References in this annual report to “we,” “us,” “Advent,” “company,” or “our company” are to Advent Technologies Holdings,
Inc., a Delaware corporation, and its consolidated subsidiaries. References to “management” or our “management team” are to our officers and directors.
Overview
We are an advanced materials and technology development company operating in the fuel cell and hydrogen
technology space. We develop, manufacture, and assemble complete fuel cell systems and the critical components that determine the performance of hydrogen fuel cells and other energy systems.
We develop and manufacture high-temperature proton exchange membranes (“HT-PEM” or “HT-PEMs”) and fuel
cell systems for the off-grid and portable power markets and plan to expand into the mobility market. Select applications are telecom towers (5G and older), energy infrastructure (methane emissions mitigation for the oil and gas industry), and
portable power for defense or emergency response units. Our mission is to become a leading provider of fuel cell systems, HT-PEMs, fuel cells, and HT-PEM based membrane electrode assemblies (“MEA” or “MEAs”), which are critical components used
in fuel cells, and other electrochemical applications such as electrolyzers and flow batteries. We develop the core chemistry components, the MEAs, that enable fuel cells to operate at high temperatures and also provide these MEAs to third-party
fuel cell manufacturers. HT-PEM fuel cells have the advantage of operating with multiple low-carbon fuels (in addition to hydrogen) and under extreme conditions.
Our current revenue is derived from the sale of fuel cell systems and from the sale of MEAs, membranes,
and electrodes for specific applications in the fuel cell and energy storage (flow battery) markets. While fuel cell systems sales and associated revenue is expected to provide the majority of our income in the near future, the MEA innovation is
expected to facilitate strategic partnerships between us and Tier 1 suppliers and original equipment manufacturers (“OEMs”) as these downstream manufacturers develop their own white-labelled HT-PEM products.
We have our headquarters in Boston, Massachusetts, and are building out a product development and
research and development facility in Charlestown, Massachusetts expected to open in 2022, and have MEA fabrication and system production facilities in Livermore, California; Achern, Germany; Aalborg, Denmark; and Patras, Greece. We plan to
scale-up U.S. and European production and its global sales operations to handle future demand. Our investment priorities are increasing MEA production volumes, executing on new product development initiatives (next-generation fuel cell systems
and MEAs), and optimizing production operations to improve unit costs.
Our principal focus is on the total fuel cell market, from components to complete systems, and we plan
to use our products and technology to address pressing global climate needs. Fuel cell and hydrogen technology is expected to play a critical role in global decarbonization. In order to meet the targets established in the Paris Climate Accords,
which seek to mitigate climate change and maintain global temperature less than 1.5°C-2.0°C above pre-industrial levels, the global community will need to accelerate the adoption of technologies like our fuel cells, that reduce or eliminate
emissions of carbon dioxide and other greenhouse gases. We believe that fuel cells will be a key component of the future energy generation platform given that:
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Fuel cells generate electricity and heat from hydrogen-based fuels, thereby substantially reducing emissions of carbon dioxide and other pollutants generated by the combustion process in
internal combustion engines (“ICE” or “ICEs”) and diesel generators. Fuel cells can be powered autonomously for hours or days where the fuel comes from a discrete source, or for longer where there is a pipeline or other large available
source of fuel such as a tank.
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Fuel cells utilize fuels with a high energy density relative to lithium-ion batteries and other battery technology (according to ARPA-E power densities, hydrogen contains 40,000 Wh/kg
while lithium-ion batteries carry only about 260Wh/kg). This makes fuel cell technology well-suited for use in mobility and off-grid energy generation applications where battery technology faces limitations such as lifespan,
self-discharge, weight (fuel cells are between 3 to 25 times lighter than batteries providing equivalent power), operation under almost any weather conditions, and recharge times.
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We expect that hydrogen will also be used to create liquid, synthetic fuels (eFuels like eMethanol, made by combining hydrogen with carbon dioxide for a net-zero liquid fuel) that have
the advantage of lower transportation costs and network infrastructure investment relative to hydrogen gas. Fuels like methanol have become subject to an increasing interest in Asia because they are currently available. We believe
methanol has the potential to become a leading zero-emissions liquid fuel that can leverage the current global infrastructure from gas stations to fuel tankers and trucks. Given the urgency to decarbonize power generation, and the
challenges the investment requirement poses for developing countries, we expect methanol to have an increasingly significant role as a liquid hydrogen carrier and a low/no carbon dioxide emission alternative to oil.
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Fuel cell and hydrogen technology is expected to play a critical role in global decarbonization given the clean nature of
emissions from hydrogen and hydrogen-carrier fuels relative to fossil fuels. In addition, the challenges associated with existing battery technology limit it from mass adoption across industries. Globally, an average of $38 billion per annum is
expected to be invested in the hydrogen and fuel cell sector between 2020 and 2040 with the goal of significantly increasing production capacity while lowering the cost of production. While the availability of hydrogen limited the fuel cell
industry in the past, it is now expected to become an opportunity for growth, particularly in sectors such as industrials, power generation and automotive.
Within the fuel cell market, our products have significant advantages relative to its competitors that are focused on
low-temperature proton exchange membrane technology (“LT-PEM” or “LT-PEMs”). We believe these advantages will help us secure commercial opportunities in the fuel cell market and help drive wide-spread adoption of fuel cell technology. The
benefits of our HT-PEMs relative to LT-PEMs include:
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We have developed our products under the principle of “Any Fuel. Anywhere.” which can be distilled into the two components:
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Any Fuel: While LT-PEMs
require high-purity hydrogen to operate, our HT-PEMs can utilize low cost and abundant hydrogen-carrier fuels, including methanol, natural gas, e-fuels, liquid organic hydrogen carriers, dimethyl ether, and renewable biofuels. The
infrastructure required for clean energy powered solely by high-purity hydrogen would cost trillions of dollars. In contrast, many of the hydrogen-carrier fuels can use existing or in-development infrastructure and have a much lower
transport cost than hydrogen. This key technology differentiator bypasses the need to commit to a specific energy distribution network and leverages existing infrastructure. Most importantly, it provides an immediately serviceable
market today, while we believe many LT-PEM competitors may have to wait another decade for the availability of green, high-purity, inexpensive hydrogen, and potentially longer for the maturity of hydrogen transportation and storage
networks. Given the urgency to decarbonize power generation, and the investment challenges faced by developing countries, we expect methanol to have an increasingly significant role as a liquid hydrogen carrier and a low or no carbon
dioxide emission alternative to oil.
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Anywhere: Our HT-PEM
fuel cells have the ability to operate in a variety of practical conditions, including a wide range of geographies, weather, ambient temperatures (as low as -20oC
and up to +55oC), and in humid or polluted environments. LT-PEM fuel cells, on the other hand, tend to struggle in the heat, can be damaged by dry
climates, or polluted air, and cannot handle impurities of the hydrogen supply. LT-PEM technology is intolerant to CO damage (with performance degradation at levels as low as 10 ppm), while HT-PEM can withstand 1-4% CO concentrations,
depending on temperature and operation. For example, readily available low-cost hydrogen can be made with 1-2% carbon monoxide (20,000ppm), which works well with HT- PEMs. LT-PEM loses performance with only 10ppm of carbon monoxide.
The relative durability of our products in a range of environments also provides a longer life of operation relative to LT-PEM fuel cells.
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Our HT-PEM technology significantly reduces the balance of plant requirements of a fuel cell system relative to LT-PEM fuel cells. This means that fuel cells using our HT-PEMs have
simplified requirements for supporting components and auxiliary systems, which enables reduced cost and increases application range for the end-user. It does this through two methods:
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Superior Heat Management: HT-PEM fuel cells operate at high temperatures (between 160°C and 220°C, with next-generation MEA-based fuel cells operating between 80°C and 240°C). Therefore,
the temperature differential between a HT-PEM fuel cell and the outside environment is large. As a result, only a small radiator, similar or smaller than the radiator in an ICE vehicle, is needed to transfer heat away from the fuel cell
stack. Conversely, because LT-PEM fuel cells run relatively cooler (under 85°C), a significantly larger radiator is required to effectively maintain suitable operating temperatures and conditions for an LT-PEM fuel cell.
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Water Management Issues: HT-PEM fuel cells use phosphoric acid as an electrolyte rather than water-assisted membranes. Therefore, they reduce the need for water balance and other
compensating engineering systems.
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Our Solution
Our core product offering include:
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Systems: Fuel cells for portable and stationary applications of power generation, in the range of 20W to 20kW. These fuel cells have applications in the telecom tower (e.g. 5G, 4G)
power, surveillance, defense (and other portable power applications), energy (and other critical) infrastructure, and auxiliary power (marine, leisure) markets. Our fuel cells are manufactured in the U.S., Denmark, and Germany. Fuel cell
systems provide the majority of our current revenue.
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The next generation of our fuel cells, in the 15kW to 1MW range, is expected to target the mobility sector (e.g., heavy-duty automotive, mining
equipment, marine, aerospace, and unmanned aerial vehicles (“UAV”)). We are planning to enter into joint development agreements with Tier 1 suppliers and OEMs to bring HT-PEM fuel cells to the mobility market. We intend to be a provider
of MEAs and core technology via licensing, rather than producing end-products for the mobility industry. Revenue from joint development agreements may include engineering fees during the 1-3 year initial development cycle, MEA sales, and
on-going licensing fees.
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We are a developer of the key component of the fuel cell, the MEA. The operation of the MEA is key to the functionality and characteristics of a fuel cell system. Our MEA enables a
robust, long-lasting, and ultimately low-cost fuel cell product, relative to LT-PEM technologies. In addition to our fuel cell system offerings, our MEA is also a discrete product offering to third-party fuel cell manufacturers. MEA sales
are expected to be a rapidly growing market in the future as more and more fuel cells are deployed globally by third parties, especially in the mobility space.
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Our Business Outlook
In 2021, we became publicly listed on NASDAQ. We acquired UltraCell LLC (“UltraCell”), which spearheaded our product
offering in the portable and defense markets. In the defense sector, we deliver human portable systems. In addition, the UltraCell portable system is being repurposed to provide remote power to oil and gas wellheads (Advent M-ZERØ family of
products) and to address the critical problem of methane emissions in Canada and the U.S. Furthermore, the Company has continued with delivery of MEAs to fuel cell manufacturers in Asia and with delivery of electrodes to the high-growth redox
flow-battery market. We are also part of a consortium that has applied to develop “White Dragon,” the seminal large-scale decarbonization project in Southern Europe. We were selected by the Greek Ministry of Development and Investment to be
part of the first wave of Important Projects of Common European Interest (“IPCEI”) on Hydrogen, which is currently pending European Union approval.
In September 2021, we completed the acquisition of SerEnergy A/S (“SerEnergy”) and fischer eco solutions GmbH (“FES”), a
leading manufacturer of fuel cell systems, with thousands of systems shipped in recent years. SerEnergy is located in Denmark and FES is located in Germany. The acquisition effectively doubled our team to over 170 people, and we believe the
acquired business will be a strong pillar of its potential growth strategy. SerEnergy and FES have significant production capabilities, are expected to benefit significantly from our next-generation MEAs and are expected to provide a very strong
foothold in the off-grid market. SerEnergy systems, primarily in the 5kW range, target the telecoms industry (especially the growing 5G tower demand) and other diesel generator replacement off-grid markets.
Our growth strategy is focused on targeting the following four sectors:
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The stationary off-grid market, expected to be a growing market.
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The human-portable defense, surveillance, energy infrastructure, and leisure market based on UltraCell’s innovative products.
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The development of next-generation MEA and fuel cell solutions for the mobility market.
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The large-scale fuel cell systems market (power generation and power to gas), especially following developments in the multi-billion euro “White Dragon” project (in which Advent is the
fuel cell development partner), if approved by the European Union.
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Business Strengths
Simplified balance of plant technology: Our HT-PEM technology significantly reduces the balance of plant requirements of a fuel cell system relative to LT-PEM fuel cells. Fuel cells utilizing our technology have simplified requirements for
supporting components and auxiliary systems because they reduce the complexity of water management systems. Our technology enables advanced, low-cost and simplified cooling technology, and increases the application range for the end-user. This
is especially important for air, heavy-duty transportation, and marine applications.
Leveraging existing fuel infrastructure: Given the fuel-flexible nature of our technology, we are able to leverage the existing fuel delivery infrastructure – e.g. around 3 million miles of natural gas
pipelines connecting production, storage and distribution systems in the U.S. – to deliver power to a wide range of customers and markets today. Our plug-and-play dynamic enables swift “time-to-market” capabilities. By contrast, the
infrastructure investment required for a high-purity hydrogen economy is expected to be significant – approximately $15 trillion between now and 2050 globally.
Experienced management team with proven track
record: The team that we have recruited to bring innovation to the fuel cell industry is highly experienced with a long pedigree in R&D and world-class manufacturing. Our team has been
developing MEA components since 2006 and is led by Dr. Emory De Castro (CTO) who has significant industrial experience. In addition, we initiated in 2021 a joint development effort under the U.S. Department of Energy (“DoE”) umbrella to
commercialize next-generation MEAs and ultra-low platinum catalyst solutions developed by Los Alamos, NREL Laboratories, and Brookhaven Laboratories in the U.S. We were selected as the scale-up and commercialization partner of the DoE and is
working closely with the highly-skilled R&D teams of top U.S. labs.
Following the acquisitions of UltraCell, SerEnergy and FES, and its ongoing recruiting and development in the U.S. (including
the new product development facility, close to Harvard and MIT, under construction in Charlestown, Massachusetts that is expected to open in 2022), we have significantly increased our product, system integration, manufacturing, and testing
capabilities. UltraCell brings Silicon Valley-type innovation, while SerEnergy’s expertise and world-class reputation in the stationary fuel cell industry is well established. Our team now numbers over 200 people, many with more than a decade
of hands-on expertise in the HT-PEM market. Our investment plan reflects its strategic goal to assemble significant global know-how of the HT-PEM industry. We expect that HT-PEM, with technology initially developed decades after LT-PEM, is in
early stages of growth as compared to LT-PEM, a technology initially developed during the 1960s.
Technology
Our fuel cells can use “Any Fuel. Anywhere.” because of the HT-PEM technology that we have pioneered since 2006.
High-temperature fuel cells currently operate at high temperatures (between 160°C and 220°C) and have the potential to operate between 80°C and 240°C, unlike typical LT-PEM fuel cells that are limited to below 100°C. This temperature advantage
allows the fuel cell to work with other fuels and to have reliable operation at extreme conditions, which we believe is a significant competitive advantage for the stationary power generation market.
Enhanced market opportunity: The multi-fuel capability enables us to have a very strong position in the off-grid and portable power market in select applications like telecom towers and critical infrastructure power needs. In
these applications, diesel generators are primed for replacement for environmental and cost reasons, batteries are unable to provide a long-term year-round solution, and hydrogen presents difficult logistical concerns. We believe fuels like
methanol are a more compelling choice and that our HT-PEM fuel cells are highly suitable for these applications. We believe decreasing fuel cell costs, due to technology innovation and manufacturing scale-up, can provide us with an opportunity
to grow in the power generation market and potentially displace diesel generators in applications with a clear total cost of ownership value proposition, in addition to the environmental mandate.
The next-generation of our fuel cells is being developed in collaboration with the U.S. DoE after we were awarded the
L’Innovator commercialization program. Under this program, we are working closely with the Los Alamos National Laboratory (LANL), Brookhaven National Laboratory (BNL), and National Renewable Energy Laboratory (NREL), to commercialize the
decade-long materials advancements in the field of MEA development. We expect that these next-generation MEAs (“Advanced MEA”) will bring the HT-PEM technology into the mobility area by enabling fuel cells to be lightweight with high-power
density. The Advanced MEA is also anticipated to deliver as much as three times the power output of its current MEA product. While we are already projecting being able to pass through substantial cost benefits to its customers through economies of
scale as it increases MEA production, the successful development of the Advanced MEA will be an important factor in delivering the required improvement in cost effective performance to our customers.
Based on the several critical advantages offered by our HT-PEM
technology over batteries and LT-PEM technology, we expect to be highly competitive in numerous applications. In particular, our HT-PEM fuel cells and MEAs are well-suited to off-grid power, portable power applications, combined heat and
power, and mobility (e.g., heavy-duty automotive, aviation, mining equipment, marine, and UAV). Our goal is to
partner with Tier 1 suppliers and OEMs in these new markets, focusing on the fuel cell technology development, licensing, and the mass production of the next-generation MEAs.
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Off-Grid Power: We have a growing presence in the off-grid power market, with its recently acquired SerEnergy subsidiary having shipped thousands of systems worldwide to
telecommunications providers for back-up power systems and stationary power sectors. Methanol is easier and cheaper to deliver to remote locations compared to pure hydrogen, providing our HT-PEM technology with an advantage in the off-grid
market. Off-grid fuel cell solutions can use methanol already available at some remote industrial sites, like wellheads. Additionally, methanol can be found in products already present at some remote sites, such as certain windshield
washer fluids. These products could be repurposed as a fuel source for the fuel cell. Fuel cells in these applications produce significantly less of the greenhouse gases compared to ICE generators and produce power without ICEs’ attendant
high levels of nitrogen oxides, sulfur oxides or particulate emissions. Off-grid power solutions have the potential to run full-time, 365 days a year, 24 hours per day. Our launch of the M-ZERØ methanol-fueled low-power system targets the
power generation needs of remote oil and gas locations. The current method of powering such equipment results in significant methane emissions that are equivalent to millions of cars’ emissions per year.
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Portable Power: Our acquisition of Silicon Valley-based UltraCell provided us with complete system technology for the portable power and defense markets. Electrification is one of the
key initiatives in the defense industry as the needs for mobility and power on demand are increasing dramatically. Our fuel cells have already been deployed by the US Department of Defense (“DoD”), in the XX-55 portable power system, while
the next-generation “Honey Badger” product, a wearable fuel cell designed to provide soldiers with on the go power, is currently in the DoD’s demonstration/validation program.
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The above markets define our current products, while the markets below constitute its largest opportunities for growth in the
future:
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Combined Heat and Power (“CHP”): By virtue of their high temperature operation, HT-PEM fuel cells are well suited for delivering heat in addition to power to large commercial buildings
and single or multi-family homes. The CHP efficiency is at the 85%-90% range, making HT-PEM fuel cells extremely efficient for such uses. HT-PEM fuel cells can be supplied by existing natural gas infrastructure and eventually by a future
hydrogen-blend or pure-hydrogen pipeline network.
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Automotive: By charging electric vehicles’ batteries on-board through the conversion of high-purity hydrogen or hydrogen-carrier fuels into electricity, our fuel cells solve the range and
recharging issues that battery-only electric vehicles currently face. This issue is a particular challenge in heavy-duty and commercial vehicles. Since our fuel cells can use hydrogen-carrier fuels such as natural gas, methanol and
biofuels, fuels that are of growing in importance in China, India, and Western Europe, we believe that our technology will be critical in accelerating the mass adoption of electric vehicles and the shift away from ICEs. Existing battery
and LT-PEM technology are unable to meet the needs of heavy-duty transportation which require long-range, heavy payloads, fast refill times, and the ability to operate in diverse environments. For example, LT-PEM fuel cells are unable to
operate in hot environments because the radiator required to cool the MEA to the appropriate temperature range would be too large and therefore impractical. The use of battery-only technology has the added disadvantage of insufficient
power capacity without a substantial volume and weight of batteries, which results in a significant reduction in cargo capacity.
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Aviation: Our fuel cells can deliver much longer range (autonomy) and better utilization (through faster time to refill and greater payload) for commercial drones, eVTOLs, and auxiliary
power for traditional aircraft than battery power alone can deliver. Existing commercial drones based on battery-only technology have a limited flight time given the power limitations of the lightweight requirements of flight. Compared to
battery powered flights, aircrafts powered by fuel cells using next generation HT-PEMs and ultra-lightweight non-metal plates could increase range, payload/passenger capacity, and the number of trips made on one charge or fill-up. HT-PEM
aircraft have the potential to refuel significantly faster than an equivalent battery could recharge. The high-purity hydrogen currently required by LT-PEM is considered unsafe for widespread commercial use, while our HT-PEM provides
sufficient range using safer liquid fuels and the Company believes it is key to efficient real-world flight usage. Hydrogen gas and dimethyl ether are suitable for use as fuel for aviation fuel cells, and both work well with HT-PEM
technology. Additionally, high-temperature operation in aviation is essential, given heat exchange issues. Fuel cells have shown that drones can stay airborne for longer periods of time, which enhances their value proposition and business
applications. We expect drone prototypes based on our technology to be available as soon as 2022.
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Marine: In the marine industry, neither compressed hydrogen nor batteries are a viable option for commercial shipping. The industry is evaluating alternative fuels to replace bunker
fuel, and methanol appears to be among the most likely hydrogen carriers positioned to meet the European Union’s 2050 decarbonization objectives. Our fuel cells are well-suited for methanol use, as the high-temperature operation can use
low-grade hydrogen (converted from methanol via reformation) that does not work with current LT-PEM fuel cells. Applications in the marine industry are likely to develop initially in auxiliary power and smaller ships, and eventually scale
to the multi-MW range main propulsion market. Our fuel cells promise fuel flexibility with hydrogen gas, liquid organic hydrogen carriers, methanol, and natural gas, and operate at high temperatures through proprietary chemistry. Marine
applications could be scalable for divergent load requirements and applications such as powering the entire propulsion system or, alternatively, providing auxiliary power to a differently powered primary propulsion system. Marine fuel cell
usage could offer long range and a fast refill; unlike battery power, and longer routes and larger vessels can be powered by fuel cells as compared to batteries. In addition, fuel cells can be used in a hybrid structure in conjunction with
battery power. We are planning our initial focus on applications for auxiliary marine power, and then plans to focus on vessels’ main power.
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We have been issued, acquired, licensed, or applied for approximately 190 international and United States patents, with a
concentration in membranes, electrodes, and MEAs, which support its product offerings. In the MEA sector, our products include two existing membrane technologies: “TPS®”, which we have exclusive rights to use and was obtained through patents filed
by its founders and technical staff, and “PBI” technology, of which we are a selective licensee, and provides exclusive rights to us for commercial sale of MEAs using PBI technology. Leveraging our membrane technologies, we also have intellectual
property for lightweight stacks made through advances in bipolar plate materials, which supports water-cooled systems. This results in a simpler and more compact balance-of-plant design. Our own investments in developing leading next-generation
fuel cell technology are supported by being able to leverage the research and development efforts of its strategic partners. We are planning next generation prototypes for fuel stacks as soon as 2022, with pilot production as soon as 2023 and mass
production as soon as 2024.
Our rights to commercialize the next-generation HT-PEM materials technology from the DoE L’Innovator Program also includes
rights to a portfolio of patents supporting this advanced technology. We were selected through a highly competitive bidding process by virtue of our management team’s track record in taking laboratory inventions and processes through to a
fully-scaled and manufactured product. We expect that this technology will reduce production costs of its MEAs significantly through a 3-fold increase in power output per unit area of membrane, and will provide longer operating lifetime and a
wider temperature operating range as well as substantially lower platinum content. We expect these advantages will enable us to reduce the cost to end-users of fuel cells and encourage a wider market adoption. We anticipate commercialization
and mass manufacture of this product by 2022. This and other partnerships, joint ventures, and joint development agreements, including with DoE, NASA (through Advent’s affiliation with Northeastern University) and the European Space Agency, are
expected to assist Advent in the mobility and off-grid power markets.
Our products and technology are currently being used in the marketplace to generate electricity for commercial applications,
and we are developing partnerships with Tier 1 suppliers, OEMs, and system integrators to further drive commercial adoption and use in an increasing number of applications and end markets. To date, more than 300,000 TPS® and PBI MEAs have been
sold (by us and others) for use in defense, micro-combined heat and power (µCHP) systems, battery range extenders for fuel cell battery hybrid vehicles, remote power for telecom and auxiliary power in remote locations, demonstrating strong
early-stage adoption of our existing product line. To date, we have shipped thousands of systems for defense, off-grid and remote/portable power markets.
As our business ramps up to mass-production, we plan to pursue a revenue model that includes engineering fees, MEA sales and
hardware-technology licensing fees through the life of product development. Our customer relationship is split into two phases: 1) partner with OEMs to co-develop customized fuel cell systems based on our MEAs, for which we earn engineering and
licensing fees, and 2) produce and sell proprietary MEAs directly to OEMs while earning licensing fees on fuel cells produced by customers using our technology. We expect high-margin licensing fees to become a larger component of our revenue mix
over time as our customers scale to mass manufacturing of fuel cells and other products.
We were founded and are managed by a team of world-class electrochemists, material scientists, and fuel cell specialists with
significant industry and manufacturing expertise. We have received numerous R&D funds from the DoE and the European Union and are considered a pioneer with years of experience in clean energy
technology innovation. We have our headquarters in Boston, Massachusetts and our operations in other Massachusetts locations, as well as in California, Greece, Germany, Denmark, and the Philippines. In 2022, We will open a facility in
Charlestown, Massachusetts offering research and development facilities and additional production capacity. For additional capacity, we intend to utilize existing U.S.-based toll-manufacturing for the membrane and electrode production to
scale-up its production levels without significant capital expenditure. Our Patras, Greece based production of membranes, electrodes, and MEAs benefits from labor cost and skill availability advantages.
We intend to direct the majority of our near-term funding requirements to operating expenses and capital expenses for product
development and plan to make substantial investments over the next several years, among others, in new production equipment and warehousing, systems assembly line, MEA assembly automation, aeronautical stacks and U.S. facility expansion.
Recent Acquisitions
Business Combination of AMCI Acquisition Corp. and Advent Technologies
In February 2021, we closed our business combination with AMCI Acquisition Corp. The business combination has provided us
with a sustainable funding base for the next phase of our expansion efforts to respond to significant and immediate market opportunities. Our shareholders opted to roll 100% of their equity and, as of the completion of the business combination,
owned 54% of the pro-forma equity base.
On February 18, 2021, we acquired UltraCell, formerly a fuel cell division of Bren-Tronics, Inc. Prior to the acquisition,
we had a mutually beneficial partnership, having worked together for several years. UltraCell is a leader in lightweight fuel cells for the portable power market, including small-scale fuel cell technology for the defense industry, and has sold
thousands of battery pack charger systems built around Advent MEAs to four NATO militaries, including those of the U.S. and the U.K. UltraCell systems have been deployed with excellent performance in stringent and challenging conditions and
climates. UltraCell’s technology uses hydrogen or liquid fuels to deliver reliable power at a fraction of the weight of batteries. Traditional LT-PEM fuel cell technology cannot be used in this type of remote environment fuel cell product due to
the issues with compressed high-purity hydrogen. Our fuel flexibility allows for the use of methanol in its fuel cell application, which is stable in liquid form, cheaper, and more accessible than hydrogen. With our technology powering
UltraCell products like the “Honey Badger”, a portable fuel cell which is in advanced testing with the U.S. military, multi-day military missions that generally required over 100 pounds of batteries can substitute a fuel cell and methanol
canister with a total weight of 25 pounds. UltraCell’s fuel cell innovations are expected to complement the development of our next-generation lightweight systems for the mobility market, with an emphasis on the commercial drone, aviation, and
heavy-duty automotive industries. UltraCell produces the only made in the U.S. NATO approved fuel cell products and is one of only two manufacturers of NATO approved fuel cell products manufacturing in a NATO country. Since the acquisition, we
have retained current UltraCell operations in the Livermore, California area, in parallel to its Boston operations, and plan to continue to do so, with the possibility of expansion in the future.
On September 1, 2021 (CEST), we completed our acquisition (the “Fischer Acquisition”) of SerEnergy and FES from F.E.R.
fischer Edelstahlrohre GmbH (“Fischer”). SerEnergy and FES currently market and build standalone systems and critical fuel cell components. These products are complementary to the mobile systems produced by Advent. The Fischer Acquisition is
well aligned to the “Any Fuel. Anywhere.” strategy, and is expected to accelerate our growing revenue base in fuel cell stacks and systems. The Fischer Acquisition also increases our patent and trademark portfolio with new intellectual property
and increases our labor force by approximately 90 employees, many of whom are highly-skilled manufacturing and sales professionals experienced in the fuel cell industry. SerEnergy has deployed hundreds of standalone telecom remote
self-maintaining power systems, including sales to Smart Communications, a leading telecommunications provider in the Philippines. These systems can operate in both high humidity and high temperature environments and offer remote monitoring. We
believe that the combined HT-PEM fuel cell production capacity and operations in international markets, currently consisting of Germany, Denmark and the Philippines, will support our expansion into international customer segments, in particular
the Asian and European markets.
Specific Product Offerings
Honey Badger: The Reformed Methanol Wearable Fuel Cell Power System, or “Honey Badger” is an offering marketed by our subsidiary UltraCell. On June 7, 2021, the U.S. DoD, through the U.S. Army DEVCOM Command, Control, Communications,
Computers, Cyber, Intelligence, Surveillance and Reconnaissance (C5ISR) Center, with funding through the Project Manager Integrated Visual Augmentation System (PM IVAS), has entered into a contract with us to complete the MIL-STD certification
of the cutting edge “Honey Badger”. “Honey Badger” is placed on a soldier worn plate carrier and provides on the move battery charging in the field. It has been selected by the DoD’s National Defense Center for Energy and Environment (NDCEE)
to take part in its 2021 demonstration/validation program and is the only fuel cell to take part in this program. The NDCEE is a DoD program that addresses high-priority environmental, safety, occupational health, and energy technological
challenges that are demonstrated and validated at active installations for military application. The product is offered at 20W and 50W power versions, and both are in testing and certification stages. Its core technology has completed
successful field trials in Army Expeditionary Warrior Experiments and high-altitude tests in California’s Sierra Nevada. UltraCell’s “Honey Badger 50” (the 50W power version) fuel cell is the only fuel cell that is part of this program that
supports the U.S. Army’s goal of having a technology-enabled force by 2028.
M-ZERØ: Our M-ZERØ line of products are designed to generate power in remote environments. Their use significantly reduces methane emissions where they replace older, less efficient technology. The current M-ZERØ products are 50W and 150W
systems, with systems featuring up to 400W of power expected to be released by the end of 2022. We have entered into agreements to trial ten 50W systems in Canada starting in the third quarter of 2021. If the trials are successful, this could
result in mass deployment of M-ZERØ systems during 2023. The products, which are not expected to require extensive servicing or refueling schedules, can work throughout the year, including in extreme cold. Traditional green remote power options
of solar plus battery storage do not function well in either extreme cold or in hard-to-reach areas. Widespread adoption of M-ZERØ technology at all of the wellheads in the U.S. and Canada will result in a substantial reduction of carbon dioxide
emissions.
Important Projects of Common European Interest (“IPCEI”)
White Dragon: White Dragon is an IPCEI proposal submitted by a consortium of Advent, Damco Energy S.A. (Copelouzos Group Company), PPC Greece, The Hellenic Gas Transmission System Operator (“DESFA”)
S.A., Hellenic Petroleum, Motor Oil, Corinth Pipeworks, TAP and Terna Energy (together the “consortium”) to develop a more than €8 billion green hydrogen project in Greece to gradually replace Western Macedonia’s lignite coal power plants of and
transition to clean energy production and transmission, with the ultimate goal of fully decarbonizing Greece’s energy system. The project plans to use large-scale renewable electricity to produce green hydrogen by electrolysis in Western
Macedonia. This hydrogen would then be stored and, through our HT-PEM fuel cells, would be expected to supply all of Greece with clean electricity, green energy, and heat. Our HT-PEM fuel cells provide a combination of both heat and electrical
power, and the heat generated by the project can initially be used in conjunction with the district heating networks of Western Macedonia, and in the future in other applications that require a heating and/or cooling system, such as industrial
workings, data centers and greenhouses. The White Dragon proposal also includes plans covering the transportation sector. We are the sole fuel cell development partner for the proposed project. Estimates are that the project, if approved,
would continue from 2022 through 2029, produce over 200,000 tons of hydrogen per year, reduce annual carbon dioxide emissions by 11.5 million tons and create 18,000 direct jobs and almost 30,000 indirect jobs. We were informed in September 2021
that the Greek government had approved of the White Dragon proposal and it is currently pending European Union approval.
Green HiPo: Green HiPo is an IPCEI proposal submitted by us which will, if approved, allow us to develop,
design, and manufacture fully scalable HT-PEM fuel cells for the production of power and heat. Green HiPo is linked to, but independent of, the White Dragon project. It proposes to establish a production facility in Western Macedonia with a
staggered production plan, starting with 15kW stacks, integration into 120kW modules, 1MW scale single units, and ultimately multi-MW fully integrated systems. Estimates are that the project, if approved, would continue from 2022 through 2029,
create approximately 1,400 jobs in the Western Macedonia region and the total cost of the project could exceed €4 billion. We were informed in September 2021 that the Greek government had approved of the Green HiPo proposal and it is currently
pending European Union approval.
Our intellectual property portfolio covers among other things: membranes, electrodes, MEAs, and systems exploiting the unique
operating characteristics of its materials. In general, our employees are party to agreements providing that all inventions, whether patented or not, made or conceived while being an Advent employee, which are related to or result from work or
research that the Company performs, will remain our sole and exclusive property.
We have been issued, acquired, licensed, or applied for approximately 190 international patents (including the intellectual
property from the Fischer Acquisition), the vast majority in membranes, electrodes, and MEAs, which support our product offerings. Additionally, we have approximately eighteen trademarks registered with the USPTO and various international
trademark offices, with additional trademark applications pending.
The market for alternative fuel and energy storage systems is still in the early stages of growth and is characterized by
well-established battery and LT-PEM products. We believe the principal competitive factors in the markets in which it operates include, but are not limited to, the size, weight, lifetime, durability, and total cost of ownership of these systems
to the end-user. We believe that our HT-PEM technology competes with these other technologies across a number of new and existing applications in the alternative energy fuel market, especially in the realm of fuel flexibility and heat
management. We believe the total addressable market opportunity could be over $72 billion by the year 2030.
Employees and Human Capital Resources
Our employees are critical to our success. As of December 31, 2021, we had approximately 200 employees, including part-time,
contractors and employees who joined us from the recent Fischer Acquisition. We also occasionally rely on additional independent contractors to support our operations. To date, we have not experienced any work stoppages and consider our
relationship with our employees to be in good standing. None of our employees are represented by a labor organization or are a party to any collective bargaining arrangement.
We believe that developing a diverse, equitable and inclusive culture is critical to continuing to attract and retain the top
talent necessary for our long-term success and strategy. We value diversity at all levels.
We strive to create a collaborative environment where our colleagues feel respected and valued. We provide our employees
with competitive compensation, opportunities for equity ownership and a robust employment package, including health care, retirement benefits and paid time off. In addition, we regularly interact with our employees to gauge employee satisfaction
and identify areas of focus.
Available Information
Our Internet address is https://www.advent.energy. Our website and the information contained on, or that can be accessed
through, the website will not be deemed to be incorporated by reference in, and are not considered part of, this Annual Report on Form 10-K. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including
exhibits, proxy and information statements and amendments to those reports filed or furnished pursuant to Sections 13(a), 14, and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available through the “Investors”
portion of our website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. In addition, our filings with the SEC may be accessed through the SEC’s Interactive Data Electronic
Applications system at http://www.sec.gov. All statements made in any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in which the
statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.
An investment in our common stock involves a high degree of risks. You should consider carefully the risks
described below as well as the other information contained in this Annual Report on Form 10-K before investing in our common stock. The risks described below are those that we believe are the material risks that we face. If any of the following
risks actually occurs, our business, prospects, operating results and financial condition could suffer materially, the trading price of our common stock could decline and you could lose all or part of your investment. The risks and uncertainties
described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. See “Forward-Looking Statements” in this Annual Report
on Form 10-K.
Risk Factors Relating to Our Operations and Business
We may be unable to adequately control the costs associated with our operations.
We will require significant capital to develop and grow our business, including developing and manufacturing our fuel cells and
building Advent’s brand. We expect to incur significant expenses which will impact our profitability, including research and development expenses, raw material procurement costs, sales and distribution expenses as we build Advent’s brand and market
our fuel cells, and general and administrative expenses as we scale our operations. Our ability to become profitable in the future will not only depend on our ability to successfully market our fuel cells and other products and services, but also
to control our costs. If we are unable to cost efficiently design, manufacture, market, sell, distribute and service our fuel cells, our margins, profitability and prospects would be materially and adversely affected.
We may need to raise additional funds and these funds may not be available to us when we need them. If we
cannot raise additional funds when we need them, our operations and prospects could be negatively affected.
The scale-up of production of our fuel cells, membranes and electrodes, together with the associated investment in our assembly
line and product development activities, will consume capital. While we expect that we will have sufficient capital to fund our planned operations through to breakeven, we may need to raise additional funds through the issuance of equity, equity
related or debt securities, or through obtaining credit from government or financial institutions. This capital will be necessary to fund our ongoing operations, continue research, development and design efforts, improve infrastructure, and
introduce new technologies. We cannot be certain that additional funds will be available to us on favorable terms when required, or at all. If we cannot raise additional funds when we need them, our financial condition, results of operations,
business and prospects could be materially adversely affected.
If we fail to manage our future growth effectively, we may not be able to market and sell our fuel cells
successfully.
Any failure to manage our growth effectively could materially and adversely affect our business, prospects, operating results
and financial condition. We intend to expand our operations significantly. Our future expansion will include:
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training new personnel;
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forecasting production and revenue;
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controlling expenses and investments in anticipation of expanded operations;
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entry into new material contracts;
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establishing or expanding design, production, licensing and sales; and
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implementing and enhancing administrative infrastructure, systems and processes.
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We intend to hire additional personnel, including design and production personnel. Because our technologies are different from
traditional electric vehicle battery technology, individuals with sufficient training in alternative fuel and electric vehicles may not be available to hire, and as a result, we will need to expend significant time and expense training the
employees we do hire. Competition for individuals with experience designing and manufacturing hydrogen fuel cells is high, and we may not be able to attract, integrate, train, motivate or retain additional highly qualified personnel in the future.
The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm our business and prospects.
We will rely on complex machinery for our operations and production involves a significant degree of risk
and uncertainty in terms of operational performance and costs.
We will rely heavily on complex machinery for our operations and our production will involve a significant degree of
uncertainty and risk in terms of operational performance and costs. Our membrane and fuel cell production plant will consist of large-scale machinery combining many components. The production plant components are likely to suffer unexpected
malfunctions from time to time and will depend on repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of the production plant components may significantly affect the intended operational
efficiency. Operational performance and costs can be difficult to predict and are often influenced by factors outside of our control, such as, but not limited to, scarcity of natural resources, environmental hazards and remediation, costs
associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining governmental permits, damages or defects in electronic systems, industrial accidents, fire, and seismic activity and natural disasters.
Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production equipment, damage to manufacturing facilities, monetary losses, delays and unanticipated fluctuations in production,
environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all which could have a material adverse effect on our business, results of operations, cash flows, financial condition or prospects.
Our future growth is dependent upon the market’s willingness to adopt our hydrogen-powered fuel cell and
membrane technology.
Our growth is highly dependent upon the adoption by the automotive, aerospace, power and energy
industries. If the market for our fuel cells and membranes does not develop at the rate or to the extent that we expect, our business, prospects, financial condition and operating results will be harmed. The market for alternative fuel and energy
storage systems is still new and is characterized by rapidly changing technologies, price competition, numerous competitors, evolving government regulation and industry standards and uncertain customer demands and behaviors.
Factors that may influence the adoption of our fuel cell and membrane technology include:
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perceptions about safety, design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of alternative fuel or electric vehicles;
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improvements in the fuel economy of internal combustion engines and battery powered vehicles;
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the availability of service for alternative fuel vehicles;
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volatility in the cost of energy, oil, gasoline and hydrogen;
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government regulations and economic incentives promoting fuel efficiency, alternate forms of energy, and regulations banning internal combustion engines;
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the availability of tax and other governmental incentives to sell hydrogen;
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volatility in the cost of energy, oil, gasoline and hydrogen;
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government regulations and economic incentives promoting fuel efficiency, alternate forms of energy, and regulations banning internal combustion engines;
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the availability of tax and other governmental incentives to sell hydrogen;
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perceptions about and the actual cost of alternative fuel; and
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We Continue to Generate a Low Level of Revenue from our core product MEA and Developing Commercial Sales to
Major Organizations.
Based on conversations with existing customers and incoming inquiries from new customers, we anticipate substantial increased
demand for our MEAs from a wide range of customers as we scale up our production facilities and testing capabilities, and as the awareness our MEA capabilities become widely known in the industry. We expect both its existing customers to increase
order volume, and to generate substantial new orders from major organizations, with some of whom it is already in discussions regarding prospective commercial partnerships and joint development agreements. As of December 31, 2021, we were still
generating a low level of revenues compared to our future projections and have not made any commercial sales to major organizations.
Future product recalls could materially adversely affect our business, prospects, operating results and
financial condition.
Any product recall in the future may result in adverse publicity, damage our brand and materially adversely affect our
business, prospects, operating results and financial condition. In the future, we may voluntarily or involuntarily, initiate a recall if any of our fuel cells or membranes prove to be defective. Such recalls involve significant expense and
diversion of management attention and other resources, which could adversely affect our brand image in our target markets, as well as our business, prospects, financial condition and results of operations.
If we are unable to attract and retain key employees and hire qualified management, technical and fuel cell
and system engineering personnel, our ability to compete could be harmed.
Our success depends, in part, on our ability to retain our key personnel. The unexpected loss of or failure to retain one or
more of our key employees could adversely affect our business. Our success also depends, in part, on our continuing ability to identify, hire, attract, train and develop other highly qualified personnel.
Competition for these employees can be intense, and our ability to hire, attract and retain them depends on our ability to
provide competitive compensation. We may not be able to attract, assimilate, develop or retain qualified personnel in the future, and our failure to do so could adversely affect our business, including the execution of our global business strategy.
Any failure by our management team to perform as expected may have a material adverse effect on our business, prospects, financial condition and results of operations.
We have been, and may in the future be, adversely affected by the global COVID-19 pandemic.
We face various risks related to epidemics, pandemics, and other outbreaks, including the recent COVID-19 pandemic. The impact
of COVID-19, including changes in consumer and business behavior, pandemic fears and market downturns, and restrictions on business and individual activities, has created significant volatility in the global economy and led to reduced economic
activity. The spread of COVID-19 has also impacted our potential customers and suppliers by disrupting the manufacturing, delivery and overall supply chain of fuel cell manufacturers and suppliers.
Actions taken around the world to help mitigate the spread of COVID-19 include restrictions on travel, quarantines in certain
areas and forced closures for certain types of public places and businesses. COVID-19 and actions taken to mitigate its spread have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries,
including the geographical area in which Advent operates. For example, In May 2021, Advent’s research and development activities in Boston were limited by the restrictions imposed on laboratory work in the U.S., with laboratories being run at
approximately 25% occupancy, with the result that certain business development activities have moved more slowly. Additionally, in Patras, Greece, approximately half of the Company’s workforce have worked from home during the temporary lockdowns
imposed by the Greek authorities, although these have largely been in support functions. These measures limit operations in our U.S. and Greece locations and have and may continue to adversely impact our employees, research and development
activities and operations and the operations of our suppliers, vendors and business partners, and may negatively impact our sales and marketing activities. We may take further actions as may be required by government authorities or that we
determine are in the best interests of our employees, suppliers, vendors and business partners.
The extent to which the COVID-19 pandemic continues to impact our business, prospects and results of operations will depend on
future developments, which are highly uncertain and cannot be predicted, including the duration and spread of the pandemic, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and
operating activities can resume. Even after the COVID-19 pandemic has subsided, we may continue to experience an adverse impact to our business as a result of the global economic impact, including any recession that has occurred or may occur in the
future.
There are no comparable recent events that may provide guidance as to the effect of the spread of COVID-19 and a pandemic, and,
as a result, the ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain.
Increases in costs, disruption of supply or shortage of raw materials could harm our business.
Once we increase production, we may experience increases in the cost or a sustained interruption in the supply or shortage of
raw materials. Any such increase or supply interruption could materially negatively impact our business, prospects, financial condition and operating results. We use various raw materials including precious group metals such as platinum; carbon
black; polymer precursors, reactants, and solvents; as well as carbon cloth and carbon fiber paper. The prices for these raw materials fluctuate depending on market conditions and global demand and could adversely affect our business and operating
results.
We are or may be subject to risks associated with strategic alliances or acquisitions.
We have entered into, and may in the future enter into additional, strategic alliances, including joint ventures or minority
equity investments with various third parties to further our business purpose. These alliances could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the third party and increased
expenses in establishing new strategic alliances, any of which may materially and adversely affect our business. We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third
parties suffers negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party.
When appropriate opportunities arise, we may acquire additional assets, products, technologies or businesses that are
complementary to our existing business. In addition to possible stockholder approval, we may need approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, which could
result in increased delay and costs, and may disrupt our business strategy if we fail to do so. Furthermore, acquisitions and the subsequent integration of new assets and businesses into our own require significant attention from our management and
could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our operations. Acquired assets or businesses may not generate the financial results we expect. Acquisitions could result in the use
of substantial amounts of cash, potentially dilutive issuances of equity securities and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.
We may experience difficulties integrating the operations of acquired companies into our business and in
realizing the expected benefits of these acquisitions.
We completed the acquisition of SerEnergy and FES on August 31, 2021. Acquisitions involve numerous
risks, any of which could harm our business and negatively affect our financial condition and results of operations. The success of our acquisition of FES and SerEnergy will depend in part on our ability to realize the anticipated business
opportunities from combining their and our operations in an efficient and effective manner. These integration processes could take longer than anticipated and could result in the loss of key employees, the disruption of each company’s ongoing
businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, employees or
other third parties, or our ability to achieve the anticipated benefits of the acquisitions, and could harm our financial performance. If we are unable to successfully or timely integrate the operations of FES and SerEnergy with our business, we
may incur unanticipated liabilities and be unable to realize the revenue growth, synergies and other anticipated benefits resulting from the acquisitions, or fully offset the costs of the acquisition, and our business, results of operations and
financial condition could be materially and adversely affected.
We are subject to substantial regulation and unfavorable changes to, or failure by us to comply with, these
regulations could substantially harm our business and operating results.
Our fuel cells and membranes are subject to substantial regulation under international, federal, state, and local laws. We
expect to incur significant costs in complying with these regulations. Regulations related to alternative energy are currently evolving and we face risks associated with changes to these regulations, including but not limited to:
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increased subsidies for corn and ethanol production, which could reduce the operating cost of vehicles that use ethanol or a combination of ethanol and gasoline; and
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increased sensitivity by regulators to the needs of established automobile manufacturers with large employment bases, high fixed costs and business models based on the internal combustion
engine, which could lead them to pass regulations that could reduce the compliance costs of such established manufacturers or mitigate the effects of government efforts to promote alternative fuel vehicles. Compliance with changing
regulations could be burdensome, time consuming, and expensive. To the extent compliance with new regulations is cost prohibitive, our business, prospects, financial condition and operating results would be adversely affected.
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We face risks associated with our international operations, including unfavorable regulatory, political,
tax and labor conditions, which could harm our business.
We face risks associated with our international operations, including possible unfavorable regulatory, political, tax and labor
conditions, which could harm our business. We have international operations in Greece that are subject to the legal, political, regulatory and social requirements and economic conditions in these jurisdictions. We are subject to a number of risks
associated with international business activities that may increase our costs, impact our ability to sell our fuel cells and membranes and require significant management attention. These risks include:
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difficulty in staffing and managing foreign operations;
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foreign government taxes, regulations and permit requirements, including foreign taxes that we may not be able to offset against taxes imposed upon us in the U.S., and foreign tax and
other laws limiting our ability to repatriate funds to the U.S.;
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fluctuations in foreign currency exchange rates and interest rates;
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U.S. and foreign government trade restrictions, tariffs and price or exchange controls;
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foreign labor laws, regulations and restrictions;
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changes in diplomatic and trade relationships;
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political instability, natural disasters, war or events of terrorism; and
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the strength of international economies.
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If we fail to successfully address these risks, our business, prospects, operating results and financial condition could be
materially harmed.
The unavailability, reduction or elimination of government and economic incentives could have a material
adverse effect on our business, prospects, financial condition and operating results.
Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy
changes, the reduced need for such subsidies and incentives due to the perceived success of alternative energies or other reasons may result in the diminished competitiveness of the alternative fuel industry generally. This could materially and
adversely affect the growth of the alternative fuel automotive markets and our business, prospects, financial condition and operating results.
While certain tax credits and other incentives for alternative energy production and alternative fuel vehicles have been
available in the past, there is no guarantee these programs will be available in the future. If current tax incentives are not available in the future, our financial position could be harmed.
We may not be able to obtain or agree on acceptable terms and conditions for all or a significant portion
of the government grants, loans and other incentives for which we may apply in the future. As a result, our business and prospects may be adversely affected.
We anticipate continuing to apply for federal and state grants, loans and tax
incentives under government programs designed to stimulate the economy and support the production of alternative fuel vehicles and related technologies. We anticipate that in the future there will be new opportunities for us to apply for grants,
loans and other incentives from the U.S., state and foreign governments. Our ability to obtain funds or incentives from government sources is subject to the availability of funds under applicable government programs and approval of our applications
to participate in such programs. The application process for these funds and other incentives will likely be highly competitive. We cannot assure you that we will be successful in obtaining any of these additional grants, loans and other
incentives. If we are not successful in obtaining any of these additional incentives and we are unable to find alternative sources of funding to meet our planned capital needs, our business and prospects could be materially adversely affected.
We may need to defend ourselves against patent or trademark infringement claims, which may be
time-consuming and cause us to incur substantial costs.
Companies, organizations or individuals, including our competitors, may own or obtain patents, trademarks or other proprietary
rights that would prevent or limit our ability to make, use, develop, license or sell our fuel cell and membrane technologies, which could make it more difficult for us to operate our business. We may receive inquiries from patent or trademark
owners inquiring whether we infringe their proprietary rights. Companies owning patents or other intellectual property rights relating to fuel cells may allege infringement of such rights. In response to a determination that we have infringed upon
a third party’s intellectual property rights, we may be required to do one or more of the following:
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cease development, sales, license or use of fuel cells or membranes that incorporate the asserted intellectual property;
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pay substantial damages;
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obtain a license from the owner of the asserted intellectual property right, which license may not be available on reasonable terms or at all; or
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redesign one or more aspects or systems of our fuel cells or membranes.
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A successful claim of infringement against us could materially adversely affect our business, prospects, operating results and
financial condition. Any litigation or claims, whether valid or invalid, could result in substantial costs and diversion of resources.
We also plan to license patents and other intellectual property from third parties and we may face claims that our use of this
in-licensed technology infringes the intellectual property rights of others. In such cases, we will seek indemnification from our licensors. However, our rights to indemnification may be unavailable or insufficient to cover our costs and losses.
Our business may be adversely affected if we are unable to protect our intellectual property rights from
unauthorized use by third parties.
Failure to adequately protect our intellectual property rights could result in our competitors offering similar products,
potentially resulting in the loss of some of our competitive advantage and a decrease in our revenue, which would adversely affect our business, prospects, financial condition and operating results. Our success depends, at least in part, on our
ability to protect our core technology and intellectual property. To accomplish this, we will rely on a combination of patents, trade secrets (including know-how), employee and third-party nondisclosure agreements, copyright, trademarks,
intellectual property licenses and other contractual rights to establish and protect our rights in our technology.
The protection of our intellectual property rights will be important to our future business opportunities. However, the
measures we take to protect our intellectual property from unauthorized use by others may not be effective for various reasons, including the following:
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any patent applications we submit may not result in the issuance of patents;
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the scope of our issued patents may not be broad enough to protect our proprietary rights;
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our issued patents may be challenged and/or invalidated by our competitors;
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the costs associated with enforcing patents, confidentiality and invention agreements or other intellectual property rights may make aggressive enforcement impracticable;
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current and future competitors may circumvent our patents; and
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our in-licensed patents may be invalidated, or the owners of these patents may breach our license arrangements.
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Patent, trademark, and trade secret laws vary significantly throughout the world. Some foreign countries do not protect
intellectual property rights to the same extent as do the laws of the U.S. Further, policing the unauthorized use of our intellectual property in foreign jurisdictions may be difficult. Therefore, our intellectual property rights may not be as
strong or as easily enforced outside of the U.S.
Our patent applications may not issue as patents, which may have a material adverse effect on our ability
to prevent others from commercially exploiting products similar to ours.
We cannot be certain that we are the first inventor of the subject matter to which we have filed a particular patent
application, or if we are the first party to file such a patent application. If another party has filed a patent application to the same subject matter as we have, we may not be entitled to the protection sought by the patent application. Further,
the scope of protection of issued patent claims is often difficult to determine. As a result, we cannot be certain that the patent applications that we file will issue, or that our issued patents will afford protection against competitors with
similar technology. In addition, our competitors may design around our issued patents, which may adversely affect our business, prospects, financial condition or operating results.
Our management team has limited experience managing a public company.
Most members of our management team have limited experience managing a publicly-traded company, interacting with public company
investors and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and
reporting obligations under the federal securities laws and the scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our management team and could divert their attention away
from the day-to-day management of our business, which could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.
The SEC released a public statement regarding accounting for warrants which resulted in our warrants being
accounted for as liabilities rather than as equity and a restatement of our previously issued financial statements.
On April 12, 2021, the staff of the SEC issued a public statement entitled “Staff Statement on Accounting and Reporting
Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”) (the “Statement”). In the Statement, the SEC staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be
classified as liabilities on the SPAC’s balance sheet as opposed to equity. Since issuance, our warrants were accounted for as equity within our balance sheet, and after discussion and evaluation, including with our independent auditors, we have
concluded that our warrants should be presented as liabilities with subsequent fair value remeasurement. Therefore, we conducted a valuation of our warrants and restated our previously issued financial statements, which resulted in unanticipated
costs and diversion of management resources and may result in potential loss of investor confidence. Although we have now completed the restatement, we cannot guarantee that we will have no further inquiries from the SEC or Nasdaq regarding our
restated financial statements or matters relating thereto. Any future inquiries from the SEC or Nasdaq as a result of the restatement of our historical financial statements will, regardless of the outcome, likely consume a significant amount of our
resources in addition to those resources already consumed in connection with the restatement itself.
The restatement of the Company’s financial statements in May 2021 has subjected us to additional risks and
uncertainties, including increased professional costs and the increased possibility of legal proceedings.
As a result of the restatement of our financial statements discussed above, we have become subject to additional risks and
uncertainties, including, among others, increased professional fees and expenses and time commitment that may be required to address matters related to the restatement, and scrutiny of the SEC and other regulatory bodies which could cause investors
to lose confidence in the Company’s reported financial information and could subject the Company to civil or criminal penalties or shareholder litigation. We could face monetary judgments, penalties or other sanctions that could have a material
adverse effect on the Company’s business, financial condition and results of operations and could cause its stock price to decline.
Certain of our warrants are accounted for as a warrant liability and are recorded at fair value upon
issuance with changes in fair value each period to be reported in earnings, which may have an adverse effect on the market price of our common stock.
Following the restatement of our historical financial statements, we account for our warrants as a warrant liability and
recorded at fair value upon issuance any changes in fair value each period reported in earnings as determined by the Company based upon a valuation report obtained from its independent third party valuation firm. The impact of changes in fair value
on earnings may have an adverse effect on the market price of our common stock.
Obtaining the MIL-STD certification for the Honey Badger and advancing it for U.S. army integration is
subject to risks and uncertainty.
Obtaining the MIL-STD certification for the Honey Badger and advancing it for U.S. army integration is subject to risks and
uncertainty, and may not be completed on the timeline the Company expects, or at all.
Cybersecurity risks and attacks, security incidents, and data breaches could compromise our intellectual property or
other proprietary information, could disrupt our electronic infrastructure, operations and manufacturing, and could impact our competitive position, reputation, results of operations, financial condition, and cash flows.
We rely upon the information technology and data security infrastructure and its capacity, reliability, and security in connection with
various aspects of our business activities. We also rely on our ability to expand and continually update these technologies and related infrastructure in response to the changing needs of our business. We face challenges related to supporting
our older technologies and implementing necessary upgrades and the hardening of current technologies. In addition, some of these technologies are managed by third-party service providers and are not under our direct control. If we experience a
problem with a critical technology, including during upgrades or new technology implementations, any resulting disruptions could have an adverse effect on our business operations and our performance.
Our business operations rely upon our electronic infrastructure and that of our third-party vendors, including to handle information and
data such as intellectual property, personal information, protected information, financial information and other confidential and proprietary information related to our business and our employees, prospects, customers, suppliers and other
business partners. While we maintain certain administrative, technical, and physical safeguards and take preventive and proactive measures to combat known and unknown cybersecurity risks, we currently are building out and maturing our electronic
infrastructure and safeguards. There is no assurance that our current controls and our ongoing efforts will be sufficient to eliminate security risks.
Cyberattacks are increasing in frequency and evolving in nature. We and our third-party providers are at risk of attack through use of
increasingly sophisticated methods, including malware, phishing, ransomware, and the deployment of technologies to find and exploit vulnerabilities. Our electronic infrastructure, and information technology systems maintained by our third-party
providers, have been in the past, and may be in the future, subjected to attempts to gain unauthorized access, disable, destroy, maliciously control or cause other business disruptions. In some cases, it is difficult to anticipate or to detect
immediately such incidents and any damage caused. While these types of incidents have not had a material impact on our business to-date, future incidents involving access to or improper use of our systems, or those of our third-parties, could
compromise confidential, proprietary or otherwise sensitive information.
In addition, cyberattacks could negatively impact our reputation and our competitive position and could result in litigation with third
parties, regulatory action, significant remediation costs, and loss of business and customers relationships, any of which could adversely impact our business, our financial condition, and our operating results. Although we maintain some insurance
coverage, we cannot be certain that coverage would apply to cyber risks, that it may be adequate for liabilities incurred, or that any insurer will not accept or deny coverage of future claims.
We may experience problems with the operation of our electronic infrastructure or the technology systems of third parties on which we rely,
as well as the development and deployment of new electronic infrastructure, that could adversely affect, or even disrupt, all or a portion of our operations until resolved. In addition, as a result of the COVID-19 pandemic a large percentage of
our salaried employees continue to work remotely full or part-time. This remote working environment may pose a heightened risk for security breaches or other disruptions of our information technology environment.
Our global operations are subject to data privacy laws and regulations that impose significant compliance costs and
create reputational and legal risk.
Due to the international scope of our operations, we may be subject to a complex system of regulatory requirements regarding data privacy,
such as the European Union General Data Protection Regulation and California’s Consumer Privacy Act and its amendments.
Our numerous foreign operations are governed by laws, rules and business practices that differ from those of the U.S. We cannot predict now
our future data privacy risks or the nature, scope or effect of future regulatory requirements to which our operations might be subject or the manner in which existing laws might be administered or interpreted.
A write-off of all or part of our goodwill or other intangible assets could adversely affect our operating
results and net worth.
Goodwill and other intangible assets are a component of our assets. As a part of our acquisition of SerEnergy and FES on August
31, 2021, we recognized $29.4 million in goodwill and $19.8 million in other intangible assets. As of December 31, 2021, goodwill was $30.0 million and other intangible assets were $23.3 million of our total assets of $163.0 million. We may have to
write off all or part of our goodwill or other intangible assets if their value becomes impaired. Although this write-off would be a non-cash charge, it could reduce our earnings and our financial condition.
Risks Related to Ownership of Our Common Stock and Warrants
Delaware law and our second amended and restated certificate of incorporation and amended and restated
bylaws contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
Our second amended and restated certificate of incorporation and our amended and restated bylaws, and the Delaware General
Corporations Law (“DGCL”), contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors and therefore depress the trading price of our common
stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors or taking other corporate actions, including effecting changes in our management. Among other things, our second amended and
restated certificate of incorporation and amended and restated bylaws include provisions regarding:
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a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;
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the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including
preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
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the limitation of the liability of, and the indemnification of, our directors and officers;
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the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director,
which prevents stockholders from being able to fill vacancies on our board of directors;
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the requirement that directors may only be removed from our board of directors for cause;
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a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of
stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors;
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the requirement that a special meeting of stockholders may be called only by our board of directors, the chairperson of our board of directors, our chief executive officer or our
president (in the absence of a chief executive officer), which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors;
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controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings;
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the requirement for the affirmative vote of holders of at least 65% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to
amend, alter, change or repeal any provision of the second amended and restated certificate of incorporation or amended and restated bylaws, which could preclude stockholders from bringing matters before annual or special meetings of
stockholders and delay changes in our board of directors and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;
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the ability of our board of directors to amend the amended and restated bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and
inhibit the ability of an acquirer to amend the amended and restated bylaws to facilitate an unsolicited takeover attempt; and
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advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which
could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies
to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of surviving entity.
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These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our board of
directors or management.
In addition, as a Delaware corporation, we will be subject to provisions of Delaware law, including Section 203 of the DGCL,
which may generally prohibit certain stockholders holding 15% or more of our outstanding capital stock from engaging in certain business combinations with us for a specified period of time unless certain conditions are met.
Any provision of the second amended and restated certificate of incorporation, amended and restated bylaws or Delaware law that
has the effect of delaying or preventing a change in control could limit the opportunity for stockholders to receive a premium for their shares of our capital stock and could also affect the price that some investors are willing to pay for our
common stock.
The second amended and restated certificate of incorporation designate a state or federal court located
within the State of Delaware as the exclusive forum for substantially all disputes between us and our stockholders, and also provide that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of
action arising under the Securities Act, each of which could limit the ability of our stockholders to choose the judicial forum for disputes with us or our directors, officers, or employees.
The second amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an
alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on its behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of its directors, officers, or other employees to us or
our stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law, or the second amended and restated certificate of incorporation or the amended and restated bylaws or (4) any other action asserting a claim
that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware), in all cases subject to
the court having jurisdiction over indispensable parties named as defendants. The second amended and restated certificate of incorporation also provides that the federal district courts of the U.S. will be the exclusive forum for resolving any
complaint asserting a cause of action arising under the Securities Act. The exclusive forum provision is applicable to the fullest extent permitted by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive
federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or
liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive
compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by
the Securities Act or the rules and regulations thereunder.
Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of
and consented to this provision. This exclusive-forum provision may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers, or other employees, which may discourage
lawsuits against us and our directors, officers, and other employees. If a court were to find the exclusive-forum provision be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other
jurisdictions, which could harm its results of operations.
We may be required to take write-downs or write-offs, restructuring and impairment or other charges that
could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.
Although we conducted due diligence on Advent, we cannot assure you that this diligence revealed all material issues that may
be present in Advent’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of our control will not later arise. As a result, the company may be forced to later
write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in losses. Even if the due diligence successfully identified certain risks, unexpected risks may arise and previously known risks may
materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that the company reports charges of this nature could contribute
to negative market perceptions about the Company or our securities. Accordingly, our stockholders could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are
able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the Proxy
Statement / Prospectus relating to the business combination contained an actionable material misstatement or material omission.
An active market for our securities may not develop, which would adversely affect the liquidity and price
of our securities.
The price of our securities may vary significantly due to factors specific to our business as well as to general market or
economic conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.
NASDAQ may delist our securities from trading on its exchange, which could limit investors’ ability to make
transactions in our securities and subject us to additional trading restrictions.
Our securities are currently listed on Nasdaq. However, we cannot assure you that our securities will continue to be listed on
Nasdaq in the future. In order to continue listing its securities on Nasdaq, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain a minimum amount in stockholders’ equity (generally $2,500,000) and a
minimum number of holders of its securities (generally 300 public holders). Additionally, we are required to demonstrate compliance with Nasdaq’s listing requirements, which are more rigorous than Nasdaq’s
continued listing requirements, in order to continue to maintain the listing of our securities on Nasdaq. For instance, our stock price would generally be required to be at least $4 per share and its stockholders’ equity would generally be required
to be at least $5 million and we will be required to have a minimum of 300 public holders. We cannot assure you that we will be able to meet those initial listing requirements at all times.
If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national
securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
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a limited availability of market quotations for its securities;
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reduced liquidity for its securities;
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a determination that our common stock is a “penny stock” which will require brokers trading in the common stock to adhere to more stringent rules and possibly result in a reduced level of
trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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Our common stock price may change significantly and you could lose all or part of your investment as a
result.
The trading price of our common stock is likely to be volatile. The stock market recently has experienced extreme volatility.
This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your shares of our common stock at an attractive price due to a number of factors such as those listed
in “Risk Factors Relating to Our Operations and Business” and the following:
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results of operations that vary from the expectations of securities analysts and investors;
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results of operations that vary from our competitors;
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changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;
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declines in the market prices of stocks generally;
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strategic actions by us or our competitors;
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announcements by us or our competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments;
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any significant change in our management;
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changes in general economic or market conditions or trends in our industry or markets;
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changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
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future sales of our common stock or other securities;
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investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives;
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the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;
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litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;
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guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;
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the development and sustainability of an active trading market for our common stock;
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actions by institutional or activist stockholders;
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changes in accounting standards, policies, guidelines, interpretations or principles; and
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other events or factors, including those resulting from pandemics, natural disasters, war, acts of terrorism or responses to these events.
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These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our
actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.
In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we
were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.
Because there are no current plans to pay cash dividends on our common stock for the foreseeable future,
you may not receive any return on investment unless you sell your common stock at a price greater than what you paid for it.
We intend to retain future earnings, if any, for future operations, expansion and debt repayment and there are no current plans
to pay any cash dividends for the foreseeable future. The declaration, amount and payment of any future dividends on shares of common stock will be at the sole discretion of the board of directors. The board of directors may take into account
general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, implications of the payment of
dividends by us to our stockholders or by its subsidiaries to it and such other factors as the board of directors may deem relevant. As a result, you may not receive any return on an investment in our common stock unless you sell your common stock
for a price greater than that which you paid for it.
Our stockholders may experience dilution in the future.
The percentage of shares of our common stock owned by current stockholders may be diluted in the future because of equity
issuances for acquisitions, capital market transactions or otherwise, including, without limitation, equity awards that we may grant to its directors, officers and employees, or exercise of warrants. Such issuances may have a dilutive effect on our
earnings per share, which could adversely affect the market price of our common stock.
If securities or industry analysts do not publish research or reports about our business, if they change
their recommendations regarding our common stock or if our operating results do not meet their expectations, our common stock price and trading volume could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts
publish about us or our businesses. If no securities or industry analysts commence coverage of us or our business, the trading price for our common stock could be negatively impacted. In the event securities or industry analysts initiate coverage,
if one or more of the analysts who cover us downgrade our securities or publish unfavorable research about our businesses, or if our operating results do not meet analyst expectations, the trading price of our common stock would likely decline. If
one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline.
Future sales, or the perception of future sales, by us or our stockholders in the public market could cause
the market price for our common stock to decline.
The sale of shares of our common stock in the public market, or the perception that such sales could occur, could harm the
prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that it deems appropriate.
As of March 31, 2022, we have a total of 51,253,591 shares of our common stock
outstanding. All shares held by public stockholders prior to the Business Combination and all of the shares issued in the Business Combination to former Old Advent stockholders are freely tradable without registration under the Securities Act, and
without restriction by persons other than our “affiliates” (as defined under Rule 144 of the Securities Act, “Rule 144”), including our directors, executive officers and other affiliates.
The shares of Advent’s common stock reserved for future issuance under the 2021 Equity Incentive Plan will become eligible for
sale in the public market once those shares are issued, subject to any applicable vesting requirements, lockup agreements and other restrictions imposed by law. A total of 6,915,892 shares of common stock have been reserved for future issuance
under the 2021 Equity Incentive Plan. We are expected to file one or more registration statements on Form S-8 under the Securities Act to register shares of our common stock or securities convertible into or exchangeable for shares of our common
stock issued pursuant to the Equity Incentive Plan. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open
market. The initial registration statement on Form S-8 is expected to cover shares of our common stock.
In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of our
common stock issued in connection with an investment or acquisition could constitute a material portion of the then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may
result in additional dilution to our stockholders.
As a public company, we are subject to additional laws, regulations and stock exchange listing standards,
which impose additional costs on us and may strain our resources and divert our management’s attention.
Advent previously operated on a private basis and following the Business Combination it became a wholly-owned subsidiary of a
public company that is subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of Nasdaq and other applicable securities laws
and regulations. Compliance with these laws and regulations will increase our legal and financial compliance costs and make some activities more difficult, time-consuming or costly, which may strain our resources or divert management’s attention.
We are an emerging growth company within the meaning of the Securities Act, and if we take advantage of
certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act. We may continue to
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We cannot predict whether investors will find
securities issued by us less attractive because we will rely on these exemptions. If some investors find those securities less attractive as a result of its reliance on these exemptions, the trading prices of our securities may be lower than they
otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised
financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with
the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt
out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company,
can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company that is neither an emerging growth company nor an emerging
growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.
We may redeem unexpired public warrants prior to their exercise at a time that is disadvantageous for
warrant holders.
We will have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their
expiration, at a price of $0.01 per warrant, provided that the last reported sales price of our common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for
any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. If and when the public warrants become redeemable by us, we may exercise our redemption
right when the registration statement to which this Annual Report forms a part comes into effect with respect to the shares of common stock underlying such warrants. Redemption of the outstanding public warrants could force you to: (1) exercise
your warrants and pay the related exercise price at a time when it may be disadvantageous for you to do so; (2) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants; or (3) accept the nominal
redemption price which, at the time the outstanding public warrants are called for redemption, is likely to be substantially less than the market value of your warrants. None of the placement warrants or working capital warrants will be redeemable
by us for cash so long as they are held by our sponsor or its permitted transferees.
Changes in accounting standards and subjective assumptions, estimates and judgments by management related
to complex accounting matters could significantly affect our financial condition and results of operations.
Accounting principles and related pronouncements, implementation guidelines and interpretations we apply to a wide range of
matters that are relevant to our business, including, but not limited to, revenue recognition, leases and stock-based compensation, are complex and involve subjective assumptions, estimates and judgments by our management. Changes in accounting
pronouncements or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported or expected financial performance.
The exercise of Warrants for our common stock would increase the number of shares eligible for future
resale in the public market and result in dilution to our stockholders.
As of December 31, 2021, we had Warrants to purchase an aggregate of 26,369,557 shares of our common stock outstanding. To the
extent remaining Warrants are exercised, additional shares of common stock will be issued, which will result in dilution to the then-existing holders of common stock and increase the number of shares eligible for resale in the public market. Sales
of substantial numbers of such shares in the public market or the fact that such Warrants may be exercised could adversely affect the market price of our common stock.
The valuation of our Warrants could increase the volatility in our net income (loss) in our consolidated statements of earnings
(loss).
The change in fair value of our Warrants is the result of changes in stock price and Warrants outstanding at each reporting
period. The Change in Fair Value of Warrant Liabilities represents the mark-to-market fair value adjustments to the outstanding Warrants issued in connection with the initial public offering of ACMI and the concurrent private placement. Significant
changes in our stock price or number of Warrants outstanding may adversely affect our net income (loss) in our consolidated statements of earnings (loss).