Advent(ADN) - 2020 Q4 - Annual Report

Part I Business The company, initially a blank check entity, merged with Advent Technologies, Inc., a fuel cell and hydrogen technology company, in February 2021 - The company originated as a blank check company (SPAC) and completed its Initial Public Offering on November 20, 2018, raising gross proceeds of $200 million[10][11] - On February 4, 2021, the company consummated a business combination with Advent Technologies, Inc., a developer of fuel cell and hydrogen technology, and was subsequently renamed Advent Technologies Holdings, Inc[17][18] - Advent's core business focuses on developing, manufacturing, and assembling critical components for hydrogen fuel cells, with its main product being the Membrane Electrode Assembly (MEA)[19] - This Annual Report on Form 10-K does not reflect the consummation of the Business Combination, which occurred after the reporting period ended on December 31, 2020, unless otherwise specified[20] Risk Factors The company faces material risks from post-merger operations, including capital needs and market adoption, and risks related to stock ownership Risk Factors Relating to Our Operations and Business Operational risks include significant capital needs, managing growth, market adoption of hydrogen technology, supply chain disruptions, and international operations - The company requires significant capital to develop and grow its business, including manufacturing fuel cells and building the Advent brand, and may need to raise additional funds in the future[26][27][28] - Future growth is highly dependent on the market's willingness to adopt hydrogen-powered fuel cell technology, which is influenced by factors like perceptions of safety, cost, and government incentives[32] - The COVID-19 pandemic has adversely affected operations, with R&D labs in Boston running at approximately 25% occupancy and some staff in Greece working from home, potentially slowing business development[36][37] - The company faces risks from its international operations in Greece, including unfavorable regulatory, political, tax, and labor conditions[44] - Potential patent or trademark infringement claims could be time-consuming and costly, possibly requiring the company to cease development, pay damages, or redesign products[50][51] Risks Related to Ownership of Our Common Stock and Warrants Risks to investors include anti-takeover provisions, potential NASDAQ delisting, stock price volatility, and the company's 'emerging growth company' status - The company's certificate of incorporation and bylaws contain anti-takeover provisions, such as a classified board and a prohibition on stockholder action by written consent, which could delay or prevent a change in control[59][60][62] - There is a risk that NASDAQ may delist the company's securities if it fails to maintain certain financial, distribution, and stock price levels, which would reduce liquidity[70][71] - The company is an "emerging growth company" under the JOBS Act, which allows for reduced disclosure obligations and an extended transition period for complying with new accounting standards[89][90][91] - The company has the ability to redeem outstanding public warrants at $0.01 per warrant if the common stock price equals or exceeds $18.00 for a specified period, which could be disadvantageous to warrantholders[92] Unresolved Staff Comments The company reports no unresolved comments from the Securities and Exchange Commission staff - None[95] Properties The company, initially without real estate, now leases its corporate headquarters in Boston, MA, post-merger - The company's corporate headquarters are located at 200 Clarendon Street, Boston, MA 02116, under a five-year lease for 6,041 square feet of office space[95] Legal Proceedings The company is not involved in material legal proceedings; a shareholder class action complaint was dismissed in February 2021 - A shareholder class action complaint filed on December 17, 2020, challenging the fairness of the business combination, was dismissed on February 10, 2021[97] Mine Safety Disclosures This section is not applicable to the company's business - Not applicable[97] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities This section details the company's Nasdaq listing, no dividend policy, recent unregistered security sales, and share redemptions - Following the business combination, the company's common stock and warrants began trading on Nasdaq under the symbols "ADN" and "ADNWW", respectively[99] - The company has never declared or paid dividends and does not anticipate doing so in the foreseeable future[101] - In connection with the business combination, the company raised $65 million in gross proceeds through a PIPE (Private Investment in Public Equity) investment from the sale of 6.5 million shares of Class A common stock[104] - On October 20, 2020, the company redeemed 5,864,053 shares of its Class A common stock for approximately $60.4 million in connection with an extension of its charter[108] Selected Financial Data This item is reserved and no financial data is presented - Reserved[108] Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the company's 2020 financial performance as a blank check company, focusing on net loss, liquidity, and critical accounting policies Results of Operations For 2020, the company reported a net loss of $993,853 with no revenue, a shift from 2019 net income due to lower dividend income and higher operating costs Comparison of Yearly Financial Results | Metric | For the year ended Dec 31, 2020 | For the year ended Dec 31, 2019 | | :--- | :--- | :--- | | Net (Loss) Income | $(993,853) | $2,872,889 | | Dividend Income | $836,541 | $4,638,361 | | Loss from Operations | $(1,631,364) | $(696,557) | Liquidity and Capital Resources Liquidity was primarily from IPO and private placement funds in a trust account, with significant cash outflows due to share redemptions - As of December 31, 2020, the company had $24,945 in cash outside the trust account and $93,340,005 in marketable securities held within the trust account[121] - In 2020, a total of 12,990,941 shares were redeemed in two separate events (May and October), resulting in approximately $133 million being withdrawn from the trust account[118] - The company borrowed $400,000 via a working capital loan from its sponsor on November 20, 2020, which was convertible into warrants upon the business combination[120] Critical Accounting Policies The critical accounting policy involves classifying common stock subject to possible redemption as temporary equity and using a two-class method for net loss per share - Common stock subject to possible redemption is classified as temporary equity and presented at redemption value, outside of the stockholders' equity section of the balance sheet[125] - Net loss per share is calculated using a two-class method, which allocates income from marketable securities in the Trust Account to redeemable shares, while the net loss from operations is allocated to non-redeemable shares[127] Quantitative and Qualitative Disclosures About Market Risk As of December 31, 2020, the company had no material market or interest rate risk exposure, with trust funds invested in short-term U.S. government treasury obligations - The company believes there was no material exposure to interest rate risk due to the short-term nature of the investments held in the trust account[131] Financial Statements and Supplementary Data This section directs the reader to the company's audited financial statements and supplementary data, included from page F-1 to F-19 - The company's financial statements can be found on pages F-1 through F-19 of this annual report[132] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure This section incorporates information by reference from the company's Current Report on Form 8-K (the "Super 8-K") - Information required by this item is incorporated by reference from the company's Super 8-K filing[132] Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective, with no material changes during the quarter - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by the report[134] - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, these controls[136] Other Information The company reports no other information for this item - None[136] Part III Directors, Executive Officers and Corporate Governance This section details the company's post-merger leadership, including the classified board, executive officers, and committee compositions, with four independent directors - The post-merger Board of Directors consists of seven members, and the executive team includes five officers, led by Chairman and CEO Vassilios Gregoriou[139][144] - The board is divided into three classes with staggered three-year terms, a structure that can delay or prevent a change in control[151][152] - The board has established Audit, Compensation, and Nominating and Corporate Governance committees, with their respective members and chairpersons identified[155] - The Board has determined that directors Katherine E. Fleming, Anggelos Skutaris, Katrina Fritz, and Lawrence M. Clark are independent under Nasdaq and SEC rules[153] Executive Compensation Prior to the business combination, no executive officers or directors received cash compensation, though the sponsor's affiliate received a monthly fee for administrative support - No executive officers or directors received any cash compensation before the business combination was completed[162] - An affiliate of the sponsor was paid $10,000 per month for office space, utilities, and administrative support, commencing in November 2018[162] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section presents the beneficial ownership of common stock as of March 23, 2021, detailing holdings of directors, executive officers, and major shareholders Beneficial Ownership as of March 23, 2021 | Name / Group | Number of Shares | Percentage of Ownership | | :--- | :--- | :--- | | Vassilios Gregoriou (Chairman & CEO) | 5,465,506 | 11.9% | | Christos Kaskavelis (CMO) | 3,704,113 | 8.0% | | All directors and executive officers as a group (9 individuals) | 12,020,323 | 26.1% | | AMCI Sponsor LLC | 4,844,148 | 9.99% | | Charalampos Antoniou | 2,775,049 | 6.0% | Certain Relationships and Related Transactions, and Director Independence This section discloses various related-party transactions, including founder share sales, administrative fees, sponsor loans, and post-merger agreements like lock-up and non-competition agreements - In June 2018, the sponsor purchased 5,750,000 founder shares for an aggregate price of $25,000[168] - The company paid an affiliate of the sponsor $10,000 per month for office space and administrative support, totaling $120,000 for the year ended December 31, 2020[170] - The sponsor provided loans to the company, including a working capital loan of up to $1,000,000 to finance transaction costs related to the business combination[172] - Certain former Advent stockholders and the sponsor entered into Lock-Up Agreements, agreeing not to sell their shares for one year following the closing, subject to certain early release conditions[178][179] Principal Accounting Fees and Services This section details fees paid to Marcum LLP for audit services in fiscal years 2020 and 2019, noting that the audit committee pre-approves all services Fees Paid to Marcum LLP | Fee Type | For the year ended Dec 31, 2020 | For the year ended Dec 31, 2019 | | :--- | :--- | :--- | | Audit Fees | $100,425 | $75,447 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | - The audit committee pre-approves all auditing services and permitted non-audit services to be performed by the company's auditors[184] Part IV Exhibits, Financial Statement Schedules This section lists exhibits filed with the Form 10-K, including the merger agreement and corporate governance documents, and notes the omission of financial statement schedules - A comprehensive list of exhibits filed with the annual report is provided, including the merger agreement, corporate governance documents, and employment agreements[188][189][191] - All financial statement schedules have been omitted because they are not applicable, not required, or the necessary information is already included in the financial statements or notes[187] Form 10-K Summary This item is not applicable, and no summary is provided - None[193] Financial Statements Report of Independent Registered Public Accounting Firm Marcum LLP issued an unqualified opinion on the company's financial statements for 2020 and 2019, affirming conformity with U.S. GAAP - Marcum LLP issued an unqualified audit opinion on the company's financial statements[200] Financial Statements (Tables) This section contains the core audited financial statements, including the Balance Sheet, Statement of Operations, and Statement of Cash Flows, highlighting asset changes and net loss Balance Sheet Summary (as of December 31) | Account | 2020 | 2019 | | :--- | :--- | :--- | | Total Assets | $93,922,522 | $226,010,880 | | Cash and cash equivalents held in Trust Account | $93,340,005 | $225,433,349 | | Total Liabilities | $10,898,365 | $9,002,433 | | Common stock subject to possible redemption | $78,024,156 | $212,008,440 | | Total Stockholders' Equity | $5,000,001 | $5,000,007 | Statement of Operations Summary (For the Year Ended December 31) | Account | 2020 | 2019 | | :--- | :--- | :--- | | Loss from operations | $(1,631,364) | $(696,557) | | Other Income – dividends and interest | $836,541 | $4,638,361 | | Net (loss) income | $(993,853) | $2,872,889 | Notes to Financial Statements This section provides detailed disclosures on the company's SPAC history, accounting policies, IPO details, related-party transactions, and critical subsequent events like the Advent merger and UltraCell acquisition - Note 1 describes the company's formation as a SPAC and its business purpose, culminating in the business combination with Advent on February 4, 2021[225][241] - Note 5 details related-party transactions, including the sponsor's purchase of 5,750,000 Founder Shares for $25,000 and a $10,000 per month administrative services agreement[272][275] - Note 10 on Subsequent Events is critical, as it describes the consummation of the merger with Advent, the $65 million PIPE Investment, and the acquisition of UltraCell, all of which occurred after the December 31, 2020 balance sheet date[303][305][309]