Advantage Solutions(ADV) - 2019 Q4 - Annual Report

Part I Business The company is a consumer-focused Special Purpose Acquisition Company (SPAC) seeking a business combination - The company is a blank check company, or SPAC, incorporated on May 2, 2019, with the purpose of effecting an initial business combination, targeting the consumer sector[12][13] - The management team has extensive experience in the consumer industry and a successful track record with a prior SPAC, The Simply Good Foods Company[14][15][17] Initial Public Offering and Trust Account Details | Metric | Value | | :--- | :--- | | IPO Date | July 22, 2019 | | Units Sold | 45,000,000 | | Price per Unit | $10.00 | | Gross Proceeds | $450,000,000 | | Amount in Trust Account | $450,000,000 | | Deadline for Business Combination | July 22, 2021 | - The company's acquisition strategy focuses on consumer companies with market leadership and sound fundamentals where management can add operational value[23][26] - Public stockholders have redemption rights upon a business combination or will receive a pro-rata share of the trust account if the company liquidates[74][91] Risk Factors The company faces risks as a SPAC, including reliance on management, competition, and potential investment loss if no combination occurs - As a recently formed entity with no operating history, it is difficult for investors to evaluate its ability to achieve its business objective[119][120] - There is a risk of failure to complete an initial business combination by the deadline of July 22, 2021, which would result in liquidation and worthless warrants[139][140] - The COVID-19 outbreak is a material risk that could adversely affect the search for and operations of a target business[141][142] - Management and directors have conflicts of interest due to involvement in other businesses and will lose their investment if a combination is not completed[221]223[233] - Stockholders face risks of dilution from additional share issuances and potential early redemption of public warrants[208][264] Unresolved Staff Comments The company reports no unresolved comments from SEC staff - There are no unresolved staff comments[293] Properties The company leases its executive office from a sponsor affiliate for a monthly fee - The company's executive office is provided by an affiliate of the sponsor[294] - The company pays its sponsor's affiliate $10,000 per month for office space, utilities, and administrative support[294] Legal Proceedings The company is not involved in any pending or contemplated litigation - To the knowledge of management, there is no pending or contemplated litigation against the company, its officers, or directors[295] Mine Safety Disclosures This section is not applicable to the company's operations - Mine Safety Disclosures are not applicable[296] Part II Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The company's securities trade on NASDAQ, and it has not paid dividends, with details on unregistered sales provided - The company's securities trade on the NASDAQ Stock Market LLC under the symbols CPAAU, CPAA, and CPAAW[298] - The company has not paid and does not intend to pay cash dividends prior to completing its initial business combination[300] - Unregistered securities sales include 11,250,000 founder shares issued to the sponsor for $25,000 and 7,333,333 private placement warrants for $11,000,000[301][302] - $450 million of the net proceeds from the IPO and private placement were placed in the trust account[305] Selected Financial Data This section is not applicable as per reporting guidelines - Selected Financial Data is not applicable[306] Management's Discussion and Analysis of Financial Condition and Results of Operations Net income of $2.5M was driven by trust account interest, with sufficient working capital to operate until the deadline - For the period from inception to December 31, 2019, the company reported a net income of approximately $2.5 million[312] - The income was primarily generated by approximately $3.6 million in interest earned on marketable securities held in the Trust Account[312] - As of December 31, 2019, the company had $951,060 in cash and cash equivalents for working capital purposes[311][315] - Contractual obligations include deferred underwriting commissions of $15.75 million and a $10,000 per month administrative support agreement[322][323] - The company has elected to use the extended transition period for new accounting standards available to emerging growth companies[331] Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, this disclosure is not required - The company is a smaller reporting company and is not required to provide the information under this item[333] Financial Statements and Supplementary Data Audited financials show $454.1M in assets, dominated by the trust account, and a net income of $2.47M Balance Sheet Summary (as of December 31, 2019) | Category | Amount (USD) | | :--- | :--- | | Assets | | | Cash and cash equivalents | $951,060 | | Marketable securities held in Trust Account | $452,816,525 | | Total Assets | $454,109,579 | | Liabilities & Equity | | | Total current liabilities | $227,912 | | Deferred underwriting commissions | $15,750,000 | | Total Liabilities | $15,977,912 | | Class A common stock subject to possible redemption | $433,131,660 | | Total Stockholders' Equity | $5,000,007 | Statement of Operations Summary (May 2, 2019 - Dec 31, 2019) | Category | Amount (USD) | | :--- | :--- | | Loss from operations | ($379,580) | | Interest income earned on Trust Account | $3,579,393 | | Income before income tax expense | $3,199,813 | | Income tax expense | $730,672 | | Net Income | $2,469,141 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants - None[334] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of December 31, 2019 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2019[336] - A report on internal control over financial reporting is not included due to the transition period for newly public companies[337] Other Information The company reports no other material information - None[338] Part III Directors, Executive Officers and Corporate Governance The company is led by an experienced team and board, with established committees and disclosed conflicts of interest - The executive team includes James M. Kilts (Executive Chairman) and David J. West (CEO), with extensive experience in the consumer goods sector[340][342][343] - The Board of Directors is staggered into three classes, with a majority of members determined to be independent per NASDAQ standards[350][356] - The Board has established an Audit Committee and a Compensation Committee, both composed entirely of independent directors[357][358][361] - Significant conflicts of interest exist as officers and directors have fiduciary duties to other entities that may compete for business opportunities[370][372] Executive Compensation No cash compensation is paid to officers or directors, though an affiliate receives a monthly administrative fee - None of the company's officers or directors have received any cash compensation for services rendered[389] - An affiliate of the sponsor is paid $10,000 per month for office space, utilities, and administrative support[389] - Officers and directors will be reimbursed for out-of-pocket expenses incurred on behalf of the company[389] - After an initial business combination, members of the management team may be paid consulting or management fees, but no agreements are currently in place[390] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The sponsor holds 19.82% of voting control, with several institutional investors holding over 5% of Class A stock Beneficial Ownership as of March 30, 2020 | Beneficial Owner | Class A % | Class B % | Total Voting Control % | | :--- | :--- | :--- | :--- | | Conyers Park II Sponsor LLC | — | 99.1% | 19.82% | | T. Rowe Price Associates, Inc. | 10.07% | — | 8.05% | | Manulife Asset Management Limited | 7.06% | — | 5.65% | | Woodson Capital Management, LP | 6.67% | — | 5.33% | | Alyeska Investment Group, L.P. | 6.25% | — | 5.00% | | All directors and executive officers as a group | * | 100% | 20.0% | Certain Relationships and Related Transactions, and Director Independence Related party transactions include founder share and warrant purchases by the sponsor and a monthly administrative fee - The sponsor purchased 11,500,000 founder shares for $25,000 and 7,333,333 private placement warrants for $11,000,000[404][405] - The company pays an affiliate of the sponsor $10,000 per month for administrative support[407] - The sponsor or its affiliates may loan the company up to $1,500,000 for transaction costs, which may be convertible into warrants[412] - The company has a formal policy requiring the audit committee to review and approve all related party transactions[415] Principal Accountant Fees and Services WithumSmith+Brown, PC's audit fees for fiscal 2019 were $62,660, with all services pre-approved by the audit committee Accountant Fees for Fiscal Year 2019 | Fee Category | Amount (USD) | | :--- | :--- | | Audit Fees | $62,660 | | Audit-Related Fees | $0 | | Tax Fees | $0 | | All Other Fees | $0 | - The audit committee pre-approves all auditing and permitted non-audit services to be performed by the auditors[425] Part IV Exhibits, Financial Statement Schedules This section lists all financial statements and material contracts filed as part of the Form 10-K report - The report includes financial statements and lists key exhibits filed, such as the Certificate of Incorporation, Warrant Agreement, and Trust Agreement[426][427] Form 10-K Summary This item is not applicable to the company - Not applicable[428]