0001493152-17-007877.txt : 20170717 0001493152-17-007877.hdr.sgml : 20170717 20170717172659 ACCESSION NUMBER: 0001493152-17-007877 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 43 CONFORMED PERIOD OF REPORT: 20170531 FILED AS OF DATE: 20170717 DATE AS OF CHANGE: 20170717 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Andina Acquisition Corp. II CENTRAL INDEX KEY: 0001652101 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 000000000 STATE OF INCORPORATION: E9 FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37628 FILM NUMBER: 17968174 BUSINESS ADDRESS: STREET 1: 250 WEST 57TH STREET, SUITE 2223 CITY: NEW YORK STATE: NY ZIP: 10107 BUSINESS PHONE: 646-565-3861 MAIL ADDRESS: STREET 1: 250 WEST 57TH STREET, SUITE 2223 CITY: NEW YORK STATE: NY ZIP: 10107 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

 

For the quarterly period ended May 31, 2017

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

 

For the transition period from                  to                  

 

Commission file number: 001-37628

 

ANDINA ACQUISITION CORP. II

(Exact Name of Registrant as Specified in Its Charter)

 

Cayman Islands   6770   47-5245051

(State or Other Jurisdiction

of Incorporation or Organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(IRS Employer

Identification No.)

 

250 West 57th St

Suite 2223

New York, NY 10107

(Address of principal executive offices)

 

(646) 565-3861

(Issuer’s telephone number)

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ]   Accelerated filer [  ]
Non-accelerated filer [  ]  (Do not check if smaller reporting company) Smaller reporting company [X]
Emerging growth company [X]      

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [  ]

 

As of July 17, 2017, 5,310,000 Ordinary Shares, par value $0.0001 per share, were issued and outstanding.

 

 

 

   
 

 

ANDINA ACQUISITION CORP. II

FORM 10-Q FOR THE QUARTER ENDED MAY 31, 2017

 

TABLE OF CONTENTS

 

      Page
       
Part I. Financial Information   3
  Item 1. Financial Statements   3
  Condensed Balance Sheets as of May 31, 2017 (unaudited) and November 30, 2016   3
  Unaudited Condensed Statements of Operations for the Three and Six Months Ended May 31, 2017 and 2016   4
  Unaudited Condensed Statements of Cash Flows for the Six Months Ended May 31, 2017 and 2016   5
  Notes to Unaudited Condensed Financial Statements   6
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   14
  Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk   16
  Item 4. Controls and Procedures   16
Part II. Other Information   17
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   17
  Item 6. Exhibits   18
Signatures   19

 

 2 
 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

ANDINA ACQUISITION CORP. II

Condensed Balance Sheets

 

   May 31, 2017   November 30, 2016 
   (Unaudited)     
Assets          
Current assets          
Cash  $36,042   $63,789 
Prepaid expenses   289,897    259,053 
Other receivable   5,839    - 
Total current assets   331,778    322,842 
Cash and marketable securities held in Trust Account   40,624,425    40,651,426 
Total assets  $40,956,203   $40,974,268 
           
Liabilities and Shareholders’ Equity          
           
Current liabilities:          
Accrued expenses  $86,689   $2,166 
Accounts payable   36,896    18,944 
Convertible note payable - related party   30,000    - 
Total current liabilities   153,585    21,110 
           
Commitments          
Ordinary shares subject to possible conversion, $0.0001 par value, 3,525,230 and 3,537,686 shares at conversion value at May 31, 2017 and November 30, 2016, respectively   35,802,611    35,953,149 
           
Shareholders’ Equity:          
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding at May 31, 2017 and November 30, 2016   -    - 
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized; 1,784,770 and 1,772,314 shares issued and outstanding at May 31, 2017 and November 30, 2016, respectively (excluding 3,525,230 and 3,537,686 shares subject to possible conversion at May 31, 2017 and November 30, 2016, respectively)   178    177 
Additional paid-in capital   5,567,313    5,416,776 
Accumulated deficit   (567,484)   (416,944)
Total shareholders’ equity   5,000,007    5,000,009 
Total Liabilities and Shareholders’ Equity  $40,956,203   $40,974,268 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 3 
 

 

ANDINA ACQUISITION CORP. II

Statements of Operations

(Unaudited)

 

   For The Three Months Ended
May 31,
   For The Six Months Ended
May 31,
 
   2017   2016   2017   2016 
General and administrative  $86,703   $124,418   $265,291   $314,075 
Loss from operations   (86,703)   (124,418)   (265,291)   (314,075)
Interest income   68,226    34,195    114,751    101,722 
Net loss  $(18,477)  $(90,223)  $(150,540)  $(212,353)
                     
Weighted average shares outstanding, basic and diluted (1)   1,781,901    1,751,615    1,777,212    1,742,123 
                     
Basic and diluted net loss per ordinary share   (0.01)   (0.05)   (0.08)   (0.12)

 

(1) This number excludes 3,525,230 and 3,546,161 ordinary shares subject to possible conversion at May 31, 2017 and May 31, 2016, respectively.

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 4 
 

 

ANDINA ACQUISITION CORP. II

Statement of Cash Flows

(Unaudited)

 

   For The Six Months Ended May 31, 
   2017   2016 
Cash Flows from Operating Activities          
Net loss  $(150,540)  $(212,353)
Adjustments to reconcile net loss to net cash used in operation activities:          
Interest earned on cash and marketable securities held in Trust Account   (114,749)   (101,708)
Changes in operating assets and liabilities:          
Prepaid expenses   (30,844)   (286,826)
Other receivable   (5,839)   - 
Accrued expenses   84,523    (209,154)
Accounts payable   17,952    (109,344)
Net cash used in operating activities   (199,497)   (919,385)
           
Cash Flows from Investing Activities          
Principal deposited in Trust Account   -    (40,600,000)
Interest released from Trust Account   141,750    - 
Net cash provided by (used in) investing activities   141,750    (40,600,000)
           
Cash Flows from Financing Activities          
Proceeds received under convertible note payable to related party   30,000    - 
Proceeds from initial public offering, net of costs   -    38,699,151 
Proceeds from private placement   -    3,100,000 
Repayment of advance from related party   -    (139,172)
Net cash provided by financing activities   30,000    41,659,979 
           
Net change in cash   (27,747)   140,594 
           
Cash - beginning of the period   63,789    100 
Cash - ending of the period  $36,042   $140,694 
           
Supplemental disclosure of noncash investing and financing activities:          
Reclassification of deferred offering costs to equity  $-   $454,149 
Change in value of ordinary shares subject to possible conversion  $(150,538)  $36,099,915 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 5 
 

 

ANDINA ACQUISITION CORP. II

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

 

Note 1 - Organization, Plan of Business Operations

 

Andina Acquisition Corp. II (the “Company”) was incorporated in the Cayman Islands on July 1, 2015 as a blank check company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (a “Business Combination”). The Company’s efforts to identify a prospective target business are not limited to a particular industry or geographic region, although the Company is currently focusing on target businesses in the Andean region of South America and in Central America.

 

All activity through May 31, 2017 relates to the Company’s formation, the initial public offering described below and the search for a Business Combination candidate. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

 

The registration statement for the Company’s initial public offering (“Initial Public Offering”) was declared effective on November 24, 2015. The Company consummated the Initial Public Offering of 4,000,000 units (“Units”) at $10.00 per unit on December 1, 2015, generating gross proceeds of $40.0 million. Offering costs were approximately $1.8 million, inclusive of $454,000 of deferred offering costs incurred prior to the closing of the Initial Public Offering (Note 4).

 

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 310,000 Units (“Private Placement Units”) at a price of $10.00 per Private Placement Unit, of which 265,000 Private Placement Units were sold to certain shareholders of the Company and their affiliates and designees, and 45,000 Private Placement Units were sold to EarlyBirdCapital, Inc. (“EBC”), the representative of the underwriters in the Initial Public Offering, generating gross proceeds of an aggregate of $3.1 million (Note 5).

 

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and Private Placement, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.

 

An aggregate amount of $40.6 million ($10.15 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Units in the Private Placement was placed in a United States-based trust account (“Trust Account”) at UBS maintained by Continental Stock Transfer & Trust Company, acting as trustee, and is invested in U.S. government treasury bills, until the earlier of: (i) the consummation of a Business Combination or (ii) the Company’s failure to consummate a Business Combination by September 1, 2017. One of the Company’s Directors has agreed that he will be liable under certain circumstances to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by the Company for services rendered, contracted for or products sold to the Company and that have not executed a waiver agreement with the Company. However, such Director may not be able to satisfy those obligations should they arise.

 

The remaining net proceeds (not held in the Trust Account) were used to pay for business, legal and accounting due diligence on prospective Business Combinations and continuing general and administrative expenses. In addition, (i) interest income earned on the funds in the Trust Account may be released to the Company to pay its income or other tax obligations and (ii) any remaining interest earned on the funds in the Trust Account may be released to the Company for its working capital requirements. With these exceptions, expenses incurred by the Company may be paid prior to a Business Combination only from the net proceeds of the Initial Public Offering and Private Placement not held in the Trust Account; provided, however, that in order to meet its working capital needs, the Company’s shareholders prior to the Initial Public Offering (the “Initial Shareholders”), officers and directors or their affiliates may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of the Company’s initial Business Combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon consummation of the Company’s Business Combination into additional Private Placement Units at a price of $10.00 per Private Placement Unit. If the Company does not complete a Business Combination, the loans would not be repaid.

 

Pursuant to the Nasdaq Capital Markets listing rules, the Company’s initial Business Combination must be with a target business or businesses whose collective fair market value is at least equal to 80% of the balance in the Trust Account (excluding taxes payable) at the time of the execution of a definitive agreement for such Business Combination, although this may entail simultaneous acquisitions of several target businesses. The fair market value of the target will be determined by the Company’s board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The target business or businesses that the Company acquires may have a collective fair market value substantially in excess of 80% of the Trust Account balance. In order to consummate such a Business Combination, the Company may issue a significant amount of its debt or equity securities to the sellers of such business and/or seek to raise additional funds through a private offering of debt or equity securities.

 

 6 
 

 

ANDINA ACQUISITION CORP. II

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

 

In connection with any proposed initial Business Combination, the Company will either (1) seek shareholder approval of such initial Business Combination at a meeting called for such purpose at which holders of the outstanding ordinary shares sold in the Initial Public Offering (“Public Shareholders”) may seek to convert such shares (“Public Shares”), regardless of whether they vote for or against the proposed Business Combination, into their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable) or (2) provide Public Shareholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable). As of May 31, 2017, the amount in the Trust Account is $10.15 per Public Share (excluding interest in the amount of approximately $24,000 that may be released to the Company as described above).

 

If the Company determines to engage in a tender offer, such tender offer will be structured so that each Public Shareholder may tender any or all of his, her or its Public Shares rather than some pro rata portion of his, her or its shares. In that case, the Company will file tender offer documents with the Securities and Exchange Commission (“SEC”) which will contain substantially the same financial and other information about the initial Business Combination as is required under the SEC’s proxy rules. The decision as to whether the Company will seek shareholder approval of a proposed Business Combination or will allow shareholders to sell their shares to it in a tender offer will be made by the Company based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require it to seek shareholder approval. The Company will consummate an initial Business Combination only if it has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, solely if it seeks shareholder approval, a majority of the outstanding ordinary shares voted are voted in favor of the Business Combination.

 

The Initial Shareholders have agreed to certain obligations and restrictions relating to their securities, including to vote in favor of any proposed Business Combination and in certain cases not to convert any shares in connection with a shareholder vote to approve, or sell their shares to the Company in any tender offer in connection with, a proposed initial Business Combination (See Note 6). The Representative has also agreed to vote its shares included in the Private Placement Units (the “private shares”) in favor of any proposed Business Combination.

 

Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) will be restricted from seeking conversion rights with respect to 20% or more of the ordinary shares sold in the Initial Public Offering without the prior consent of the Company. Accordingly, all shares in excess of 20% of the shares sold in the Initial Public Offering held by a holder will not be converted to cash.

 

The Company’s Amended and Restated Memorandum and Articles of Association currently provides that the Company will continue in existence only until September 1, 2017. If the Company has not completed a Business Combination by such date, it will trigger the automatic liquidation of the Trust Account and the voluntary liquidation of the Company. In such event, holders of Public Shares will share ratably in the Trust Account, including any interest not previously released to the Company, and any net assets remaining available for distribution to them after payment of liabilities. The Representative and the holders of the insider shares (as defined in Note 5), private shares, and rights and warrants included in the Private Placement Units (the “private rights” and “private warrants” respectively) will not participate in any liquidation distribution with respect to their insider shares, private shares, private rights or private warrants.

 

Note 2 - Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and pursuant to rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three and six months ended May 31, 2017 are not necessarily indicative of the results that may be expected for the year ending November 30, 2017. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended November 30, 2016, filed with SEC on February 28, 2017.

 

Liquidity

 

As of May 31, 2017, the Company had approximately $36,000 in its operating bank account and approximately $24,000 of interest income held in the Trust Account available to be released to the Company.

 

Through May 31, 2017, the Company’s liquidity needs were satisfied through receipt of approximately $686,000 from the sale of the Units held outside of the Trust Account upon closing of the Initial Public Offering, $25,000 from the sale of the insider shares (as described in Note 6), advances from a director in an aggregate amount of $139,000, which was repaid on December 1, 2015 from the proceeds received upon closing of the Initial Public Offering, a promissory note for up to $100,000 from related party, of which the Company has borrowed $30,000 under the note, and interest released from the Trust Account for working capital purposes.

 

 7 
 

 

ANDINA ACQUISITION CORP. II

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

 

As indicated above, if needed to finance transaction costs in connection with searching for a target business or consummating an intended initial Business Combination, the Initial Shareholders, officers, directors or their affiliates may, but are not obligated to, loan the Company funds as may be required. Such loans would be evidenced by promissory notes. The notes would either be paid upon consummation of the Company’s initial Business Combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon consummation of the Company’s initial Business Combination into additional Private Placement Units at a price of $10.00 per Unit (which, for example, would result in the holders being issued 57,142 Ordinary Shares if $500,000 of notes were so converted as the rights included in the Units would result in an additional 7,142 shares being issued, as well as 50,000 Warrants to purchase 25,000 Ordinary Shares).

 

Based on the foregoing, management believes that the Company will have sufficient working capital to meet the Company’s needs through the earlier of the consummation of a Business Combination or September 1, 2017. The Company anticipates that its uses of cash until September 1, 2017 will be approximately $71,000 of expenses for the search for target businesses and for the legal, accounting and other third-party expenses attendant to the due diligence investigations, structuring and negotiating of a Business Combination.

 

Note 3 - Significant Accounting Policies

 

Emerging Growth Company

 

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 registration statement under the Securities Act of 1933, as amended (“Securities Act”), 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 an election to opt out is irrevocable. The Company has 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, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

 

Cash and Cash Equivalents

 

The Company considers all short-term investments with a maturity of three months or less when purchased to be cash equivalents.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. At May 31, 2017, the Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

 

Fair Value of Financial Instruments

 

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.

 

Cash and Marketable Securities Held in Trust Account

 

The amounts held in the Trust Account represent substantially all of the proceeds of the Initial Public Offering and are classified as restricted assets since such amounts can only be used by the Company in connection with the consummation of a Business Combination. As of May 31, 2017, cash and cash equivalents held in the Trust Account consisted of approximately $40.6 million in United States Treasury Bills and approximately $695 in cash. At May 31, 2017, there was approximately $24,000 of interest income held in the Trust Account available to be released to the Company.

 

 8 
 

 

ANDINA ACQUISITION CORP. II

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

 

Ordinary Shares Subject to Possible Conversion

 

The Company accounts for its Ordinary Shares subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary Shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable Ordinary Shares (including Ordinary Shares that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Ordinary Shares are classified as shareholders’ equity. The Company’s Ordinary Shares features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Ordinary Shares subject to possible conversion at conversion value are presented as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.

 

Net Loss per Share

 

Loss per share is computed by dividing net loss by the weighted-average number of Ordinary Shares outstanding during the period. An aggregate of 3,525,230 and 3,546,161 Ordinary Shares subject to possible redemption at May 31, 2017 and 2016, respectively, have been excluded from the calculation of basic loss per ordinary share since such Ordinary Shares, if redeemed, only participate in their pro rata share of the trust earnings. The Company has not considered the effect of (i) warrants sold in the Public Offering and Private Placement to purchase 2,155,000 Ordinary Shares of the Company, (ii) rights to acquire 615,713 Ordinary Shares of the Company and (iii) 400,000 Ordinary Shares, warrants to purchase 200,000 Ordinary Shares and rights to acquire 57,142 Ordinary Shares included in the unit purchase option sold to the underwriter, in the calculation of diluted loss per share, since the exercise of the unit purchase option and warrants as well as the conversion of rights is contingent on the occurrence of future events.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

 

Recent Accounting Standards

 

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

 

Note 4 - Initial Public Offering

 

On December 1, 2015, the Company consummated the Initial Public Offering of 4,000,000 Units. The Units were sold at an offering price of $10.00 per Unit, generating net proceeds of approximately $38.2 million, net of offering costs of approximately $1.8 million, inclusive of $454,000 of deferred offering costs incurred prior to the closing of the Initial Public Offering.

 

Each Unit consists of one ordinary share in the Company, one right to receive one-seventh (1/7) of a share upon consummation of an initial Business Combination and one redeemable warrant (“Warrant”) to purchase one half of one ordinary share for $11.50 per full share. No fractional shares will be issued. In the event the Company will not be the surviving company upon completion of an initial Business Combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the 1/7 of a share underlying each right upon consummation of the Business Combination. There is no length of time within which an investor must affirmatively elect to convert the rights. However, until a holder affirmatively elects to convert his, her or its rights, the right certificates held by such holder will not represent the ordinary shares they are convertible for but instead will simply represent the right to receive such ordinary shares.

 

Each Warrant entitles the holder to purchase one-half of one ordinary share at a price of $11.50 per full ordinary share commencing on the Company’s completion of its initial Business Combination, and expiring five years from the completion of the Company’s initial Business Combination. The Company will not issue fractional shares. As a result, investors must exercise Warrants in multiples of two Warrants, at a price of $11.50 per full share, subject to adjustment, to validly exercise the Warrants. The Company may redeem the Warrants at a price of $0.01 per Warrant upon 30 days’ notice, only in the event that the last sale price of the ordinary shares is at least $24.00 per share for any 20 trading days within a 30-trading day period (“30-Day Trading Period”) ending on the third day prior to the date on which notice of redemption is given, provided there is a current registration statement in effect with respect to the ordinary shares underlying such Warrants commencing five business days prior to the 30-Day Trading Period and continuing each day thereafter until the date of redemption. If the Company redeems the Warrants as described above, management will have the option to require all holders that wish to exercise Warrants to do so on a “cashless basis.” In accordance with the warrant agreement relating to the Warrants sold and issued in the Initial Public Offering the Company is only required to use its best efforts to maintain the effectiveness of the registration statement covering the Warrants. If a registration statement is not effective within 90 days following the consummation of a Business Combination, Warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. In the event that a registration statement is not effective at the time of exercise or no exemption is available for a cashless exercise, the holder of such Warrant shall not be entitled to exercise such Warrant for cash and in no event (whether in the case of a registration statement being effective or otherwise) will the Company be required to net cash settle the Warrant exercise. Additionally, in no event will the Company be required to net cash settle the Rights.

 

If the Company is unable to complete an initial Business Combination within the required time period and the Company redeems the Public Shares for the funds held in the Trust Account, holders of rights and warrants will not receive any of such funds for their rights and warrants and the rights and warrants will expire worthless.

 

 9 
 

 

ANDINA ACQUISITION CORP. II

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

 

Note 5 - Private Placement

 

Simultaneously with the consummation of the Initial Public Offering, the Company consummated the Private Placement of 310,000 Private Placement Units, at $10.00 per Private Placement Unit for a total purchase price of $3.1 million. Of the Private Placement Units, 265,000 were purchased by Initial Shareholders and their affiliates and designees and 45,000 were purchased by EBC. The Private Placement Units are identical to the units sold in the Initial Public Offering except the warrants included in the Private Placement Units are non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees. Additionally, because the warrants included in the Private Placement Units were issued in a private transaction, the holders and their transferees will be allowed to exercise such warrants for cash even if a registration statement covering the ordinary shares issuable upon exercise of such warrants is not effective and receive unregistered ordinary shares. Furthermore, the purchasers have agreed (A) to vote the private shares in favor of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to the Company’s proposed amended and restated memorandum and articles of association to be effected prior to the completion of the Initial Public Offering that would affect the substance or timing of the Company’s obligation to allow holders of Public Shares to exercise conversion rights with respect thereto as described herein unless the Company provides dissenting Public Shareholders with the opportunity to convert their Public Shares in connection with any such vote, (C) not to convert any private shares for cash from the Trust Account in connection with a shareholder vote to approve a proposed initial Business Combination (or to sell such shares to the Company in any tender offer the Company may engage in) or a vote to amend the provisions of the Company’s amended and restated memorandum and articles of association as described above and (D) that the private shares shall not participate in any liquidating distribution upon winding up if a Business Combination is not consummated. The purchasers have also agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to certain permitted transferees) until the completion of an initial Business Combination.

 

Note 6 - Related Party Transactions

 

Initial Shares

 

In July 2015, the Company issued 1,150,000 ordinary shares (the “insider shares”) to the Initial Shareholders for an aggregate purchase price of $25,000. The insider shares held by the Initial Shareholders included an aggregate of 150,000 shares repurchased for an aggregate purchase price of $0.01 and cancelled by the Company in December 2015 upon receiving notice that the underwriters’ over-allotment option was not exercised in full.

 

The insider shares are identical to the ordinary shares included in the Units sold in the Initial Public Offering. However, the Initial Shareholders have agreed (subject to certain exceptions) (A) to vote their insider shares (as well as any public shares acquired in or after the Initial Public Offering) in favor of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to the amended and restated memorandum and articles of association with respect to pre-Business Combination activities prior to the consummation of such a Business Combination unless the Company provides dissenting public shareholders with the opportunity to convert their public shares into the right to receive cash from the trust account in connection with any such vote, (C) not to convert any insider shares (as well as any other shares acquired in or after the Initial Public Offering) into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a proposed initial Business Combination (or sell any shares they hold to the Company in a tender offer in connection with a proposed initial Business Combination) or a vote to amend the provisions of the amended and restated memorandum and articles of association as described above and (D) that the insider shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. Additionally, the Initial Shareholders have agreed not to transfer, assign or sell any of the insider shares (except to certain permitted transferees) until (1) with respect to 50% of the insider shares, the earlier of one year after the date of the consummation of initial Business Combination and the date on which the closing price of ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after initial business combination and (2) with respect to the remaining 50% of the insider shares, one year after the date of the consummation of initial Business Combination, or earlier, in either case, if, subsequent to initial business combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of shareholders having the right to exchange their ordinary shares for cash, securities or other property.

 

 10 
 

 

ANDINA ACQUISITION CORP. II

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

 

Related Party Transactions

 

Prior to the closing of the Initial Public Offering, a director advanced an aggregate of approximately $139,000 to cover expenses related to the Company’s formation and the Initial Public Offering. The Company repaid this amount on December 1, 2015 from the proceeds received upon closing of the Initial Public Offering. Following the commitment letter from one of the Company’s directors and non-executive Chairman of the Board to provide working capital to the Company, on April 28, 2017, the Company issued a $100,000 convertible promissory note to a related party.  The loan is unsecured, non-interest bearing and is payable upon consummation of a Business Combination. Upon consummation of a Business Combination, the principal balance of the note may be converted, at the holder’s option, to Private Placement Units at a price of $10.00 per Private Placement Unit. If the lender converts the entire principal balance of the convertible promissory note, he would receive 10,000 Private Placement Units. If a Business Combination is not consummated, the note will not be repaid by the Company and all amounts owed thereunder by the Company will be forgiven except to the extent that the Company has funds available to it outside of its Trust Account established in connection with the Initial Public Offering. As of May 31, 2017, the Company had borrowed $30,000 under such note.

 

The Company maintains its principal executive offices in office space provided to us at no cost by a third party affiliated with one of the Company’s directors.

 

The Company is also permitted to pay consulting fees to its officers, directors, shareholders or their affiliates for assisting us in consummating our initial business combination in an amount not to exceed an aggregate of $500,000.

 

Note 7 - Commitments and Contingencies

 

Underwriting Agreement

 

On November 24, 2015, the Company entered into an agreement with EBC (“Underwriting Agreement”), pursuant to which the Company paid an underwriting discount of $1.3 million. The Company has further engaged EBC to assist the Company with its initial Business Combination. Pursuant to this arrangement, the Company anticipates that EBC will assist the Company in holding meetings with shareholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities, assist the Company in obtaining shareholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The Company will pay EBC a cash fee of $1,600,000 for such services upon the consummation of its initial Business Combination (exclusive of any applicable finders’ fees which might become payable); provided that up to 25% of the fee may be allocated at the Company’s sole discretion to one or more advisors that assist the Company in identifying and consummating an initial Business Combination. The Company will also reimburse EBC for up to $20,000 of its reasonable costs and expenses incurred by it (including reasonable fees and disbursements of counsel) in connection with the performance of its services pursuant to the agreement; provided, however, all expenses in excess of $5,000 in the aggregate shall be subject to prior written approval, which approval will not be unreasonably withheld.

 

Unit Purchase Option

 

In November 2015, the Company sold to EBC and its designees for $100, unit purchase options to purchase an aggregate of 400,000 units (collectively, the “Unit Purchase Option”). The Unit Purchase Option is exercisable at $10.00 per unit, commencing on the later of the consummation of a Business Combination and November 24, 2016. The Unit Purchase Option expires on November 24, 2020. Since the option is not exercisable until the consummation of a Business Combination at the earliest, and the rights will result in the issuance of shares upon consummation of a Business Combination, the option will effectively represent the right to purchase an aggregate 457,142 ordinary shares (which includes the 57,142 ordinary shares issuable for the rights included in the units, as well as 400,000 warrants to purchase 200,000 ordinary shares for $11.50 per share). The Unit Purchase Option grants to the holders demand and “piggy back” registration rights for periods of five and seven years, respectively, from November 24, 2015 with respect to the securities directly and indirectly issuable upon exercise of the option. The Company will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves.

 

The Company accounted for the fair value of the Unit Purchase Option, inclusive of the receipt of a $100 cash payment, as an expense of the Initial Public Offering resulting in a charge directly to shareholders’ equity. The Company estimated that the fair value of the Unit Purchase Option was approximately $2 million (or $5.01 per unit) using the Black-Scholes option-pricing model. The fair value of the Unit Purchase Option was estimated as of the date of grant using the following assumptions: (1) expected volatility of 57.71%, (2) risk-free interest rate of 1.52%, and (3) expected life of five years. The Unit Purchase Option may be exercised for cash or on a “cashless” basis, at the holder’s option, such that the holder may use the appreciated value of the Unit Purchase Option (the difference between the exercise prices of the Unit Purchase Option and the market price of the Units and underlying ordinary shares) to exercise the Unit Purchase Option without the payment of any cash. The Company will have no obligation to net cash settle the exercise of the Unit Purchase Option or underlying rights and warrants.

 

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ANDINA ACQUISITION CORP. II

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

 

Advisory Agreements

 

On October 8, 2015, the Company engaged B. Riley & Co. LLC (“B. Riley”) to provide certain advisory services in connection with the Company’s initial Business Combination in exchange for $250,000 in service fees, which were paid in December 2015 and is included in Prepaid Expenses in the accompanying Condensed Balance Sheets as B. Riley has not provided material services to date.

 

The Company has also signed agreements with individuals in the business community of their respective countries (the “Originators”) to supplement the efforts of the management team on its search of targets for a potential Business Combination. The agreements with the Originators are for a period of three to six months. In exchange for the services, the Company agreed to pay the Originators a finder’s fee of 0.75% of the transaction value, payable upon the completion of a Business Combination. The aggregated amount of the finders’ fee for the Financial Advisor and the Originators should be below 2.8% of the amount invested by the Company in the target company. To date, no fees have been incurred in connection with the agreements yet.

 

Registration Rights

 

The Initial Shareholders and purchasers of the private Placement Units are entitled to registration rights with respect to their securities, pursuant to an agreement dated as of November 24, 2015. The holders of the majority of the insider shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the Private Placement Units (or underlying securities) issued in payment of working capital loans made to the Company can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

 

Note 8 - Shareholder Equity

 

Preferred Shares

 

The Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors.

 

As of May 31, 2017, there are no preferred shares issued or outstanding.

 

Ordinary Shares

 

The Company is authorized to issue 100,000,000 ordinary shares with a par value of $0.0001 per share.

 

As of May 31, 2017, after the consummation of the Initial Public Offering and the Private Placement, the Company has an aggregate of 5,310,000 ordinary shares outstanding, inclusive of 3,525,230 and 3,537,686 ordinary shares subject to possible conversion classified as temporary equity in the accompanying Balance Sheet as of May 31, 2017 and November 30, 2016, respectively.

 

Note 9 - Fair Value Measurements

 

The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

 

 12 
 

 

ANDINA ACQUISITION CORP. II

NOTES TO CONDENSED FINANCIAL STATEMENTS

(UNAUDITED)

 

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

 

Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

 

Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

 

Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

 

The following table presents information about the Company’s assets that are measured on a recurring basis as of May 31, 2017, and November 30, 2016 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.

 

   Quoted Prices in Active Markets 
   (Level 1) 
Description  May 31, 2017   November 30, 2016 
Cash and marketable securities held in Trust Account  $40,624,425    40,651,426 

 

Approximately $695 and $44,000 of the balance in the Trust Account was held in cash as of May 31, 2017 and November 30, 2016.

 

Note 10 - Subsequent Events

 

On June 29, 2017, the Company held its annual meeting of stockholders as required by Nasdaq Listing Rules. Nasdaq subsequently notified the Company that, as a result, the Company had regained compliance with such listing rules.

 

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Item 2. Management’s Discussion and Analysis.

 

References in this report to “we,” “us” or the “Company” refer to Andina Acquisition Corp II. References to our “management” or our “management team” refers to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

 

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. References to “we”, “us”, “our” or the “Company” are to Andina Acquisition Corp II., except where the context requires otherwise. The following discussion should be read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this report.

 

Overview

 

We are a blank check company in the development stage, formed on July 1, 2015 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. Our efforts to identify a prospective target business are not limited to a particular industry or geographic region, although we are currently focusing on target businesses in the Andean region of South America and in Central America.

 

We consummated our initial public offering of 4,000,000 units at $10.00 per unit on December 1, 2015, generating gross proceeds of $40 million. Offering costs associated with the initial public offering was approximately $1.8 million, inclusive of $1.3 million of underwriting fees and approximately $454,000 of offering costs incurred prior to the closing of the initial public offering.

 

Simultaneously with the closing of the Initial Public Offering, we consummated the private placement of 310,000 Private Placement Units at a price of $10.00 per Private Placement Unit, of which 265,000 Private Placement Units were sold to the initial shareholders and their affiliates and designees, and 45,000 Private Placement Units were sold to EarlyBirdCapital, Inc., the representative of the underwriters in the initial public offering, generating gross proceeds of $3.1 million.

 

An aggregate amount of $40.6 million ($10.15 per Unit) from the net proceeds of the sale of the units in the initial public offering and the Private Placement Units was placed in a United States-based trust account (“Trust Account”) at UBS maintained by Continental Stock Transfer & Trust Company, acting as trustee, and is invested in U.S. government treasury bills, until the earlier of: (i) the consummation of a business combination or (ii) our failure to consummate a business combination by September 1, 2017. B. Luke Weil has agreed that he will be liable under certain circumstances to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by us for services rendered, contracted for or products sold to the Company and that did not execute a waiver agreement with us. However, he may not be able to satisfy those obligations should they arise.

 

Our management has broad discretion with respect to the specific application of the net proceeds of the offering and the private placement, although substantially all of the net proceeds are intended to be applied generally towards consummating a business combination.

 

Critical Accounting Policy

 

Ordinary Shares Subject to Possible Conversion

 

We account for our ordinary shares subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. Our ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible conversion at the conversion value are presented as temporary equity, outside of the shareholders’ equity section of our balance sheet.

 

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Results of Operations

 

We have neither engaged in any business operations nor generated any revenues to date. Our entire activity from inception up to the closing of our initial public offering on December 1, 2015 was in preparation for that event. Subsequent to the initial public offering, our activity has been limited to the evaluation of business combination candidates, and we will not be generating any operating revenues until the closing and completion of our initial business combination. We have, and expect to continue to generate small amounts of non-operating income in the form of interest income on cash and cash equivalents. Interest income is not expected to be significant in view of current low interest rates on risk-free investments (treasury securities). We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

 

For the three months ended May 31, 2017, we had net loss of approximately $18,000, which consisted of operating expenses of approximately $87,000 offset by interest income from our Trust Account of approximately $68,000.

 

For the three months ended May 31, 2016, we had net losses of approximately $90,000, which consisted of operating expenses of approximately $124,000 offset by interest income from our Trust Account of approximately $34,000.

 

For the six months ended May 31, 2017, we had net losses of approximately $151,000, which consisted of operating expenses of approximately $265,000 offset by interest income from our Trust Account of approximately $115,000.

 

For the six months ended May 31, 2016, we had net losses of approximately $212,000, which consisted of operating expenses of approximately $314,000 offset by interest income from our Trust Account of approximately $102,000.

 

Our operating expenses principally consisted of expenses related to our public filings and listing and identification and due diligence related to a potential target business, and to general operating expenses including printing, insurance and office expenses. Until we consummate a business combination, we will have no operating revenues.

 

Liquidity and Capital Resources

 

As of May 31, 2017, we had approximately $36,000 in our operating bank account and approximately $24,000 of interest income held in the Trust Account available to be released to us.

 

We presently have no revenue. Through May 31, 2017, our liquidity needs were satisfied through receipt of approximately $686,000 held outside of the Trust Account upon closing of the initial public offering, $25,000 from the sale of the insider shares, advances from B. Luke Weil in an aggregate amount of $139,000, which we repaid on December 1, 2015 from the proceeds received upon closing of the initial public offering, promissory note for up to $100,000 from related party, and interest released to us from the Trust Account for our working capital needs. As of May 31, 2017, we had borrowed $30,000 under such note.

 

If needed to finance transaction costs in connection with searching for a target business or consummating an intended initial business combination, our initial shareholders, officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Such loans would be evidenced by promissory notes. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into additional Private Placement Units at a price of $10.00 per unit (which, for example, would result in the holders being issued 57,142 Ordinary Shares if $500,000 of notes were so converted as the rights included in the units would result in an additional 7,142 shares being issued, as well as 50,000 Warrants to purchase 25,000 Ordinary Shares). In February 2017, one of our directors and non-executive Chairman of the Board provided a commitment letter, which was later amended in April 2017, to loan us up to an aggregate of $110,000 for working capital purposes. Following the commitment letter, on April 28, 2017, we issued a $100,000 convertible promissory note to a related party. The loan is unsecured, non-interest bearing and is payable upon consummation of a Business Combination. Upon consummation of a Business Combination, the principal balance of the note may be converted, at the holder’s option, to Private Placement Units at a price of $10.00 per Private Placement Units.

 

Based on the foregoing, our management believes that we will have sufficient working capital to meet our needs through the earlier of consummation of a business combination or September 1, 2017. In May 2017, we announced that we had executed several letters of intent for a potential Business Combination. As a result, we now have until September 1, 2017 to consummate an initial Business Combination. We anticipate that our uses of cash until September 1, 2017 will be approximately $71,000 of expenses for the search for target businesses and for the legal, accounting and other third-party expenses attendant to the due diligence investigations, structuring and negotiating of a Business Combination.

 

 15 
 

 

Related Party Transactions

 

Prior to the closing of our initial public offering, B. Luke Weil advanced to us an aggregate of approximately $139,000 to cover expenses related to our formation and the initial public offering, which we already paid on December 1, 2015 from the proceeds received upon closing of the initial public offering. In February 2017, one of our directors and non-executive Chairman of the Board provided a commitment letter, which was later amended in April 2017, to loan us up to an aggregate of $110,000 for working capital purposes. Following the commitment letter, on April 28, 2017, we issued a $100,000 convertible promissory note to a related party. The loan is unsecured, non-interest bearing and is payable upon consummation of a Business Combination. Upon consummation of a Business Combination, the principal balance of the note may be converted, at the holder’s option, to Private Placement Units at a price of $10.00 per Private Placement Units. If the lender converts the entire principal balance of the convertible promissory note, he would receive 10,000 Private Placement Units. If a Business Combination is not consummated, the note will not be repaid by us and all amounts owed thereunder by us will be forgiven except to the extent that we have funds available to it outside of our trust account established in connection with the Initial Public Offering. As of May 31, 2017, we had borrowed $30,000 under such note.

 

We maintain our principal executive offices in office space provided to us at no cost by a third party affiliated with B. Luke Weil, one of our directors.

 

We are also permitted to pay consulting fees to our officers, directors, shareholders or their affiliates for assisting us in consummating our initial business combination in an amount not to exceed an aggregate of $500,000.

 

If financing is needed to finance transaction costs in connection with searching for a target business or consummating an intended initial business combination, our initial shareholders, officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Such loans would be evidenced by promissory notes. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into additional private placement units at a price of $10.00 per unit (which, for example, would result in the holders being issued 57,142 ordinary shares if $500,000 of notes were so converted as the rights included in the units would result in an additional 7,142 shares being issued, as well as 50,000 warrants to purchase 25,000 ordinary shares). We believe the purchase price of these units will approximate the fair value of such units when issued. However, if it is determined, at the time of issuance, that the fair value of such units exceeds the purchase price, we would record compensation expense for the excess of the fair value of the units on the day of issuance over the purchase price in accordance with Accounting Standards Codification (“ASC”) 718 - Compensation - Stock Compensation.

 

Recent Accounting Standards

 

Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on our financial statements.

 

Off-Balance Sheet Arrangements

 

We did not have any off-balance sheet arrangements as of May 31, 2017.

 

JOBS Act

 

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As such, our financial statements may not be comparable to companies that comply with public company effective dates.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

As of May 31, 2017, we were not subject to any market or interest rate risk. Following the consummation of our initial public offering, the net proceeds of our initial public offering, including amounts in the Trust Account, may be invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that invest solely in US treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

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Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended May 31, 2017, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective.

 

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting that occurred during the fiscal quarter of 2017 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities

 

In July 2015, the Company issued an aggregate of 1,150,000 ordinary shares to our initial shareholders for an aggregate purchase price of $25,000, or approximately $0.02 per share, in connection with our organization pursuant to the exemption from registration contained in Section 4(2) of the Securities Act.

 

On December 1, 2015, we consummated our initial public offering of 4,000,000 units (“Units”). Each unit consisted of one ordinary share, one redeemable warrant to purchase one-half of one ordinary share and one right, each to receive one-seventh of one ordinary share upon consummation of a business combination. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $40,000,000. EarlyBirdCapital, Inc. acted as the underwriter of the initial public offering. The securities in the offering were registered under the Securities Act of 1933 on a registration statement on Form S-1 (No. 333-207037). The Securities and Exchange Commission declared the registration statement effective on November 24, 2015.

 

Simultaneous with the consummation of the initial public offering, we consummated the private placement (“Private Placement”) of 310,000 private Units (“Private Placement Units”) at a price of $10.00 per Private Placement Unit, generating total proceeds of $3,100,000. The Private Placement Units were purchased by the Company’s initial shareholders (and affiliates and designees) and EarlyBirdCapital, Inc. These issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. The Private Placement Units are identical to the Units sold in the initial public offering. However, the holders of the Private Placement Units have agreed (A) to vote their private shares in favor of any proposed business combination, (B) not to propose, or vote in favor of, an amendment to the Company’s amended and restated certificate of incorporation with respect to the Company’s pre-business combination activities prior to the consummation of such a business combination, (C) not to convert any private shares into the right to receive cash from the trust account in connection with a stockholder vote to approve our proposed initial business combination or a vote to amend the provisions of our amended and restated certificate of incorporation relating to stockholders’ rights or pre-business combination activity and (D) that such private shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. Additionally, the purchasers have agreed not to transfer, assign or sell any of the Private Placement Units (except to certain permitted transferees) until the completion of our initial business combination.

 

Following the consummation of the initial public offering, the underwriters notified the Company that they would not be exercising the over-allotment option. As a result, the initial shareholders had 150,000 ordinary shares held by them compulsorily repurchased by the Company for an aggregate purchase price of $0.01 so that they collectively own 20.0% of the Company’s issued and outstanding ordinary shares after the initial public offering (not including the Private Shares).

 

We paid a total of $1,300,000 in underwriting discounts and commissions and approximately $500,000 for other costs and expenses related to our formation and the offering.

 

For a description of the use of the proceeds generated in our initial public offering, see Part I, Item 2 of this Form 10-Q.

 

 17 
 

 

Item 6. Exhibits.

 

Exhibit No.   Description
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.INS   XBRL Instance Document.
101.SCH   XBRL Taxonomy Extension Schema.
101.CAL   XBRL Taxonomy Extension Calculation Linkbase.
101.DEF   XBRL Taxonomy Extension Definition Linkbase.
101.PRE   XBRL Taxonomy Extension Label Linkbase.
101.LAB   XBRL Taxonomy Extension Presentation Linkbase.

 

 18 
 

 

SIGNATURE

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  ANDINA ACQUISITION CORP. II
     
  By: /s/ Julio A. Torres
    Julio A. Torres
   

Chief Executive Officer

(Principal executive officer)

     
  By: /s/ Mauricio Orellana
    Mauricio Orellana
   

Chief Financial Officer

(Principal financial and accounting officer)

 

Date: July 17, 2017

 

 19 
 

 

EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

CERTIFICATION

PURSUANT TO RULE 13a-14 AND 15d-14

UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

 

I, Julio A. Torres, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Andina Acquisition Corp. II;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: July 17, 2017

 

    /s/ Julio A. Torres
  Name: Julio A. Torres
  Title:

Chief Executive Officer

(Principal executive officer)

 

   
 

EX-31.2 3 ex31-2.htm

 

Exhibit 31.2

 

CERTIFICATION

PURSUANT TO RULE 13a-14 AND 15d-14

UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

 

I, Mauricio Orellana, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Andina Acquisition Corp. II;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: July 17, 2017

 

    /s/ Mauricio Orellana
  Name: Mauricio Orellana
  Title:

Chief Financial Officer

(Principal financial and accounting officer)

 

   
 

EX-32.1 4 ex32-1.htm

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Andina Acquisition Corp. II (the “Company”) on Form 10-Q for the period ended May 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

 

Dated: July 17, 2017

 

    /s/ Julio A. Torres
  Name: Julio A. Torres
  Title:

Chief Executive Officer

(Principal executive officer)

 

    /s/ Mauricio Orellana
  Name: Mauricio Orellana
  Title:

Chief Financial Officer

(Principal financial and accounting officer)

 

   
 

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Jul. 17, 2017
Document And Entity Information    
Entity Registrant Name Andina Acquisition Corp. II  
Entity Central Index Key 0001652101  
Document Type 10-Q  
Document Period End Date May 31, 2017  
Amendment Flag false  
Current Fiscal Year End Date --11-30  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   5,310,000
Trading Symbol ANDAU  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2017  
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Nov. 30, 2016
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Prepaid expenses 289,897 259,053
Other receivable 5,839
Total current assets 331,778 322,842
Cash and marketable securities held in Trust Account 40,624,425 40,651,426
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Accounts payable 36,896 18,944
Convertible note payable - related party 30,000
Total current liabilities 153,585 21,110
Commitments
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May 31, 2017
Nov. 30, 2016
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3 Months Ended 6 Months Ended
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May 31, 2016
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Loss from operations (86,703) (124,418) (265,291) (314,075)
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Accounts payable 17,952 (109,344)
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Cash Flows from Investing Activities    
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Interest released from Trust Account 141,750
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Cash Flows from Financing Activities    
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Proceeds from private placement 3,100,000
Repayment of advance from related party (139,172)
Net cash provided by financing activities 30,000 41,659,979
Net change in cash (27,747) 140,594
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Organization, Plan of Business Operations
6 Months Ended
May 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization, Plan of Business Operations

Note 1 - Organization, Plan of Business Operations

 

Andina Acquisition Corp. II (the “Company”) was incorporated in the Cayman Islands on July 1, 2015 as a blank check company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (a “Business Combination”). The Company’s efforts to identify a prospective target business are not limited to a particular industry or geographic region, although the Company is currently focusing on target businesses in the Andean region of South America and in Central America.

 

All activity through May 31, 2017 relates to the Company’s formation, the initial public offering described below and the search for a Business Combination candidate. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

 

The registration statement for the Company’s initial public offering (“Initial Public Offering”) was declared effective on November 24, 2015. The Company consummated the Initial Public Offering of 4,000,000 units (“Units”) at $10.00 per unit on December 1, 2015, generating gross proceeds of $40.0 million. Offering costs were approximately $1.8 million, inclusive of $454,000 of deferred offering costs incurred prior to the closing of the Initial Public Offering (Note 4).

 

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 310,000 Units (“Private Placement Units”) at a price of $10.00 per Private Placement Unit, of which 265,000 Private Placement Units were sold to certain shareholders of the Company and their affiliates and designees, and 45,000 Private Placement Units were sold to EarlyBirdCapital, Inc. (“EBC”), the representative of the underwriters in the Initial Public Offering, generating gross proceeds of an aggregate of $3.1 million (Note 5).

 

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and Private Placement, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.

 

An aggregate amount of $40.6 million ($10.15 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Units in the Private Placement was placed in a United States-based trust account (“Trust Account”) at UBS maintained by Continental Stock Transfer & Trust Company, acting as trustee, and is invested in U.S. government treasury bills, until the earlier of: (i) the consummation of a Business Combination or (ii) the Company’s failure to consummate a Business Combination by September 1, 2017. One of the Company’s Directors has agreed that he will be liable under certain circumstances to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by the Company for services rendered, contracted for or products sold to the Company and that have not executed a waiver agreement with the Company. However, such Director may not be able to satisfy those obligations should they arise.

 

The remaining net proceeds (not held in the Trust Account) were used to pay for business, legal and accounting due diligence on prospective Business Combinations and continuing general and administrative expenses. In addition, (i) interest income earned on the funds in the Trust Account may be released to the Company to pay its income or other tax obligations and (ii) any remaining interest earned on the funds in the Trust Account may be released to the Company for its working capital requirements. With these exceptions, expenses incurred by the Company may be paid prior to a Business Combination only from the net proceeds of the Initial Public Offering and Private Placement not held in the Trust Account; provided, however, that in order to meet its working capital needs, the Company’s shareholders prior to the Initial Public Offering (the “Initial Shareholders”), officers and directors or their affiliates may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion. Each loan would be evidenced by a promissory note. The notes would either be paid upon consummation of the Company’s initial Business Combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon consummation of the Company’s Business Combination into additional Private Placement Units at a price of $10.00 per Private Placement Unit. If the Company does not complete a Business Combination, the loans would not be repaid.

 

Pursuant to the Nasdaq Capital Markets listing rules, the Company’s initial Business Combination must be with a target business or businesses whose collective fair market value is at least equal to 80% of the balance in the Trust Account (excluding taxes payable) at the time of the execution of a definitive agreement for such Business Combination, although this may entail simultaneous acquisitions of several target businesses. The fair market value of the target will be determined by the Company’s board of directors based upon one or more standards generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The target business or businesses that the Company acquires may have a collective fair market value substantially in excess of 80% of the Trust Account balance. In order to consummate such a Business Combination, the Company may issue a significant amount of its debt or equity securities to the sellers of such business and/or seek to raise additional funds through a private offering of debt or equity securities.

 

In connection with any proposed initial Business Combination, the Company will either (1) seek shareholder approval of such initial Business Combination at a meeting called for such purpose at which holders of the outstanding ordinary shares sold in the Initial Public Offering (“Public Shareholders”) may seek to convert such shares (“Public Shares”), regardless of whether they vote for or against the proposed Business Combination, into their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable) or (2) provide Public Shareholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable). As of May 31, 2017, the amount in the Trust Account is $10.15 per Public Share (excluding interest in the amount of approximately $24,000 that may be released to the Company as described above).

 

If the Company determines to engage in a tender offer, such tender offer will be structured so that each Public Shareholder may tender any or all of his, her or its Public Shares rather than some pro rata portion of his, her or its shares. In that case, the Company will file tender offer documents with the Securities and Exchange Commission (“SEC”) which will contain substantially the same financial and other information about the initial Business Combination as is required under the SEC’s proxy rules. The decision as to whether the Company will seek shareholder approval of a proposed Business Combination or will allow shareholders to sell their shares to it in a tender offer will be made by the Company based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require it to seek shareholder approval. The Company will consummate an initial Business Combination only if it has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, solely if it seeks shareholder approval, a majority of the outstanding ordinary shares voted are voted in favor of the Business Combination.

 

The Initial Shareholders have agreed to certain obligations and restrictions relating to their securities, including to vote in favor of any proposed Business Combination and in certain cases not to convert any shares in connection with a shareholder vote to approve, or sell their shares to the Company in any tender offer in connection with, a proposed initial Business Combination (See Note 6). The Representative has also agreed to vote its shares included in the Private Placement Units (the “private shares”) in favor of any proposed Business Combination.

 

Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) will be restricted from seeking conversion rights with respect to 20% or more of the ordinary shares sold in the Initial Public Offering without the prior consent of the Company. Accordingly, all shares in excess of 20% of the shares sold in the Initial Public Offering held by a holder will not be converted to cash.

 

The Company’s Amended and Restated Memorandum and Articles of Association currently provides that the Company will continue in existence only until September 1, 2017. If the Company has not completed a Business Combination by such date, it will trigger the automatic liquidation of the Trust Account and the voluntary liquidation of the Company. In such event, holders of Public Shares will share ratably in the Trust Account, including any interest not previously released to the Company, and any net assets remaining available for distribution to them after payment of liabilities. The Representative and the holders of the insider shares (as defined in Note 5), private shares, and rights and warrants included in the Private Placement Units (the “private rights” and “private warrants” respectively) will not participate in any liquidation distribution with respect to their insider shares, private shares, private rights or private warrants.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.7.0.1
Basis of Presentation
6 Months Ended
May 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation

Note 2 - Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and pursuant to rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three and six months ended May 31, 2017 are not necessarily indicative of the results that may be expected for the year ending November 30, 2017. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended November 30, 2016, filed with SEC on February 28, 2017.

 

Liquidity

 

As of May 31, 2017, the Company had approximately $36,000 in its operating bank account and approximately $24,000 of interest income held in the Trust Account available to be released to the Company.

 

Through May 31, 2017, the Company’s liquidity needs were satisfied through receipt of approximately $686,000 from the sale of the Units held outside of the Trust Account upon closing of the Initial Public Offering, $25,000 from the sale of the insider shares (as described in Note 6), advances from a director in an aggregate amount of $139,000, which was repaid on December 1, 2015 from the proceeds received upon closing of the Initial Public Offering, a promissory note for up to $100,000 from related party, of which the Company has borrowed $30,000 under the note, and interest released from the Trust Account for working capital purposes.

 

As indicated above, if needed to finance transaction costs in connection with searching for a target business or consummating an intended initial Business Combination, the Initial Shareholders, officers, directors or their affiliates may, but are not obligated to, loan the Company funds as may be required. Such loans would be evidenced by promissory notes. The notes would either be paid upon consummation of the Company’s initial Business Combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon consummation of the Company’s initial Business Combination into additional Private Placement Units at a price of $10.00 per Unit (which, for example, would result in the holders being issued 57,142 Ordinary Shares if $500,000 of notes were so converted as the rights included in the Units would result in an additional 7,142 shares being issued, as well as 50,000 Warrants to purchase 25,000 Ordinary Shares).

 

Based on the foregoing, management believes that the Company will have sufficient working capital to meet the Company’s needs through the earlier of the consummation of a Business Combination or September 1, 2017. The Company anticipates that its uses of cash until September 1, 2017 will be approximately $71,000 of expenses for the search for target businesses and for the legal, accounting and other third-party expenses attendant to the due diligence investigations, structuring and negotiating of a Business Combination.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.7.0.1
Significant Accounting Policies
6 Months Ended
May 31, 2017
Accounting Policies [Abstract]  
Significant Accounting Policies

Note 3 - Significant Accounting Policies

 

Emerging Growth Company

 

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 registration statement under the Securities Act of 1933, as amended (“Securities Act”), 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 an election to opt out is irrevocable. The Company has 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, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

 

Cash and Cash Equivalents

 

The Company considers all short-term investments with a maturity of three months or less when purchased to be cash equivalents.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. At May 31, 2017, the Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

 

Fair Value of Financial Instruments

 

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.

 

Cash and Marketable Securities Held in Trust Account

 

The amounts held in the Trust Account represent substantially all of the proceeds of the Initial Public Offering and are classified as restricted assets since such amounts can only be used by the Company in connection with the consummation of a Business Combination. As of May 31, 2017, cash and cash equivalents held in the Trust Account consisted of approximately $40.6 million in United States Treasury Bills and approximately $695 in cash. At May 31, 2017, there was approximately $24,000 of interest income held in the Trust Account available to be released to the Company.

  

Ordinary Shares Subject to Possible Conversion

 

The Company accounts for its Ordinary Shares subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary Shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable Ordinary Shares (including Ordinary Shares that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Ordinary Shares are classified as shareholders’ equity. The Company’s Ordinary Shares features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Ordinary Shares subject to possible conversion at conversion value are presented as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.

 

Net Loss per Share

 

Loss per share is computed by dividing net loss by the weighted-average number of Ordinary Shares outstanding during the period. An aggregate of 3,525,230 and 3,546,161 Ordinary Shares subject to possible redemption at May 31, 2017 and 2016, respectively, have been excluded from the calculation of basic loss per ordinary share since such Ordinary Shares, if redeemed, only participate in their pro rata share of the trust earnings. The Company has not considered the effect of (i) warrants sold in the Public Offering and Private Placement to purchase 2,155,000 Ordinary Shares of the Company, (ii) rights to acquire 615,713 Ordinary Shares of the Company and (iii) 400,000 Ordinary Shares, warrants to purchase 200,000 Ordinary Shares and rights to acquire 57,142 Ordinary Shares included in the unit purchase option sold to the underwriter, in the calculation of diluted loss per share, since the exercise of the unit purchase option and warrants as well as the conversion of rights is contingent on the occurrence of future events.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

 

Recent Accounting Standards

 

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.7.0.1
Initial Public Offering
6 Months Ended
May 31, 2017
Equity [Abstract]  
Initial Public Offering

Note 4 - Initial Public Offering

 

On December 1, 2015, the Company consummated the Initial Public Offering of 4,000,000 Units. The Units were sold at an offering price of $10.00 per Unit, generating net proceeds of approximately $38.2 million, net of offering costs of approximately $1.8 million, inclusive of $454,000 of deferred offering costs incurred prior to the closing of the Initial Public Offering.

 

Each Unit consists of one ordinary share in the Company, one right to receive one-seventh (1/7) of a share upon consummation of an initial Business Combination and one redeemable warrant (“Warrant”) to purchase one half of one ordinary share for $11.50 per full share. No fractional shares will be issued. In the event the Company will not be the surviving company upon completion of an initial Business Combination, each holder of a right will be required to affirmatively convert his, her or its rights in order to receive the 1/7 of a share underlying each right upon consummation of the Business Combination. There is no length of time within which an investor must affirmatively elect to convert the rights. However, until a holder affirmatively elects to convert his, her or its rights, the right certificates held by such holder will not represent the ordinary shares they are convertible for but instead will simply represent the right to receive such ordinary shares.

 

Each Warrant entitles the holder to purchase one-half of one ordinary share at a price of $11.50 per full ordinary share commencing on the Company’s completion of its initial Business Combination, and expiring five years from the completion of the Company’s initial Business Combination. The Company will not issue fractional shares. As a result, investors must exercise Warrants in multiples of two Warrants, at a price of $11.50 per full share, subject to adjustment, to validly exercise the Warrants. The Company may redeem the Warrants at a price of $0.01 per Warrant upon 30 days’ notice, only in the event that the last sale price of the ordinary shares is at least $24.00 per share for any 20 trading days within a 30-trading day period (“30-Day Trading Period”) ending on the third day prior to the date on which notice of redemption is given, provided there is a current registration statement in effect with respect to the ordinary shares underlying such Warrants commencing five business days prior to the 30-Day Trading Period and continuing each day thereafter until the date of redemption. If the Company redeems the Warrants as described above, management will have the option to require all holders that wish to exercise Warrants to do so on a “cashless basis.” In accordance with the warrant agreement relating to the Warrants sold and issued in the Initial Public Offering the Company is only required to use its best efforts to maintain the effectiveness of the registration statement covering the Warrants. If a registration statement is not effective within 90 days following the consummation of a Business Combination, Warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. In the event that a registration statement is not effective at the time of exercise or no exemption is available for a cashless exercise, the holder of such Warrant shall not be entitled to exercise such Warrant for cash and in no event (whether in the case of a registration statement being effective or otherwise) will the Company be required to net cash settle the Warrant exercise. Additionally, in no event will the Company be required to net cash settle the Rights.

 

If the Company is unable to complete an initial Business Combination within the required time period and the Company redeems the Public Shares for the funds held in the Trust Account, holders of rights and warrants will not receive any of such funds for their rights and warrants and the rights and warrants will expire worthless.

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.7.0.1
Private Placement
6 Months Ended
May 31, 2017
Equity [Abstract]  
Private Placement

Note 5 - Private Placement

 

Simultaneously with the consummation of the Initial Public Offering, the Company consummated the Private Placement of 310,000 Private Placement Units, at $10.00 per Private Placement Unit for a total purchase price of $3.1 million. Of the Private Placement Units, 265,000 were purchased by Initial Shareholders and their affiliates and designees and 45,000 were purchased by EBC. The Private Placement Units are identical to the units sold in the Initial Public Offering except the warrants included in the Private Placement Units are non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees. Additionally, because the warrants included in the Private Placement Units were issued in a private transaction, the holders and their transferees will be allowed to exercise such warrants for cash even if a registration statement covering the ordinary shares issuable upon exercise of such warrants is not effective and receive unregistered ordinary shares. Furthermore, the purchasers have agreed (A) to vote the private shares in favor of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to the Company’s proposed amended and restated memorandum and articles of association to be effected prior to the completion of the Initial Public Offering that would affect the substance or timing of the Company’s obligation to allow holders of Public Shares to exercise conversion rights with respect thereto as described herein unless the Company provides dissenting Public Shareholders with the opportunity to convert their Public Shares in connection with any such vote, (C) not to convert any private shares for cash from the Trust Account in connection with a shareholder vote to approve a proposed initial Business Combination (or to sell such shares to the Company in any tender offer the Company may engage in) or a vote to amend the provisions of the Company’s amended and restated memorandum and articles of association as described above and (D) that the private shares shall not participate in any liquidating distribution upon winding up if a Business Combination is not consummated. The purchasers have also agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to certain permitted transferees) until the completion of an initial Business Combination.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.7.0.1
Related Party Transactions
6 Months Ended
May 31, 2017
Related Party Transactions [Abstract]  
Related Party Transactions

Note 6 - Related Party Transactions

 

Initial Shares

 

In July 2015, the Company issued 1,150,000 ordinary shares (the “insider shares”) to the Initial Shareholders for an aggregate purchase price of $25,000. The insider shares held by the Initial Shareholders included an aggregate of 150,000 shares repurchased for an aggregate purchase price of $0.01 and cancelled by the Company in December 2015 upon receiving notice that the underwriters’ over-allotment option was not exercised in full.

 

The insider shares are identical to the ordinary shares included in the Units sold in the Initial Public Offering. However, the Initial Shareholders have agreed (subject to certain exceptions) (A) to vote their insider shares (as well as any public shares acquired in or after the Initial Public Offering) in favor of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to the amended and restated memorandum and articles of association with respect to pre-Business Combination activities prior to the consummation of such a Business Combination unless the Company provides dissenting public shareholders with the opportunity to convert their public shares into the right to receive cash from the trust account in connection with any such vote, (C) not to convert any insider shares (as well as any other shares acquired in or after the Initial Public Offering) into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a proposed initial Business Combination (or sell any shares they hold to the Company in a tender offer in connection with a proposed initial Business Combination) or a vote to amend the provisions of the amended and restated memorandum and articles of association as described above and (D) that the insider shares shall not participate in any liquidating distribution upon winding up if a business combination is not consummated. Additionally, the Initial Shareholders have agreed not to transfer, assign or sell any of the insider shares (except to certain permitted transferees) until (1) with respect to 50% of the insider shares, the earlier of one year after the date of the consummation of initial Business Combination and the date on which the closing price of ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after initial business combination and (2) with respect to the remaining 50% of the insider shares, one year after the date of the consummation of initial Business Combination, or earlier, in either case, if, subsequent to initial business combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of shareholders having the right to exchange their ordinary shares for cash, securities or other property.

  

Related Party Transactions

 

Prior to the closing of the Initial Public Offering, a director advanced an aggregate of approximately $139,000 to cover expenses related to the Company’s formation and the Initial Public Offering. The Company repaid this amount on December 1, 2015 from the proceeds received upon closing of the Initial Public Offering. Following the commitment letter from one of the Company’s directors and non-executive Chairman of the Board to provide working capital to the Company, on April 28, 2017, the Company issued a $100,000 convertible promissory note to a related party.  The loan is unsecured, non-interest bearing and is payable upon consummation of a Business Combination. Upon consummation of a Business Combination, the principal balance of the note may be converted, at the holder’s option, to Private Placement Units at a price of $10.00 per Private Placement Unit. If the lender converts the entire principal balance of the convertible promissory note, he would receive 10,000 Private Placement Units. If a Business Combination is not consummated, the note will not be repaid by the Company and all amounts owed thereunder by the Company will be forgiven except to the extent that the Company has funds available to it outside of its Trust Account established in connection with the Initial Public Offering. As of May 31, 2017, the Company had borrowed $30,000 under such note.

 

The Company maintains its principal executive offices in office space provided to us at no cost by a third party affiliated with one of the Company’s directors.

 

The Company is also permitted to pay consulting fees to its officers, directors, shareholders or their affiliates for assisting us in consummating our initial business combination in an amount not to exceed an aggregate of $500,000.

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.7.0.1
Commitments and Contingencies
6 Months Ended
May 31, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 7 - Commitments and Contingencies

 

Underwriting Agreement

 

On November 24, 2015, the Company entered into an agreement with EBC (“Underwriting Agreement”), pursuant to which the Company paid an underwriting discount of $1.3 million. The Company has further engaged EBC to assist the Company with its initial Business Combination. Pursuant to this arrangement, the Company anticipates that EBC will assist the Company in holding meetings with shareholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities, assist the Company in obtaining shareholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The Company will pay EBC a cash fee of $1,600,000 for such services upon the consummation of its initial Business Combination (exclusive of any applicable finders’ fees which might become payable); provided that up to 25% of the fee may be allocated at the Company’s sole discretion to one or more advisors that assist the Company in identifying and consummating an initial Business Combination. The Company will also reimburse EBC for up to $20,000 of its reasonable costs and expenses incurred by it (including reasonable fees and disbursements of counsel) in connection with the performance of its services pursuant to the agreement; provided, however, all expenses in excess of $5,000 in the aggregate shall be subject to prior written approval, which approval will not be unreasonably withheld.

 

Unit Purchase Option

 

In November 2015, the Company sold to EBC and its designees for $100, unit purchase options to purchase an aggregate of 400,000 units (collectively, the “Unit Purchase Option”). The Unit Purchase Option is exercisable at $10.00 per unit, commencing on the later of the consummation of a Business Combination and November 24, 2016. The Unit Purchase Option expires on November 24, 2020. Since the option is not exercisable until the consummation of a Business Combination at the earliest, and the rights will result in the issuance of shares upon consummation of a Business Combination, the option will effectively represent the right to purchase an aggregate 457,142 ordinary shares (which includes the 57,142 ordinary shares issuable for the rights included in the units, as well as 400,000 warrants to purchase 200,000 ordinary shares for $11.50 per share). The Unit Purchase Option grants to the holders demand and “piggy back” registration rights for periods of five and seven years, respectively, from November 24, 2015 with respect to the securities directly and indirectly issuable upon exercise of the option. The Company will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves.

 

The Company accounted for the fair value of the Unit Purchase Option, inclusive of the receipt of a $100 cash payment, as an expense of the Initial Public Offering resulting in a charge directly to shareholders’ equity. The Company estimated that the fair value of the Unit Purchase Option was approximately $2 million (or $5.01 per unit) using the Black-Scholes option-pricing model. The fair value of the Unit Purchase Option was estimated as of the date of grant using the following assumptions: (1) expected volatility of 57.71%, (2) risk-free interest rate of 1.52%, and (3) expected life of five years. The Unit Purchase Option may be exercised for cash or on a “cashless” basis, at the holder’s option, such that the holder may use the appreciated value of the Unit Purchase Option (the difference between the exercise prices of the Unit Purchase Option and the market price of the Units and underlying ordinary shares) to exercise the Unit Purchase Option without the payment of any cash. The Company will have no obligation to net cash settle the exercise of the Unit Purchase Option or underlying rights and warrants.

 

Advisory Agreements

 

On October 8, 2015, the Company engaged B. Riley & Co. LLC (“B. Riley”) to provide certain advisory services in connection with the Company’s initial Business Combination in exchange for $250,000 in service fees, which were paid in December 2015 and is included in Prepaid Expenses in the accompanying Condensed Balance Sheets as B. Riley has not provided material services to date.

 

The Company has also signed agreements with individuals in the business community of their respective countries (the “Originators”) to supplement the efforts of the management team on its search of targets for a potential Business Combination. The agreements with the Originators are for a period of three to six months. In exchange for the services, the Company agreed to pay the Originators a finder’s fee of 0.75% of the transaction value, payable upon the completion of a Business Combination. The aggregated amount of the finders’ fee for the Financial Advisor and the Originators should be below 2.8% of the amount invested by the Company in the target company. To date, no fees have been incurred in connection with the agreements yet.

 

Registration Rights

 

The Initial Shareholders and purchasers of the private Placement Units are entitled to registration rights with respect to their securities, pursuant to an agreement dated as of November 24, 2015. The holders of the majority of the insider shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these ordinary shares are to be released from escrow. The holders of a majority of the Private Placement Units (or underlying securities) issued in payment of working capital loans made to the Company can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.7.0.1
Shareholder Equity
6 Months Ended
May 31, 2017
Equity [Abstract]  
Shareholder Equity

Note 8 - Shareholder Equity

 

Preferred Shares

 

The Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors.

 

As of May 31, 2017, there are no preferred shares issued or outstanding.

 

Ordinary Shares

 

The Company is authorized to issue 100,000,000 ordinary shares with a par value of $0.0001 per share.

 

As of May 31, 2017, after the consummation of the Initial Public Offering and the Private Placement, the Company has an aggregate of 5,310,000 ordinary shares outstanding, inclusive of 3,525,230 and 3,537,686 ordinary shares subject to possible conversion classified as temporary equity in the accompanying Balance Sheet as of May 31, 2017 and November 30, 2016, respectively.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fair Value Measurements
6 Months Ended
May 31, 2017
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 9 - Fair Value Measurements

 

The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

  

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

 

Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

 

Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

 

Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

 

The following table presents information about the Company’s assets that are measured on a recurring basis as of May 31, 2017, and November 30, 2016 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.

 

    Quoted Prices in Active Markets  
    (Level 1)  
Description   May 31, 2017     November 30, 2016  
Cash and marketable securities held in Trust Account   $ 40,624,425       40,651,426  
                 

 

Approximately $695 and $44,000 of the balance in the Trust Account was held in cash as of May 31, 2017 and November 30, 2016.

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.7.0.1
Subsequent Events
6 Months Ended
May 31, 2017
Subsequent Events [Abstract]  
Subsequent Events

Note 10 - Subsequent Events

 

On June 29, 2017, the Company held its annual meeting of stockholders as required by Nasdaq Listing Rules. Nasdaq subsequently notified the Company that, as a result, the Company had regained compliance with such listing rules.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.7.0.1
Significant Accounting Policies (Policies)
6 Months Ended
May 31, 2017
Accounting Policies [Abstract]  
Emerging Growth Company

Emerging Growth Company

 

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 registration statement under the Securities Act of 1933, as amended (“Securities Act”), 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 an election to opt out is irrevocable. The Company has 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, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

The Company considers all short-term investments with a maturity of three months or less when purchased to be cash equivalents.

Concentration of Credit Risk

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. At May 31, 2017, the Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.

Cash and Marketable Securities Held in Trust Account

Cash and Marketable Securities Held in Trust Account

 

The amounts held in the Trust Account represent substantially all of the proceeds of the Initial Public Offering and are classified as restricted assets since such amounts can only be used by the Company in connection with the consummation of a Business Combination. As of May 31, 2017, cash and cash equivalents held in the Trust Account consisted of approximately $40.6 million in United States Treasury Bills and approximately $695 in cash. At May 31, 2017, there was approximately $24,000 of interest income held in the Trust Account available to be released to the Company.

Ordinary Shares Subject to Possible Conversion

Ordinary Shares Subject to Possible Conversion

 

The Company accounts for its Ordinary Shares subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary Shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable Ordinary Shares (including Ordinary Shares that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Ordinary Shares are classified as shareholders’ equity. The Company’s Ordinary Shares features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, Ordinary Shares subject to possible conversion at conversion value are presented as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.

Net Loss Per Share

Net Loss per Share

 

Loss per share is computed by dividing net loss by the weighted-average number of Ordinary Shares outstanding during the period. An aggregate of 3,525,230 and 3,546,161 Ordinary Shares subject to possible redemption at May 31, 2017 and 2016, respectively, have been excluded from the calculation of basic loss per ordinary share since such Ordinary Shares, if redeemed, only participate in their pro rata share of the trust earnings. The Company has not considered the effect of (i) warrants sold in the Public Offering and Private Placement to purchase 2,155,000 Ordinary Shares of the Company, (ii) rights to acquire 615,713 Ordinary Shares of the Company and (iii) 400,000 Ordinary Shares, warrants to purchase 200,000 Ordinary Shares and rights to acquire 57,142 Ordinary Shares included in the unit purchase option sold to the underwriter, in the calculation of diluted loss per share, since the exercise of the unit purchase option and warrants as well as the conversion of rights is contingent on the occurrence of future events.

Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Recent Accounting Standards

Recent Accounting Standards

 

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fair Value Measurements (Tables)
6 Months Ended
May 31, 2017
Fair Value Disclosures [Abstract]  
Fair Value Assets Measured on Recurring Basis

The following table presents information about the Company’s assets that are measured on a recurring basis as of May 31, 2017, and November 30, 2016 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.

 

    Quoted Prices in Active Markets  
    (Level 1)  
Description   May 31, 2017     November 30, 2016  
Cash and marketable securities held in Trust Account   $ 40,624,425       40,651,426  
                 

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.7.0.1
Organization, Plan of Business Operations (Details Narrative) - USD ($)
6 Months Ended
Dec. 02, 2015
May 31, 2017
Unit price   $ 10.00
Amount held in trust   $ 10.15
Interest held in trust account available to release   $ 24,000
Amount of net tangible assets for business combination   $ 5,000,001
Description of conversion terms   All shares in excess of 20% of the shares sold in the Initial Public Offering held by a holder will not be converted to cash.
Initial Public Offering [Member]    
Number of units issued 4,000,000  
Unit price $ 10.00  
Gross proceeds from unit issued $ 40,000,000  
Net offering cost 1,800,000  
Deferred offering costs $ 454,000  
Private Placement [Member]    
Number of units issued   310,000
Unit price   $ 10.00
Gross proceeds from unit issued   $ 3,100,000
Maximum amount of notes converted   $ 500,000
Initial Shareholders [Member] | Private Placement [Member]    
Number of units issued   265,000
Early Bird Capital [Member] | Private Placement [Member]    
Number of units issued   45,000
Continental Stock Transfer & Trust Company [Member]    
Unit price   $ 10.15
Total net proceeds placed in trust account   $ 40,600,000
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.7.0.1
Basis of Presentation (Details Narrative) - USD ($)
6 Months Ended
May 31, 2017
May 31, 2016
Nov. 30, 2016
Dec. 02, 2015
Nov. 30, 2015
Cash balance $ 36,042 $ 140,694 $ 63,789   $ 100
Interest income held in trust account available to release 24,000        
Proceeds from related party debt 30,000      
Notes converted into units for initial business combination $ 500,000        
Unit price $ 10.00        
Ordinary shares issued 57,142        
Ordinary shares issued in addition 7,142        
Number of warrants issued 50,000        
Warrants to purchase ordinary shares 25,000        
Anticipated cash expenses for the next 3 months $ 71,000        
Initial Public Offering [Member]          
Proceeds held outside of the trust account 686,000        
Number of shares issued upon new issue, value 25,000        
Unit price       $ 10.00  
Initial Public Offering [Member] | Promissory Note [Member] | Maximum [Member]          
Proceeds from related party debt 100,000        
Initial Public Offering [Member] | Director [Member]          
Due to related party 139,000        
Additional Private Placement Units [Member]          
Notes converted into units for initial business combination $ 500,000        
Unit price $ 10.00        
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.7.0.1
Significant Accounting Policies (Details Narrative) - USD ($)
6 Months Ended
May 31, 2017
Nov. 30, 2016
May 31, 2016
Federal depository insurance coverage $ 250,000    
Cash and cash equivalents held in the trust account 40,600,000    
Cash 695    
Interest income held in trust account available to release $ 24,000    
Ordinary shares subject to possible conversion 3,525,230 3,537,686 3,546,161
Initial Public Offering [Member]      
Warrants sold in the public offering and private placement to purchase ordinary shares 2,155,000    
Right to acquire of ordinary shares 615,713    
Ordinary shares, included in the purchase option sold to the underwriter 400,000    
Ordinary shares, warrants to purchase, included in the purchase option sold to the underwriter 200,000    
Ordinary shares, rights to acquire, included in the purchase option sold to the underwriter 57,142    
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.7.0.1
Initial Public Offering (Details Narrative) - USD ($)
6 Months Ended
Dec. 02, 2015
May 31, 2017
Class of Stock [Line Items]    
Unit price   $ 10.00
Initial Public Offering [Member]    
Class of Stock [Line Items]    
Number of units issued 4,000,000  
Unit price $ 10.00  
Net proceeds from unit issued $ 38,200,000  
Net offering cost 1,800,000  
Deferred offering costs incurred prior to the closing of public offering $ 454,000  
Description of unit components   Each Unit consists of one ordinary share in the Company, one right to receive one-seventh (1/7) of a share upon consummation of an initial Business Combination and one redeemable warrant (“Warrant”) to purchase one half of one ordinary share for $11.50 per full share.
Warrants redeemable, threshold of stock price   $ 24.00
Warrants redeemable, threshold trading days   20 days
Redeemable Warrant [Member] | Initial Public Offering [Member]    
Class of Stock [Line Items]    
Exercise price   $ 11.50
Expiration period   5 years
Redemption price   $ 0.01
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.7.0.1
Private Placement (Details Narrative)
6 Months Ended
May 31, 2017
USD ($)
$ / shares
shares
Class of Stock [Line Items]  
Unit price | $ / shares $ 10.00
Private Placement [Member]  
Class of Stock [Line Items]  
Number of units issued 310,000
Unit price | $ / shares $ 10.00
Net proceeds from unit issued | $ $ 3,100,000
Initial Shareholders [Member] | Private Placement [Member]  
Class of Stock [Line Items]  
Number of units issued 265,000
Early Bird Capital [Member] | Private Placement [Member]  
Class of Stock [Line Items]  
Number of units issued 45,000
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.7.0.1
Related Party Transactions (Details Narrative) - USD ($)
1 Months Ended 6 Months Ended
Apr. 28, 2017
Dec. 31, 2015
Jul. 31, 2015
May 31, 2017
May 31, 2016
Dec. 02, 2015
Related Party Transaction [Line Items]            
Share price       $ 10.00    
Proceeds from related party debt       $ 30,000  
Maximum allowable amount of consulting fees to its officers, directors, shareholders or their affiliates       500,000    
Convertible Promissory Note [Member]            
Related Party Transaction [Line Items]            
Proceeds from related party debt $ 100,000          
Debt conversion, converted instrument, shares 10,000          
Initial Public Offering [Member]            
Related Party Transaction [Line Items]            
Number of shares issued upon new issue, value       25,000    
Share price           $ 10.00
Private Placement Units [Member]            
Related Party Transaction [Line Items]            
Share price $ 10.00          
Initial Shareholders [Member]            
Related Party Transaction [Line Items]            
Number of shares issued upon new issue     1,150,000      
Number of shares issued upon new issue, value     $ 25,000      
Description of related party transaction     (1) with respect to 50% of the insider shares, the earlier of one year after the date of the consummation of initial Business Combination and the date on which the closing price of ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after initial business combination and (2) with respect to the remaining 50% of the insider shares, one year after the date of the consummation of initial Business Combination, or earlier, in either case, if, subsequent to initial business combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction which results in all of shareholders having the right to exchange their ordinary shares for cash, securities or other property.      
Initial Shareholders [Member] | Over-Allotment Option [Member]            
Related Party Transaction [Line Items]            
Number of shares repurchased   150,000        
Share price   $ 0.01        
Director [Member] | Initial Public Offering [Member]            
Related Party Transaction [Line Items]            
Due to related party       $ 139,000    
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.7.0.1
Commitments and Contingencies (Details Narrative) - USD ($)
1 Months Ended 6 Months Ended
Dec. 02, 2015
Nov. 24, 2015
Dec. 31, 2015
Nov. 30, 2015
May 31, 2017
Loss Contingencies [Line Items]          
Number of ordinary shares called         25,000
Cash payment         $ 695
Description of commitments after completion of business combination         In exchange for the services, the Company agreed to pay the Originators a finder’s fee of 0.75% of the transaction value, payable upon the completion of a Business Combination.
Initial Public Offering [Member]          
Loss Contingencies [Line Items]          
Number of unit issued 4,000,000        
Redeemable Warrant [Member] | Initial Public Offering [Member]          
Loss Contingencies [Line Items]          
Exercise price         $ 11.50
Minimum [Member]          
Loss Contingencies [Line Items]          
Agreement period         3 months
Maximum [Member]          
Loss Contingencies [Line Items]          
Agreement period         6 months
Finder's fee percentage, maximum         2.80%
Stock Option (Unit Purchase Option) [Member] | Underwriting Agreement [Member]          
Loss Contingencies [Line Items]          
Exercisable unit price       $ 10.00  
Maturity date       Nov. 24, 2020  
Aggregate number of ordinary shares       457,142  
Number of rights called       57,142  
Cash payment       $ 100  
Estimate fair value       $ 2,000,000  
Estimate fair value       $ 5.01  
Expected volatility       57.71%  
Risk-free interest rate       1.52%  
Expected life       5 years  
Stock Option (Unit Purchase Option) [Member] | Redeemable Warrant [Member] | Underwriting Agreement [Member]          
Loss Contingencies [Line Items]          
Number of rights called       400,000  
Number of ordinary shares called       200,000  
Exercise price       $ 11.50  
Early Bird Capital [Member] | Underwriting Agreement [Member]          
Loss Contingencies [Line Items]          
Underwriting fees   $ 1,300,000      
Payment of services for cash fee   $ 1,600,000      
Percentage of finders' fee   25.00%      
Reimbursement of reasonable fees and disbursements, maximum   $ 20,000      
Description of restriction on reimbursement of reasonable fees and disbursements   All expenses in excess of $5,000 in the aggregate shall be subject to prior written approval, which approval will not be unreasonably withheld.      
Early Bird Capital [Member] | Stock Option (Unit Purchase Option) [Member] | Underwriting Agreement [Member]          
Loss Contingencies [Line Items]          
Unit purchase option price       $ 100  
Number of unit issued       400,000  
B. Riley & Co. LLC [Member] | Initial Public Offering [Member]          
Loss Contingencies [Line Items]          
Cash payment for advisory services     $ 250,000    
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.7.0.1
Shareholder Equity (Details Narrative) - $ / shares
May 31, 2017
Nov. 30, 2016
May 31, 2016
Class of Stock [Line Items]      
Preferred shares, authorized 1,000,000 1,000,000  
Preferred shares, par value $ 0.0001 $ 0.0001  
Preferred shares, issued  
Preferred shares, outstanding  
Ordinary shares, authorized 100,000,000 100,000,000  
Ordinary shares, par value $ 0.0001 $ 0.0001  
Ordinary shares, outstanding 1,784,770 1,772,314  
Ordinary shares subject to conversion 3,525,230 3,537,686 3,546,161
Initial Public Offering and Private Placement [Member]      
Class of Stock [Line Items]      
Ordinary shares, outstanding 5,310,000    
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fair Value Measurements (Details Narrative) - USD ($)
May 31, 2017
Nov. 30, 2016
Fair Value Disclosures [Abstract]    
Fair value of assets, cash held in Trust Account $ 695 $ 44,000
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.7.0.1
Fair Value Measurements - Fair Value Assets Measured on Recurring Basis (Details) - USD ($)
May 31, 2017
Nov. 30, 2016
Cash and marketable securities held in Trust Account $ 695 $ 44,000
Level 1 [Member]    
Cash and marketable securities held in Trust Account $ 40,624,425 $ 40,651,426
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