Business context and reporting period
The supplied filing is Andina Acquisition Corporation’s Form 10-Q for the quarter ended November 30, 2012—not a filing for Tecnoglass Holdings Inc. Andina was a development-stage blank-check company seeking a business combination, with a stated focus on the Andean region and Central America, particularly Colombia. It reported no operating revenue and had not completed a business combination.
Financial results and position
| Metric | Reported amount |
|---|---|
| Revenue | None; operations had not commenced. |
| Net loss, three months ended November 30, 2012 | $85,465 |
| Net loss, nine months ended November 30, 2012 | $297,839 |
| Operating and formation costs, nine months | $319,865 |
| Interest income, nine months | $22,027 |
| Cash outside trust, November 30, 2012 | $149,720 |
| Restricted trust assets, including accrued interest | $42,762,027 |
| Working capital | Approximately $110,000 |
| Total liabilities | $38,840; no shareholder note payable remained outstanding. |
| Cash used in operating activities, nine months | $333,089 |
| Cash provided by financing activities, nine months | $43,219,795 |
Quarterly expenses were principally insurance ($43,000), travel ($31,000), accounting and legal fees ($8,000), and office expense ($4,000), partly offset by approximately $10,000 of interest income. The filing reports no operating margins because there was no revenue-producing business.
Changes versus prior periods
Compared with February 29, 2012, total assets rose from $159,736 to $42,911,747, largely reflecting the March 2012 public offering and the $42.74 million trust deposit. Cash outside trust increased from $3,014 to $149,720; liabilities fell from $152,063 to $38,840 after repayment of the $100,000 shareholder note. The company reported a $297,839 loss for the nine months ended November 30, 2012. The filing’s inception-to-November 2011 loss of $4,331 covers a different, shorter period and is not a like-for-like comparison.
Outlook, risks, and unusual items
- Management said available funds outside the trust and permitted trust interest would be used for working capital, and anticipated using those funds to meet requirements. It warned that additional financing might be needed and was not assured.
- The company disclosed substantial doubt about its ability to continue as a going concern if it could not obtain additional capital; possible responses included curtailing operations or suspending its business plan.
- The trust was invested in cash and U.S. Treasury securities with maturities of 180 days or less. Management considered material interest-rate exposure unlikely given the short maturities.
- The company was required to complete a business combination by December 22, 2013 or face liquidation and dissolution. Public shareholders had conversion rights, subject to the disclosed conditions; at least 87.5% of public shares exercising conversion rights would prevent a business combination.
- The trust could be exposed to third-party claims despite efforts to obtain waivers. The chairman accepted certain obligations related to trust claims, but the filing cautioned he might not be able to satisfy them.
- A $1.61 million cash fee was payable to EarlyBirdCapital upon consummation of a business combination. The company also disclosed potential need for additional acquisition financing.
- Management reported disclosure controls were effective and no material change in internal control over financial reporting during the quarter.
Important facts to verify
- Confirm the intended issuer: the provided filing identifies Andina Acquisition Corporation, not Tecnoglass Holdings Inc.
- Verify the trust balance, restrictions on access to trust funds, and the terms and timing of shareholder conversion or liquidation.
- Assess the company’s ability to fund operating expenses through the December 22, 2013 business-combination deadline, given approximately $110,000 of working capital and the going-concern warning.
- Review any subsequent business-combination developments and potential financing or dilution; this filing reported no completed transaction.