UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from __________ to __________
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
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| (Address of principal executive offices) | (Zip code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The Capital Market | ||||
| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of August 11, 2023, the registrant had shares of common stock, par value $0.0001 per share, issued and outstanding.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “could,” “target,” “predict,” “seek” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short- and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those referenced in the section titled “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Annual Report”) which could cause actual results to differ materially. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in or implied by any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
Some of the key factors that could cause actual results to differ from our expectations include:
| ● | our ability to maintain the listing of our shares of common stock and warrants on Nasdaq; |
| ● | our ability to raise financing in the future; |
| ● | our success in retaining or recruiting officers, key employees or directors; |
| ● | factors relating to our business, operations and financial performance, including: |
| ○ | our ability to control the costs associated with our operations; |
| ○ | our ability to grow and manage growth profitably; |
| ○ | our reliance on complex machinery for our operations and production; |
| ○ | the market’s willingness to adopt our technology; |
| ○ | our ability to maintain relationships with customers; |
| ○ | the potential impact of product recalls; |
| ○ | our ability to compete within our industry; |
| ○ | increases in costs, disruption of supply or shortage of raw materials; |
| ○ | risks associated with strategic alliances or acquisitions; |
| ○ | the impact of unfavorable changes in U.S. and international regulations; |
| ○ | the availability of and our ability to meet the terms and conditions for government grants and economic incentives; and |
| ○ | our ability to protect our intellectual property rights; |
i
| ● | market conditions and global and economic factors beyond our control; |
| ● | volatility of our stock price and potential share dilution; |
| ● | future exchange and interest rates; and |
| ● | other factors detailed within the 2022 Annual Report under the section entitled “Risk Factors.” |
The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report. You should not rely upon forward-looking statements as predictions of future events. We cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or reflect interim developments.
As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. For a discussion of the risks involved in our business and investing in our common stock, see the section entitled “Risk Factors” within the 2022 Annual Report.
Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.
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Advent Technologies Holdings, Inc.
Table of Contents
iii
PART I—FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
ADVENT TECHNOLOGIES HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in USD thousands, except share and per share amounts)
| As of | ||||||||
| June 30, 2023 |
December 31, 2022 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Accounts receivable, net | ||||||||
| Contract assets | ||||||||
| Inventories | ||||||||
| Prepaid expenses and Other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Goodwill | ||||||||
| Intangibles, net | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets | ||||||||
| Restricted cash, non-current | ||||||||
| Other non-current assets | ||||||||
| Available for sale financial asset | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Trade and other payables | $ | $ | ||||||
| Deferred income from grants, current | ||||||||
| Contract liabilities | ||||||||
| Other current liabilities | ||||||||
| Operating lease liabilities | ||||||||
| Income tax payable | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Warrant liability | ||||||||
| Long-term operating lease liabilities | ||||||||
| Defined benefit obligation | ||||||||
| Deferred income from grants, non-current | ||||||||
| Other long-term liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingent liabilities | ||||||||
| Stockholders’ equity | ||||||||
| Common stock ($ par value per share; Shares authorized: and at June 30, 2023 and December 31, 2022, respectively; Issued and outstanding: and at June 30, 2023 and December 31, 2022, respectively) | ||||||||
| Preferred stock ($ par value per share; Shares authorized: at June 30, 2023 and December 31, 2022; nil issued and outstanding at June 30, 2023 and December 31, 2022) | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( |
) | ( |
) | ||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
1
ADVENT TECHNOLOGIES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in USD thousands, except share and per share amounts)
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue, net | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Gross loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income from grants | ||||||||||||||||
| Research and development expenses | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Administrative and selling expenses | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Sublease income | ||||||||||||||||
| Amortization of intangibles | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Credit loss – customer contracts | ( |
) | ( |
) | ||||||||||||
| Impairment losses | ( |
) | ( |
) | ||||||||||||
| Operating loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Fair value change of warrant liability | ( |
) | ||||||||||||||
| Finance income / (expenses), net | ( |
) | ||||||||||||||
| Foreign exchange gains / (losses), net | ( |
) | ( |
) | ||||||||||||
| Other income / (expenses), net | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Loss before income tax | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income taxes | ( |
) | ( |
) | ||||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Net loss per share | ||||||||||||||||
| Basic loss per share | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Basic weighted average number of shares | ||||||||||||||||
| Diluted loss per share | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Diluted weighted average number of shares | ||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
2
ADVENT TECHNOLOGIES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in USD thousands)
| Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Other comprehensive loss, net of tax effect: | ||||||||||||||||
| Foreign currency translation adjustment | ( |
) | ( |
) | ( |
) | ||||||||||
| Total other comprehensive loss | ( |
) | ( |
) | ( |
) | ||||||||||
| Comprehensive loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
See accompanying notes to unaudited condensed consolidated financial statements.
3
ADVENT TECHNOLOGIES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY / (DEFICIT)
(Amounts in USD thousands, except share amounts)
| Three Months Ended June 30, 2023 | ||||||||||||||||||||||||||||||||||||||||
| Preferred Stock Series A |
Preferred Stock Series Seed |
Common Stock | Additional Paid-in |
Accumulated | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | OCI | Equity | |||||||||||||||||||||||||||||||
| Balance as of March 31, 2023 (Unaudited) | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
| Issuance of common stock (Unaudited) | ||||||||||||||||||||||||||||||||||||||||
| Stock issued under stock compensation plan (Unaudited) | - | - | ||||||||||||||||||||||||||||||||||||||
| Stock based compensation expense (Unaudited) | - | - | - | |||||||||||||||||||||||||||||||||||||
| Reclassification of private warrants (Unaudited) | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss (Unaudited) | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Other comprehensive gain (Unaudited) | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 (Unaudited) | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
4
ADVENT TECHNOLOGIES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY / (DEFICIT)
(Amounts in USD thousands, except share amounts)
| Three Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||
| Preferred Stock Series A |
Preferred Stock Series Seed |
Common Stock | Additional Paid-in |
Accumulated | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | OCI | Equity | |||||||||||||||||||||||||||||||
| Balance as of March 31, 2022 (Unaudited) | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
| Stock issued under stock compensation plan (Unaudited) | - | - | ||||||||||||||||||||||||||||||||||||||
| Stock based compensation expense (Unaudited) | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss (Unaudited) | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Other comprehensive loss (Unaudited) | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Balance as of June 30, 2022 (Unaudited) | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
5
ADVENT TECHNOLOGIES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY / (DEFICIT)
(Amounts in USD thousands, except share amounts)
| Six Months Ended June 30, 2023 | ||||||||||||||||||||||||||||||||||||||||
| Preferred Stock Series A |
Preferred Stock Series Seed |
Common Stock | Additional Paid-in |
Accumulated | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | OCI | Equity | |||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
| Issuance of common stock (Unaudited) | ||||||||||||||||||||||||||||||||||||||||
| Stock issued under stock compensation plan (Unaudited) | ||||||||||||||||||||||||||||||||||||||||
| Stock based compensation expense (Unaudited) | - | - | - | |||||||||||||||||||||||||||||||||||||
| Reclassification of private warrants (Unaudited) | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss (Unaudited) | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Other comprehensive loss (Unaudited) | - | - | - | |||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 (Unaudited) | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
6
ADVENT TECHNOLOGIES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY / (DEFICIT)
(Amounts in USD thousands, except share amounts)
| Six Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||
| Preferred Stock Series A |
Preferred Stock Series Seed |
Common Stock | Additional Paid-in |
Accumulated | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | OCI | Equity | |||||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
| Stock issued under stock compensation plan (Unaudited) | - | - | ||||||||||||||||||||||||||||||||||||||
| Stock based compensation expense (Unaudited) | - | - | - | |||||||||||||||||||||||||||||||||||||
| Net loss (Unaudited) | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Other comprehensive loss (Unaudited) | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||
| Balance as of June 30, 2022 (Unaudited) | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
7
ADVENT TECHNOLOGIES HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in USD thousands)
| Six months ended June 30, |
||||||||
| (Unaudited) | ||||||||
| 2023 | 2022 | |||||||
| Net Cash used in Operating Activities | $ | ( |
) | $ | ( |
) | ||
| Cash Flows from Investing Activities: | ||||||||
| Purchases of property and equipment | ( |
) | ( |
) | ||||
| Purchases of intangible assets | ( |
) | ||||||
| Advances for the acquisition of property and equipment | ( |
) | ||||||
| Acquisition of available for sale financial assets | ( |
) | ||||||
| Acquisition of subsidiaries | ( |
) | ||||||
| Net Cash used in Investing Activities | $ | ( |
) | $ | ( |
) | ||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds of issuance of common stock and paid-in capital | ||||||||
| Net Cash provided by Financing Activities | $ | $ | ||||||
| Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents | $ | ( |
) | $ | ( |
) | ||
| Effect of exchange rate changes on cash, cash equivalent, restricted cash and restricted cash equivalents | ( |
) | ||||||
| Cash, cash equivalents, restricted cash and restricted cash equivalents at the beginning of the period | ||||||||
| Cash, cash equivalents, restricted cash and restricted cash equivalents at the end of the period | $ | $ | ||||||
| Reconciliation to Condensed Consolidated Balance Sheets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Restricted cash, non-current | ||||||||
| Cash, cash equivalents, restricted cash and restricted cash equivalents | $ | $ | ||||||
| Supplemental Cash Flow Information | ||||||||
| Cash activities | ||||||||
| Interest paid | $ | $ | ||||||
| Non-cash Investing and Financing Activities: | ||||||||
| Assets acquired under operating leases | $ | $ | ||||||
| Issuance of common stock and paid-in capital | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
8
ADVENT TECHNOLOGIES HOLDINGS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Basis of presentation |
Overview
Advent Technologies Holdings, Inc. and its subsidiaries (collectively referred to as “Advent” or the “Company”) is an advanced materials and technology development company operating in the fuel cell and hydrogen technology space. Advent develops, manufactures and assembles the critical components that determine the performance of hydrogen fuel cells and other energy systems. To date, Advent’s principal operations have been to develop and manufacture Membrane Electrode Assembly (MEA), and fuel cell stacks and complete fuel cell systems for a range of customers in the stationary power, portable power, automotive, aviation, energy storage and sensor markets.
Advent has its headquarters in Boston, Massachusetts, which includes a research and development and manufacturing facility, a product development facility in Livermore, California, production facilities in Greece, Denmark, and Germany, and sales and warehousing facilities in the Philippines.
On February 4, 2021 (“Closing Date”), AMCI Acquisition Corp. (“AMCI”), consummated the business combination (the “Business Combination”) pursuant to that certain merger agreement (the “Agreement and Plan of Merger”), dated October 12, 2020, by and among AMCI, AMCI Merger Sub Corp., a Delaware corporation and newly formed wholly-owned subsidiary of AMCI (“Merger Sub”), AMCI Sponsor LLC (the “Sponsor”), solely in the capacity as the representative from and after the effective time of the Business Combination for the stockholders of AMCI, Advent Technologies, Inc., a Delaware corporation (“Legacy Advent”), and Vassilios Gregoriou, solely in his capacity as the representative from and after the effective time for the Legacy Advent stockholders (the “Seller Representative”), as amended by Amendment No. 1 and Amendment No. 2 to the Agreement and Plan of Merger, dated as of October 19, 2020 and December 31, 2020, respectively, by and among AMCI, Merger Sub, Sponsor, Legacy Advent, and Seller Representative. In connection with the closing of the Business Combination (the “Closing” or “Closing Date”), AMCI acquired
On the Closing Date, and in connection with the closing of the Business Combination, AMCI changed its name to Advent Technologies Holdings, Inc. Legacy Advent was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805. This determination was primarily based on Legacy Advent’s stockholders prior to the Business Combination having a majority of the voting interests in the combined company, Legacy Advent’s operations comprising the ongoing operations of the combined company, Legacy Advent’s board of directors comprising a majority of the board of directors of the combined company, and Legacy Advent’s senior management comprising the senior management of the combined company. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Advent issuing stock for the net assets of AMCI, accompanied by a recapitalization. The net assets of AMCI are stated at historical cost, with no goodwill or other intangible assets recorded.
While AMCI was the legal acquirer in the Business Combination, because Legacy Advent was deemed the accounting acquirer, the historical financial statements of Legacy Advent became the historical financial statements of the combined company, upon the consummation of the Business Combination. As a result, the consolidated financial statements included in this report reflect (i) the historical operating results of Legacy Advent prior to the Business Combination; (ii) the results of the Company (combined results of AMCI and Legacy Advent) following the closing of the Business Combination; (iii) the assets and liabilities of Legacy Advent at their historical cost; and (iv) Company’s equity structure for all periods presented.
In accordance with guidance applicable to these circumstances, the equity structure has been restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s common stock, $ par value per share (the “Common Stock”), issued to Legacy Advent’s stockholders in connection with the recapitalization transaction. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Advent Preferred Stock (“Preferred Series A” and “Preferred Series Seed”) and Legacy Advent common stock prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination Agreement. Activity within the statement of changes in stockholders’ equity / (deficit) for the issuances of Legacy Advent’s Preferred Stock, were also retroactively converted to Legacy Advent common stock.
9
On February 18, 2021, Advent Technologies, Inc. entered into a Membership Interest Purchase Agreement with Bren-Tronics, Inc. (“Bren-Tronics”) and UltraCell, LLC (“UltraCell”), a Delaware limited liability company and a direct wholly owned subsidiary of Bren-Tronics.
UltraCell LLC was renamed to Advent Technologies LLC following its acquisition by the Company.
On June 25, 2021, the Company entered into a Share Purchase Agreement, with F.E.R. fischer Edelstahlrohre GmbH, a limited liability company incorporated under the Laws of Germany (the “Seller”) to acquire all of the issued and outstanding equity interests in SerEnergy A/S, a Danish stock corporation and a wholly-owned subsidiary of the Seller (“SerEnergy”) and fischer eco solutions GmbH, a German limited liability company and a wholly-owned subsidiary of the Seller (“FES”) together with certain outstanding shareholder loan receivables.
SerEnergy and FES were renamed to Advent Technologies A/S and Advent Technologies GmbH, respectively, following their acquisition by the Company on August 31, 2021.
The unaudited condensed consolidated financial statements of the Company have been prepared to reflect the consolidation of the companies listed below:
| Country of | Ownership Interest | Statements of Operations | ||||||||
| Company Name | Incorporation | Direct | Indirect | 2023 | 2022 | |||||
Unaudited Condensed Consolidated Financial Statements
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). The unaudited financial information reflects, in the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the periods indicated. The results reported for the interim period presented are not necessarily indicative of results that may be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2022, included in the Annual Report on Form 10-K filed with the SEC on March 31, 2023. We reclassified certain prior year amounts in our consolidated financial statements to conform to the current year presentation.
The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated.
Share and per share amounts are presented on a post-conversion basis for all periods presented, unless otherwise specified.
10
Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will continue in operation one year from the date these unaudited condensed consolidated financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. As such, the accompanying unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.
In
accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)
2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company
has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the
Company’s ability to continue as a going concern for one year from the date that the unaudited condensed consolidated
financial statements are issued. The Company’s ability to meet its liquidity needs will largely depend on its ability to
generate cash in the future. During the six months ended June 30, 2023, the Company used $18.9
million of cash in operating activities, and the Company’s ability to generate cash in the future is subject to general
economic, financial, competitive, legislative, regulatory, and other factors that are beyond the Company’s control. The
transition to profitability is dependent upon the successful development, approval, and commercialization of its products and the
achievement of a revenue level adequate to support its cost structure. Based on the Company’s current operating plan, the
Company believes that its cash and cash equivalents as of June 30, 2023 of $
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| 2. | Summary of Significant Accounting Policies |
There have been no significant changes from the significant accounting policies disclosed in Note 2 of the “Notes to Consolidated Financial Statements” included in the Annual Report on Form 10-K filed with the SEC on March 31, 2023.
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”). As an emerging growth company (“EGC”), the JOBS Act allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an EGC. The Company did not apply any new accounting policies during the six-month period ended June 30, 2023 other than those noted below.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, management evaluates the estimates and judgments, including those related to the selection of useful lives for tangible assets, expected future cash flows from long-lived assets to support impairment tests, the carrying value of goodwill, provisions necessary for accounts receivables and inventory write downs, provisions for legal disputes, and contingencies. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions and/or conditions.
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
Cash and cash equivalents are highly liquid investments with original maturities of three months or less. Cash and cash equivalents consist of cash on hand, deposits held on call with banks and investments in money market funds with original maturities of three months or less at the date of acquisition. As of June 30, 2023 and December 31, 2022, the Company has cash and cash equivalents which are restricted of $
The Company reconciles cash, cash equivalents, restricted cash and restricted cash equivalents reported in the consolidated balance sheets that aggregate to the beginning and ending balances shown in the unaudited condensed consolidated statements of cash flows as follows:
|
June 30, 2023 |
December 31, 2022 |
|||||||
| (Amounts in thousands) | (Unaudited) | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash, current | ||||||||
| Restricted cash, non-current | ||||||||
| Cash, cash equivalents, restricted cash and restricted cash equivalents | $ | $ | ||||||
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Warranties
The Company provides a warranty on fuel cells we sell for typically
The changes in the accrued warranty reserve for the three and six months ended June 30, 2023 and 2022 were as follows:
|
For the Three Months Ended |
For the Three Months Ended June 30, 2022 |
For the Six Months Ended June 30, 2023 |
For the Six Months Ended June 30, 2022 |
|||||||||||||
| (Amounts in thousands) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
| Balance at beginning of period | $ | $ | $ | $ | ||||||||||||
| Additions | ||||||||||||||||
| Settlements | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Foreign exchange fluctuations | ( |
) | ( |
) | ( |
) | ||||||||||
| Balance at end of period | $ | $ | $ | $ | ||||||||||||
Credit Losses
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments, which amends the requirement on the measurement and recognition of expected credit losses for financial assets held. Furthermore, amendments ASU 2019-10 and ASU 2019-11 provided additional clarification for implementing ASU 2016-13. ASU 2016-13 is effective for the Company beginning January 1, 2023, with early adoption permitted. The Company adopted the standard on January 1, 2023, in accordance with the adoption dates for private entities applicable to it under its emerging growth company status and the standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures. The Company is exposed to credit losses primarily through sales of its products. The Company assesses each customer’s ability to pay and a credit loss estimate by conducting a credit review which includes consideration of established credit rating or an internal assessment of the customer’s creditworthiness based on an analysis of their payment history when a credit rating is not available. The Company monitors credit exposure through active review of customer balances. The Company’s expected loss methodology for accounts receivable is developed through consideration of factors including, but not limited to, historical collection experience, current customer credit ratings, current customer financial condition, current and future economic and market conditions, and age of the receivables. Charges related to credit losses are included in Credit loss – customer contracts and are recorded in the period that the outstanding receivables are determined to be doubtful. Account balances are written-off against the allowance when they are deemed uncollectible.
Sublease
On January 9, 2023, the Company entered into a sublease agreement by and among the Company, in its capacity as sublandlord, BP Hancock LLC, a Delaware limited liability company, in its capacity as landlord, and Hughes Boston, Inc. (“Hughes”), in its capacity as subtenant. The sublease provides for the rental by Hughes of office space at 200 Clarendon Street, Boston, MA 02116. Under the terms of the sublease, Hughes subleases
13
Fair Value Measurements
The Company follows the accounting guidance in ASC 820 for its fair value measurements of financial assets and liabilities measured at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2: Observable inputs other than Level 1 prices, for similar assets or liabilities that are directly or indirectly observable in the marketplace. |
| ● | Level 3: Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. |
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Convertible Bond Loan
On May 25, 2022, Advent Technologies S.A (“Advent SA”) and UNI.FUND Mutual Fund (“UNIFUND”) entered into an agreement to finance Cyrus SA (“Cyrus”) with a convertible bond loan (“Bond Loan”) of €
Cyrus business relates to the research and experimental development in natural sciences and mechanics, the construction of pumps and hydrogen compressors and the wholesale of compressors. Hydrogen compressors are a critical part of the Hydrogen Refueling Stations (HRS) to be used by transport applications. Cyrus has developed a prototype Metal Hydride Compressor which offers unique advantages. The proceeds from the Bond Loan are to cover Cyrus’s working capital needs in the context of its operation and the product development.
Mandatory conversion of the Bond Loan will occur in the event of qualified financing which is equivalent to a share capital increase by Cyrus in the first three years from the execution of the Bond Loan agreement with a total amount over €3 million which is covered by third parties unrelated to the basic shareholders or by investors related to them.
The Company classifies the Bond Loan as an available for sale financial asset on the consolidated balance sheets. The Company recognizes interest income within the consolidated statement of operations. For the three and six months ended June 30, 2023, the Company recognized $
The Company initially measured the available for sale Bond Loan at the transaction price plus any applicable transaction costs. The Bond Loan is remeasured to its fair value at each reporting period and upon settlement. The estimated fair value of the Bond Loan is determined using Level 3 inputs by using a discounted cash flow model. The change in fair value is recognized within the consolidated statements of comprehensive loss. The Company did not recognize any unrealized gain / (loss) during the three and six months ended June 30, 2023 and 2022.
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Warrant Liability
As a result of the Business Combination, the Company assumed a warrant liability (the “Warrant Liability”) related to previously issued
The following tables summarize the fair value of the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022.
| As of June 30, 2023 |
||||||||
| (Unaudited) | ||||||||
| (Amounts in thousands) | Fair Value | Unobservable Inputs (Level 3) |
||||||
| Assets | ||||||||
| Available for sale financial asset | $ | $ | ||||||
| $ | $ | |||||||
| Liabilities | ||||||||
| Warrant liability | $ | $ | ||||||
| $ | $ | |||||||
| As of December 31, 2022 |
||||||||
| (Amounts in thousands) | Fair Value | Unobservable Inputs (Level 3) |
||||||
| Assets | ||||||||
| Available for sale financial asset | $ | $ | ||||||
| $ | $ | |||||||
| Liabilities | ||||||||
| Warrant liability | $ | $ | ||||||
| $ | $ | |||||||
The carrying amounts of the Company’s remaining financial instruments reflected on the consolidated balance sheets and which consist of cash and cash equivalents, accounts receivables, net, other current assets, trade and other payables, and other current liabilities, approximate their respective fair values due to their short-term nature.
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Changes in the fair value of Level 3 assets and liabilities for the three and six months ended June 30, 2023 and 2022 were as follows:
| Available for Sale Financial Asset | ||||||||||||||||
| For the Three Months Ended June 30, 2023 |
For the Three Months Ended June 30, 2022 |
For the Six Months Ended June 30, 2023 |
For the Six Months Ended June 30, 2022 |
|||||||||||||
| (Amounts in thousands) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
| Estimated fair value (beginning of period) | $ | $ | $ | $ | ||||||||||||
| Estimated fair value of available for sale financial asset acquired | ||||||||||||||||
| Foreign exchange fluctuations | ||||||||||||||||
| Change in estimated fair value | ||||||||||||||||
| Estimated fair value (end of period) | $ | $ | $ | $ | ||||||||||||
| Warrant Liability | ||||||||||||||||
| For the Three Months Ended June 30, 2023 |
For the Three Months Ended June 30, 2022 |
For the Six Months Ended June 30, 2023 |
For the Six Months Ended June 30, 2022 |
|||||||||||||
| (Amounts in thousands) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
| Estimated fair value (beginning of period) | $ | $ | $ | $ | ||||||||||||
| Change in estimated fair value | ( |
) | ( |
) | ( |
) | ||||||||||
| Reclassification of private placement warrants | ( |
) | ( |
) | ||||||||||||
| Estimated fair value (end of period) | $ | $ | $ | $ | ||||||||||||
The Warrant Liability is remeasured to its fair value at each reporting period and upon settlement. The change in fair value is recognized in “Fair value change of warrant liability” on the consolidated statements of operations.
The estimated fair value of the Private Placement Warrants and the Working Capital Warrants (each as defined below) is determined using Level 3 inputs by using the Black-Scholes model. The application of the Black-Scholes model requires the use of a number of inputs and significant assumptions including volatility. Significant judgment is required in determining the expected volatility of our common stock. Due to the limited history of trading of our Common Stock, we determined expected volatility based on a peer group of publicly traded companies.
The following tables provide quantitative information regarding Level 3 fair value measurement inputs as of their measurement date of June 30, 2023:
| Available for Sale Financial Asset | ||||
| Interest Rate | % | |||
| Discount Rate | % | |||
| Remaining term (in years) | ||||
| Warrant Liability | ||||
| Stock price | $ | |||
| Exercise price (strike price) | $ | |||
| Risk-free interest rate | % | |||
| Volatility | % | |||
| Remaining term (in years) | ||||
The Company performs routine procedures such as comparing prices obtained from independent source to ensure that appropriate fair values are recorded.
16
| 3. | Related party disclosures |
Balances with related parties
The were
Transactions with related parties
Related party transactions are in the normal course of operations and are measured at the amount of consideration established and agreed to by the related parties.
| 4. | Accounts receivable, net |
Accounts receivable consist of the following:
| June 30, 2023 |
December 31, 2022 |
|||||||
| (Amounts in thousands) | (Unaudited) | |||||||
| Accounts receivable from third party customers | $ | $ | ||||||
| Less: Allowance for credit losses | ( |
) | ( |
) | ||||
| Accounts receivable, net | $ | $ | ||||||
| 5. | Inventories |
Inventories consist of the following:
| June 30, 2023 |
December 31, 2022 |
|||||||
| (Amounts in thousands) | (Unaudited) | |||||||
| Raw materials and supplies | $ | $ | ||||||
| Work-in-process | ||||||||
| Finished goods | ||||||||
| Total | $ | $ | ||||||
| Provision for slow moving inventory | ( |
) | ( |
) | ||||
| Total | $ | $ | ||||||
The changes in the provision for slow moving inventory is as follows:
|
For the |
For the |
For the |
For the |
|||||||||||||
| (Amounts in thousands) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
| Balance at beginning of period | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
| Exchange differences | ( |
) | ||||||||||||||
| Balance at end of period | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
17
| 6. | Prepaid expenses and other current assets |
Prepaid expenses are analyzed as follows:
|
June 30, |
December 31, 2022 |
|||||||
| (Amounts in thousands) | (Unaudited) | |||||||
| Prepaid insurance expenses | $ | $ | ||||||
| Prepaid research expenses | ||||||||
| Prepaid rent expenses | ||||||||
| Other prepaid expenses | ||||||||
| Total | $ | $ | ||||||
Prepaid insurance expenses as of June 30, 2023 and December 31, 2022 mainly include prepayments to insurers for directors’ and officers’ insurance for liabilities that may arise in their capacity as directors and officers of a public entity.
Prepaid research expenses as of June 30, 2023 and December 31, 2022 mainly relate to prepayments for expenses under the Cooperative Research and Development Agreement as discussed in Note 16.
Other prepaid expenses as of June 30, 2023 and December 31, 2022 mainly include prepayments for professional fees and purchases.
Other current assets are analyzed as follows:
|
June 30, |
December 31, 2022 |
& | ||||||