, as redemption rights are outside the company's control[44] - Net loss per common share is calculated using the two-class method, excluding shares subject to possible redemption from basic loss per share calculation, as they only participate in Trust Account earnings[45][48] Table: Net Loss Per Common Share Calculation | Metric | Three Months Ended March 31, 2020 (USD) | Three Months Ended March 31, 2019 (USD) | | :----- | :-------------------------------------- | :-------------------------------------- | | Net income | $365,235 | $790,254 | | Less: Income attributable to common stock subject to possible redemption | $(455,689) | $(874,163) | | Adjusted net loss | $(90,454) | $(83,909) | | Weighted average shares outstanding, basic and diluted | 6,718,698 | 6,695,829 | | Basic and diluted net loss per common share | $(0.01) | $(0.01) | - The company follows the asset and liability method for income taxes (ASC 740) and does not expect the CARES Act to have a significant impact on its financial position or operations[50][52] Note 3 – Initial Public Offering This note details the terms of the company's Initial Public Offering, where 22,052,077 units were sold at $10.00 each, comprising Class A common stock and redeemable warrants - The Company sold 22,052,077 units in its Initial Public Offering at $10.00 per unit[57] - Each unit consists of one share of Class A common stock and one redeemable warrant, with each warrant exercisable at $11.50 per share[57] Note 4 - Private Placement Warrants This note describes the private placement of 5,910,416 non-redeemable warrants to the Sponsor at $1.00 each, exercisable on a cashless basis - The Sponsor purchased an aggregate of 5,910,416 Private Placement Warrants at $1.00 per warrant, generating $5,910,416 in gross proceeds[58] - These warrants are non-redeemable and exercisable on a cashless basis when held by the Sponsor or its permitted transferees, expiring five years after a Business Combination or earlier upon liquidation[58] Note 5 - Related Party Transactions This note details transactions with related parties, including Founder Shares, administrative services agreements, and potential Working Capital Loans - The Sponsor initially purchased 5,750,000 Founder Shares for $25,000, which automatically convert to Class A common stock upon a Business Combination[60] - The Sponsor forfeited 236,981 Founder Shares due to the partial exercise of the over-allotment option[62] - The company pays an affiliate of the Sponsor $10,000 per month for administrative services, totaling $30,000 for the three months ended March 31, 2020 and 2019[64] - The Sponsor or its affiliates may provide Working Capital Loans, convertible into warrants at $1.00 per warrant, to finance transaction costs for a Business Combination[66] Note 6 – Commitments This note outlines the company's commitments, including registration rights for security holders and deferred payment agreements contingent on a business combination - Holders of Founder Shares, Private Placement Warrants, Forward Purchase Units, and securities from Working Capital Loans are entitled to registration rights[69] - The company has deferred payments totaling $33,984 to a legal firm and a transfer agent/trust company, contingent on the consummation of a Business Combination[70] Note 7 - Stockholders' Equity This note details the components of stockholders' equity, including authorized and outstanding shares of preferred, Class A, and Class B common stock, and warrant terms - The company is authorized to issue 1,000,000 shares of preferred stock, but none were issued or outstanding as of March 31, 2020, and December 31, 2019[71] - As of March 31, 2020, there were 1,210,695 shares of Class A common stock and 5,513,019 shares of Class B common stock issued and outstanding[72] - Class B common stock automatically converts to Class A common stock upon a Business Combination, with an adjustment mechanism to ensure Class B shares represent 20% of total common stock post-IPO and Business Combination[74] - Public Warrants become exercisable 30 days after a Business Combination or 12 months from the IPO closing, at an exercise price of $11.50 per share, and may be redeemed by the company under certain conditions[75][76][77] Note 8 - Fair Value Measurements This note explains the company's fair value measurement approach, categorizing financial assets and liabilities into a three-tier hierarchy based on input observability - The company uses ASC 820-10 for fair value measurements, employing a three-tier hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[81] Table: Fair Value Measurements | Description | Quoted Prices in Active Markets (Level 1) (USD) | | :---------- | :---------------------------------------------- | | Cash and cash equivalents held in Trust Account (March 31, 2020) | $225,920,285 | | Cash and cash equivalents held in Trust Account (December 31, 2019) | $225,433,349 | Note 9 - Subsequent Events This note discloses subsequent events, specifically a non-binding letter of intent for an initial business combination with a mining company to acquire copper production interests - On May 7, 2020, the company entered into a non-binding letter of intent for an initial Business Combination with an established mining company to acquire a portfolio of copper production interests[84] - There is no assurance that a definitive agreement will be entered into or that the proposed transaction will be consummated[84] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, operating results, liquidity, capital resources, critical accounting policies, and COVID-19 impact Special Note Regarding Forward-Looking Statements This section highlights that the report contains forward-looking statements subject to risks and uncertainties, advising readers to consult the Risk Factors section for important factors - The report includes forward-looking statements that involve risks and uncertainties, which could cause actual results to differ materially from those projected[87] - Readers are directed to the Risk Factors section of the company's annual report on Form 10-K for important factors that could impact actual results[87] Overview This overview describes the company as a blank check entity formed for a business combination, outlining potential risks from issuing additional shares or incurring significant indebtedness - AMCI Acquisition Corp. is a blank check company formed on June 18, 2018, to effect a business combination using proceeds from its IPO, capital stock, debt, or a combination[88] - Issuing additional shares in a business combination may significantly dilute equity interests, subordinate common stock rights, cause a change in control, delay changes of control, and adversely affect market prices[88] - Incurring significant indebtedness could lead to default, acceleration of obligations, inability to obtain additional financing, restrictions on dividends, and increased vulnerability to adverse economic conditions[89][91] Results of Operations The company has not generated operating revenues, focusing on its formation and IPO, with non-operating income from trust account investments offset by expenses and taxes - The company has not engaged in operations or generated revenues, with activities focused on formation, IPO, and identifying a target for a business combination[93] - Non-operating income is generated from dividends and interest on marketable securities held in the trust account[93] Table: Results of Operations Summary | Metric | Three Months Ended March 31, 2020 (USD) | Three Months Ended March 31, 2019 (USD) | | :----- | :-------------------------------------- | :-------------------------------------- | | Net income | $365,235 | $790,254 | | Dividend and interest income | $695,730 | $1,260,391 | | Operating costs | $175,719 | $241,137 | | Provision for income taxes | $154,776 | $229,000 | Liquidity and Capital Resources This section details the company's liquidity from IPO and private placement proceeds, held in and outside the trust account, and discusses potential needs for additional financing - The company's IPO and private placement generated gross proceeds of $220,520,770, with $220,520,770 placed in a U.S.-based trust account[95][97] - As of March 31, 2020, the company had $377,064 in cash outside the trust account and working capital of $410,110, intended for identifying and evaluating target businesses[99] - The Sponsor or affiliates may provide Working Capital Loans, convertible into warrants, to fund transaction costs if needed[100] - Management believes current liquidity is sufficient through the combination period, but acknowledges potential need for additional financing if transaction costs are underestimated or significant public share redemptions occur[101][102] Off-balance Sheet Financing Arrangements As of March 31, 2020, the company reported no off-balance sheet financing arrangements, including variable interest entities or debt guarantees - As of March 31, 2020, the company had no off-balance sheet arrangements, including relationships with unconsolidated entities or guarantees of debt[103] Contractual Obligations The company has no long-term debt or purchase obligations, with its primary contractual obligation being a $10,000 monthly administrative fee to an affiliate of its sponsor - The company has no long-term debt, capital lease obligations, operating lease obligations, purchase obligations, or long-term liabilities[104] - The sole contractual obligation is a $10,000 monthly fee to an affiliate of the sponsor for office space, utilities, and administrative support, commencing November 16, 2018, until a business combination or liquidation[104] Critical Accounting Policies This section highlights critical accounting policies requiring significant management judgment, focusing on common stock subject to possible redemption and net loss per common share - The preparation of financial statements requires management to make significant estimates and assumptions, with actual results potentially differing materially[105] - Common stock subject to possible redemption is classified as temporary equity at redemption value due to redemption rights being outside the company's control[106] - Net loss per common share is calculated using the two-class method, excluding redeemable common stock from basic net loss per share as they only participate in trust account earnings[107] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company reports no material market or interest rate risk as of March 31, 2020, due to its investments in short-term U.S. government treasury obligations and lack of hedging activities - As of March 31, 2020, the company was not subject to any material market or interest rate risk[108] - Proceeds in the trust account are invested in money market funds holding direct U.S. government treasury obligations, and due to their short-term nature, there is no material exposure to interest rate risk[108] - The company has not engaged in any hedging activities since its inception and does not expect to do so[108] Item 4. Control and Procedures This section details the evaluation of the company's disclosure controls and procedures, concluding their effectiveness as of March 31, 2020, with no material changes in internal control Evaluation of Disclosure Controls and Procedures The CEO and CFO evaluated and concluded the effectiveness of the company's disclosure controls and procedures as of March 31, 2020 - The CEO and CFO evaluated the effectiveness of disclosure controls and procedures as of March 31, 2020[111] - Based on their evaluation, the disclosure controls and procedures were concluded to be effective[111] Changes in Internal Control Over Financial Reporting There were no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2020 - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2020[111] PART II – OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered sales of equity securities, and other required disclosures Item 1. Legal Proceedings The company reported no legal proceedings as of the filing date - There are no legal proceedings to report[112] Item 1A. Risk Factors This section refers to risk factors from the annual report and highlights the material adverse effect of the COVID-19 outbreak on the search for a business combination - The company's actual results could differ materially from expectations due to risks described in its annual report on Form 10-K[112] - The search for a business combination and any target business may be materially adversely affected by the recent coronavirus (COVID-19) outbreak, impacting travel, meetings, and the ability to consummate a transaction[113][114] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the unregistered private placement of 5,910,416 warrants to the Sponsor at $1.00 each, with proceeds placed in the trust account - The company consummated a private placement of 5,500,000 warrants to its Sponsor at $1.00 per warrant, generating $5,500,000[116] - An additional 410,416 private placement warrants were sold to the Sponsor for $410,416 in connection with the over-allotment option[116] - These private placement warrants are identical to the warrants sold in the Initial Public Offering and were issued under the exemption from registration in Section 4(a)(2) of the Securities Act[116][118] - A total of $220,520,770 from the IPO and private placement was placed in a trust account[118] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities[118] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[118] Item 5. Other Information The company reported no other information for this item - No other information is reported under this item[118] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including certifications and XBRL documents Table: Exhibits Filed | Exhibit Number | Description | | :------------- | :---------- | | 31.1* | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1** | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 101.INS | XBRL Instance Document | | 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | | 101.SCH | XBRL Taxonomy Extension Schema Document | | 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | | 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | SIGNATURES The report is duly signed on behalf of AMCI Acquisition Corp. by its Chief Executive Officer, Chief Financial Officer, President, and Director on May 11, 2020 - The report was signed by William Hunter, Chief Executive Officer, Chief Financial Officer, President, and Director, on May 11, 2020[122]