Advantage Solutions(ADV) - 2020 Q3 - Quarterly Report

PART I Item 1. Financial Statements The SPAC reported $454.7 million in total assets as of September 30, 2020, a $4.1 million net loss for the nine-month period, and faces going concern uncertainty due to its business combination deadline Condensed Balance Sheets Total assets reached $454.7 million as of September 30, 2020, primarily comprising $453.7 million in marketable securities, while total liabilities increased to $20.6 million Condensed Balance Sheet Data (in thousands) | Account | Sep 30, 2020 (Unaudited) | Dec 31, 2019 (Audited) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $515 | $951 | | Marketable securities held in Trust Account | $453,742 | $452,817 | | Total Assets | $454,690 | $454,110 | | Liabilities & Equity | | | | Total current liabilities | $4,869 | $228 | | Deferred underwriting commissions | $15,750 | $15,750 | | Total Liabilities | $20,619 | $15,978 | | Class A common stock subject to possible redemption | $429,070 | $433,132 | | Total Stockholders' Equity | $5,000 | $5,000 | Condensed Statements of Operations The company reported a $5.0 million net loss for the three months ended September 30, 2020, a significant decline from $1.2 million net income in the prior year, primarily due to increased general and administrative expenses and reduced interest income Statement of Operations Highlights (in thousands) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | | General and administrative expenses | $4,968 | $138 | $5,290 | | Interest income earned on Trust Account | $34 | $1,697 | $1,705 | | Net Income / (Loss) | ($4,980) | $1,163 | ($4,061) | Condensed Statements of Cash Flows Net cash used in operating activities totaled $1.2 million for the nine months ended September 30, 2020, leading to a $0.4 million decrease in cash and cash equivalents, ending at $0.5 million Cash Flow Summary (Nine Months Ended Sep 30, 2020) | Cash Flow Category | Amount (in thousands) | | :--- | :--- | | Net cash used in operating activities | ($1,213) | | Net cash provided by investing activities | $777 | | Net cash provided by financing activities | $0 | | Net change in cash and cash equivalents | ($436) | | Cash and cash equivalents at end of period | $515 | - The company entered a definitive merger agreement with Advantage Solutions Inc. on September 7, 2020, supported by a $2.5 billion debt commitment and a $700 million private placement[41][47][51] - Management identified substantial doubt about the company's ability to continue as a going concern due to liquidity and the mandatory liquidation deadline of July 22, 2021[40] - Subsequent to quarter-end, $1.0 million was withdrawn from trust account interest for working capital[99] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The blank check company reported a $5.0 million net loss for Q3 2020 and a $3.9 million working capital deficit, raising substantial doubt about its going concern ability due to the July 22, 2021 liquidation deadline and $15.75 million in deferred underwriting fees - The company, a blank check entity, completed its IPO on July 22, 2019, raising $450 million, and must finalize a business combination by July 22, 2021, or face liquidation[102][103][105] - Liquidity concerns and the mandatory July 22, 2021 liquidation date raise substantial doubt about the company's ability to continue as a going concern[115] Results of Operations (Three Months Ended Sep 30) | Period | Net Income / (Loss) | Key Drivers | | :--- | :--- | :--- | | 2020 | ($4,980,376) | $4.97M in G&A costs, minimal interest income | | 2019 | $1,163,222 | $1.7M in interest income, low G&A costs | - A deferred underwriting commission of approximately $15.75 million is payable from the Trust Account only upon completion of a business combination[117] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company under Rule 12b-2 of the Exchange Act, the company is not required to provide market risk disclosures[129] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2020[130] - No material changes to internal control over financial reporting occurred during the quarter[132] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings - No legal proceedings to report[133] Item 1A. Risk Factors. A new risk factor was added regarding the potential for negative interest rates on trust account securities, which could reduce the per-share redemption amount below $10.00 - A new risk factor highlights the possibility of negative interest rates on trust account treasury obligations, potentially reducing the per-share redemption amount below $10.00[135][136] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities The company reported unregistered sales of Class B common stock and 7,333,333 private placement warrants for $11.0 million, with $450 million from IPO and private placement proceeds placed in the Trust Account - The Sponsor purchased 7,333,333 Private Placement Warrants for $11.0 million in a private placement[138] - Net proceeds of $450 million from the IPO and Private Placement Warrants were placed in the Trust Account, with no change in planned use[141][142] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[142] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[142] Item 5. Other Information The company reported no other information - None[142] Item 6. Exhibits. The report includes CEO and CFO certifications as required by Sarbanes-Oxley, along with XBRL data files - Exhibits include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and various XBRL documents[144]