February 07, 2022 - 9:14am EST by
2022 2023
Price: 4.04 EPS 0 0
Shares Out. (in M): 51 P/E 0 0
Market Cap (in $M): 207 P/FCF 0 0
Net Debt (in $M): -92 EBIT 0 0
TEV (in $M): 115 TEV/EBIT 0 0
Borrow Cost: Available 0-15% cost

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Shortable Shares: 1mm @ 2.3% but more will come as 29m shares will enter float now that lockup has expired


Advent Technologies (NASDAQ:ADN) is a small cap hydrogen fuel cell play that went public via a SPAC merger with AMCI in February 2021.


The current market cap of ADN is around $207 million with an enterprise value of $115 million. ADN is still valued at a lofty revenue multiple with the company only generating revenues of $4.2 million during 9M 2021 ($13.1 million pro forma for acquisitions) and $0.8 million in 2020 and $0.6 million in 2019. The company has lofty goals of hitting $250 million of revenues in and $50 million of EBITDA in 2025 but is far from commercialization with no material product revenues or customer contracts.


Despite shares being down significantly since going public, ADN is a decent short opportunity (can possibly hedge with the public warrants ADNWW trading at $0.58 per whole warrant with a strike of $11.50) based on the recent lockup expiration (February 4, 2022) which will allow management and insiders to dump around 29.2 million shares, expectation of further dilution/need to raise equity, missed targets and the company and technology being smoke and mirrors.  


SPAC Merger Background

ADN went public by merging with AMCI at a market cap of $461 million and enterprise value of $319 million at $10 per share net of approx. $141 million of pro forma cash.


Through the transaction, ADN raised $158.3 million including $93.3 million of AMCI’s cash held in trust net of redemptions and $65 million from a PIPE. Transaction expenses and fees totaled $17.2 million leaving ADN with $141.1 million of cash in February 2021.  As of Q3 2021, ADN had around $92.5 million of cash on hand.


Of the $17.2 million in fees and expenses, ADN management received a transaction bonus payout of $5.7 million and $3.8 million for transaction expenses. AMCI received $7.7 million in deferred underwriter fees and $4.7 million for transaction costs.


Existing ADN shareholders rolled over 100% of their equity in the transaction.  Around 29.2 million (23.7 million shares of existing ADN shareholders and 5.5 million AMCI Sponsor shares) were locked up until the earlier of (i) stock trading above $12 for 20 out of 30 consecutive trading days starting 150 days from the Closing Date of February 4, 2021 and (ii) one year from the Closing Date. With the recent, expiration of the lockup former AMCI sponsor and ADN insiders are now freely able to sell their shares.


Company Overview

Founded in 2012 by the current CEO, Advent is an early stage materials technology and development company operating in the fuel cell and hydrogen technology space. Advent develops, manufactures and assembles components for hydrogen fuel cells and other energy systems. The Company’s core product offering is the Membrane Electrode Assembly (“MEA”) or membrane components which are used in fuel cells and other renewable energy applications. Advent is based in Boston, MA where it has a product development function and has a production facility in Patras, Greece.


In 2014, Advent acquired a license from BASF to fabricate and market BASF’s HT-PEM membrane electrode assemblies that are based on polybenzimidazole (“PBI”) membraes and gas diffusion electrodes (GDEs) developed by BASF. Additionally, BASF granted Advent a second license for the right to manufacture and market BASF’s gas diffusion electrodes. This was a business that BASF had originally purchased in 2006. The CTO of the Company, Emory De Castro, who joined in 2013 used to be a VP of Business Management and Site Manager for BASF Fuel Cell Inc. 


According to Advent, its HT-PEM MEAs have advantages over its competition, which is mostly focused on LT-PEMs. LT-PEMs require high purity hydrogen to operate whereas HT-PEMs can utilize low cost and abundant hydrogen carrier fuels including methanol, natural gas, ammonia and renewable biofuels. HT-PEMs can operate in a wider range of temperatures (-20 to 55C) whereas LT-PEMs struggle in heat and can be damaged in dry climates or pollution. HT-PEMs are have simplified balance of plant requirements smaller radiator is required to transfer heat away from the fuel cell since HT PEMs operate at high temperatures and use phosphoric acid as an electrolyte rather than water assisted membranes. These advantages of HT-PEMs will ultimately result in a more robust, longer-lasting and ultimately lower cost fuel cell product that is well-suited to EVs, aviation, off-grid applications, and electrochemical gas sensors.


The majority of Advent’s current revenues are derived from the sale of MEAs, but also from the sale of membranes and electrodes for specific applications in the iron flow battery and cellphone markets respectively. Advent also has nominal revenue from secured grant funding from research agencies and other organizations in the U.S. and Greece.


Red Flags


Massive Lockup expiration on February 4, 2022

Lockups for insider shares totaling 29.2 million (23.7 million shares of existing ADN shareholders and 5.5 million AMCI Sponsor shares) expired on February 4, 2022, which will drive dumping of ADN shares. This is approximately 57% of the total shares outstanding.


A total of 6.9 million shares of common stock have been reserved for future issuance under the 2021 Equity Incentive Plan which would also become immediately available for sale. As of September 30, 2021, 2.6 million stock options were granted at strike prices between $7.40 and $10.36.


Lifestyle Company for ADN Management and AMCI Sponsor

The SPAC transaction was clearly done to enrich management and the AMCI sponsor.  Upon closing, ADN management received hefty bonus payments totaling $5.7 million and $3.8 million for “transaction costs.” AMCI received $7.7 million in deferred underwriter fees and transaction expenses of $4.7 million. Additionally, ADN management received hefty salary hikes at the time of deal closing. The CEO, Vasilio Gregoriou’s annual base salary was increased from $170k to $800k; The CTO, Emory De Castro’s annual base salary was increased from $150k to $350k; and the CMO, Christos Kaskavelis’s annual base salary was increased from $120k to $350k. Now that the share lockup has expired insiders stand to cash out significantly whether the Company succeeds or not.


Membrane Company Trying to Ride Hydrogen Hype

Advent is not a high tech fuel cell company or a green hydrogen company. Rather, it sells membranes used in fuel cell and certain renewable energy applications. The Company has basically licensed BASF’s legacy PBI technology and has the right for the commercial sale of MEAs using this technology.


No Business Plan or Manufacturing Facilities

The original SPAC business plan was to scale up its operations in the US and Greece and build out manufacturing facilities in anticipation of significant demand from customers for its MEAs. However, none of this anticipated demand has materialized and Advent still generates a low level of revenues compared to its future projections and has not made any significant commercial sales.



A google maps search of the Company's manufacturing facility in Patras, Greece also raises considerable doubts.!1s0x135e4b78bdf127cd%3A0xf322c8f1820e14ba!3m1!7e115!4s%2Fmaps%2Fplace%2Fadamant%2Bcomposites%2Bltd%2F%4038.2989507%2C21.818476%2C3a%2C75y%2C168.95h%2C90t%2Fdata%3D*213m4*211e1*213m2*211sbczxlpEjZzM4ujLf2qEkjA*212e0*214m2*213m1*211s0x135e4b78bdf127cd%3A0xf322c8f1820e14ba%3Fsa%3DX!5sadamant%20composites%20ltd%20-%20Google%20Search!15sCgIgAQ&imagekey=!1e2!2sbczxlpEjZzM4ujLf2qEkjA&hl=en&sa=X&ved=2ahUKEwjel8a0tO31AhXekokEHauVDPEQpx96BAgkEAM


Instead of building out its own manufacturing capacity as originally planned, Advent has gone on an acquisition spree buying its main customers at seemingly rich valuations. To date, Advent has spent $24 million of its cash on acquisitions since going public.


UltraCell: In February 2021, Advent acquired UltraCell, one of its main customers, for $6 million in cash.


SerEnergy and FES: In August 2021, Advent acquired the fuel cell systems business from from the Fischer Group comprised of SerEnergy and FES for a total consideration of $56 million ($17.9 million in cash and 5.1 million shares of stock).  During 9M 2021, these businesses generated only $9 million in revenues.


SerEnergy is a leading manufacturer of high-temperature polymer electrolyte membrane HT-PEM fuel cells and operates facilities in Aalborg, Denmark and in Manila, Philippines. FES operates in Achern, Germany and provides fuel-cell stack assembly and testing as well as the production of critical fuel cell components, including membrane electrode assemblies, bipolar plates and reformers.


Dubious Track Record of Management

The Advent management team has a patchy track record that provides little confidence in them being to successfully commercialize and market their MEA product.


The CEO of the Company, Dr. Vassilios Gregoriou, who co-founded Advent in 2021, holds a full time position as the Director and Chairman of the National Hellenic Research Foundation (“NHRF”).  


The CTO of the Company, Emory de Castro, basically arranged the licenses to market BASF’s existing MEA technology.


The CMO, Christos Kaskavelis joined ADN in 2019 and used to be the Co-founder and COO of Velti, a mobile advertising company that went public in 2011 and filed for bankruptcy in 2013.


Furthermore, despite being NASDAQ listed Advent is audited by a local Greek firm, E&Y Hellas, which looks to be a possible red flag.


Cash Burn and Further Dilution

As of 9/30/2021, Advent had $92.5 million of cash with a quarterly G&A burn of at least $7 million, which suggests the Company may need to raise equity later this year if more acquisitions are planned.


I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise do not hold a material investment in the issuer's securities.


Lockup expiration for insider shares which occurred on February 4, 2022

Missing projections

Cash burn

Further dilution


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