UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(MARK ONE)

☒  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2016 

☐  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: 001-36664

DT ASIA INVESTMENTS LIMITED

(Exact name of registrant as specified in its charter)

British Virgin Islands		98-1192662
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

 Room 703, 7/F.,

Beautiful Group Tower,

77 Connaught Road Central,

Hong Kong

(Address of registrant’s principal executive offices)

Registrant’s telephone number: (852) 2110-0081

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:		Name of Each Exchange on Which Registered:
Ordinary Shares, no par value per share		The NASDAQ Stock Market LLC
Warrants to purchase one-half of one Ordinary Share		The NASDAQ Stock Market LLC
Rights, exchangeable into one-tenth of one Ordinary Share		The NASDAQ Stock Market LLC
Units, each consisting of one Ordinary Share, one Right and one Warrant		The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  ☐   No  ☒ 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes  ☐   No  ☒ 

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☒ 

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

	Large accelerated filer  ☐	Accelerated filer                    ☐
	Non-accelerated filer    ☐	Smaller reporting company   ☒

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

As of September 30, 2015, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the ordinary shares outstanding, other than shares held by persons who may be deemed affiliates of the registrant, was $69,138,766.

As of June 20, 2016, 2015, there were 3,671,674 shares of the registrant’s ordinary shares, no par value per share, issued and outstanding.

 

 

 

TABLE OF CONTENTS

 

		PAGE
PART I
Item 1.	Business	5
Item 1A.	Risk Factors	18
Item 1B.	Unresolved Staff Comments	40
Item 2.	Properties	40
Item 3.	Legal Proceedings	40
Item 4.	Mine Safety Disclosures	40
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	41
Item 6.	Selected Financial Data	42
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 8.	Financial Statements and Supplementary Data	48
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	48
Item 9A.	Controls and Procedures	48
Item 9B.	Other Information	48
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	49
Item 11.	Executive Compensation	53
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	53
Item 13.	Certain Relationships and Related Transactions, and Director Independence	55
Item 14.	Principal Accounting Fees and Services	57
PART IV
Item 15.	Exhibits and Financial Statement Schedules	58

 

 

Unless otherwise stated in this Annual Report on Form 10-K (this “Report”), references in this Report to:

 

	●	“we,” “us,” “the Company,” or “our company” refer to DT Asia Investments Limited, a BVI business company with limited liability;
	●	“Adrie” refers to Adrie Global Holdings Limited, the entity we plan to acquire if the Business Combination is approved by our shareholders.
	●	“China Lending Group” refers to Adrie and its consolidated subsidiaries and variable interest entity.
	●	the “Business Combination” refers to the transactions contemplated by the share exchange agreement dated January 11, 2016 (the “Exchange Agreement”) providing for the acquisition by us of all of the outstanding issued shares and other equity interests in Adrie Global Holdings Limited, which primarily conducts its business through its variable interest entity, Urumqi Feng Hui Direct Lending Limited, from the shareholders of Adrie.
	●	the “Companies Act” and the “Insolvency Act” are to the BVI Business Companies Act, 2004 and the Insolvency Act, 2003 of the British Virgin Islands, respectively;
	●	“founder shares” refer to the 1,715,015 ordinary shares currently held by the initial shareholders (as defined below), which were issued to our initial shareholders prior to our initial public offering;
	●	our “initial shareholders” refer to our sponsor, officers and directors that hold founder shares;
	●	our “insider units” refer to 319,119 units issued privately to our sponsor and/or its designees in connection with our initial public offering;
	●	“private units” refer to the insider units and units issued to EarlyBirdCapital, Inc. in connection with our initial public offering;
	●	“ordinary shares” refer to the ordinary shares of no par value in the company;
	●	“private shares,” “private rights” and “private warrants” refers to the ordinary shares, rights and warrants included within the private units;
	●	our “management” or our “management team” refer to our officers and directors;
	●	“memorandum and articles of association” refer to the Memorandum and Articles of Association of the Company, as amended from time to time;
	●	“PIPE Preferred Investment” refers to the contemplated private placement of at least $12.0 million of our newly created Series A Convertible Preferred Stock to be sold in a private placement to certain investors.
	●	“Proxy Statement” refers to the Definitive Proxy Statement filed by the Company on June 21, 2016;
	●	“public shares” refer to ordinary shares sold as part of the units in our initial public offering (whether they were purchased in our initial public offering or thereafter in the open market) that have not yet been redeemed and references to “public shareholders” refer to the holders of our public shares, including our initial shareholders to the extent our initial shareholders purchase public shares, provided that their status as “public shareholders” shall exist only with respect to such public shares;
	●	our “rights” or “public rights” refer to the rights which were sold as part of the units in our initial public offering;
	●	our “sponsor” refer to DeTiger Holdings Limited, a company incorporated in the British Virgin Islands owned and controlled by Ms. Winnie Lai Ling Ng;
	●	our “sponsor warrants” refer to the 2,058,007 additional warrants sold privately to our sponsor and/or its designees in connection with our initial public offering which are not part of the private units; and
	●	our “warrants” or “public warrants” refer to the warrants which were sold as part of the units in our initial public offering.

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Report, including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or other business combination and any other statements that are not statements of current or historical facts. These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to:

 

	●	our ability to complete our initial business combination;
	●	our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;
	●	our potential ability to obtain additional financing to complete our initial business combination;
	●	failure to maintain the listing on, or the delisting of our securities from, Nasdaq or an inability to have our securities listed on Nasdaq or another national securities exchange following our initial business combination;
	●	our public securities’ potential liquidity and trading;
	●	the lack of a market for our securities; or
	●	our financial performance.

 

The forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” beginning on page 18. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under “Risk Factors” may not be exhaustive.

 

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Report. In addition, even if our results of operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods. For any risks associated with the Business Combination (as described below), see the Company’s Form 8-K as filed with the SEC on January 13, 2016 and in the Proxy Statement as filed with the SEC on June 21, 2016.

 

 

PART I

 

Item 1. Business

 

Introduction

 

We are a blank check company incorporated in the British Virgin Islands as a business company with limited liability. This means that our shareholders have no additional liability for the company’s liabilities over and above the amount paid for their shares. We were formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, contractual control arrangement with, purchasing all or substantially all of the assets of, or engaging in any other similar business combination with one or more businesses or entities.

 

Prior to January 11, 2016, our efforts have been limited to organizational activities, our initial public offering, and the search for a suitable acquisition target. On January 11, 2016, we entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with Adrie Global Holdings Limited, a business company incorporated in the British Virgin Islands with limited liability (“Adrie”), each of Adrie’s shareholders (collectively, the “Sellers”), the Company’s sponsor, DeTiger Holdings Limited, in the capacity as the representative for the Company’s shareholders prior to the closing of the Business Combination (as defined below) (the “DT Representative”), and Li Jingping in the capacity as the representative for the Sellers (the “Seller Representative”), pursuant to which, among other things and subject to the terms and conditions contained therein, the Company will effect an acquisition of Adrie and its subsidiaries, including certain wholly foreign-owned enterprises registered in China which contractually control Urumqi Feng Hui Direct Lending Limited, a registered company in Xinjiang China (“China Lending” and collectively with Adrie and their respective subsidiaries and variable interest entities , the “China Lending Group”) by acquiring from the Sellers all outstanding equity interests of Adrie (the “Business Combination”).

 

We intend to hold a special meeting of shareholders to approve the Business Combination. On June 21, 2016 we filed a definitive proxy statement (the “Proxy Statement”) on Schedule 14A containing information about the Business Combination. If the Business Combination is approved, then concurrently with the Business Combination, we will provide our shareholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust. The description of the Share Exchange Agreement is qualified in its entirety by reference to the full text of the Share Exchange Agreement which was filed with the SEC on the Company’s Current Report on Form 8-K filed on January 13, 2016 and the Proxy Statement filed on June 21, 2016. You are urged to read the entire Share Exchange Agreement and the other exhibits attached thereto.

 

Additional information about the proposed Business Combination, the business of China Lending Group and the special meeting are available, without charge, at the SEC’s website (http://www.sec.gov). Other than specific references to the Business Combination, the discussion in this Annual Report is as of March 31, 2016.

 

Business Strategy

 

Our efforts in identifying prospective target businesses were not limited to a particular country, although we sought to capitalize on the global network and investing and operating experience of our management team and board of directors to identify, acquire and operate one or more businesses that have their primary operations located in Asia (with an emphasis on China).

 

Our team consists of experienced financial services professionals, senior operating executives, directors of Asian companies, and specifically a Certified Public Accountant (“CPA”) and a China Certified Tax Accountant (“CTA”). Our Chairman, Chief Executive Officer (“CEO”), and directors have decades of experience in mergers, acquisitions and divestures of privately and publicly-held companies. Both our Chairman and CEO have been actively engaged in cross-border investments/divestments between the U.S. and Asia (with an emphasis on China) for several decades, while also assisting U.S. companies with expansion in China and vice versa since the early 1990s. In addition, our CEO has had significant prior experience with China-focused blank check companies, from 2005 to 2010. Our independent directors are Chinese and Hong Kong natives who have decades of experience in entrepreneurship, asset management/advisory services, and accounting & tax practices in Mainland China and Hong Kong. We believe we will benefit from their accomplishments in Asia, and specifically their current activities in China, in identifying attractive acquisition opportunities. However, there is no assurance that we will complete a business combination.

 

There was no restriction in the geographic location of targets we could pursue, however we prioritized geographic locations in Asia, and specifically China. We sought to identify targets that are likely to provide attractive financial returns through business combinations.

 

 

Significant Activities Since Inception

 

On October 6, 2014, we consummated our initial public offering of 6,000,000 units, each unit consisting one ordinary share, no par value per share (“Ordinary Share”), one right (“Right”) to receive one-tenth (1/10) of one Ordinary Share upon consummation of an initial business combination and one warrant (“Warrant”) to purchase one-half of one Ordinary Share at an exercise price of $12.00 per full share, pursuant to a registration statement on Form S-1 (File No. 333-197187). The units were sold in our initial public offering at an offering price of $10.00 per unit, generating gross proceeds of $60,000,000 (before underwriting discounts and commissions and offering expenses). Simultaneously with the consummation of our initial public offering, we completed a private placement of (i) 320,000 units in the aggregate to the underwriter and our sponsor at $10.00 per unit and (ii) 1,800,000 warrants to our sponsor at a price of $0.50 per warrant, generating total proceeds of $4,100,000. 

 

On October 14, 2014, the underwriter exercised its over-allotment option in part and purchased 860,063 Over-Allotment Units, which were sold at an offering price of $10.00 per Unit, generating gross proceeds of $8,600,630. Simultaneously with the sale of the Over-Allotment Units, we consummated the private sale of an additional 32,253 private units at a price of $10.00 per unit, for an aggregate purchase price of $322,530, and 258,007 warrants to our sponsor, at a price of $0.50 per warrant, for an aggregate purchase price of $129,004. Since the underwriter exercised the over-allotment option in part, and purchased 860,063 of the total possible 900,000 additional Units, the sponsor forfeited 9,985 shares.

 

A total of $69,972,643 from the net proceeds from our initial public offering (including the Over-Allotment Units), and the private placements on October 6, 2014 and October 14, 2014, were placed in a trust account established for the benefit of our public stockholders.

 

The units began trading on October 1, 2014 on the NASDAQ Capital Market under the symbol “CADTU”. Commencing on October 22, 2014, the securities comprising the units began to trade separately. The units, ordinary shares, warrants and rights are trading on the NASDAQ Capital Market under the symbols “CADTU,” “CADT,” “CADTW” and “CADTR,” respectively.

 

After the payment of approximately $440,000 in expenses relating to our initial public offering (other than underwriting commissions), approximately $69,972,643 of the net proceeds of our initial public offering and the private placement of the units (or approximately $10.20 per unit sold in our initial public offering) was deposited in a trust account with Continental Stock Transfer & Trust Company as trustee.

 

In connection with the Company’s March 31, 2016 meeting of shareholders to approve an extension of the date to complete an initial business combination from April 6, 2016 to July 6, 2016 (the “Extension Meeting”), a total of 5,255,657 ordinary shares were redeemed. On April 1, 2016, our sponsor deposited into the trust account approximately $96,000 (the “Contribution”), which amount was equal to $0.06 for each of the 1,604,406 public shares of the Company that were not redeemed in connection with the extension. As a result of the Contribution and following redemption of the public shares in connection with the extension, the pro rata portion of the funds available in the trust account for the public shares that were not redeemed increased from approximately $10.20 per share to approximately $10.26 per share.

 

All proceeds in the trust account may be invested in either U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, and that invest solely in U.S. Treasuries. Except for a portion of the interest income (net of taxes payable) that may be released to us to fund our working capital requirements, none of the funds held in the trust account will be released until the earlier of the completion of our initial business combination and the redemption of 100% of our public shares if we are unable to consummate a business combination by July 6, 2016. The net proceeds deposited into the trust account in the initial public offering and in connection with the Extension Meeting and Contribution remain on deposit in the trust account earning interest. As of March 31, 2016, there was approximately $70.0 million held in the trust account, including accrued interest of approximately $111,000, and $53,115 held outside the trust account for working capital purposes. As of March 31, 2016, no funds had been withdrawn from the trust account for taxes or working capital purposes. As of June 20, 2016, there was approximately $16.5 million held in the trust account following the release of $53,607,701 for redemptions, plus approximately $111,000 in accrued interest withdrawn from the trust account for taxes or working capital purposes.

 

Share Exchange Agreement

 

As discussed above, on January 11, 2016, we entered into a Share Exchange Agreement with Adrie, Sellers, our sponsor, and Li Jingping, pursuant to which, among other things and subject to the terms and conditions contained therein, the Company will effect an acquisition of China Lending Group by acquiring from the Sellers all outstanding equity interests of Adrie.

 

 

Pursuant to the Share Exchange Agreement, in exchange for all of the outstanding shares of Adrie, the Company will issue 20 million ordinary shares of DT Asia to the Sellers (“Exchange Shares”), with 8 million of such Exchange Shares (“Escrow Shares”) being deposited in escrow at the closing of the Business Combination and subject to forfeiture (along with dividends and other earnings otherwise payable with respect to such Escrow Shares) in the event that the post-combination company fails to meet certain minimum financial performance targets or in the event that the DT Representative successfully brings an indemnification claim under the Share Exchange Agreement on behalf of the Company’s pre-combination shareholders. The Exchange Shares, including the Escrow Shares, will be allocated among the Sellers pro-rata based on each Seller’s ownership of Adrie prior to the Business Combination.

 

The Escrow Shares will be held in an escrow account maintained by Continental Stock Transfer & Trust Company (“Continental”), as escrow agent (the “Escrow Agent”). While the Escrow Shares are held in escrow, any dividends and other distributions otherwise payable with respect to the Escrow Shares will be held back by us and not paid until the Escrow Shares are released from escrow to the Sellers in proportion to their respective equity interests in Adrie immediately prior to the closing of the Business Combination, but the Sellers will be entitled to vote the Escrow Shares. Subject to indemnification claims, one-third of the Escrow Shares (along with the related accrued dividends and distributions) shall be released upon the post-combination company obtaining certain specified adjusted consolidated net income targets in each of calendar years 2016, 2017 and 2018, and with the Sellers also able to earn the Escrow Shares for any fiscal years where the target was not met through an alternative earn-out payment if the average adjusted consolidated net income for all three years combined meets a certain specified target. If the respective targets are met, the applicable Escrow Shares will be released on or before the 130^th day after the subject year end. The adjusted consolidated net income targets are based on the cash available at the closing from the trust funds (after giving effect to the redemptions) and the shares issued in the PIPE Preferred Investment, net of our transaction expenses and deferred initial public offering fees (also referred to herein as the net closing proceeds), with the scale range of the net closing proceeds being from $0 million to $69.0 million, and the target adjusted consolidated net income ranging in 2016 from $20.2 million at the bottom to $32.0 million at the top, in 2017 from $22.6 million at the bottom to $38.0 million at the top, and in 2018 from $25.6 million at the bottom to $44.0 million at the top, and with the average adjusted consolidated net income target for the alternative earn-out payment ranging from $23.3 million at the bottom to $40.0 million at the top. The targets will also be reduced based on the date of the closing of the Business Combination, with the 2016 target reduced by an amount equal to 50% of the 2016 target multiplied by a fraction based on the number of days in the 2016 calendar year prior to the closing date as compared to the number of days in the 2016 calendar year, and with the average adjusted consolidated net income target being reduced by 1/3 of the amount by which the 2016 target is reduced. So long as the upper limit for the annual rate of private borrowing and lending allowed in Xinjiang, China is four times the Peoples’ Bank of China base interest rate, the targets are further adjusted based on the change in the Peoples’ Bank of China base interest rate from the June 30, 2015 rate of 4.85%. The actual targets for purposes of determining adjusted consolidated net income will be expressed in their RMB equivalent based on the June 30, 2015 US dollar/CNY exchange rate of 6.1088 (as of January 22, 2016, the US dollar/CNY exchange rate was 6.5788). The adjusted consolidated net income will be determined using the post-combination company’s consolidated net income as determined in accordance with U.S. generally accepted accounting principles, expressed in RMB based upon the June 30, 2015 exchange rate, and with such amounts subject to adjustment to exclude the effects of any new businesses that we acquire after the closing, any extraordinary gains or losses or extraordinary income or expenses and any non-recurring revenue earned outside of the ordinary course of business.

 

Sellers will not transfer, assign or sell the remaining 12.0 million Exchange Shares for a period of one year from the closing of the Business Combination (which period may be shortened under certain circumstances).

 

PIPE Preferred Investment Financing

 

As a condition to the Business Combination, we intend to sell a minimum of at least $12 million (and up to $24 million, and potentially more with the consent of BVICo) of new Series A Convertible Preferred Stock to be created by us prior to the closing in a private placement to certain investors (also referred to herein as the PIPE Preferred Investment) at a per share price of $12.00. Such Series A Convertible Preferred Stock will be sold contingent upon the closing of the Business Combination with China Lending Group and may be subject to certain other conditions to be negotiated during the period between the signing of the Share Exchange Agreement and the closing of the Business Combination. We intend to use the net proceeds for working capital and general corporate purposes for the combined business after the Business Combination. As of June 28, 2016, the Company has received executed subscription agreements for an aggregate subscription amount of $10,320,000 for the PIPE Preferred Investment, of which $8,239,212 had been received into escrow. We expect to receive the balance of the funds into escrow prior to the closing of the Business Combination.

 

 

Special Meeting of Shareholders

 

We intend to hold a special meeting of shareholders on July 5, 2016 to approve the Business Combination. It is anticipated that, following completion of the Business Combination and if there are no additional redemptions, DT Asia’s existing shareholders, including our sponsor, will retain an ownership interest of approximately 18.4% of the Company, and Sellers will own approximately 81.6% of the Company. These percentages are calculated based on a number of assumptions (as described in the Proxy Statement filed on June 21, 2016) and are subject to adjustment in accordance with the terms of the Share Exchange Agreement. 

 

Effecting our Initial Business Combination

 

General

 

We are not presently engaged in any operations. We intend to effectuate our initial business combination by issuing ordinary shares as the consideration to the sellers of the acquired business..

 

We may seek to raise additional funds through a private offering of debt or equity securities in connection with the consummation of our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account. Subject to compliance with applicable securities laws, we would consummate such financing only simultaneously with the consummation of our business combination. In the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the business combination would disclose the terms of the financing and, only if required by law or the Nasdaq Capital Market, we would seek shareholder approval of such financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination. As discussed above, in connection with the Business Combination, we intend to sell a minimum of $12 million of Series A Convertible Preferred Stock in the PIPE Preferred Investment. As of June 28, 2016, the Company has received executed subscription agreements for an aggregate subscription amount of $10,320,000 for the PIPE Preferred Investment, of which $8,239,212 had been received into escrow. We expect to receive the balance of the funds into escrow prior to the closing of the Business Combination.

 

 

Investment Criteria

 

We had identified the following general criteria and guidelines, which we believed were important in evaluating prospective target businesses.

 

	●	Middle-Market Growth Business. We sought to acquire one or more growth businesses with a total enterprise value in excess of $300,000,000. We believed that there were a substantial number of potential target businesses within this valuation range that could benefit from new capital for scalable operations to yield significant revenue and earnings growth. We do not intend to acquire either a start-up company or a company with negative cash flow.
	●	Companies with Opportunity to Strengthen Management and Add Value. We sought to acquire one or more businesses that provides a platform for the existing management team to leverage the experience of our management team. We believe that the operating expertise of our management team is well suited to complement and, if beneficial, replace the target’s management team.
	●	Companies in Business Segments that are Strategically Significant to China. We sought to acquire those businesses with strong technological know-how, distribution networks and/or business practices in economic sectors that are currently experiencing significant Asia/China outbound investing. Such sectors include: Energy and resources, food processing, retail, manufacturing, and high technology business segments.
	●	Business with Revenue and Earnings Growth Potential. We sought to acquire one or more businesses that have the potential for significant revenue and earnings growth through a combination of brand and new product development, increased production capacity, expense reduction and synergistic follow-on acquisitions resulting in increased operating leverage.
	●	Companies with Potential for Strong Free Cash Flow Generation. We sought to acquire one or more businesses that have the potential to generate strong, stable and increasing free cash flow. We focused on businesses that had predictable revenue streams and definable low working capital and capital expenditure requirements. We also sought to leverage cash flow in order to enhance shareholder value.
	●	Benefit from Being a Public Company. We intended to only acquire a business or businesses that would benefit from being publicly traded and which could effectively utilize access to broader sources of capital and a public profile that are associated with being a publicly traded company.

 

These criteria were not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may have been based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may have deemed relevant.

 

Sources of target businesses

 

From the date of our initial public offering through execution of a non-binding letter of intent with Adrie on March 10, 2015, we had identified and evaluated over 60 acquisition target companies. In doing so, we followed the initial set of criteria and guidelines outlined above, which we believed were important in evaluating prospective targets.

 

Target business candidates were brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity groups, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses were brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These sources also introduced us to target businesses in which they thought we might be interested on an unsolicited basis, since many of these sources had read our SEC filings and knew what types of businesses we were targeting. Our officers and directors, as well as their affiliates, also brought to our attention target business candidates that they became aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we received a number of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result of the business relationships of our officers and directors.

 

We were not prohibited from pursuing an initial business combination with a company that was affiliated with our sponsor, officers or directors. In the event we sought to complete our initial business combination with such a company, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm that such an initial business combination is fair to our unaffiliated shareholders from a financial point of view.

 

 

Selection of a target business and structuring of our initial business combination

 

Subject to the requirement that our initial business combination must be with one or more target businesses or assets having an aggregate fair market value of at least 80% of the value of the trust account (excluding any taxes) at the time of the agreement to enter into such initial business combination, our management had virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we were not permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations. In any case, we would only consummate an initial business combination in which we become the majority shareholder of the target (or control the target through contractual arrangements in limited circumstances for regulatory compliance purposes as discussed below) or were otherwise not required to register as an investment company under the Investment Company Act.

 

In evaluating a prospective target business, and in evaluating China Lending Group in particular, we have conducted a thorough due diligence review which has encompassed, among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and other information which will be made available to us.

 

The time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process, are not currently ascertainable with any degree of certainty; however, assuming that shareholders approve the Business Combination at our special meeting of shareholders by July 6, 2016, and all conditions to closing are met or otherwise waived, we expect to close the Business Combination shortly thereafter.

 

Alternative structures to comply with regulations in certain Chinese industries

 

The PRC government has restricted or limited direct foreign ownership of certain kinds of assets and companies operating in a wide variety of industries, including certain aspects of telecommunications, advertising, financial institutions, food production, and heavy equipment manufacturers. As a result, it is not uncommon to employ alternative structures to acquire a target company in such acquired. The competent PRC authorities (i.e. the National Development & Reform Commission and Ministry of Commerce) have been issuing and updating a Catalogue of Industry for the Guidance of Foreign Investment listing the encouraged, restricted and forbidden industries for foreign investment (originally issued in 2002 and amended in 2004, 2007, 2011 and 2015). It is seen from the evolution of such catalogue more industries have become open to foreign investment, though there can be restrictions on the foreign ownership of businesses that are determined from time to time to be in “important industries” that may affect the national economic security or having “famous Chinese brand names” or “well established Chinese brand names”. Subject to the review requirements of the Ministry of Commerce and other relevant agencies for acquisitions of assets and companies in China and subject to the various percentage ownership limitations that exist from time to time, acquisitions involving foreign investors and parties in the various restricted categories of assets and industries may nonetheless sometimes be consummated using contractual arrangements with permitted Chinese parties which could, for example, result in a structure where, in exchange for our payment of the acquisition consideration, the target business would be majority or wholly owned by Chinese residents whom we designate, and the target business would continue to hold the requisite licenses necessary to operate its business. To the extent such agreements are employed, they may be for control of specific assets such as intellectual property or control of blocks of the equity ownership interests of a company. The agreements would be designed to secure for us economic benefits and to assume risk of losses and control over the subject assets or equity interests similar to the rights of full ownership, while leaving the technical ownership in the hands of Chinese parties.

 

For example, these contracts could result in a structure where, in exchange for our payment of the acquisition consideration: (i) the target company would be majority owned by Chinese residents whom would be likely designated by us and the target company would continue to hold the requisite licenses for the target business and (ii) we would establish a new subsidiary in China which would provide technology, technical support, consulting and related services to the target company in exchange for fees, which would transfer to us substantially all of the economic benefits of ownership of the target company.

 

These contractual arrangements would be designed to provide the following:

 

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Our exercise of effective control over the target company;

 

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We will assume economic benefits and risk of losses of the target company that are substantially similar to full ownership;

 

 

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The shareholders of the target company would grant us a pledged interest in all of the issued and outstanding interests of the target company, including the right to vote such shares, as security for the performance of the target company’s obligations under the contractual arrangements;

 

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The shareholders of the target company would grant us an irrevocable proxy for the maximum period permitted by law, to vote the shareholders’ shares in the target company in such manner and for or against such proposals as we may determine; and

 

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We, or our designee, would have an exclusive option to purchase all or part of the equity interests in the target company owned by the Chinese residents whom we designate, or all or part of the assets of the target company, in each case when and to the extent permitted by PRC regulations.

 

While we cannot predict the terms of any such contract that we will be able to negotiate, at a minimum, any contractual arrangement would need to provide us with effective control over the target’s operations and management either directly through board control or through affirmative and/or negative covenants and veto rights with respect to matters such as entry into material agreements, management changes and issuance of debt or equity securities, among other potential control provisions. We have not, however, established specific provisions which must be in an agreement in order to meet the definition of business combination.

 

These agreements likely also would provide for increased ownership or full ownership and control by us when and if permitted under PRC law and regulation. If we choose to effect our initial business combination that employs the use of these types of control arrangements, we may have difficulty in enforcing our rights. Therefore, these contractual arrangements may not be as effective in providing us with the same economic benefits, accounting consolidation or control over a target business as would direct ownership through a merger or shares exchange. For example, if the target business or any other entity fails to perform its obligations under these contractual arrangements, we may have to incur substantial costs and expend substantial resources to enforce such arrangements, and rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be sufficient to off-set the cost of enforcement and may adversely affect the benefits we expect to receive from the business combination.

 

While we believe under such contractual arrangement, we will be considered the primary beneficiary and be able to consolidate financial results of the target company in our consolidated financial statements. In the event that in the future generally accepted accounting policies in the United States and the SEC accounting regulations change and we are deemed not to be the primary beneficiary by controlling the target company through such contractual arrangement, we would not be able to consolidate line by line the target company’s financial results in our consolidated financial statements.

 

Moreover, we expect that the contractual arrangements upon which we would be relying would be governed by PRC law and would be the only basis of providing resolution of disputes which may arise through either arbitration or litigation in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. Uncertainties in the Chinese legal system could limit our ability to enforce these contractual arrangements. In the event we are unable to enforce these contractual arrangements, we may not be able to exert the effective level of control over the target business.

 

China Lending Group utilizes the contractual arrangements described above and therefore, if we consummate the Business Combination, we would be subject to the uncertainties described above. As discussed in further detail in the Proxy Statement, we and our PRC counsel believe the ownership structure of China Lending Group, both currently and immediately after giving effect to the Business Combination, does not and will not violate any applicable PRC law or license currently in effect; and the contractual agreements by and among the China Lending Group entities and their respective shareholders are valid, binding and enforceable in accordance with their terms and applicable PRC laws and regulations currently in effect and will not violate any applicable PRC law currently in effect such as the PRC Laws regarding foreign ownership of Chinese businesses. However, there are substantial uncertainties regarding the interpretation and application of current PRC laws. Accordingly, the PRC regulatory authorities and PRC courts may in the future take a view that is contrary to our views and the views of our PRC legal counsel. If the PRC courts or regulatory authorities determine that the contractual agreements violate applicable PRC laws, our contractual arrangements will become invalid or unenforceable.

 

Circular of State Administration of Foreign Exchange (SAFE) on Foreign Exchange Administration over Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Overseas Special Purpose Vehicles (Circular 37)

 

If any contractual arrangements as mentioned above were used in an acquisition and one or several direct or indirect shareholders holds shares in the bidding company is a PRC resident, such acquisition would be subject to requirement under Circular 37 and other relevant SAFE regulations. Circular 37 became effective as of July 4 2014 to replace the SAFE Circular No75 on Relevant Issues concerning Foreign Exchange Administration for Domestic Residents to Engage in Financing and in Return Investment via Overseas Special Purpose Vehicles dated October 21, 2005. According to Circular 37, a PRC resident can conduct a round-trip investment into a PRC enterprise via overseas special purpose vehicles provided that such resident shall make relevant registration with SAFE.

 

 

Security review system for inbound mergers and acquisitions

 

On February 3, 2011, the State Council issued the Notice of the General Office of the State Council on the Establishment of the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (No.6 [2011] of the General Office of the State Council) which stipulate a review system for mergers and acquisitions of domestic enterprise by foreign investors. Unlike criteria under anti-trust law and relevant regulations, security review mainly focuses on the influence of mergers and acquisitions on the national security, the stable operation of the national economy, the order of basic social welfare and the capacity of research and development of key technologies involving national security. The security review system covers a wide range of sensitive areas and the foreign investment into such areas is required to be subject to such security review system.

 

Fair market value of target business or businesses

 

The target business or businesses or assets with which we effect our initial business combination must have a collective fair market value equal to at least 80% of the value of the trust account (excluding taxes) at the time of the agreement to enter into such initial business combination. If we acquired less than 100% of one or more target businesses in our initial business combination, the aggregate fair market value of the portion or portions we acquire must have equaled at least 80% of the value of the trust account at the time of the agreement to enter into such initial business combination. However, we would always acquire at least a controlling interest in a target business. The fair market value of a portion of a target business or assets would likely be calculated by multiplying the fair market value of the entire business by the percentage of the target we acquire. We could have sought to consummate our initial business combination with an initial target business or businesses with a collective fair market value in excess of the balance in the trust account. In order to consummate such an initial business combination, we could have issued a significant amount of debt, equity or other securities to the sellers of such business and/or seek to raise additional funds through a private offering of debt, equity or other securities. If we issued securities in order to consummate such an initial business combination, our shareholders could end up owning a minority of the combined company’s voting securities as there is no requirement that our shareholders own a certain percentage of our company (or, depending on the structure of the initial business combination, an ultimate parent company that may be formed) after our business combination.

 

The fair market value of a target business or businesses or assets would be determined by our board of directors based upon standards generally accepted by the financial community, such as actual and potential gross margins, the values of comparable businesses, earnings and cash flow, book value and, where appropriate, upon the advice of appraisers or other professional consultants. If our board of directors was not able to independently determine that the target business or assets has a sufficient fair market value to meet the threshold criterion, we will obtain an opinion from an unaffiliated, independent investment banking firm with respect to the satisfaction of such criterion. In the case of China Lending Group, we obtained a fairness opinion from Cassel Salpeter & Co., LLC. Notwithstanding the foregoing, unless we consummated a business combination with an affiliated entity, we were not required to obtain an opinion from an independent investment banking firm that the price we were paying was fair to our shareholders.

 

Lack of business diversification

 

For an indefinite period of time after consummation of our initial business combination, the prospects for our success might depend entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it was probable that we would not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By consummating our initial business combination with only a single entity, our lack of diversification may:

 

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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and

 

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cause us to depend on the marketing and sale of a single product or limited number of products or services.

 

 

Redemption rights for public shareholders upon consummation of our initial business combination

 

We intend to seek shareholder approval for the Business Combination with China Lending Group and related transactions at our July 5, 2016 special meeting of shareholders. We will provide our shareholders with the opportunity to redeem their shares upon the consummation of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account was initially anticipated to be $10.20 per share. In connection with the Extension Meeting, a total of 5,255,657 ordinary shares were redeemed. On April 1, 2016, our sponsor deposited into the trust account approximately $96,000, which amount was equal to $0.06 for each of the 1,604,406 public shares of DT Asia that were not redeemed in connection with the extension. As a result of the Contribution and following redemption of the public shares in connection with the extension, the pro rata portion of the funds available in the trust account for the public shares that were not redeemed, net of taxes payable, increased from approximately $10.20 per share to approximately $10.26 per share. Our sponsor has agreed to waive its right to receive liquidating distributions if we fail to consummate our initial business combination within the requisite time period. However, if our sponsor or any of our officers, directors or affiliates acquires public shares after our initial public offering, they will be entitled to receive liquidating distributions with respect to such public shares if we fail to consummate our initial business combination within the required time period.

 

Manner of Conducting Redemptions

 

We will provide our shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of the Business Combination in connection with the July 5, 2016 shareholder meeting called to approve the business combination.

 

We intend to hold a shareholder vote in connection with the Business Combination. In such case, we will conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. We have distributed proxy materials and, in connection therewith, provided our public shareholders with the redemption rights described above upon consummation of the Business Combination.

 

If we seek shareholder approval, we will consummate our Business Combination only if a majority of the outstanding ordinary shares voted are voted in favor of the Business Combination. In such case, our sponsor has agreed to vote its founder shares and any of its public shares purchased after our initial public offering in favor of our initial business combination and our officers and directors have also agreed to vote any public shares purchased during or after our initial public offering in favor of the Business Combination. Currently, our sponsor, certain of its affiliates and our independent directors, together with the underwriter in our initial public offering, own approximately 54.7% of our issued and outstanding ordinary shares, including all of the founder shares. Each public shareholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. In addition, our sponsor has agreed to waive its redemption rights with respect to its founder shares and public shares in connection with the consummation of the Business Combination.

 

Many blank check companies would not be able to consummate an initial business combination if the holders of the company’s public shares voted against a proposed business combination and elected to redeem more than a specified maximum percentage of the shares sold in such company’s initial public offering, which percentage threshold has typically been between 19.99% and 39.99%. As a result, many blank check companies have been unable to complete business combinations because the amount of shares voted by their public shareholders electing redemption exceeded the maximum redemption threshold pursuant to which such company could proceed with our initial business combination. Since we have no such specified maximum redemption threshold, our structure is different in this respect from the structure that has been used by many blank check companies. However, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. Furthermore, the redemption threshold may be further limited by the terms and conditions of our initial business combination. In such case, we would not proceed with the redemption of our public shares and the related business combination.

 

 

Limitation on redemption rights upon consummation of our initial business combination if we seek shareholder approval

 

If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our memorandum and articles of association provides that a public shareholder, individually or together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in our initial public offering. We believe this restriction will discourage shareholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public shareholder holding more than an aggregate of 15% of the shares sold in our initial public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our shareholders’ ability to redeem no more than 15% of the shares sold in our initial public offering, we believe we will limit the ability of a small group of shareholders to unreasonably attempt to block our ability to consummate our initial business combination, particularly in connection with our initial business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. We will resolve any disputes relating to whether a public shareholder is acting in concert or as a “group” either by requiring certifications under the penalty of perjury to such effect by public shareholders or via adjudication in court.

 

Permitted purchases of our securities by our affiliates

 

If we seek shareholder approval of our business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions either prior to or following the consummation of our initial business combination. Such a purchase would include a contractual acknowledgement that such shareholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares. Although very unlikely, our initial shareholders, officers, directors and their affiliates could purchase sufficient shares so that the initial business combination may be approved without the majority vote of public shares held by non-affiliates. It is intended that purchases will comply with Rule 10b-18 under the Exchange Act, which provides a safe harbor for purchases made under certain conditions, including with respect to timing, pricing and volume of purchases.

 

 

The purpose of such purchases would be to (1) increase the likelihood of obtaining shareholder approval of the business combination or (2) to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of the business combination, where it appears that such requirement would otherwise not be met. This may result in the consummation of an initial business combination that may not otherwise have been possible.

 

As a consequence of any such purchases, the public “float” of our ordinary shares may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to obtain the listing or trading of our securities on a national securities exchange.

 

Tendering share certificates in connection with a tender offer or redemption rights

 

We will require our public shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the expiration date set forth in the tender offer documents or proxy materials mailed to such holders, or in the event we distribute proxy materials, up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. Accordingly, a public shareholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to two days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for shareholders to use electronic delivery of their public shares.

 

There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $45.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.

 

The foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check companies would distribute proxy materials for the shareholders’ vote on our initial business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his redemption rights. After the business combination was approved, the company would contact such shareholder to arrange for him to deliver his certificate to verify ownership. As a result, the shareholder then had an “option window” after the consummation of the business combination during which he could monitor the price of the company’s shares in the market. If the price rose above the redemption price, he could sell his shares in the open market before actually delivering his shares to the company for cancellation. As a result, the redemption rights, to which shareholders were aware they needed to commit before the shareholder meeting, would become “option” rights surviving past the consummation of the business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the business combination is approved.

 

Any request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the shareholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial business combination.

 

If our proposed Business Combination with China Lending Group is not consummated, we will not have enough time to consummate our initial business combination with a different target before our expiration date of July 6, 2016.

 

 

Redemption of public shares and liquidation if no initial business combination

 

We must complete our initial business combination by July 6, 2016. If we are unable to consummate the Business Combination with China Lending Group by July 6, 2016, we will, as promptly as reasonably possible but not more than five business days thereafter, distribute the aggregate amount then on deposit in the trust account (less up to $50,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders by way of redemption and cease all operations except for the purposes of winding up of our affairs. This redemption of public shareholders from the trust account shall be done automatically by function of our memorandum and articles of association and prior to any voluntary winding up, although at all times subject to the Companies Act.

 

Following the redemption of public shares, we intend to enter “voluntary liquidation” which is the statutory process for formally closing and dissolving a company under the laws of the British Virgin Islands. Given that we intend to enter voluntary liquidation following the redemption of public shareholders from the trust account, we do not expect that the voluntary liquidation process will cause any delay to the payment of redemption proceeds from our trust account. In connection with such a voluntary liquidation, the liquidator would give notice to creditors inviting them to submit their claims for payment, by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in at least one newspaper published in the British Virgin Islands newspaper and in at least one newspaper circulating in the location where the company has its principal place of business, and taking any other steps he considers appropriate to identify the company’s creditors, after which our remaining assets would be distributed. As soon as the affairs of the company are fully wound-up, the liquidator must complete his statement of account and make a notificational filing with the Registrar. We would be dissolved once the Registrar issues a Certificate of Dissolution.

 

Our sponsor has agreed to waive its redemption rights with respect to its founder shares if we fail to consummate our initial business combination within the applicable period from the closing of our initial public offering.

 

However, if our sponsor, or any of our officers, directors or affiliates acquire public shares after our initial public offering, they will be entitled to redemption rights with respect to such public shares if we fail to consummate our initial business combination within the required time period. There will be no redemption rights or liquidating distributions with respect to our rights or warrants, which will expire worthless in the event we do not consummate our initial business combination by July 6, 2016. We will pay the costs of our liquidation from our remaining assets outside of the trust account. However, if those funds are not sufficient to cover these costs and expenses, we may request the trustee to release to us an amount of up to $50,000 of such accrued interest to pay those costs and expenses. However, the liquidator may determine that he or she requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). Also, a creditor or shareholder may file a petition with the BVI court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our remaining assets.

 

Additionally, in any liquidation proceedings of the company under British Virgin Islands law, the funds held in our trust account may be included in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any such claims deplete the trust account, we may not be able to return to our public shareholders the liquidation amounts payable to them.

 

If we were to expend all of the net proceeds of our initial public offering, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by shareholders upon our dissolution would be $10.26. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors, which would have higher priority than the claims of our public shareholders. The actual per-share redemption amount received by shareholders may be less than $10.26, plus interest (net of any taxes payable).

 

Although we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, Ms. Winnie Lai Ling Ng agreed that she will be liable to us, if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below $10.26 per share, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, Ms. Ng will not be responsible to the extent of any liability for such third party claims. However, Ms. Ng may not be able to satisfy those obligations. None of our other officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses. We have not independently verified whether Ms. Ng. has sufficient funds to satisfy her indemnity obligations. We believe the likelihood of Ms. Ng having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account.

 

 

In the event that the proceeds in the trust account are reduced below $10.26 per share and Ms. Ng asserts that she is unable to satisfy any applicable obligations or that she has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against Ms. Ng to enforce her indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against Ms. Ng to enforce her indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly, due to claims of creditors, the actual value of the per-share redemption price may be less than $10.26 per share.

 

We will seek to reduce the possibility that Ms. Ng will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. To date, with the exception of EarlyBird Capital, UHY LLP and FTO Consulting, each of BVICo and DT Asia’s vendors has agreed that it will not have any right, title, interest or claim of any kind in or to any monies in our trust account, and will not make any claim against our trust account (including any distributions therefrom). Ms. Ng will also not be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. As of March 31, 2016, we had access to $53,115 not placed in the trust account, and the interest income earned on the balance of the trust account (net of taxes payable) with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $50,000). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, shareholders who received funds from our trust account could be liable for claims made by creditors.

 

If we are deemed insolvent for the purposes of the Insolvency Act (i.e. (i) we fail to comply with the requirements of a statutory demand that has not been set aside under section 157 of the Insolvency Act; (ii) execution or other process issued on a judgment, decree or order of a British Virgin Islands Court in favor of a creditor of the company is returned wholly or partly unsatisfied; or (iii) either the value of the company’s liabilities exceeds its assets, or the company is unable to pay its debts as they fall due), then there are very limited circumstances where prior payments made to shareholders or other parties may be deemed to be a “voidable transaction” for the purposes of the Insolvency Act. A voidable transaction would include, for these purposes, payments made as “unfair preferences” or “transactions at an undervalue”. A liquidator appointed over an insolvent company who considers that a particular transaction or payment is a voidable transaction under the Insolvency Act could apply to the British Virgin Islands Courts for an order setting aside that payment or transaction in whole or in part.

 

Additionally, if we enter insolvent liquidation under the Insolvency Act, the funds held in our trust account will likely be included in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any insolvency claims deplete the trust account you may not be able to return to our public shareholders the liquidation amounts due them.

 

Our public shareholders will be entitled to receive funds from the trust account only in the event of a redemption to public shareholders prior to any winding up in the event we do not consummate our initial business combination or our liquidation or if they redeem their shares in connection with an initial business combination that we consummate. In no other circumstances shall a shareholder have any right or interest of any kind to or in the trust account. In the event we seek shareholder approval in connection with our initial business combination, a shareholder’s voting in connection with the business combination alone will not result in a shareholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such shareholder must have also exercised its redemption rights described above.

 

Competition

 

In identifying, evaluating and selecting a target business for our initial business combination, we may encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have significant experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, the requirement that we acquire a target business or businesses having a fair market value equal to at least 80% of the value of the trust account at the time of the agreement to enter into the business combination, our obligation to pay cash in connection with our public shareholders who exercise their redemption rights and the number of our outstanding rights and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Any of these factors may place us at a competitive disadvantage in successfully negotiating our initial business combination.

 

 

Employees

 

We currently have one executive officer. This individual is not obligated to devote any specific number of hours to our matters but he intends to devote as much of his time as he deems necessary to our affairs until we have completed our initial business combination. The amount of time he will devote in any time period will vary based on whether a target business has been selected for our initial business combination and the stage of the business combination process we are in. We do not intend to have any full time employees prior to the consummation of our initial business combination.

 

Periodic Reporting and Financial Information

 

We have registered our units, ordinary shares, rights and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited and reported on by our independent registered public accountants.

 

We will provide shareholders with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to shareholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in accordance with GAAP. A particular target business identified by us as a potential acquisition candidate may not have financial statements prepared in accordance with GAAP or that the potential target business will be able to prepare its financial statements in accordance with GAAP. To the extent that this requirement cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential acquisition candidates, we do not believe that this limitation will be material.

 

We will be required to have our internal control procedures evaluated for the fiscal year ending March 31, 2016 required by the Sarbanes-Oxley Act. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.

 

We are an “emerging growth company” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We will remain an “emerging growth company” for up to five years after the date of the closing of our initial public offering, although if our non-convertible debt issued within a three year period or revenues exceeds $1 billion, or if the market value of our ordinary shares that are held by non-affiliates exceeds $700 million on the last day of our second fiscal quarter, we would cease to be an “emerging growth company” as of the following fiscal year.

 

Item 1A. Risk Factors

 

You should carefully consider the following risk factors and all other information contained in this Report, including the financial statements. If any of the following events occur, our business, financial condition or results of operations may be materially and adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect to us and our business. This Report also contains forward-looking statements that involve risks and uncertainties. There can be no assurance that actual results will not materially differ from expectations. Important factors could cause actual results to differ materially from those indicated by such forward-looking statements. With respect to the proposed Business Combination, these factors include, but are not limited to: business conditions; natural disasters; changing interpretations of U.S. generally accepted accounting principles; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; changes in legislation or regulatory environments, requirements or changes adversely affecting the business of DT Asia and Adrie, including but not limited to difficulties in maintaining and managing continued growth, difficulties in ensuring performance of loans, fluctuations in revenue and margins and difficulties in meeting the earn-out targets, restrictions on the ability to make dividend payments, and difficulties in acquiring smaller competitors; general economic conditions; geopolitical events and regulatory changes; and the failure to maintain the listing of DT Asia’s securities on the Nasdaq Stock Market. Other factors include the possibility that the business combination does not close, including due to the failure to receive required security holder approvals, the failure to complete the contemplated private placement or the failure of other closing conditions. These risks, also well as other risks associated with the Business Combination, are more fully discussed in the Proxy Statement. Please also refer to the Proxy Statement for a discussion of risks associated with acquiring and operating a business in China, and in particular, those relating to the corporate structure of China Lending Group.

 

 

Risks Associated with Our Business and our Securities

 

We are a newly formed blank check company in the development stage with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.

 

We are a recently formed blank check company with no operating results and we will not commence operations until consummating our initial business combination. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses. If we fail to complete our initial business combination, we will never generate any operating revenues.

 

Our independent registered public accounting firm, in their audit report related to our financial statements for the fiscal year ended March 31, 2016, expressed substantial doubt about our ability to continue as a going concern.

 

Due to our lack or revenue and dependence on the completion of a business combination, our independent registered public accounting firm has included an explanatory paragraph in its report on our financial statements for the fiscal year ended March 31, 2016, expressing substantial doubt as to our ability to continue as a going concern. The inclusion of a going concern explanatory paragraph in the report of our independent registered public accounting firm may make it more difficult for us to secure additional financing or enter into strategic relationships on terms acceptable to us, if at all, and may materially and adversely affect the terms of any financing that we might obtain.

 

The requirement that the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial business combination may limit the type and number of companies that we may complete such a business combination with.

 

Pursuant to the Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the type and number of companies that we may complete a business combination with. If we are unable to locate a target business or businesses that satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of the funds in the trust account.

 

 

The ability of our public shareholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into our initial business combination with a target.

 

We may enter into a transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. The Share Exchange Agreement with Adrie requires that, unless waived by mutual agreement of the parties, we will be required to have at least $10 million in cash (before expenses) available in the trust and in proceeds from the PIPE Preferred Investment. If too many public shareholders exercise their redemption rights, we may not be able to meet such closing condition, and as a result, would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. Our memorandum and articles of association requires us to provide all of our public shareholders with an opportunity to redeem all of their shares in connection with the consummation of any initial business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination.

 

The ability of a large number of our shareholders to exercise redemption rights may not allow us to consummate the most desirable business combination or optimize our capital structure.

 

In connection with the successful consummation of our business combination, we may redeem up to that number of ordinary shares that would permit us to maintain net tangible assets of $5,000,001. If our business combination requires us to use substantially all of our cash to pay the purchase price, the redemption threshold may be further limited. Alternatively, we may need to arrange third party financing to help fund our business combination in case a larger percentage of shareholders exercise their redemption rights than we expect. If the acquisition involves the issuance of our shares as consideration, we may be required to issue a higher percentage of our shares to the target or its shareholders to make up for the failure to satisfy a minimum cash requirement. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the most attractive business combination available to us.

 

The requirement that we maintain a minimum net worth or retain a certain amount of cash could increase the probability that our business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.

 

If, pursuant to the terms of our proposed business combination, we are required to maintain a minimum net worth or retain a certain amount of cash in trust in order to consummate the business combination and regardless of whether we proceed with redemptions under the tender or proxy rules, the probability that our business combination would be unsuccessful is increased. If our business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares may trade at a discount to the pro rata amount in our trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your shares in the open market.

 

 

We may not be able to consummate our initial business combination by July 6, 2016, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.

 

Following the amendment to our charter adopted as of March 31, 2016, we must complete our initial business combination by July 6, 2016. We may not be able to find a suitable target business and consummate our initial business combination within such time period. If we are unable to consummate our initial business combination by July 6, 2016, we will, as promptly as reasonably possible but not more than five business days thereafter, distribute the aggregate amount then on deposit in the trust account (less up to $50,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders by way of redemption and cease all operations except for the purposes of winding up of our affairs, as further described herein. This redemption of public shareholders from the trust account shall be done automatically by function of our memorandum and articles of association and prior to any voluntary winding up.

 

If we seek shareholder approval of our business combination, our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares from shareholders, in which case we or they may influence a vote in favor of a proposed business combination that you do not support.

 

If we seek shareholder approval of our business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions either prior to or following the consummation of our initial business combination. Such a purchase would include a contractual acknowledgement that such shareholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholders would be required to revoke their prior elections to redeem their shares.

 

The purpose of such purchases would be to (1) increase the likelihood of obtaining shareholder approval of the business combination or (2) satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of the business combination, where it appears that such requirement would otherwise not be met. This may result in the consummation of an initial business combination that may not otherwise have been possible.

 

Purchases of ordinary shares in the open market or in privately negotiated transactions by our sponsor, directors, officers, advisors or their affiliates may make it difficult for us to list our ordinary shares on a national securities exchange.

 

If our sponsor, directors, officers, advisors or their affiliates purchase ordinary shares in the open market or in privately negotiated transactions, the public “float” of our ordinary shares and the number of beneficial holders of our securities would both be reduced, possibly making it difficult to obtain the listing or trading of our securities on a national securities exchange if we determine to apply for such listing in connection with the business combination.

 

You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or rights, potentially at a loss.

 

Our public shareholders shall be entitled to receive funds from the trust account only in the event of a redemption to public shareholders prior to any winding up in the event we do not consummate our initial business combination or our liquidation or if they redeem their shares pursuant to a tender offer in connection with an initial business combination that we consummate. In no other circumstances will a shareholder have any right or interest of any kind to the funds in the trust account. Accordingly, to liquidate your investment, you may be forced to sell your public shares or rights, potentially at a loss.

 

 

If we seek shareholder approval of our business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of shareholders are deemed to hold in excess of 15% of our ordinary shares, you will lose the ability to redeem all such shares in excess of 15% of our ordinary shares.

 

If we seek shareholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our memorandum and articles of association provides that a public shareholder, individually or together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in our initial public offering. Your inability to redeem more than an aggregate of 15% of the shares sold in our initial public offering will reduce your influence over our ability to consummate our initial business combination and you could suffer a material loss on your investment in us if you sell such excess shares in open market transactions. As a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, you would be required to sell your shares in an open market transaction, potentially at a loss.

 

If the net proceeds of our initial public offering that are not being held in the trust account, together with the interest in the trust account (net of taxes payable) which may be released to us for working capital purposes, are insufficient to allow us to operate at least until July 6, 2016, we may be unable to complete our initial business combination.

 

The funds available to us outside of the trust account, plus the interest earned on the funds held in the trust account that may be available to us, may not be sufficient to allow us to operate for at least until July 6, 2016. All the interest income (net of taxes payable) earned on the trust account may be released to us to fund our working capital requirements; however, based on the current interest rate environment, we anticipate that approximately $111,000 of interest income (net of taxes payable) will be available to us; however, our estimate may not be accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we are unable to fund such down payments or “no shop” provisions, our ability to close a contemplated transaction could be impaired. Furthermore, if we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to complete our initial business combination, our public shareholders may only receive $10.26 per share on our redemption, and our rights and warrants will expire worthless.

 

The current low interest rate environment could limit the amount available to fund our search for a target business or businesses and complete our initial business combination since we will use interest earned on the trust account to fund our search, to pay our taxes and to complete our initial business combination.

 

As of March 31, 2016, $53,115 was available to us outside the trust account to fund our working capital requirements. The current interest rate environment makes it more difficult for us to generate sufficient interest from the proceeds in the trust account to structure, negotiate or close our initial business combination. In such event, we would need to borrow funds from our sponsor or management team to operate or may be forced to liquidate. Neither our sponsor nor our management team is under any obligation to advance funds to us in such circumstances. If we are unable to complete our initial business combination, our public shareholders may only receive $10.26 per share on our redemption, and our rights and warrants will expire worthless.

 

Subsequent to our consummation of our initial business combination, we may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, which could cause you to lose some or all of your investment.

 

Even if we conduct thorough due diligence on a target business with which we combine, this diligence may not surface all material issues that may be present inside a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing.

 

 

If we liquidate, distributions, or part of them, may be delayed while the liquidator determines the extent of potential creditor claims.

 

Pursuant to, among other documents, our memorandum and articles of association, if we do not complete our initial business combination by July 6, 2016, this will trigger an automatic redemption of our ordinary shares using the available funds in the trust account pursuant to our memorandum and articles of association, resulting in our repayment of available funds in the trust account. Following which, we will proceed to commence a voluntary liquidation and thereby a formal dissolution of the company. In connection with such a voluntary liquidation, the liquidator would give notice to our creditors inviting them to submit their claims for payment, by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in at least one newspaper published in the British Virgin Islands newspaper and in at least one newspaper circulating in the location where the company has its principal place of business, and taking any other steps he considers appropriate, after which our remaining assets would be distributed.

 

As soon as our affairs are fully wound-up, if we were to liquidate, the liquidator must complete his statement of account and will then notify the Registrar of Corporate Affairs in the British Virgin Islands (the “Registrar”) that the liquidation has been completed. However, the liquidator may determine that he or she requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). Also, a creditor or shareholder may file a petition with the British Virgin Islands Court, which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our remaining assets.

 

In any liquidation proceedings of the company under British Virgin Islands law, the funds held in our trust account may be included in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any such claims deplete the trust account we may not be able to return to our public shareholders the redemption amounts payable to them.

 

Our directors may decide not to enforce indemnification obligations against Ms. Winnie Lai Ling Ng, resulting in a reduction in the amount of funds in the trust account available for distribution to our public shareholders.

 

In the event that the proceeds in the trust account are reduced below $10.26 per share and Ms. Winnie Lai Ling Ng asserts that she is unable to satisfy her obligations or that she has no indemnification obligations related to a particular claim, our independent directors would determine on our behalf whether to take legal action against Ms. Ng to enforce her indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against Ms. Ng to enforce her indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations on our behalf, the amount of funds in the trust account available for distribution to our public shareholders may be reduced below $10.26 per share.

 

If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.

 

If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including restrictions on the nature of our investments and restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination. In addition, we may have imposed upon us burdensome requirements, including registration as an investment company, adoption of a specific form of corporate structure and reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.

 

If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to consummate our initial business combination.

 

Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations.

 

We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application also may change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations.

 

 

We are not subject to the supervision of the Financial Services Commission of the British Virgin Islands and so our shareholders are not protected by any regulatory inspections in the British Virgin Islands.

 

We are not an entity subject to any regulatory supervision in the British Virgin Islands by the Financial Services Commission. As a result, shareholders are not protected by any regulatory supervision or inspections by any regulatory agency in the British Virgin Islands and we are not required to observe any restrictions in respect of its conduct save as disclosed in our memorandum and articles of association.

 

If we are unable to consummate our initial business combination, our public shareholders may be forced to wait until July 6, 2016 before redemption from our trust account.

 

If we are unable to consummate our initial business combination by July 6, 2016, we will, as promptly as reasonably possible but not more than five business days thereafter, distribute the aggregate amount then on deposit in the trust account (less up to $50,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders by way of redemption and cease all operations except for the purposes of winding up of our affairs by way of a voluntary liquidation, as further described herein. Any redemption of public shareholders from the trust account shall be effected automatically by function of our memorandum and articles of association prior to our commencing any voluntary liquidation. If we are required to liquidate prior to distributing the aggregate amount then on deposit in the trust account (less up to $50,000 of the net interest earned thereon to pay dissolution expenses) pro rata to our public shareholders, then such winding up, liquidation and distribution must comply with the applicable provisions of the Companies Act. In that case, investors may be forced to wait beyond July 6, 2016 before the redemption proceeds of our trust account become available to them, and they receive the return of their pro rata portion of the proceeds from our trust account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless we consummate our initial business combination prior thereto and only then in cases where investors have sought to redeem their ordinary shares. Only upon our redemption or any liquidation will public shareholders be entitled to distributions if we are unable to complete our initial business combination.

 

If we are deemed to be insolvent, distributions, or part of them, may be delayed while the insolvency liquidator determines the extent of potential creditor claims. In these circumstances, prior payments made by the company may be deemed “voidable transactions.”

 

If we do not complete our initial business combination by July 6, 2016, this will trigger an automatic redemption of public shareholders from the trust account pursuant to our memorandum and articles of association.

 

However, if at any time we are deemed insolvent for the purposes of the Insolvency Act (i.e. (i) we fail to comply with the requirements of a statutory demand that has not been set aside under section 157 of the Insolvency Act; (ii) execution or other process issued on a judgment, decree or order of a British Virgin Islands Court in favor of a creditor of the company is returned wholly or partly unsatisfied; or (iii) either the value of the company’s liabilities exceeds its assets, or the company is unable to pay its debts as they fall due), we are required to immediately enter insolvent liquidation. In these circumstances, a liquidator will be appointed who will give notice to our creditors inviting them to submit their claims for payment, by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in at least one newspaper published in the British Virgin Islands newspaper and in at least one newspaper circulating in the location where the company has its principal place of business, and taking any other steps he considers appropriate, after which our assets would be distributed. Following the process of insolvent liquidation, the liquidator will complete its final report and accounts and will then notify the Registrar of Corporate Affairs in the British Virgin Islands (the “Registrar”). The liquidator may determine that he requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). Also, a creditor or shareholder may file a petition with the British Virgin Islands Court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our assets to our public shareholders. In such liquidation proceedings, the funds held in our trust account may be included in our estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any such claims deplete the trust account we cannot assure you we will be able to return to our public shareholders the amounts otherwise payable to them.

 

If we are deemed insolvent, then there are also limited circumstances where prior payments made to shareholders or other parties may be deemed to be a “voidable transaction” for the purposes of the Insolvency Act. A voidable transaction would be, for these purposes, payments made as “unfair preferences” or “transactions at an undervalue.” Where a payment was a risk of being a voidable transaction, a liquidator appointed over an insolvent company could apply to the British Virgin Islands Court for an order, inter alia, for the transaction to be set aside as a voidable transaction in whole or in part.

 

Our initial shareholders have waived their right to participate in any liquidation distribution with respect to the initial shares. We will pay the costs of our liquidation and distribution of the trust account from our remaining assets outside of the trust account and may request the trustee to release to us up to $50,000 of the net interest earned on the trust account to pay dissolution expenses. In addition, Ms. Winnie Ng has agreed that she will be liable to us, for all claims of creditors to the extent that we fail to obtain executed waivers from such entities in order to protect the amounts held in trust, except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. However, we cannot assure you that the liquidator will not determine that he or she requires additional time to evaluate creditors’ claims (particularly if there is uncertainty over the validity or extent of the claims of any creditors). We also cannot assure you that a creditor or shareholder will not file a petition with the British Virgin Islands Court which, if successful, may result in our liquidation being subject to the supervision of that court. Such events might delay distribution of some or all of our assets to our public shareholders.

 

 

If deemed to be insolvent, distributions made to public shareholders, or part of them, from our trust account may be subject to claw back in certain circumstances.

 

If we do not complete our initial business combination by July 6, 2016, and instead distribute the aggregate amount then on deposit in the trust account (less up to $50,000 of the net interest earned thereon to pay dissolution expenses), pro rata to our public shareholders by way of redemption, it will be necessary for our directors to pass a board resolution approving the redemption of those ordinary shares and the payment of the proceeds to public shareholders. Such board resolutions are required to confirm that we satisfy the solvency test prescribed by the Companies Act, (namely that our assets exceed our liabilities; and that we are able to pay our debts as they fall due). If, after the redemption proceeds are paid to public shareholders, it transpires that our financial position at the time was such that it did not satisfy the solvency test, the Companies Act provides a mechanism by which those proceeds could be recovered from public shareholders. However, the Companies Act also provides for circumstances where such proceeds could not be subject to claw back, namely where (a) the public shareholders received the proceeds in good faith and without knowledge of our failure to satisfy the solvency test; (b) a public shareholder altered its position in reliance of the validity of the payment of the proceeds; or (c) it would be unfair to require repayment of the proceeds in full or at all.

 

The grant of registration rights to our initial shareholders may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our ordinary shares.

 

Pursuant to an agreement entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial shareholders and their permitted transferees can demand that we register the founder shares, the holders of our insider units and their permitted transferees can demand that we register the insider units and the ordinary shares and warrants included in the insider units (or issuable under the rights or upon exercise of the warrants), and the holders of our sponsor warrants and their permitted transferees can demand that we register the sponsor warrants and the underlying shares issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our ordinary shares. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude. This is because the shareholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our ordinary shares that is expected when the securities owned by our sponsor, holders of our insider units or their respective permitted transferees are registered.

  

We may seek investment opportunities outside of our management’s area of expertise and our management may not be able to adequately ascertain or assess all significant risks associated with the target company.

 

There is no limitation on the industry or business sector we may consider when contemplating our initial business combination. We may therefore be presented with a business combination candidate in an industry unfamiliar to our management team, but determine that such candidate offers an attractive investment opportunity for our company. In the event we elect to pursue an investment outside of our management’s expertise, our management’s experience may not be directly applicable to the target business or their evaluation of its operations.

 

 

Although we identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.

 

Although we have identified specific criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business combination will not have all of these positive attributes. If we consummate our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce our initial business combination with a target that does not meet our general criteria and guidelines, a greater number of shareholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if shareholder approval of the transaction is required by law or the Nasdaq Capital Market, or we decide to obtain shareholder approval for business or other legal reasons, it may be more difficult for us to attain shareholder approval of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial business combination, our public shareholders may only receive $10.26 per share on our redemption, and our rights and warrants will expire worthless.

 

Management’s flexibility in identifying and selecting a prospective acquisition candidate, along with our management’s financial interest in consummating our initial business combination, may lead management to enter into an acquisition agreement that is not in the best interest of our shareholders.

 

Subject to the requirement that our initial business combination must be with one or more target businesses or assets having an aggregate fair market value of at least 80% of the value of the trust account (excluding any taxes) at the time of the agreement to enter into such initial business combination, we will have virtually unrestricted flexibility in identifying and selecting a prospective acquisition candidate. Investors will be relying on management’s ability to identify business combinations, evaluate their merits, conduct or monitor diligence and conduct negotiations. Management’s flexibility in identifying and selecting a prospective acquisition candidate, along with management’s financial interest in consummating our initial business combination, may lead management to enter into an acquisition agreement that is not in the best interest of our shareholders, which would be the case if the trading price of our ordinary shares after giving effect to such business combination was less than the per-share trust liquidation value that our shareholders would have received if we had dissolved without consummating our initial business combination.

 

We may issue additional ordinary or preferred shares to complete our initial business combination or under an employee incentive plan after consummation of our initial business combination, which would dilute the interest of our shareholders and likely present other risks.

 

Our memorandum and articles of association authorize the issuance of an unlimited amount of both ordinary shares of no par value and preferred shares of no par value. We may issue a substantial number of additional ordinary or preferred shares to complete our initial business combination, including in connection with the PIPE Preferred Investment, or under an employee incentive plan after consummation of our initial business combination. Although no such issuance of ordinary or preferred shares will affect the per share amount available for redemption from the trust account, the issuance of additional ordinary or preferred shares:

 

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may significantly dilute the equity interest of investors in our initial public offering, who will not have pre-emption rights in respect of such an issuance;

 

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may subordinate the rights of holders of ordinary shares if preferred shares are issued with rights created by amendment of our memorandum and articles of association by resolution of the directors senior to those afforded our ordinary shares;

 

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could cause a change in control if a substantial number of ordinary shares is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and

 

●

may adversely affect prevailing market prices for our units, ordinary shares and/or rights.

 

 

We believe we have been considered a passive foreign investment company, or “PFIC,” since our inception, which could result in adverse U.S. federal income tax consequences to U.S. taxpayers.

 

If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds our ordinary shares, warrants or rights, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements. Because of the composition of our assets and income, we believe we have been considered a PFIC since our inception.

 

The discussion below of the U.S. federal income tax consequences to “U.S. Holders” will apply to a beneficial owner of our securities that is for U.S. federal income tax purposes (i) an individual citizen or resident of the United States; (ii) a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or (iv) a trust if (A) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (B) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

 

A foreign (i.e., non-U.S.) corporation will be a PFIC for U.S. tax purposes if at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income. Alternatively, a foreign corporation will be a PFIC if at least 50% of its assets in a taxable year of the foreign corporation, ordinarily determined based on fair market value and averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.

 

Because we are a blank check company, and have not engaged in an active business of any kind, we believe that it is likely that we metthe PFIC asset or income test for our initial taxable year ending March 31, 2015. However, pursuant to a start-up exception, a corporation will not be a PFIC for the first taxable year the corporation has gross income, if (1) no predecessor of the corporation was a PFIC; (2) the corporation satisfies the IRS that it will not be a PFIC for either of the first two taxable years following the start-up year; and (3) the corporation is not in fact a PFIC for either of those years. Because we did not complete a business combination on or prior to the end of our second taxable year (the taxable year ended March 31, 2016) we do not qualify for the PFIC start-up exception.

 

If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our ordinary shares, rights or warrants and, in the case of our ordinary shares, the U.S. Holder did not make either a timely “qualified electing fund” (a “QEF”) election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) ordinary shares or a timely “mark-to-market” election, in each case as described below, such holder generally will be subject to special rules with respect to:

 

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any gain recognized by the U.S. Holder on the sale or other disposition of its ordinary shares, rights or warrant; and

 

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any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the ordinary shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for the ordinary shares).

 

Under these rules,

 

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the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the ordinary shares, rights or warrants;

 

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the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of our first taxable year in which we are a PFIC, will be taxed as ordinary income;

 

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the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and

 

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the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such other taxable year of the U.S. Holder.

 

In general, if we are determined to be a PFIC, a U.S. Holder may avoid the PFIC tax consequences described above in respect to our ordinary shares (but not our warrants) by making a timely QEF election (if eligible to do so) to include in income its pro rata share of our net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder in which or with which our taxable year ends. A U.S. Holder may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge.

 

 

In order to comply with the requirements of a QEF election, a U.S. Holder must receive a PFIC annual information statement from us. If we determine we are a PFIC for any taxable year, we will endeavor to provide to a U.S. Holder such information as the IRS may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a QEF election. However, there can be no assurance that we will provide any such required information.. If we do not timely provide such required information, then a QEF election may not be available to U.S. Holders.

 

Alternatively, if a U.S. Holder makes a timely, valid “mark-to-market” election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) ordinary shares in us and for which we are determined to be a PFIC, such holder generally will not be subject to the PFIC rules described above in respect to its ordinary shares. Notwithstanding the foregoing, U.S. Holders who do not make a timely, valid mark-to-market election for such first taxable year but make a mark-to-market election with respect to a subsequent taxable year may be subject to special tax rules, and the discussion below does not address any mark-to-market election consequences to such U.S. Holders.

 

If a U.S. Holder makes a timely, valid mark-to-market election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) ordinary shares in us and for which we are determined to be a PFIC, in general, the U.S. Holder will include as ordinary income each year the excess, if any, of the fair market value of its ordinary shares at the end of its taxable year over the adjusted basis in its ordinary shares. The U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of its ordinary shares over the fair market value of its ordinary shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s basis in its ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of the ordinary shares will be treated as ordinary income. Currently, a mark-to-market election may not be made with respect to our warrants and, as discussed below, it may not be available with respect to the rights to acquire our ordinary shares.

 

The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission, including the Nasdaq Capital Market, or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. U.S. Holders should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to our ordinary shares under their particular circumstances.

 

The application of the PFIC rules to the rights to acquire our ordinary shares is unclear. For example, the rights may be viewed as equity in our company from the time the rights are received. On the other hand, the rights may be viewed as a derivative security or similar interest in our company (analogous to a warrant or option with no exercise price), and thus the holder of the rights would not be viewed as owning the ordinary shares issuable pursuant to the rights until such shares are actually issued. There may be other alternative characterizations of the rights that the IRS may successfully assert that would reach different conclusions regarding the tax treatment of the rights under the PFIC rules. In any case, depending on which characterization is successfully applied to the rights, different PFIC consequences may result for U.S. Holders of the rights.

 

On the one hand, U.S. Holder may be permitted to make a QEF or mark-to-market election with respect to its rights to acquire our ordinary shares, in which case the PFIC tax consequences described above would not apply, and the QEF and mark-to-market rules described above would apply to such rights. On the other hand, if a U.S. Holder is not permitted to make a QEF or mark-to-market election with respect to such rights, then the PFIC tax consequences described above would apply to such rights, and not the QEF or mark to market rules. Because of the uncertainty regarding the characterization of the rights for PFIC purposes, this discussion of the PFIC rules does not assert which of the varying theories of the characterization of the rights will ultimately be upheld under U.S. federal income tax law. Therefore, potential investors are strongly urged to consult with their own tax advisors regarding an investment in the rights offered hereunder as part of units offering.

 

Although a determination as to our PFIC status will be made annually, an initial determination that we are a PFIC will generally apply for subsequent years to a U.S. Holder who held ordinary shares, rights or warrants while we were a PFIC, whether or not we meet the test for PFIC status in those subsequent years. A U.S. Holder who makes the QEF election discussed above for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to hold) our ordinary shares, however, will not be subject to the PFIC tax and interest charge rules discussed above in respect to such shares. In addition, such U.S. Holder will not be subject to the QEF inclusion regime with respect to such shares for any taxable year of us that ends within or with a taxable year of the U.S. Holder and in which we are not a PFIC. On the other hand, if the QEF election is not effective for each of our taxable years in which we are a PFIC and the U.S. Holder holds (or is deemed to hold) our ordinary shares, the PFIC rules discussed above will continue to apply to such shares unless the holder makes a purging election, as described above, and pays the tax and interest charge with respect to the gain inherent in such shares attributable to the pre-QEF election period.

 

We urge U.S. Holders to consult their own tax advisors regarding the possible application of the PFIC rules in their particular situation.

 

An investor may be subject to adverse U.S. federal income tax consequences in the event the Internal Revenue Service (“IRS”) were to disagree with the U.S. federal income tax consequences described herein.

 

We have not sought a ruling from the IRS as to any U.S. federal income tax consequences described herein. The IRS may disagree with the descriptions of U.S. federal income tax consequences contained herein, and its determination may be upheld by a court. Any such determination could subject an investor or our company to adverse U.S. federal income tax consequences that would be different than those described herein. Accordingly, each prospective investor is urged to consult a tax advisor with respect to the specific tax consequences of the acquisition, ownership and disposition of our ordinary shares, rights and units, including the applicability and effect of state, local or non-U.S. tax laws, as well as U.S. federal tax laws.

 

 

After our initial business combination, it is likely that a majority of our directors and officers will live outside the United States and all of our assets will be located outside the United States; therefore investors may not be able to enforce federal securities laws or their other legal rights.

 

It is likely that after our initial business combination, a majority of our directors and officers will reside outside of the United States and all of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases not possible, for investors in the United States to enforce their legal rights, to effect service of process upon all of our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers under United States laws.

 

Our ability to successfully effect our initial business combination and to be successful thereafter will be largely dependent upon the efforts of our officers, directors and key personnel, some of whom may join us following our initial business combination. The loss of our officers, directors, or key personnel could negatively impact the operations and profitability of our business.

 

Our operations are dependent upon a relatively small group of individuals and, in particular, our officers and directors. We believe that our success depends on the continued service of our officers and directors, at least until we have consummated our initial business combination. In addition, our officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers could have a detrimental effect on us.

 

The role of such persons in the target business, however, cannot presently be ascertained. Although some of such persons may remain with the target business in senior management or advisory positions following our initial business combination, it is likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination, our assessment of these individuals may not prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.

 

Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.

 

Our key personnel may be able to remain with the company after the consummation of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the consummation of the business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe the ability of such individuals to remain with us after the consummation of our initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any of our key personnel will remain with us after the consummation of our initial business combination. Our key personnel may not remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.

 

We may have a limited ability to assess the management of a prospective target business and, as a result, may effect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.

 

When evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the target business’ management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted.

 

The officers and directors of an acquisition candidate may resign upon consummation of our initial business combination. The loss of an acquisition target’s key personnel could negatively impact the operations and profitability of our post-combination business.

 

The role of an acquisition candidate’s key personnel upon the consummation of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our initial business combination, it is possible that some members of the management team of an acquisition candidate will not wish to remain in place.

 

 

Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.

 

Until we consummate our business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our executive officers and directors are, or may in the future become, affiliated with entities that are engaged in a similar business.

 

Our officers may become involved with subsequent blank check companies similar to our company. Our officers also may become aware of business opportunities, which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary duties. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor or that a potential target business would not be presented to another entity prior to its presentation to us.

 

Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.

 

We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into our initial business combination with a target business that is affiliated with our sponsor, our directors or officers, although we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us.

 

The shares beneficially owned by our officers and directors will not participate in liquidation distributions and, therefore, our officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for our initial business combination.

 

Our officers and directors have waived their right to redeem their founder shares, private shares or any other ordinary shares acquired in our initial public offering or thereafter, or to receive distributions with respect to their founder shares or private shares upon our liquidation if we are unable to consummate our initial business combination. Accordingly, these securities will be worthless if we do not consummate our initial business combination. Any rights and warrants they hold, like those held by the public, will also be worthless if we do not consummate an initial business combination. The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our shareholders’ best interest.

 

We may engage in our initial business combination with one or more target businesses that have relationships with entities that may be affiliated with our executive officers, directors or existing holders, which may raise potential conflicts of interest.

 

In light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, officers and directors. Our directors also serve as officers and board members for other entities. Our sponsor, officers and directors are not currently aware of any specific opportunities for us to consummate our initial business combination with any entities with which they are affiliated, and there have been no preliminary discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for our initial business combination and such transaction was approved by a majority of our disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm regarding the fairness to our shareholders from a financial point of view of a business combination with one or more domestic or international businesses affiliated with our executive officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our public shareholders as they would be absent any conflicts of interest. Our directors have a fiduciary duty to act in the best interests of our shareholders, whether or not a conflict of interest may exist.

 

Since our sponsor will lose its entire investment in us if our initial business combination is not consummated and our officers and directors have significant financial interests in us, a conflict of interest may arise in determining whether a particular acquisition target is appropriate for our initial business combination.

 

In June 2014, our initial shareholders purchased an aggregate of 1,725,000 founder shares for an aggregate purchase price of $25,000 (of which 9,985 founder shares were forfeited due to the underwriter’s partial exercise of its over-allotment option in connection with our initial public offering). The founder shares will be worthless if we do not consummate an initial business combination. In addition, our sponsor purchased an aggregate of 319,119 insider units, each consisting of one ordinary share, a right to receive 1/10 of an ordinary share, and a warrant to purchase 1/2 of one ordinary share, for an aggregate purchase price of $3,191,190, as well as 2,058,007 sponsor warrants for an aggregate purchase price of $1,029,003.50, that will also be worthless if we do not consummate our initial business combination. Finally, as of the date of this Report, our sponsor has lent us $1,600,000 pursuant to a note, which becomes due on the earlier of July 6, 2016 and the date on which the Company consummates an initial business combination. Of the $1,600,000, up to $500,000 is convertible, in whole or in part, at the payee’s election, upon the consummation of the Business Combination, into units, at a price of $10.00 per unit. These units will be identical to the private units issued in a private placement in connection with Company’s initial public offering. If we do not consummate an initial business combination, the conversion feature of the note will be worthless, and the sponsor have limited recourse to be repaid any unpaid principal under the note.

 

 

We may issue notes or other debt securities, or otherwise incur substantial debt, to complete our initial business combination, which may adversely affect our financial condition and thus negatively impact the value of our shareholders’ investment in us.

 

Although we have no commitments as of the date of this Report to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial debt to complete our initial business combination. We and our officers and directors have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account. As such, no issuance of debt will affect the per share amount available for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:

 

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default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt obligations;

 

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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

 

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our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;

 

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our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;

 

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our inability to pay dividends on our ordinary shares;

 

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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;

 

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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

 

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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and

 

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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

 

We may only be able to complete one business combination with the proceeds of our initial public offering, which will cause us to be solely dependent on a single business, which may have a limited number of products or services. This lack of diversification may negatively impact our operations and profitability.

 

The net proceeds from our initial public offering provided us with approximately $69,972,643 that we were able use to complete our initial business combination; after redemptions of 5,255,657 ordinary shares with a total amount of $53,607,701 in connection with the Extension Meeting, we have approximately $16.5 million in the trust account.

 

We may effectuate our initial business combination with a single target business or multiple target businesses simultaneously. However, we may not be able to effectuate our initial business combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By consummating our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities, which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be:

 

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solely dependent upon the performance of a single business, property or asset, or

 

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dependent upon the development or market acceptance of a single or limited number of products, processes or services.

 

This lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.

 

 

We may attempt to consummate our initial business combination with a private company about which little information is available, which may result in our initial business combination with a company that is not as profitable as we suspected, if at all.

 

In pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. By definition, very little public information exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of limited information, which may result in our initial business combination with a company that is not as profitable as we suspected, if at all.

 

We may not be able to maintain control of a target business after our initial business combination.

 

We may structure our initial business combination to acquire less than 100% of the equity interests or assets of a target business, but we will only consummate such business combination if we will become the majority shareholder of the target (or control the target through contractual arrangements in limited circumstances for regulatory compliance purposes) or are otherwise not required to register as an investment company under the Investment Company Act. Even though we may own a majority interest in the target, our shareholders prior to the business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our shareholders immediately prior to such transaction could own less than a majority of our outstanding shares subsequent to such transaction. In addition, other minority shareholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that we will not be able to maintain our control of the target business.

 

Unlike many blank check companies, we do not have a specified maximum redemption threshold. The absence of such a redemption threshold will make it easier for us to consummate our initial business combination with which a substantial majority of our shareholders do not agree.

 

Since we have no specified percentage threshold for redemption contained in our memorandum and articles of association, our structure is different in this respect from the structure that has been used by many blank check companies. Many blank check companies would not be able to consummate an initial business combination if the holders of the company’s public shares voted against a proposed business combination and elected to redeem more than a specified percentage of the shares sold in such company’s initial public offering, which percentage threshold has typically been between 19.99% and 39.99%. As a result, many blank check companies have been unable to complete business combinations because the amount of shares voted by their public shareholders electing redemption exceeded the maximum redemption threshold pursuant to which such company could proceed with our initial business combination. Unlike these blank check companies, we may be able to consummate our initial business combination even though a substantial majority of our public shareholders do not agree with the transaction and have redeemed their shares or, if we seek shareholder approval of our initial business combination and do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to us or our sponsor, officers, directors, advisors or their affiliates. However, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. Furthermore, the redemption threshold may be further limited by the terms and conditions of our initial business combination. In such case, we would not proceed with the redemption of our public shares and the related business combination, and instead may search for an alternate business combination.

 

 

Holders of rights and warrants will not participate in liquidating distributions if we are unable to complete an initial business combination within the required time period.

 

If we are unable to complete an initial business combination within the required time period and we liquidate the funds held in the trust account, the rights and warrants will expire and holders will not receive any of such proceeds with respect to the rights and warrants. In this case, holders of rights and warrants are treated in the same manner as holders of rights and warrants of blank check companies whose units are comprised of shares, rights and warrants, as the rights and warrants in those companies do not participate in liquidating distributions. Nevertheless, the foregoing may provide a financial incentive to public shareholders to vote in favor of any proposed initial business combination as their rights would entitle the holder to receive one-tenth of a share of ordinary shares upon consummation of such business combination or to purchase one-half of one ordinary share, resulting in an increase in their overall economic stake in our company. If a business combination is not approved, the rights and warrants will expire and will be worthless.

 

If we do not maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants, public holders will only be able to exercise such warrants on a “cashless basis” which would result in a fewer number of shares being issued to the holder had such holder exercised the warrants for cash.

 

If we do not maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the public warrant at the time that holders wish to exercise such warrants, they will only be able to exercise them on a “cashless basis” provided that an exemption from registration is available. As a result, the number of ordinary shares that a holder will receive upon exercise of its public warrants will be fewer than it would have been had such holder exercised its warrant for cash. Further, if an exemption from registration is not available, holders would not be able to exercise their warrants on a cashless basis and would only be able to exercise their warrants for cash if a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants is available. Under the terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions and to maintain a current and effective prospectus relating to the ordinary shares issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential “upside” of the holder’s investment in our company may be reduced or the warrants may expire worthless. Notwithstanding the foregoing, the private warrants and sponsor warrants may be exercisable for unregistered ordinary shares for cash even if the prospectus relating to the ordinary shares issuable upon exercise of the warrants is not current and effective.

 

An investor will only be able to exercise a warrant if the issuance of ordinary shares upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state of residence of the holder of the warrants.

 

No public warrants will be exercisable for cash and we will not be obligated to issue ordinary shares unless the ordinary shares issuable upon such exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. At the time that the warrants become exercisable, we expect to continue to be listed on a national securities exchange, which would provide an exemption from registration in every state. However, we cannot assure you of this fact. If the ordinary shares issuable upon exercise of the warrants are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside, the warrants may be deprived of any value, the market for the warrants may be limited and they may expire worthless if they cannot be sold.

 

Our management’s ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer ordinary shares upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.

 

If we call our public warrants for redemption after the redemption criteria has been satisfied, our management will have the option to require any holder that wishes to exercise his warrant (including any warrants held by our initial shareholders or their permitted transferees) to do so on a “cashless basis.” If our management chooses to require holders to exercise their warrants on a cashless basis, the number of ordinary shares received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant for cash. This will have the effect of reducing the potential “upside” of the holder’s investment in our company.

 

 

We may amend the terms of the warrants in a way that may be adverse to holders with the approval by the holders of a majority of the then outstanding warrants.

 

Our warrants were issued pursuant to a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision. The warrant agreement requires the approval by the holders of a majority of the then outstanding warrants (including the private warrants and the sponsor warrants) in order to make any change that adversely affects the interests of the registered holders.

 

The ability of our public shareholders to exercise their redemption rights may not allow us to effectuate the most desirable business combination or optimize our capital structure.

 

If our initial business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know how many public shareholders may exercise redemption rights, we may either need to reserve part of the trust account for possible payment upon such redemption, or we may need to arrange third party financing to help fund our initial business combination. In the event that the acquisition involves the issuance of our stock as consideration, we may be required to issue a higher percentage of our stock to make up for a shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the most attractive business combination available to us.

 

We may be unable to consummate an initial business combination if a target business requires that we have a certain amount of cash at closing, in which case public shareholders may have to remain shareholders of our company and wait until our redemption of the public shares to receive a pro rata share of the trust account or attempt to sell their shares in the open market.

 

A potential target may make it a closing condition to our initial business combination that we have a certain amount of cash in excess of the $5,000,001 of net tangible assets we are required to have pursuant to our organizational documents available at the time of closing. In addition, pursuant to the terms of the Exchange Agreement with China Lending Group, in order to close on the Business Combination (or unless waived by us), we will need to have completed the PIPE Preferred Investment for at least $12 million and, upon the closing, after giving effect to the redemptions and the PIPE Preferred Investment, there must be at least $10 million in cash (before expenses) (unless waived by mutual agreement of the parties) available at the closing from the trust funds and the shares issued in the PIPE Preferred Investment. If the number of our public shareholders electing to exercise their redemption rights has the effect of reducing the amount of money available to us to consummate an initial business combination below such minimum amount required by the target business and we are not able to locate an alternative source of funding, we will not be able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable time period, if at all. In that case, public shareholders may have to remain shareholders of our company and wait until July 6, 2016 in order to be able to receive a portion of the trust account, or attempt to sell their shares in the open market prior to such time, in which case they may receive less than they would have in a liquidation of the trust account.

 

We will offer each public shareholder the option to vote in favor of the proposed business combination and still seek redemption of his, her or its shares.

 

In connection with any meeting held to approve an initial business combination, we will offer each public shareholder (but not our initial shareholders, officers or directors) the right to have his, her or its ordinary shares redeemed for cash (subject to certain limitations) regardless of whether such shareholder votes for or against such proposed business combination; provided that a shareholder must in fact vote for or against a proposed business combination in order to have his, her or its ordinary shares redeemed for cash. If a shareholder fails to vote for or against a proposed business combination, that shareholder would not be able to have his ordinary shares so redeemed. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and a majority of the outstanding ordinary shares voted are voted in favor of the business combination. This is different than other similarly structured blank check companies where shareholders are offered the right to redeem their shares only when they vote against a proposed business combination. This threshold and the ability to seek redemption while voting in favor of a proposed business combination may make it more likely that we will consummate our initial business combination.

 

 

A public shareholder that fails to vote either in favor of or against a proposed business combination will not be able to have his shares redeemed for cash.

 

In order for a public shareholder to have his shares redeemed for cash in connection with any proposed business combination, that public shareholder must vote either in favor of or against a proposed business combination. If a public shareholder fails to vote in favor of or against a proposed business combination, whether that shareholder abstains from the vote or simply does not vote, that shareholder would not be able to have his ordinary shares so redeemed to cash in connection with such business combination.

 

We will require public shareholders who wish to redeem their ordinary shares in connection with a proposed business combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.

 

We will require public shareholders who wish to redeem their ordinary shares in connection with a proposed business combination to either tender their certificates to our transfer agent at any time prior to the vote taken at the shareholder meeting relating to such business combination or to deliver their shares to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. In order to obtain a physical stock certificate, a shareholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that shareholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been advised that it takes a short time to deliver shares through the DWAC System, this may not be the case. Under our memorandum and articles of association, we are required to provide at least 10 days advance notice of any shareholder meeting, which would be the minimum amount of time a shareholder would have to determine whether to exercise redemption rights. Accordingly, if it takes longer than we anticipate for shareholders to deliver their shares, shareholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be unable to redeem their shares.

 

 

Because of our structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination.

 

We expect to encounter intense competition from entities other than blank check companies having a business objective similar to ours, including venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. Therefore, our ability to compete in acquiring certain sizable target businesses may be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, seeking shareholder approval of our initial business combination may delay the consummation of a transaction. Additionally, our rights, and the future dilution they represent (entitling the holders to receive ordinary shares on consummation of our initial business combination), may not be viewed favorably by certain target businesses. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating our initial business combination.

 

The provisions of our memorandum and articles of association relating to the rights and obligations attaching to our ordinary shares may be amended prior to the consummation of our initial business combination with the approval of the holders of 65% (or 50% if for the purposes of approving, or in conjunction with, the consummation of our initial business combination) of our outstanding ordinary shares attending and voting on such amendment at the relevant meeting, which is a lower amendment threshold than that of many blank check companies. It may be easier for us, therefore, to amend our memorandum and articles of association to facilitate the consummation of our initial business combination that a significant number of our shareholders may not support.

 

Many blank check companies have a provision in their charter, which prohibits the amendment of certain of its provisions, including those, which relate to a company’s pre-business combination activity, without approval by a certain percentage of the company’s shareholders. Typically, amendment of these provisions requires approval by between 90% and 100% of the company’s public shareholders. Our memorandum and articles of association provides that, prior to the consummation of our initial business combination, its provisions related to pre-business combination activity and the rights and obligations attaching to the ordinary shares, may be amended if approved by holders of 65% (or 50% if approved in connection with our initial business combination) of our outstanding ordinary shares attending and voting on such amendment. Prior to our initial business combination, if we seek to amend any provisions of our memorandum and articles of association relating to shareholders’ rights or pre-business combination activity, we will provide dissenting public shareholders with the opportunity to redeem their public shares in connection with any such vote on any proposed amendments to our memorandum and articles of association. Other provisions of our memorandum and articles of association may be amended prior to the consummation of our initial business combination if approved by a majority of the votes of shareholders attending and voting on such amendment or by resolution of the directors. Following the consummation of our initial business combination, the rights and obligations attaching to our ordinary shares and other provisions of our memorandum and articles of association may be amended if approved by a majority of the votes of shareholders attending and voting on such amendment or by resolution of the directors. Our initial shareholders, together with the underwriter of our initial public offering, which beneficially own approximately 54.7% of our ordinary shares, will participate in any vote to amend our memorandum and articles of association and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our memorandum and articles of association which govern our pre-business combination and the rights and obligations attaching to the ordinary shares behavior more easily that many blank check companies, and this may increase our ability to consummate our initial business combination with which you do not agree. However, we and our directors and officers have agreed not to propose any amendment to our memorandum and articles of association that would affect the substance and timing of our obligation to redeem the public shares of any public shareholder without the consent of that holder, if we are unable to consummate our initial business combination by July 6, 2016.

 

 

Our initial shareholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support.

 

Our initial shareholders, together with the underwriter of our initial public offering, own 54.7% of our issued and outstanding ordinary shares. Accordingly, they may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support, including amendments to our memorandum and articles of association. If our initial shareholders purchase any additional ordinary shares in the aftermarket or in privately negotiated transactions, this would increase their control. Neither our sponsor nor, to our knowledge, any of our officers or directors, has any current intention to purchase additional securities. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our ordinary shares. In addition, our board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. It is unlikely that there will be an annual meeting of shareholders to elect new directors prior to the consummation of our initial business combination, in which case all of the current directors will continue in office until at least the consummation of the business combination. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for election and our sponsor, because of its ownership position, will have considerable influence regarding the outcome. Accordingly, our sponsor will continue to exert control at least until the consummation of our initial business combination.

 

There is currently a limited market for our securities and an active market for our securities may not develop, which would adversely affect the liquidity and price of our securities.

 

Although our securities are currently listed on the Nasdaq Capital Market, there is currently a limited market for our securities. The price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions. Although listed on the Nasdaq Capital Market, an active trading market for our securities may never develop or, if developed, it may not be sustained. Additionally, if our securities become delisted from the Nasdaq Capital Market for any reason, and are quoted on the OTC Bulletin Board, the liquidity and price of our securities may be more limited than if we were listed on the Nasdaq Capital Market or another national exchange. You may be unable to sell your securities unless a market can be established and sustained.

 

Although initially listed on the Nasdaq Capital Market, our securities may not continue to be listed on the Nasdaq Capital Market in the future, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

 

Our securities are currently listed on the Nasdaq Capital Market. However, we cannot assure you that our securities will continue to be listed on the Nasdaq Capital Market in the future. Additionally, in connection with our business combination, the Nasdaq Capital Market will require us to file a new initial listing application and meet its initial listing requirements as opposed to its more lenient continued listing requirements. We cannot assure you that we will be able to meet those initial listing requirements at that time.

 

If the Nasdaq Capital Market delists our securities from trading on its exchange, we could face significant material adverse consequences, including:

 

●

a limited availability of market quotations for our securities;

  

●

a reduced liquidity with respect to our securities;

 

●

a determination that our ordinary shares are a “penny stock” which will require brokers trading in our ordinary shares to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our ordinary shares;

 

●

a limited amount of news and analyst coverage for our company; and

 

●

a decreased ability to issue additional securities or obtain additional financing in the future.

 

 

Because we must furnish our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses.

 

The United States federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements must be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, and the historical financial statements must be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and consummate our initial business combination by July 6, 2016.

 

Compliance obligations under the Sarbanes-Oxley Act of 2002 may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition.

 

Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ended March 31, 2016. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target company with which we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.

 

If we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accurately. Any inability to report and file our financial results accurately and timely could harm our business and adversely affect the trading price of our common stock.

 

We are required to establish and maintain internal controls over financial reporting and disclosure controls and procedures and to comply with other requirements of the Sarbanes-Oxley Act and the rules promulgated by the SEC. At present, we have instituted internal controls, but, as discussed in Item 9A of this Report, we are in the process of correcting certain material weaknesses in our internal controls. Our management, including our Chief Executive Officer and Chief Financial Officer, cannot guarantee that our internal controls and disclosure controls and procedures will prevent all possible errors. Because of the inherent limitations in all control systems, no system of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the possibility that judgments in decision-making can be faulty and subject to simple error or mistake. Furthermore, controls can be circumvented by individual acts of some persons, by collusion of two or more persons, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

 

You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited, because we are incorporated under British Virgin Islands law.

 

We are a company incorporated under the laws of the British Virgin Islands. As a result, it may be difficult for investors to enforce judgments obtained in the United States courts against our directors or officers.

 

Our corporate affairs are governed by our memorandum and articles of association, the Companies Act and the common law of the British Virgin Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under British Virgin Islands law are governed by the Companies Act and the common law of the British Virgin Islands. The common law of the British Virgin Islands is derived from English common law, and whilst the decisions of the English courts are of persuasive authority, they are not binding on a court in the British Virgin Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law may not be as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the British Virgin Islands has a less developed body of securities laws as compared to the United States, and some states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law. In addition, while statutory provisions do exist in British Virgin Islands law for derivative actions to be brought in certain circumstances, shareholders in BVI companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect to any such action, may result in the rights of shareholders of a BVI company being more limited than those of shareholders of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred.

 

 

The British Virgin Islands Courts are also unlikely:

 

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to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws where that liability is in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the company; and

 

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to impose liabilities against us, in original actions brought in the British Virgin Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.

 

There is no statutory recognition in the British Virgin Islands of judgments obtained in the United States, although the courts of the British Virgin Islands will in certain circumstances recognize such a foreign judgment and treat it as a cause of action in itself which may be sued upon as a debt at common law so that no retrial of the issues would be necessary provided that the U.S. judgment:

 

●

the U.S. court issuing the judgment had jurisdiction in the matter and the company either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with process;

 

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is final and for a liquidated sum;

 

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the judgment given by the U.S. court was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the company;

 

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in obtaining judgment there was no fraud on the part of the person in whose favor judgment was given or on the part of the court;

 

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recognition or enforcement of the judgment would not be contrary to public policy in the British Virgin Islands; and

 

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the proceedings pursuant to which judgment was obtained were not contrary to natural justice.

 

In appropriate circumstances, a British Virgin Islands Court may give effect in the British Virgin Islands to other kinds of final foreign judgments such as declaratory orders, orders for performance of contracts and injunctions.

 

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management or controlling shareholders than they would as public shareholders of a U.S. company. For a discussion of certain differences between the provisions of the Companies Act, remedies available to shareholders and the laws applicable to companies incorporated in the United States and their shareholders, see “British Virgin Islands Company Considerations.”

 

Our memorandum and articles of association permit the board of directors by resolution to amend our memorandum and articles of association, including to create additional classes of securities, including shares with rights, preferences, designations and limitations as they determine which may have an anti-takeover effect.

 

Our memorandum and articles of association permits the board of directors by resolution to amend the memorandum and articles of association including to designate rights, preferences, designations and limitations attaching to the preferred shares as they determine in their discretion, without shareholder approval with respect the terms or the issuance. If issued, the rights, preferences, designations and limitations of the preferred shares would be set by the board of directors and could operate to the disadvantage of the outstanding ordinary shares the holders of which would not have any pre-emption rights in respect of such an issue of preferred shares. Such terms could include, among others, preferences as to dividends and distributions on liquidation, or could be used to prevent possible corporate takeovers. We may issue some or all of such preferred shares in connection with our initial business combination. Notwithstanding the foregoing, we and our directors and officers have agreed not to propose any amendment to our memorandum and articles of association that would affect the substance and timing of our obligation to redeem our public shares if we are unable to consummate our initial business combination by July 6, 2016.

 

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our securities less attractive to investors.

 

We are an “emerging growth company,” as defined in the JOBS Act. We will remain an “emerging growth company” for up to five years from the closing of our initial public offering. However, if our non-convertible debt issued within a three-year period or revenues exceeds $1 billion, or the market value of our ordinary shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we are not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and we are exempt from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

 

 

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, will not adopt the new or revised standard until the time private companies are required to adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used. We cannot predict if investors will find our ordinary shares less attractive because we may rely on these provisions. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our shares and our share price may be more volatile.

 

Item 1B. Unresolved Staff Comments

 

None.

 

Item 2. Properties

 

We do not own any real estate or other physical properties materially important to our operation. Our executive office is located at Room 703, 7/F., Beautiful Group Tower, 77 Connaught Road Central, Hong Kong. The cost for such space was included in the $10,000 per month fee that we paid until March 31, 2016 to our sponsor, an entity controlled by Ms. Winnie Lai Ling Ng, for office space, utilities and secretarial and administrative services. We consider our current office space adequate for our current operations.

 

Item 3. Legal Proceedings

 

To the knowledge of our management, there is no litigation currently pending or contemplated against us, any of our officers or directors in their capacity as such or against any of our property.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

 

PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

 

Market Information

 

Our units, ordinary shares, rights and warrants are each traded on the NASDAQ Capital Market under the symbols “CADTU,” “CADT,” “CADTR” and “CADTW”, respectively. Our units commenced public trading on October 1, 2014, and our ordinary shares, rights and warrants commenced public trading on October 22, 2014.

 

The table below sets forth, for the calendar quarter indicated, the high and low bid prices of our units, ordinary shares, rights and warrants as reported on the Nasdaq for the period October 1, 2014 through March 31, 2016.

 

Calendar Period		Units								Ordinary Shares								Warrants								Rights
		Low				High				Low				High				Low				High				Low				High
2014:
Fourth Quarter		$	9.71			$	10.25			$	9.66			$	9.75			$	0.12			$	0.14			$	0.22			$	0.30
2015:
First Quarter		$	9.79			$	10.09			$	9.65			$	9.87			$	0.09			$	0.13			$	0.16			$	0.24
Second Quarter		$	9.51			$	10.39			$	9.75			$	10.25			$	0.09			$	0.17			$	0.16			$	0.31
Third Quarter		$	10.02			$	10.55			$	9.90			$	10.17			$	0.08			$	0.13			$	0.13			$	0.24
Fourth Quarter		$	10.02			$	10.55			$	9.90			$	10.07			$	0.05			$	0.13			$	0.10			$	0.27
2016:
First Quarter		$	10.10			$	10.60			$	9.92			$	10.15			$	0.02			$	0.13			$	0.07			$	0.22

 

On June 27, 2016, our units had a closing price of $10.53, our ordinary shares had a closing price of $8.60, our warrants had a closing price of $0.09, and our rights had a closing price of $0.34.

 

Holders

 

On June 27, 2016, there were 2 holders of record of our units, 8 holders of record of our ordinary shares, 2 holders of record of our warrants and 2 holders of record of our rights.

 

Dividends

 

We have not paid any cash dividends on our ordinary shares to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness in connection with our business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.

 

Securities Authorized for Issuance Under Equity Compensation Plans.

 

None.

 

Recent Sales of Unregistered Securities

 

None.

 

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

 

None.

 

Use of Proceeds

 

From the effective date of the registration statement filed in connection with the initial public offering through March 31, 2016, we have spent approximately $1,708,678 on operating expenses.

 

 

Item 6. Selected Financial Data

 

The following table summarizes the relevant financial data for our business and should be read with our financial statements, which are included in this Report. We have not had any significant operations to date, so only balance sheet and cash flow data is presented.

 

		For the year ended March 31, 2016				For the period from April 8, 2014 (inception) to March 31, 2015
		(Audited)				(Audited)
Statement of Operations Data:
Revenues		$	—			$	—
General and administrative expenses		$	(1,450,019	)		$	(256,531	)
Net loss attributable to ordinary shares		$	(1,343,249	)		$	(246,857	)
Weighted average number of shares outstanding, excluding shares subject to possible redemption, basic and diluted			8,927,331				4,881,097
Net loss per ordinary share: basic and diluted		$	(0.15	)		$	(0.05	)
Cash Flow Data:
Net loss		$	(1,343,249	)		$	(246,857	)
Net cash used in operating activities		$	(1,359,503	)		$	(308,256	)
Net cash used in investing activities		$	—			$	(69,972,643	)
Net cash provided by financing activities		$	1,187,989			$	70,505,528
Net (decrease) increase in cash		$	(171,514	)		$	224,629
Cash at beginning of period		$	224,629			$	—
Cash at end of period		$	53,115			$	224,629
Supplemental disclosure of non-cash financing activities:
Deferred legal fees		$	—			$	100,000
Redeemed Ordinary share payable		$	53,607,701			$	—

 

		March 31, 2016				March 31, 2015
		(Audited)				(Audited)
Balance Sheet Data:
Cash		$	53,115			$	224,629
Cash and cash equivalents held in trust account			70,091,214
Other current assets			73,233				70,366
Investments held in trust account			—				69,984,444
Total assets		$	70,217,562			$	70,279,439
Current liabilities:
Deferred legal fees		$	100,000			$	100,000
Accounts payable and accrued liabilities			96,671				20,769
Amount due to related parties			17,482				—
Redeemed Ordinary shares payable			53,607,701				—
Promissory note – related party			500,000
Convertible promissory note – related party			687,989				—
Total current liabilities			55,009,843				120,769
Ordinary shares, no par value, subject to possible redemption; 1,000,756 and 6,388,104 shares (at redemption value $10.20 per share) at March 31, 2016 and March 31, 2015, respectively			10,207,711				65,158,661
Additional paid-in-capital			6,590,114				5,246,866
Accumulated deficit			(1,590,106	)			(246,857	)
Total shareholders’ equity			5,000,008				5,000,009
Total liabilities and shareholders’ equity		$	70,217,562			$	70,279,439

 

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis of our 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.

 

Overview

 

We are a blank check company incorporated on April 8, 2014 in the British Virgin Islands with limited liability (meaning our public shareholders have no liability, as members of the Company, for the liabilities of the Company over and above the amount paid for their shares) formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, purchasing all or substantially all of the assets of, or engaging in any other similar business combination with one or more businesses or entities. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private placement of the private units, our shares, debt securities or a combination of cash, shares and debt securities.

 

The issuance of additional shares in our initial business combination:

 

●

may significantly dilute the equity interest of investors in our initial public offering who would do not have pre-emption rights in respect of any such issue;

 

●

may subordinate the rights of holders of ordinary shares if the rights, preferences, designations and limitations attaching to the preferred shares are created by amendment of our memorandum and articles of association by resolution of the board of directors and preferred shares are issued with rights senior to those afforded our ordinary shares;

 

●

could cause a change in control if a substantial number of ordinary shares is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;

 

●

may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights or a person seeking to obtain control of us; and

 

●

may adversely affect prevailing market prices for our ordinary shares and/or rights.

 

Similarly, if we issue debt securities, it could result in:

 

●

default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt obligations;

 

●

acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

 

●

our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;

 

●

our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;

 

 

●

our inability to pay dividends on our ordinary shares;

 

●

our using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;

 

●

limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

 

●

increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and

 

●

limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

 

On January 3, 2016, DT Asia’s board of directors approved the Share Exchange Agreement with China Lending Group as being in the best interests of DT Asia and its shareholders, and on January 11, 2016, the parties executed the Share Exchange Agreement. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.

 

We presently have no revenue, have had losses since inception through March 31, 2016 of approximately $1,343,249, primarily from incurring costs related to due diligence, professional, and investor relations related costs, etc., and we have no other operations other than the active solicitation of a target business with which to complete a business combination. We have relied upon the sale of our securities and loans from our officers, directors and Sponsor to fund our operations.

 

On October 6, 2014, DT Asia consummated its initial public offering of 6,000,000 units, each unit consisting of one ordinary share, one right, and one warrant. Each right entitles the holder to receive one-tenth (1/10) of an ordinary share on the consummation of an Initial Business Combination. Each Warrant entitles the holder thereof to purchase one-half of one ordinary share, at a price of $12.00 per full share. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $60.0 million.

 

On October 6, 2014, simultaneously with the consummation of the initial public offering, the Company completed the private placement of an aggregate of 320,000 private units, at $10.00 per unit, among which 290,000 private units were purchased by DeTiger Holdings Limited, our sponsor, and 30,000 private units were purchased by EarlyBirdCapital, generating gross proceeds of $3,200,000. Each private unit is comprised of one ordinary share, one right, and one warrant. Each right entitles the holder to receive one-tenth (1/10) of an ordinary share on the consummation of an Initial Business Combination. Each Warrant entitles the holder thereof to purchase one-half of one ordinary share, at a price of $12.00 per full share. In addition, our sponsor purchased from us an aggregate of 1,800,000 Warrants, or sponsor warrants, at a price of $0.50 per warrant ($900,000). Each sponsor warrant is exercisable to purchase one-half of one ordinary share at $12.00 per full share. The private units and sponsor warrants generated total gross proceeds of $4,100,000 (private units $3,200,000 plus sponsor warrants $900,000).

 

The underwriters of the initial public offering were granted an option to purchase up to an additional 900,000 units to cover over-allotments, if any, the over-allotment units. The underwriters exercised the option in part and, on October 14, 2014, the underwriters purchased 860,063 over-allotment units, which were sold at an offering price of $10.00 per unit, generating gross proceeds of $8,600,630.

 

On October 14, 2014, simultaneously with the sale of the over-allotment units, the Company consummated the private sale of an additional 32,253 private units at a price of $10.00 per unit, for an aggregate purchase price of $322,530. Each private unit is comprised of one ordinary share, one right, and one warrant. In addition, simultaneously with the sale of the over-allotment units, the Company consummated the private sale of an additional 258,007 sponsor warrants at a price of $0.50 per sponsor warrant, for an aggregate purchase price of $129,004. The private placements on October 14, 2014 generated an additional $451,534.

 

In addition, the 1,725,000 shares held by our initial shareholders (prior to the exercise of the over-allotment) included an aggregate of up to 225,000 shares subject to forfeiture by our sponsor to the extent that the underwriters’ over-allotment option was not exercised in full, so that the initial shareholders would collectively own 20.0% of issued and outstanding shares of the Company (excluding the sale of the private units and sponsor warrants). Since the underwriters exercised the over-allotment option in part, and purchased 860,063 of the total possible 900,000 additional units, our sponsor has forfeited 9,985 shares, which were canceled by the Company, in order to maintain this 20.0% limitation.

 

 

The Company received total gross proceeds of $73,152,164 from the sale of units in the initial public offering (including over-allotment units) and all related private placements on October 6, 2014 and October 14, 2014. A total of $69,972,643 of the net proceeds were deposited in a trust account established for the benefit of our public shareholders. We incurred offering costs totaling approximately $4,440,838, consisting of $2,229,520 in underwriters’ fees, plus $442,218 of other cash expenses, $100,000 in deferred expenses and a non-cash charge of $1,669,100.

 

On March 31, 2016, we held a special meeting of shareholders in lieu of any annual meeting to: (i) approve an extension of the date to complete an initial business combination from April 6, 2016 to July 6, 2016, (ii) elect Hai Wang as a Class I director, to serve on the Company’s Board of Directors until the 2019 annual meeting of shareholders or until his successor is elected and qualified, and (iii) to ratify the selection by Company’s audit committee of UHY LLP to serve as the Company’s independent registered public accounting firm for the year ending March 31, 2016 (the “Extension Meeting”). In connection with the Extension Meeting, a total of 5,255,657 ordinary shares (equivalent to approximately $53,607,701) were redeemed.

 

On April 1, 2016, DeTiger Holdings Limited (“Sponsor”) deposited into the trust account approximately $96,000 (the “Contribution”), which amount was equal to $0.06 for each of the 1,604,406 public shares of the Company that were not redeemed in connection with the Extension Meeting. As a result of the Contribution and following redemption of the public shares in connection with the Extension Meeting, the pro rata portion of the funds available in the trust account for the public shares that were not redeemed increased from approximately $10.20 per share to approximately $10.26 per share.

 

Results of Operations

 

Our entire activity from inception up to October 6, 2014 was in preparation for our initial public offering, which was consummated on October 6, 2014. Following the offering, our activity has been limited to the evaluation and due diligence of business combination candidates, preparing and negotiating the Share Exchange Agreement with China Lending Group, preparing and filing proxy statements with SEC, presenting and soliciting investment in the private placement issue of our unregistered Series A Convertible Preferred Stock (“Preferred Shares”). We will not be generating any operating revenues until the closing and completion of our initial business combination. We have generated small amounts of non-operating income in the form of interest income on cash and cash equivalents. Interest income has not been significant in view of current low interest rates on risk-free investments (treasury securities). We have incurred 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. As of June 20, 2016, we have a total of approximately $252,000 available ($141,000 cash in bank and $111,000 in interest earned from the trust held by Continental Stock Transfer & Trust Company acting as trustee). Further, we have approximately $60,000 in payables and $45,000 of accrued expenses, both payable before a business combination, and we expect to incur an additional $120,000 in expenses to complete the business combination before July 6, 2016. Furthermore, there are an estimated $450,000 of payables and contingent expenses which are deferred and are not payable unless there is a closing of a business combination.

 

For the period from April 8, 2014 (inception) to March 31, 2015, we had net losses of $246,857, which consisted of operating expenses partially offset by interest income from our trust account. Operating expenses generally consisted of the $10,000 monthly payment to our sponsor for office and administrative support, monthly professional fees owed to our service providers, travel expenses, Nasdaq market listing fees and our directors and officers insurance policy costs. Operating expenses after our initial public offering increased dramatically due to our having commenced searching a target company, and professional expenses being expensed in the statement of operations.

 

For the year ended March 31, 2016, we had net losses of $1,343,249 (accumulated net losses of $1,590,106 since inception), which consisted of operating expenses partially offset by interest income from our trust account. Operating expenses generally consisted of the $10,000 monthly payment to our sponsor for office and administrative support, monthly professional fees owed to our service providers, travel expenses and amortization of our director and officer insurance policy. Operating expenses for the year ended March 31, 2016 increased dramatically as compared to the period ended March 31, 2015 due to our having commenced operations in the target company after our initial public offering.

 

Liquidity and Capital Resources

 

As of March 31, 2016, we had cash of $53,115. Through March 31, 2016, our liquidity needs have been satisfied to date primarily through net proceeds from our initial public offering (including over-allotment units issued in connection with the underwriter’s partial exercise of its over-allotment option) and all related private placements not held in the trust account and the loan from our sponsor. As of March 31, 2016, our sponsor has loaned the Company $1,187,989 pursuant to a note, which becomes due on the earlier of (1) July 6, 2016; or (2) the date the Company consummates a business combination. Up to $500,000 of our sponsor loan is convertible, in whole or in part, at the payee’s election, upon the consummation of the Business Combination, into units, at a price of $10.00 per unit. These units will be identical to the private units issued in a private placement in connection with our initial public offering.

 

 

We received total gross proceeds of $73,152,164 from the sale of units in our initial public offering (including the private units issued in connection with the underwriters’ partial exercise of their over-allotment option) and all related private placements on October 6, 2014 and October 14, 2014. A total of $69,972,643 of net proceeds was deposited in a trust account established for the benefit of the Company’s public shareholders and as of March 31, 2015, the carrying value of cash and investments held in trust account is $70,051,271 (including earned interest income of $111,251 since October 2014).

 

On March 31, 2016, the Company held a special meeting in lieu of an annual meeting of shareholders (the “Meeting”). At the Meeting, the shareholders approved the following items: (i) an amendment to the Company’s memorandum and articles of association extending the date by which the Company must consummate its initial business combination and the date for cessation of operations of the Company if the Company has not completed an initial business combination from April 6, 2016 to July 6, 2016 (the “Extension Amendment”), (ii) an amendment to the Investment Management Trust Agreement (as amended, the “Amended and Restated Trust Agreement”) between the Company and Continental extending the date on which to commence liquidation of the trust account established in connection with the Company’s initial public offering in accordance with the Amended and Restated Trust Agreement to July 6, 2016, (iii) to direct the election of Hai Wang as a director, to serve until the 2019 annual meeting of shareholders or until his successor is elected and qualified, and (iv) to direct the ratification of the selection by the Company’s audit committee of UHY LLP to serve as the Company’s independent registered public accounting firm for the year ended March 31, 2016.

 

The number of ordinary shares presented for redemption in connection with the Extension Amendment was 5,255,657 shares (equivalent to $53,607,701 at $10.20 per share) as of March 31, 2016. On April 1, 2016, our sponsor deposited into the trust account approximately $96,000, which amount was equal to $0.06 for each of the 1,604,406 public shares of the Company that were not redeemed in connection with the Extension Amendment. As a result of the Contribution and following redemption of the public shares in connection with the Extension Amendment, the pro rata portion of the funds available in the trust account for the public shares that were not redeemed will increase from approximately $10.20 per share to approximately $10.26 per share. Therefore, as of June 7, 2016, we have approximately $16.5 million in the trust account. The 1,604,406 public shares (equivalent to $16,461,205 at $10.26 per share in the trust account) are subject to redemption at the option of the shareholders at business combination.

 

We intend to use substantially all of our cash, including the funds held in the trust account and proceeds of the PIPE Preferred Investment, to acquire a target business or businesses and to pay our expenses, including a fee payable to EarlyBirdCapital in an amount equal to 4% of the total gross proceeds raised in our initial public offering (approximately $2.7 million) for its services in connection with our initial business combination. We believe that the cash not held in the trust account, plus the interest earned on the trust account balance (net of income, and other tax obligations) that may be released to us to fund our working capital requirements, together with the loan for up to $1,600,000 ($1,187,989 outstanding as of March 31, 2016) from our sponsor mentioned below, will be sufficient to allow us to operate until at least July 6, 2016, assuming that a business combination is not consummated prior to that time. However, as noted above the Company will need to raise additional financing from the PIPE Preferred Investment of up to $12,000,000 in the event that some or all of the remaining publicly-held shares are redeemed prior to completion of the business combination. As of June 28, 2016, we have received signed subscription agreements for an aggregate subscription amount of $10,320,000 for the PIPE Preferred Investment. The PIPE Preferred Investment subscription agreements require each subscriber to deposit 10% of his/her total subscription into escrow on the effective date of the relevant Escrow Agreement, and the balance of 90% is to be paid into the escrow account 6 days before shareholders vote to approve the proposed Business Combination. As of June 28, 2016, $8,239,212 of subscriptions had been received into escrow. Under the Share Exchange Agreement, the intention is to raise at least $12,000,000 from this financing exercise, however this minimum threshold may be waived by us.

 

In addition, if the funds not held in the trust account are insufficient, our sponsor, an affiliate of our sponsor or the Company’s officers and directors 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, as described in Note 4 — Expense Advance Agreement, of the Notes to Financial Statements included in this Report. On September 13, 2015, we issued a non-interest bearing convertible promissory note in the amount of up to $500,000 (the “Note”) to DeTiger Holdings Limited. On December 1, 2015, the Note was amended to allow for an additional $400,000 to be drawn down. On February 5, 2016, the Note was further amended to allow an additional $500,000 to be drawn down. Payment on all of the Note is due on the earlier of: (i) July 6, 2016 and (ii) the date on which the Company consummates its Business Combination (as defined in the Company’s amended and restated articles and memorandum of association). Pursuant to the terms of the Note, until the maturity date, up to $1,400,000 can be drawn down in one or more installments of at least $1,000 each. On June 14, 2016, the Note was amended to allow for an additional $200,000 to be drawn down. We issued the Note in consideration for loans from the payee to fund the Company’s working capital requirements. Funds in the trust account will not be used to repay any of the Note. The Note includes an option for up to $500,000 of the principal outstanding under the Note to be convertible, in whole or in part, at the payee’s election, upon the consummation of the Business Combination. Upon such election, up to $500,000 of the principal outstanding under the Note will convert into units, at a price of $10.00 per unit. These units will be identical to the private units issued in a private placement in connection with our initial public offering. As such, each unit will be comprised of one ordinary share, one right to receive one-tenth of one ordinary share upon consummation of a Business Combination, and one warrant to purchase one-half of an ordinary share at an exercise price of $12.00 per full share.

 

 

The Company had drawn down all of the $1,600,000 as of June 15, 2016. If we are required to seek additional capital, we will need to raise additional capital through loans or additional investments from our sponsor, shareholders, officers, directors, or third parties. None of the sponsors, shareholders, officers or directors are under any obligation to advance funds to, or to invest in, the Company. Accordingly, we may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

As of June 20, 2016, we have a total of approximately $252,000 available ($141,000 cash in bank and $111,000 in interest earned from the trust held by Continental Stock Transfer & Trust Company acting as trustee). Further, we have approximately $60,000 in payables and $45,000 of accrued expenses, both payable before a business combination, and we expect to incur an additional $120,000 in expenses to complete the business combination before July 6, 2016. Therefore, there should be sufficient cash resources to complete the business combination, assuming it proceeds according to the planned timetable and there are no significant unforeseen costs or claims. There are an estimated $450,000 of payables and contingent expenses which are deferred and are not payable unless there is a closing of a business combination.

 

If we were unable to complete the Business Combination, 100% of our outstanding public shares will be redeemed for a portion of the funds held in the trust account, each holder will receive a full pro rata portion of the amount then in the trust account (less up to $50,000 to pay dissolution costs), plus any pro rata interest earned on the funds held in the trust account and not previously released to us for our working capital requirements or necessary to pay taxes payable on such funds. Holders of rights or warrants will receive no proceeds in connection with the liquidation with respect to such rights or warrants, which will expire worthless. Further, holders of the founder shares, private units and sponsor warrants will not participate in any redemption distribution with respect to their founder shares, private shares, private rights, private warrants or sponsor warrants.

 

Additionally in such circumstance we may not have sufficient funds to pay or provide for all creditors’ claims (including the sponsor loans). Although we have entered into valid and enforceable agreements waiving any right, title, interest or claim of any kind in or to any monies held in the trust account with third parties, including vendors and other entities we have engaged, but excluding our independent registered public accounting firm and US GAAP reporting consultants, there is no guarantee that the third parties would not challenge the enforceability of these waivers and bring claims against the trust account for monies owed to them. In the situation that any such legal challenges were to be successful, the actual redemption price may be less than the currently estimated $10.26 per share.

 

Off-Balance Sheet Arrangements and Contractual Obligations

 

As of March 31, 2016, we did not have any off-balance sheet arrangements. We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities other than an agreement to pay our sponsor a total of $10,000 per month for office space, utilities, secretarial support and administrative services.

 

Critical Accounting Policies and Estimates

  

Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our audited financial information. We describe our significant accounting policies in Note 2 - Significant Accounting Policies, of the Notes to Financial Statements included in this report. Our audited financial statements have been prepared in accordance with U.S. GAAP. Certain of our accounting policies require that management apply significant judgments in defining the appropriate assumptions integral to financial estimates. On an ongoing basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. Judgments are based on historical experience, terms of existing contracts, industry trends and information available from outside sources, as appropriate. However, by their nature, judgments are subject to an inherent degree of uncertainty, and, therefore, actual results could differ from our estimates.

 

 

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

As of March 31, 2016, we were not subject to any market or interest rate risk.

Following the consummation of the our initial public offering, the net proceeds held in the trust account were invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less with Continental Stock Transfer & Trust Company acting as trustee. In March 2016, in order to comply with the shareholders’ request upon future redemption, the Company decided to invest the fund on escrow account maintained by Continental Stock Transfer & Trust Company in US Money market fund with no maturity date, which would allow the Company to liquidate the fund at the Company’s discretion at any time. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk. The net proceeds not held in the trust account are held in US Dollars and Hong Kong Dollars as cash deposits in a bank in Hong Kong SAR. 

Item 8. Financial Statements and Supplementary Data

The financial statements are filed as part of this Report beginning on page F-1. 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 

None. 

Item 9A. Controls and Procedures 

Evaluation of Disclosure Controls and Procedures 

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. 

Under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our CEO concluded that the Company has a material weakness in its internal control over financial reporting as of March 31, 2016 relating to its inability to sufficiently draft complete and accurate financial statements in accordance with Generally Accepted Accounting Principles (United States) (US GAAP) and the related rules and regulations adopted by the U.S. Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB). Our disclosure controls and procedures were not effective and require improvement to reach a reasonable assurance level and, accordingly, provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. 

Management’s Report on Internal Controls Over Financial Reporting 

Our management, with oversight from our audit committee, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting includes those policies and procedures that: (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. In designing and evaluating internal controls, management recognizes that any internal controls, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of control systems must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Our management, including our Chief Executive Officer, assessed the effectiveness of our internal control over financial reporting as of March 31, 2016, based upon the updated framework in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 1992 and updated in May 2013. Based on this assessment, our management concluded that, as of March 31, 2016, there is a material weakness in our internal control over financial reporting. Specifically, the Company has a material weakness in its internal control over financial reporting as of March 31, 2016 relating to its inability to sufficiently draft complete and accurate financial statements in accordance with Generally Accepted Accounting Principles (United States) (US GAAP) and the related rules and regulations adopted by the U.S. Securities and Exchange Commission (SEC) and Public Company Accounting Oversight Board (PCAOB). 

Changes in Internal Control over Financial Reporting 

Other than as described above, there was no change in our internal control over financial reporting for the fiscal year ended March 31, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 

Item 9B. Other Information. 

None. 

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance

 

Directors and Executive Officers

 

Our directors and executive officers as of the date of this Report are as follows:

 

Name		Age		Position
Emily Chui-Hung Tong		62		Chairwoman
Stephen N. Cannon		48		President/CEO/Director
Haibin Wang		49		Director
Hai Wang		39		Director
Jason Kon Man Wong		52		Director

 

Ms. Emily Tong, 62, has been our Chairwoman since June 2014. Ms. Tong served as the President of Method Investments & Advisory, LLC in New York from January 2012 to December 2014. She was the Managing Director of Kildare Capital, Inc. from June 2010 to June 2011. She was the co-founder and President of EastGate Securities, LLC from 2008 to March 2010. During her tenure with Method, Kildare and EastGate Securities, all of which are U.S. securities firms, Ms. Tong was responsible for those firms’ China related transactions. In addition, Ms. Tong was the co-founder and President of EastGate Financial, Inc. (from 2006 to December 2013) and was the co-founder and President of The Jade Cricket Company Inc. (from 1993 to 2006), both of which were U.S. financial advisory firms specializing in China related transactions. She holds Series 7, 24, 63, 79, and 99 licenses. In the 1990’s, Ms. Tong was the co-founder and President of a joint venture between The Jade Cricket Company, Inc. and Lenovo Computers, a Chinese multinational computer technology company with headquarters in China and United States. Ms. Tong worked for IBM, an American multinational technology and consulting corporation, between 1978 and 1993. Her last position at IBM was in its Wall Street office leading its sales and marketing efforts from 1988 to 1993. Ms. Tong graduated from the University of Illinois at Urbana-Champaign with a Master degree in Computer Science and from Hunter College, City University of New York, with a Bachelor’s degree in Computer Science. We believe Ms. Tong is well-qualified to serve as a member of the board due to her in-depth knowledge and experience in the U.S. and China capital markets and her experience in the field of financial services in the U.S. for over 20 years.

 

Mr. Stephen N. Cannon, 48, has been our President, CEO and director since June 2014. Since April 2010, Mr. Cannon has been a Partner and Head of China for RedBridge Group Ltd, a boutique merchant banking firm focused on Chinese and Arabian Gulf cross-border investments, and since June 2009, Mr. Cannon has been a senior advisor at Ackrell & Co, a U.S. broker-dealer. From 2007 until April 2010, Mr. Cannon served in various capacities with Hambrecht Asia Acquisition Corp., a Nasdaq-listed SPAC. Mr. Cannon was a co-founder, initial CFO and director, and then VP of Acquisitions, for the SPAC. In addition to having responsibility for the formation and IPO process of the SPAC, Mr. Cannon identified the SPAC’s ultimate acquisition target (SGOCO Group Limited (NASD: SGOC) and negotiated a transaction with that company. In addition, in 2008, Mr. Cannon was a co-founder and CFO of Ruslan Acquisition Corp, a Russia-focused SPAC that filed a $300 million IPO with Euronext regulators that was never funded due to market conditions. The committed underwriters of the offering, Credit Suisse & Morgan Stanley postponed the offering as a result of the global financial crisis. From 2005 until 2008, Mr. Cannon served as a Managing Director of Asian investment banking for WR Hambrecht & Co. In addition to founding and heading the firm’s Shanghai office, he had overall responsibility for corporate finance transactions for Asian clients. During his tenure, WR Hambrecht& Co grew to be one of the most active U.S.-based investment banks of U.S. public offerings for private Chinese middle market companies. Through a combination of underwriting IPOs, providing M&A advisory services, and fairness opinions, the firm was involved with a significant portion of the Chinese-focused SPACs consummated during this period. Prior to WR Hambrecht & Co, Mr. Cannon worked at the following investment banking firms: Ackrell & Co (2003-2005); ABN-Amro Securities (2000-2002); Donaldson Lufkin & Jenrette (1994-2000); Smith Barney (1993-1994); and Salomon Brothers (1991-1993). Mr. Cannon’s career has spanned several industry and product groups, including M&A, public equity and debt, private equity and debt, high yield financings, leveraged buy-outs and restructurings. He holds Series 7, 63, and 24 licenses with FINRA. Mr. Cannon graduated from the University of Notre Dame with a Bachelor’s degree in Mechanical Engineering and a Bachelor’s degree in Economics. We believe Mr. Cannon is well-qualified to serve as a member of the board due to his in depth knowledge and experience in the U.S. and-China capital markets and his prior experience with SPACs.

 

 

Mr. Haibin Wang, 49, has been one of our independent directors since our initial public offering. Mr. Wang is the founder of San Glory International Hotel, Beijing, and has been its Director and the majority shareholder since May 2009. San Glory International Hotel is a four-star business hotel located in Daxing District, Beijing. He has also served as the Executive Director of the Star Group, China, since 2005. The Star Group is a conglomerate engaged in businesses involving hotels, golf courses, real estate developments, direct investments, fund management, and manufacturing. The Star Group has 11 subsidiaries and over 1,600 employees. One of its subsidiaries, Xing Pai Sports Goods Co. Ltd., is the largest billiard table manufacturer in China and the official table supplier to ‘World Snooker’. He has also served as the General Manager of the Star Group Investment Holdings Limited since 2005. Star Group Investment Holdings Limited is a direct investment company that focuses on financial and mining sectors in China. From August 2009 to August 2010, he was an independent non-executive Director of Bo Ying Investment Co., Ltd. headquartered in Hubei, China, which is a public company (SZSE: 000760) listed on the Shenzhen Stock Exchange, China. From 2006 to 2008, he served as Chairman of the Investment Committee of CITIC Star Group Fund, a China-based investment company. From 2003 to 2005, Mr. Wang founded Beijing Day Skandia Technology Co, a company engaged in the distribution of electronic tax machines, certified by the Beijing tax authority. Between 1999 and 2005, he founded several tax accounting firms, including: Beijing Sino CTA Firm, Beijing Capital CTA Firm, Beijing China Water Valuation Firm, and Beijing Guang Zhang CTA Firm. Among those firms, the Beijing Sino CTA Firm merged with Unitax Certified Tax Agent Co. Ltd. in 2009, which has become one of the largest tax accounting firms in China with over one thousand employees. He was a tax officer in the Beijing Tax Bureau of China from 1994 to 1999. He has been a Certified Tax Accountant of China since 2002. We believe Mr. Wang is well-qualified to serve as a member of the board due to his entrepreneurship and his financial expertise as a Certified Tax Accountant (CTA).

 

Mr. Hai Wang, 39, has been one of our independent directors since our initial public offering. Mr. Wang founded Top (HK) Investment & Development Ltd. in September 2009. Mr. Wang has been the Company’s Executive Director and led all of its investments since its inception. The company manages a private equity fund focused on emerging market sectors involving the online business, online video and online gaming, green energy, and financial industry sectors. From April 2008 to June 2009, Mr. Wang was the Chief Operating Officer of MTV China, one of the largest subsidiaries of MTV, the world’s largest music television network and owned by Viacom. Mr. Wang was responsible for MTV China’s overall operations, as well as Viacom’s investments and M&A activities in China. From November 2006 to March 2008, Mr. Wang was the Senior Vice President of PPLIVE, one of the largest point-to-point (P2P) technology based online video companies in China with over 90 million users globally and over 700 distribution channels featuring movies, TV drama, sports, and cartoon, which founded in 2005. From September 2005 to October 2006, Mr. Wang was the Head of Strategy and Investment Development of BESTV in China. From September 2003 to March 2005, he was the Director of Digital Media Investment, Family Fund of Bertalsmann, Austria, a joint venture company of Bertalsmann and Orf in Austria specialized in investing, promoting, and operating digital media, interactive media and mobile TV. From December 1997 to September 2001, he worked as a producer for Zhejiang Television Station, Hangzhou, China. Mr. Wang graduated from the Peking (Beijing) University with an Executive Master of Business Administration degree, from the University of ART Linz, Austria with a Master degree in Business Administration and Director of Movie, and from Media College of Zhejiang in China with a Bachelor’s degree. We believe Mr. Wang is well-qualified to serve as a member of the board due to his wide range of experience in investing, managing, and assisting Chinese companies with their offshore IPOs.

 

Mr. Jason Kon Man Wong, 52, has been one of our independent directors since our initial public offering, and serves as the chairman of our audit committee. Mr. Wong has served as a member of the board of directors of Whiz Partners Asia Ltd., an investment advisory company focused on assisting Japanese companies expand their business operations in Asia, since April 2013. He has also served as a member of the board of directors of Fortune Capital Group Ltd., an investment company, since 2000. Mr. Wong has been an independent and Non-Executive Director of Group Sense International Limited (HKSE: 601), a manufacturer of electronic dictionaries and other handheld information devices, since 2004. He has been the independent and Non-Executive Director and Chairman of Audit Committee of Neo-Neon Holdings Limited (HKSE: 1868), a decorative lighting company based in Hong Kong since November 2011. From May 2010 to November 2013, Mr. Wong was the Independent and Non-Executive director and Chairman of the Audit Committee of Polyard Petroleum International Group Limited (Hong Kong Stock Exchange Listed: 8011.hk), which mainly engages in the exploration, development and production of oil and gas, provision of professional technical services, and trading of petroleum-related products. From July 2009 to December 2011, he was the Independent Director and Chairman of Audit Committee of China Shen Zhou Mining & Resources, Inc. (American Stock Exchange Listed: SHZ). Prior to that, he was a financial consultant of Transpac Capital Limited, one of the largest and oldest private equity funds and venture capital funds in Asia, from 1993 to 2000. From 1992 to 1993, Mr. Wong was an auditor for Ernst & Young CPA, Hong Kong and was an auditor for Clay & Co. in the USA from 1989 to 1992. He has been a member of AICPA and HKICPA since 1992 and 1993, respectively. Mr. Wong graduated from the University of Hawaii at Manoa with a Bachelor’s degree in Accounting. We believe Mr. Wong is well-qualified to serve as a member of the board due to his listed company experience and experience as a fund manager, investment adviser as well as a member of American Institute of CPA (AICPA).

 

 

Advisor to Board

 

Vincent Ng, Chief Executive Officer of our sponsor, has served as an advisor to the board of directors. In that capacity, and as a representative of our sponsor, he has assisted the board in identifying potential acquisition targets and participating in due diligence and negotiations with acquisition targets, including the Business Combination involving China Lending Group. Mr. Ng, age 57, has extensive experience in corporate financing, mergers, and acquisitions (“M&A”), especially with regard to enterprises in the PRC. He has served as the Chief Executive Officer of DeTiger Capital Holdings Ltd. since 2014 and the Chief Executive Officer of DeTiger Holdings Limited, the Company’s sponsor, since 2015. Prior to that, Mr. Ng founded VMG Management Ltd., a company specializing in corporate restructuring and M&A of enterprises in China and served as the Chief Executive Officer of VMG Management since 2008. Mr. Ng has also held executive positions at several companies. He served as the Chief Executive Officer of VMG International Ltd., a Hong Kong-based consulting company specializing in corporate restructuring and M&A of PRC entities. From 2001 to 2010, he was the Chief Executive Officer of Pearltek Ltd., a Hong Kong — based company specializing in direct investment and real estate development in the PRC. Prior to that, Mr. Ng founded APAC Energy Holdings Ltd. in 1995, a company that specialized in infrastructure M&A in the PRC. He served as the Chief Executive Officer of this company until 2001. In addition, Mr. Ng has been operating a consortium consisting of various interests including direct investment in a flour mill, electronics factory and a real estate company in Hong Kong and the PRC. Mr. Ng holds a Bachelor’s of Business Administration from Simon Fraser University of British Columbia, Canada. Mr. Ng is brother to Winnie Ng, sole director and shareholder of our sponsor.

 

Number and Terms of Office of Officers and Directors

 

Our board of directors is divided into three classes with only one class of directors being elected in each year and each class serving a three-year term. On March 31, 2016, we held a special meeting of shareholders in lieu of an annual meeting, at which Hai Wang was re-elected to serve in the first class of directors for a term of three years, until our 2019 annual meeting of shareholders. The term of office of the second class of directors, consisting of Jason Kon Man Wong and Haibin Wang, will expire at our 2017 annual meeting. The term of office of the third class of directors, consisting of Emily Chui-Hung Tong and Stephen N. Cannon, will expire at our 2018 annual meeting.

 

Our officers are elected by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our charter as it deems appropriate. Our charter provides that our officers may consist of a Chief Executive Officer, President, Chief Financial Officer, one or more vice-presidents, secretaries and treasurers and such other offices as may be determined by the board of directors. However, at the closing of the Business Combination our board and officers will change as described in the section entitled “Management After the Business Combination” in the Proxy Statement.

 

Board of Directors and Committees

 

Audit Committee

 

We have established an audit committee of the board of directors. Messrs. Jason Kon Man Wong, Hai Wang, and Haibin Wang currently serve as members of our audit committee. Mr. Jason Kon Man Wong serves as chairman of the audit committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have three members of the audit committee, all of whom must be independent. Messrs. Jason Kon Man Wong, Hai Wang, and Haibin Wang are independent.

 

Each member of the audit committee is financially literate and our board of directors has determined that Mr. Jason Kon Man Wong qualifies as an “audit committee financial expert” as defined in applicable SEC rules.

 

We have adopted an audit committee charter, which details the responsibilities of the audit committee, including:

 

	●	the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us;
	●	pre-approving all audit and non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;
	●	reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence;
	●	setting clear hiring policies for employees or former employees of the independent auditors;
	●	setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
	●	obtaining and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within, the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;

 

 

	●	reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and
	●	reviewing with management, the independent auditors, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.

 

Compensation Committee

 

The members of our compensation committee are Messrs. Hai Wang and Haibin Wang. Mr. Haibin Wang serves as chairman of the compensation committee. We have adopted a compensation committee charter, which details the principal functions of the compensation committee, including:

 

	●	reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer’s based on such evaluation in executive session at which the Chief Executive Officer is not present;
	●	reviewing and approving the compensation of all of our other executive officers;
	●	reviewing our executive compensation policies and plans;
	●	implementing and administering our incentive compensation equity-based remuneration plans;
	●	assisting management in complying with our proxy statement and annual report disclosure requirements;
	●	approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees;
	●	producing a report on executive compensation to be included in our annual proxy statement; and
	●	reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

 

The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.

 

Other Board Committees

 

We do not have a standing nominating committee, though we intend to form a nominating and corporate governance committee as and when required to do so by law or Nasdaq rules. In accordance with Rule 5605(e)(2) of the Nasdaq rules, a majority of the independent directors may recommend a director nominee for selection by the board of directors. The board of directors believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees without the formation of a standing nominating committee. As there is no standing nominating committee, we do not have a nominating committee charter.

 

The board of directors will also consider director candidates recommended for nomination by our shareholders during such times as they are seeking proposed nominees to stand for election at the next annual meeting of shareholders (or, if applicable, a meeting of shareholders). Our shareholders that wish to nominate a director for election to the board of directors should follow the procedures set forth in our charter.

 

We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, our board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our shareholders.

 

 

Code of Conduct and Ethics

 

We have adopted a Code of Ethics applicable to our directors, officers and employees. Copies of our Code of Ethics and our audit committee and compensation committee charters are available, without charge, upon request to us in writing at Room 703, 7/F., Beautiful Group Tower, 77 Connaught Road Central, Hong Kong, or by telephone at (852) 2110-0081.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than ten percent of any publicly traded class of our equity securities, to file reports of ownership and changes in ownership of equity securities of the Company with the SEC. Officers, directors, and greater-than-ten-percent shareholders are required by the SEC’s regulations to furnish the Company with copies of all Section 16(a) forms that they file.

 

Based solely upon a review of Forms 3 and Forms 4 furnished since the effective date of our initial public offering, we believe that all such forms required to be filed pursuant to Section 16(a) of the Exchange Act were timely filed, as necessary, by the officers, directors, and security holders required to file the same, except that our sponsor did not timely file one Form 4 relating to its acquisition of securities in the private placement that closed contemporaneously with the consummation of the initial public offering.

  

Item 11. Executive Compensation

 

Compensation Discussion and Analysis

 

None of our executive officers or directors has received any cash (or non-cash) compensation for services rendered to us. Commencing on October 1, 2014 through March 31, 2016, we agreed to pay our sponsor, a total of $10,000 per month for office space, utilities and secretarial and administrative services. Our sponsors, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsors, officers, directors or our or their affiliates.

 

After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting, management or other fees, or a salary, from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our shareholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time, because the directors of the post-combination business will be responsible for determining executive and director compensation. Any compensation to be paid to our officers will be determined by our compensation committee.

 

We do not intend to take any action to ensure that members of our management team maintain their positions with us after the consummation of our initial business combination, although it is possible that some or all of our executive officers and directors may negotiate employment or consulting arrangements to remain with us after the initial business combination. The existence or terms of any such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the consummation of our initial business combination will be a determining factor in our decision to proceed with any potential business combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment.

 

  

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

The following table sets forth information regarding the beneficial ownership of our ordinary shares as of June 20, 2016 based on information obtained from the persons named below, with respect to the beneficial ownership of shares of our ordinary shares, by:

 

	●	each person known by us to be the beneficial owner of more than 5% of our outstanding shares of ordinary shares;
	●	each of our executive officers and directors that beneficially owns shares of our ordinary shares; and
	●	all our executive officers and directors as a group.

 

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of ordinary shares beneficially owned by them.

 

		Number of Shares				%
Name and Address of Beneficial Owners(1)
DeTiger Holdings Limited (our sponsor)(2)			1,834,134	(3)			49.95
Winnie Ng(2)			1,834,134				49.95
Stephen N. Cannon			50,000				1.36
Emily Chui-Hung Tong			50,000				1.36
Jason Kon Man Wong			25,000				*
Haibin Wang			25,000				*
Hai Wang			25,000				*
All directors and officers as a group(5 persons)			175,000				4.77

 

*	Less than one percent

 

(1)	Unless otherwise indicated, the business address of each of the individuals is Room 703, 7/F., Beautiful Group Tower, 77 Connaught Road Central, Hong Kong.
(2)	The shares held by DeTiger Holdings Limited, our sponsor, are beneficially owned by Ms. Winnie Lai Ling Ng. Ms. Ng is the sole director and 100% owner of DeTiger Holdings Limited and exercises voting and dispositive power over the shares held by such entity.
(3)	In connection with a Deed of Release dated December 17, 2015 executed among the sponsor, Luck Key Limited, and Mr. Miao Yang, the sponsor undertook to transfer to Mr. Miao 380,000 of the sponsor’s ordinary shares of DT Asia at the closing of the Business Combination. Mr. Miao will be subject to the same restrictions as the other founder shares.

 

The table above does not include the ordinary shares underlying the sponsor warrants because these securities are not exercisable within 60 days of this Report.

 

Changes in Control

 

Pursuant to the Share Exchange Agreement, upon or before the closing of the Business Combination, we anticipate decreasing the size of our board of directors from six to five directors. All incumbent directors of DT Asia except Jason Kon Man Wong have informed us that they will resign from our board of directors upon closing of the Business Combination. Our board of directors intends to fill the vacancies left by these directors with five persons, two of whom will be required to be independent and will be nominated by DT Asia (and one of whom will be Mr. Jason Kon Man Wong, a current independent director of DT Asia) and three of whom will be nominated by Adrie (at least one of whom will be required to be independent). Also, in connection with the special meeting of shareholders to be held on July 5, 2016 to approve the Business Combination, our shareholders will be provided with the opportunity to redeem ordinary shares then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the consummation of the transactions contemplated by the Share Exchange Agreement) in the trust account that holds the proceeds (less taxes payable) of our initial public offering. Furthermore, in connection with the Business Combination, the Sellers will receive equity securities in the Company, as more fully described in the Proxy Statement filed on June 21, 2016 and in the Form 8-K filed on January 13, 2016. 

 

 

Item 13. Certain Relationships and Related Transactions, and Director Independence

 

Certain Relationships and Related Transactions

 

In June 2014, we issued an aggregate of 1,725,000 founder shares to our initial shareholders for an aggregate purchase price of $25,000 in cash, or approximately $0.014 per share. On or about June 9, 2014, our sponsor transferred 25,000 ordinary shares to each of our independent directors. On October 20, 2014, our sponsor forfeited 9,985 founder shares as a result of the underwriter’s partial exercise of its over-allotment option in connection with our initial public offering.

 

Our initial shareholders have agreed not to transfer, assign or sell any of the founder shares (except to certain permitted transferees as described below) until, with respect to 50% of the founder shares, the earlier of (i) one year after the date of the consummation of our initial business combination or (ii) the date on which the closing price of our ordinary shares equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination, with respect to the remaining 50% of the founder shares, upon one year after the date of the consummation of our initial business combination, or earlier, in either case, if, subsequent to our initial business combination, we consummate a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of our shareholders having the right to exchange their ordinary shares for cash, securities or other property.

 

Our sponsor purchased an aggregate of 319,199 insider units (including 290,000 insider units purchased in a private placement that occurred simultaneously with our initial public offering and 29,119 insider units purchased in connection with the underwriter’s partial exercise of its over-allotment option). In addition, our sponsor purchased from us an aggregate of 2,058,007 sponsor warrants (including 1,800,00 sponsor warrants purchased at the closing of our initial public offering and 258,007 sponsor warrants purchased in connection with the underwriter’s exercise of its over-allotment option) at a price of $0.50 per warrant ($1,029,003.50 in the aggregate). Our sponsor has agreed not to transfer, assign or sell any of the sponsor warrants and their underlying shares and the shares included in the insider units and the respective ordinary shares underlying the rights and the warrants included in the insider units until 30 days after the completion of our initial business combination.

 

Our sponsor agreed, from the date that our securities were first listed on the Nasdaq Capital Market through March 31, 2016, to make available to us office space, utilities and secretarial and administrative services, as we may require from time to time. We paid our sponsor $10,000 per month for these services. However, this arrangement is solely for our benefit and is not intended to provide our sponsor with compensation in lieu of salary. We believe, based on rents and fees for similar services in the Hong Kong metropolitan area, that the fee charged by our sponsor is at least as favorable as we could have obtained from an unaffiliated person.

 

Other than the $10,000 per-month administrative fee as described above, reimbursement of any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations, no compensation or fees of any kind, including finder’s fees, consulting fees or other similar compensation, will be paid to our sponsor, officers or directors, or to any of their respective affiliates, prior to or with respect to our initial business combination (regardless of the type of transaction that it is). Our independent directors will review on a quarterly basis all payments that were made to our sponsor, officers, directors or their affiliates and will be responsible for reviewing and approving all related party transactions as defined under Item 404 of Regulation S-K, after reviewing each such transaction for potential conflicts of interests and other improprieties.

 

Prior to our initial public offering, our sponsor advanced to us an aggregate of $175,000 to cover expenses related to the offering. This advance was repaid in the full upon the consummation of our initial public offering.

 

In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or our officers and directors may, but are not obligated to, loan us funds as may be required. If we consummate our initial business combination, we would repay such loaned amounts. In the event that the initial business combination does not close, we may use a portion of the offering proceeds held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment, other than the interest on such proceeds that may be released to us for working capital purposes. 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 units at a price of $10.00 per unit (which, for example, would result in the holders being issued 55,000 ordinary shares if $500,000 of notes were so converted since the 50,000 rights included in the private units would result in the issuance of 5,000 ordinary shares upon the closing of our business combination as well as 50,000 warrants to purchase 25,000 ordinary shares).

 

 

On September 13, 2015, we issued a non-interest bearing convertible promissory note in the amount of up to $500,000 to our sponsor. On September 14, 2015, an initial drawdown of $300,000 was funded to the Company and subsequently the remaining $200,000 was drawn down. On December 1, 2015, the Note was amended to allow for an additional $400,000 to be drawn down. On February 5, 2016, the Note was further amended to allow for an additional $500,000 to be drawn down. Payment on all of the Note is due on the earlier of: (i) July 6, 2016 and (ii) the date on which the Company consummates its Business Combination (as defined in the Company’s amended and restated articles and memorandum of association). On June 14, 2016, the Note was amended to allow for an additional $200,000 to be drawn down. As amended, until the maturity date, an aggregate of up to $1,600,000 can be drawn down on the Note in one or more installments of at least $1,000 each. The Company had drawn down a total amount of $1,600,000 as of June 15, 2016. We issued the Note in consideration for loans from the payee to fund the Company’s working capital requirements. Funds in the trust account will not be used to repay any of the Note. The Note includes an option for up to $500,000 of the principal outstanding under the Note to be convertible, in whole or in part, at the payee’s election, upon the consummation of the Business Combination. Upon such election, up to $500,000 of the principal outstanding under the Note will convert into units, at a price of $10.00 per unit. These units will be identical to the private units issued in a private placement in connection with our initial public offering. As such, each unit will be comprised of one ordinary share, one right to receive one-tenth of one ordinary share upon consummation of a Business Combination, and one warrant to purchase one-half of an ordinary share at an exercise price of $12.00 per full share.

 

In connection with a Deed of Release dated December 17, 2015 executed among our sponsor, Luck Key and Mr. Miao Yang, our sponsor undertook to transfer to Mr. Miao 380,000 of the sponsor’s ordinary shares of DT Asia at the closing of the Business Combination. As a permitted transferee, Mr. Miao will be subject to the same restrictions as the other founder shares, as described above.

 

On April 1, 2016, our sponsor deposited into the trust account approximately $96,000 (the “Contribution”), which amount was equal to $0.06 for each of the 1,604,406 public shares of the Company that were not redeemed in connection with the Extension Meeting. As a result of the Contribution and following redemption of the public shares in connection with the Extension Meeting, the pro rata portion of the funds available in the trust account for the public shares that were not redeemed increased from approximately $10.20 per share to approximately $10.26 per share.

 

After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our shareholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our shareholders. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a shareholder meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director compensation.

 

All ongoing and future transactions between us and any member of our management team or his or her respective affiliates will be on terms believed by us at that time, based upon other similar arrangements known to us, to be no less favorable to us than are available from unaffiliated third parties. It is our intention to obtain estimates from unaffiliated third parties for similar goods or services to ascertain whether such transactions with affiliates are on terms that are no less favorable to us than are otherwise available from such unaffiliated third parties. If a transaction with an affiliated third party were found to be on terms less favorable to us than with an unaffiliated third party, we would not engage in such transaction.

 

We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm that our initial business combination is fair to our shareholders from a financial point of view.

 

We have entered into a registration rights agreement with respect to the founder shares and insider units. Pursuant to the registration rights agreement, the initial shareholders will be entitled to registration rights with respect to their initial shares and the purchasers of the Private Units and sponsor warrants will be entitled to registration rights with respect to the private units and sponsor warrants (and underlying securities). The holders of the majority of the initial shares are entitled to demand that the Company register these shares at any time commencing three months prior to the first anniversary of the consummation of a Business Combination. The holders of the private units and sponsor warrants (or underlying securities) are entitled to demand that the Company register these securities at any time after the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights on registration statements filed after the Company’s consummation of a Business Combination.

 

 

Director Independence

 

The Nasdaq Capital Market requires that a majority of our board must be composed of “independent directors,” which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director.

 

Messrs. Jason Kon Man Wong, Haibin Wang and Hai Wang are our independent directors. Our independent directors will have regularly scheduled meetings at which only independent directors are present.

 

Any affiliated transactions will be on terms no less favorable to us than could be obtained from independent parties. Any affiliated transactions must be approved by a majority of our independent and disinterested directors.

 

Item 14. Principal Accountant Fees and Services

 

The following is a summary of fees paid to our independent registered public accounting firm for services rendered during the period from April 8, 2014 (inception) through March 31, 2016:

 

Audit Fees

 

Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by UHY LLP in connection with regulatory filings. The aggregate fees billed by UHY LLP for professional services rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective periods, the registration statement, the closing 8-K and other required filings with the SEC for the period from April 8, 2014 (inception) through March 31, 2015 totaled $45,000 and for year ended March 31, 2016 totaled $131,399. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.

 

Audit-Related Fees

 

Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attestation services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. We did not pay UHY LLP for consultations concerning financial accounting and reporting standards during the period from April 8, 2014 (inception) through March 31, 2016.

  

Tax Fees

 

We did not pay UHY LLP for tax planning and tax advice for the period from April 8, 2014 (inception) through March 31, 2016.

 

All Other Fees

 

We did not pay UHY LLP for other services for the period from April 8, 2014 (inception) through March 31, 2016.

 

Pre-Approval Policy

 

Our audit committee was formed upon the consummation of our initial public offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has approved and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).

 

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules

 

(a)	The following documents are filed as part of this Report:

 

(1)	Financial Statements

 

(2)	Financial Statements Schedule

 

All financial statement schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the required information is presented in the financial statements and notes thereto in is Item 15 of Part IV below.

 

(3)

Exhibits

 

We hereby file as part of this Report the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates or on the SEC website at www.sec.gov .

 

Exhibit No.		Description
1.1		Underwriting Agreement, dated September 30, 2014, between the Company and EarlyBirdCapital, Inc. as representative for the underwriters. (1)
1.2		Business Combination Marketing Agreement, dated September 30, 2014, between the Company and EarlyBirdCapital, Inc. (1)
3.1		Memorandum and Articles of Association (2)
3.2		Amended and Restated Memorandum of Association (1)
3.3		Amended and Restated Memorandum of Association (7)
4.1		Specimen Unit Certificate (3)
4.2		Specimen Ordinary Shares Certificate (3)
4.3		Specimen Right Certificate (3)
4.4		Specimen Warrant Certificate (3)
4.5		Warrant Agreement, dated September 30, 2014, between the Company and Continental Stock Transfer & Trust Company (1)
4.6		Rights Agreement, dated September 30, 2014, between the Company and Continental Stock Transfer & Trust Company (1)
4.7		Form of Unit Purchase Option between the Registrant and EarlyBirdCapital, Inc. (3)
10.1		Letter Agreement, dated September 30, 2014, among the Company, EarlyBirdCapital, Inc. and each shareholder, director and officer of the Company (1)
10.2		Amended and Restated Investment Management Trust Agreement, dated April 1, 2016, between the Company and Continental Stock Transfer & Trust Company (7)
10.3		Administrative Services Agreement, dated September 30, 2014, between the Company and DeTiger Holdings Limited (1)
10.4		Escrow Agreement, dated September 30, 2014, among the Company, initial shareholders and Continental Stock Transfer & Trust Company (1)
10.5		Securities Purchase Agreement, dated June 5, 2014, between the Company and Emily Chui-Hung Tong (3)
10.6		Securities Purchase Agreement, dated June 5, 2014, between the Company and Stephen N. Cannon (3)

 

 

Exhibit No.		Description
10.7		Securities Purchase Agreement, dated June 8, 2014, between the Company and DeTiger Holdings Limited (3)
10.8		Unit Purchase Agreement, dated August 26, 2014, between the Registrant and DeTiger Holdings Limited (3)
10.9		Unit Purchase Agreement, dated August 26, 2014, between the Registrant and EarlyBirdCapital, Inc. (3)
10.10		Registration Rights Agreement, dated September 30, 2014, between the Company and securityholders (1)
10.11		Form of Indemnity Agreement (4)
10.12		Sponsor Warrants Purchase Agreement, dated September 22, 2014, between the Registrant and sponsor (5)
10.13		Share Exchange Agreement, dated as of January 11, 2016, by and among DT Asia Investments Limited, DeTiger Holdings Limited, in the capacity as the DT Representative thereunder, Adrie Global Holdings Limited, the shareholders of Adrie Global Holdings Limited, and Li Jingping, in the capacity as the Seller Representative thereunder (6)
10.14		Form of Registration Rights Agreement, by and among DT Asia Investments Limited, DeTiger Holdings Limited, in the capacity as the DT Representative and shareholders of Adrie Global Holdings Limited named as Investors therein (6)
10.15		Form of Lock-Up Agreement, by and among DT Asia Investments Limited, DeTiger Holdings Limited, in the capacity as the DT Representative, and shareholders of Adrie Global Holdings Limited (6)
10.16		Form of Non-Competition and Non-Solicitation Agreement, by and among certain shareholders of Adrie Global Holdings Limited and certain other associated persons and entities for the benefit of DT Asia Investments Limited, DeTiger Holdings Limited, in the capacity as the DT Representative, and Adrie Global Holdings Limited (6)
10.17		Form of Escrow Agreement, by and among DT Asia Investment Limited, Li Jingping, in the capacity as the Seller Representative, and Continental Stock Transfer & Trust Company as escrow agent (6)
10.18		Amended and Restated Convertible Promissory Note, dated June 14, 2016 (8)
14		Code of Ethics (4)
31.1*		Certification of the Chief Executive Officer and Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1**		Certification of the Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Calculation Linkbase
101.LAB*		XBRL Taxonomy Label Linkbase
101.PRE*		XBRL Definition Linkbase Document
101.DEF*		XBRL Definition Linkbase Document

 

*	Filed herewith
**	Furnished herewith

 

(1)	Incorporated by reference to the Company’s Form 8-K, filed with the Commission on October 6, 2014.
(2)	Incorporated by reference to the Company’s Form S-1, filed with the Commission on July 1, 2014.
(3)	Incorporated by reference to the Company’s Form S-1/A, filed with the Commission on August 27, 2014.
(4)	Incorporated by reference to the Company’s Form S-1/A, filed with the Commission on September 11, 2014.
(5)	Incorporated by reference to the Company’s Form S-1/A, filed with the Commission on September 23, 2014.
(6)	Incorporated by reference to the Company’s Form 8-K, filed with the Commission on January 13, 2016.
(7)	Incorporated by reference to the Company’s Form 8-K, filed with the Commission on April 5, 2016.
(8)	Incorporated by reference to the Company’s Form 8-K, filed with the Commission on June 14, 2016.

 

 

DT Asia Investments Limited

 

INDEX TO FINANCIAL STATEMENTS

 

		Page
DT ASIA INVESTMENTS LIMITED
Report of Independent Registered Public Accounting Firm		F-2
Financial Statements:
Balance Sheets as of March 31, 2016 and 2015		F-3
Statements of Operations		F-4
Statements of Changes in Stockholders’ Equity		F-5
Statements of Cash Flows		F-6
Notes to Financial Statements		F-7 – F-22

  

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders
DT Asia Investments Limited

 

We have audited the accompanying balance sheets of DT Asia Investments Limited (the “Company”) as of March 31, 2016 and 2015, and the related statements of operations, changes in stockholders’ equity, and cash flows for the year ended March 31, 2016 and the period from April 8, 2014 to March 31, 2015. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of DT Asia Investments Limited as of March 31, 2016 and March 31, 2015, and the results of its operations and its cash flows for the year ended March 31, 2016 and the period from April 8, 2014 to March 31, 2015 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has no present revenue, its business plan is dependent on the completion of a financing transaction and the Company’s cash and working capital as of March 31, 2016 are not sufficient to complete its planned activities for the upcoming year. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also described in Notes 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ UHY LLP

 

June 7, 2016, except for Note 8 which is as of June 29, 2016
New York, New York

 

 

DT ASIA INVESTMENTS LIMITED

 

BALANCE SHEETS

 

		March 31, 2016				March 31, 2015
ASSETS
Current Assets:
Cash and cash equivalents		$	53,115			$	224,629
Cash and cash equivalents held in trust account			70,091,214				—
Other current assets			73,233				70,366
Total Current Assets			70,217,562				294,995
Non-current Assets
Cash and investments held in trust account			—				69,984,444
Total Assets		$	70,217,562			$	70,279,439
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accrued expenses		$	96,671			$	20,769
Amounts due to related parties			17,482				—
Redeemed Ordinary shares payable			53,607,701				—
Convertible promissory note – related party			500,000				—
Promissory note – related party			687,989				—
Deferred legal fees			100,000				100,000
Total Current Liabilities			55,009,843				120,769
Total Liabilities			55,009,843				120,769
Commitments and Contingencies
Ordinary Shares, no par value; subject to possible redemption; 1,000,756 and 6,388,104 shares (at redemption value of $10.20 per share) at March 31, 2016 and 2015 respectively			10,207,711				65,158,661
Stockholders’ Equity:
Preferred Shares, no par value, unlimited shares authorized, no shares issued and outstanding			—				—
Ordinary Shares, no par value; unlimited shares authorized; 2,670,918 and 2,539,227 shares issued and outstanding (excluding 1,000,756 and 6,388,104 shares at March 31, 2016 and 2015 respectively subject to possible redemption) at March 31, 2016 and 2015 respectively			—				—
Additional paid-in capital			6,590,114				5,246,866
Accumulated deficit			(1,590,106	)			(246,857	)
Total Stockholders’ Equity			5,000,008				5,000,009
Total Liabilities and Stockholders’ Equity		$	70,217,562			$	70,279,439

 

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

 

 

DT ASIA INVESTMENTS LIMITED

 

STATEMENTS OF OPERATIONS

 

		For the year ended March 31, 2016				For the period from April 8, 2014 to March 31, 2015
Formation costs		$	—			$	(2,128	)
General and administrative expenses			(1,450,019	)			(256,531	)
Total operating expenses			(1,450,019	)			(258,659	)
Other income
Interest income			106,770				11,802
Total other income			106,770				11,802
Net loss		$	(1,343,249	)		$	(246,857	)
Comprehensive loss		$	(1,343,249	)		$	(246,857	)
Basic and diluted weighted average shares outstanding			8,927,331				4,881,097
Basic and diluted net loss per share		$	(0.15	)		$	(0.05	)

 

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

 

 

DT ASIA INVESTMENTS LIMITED

 

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
From April 8, 2014 (inception) to March 31, 2016

 

		Ordinary shares								Additional paid-in				Accumulated				Stockholders’
		Shares				Amount				capital				deficit				equity
Sale of ordinary shares to the Founders on June 6, 2014 at approximately $0.0145 per share			1,725,000			$	—			$	25,000			$	—			$	25,000
Sale of 6,000,000 Units on October 6, 2014 through public offering net of underwriter’s discount and offering expenses (including 5,555,102 shares subject to possible redemption)			6,000,000				—				57,228,262				—				57,228,262
Reclassification of shares subject to possible redemption at redemption value on October 6, 2014			(5,555,102	)			—				(56,662,040	)			—				(56,662,040	)
Sale of Private Placement Units on October 6, 2014			320,000				—				3,200,000				—				3,200,000
Sale of Sponsor warrants on October 6, 2014			—				—				900,000				—				900,000
Sale of Over-Allotment units to underwriter on October 14, 2014			860,063				—				8,600,630				—				8,600,630
Sale of Private Placement Units on October 14, 2014			32,253				—				322,530				—				322,530
Sale of Sponsor warrants on October 14, 2014			—				—				129,004				—				129,004
Proceed from sale of underwriter’s unit purchase option			—				—				100				—				100
Forfeiture of Founder shares in connection with the underwriter’s election to not exercise their over-allotment option			(9,985	)			—				—				—				—
Change in shares subject to possible redemption to 6,388,104 shares on March 31, 2015			(833,002	)			—				(8,496,620	)			—				(8,496,620	)
Net loss			—				—				—				(246,857	)			(246,857	)
Balance as of March 31, 2015			2,539,227			$	—			$	5,246,866			$	(246,857	)		$	5,000,009
Change in shares subject to possible redemption to 1,000,756 shares on March 31, 2016 (5,255,657 shares were redeemed on March 31, 2016)			131,691				—				1,343,248				—				1,343,248
Net loss			—				—				—				(1,343,249	)			(1,343,249	)
Balance as of March 31, 2016			2,670,918			$	—			$	6,590,114			$	(1,590,106	)		$	5,000,008

 

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

 

 

DT ASIA INVESTMENTS LIMITED

 

STATEMENTS OF CASH FLOWS

 

		For the year ended March 31, 2016				For the period from April 8, 2014 to March 31, 2015
Operating Activities
Net loss		$	(1,343,249	)		$	(246,857	)
Adjustments to reconcile net loss to net cash used in operating activities
Interest income earned in cash and investments held in Trust Account			(106,770	)			(11,802	)
Changes in current assets and current liabilities:
Changes in other current assets			(2,867	)			(70,366	)
Changes in accrued expense & accounts payable			75,901				20,769
Changes in amount due to related parties			17,482				—
Net cash used in operating activities			(1,359,503	)			(308,256	)
Investing Activities
Restricted cash			—				—
Proceeds deposited in Trust Account			—				(69,972,643	)
Purchases of investments held in Trust Account			(210,065,894	)			—
Proceeds from maturity of investments held in Trust Account			210,065,894				—
Net cash used in investing activities			—				(69,972,643	)
Financing Activities
Proceeds from sale of ordinary shares to initial shareholders			—				1,450
Proceeds from sale of ordinary shares to Sponsor			—				23,550
Proceeds from initial public offering, net of $2,229,250 commissions			—				66,371,110
Proceeds from purchase of underwriters’ purchase option			—				100
Proceeds from convertible promissory note – related party			500,000				—
Proceeds from promissory note – related party			687,989				—
Proceeds from advance payable to Sponsor			—				175,000
Repayment of advance payable to Sponsor			—				(175,000	)
Proceeds from private placements to Sponsor			—				4,220,196
Proceeds from private placements to EBC			—				331,340
Payment of offering costs							(442,218	)
Net cash provided by financing activities			1,187,989				70,505,528
Net (decrease) increase in cash and cash equivalents			(171,514	)			224,629
Cash and cash equivalents, beginning			224,629				—
Cash and cash equivalents, ending		$	53,115			$	224,629
Supplemental schedule of non-cash financing activities
Increase in deferred legal fees		$	—			$	100,000
Redeemed Ordinary shares payable		$	53,607,701				—

 

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

 

  

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 1 — Organization and Business Operations

 

Organization and General

 

DT Asia Investments Limited (the “Company”, “we”, “us” and “our”) is a newly organized blank check company incorporated on April 8, 2014, under the laws of the British Virgin Islands for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, purchasing all or substantially all of the assets of, entering into contractual arrangements, or engaging in any other similar business combination with one or more businesses or entities (an “Initial Business Combination”). The Company has selected March 31 as its fiscal year end and tax year end. On January 11, 2016, the Company entered into the merger agreement with the shareholders of Adrie Global Holdings Limited (“Adrie”), a British Virgin Islands company, was previously disclosed in a Current Report on Form 8-K filed on January 13, 2016. Pursuant to the Share Exchange Agreement, the Company will effect an acquisition of Adrie and its subsidiaries and variable interest entity by acquiring from the shareholders of Adrie, all outstanding interests of Adrie for a purchase price of $200 million. In exchange for all of the shares of Adrie, the Company will issue 20 million ordinary shares, with 8 million of such shares (the “Escrow Shares”) being held in escrow and subject to forfeiture (1) should the post-combination company fail after the closing to meet certain minimum financial performance targets or (2) as a result of indemnification claims by DT Asia Investments Limited. One-third of the Escrow Shares shall be released upon the post-combination company obtaining certain specified adjusted consolidated net income targets in each of the calendar years 2016, 2017 and 2018.

 

The transaction will be accounted for as a “reverse acquisition” since, immediately following completion of the transaction, the shareholders of Adrie will have effective control of the post-combination company.

 

The obligation of the parties to complete the transaction is subject to the fulfillment of certain, customary closing conditions, including the approval of the Share Exchange Agreement by a majority of the shareholders of the Company; the receipt of required regulatory approval and consents; upon the closing, the Company has at least $5,000,001 in net tangible assets; the execution of a registration rights agreement and lock-up, non-competition, non-solicitation agreements; The fonder shareholder are agreed that they will not redeem their shares and keep the net tangible assets at least $5,000,001. All public shareholders (currently 1,604,406 shares) have the option to redeem their shares at $10.20 per share as of March 31, 2016, at closing of the business combination and if there is no additional funding raised at business combination, such as Private Investment in Public Equity, “PIPE”. However, the Company would need 603,650 shares held by public shareholders not to be redeemed in order to pay off the professional fees, sponsor loan and underwriter advisor fee and to meet the SEC requirement for SPAC business combination which requires the net tangible assets with not less than $5,000,001 as of March 31, 2016.

 

Financings

 

The registration statement for the Company’s initial public offering (the “Public Offering” as described in Note 3) was declared effective by the United States Securities and Exchange Commission (“SEC”) on September 30, 2014. The Company consummated the Public Offering on October 6, 2014 with the sale of 6,000,000 units at $10.00 per unit (the “Units”) and received net proceeds of approximately $62,150,000 which includes $4,100,000 received from the private placements of (i) an aggregate 320,000 Units to DeTiger Holdings Limited (the “Sponsor”) and EarlyBirdCapital, Inc. (“EBC”) (the “Private Units”) at $10.00 per unit ($3,200,000 in the aggregate) and (ii) an aggregate of 1,800,000 warrants to the Sponsor (the “Sponsor Warrants”) at a price of $0.50 per warrant ($900,000 in the aggregate), less underwriter fees of approximately $1,950,000.

 

Contained in the underwriting agreement for the Public Offering was an overallotment option allowing the underwriters to purchase from the Company up to an additional 900,000 Units (the “Over-Allotment Units”) (as described in Note 3 — Public Offering), and in addition, the Company received a commitment from the Sponsor and EBC to purchase additional Private Units and Sponsor Warrants in order to maintain the amount of cash in the Trust Account equal to $10.20 per Public Share. The underwriters exercised the option in part, on October 14, 2014, and purchased 860,063 Over-Allotment Units, which were sold at an offering price of $10.00 per Unit, generating gross proceeds of $8,600,630 before deduction of underwriter fees of $279,520.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 1 — Organization and Business Operations (cont.)

 

On October 14, 2014, simultaneously with the sale of the Over-Allotment Units, the Company consummated the private placement of an additional 32,253 Private Units at a price of $10.00 per unit, for an aggregate purchase price of $322,530, and an additional 258,007 Sponsor Warrants at a price of $0.50 per warrant, for an aggregate purchase price of $129,004. The private placements on October 14, 2014 generated total additional proceeds of $451,534.

 

Trust Account

 

The Company received total gross proceeds of $73,152,164 from the sale of Units in the Public Offering (including Over-Allotment Units) and all related private placements closed on October 6, 2014 and October 14, 2014. Management deposited $10.20 per Unit acquired by shareholders in the Public Offering (“Public Shareholders”), or $69,972,643 in the aggregate in a trust account in the United States with Continental Stock Transfer & Trust Company acting as trustee (the “Trust Account”).

 

The Company incurred offering costs totaling approximately $4,440,838, consisting of $2,229,520 in underwriters’ fees, plus $442,218 of other cash expenses, $100,000 in deferred legal fees and a non-cash charge of $1,669,100 representing the fair value of unit purchase option sold to EBC (see Note 3, accounting for UPO).

 

The funds in the Trust Account can be invested only in U.S. government treasury bills, notes and bonds with a maturity of 180 days or less or in Money Market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 and which will invest solely in U.S. Treasuries. Except for all interest income that may be released to the Company (net of taxes payable) to fund its working capital requirements and pay its tax obligations, none of the funds held in the Trust Account will be released from the Trust Account, until the earlier of: (1) the completion of an Initial Business Combination within the required time period and (2) the redemption of 100% of the outstanding public shares if the Company has not completed an Initial Business Combination in the required time period. Therefore, unless and until an Initial Business Combination is consummated, the proceeds held in the Trust Account will not be available for the Company’s use for any expenses related to the Public Offering or expenses which the Company may incur related to the investigation and selection of a target business and the negotiation of an agreement to acquire a target business.

 

The placing of the funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, prospective target businesses or other entities it engages, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account, there is no guarantee that they will execute such agreements. Ms. Winnie Lai Ling Ng, the 100% shareholder of the Sponsor, agreed that she 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. However, there can be no assurance that she will be able to satisfy those obligations should they arise.

 

The remaining proceeds in the amount of approximately $493,000 (not held in the Trust Account) were available to be used for paying business, legal and accounting, due diligence on prospective acquisitions and continuing general and administrative expenses (as of March 31, 2016 the amount not held in the Trust Account was $53,115, which was the remaining proceeds of the loan from our Sponsor). In addition, interest earned on the funds held in the Trust Account (after payment of taxes owed on such interest income) may be released to the Company to fund its working capital requirements in searching for an Initial Business Combination and to pay its tax obligations. On March 2, 2016, the cash held in HSBC bank account in the amount of $53,115 was temporarily suspended due to a periodic compliance review by the bank. As of March 31, 2016, the bank account was temporarily suspended. On May 18, 2016, after the Company provided required documentations to the bank to conclude the review, the bank account was unfrozen.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 1 — Organization and Business Operations (cont.)

 

Initial Business Combination

 

On January 11, 2016, the Company entered into the merger agreement with the shareholders of Adrie Global Holdings Limited (“Adrie”), a British Virgin Islands company, was previously disclosed in a Current Report on Form 8-K filed on January 13, 2016. Pursuant to the Share Exchange Agreement, the Company will effect an acquisition of Adrie and its subsidiaries and variable interest entity by acquiring from the shareholders of Adrie, all outstanding interests of Adrie for a purchase price of $200 million. In exchange for all of the shares of Adrie, the Company will issue 20 million ordinary shares, with 8 million of such shares (the “Escrow Shares”) being held in escrow and subject to forfeiture (1) should the post-combination company fail after the closing to meet certain minimum financial performance targets or (2) as a result of indemnification claims by DT Asia Investments Limited. One-third of the Escrow Shares shall be released upon the post-combination company obtaining certain specified adjusted consolidated net income targets in each of the calendar years 2016, 2017 and 2018.

 

The transaction will be accounted for as a “reverse acquisition” since, immediately following completion of the transaction, the shareholders of Adrie will have effective control of the post-combination company.

 

The obligation of the parties to complete the transaction is subject to the fulfillment of certain, customary closing conditions, including the approval of the Share Exchange Agreement by a majority of the shareholders of the Company; the receipt of required regulatory approval and consents; upon the closing, the Company has at least $5,000,001 in net tangible assets; the execution of a registration rights agreement and lock-up, non-competition, non-solicitation agreements; and the sale of at least 12 million of the Company’s Series A preferred stock in a private placement to certain investors. However, this private placement may be waived by mutual agreement of the parties. As of June 7, 2016, we have received signed subscription agreements for an aggregate subscription amount of $11,520,000 for the Series A preferred stock. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, the Private Units and the Sponsor Warrants, although substantially all of the net proceeds are intended to be generally applied toward consummating an Initial Business Combination. Although the Company is not limited to a particular geographic region, the Company intends to focus on operating businesses with primary operations in Asia (with an emphasis in China). The Company’s efforts to identify a prospective target business will not be limited to a particular industry or geographic location. Furthermore, there is no assurance that the Company will be able to successfully effect an Initial Business Combination.

 

The Company, after signing a definitive agreement for the acquisition of a target business, is required to provide Public Shareholders with the opportunity to redeem their Units for a pro rata share of the Trust Account. On March 31, 2016, 5,255,657 shares were redeemed by the discretion of the Public Shareholders.

 

In connection with any proposed Initial Business Combination, the Company intends to seek shareholder approval of such Initial Business Combination at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination. In such case, the Company will consummate an Initial Business Combination only if it has net tangible assets of at least $5,000,001 upon such consummation and a majority of the outstanding ordinary shares voted are voted in favor of the Business Combination. The Company’s Sponsor, officers and directors that hold Founder Shares (“Initial Shareholders”) have waived any redemption rights they may have in connection with the Initial Business Combination.

 

With respect to an Initial Business Combination which is consummated, any Public Shareholder can demand that the Company redeem his or her Units.

 

	●	If the Company holds a shareholder vote to approve an Initial Business Combination, any Public Shareholder seeking redemption will have his or her Unit redeemed for a full pro rata portion of the Trust Account (initially expected to be $10.20 per share net of (i) taxes payable and (ii) interest income earned on the Trust Account previously released to the Company for working capital requirements.
	●	If the Company commences a tender offer in connection with an Initial Business Combination, Public Shareholders seeking redemption will have his or her Units redeemed for a pro rata portion of the Trust Account (initially expected to be $10.20 per share) net of (i) taxes payable and (ii) interest income earned on the Trust Account previously released to the Company for working capital requirements.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 1 — Organization and Business Operations (cont.)

 

The Company’s Memorandum and Articles of Association were amended prior to the consummation of the Public Offering to provide that if the Company is unable to complete an Initial Business Combination within 21 months from the closing of the Public Offering July 6, 2016, it will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than five business days thereafter, redeem 100% of the outstanding public shares which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining holders of ordinary shares and its board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject (in the case of (ii) and (iii) above) to our obligations to provide for claims of creditors and the requirements of applicable law. As of March 31, 2016, 5,255,657 shares have been redeemed but liability has not yet been paid as of March 31, 2016. The redeemed Ordinary shares payable as of March 31, 2016 is $53,607,701.

 

In connection with the redemption of 100% of the Company’s outstanding public shares for a portion of the funds held in the Trust Account, each shareholder will receive a full pro rata portion of the amount then in the Trust Account, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company for its working capital requirements or necessary to pay its taxes payable on such funds. Holders of rights will receive no proceeds in connection with the liquidation with respect to such rights, which will expire worthless.

 

The holders of the Founder Shares and Private Units will not participate in any redemption distribution with respect to their securities.

 

Liquidation

 

If the Company is unable to conclude an Initial Business Combination and it expends all of the net proceeds of the Public Offering not deposited in the Trust Account, without taking into account any interest earned on the funds held in the Trust Account, the initial per-share redemption price is expected to be $10.20. The proceeds deposited in the Trust Account could, however, become subject to claims of creditors that are in preference to the claims of shareholders. In addition, if the Company is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against the Company that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in the Company’s bankruptcy estate and subject to the claims of third parties with priority over the claims of shareholders. Therefore, the actual per-share redemption price may be less than $10.20.

 

The Company will pay the costs of any subsequent liquidation from the remaining assets outside of the Trust Account together with up to $20,000 of interest earned on the funds held in the Trust Account and available for such use. If such funds are insufficient, Ms. Lai Ling Winnie Ng has agreed to pay the funds necessary to complete such liquidation and has agreed not to seek repayment for such expenses.

 

Liquidity and Going Concern

 

As of March 31, 2016, the Company had $53,115 in cash and a working capital of approximately $15.2 million which included in this calculation is approximately $70.1 million held in the Trust Account restricted for an Initial Business Combination or to convert its ordinary shares. As of March 31, 2016, none of the amount on deposit in the Trust Account was available to be withdrawn as described above. On March 2, 2016, the cash held in the HSBC bank account was temporarily suspended due to a periodic compliance review from the bank. The Company is providing required documentations to the bank to conclude the review. As of March 31, 2016, the bank account was temporarily suspended. The sponsor is responsible to provide the working capital to the Company during the period when the bank account was temporarily suspended. On May 18, 2016, after the Company provided required documentations to the bank to conclude the review, the bank account was unfrozen.

  

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 1 — Organization and Business Operations (cont.)

 

Until consummation of its initial Business Combination, the Company will be using the funds not held in the Trust Account, plus the interest earned on the Trust Account balance (net of income, and other tax obligations) that may be released to the Company to fund its working capital requirements, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.

 

The Company will need to raise additional capital through loans from its Sponsor, officers, directors, or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

On March 31, 2016, the Company held a special meeting in lieu of an annual meeting of shareholders (the “Meeting”) to approve the following items related to the business combination and the fund in trust management: (i) an amendment to the Company’s memorandum and articles of association extending the date by which the Company must consummate its initial business combination and the date for cessation of operations of the Company if the Company has not completed an initial business combination from April 6, 2016 to July 6, 2016 (the “Extension Amendment”), (ii) an amendment to the Investment Management Trust Agreement (as amended, the “Amended and Restated Trust Agreement”) between the Company and Continental extending the date on which to commence liquidation of the trust account (the “Trust Account”) established in connection with the Company’s initial public offering in accordance with the Amended and Restated Trust Agreement to July 6, 2016 (the “Trust Amendment”).

 

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 Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. 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.

 

Note 2 — Significant Accounting Policies

 

Basis of Presentation

 

The accompanying audited financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made that are necessary to present fairly the financial position, and the results of its operations and its cash flows. Operating results as presented are not necessarily indicative of the results to be expected for a full year.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 2 — Significant Accounting Policies (cont.)

 

Foreign Currency Translation

 

The Company’s reporting currency is the United States (“U.S.”) dollar. Although the Company maintains a cash account with a bank in Hong Kong, denominated in U.S. dollars, its expenditures to date have been primarily, and are expected to continue to be, denominated in U.S. dollars. Accordingly, the Company has designated its functional currency as the U.S. dollar.

 

In accordance with ASC 830, “Foreign Currency Translation”, foreign currency balance sheets, if any, will be translated using the exchange rates as of the balance sheet date, and revenue and expense amounts in the statements of operations are translated at the transaction date or the average exchange rate for each period. The resulting foreign currency translation adjustments are recognized into the balance sheet as accumulated other comprehensive income/(loss) within shareholders’ equity.

 

Foreign currency transaction gains and losses will be included in the statement of operations as they occur. For the periods presented, there were no local currency financial statements and, therefore, no such gains or losses and translation adjustments.

 

Development Stage Company

 

The Company complies with the reporting requirements of the FASB ASC 915, “Development Stage Entities” and early adopted Accounting Standards Update 2014-10 (“ASU 2014-10”). On March 31, 2016, the Company has not commenced any operations nor generated revenue to date. All activity from the inception through March 31, 2016 relates to the Company formation, the Public Offering and pursuit of an acquisition target for its Initial Business Combination. The Company will not generate any operating revenues until after the completion of the Initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on the Trust Account after the Public Offering.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts and money market fund in a financial institution, which at times, may exceed the U.S. Federal depository insurance coverage of $250,000, or other limits of protection if held in financial institutions outside of the U.S., such as Government securities coverage of HK$500,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

 

Cash and Cash Equivalents Held in Trust Account

 

Investment securities consist of United States Treasury securities. The Company classifies its securities as held-to-maturity in accordance with FASB ASC Topic 320 “Investments — Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts.

 

A decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment that reduces the carrying costs to such securities’ fair value. The impairment is charged to earnings and a new cost basis for the security is established. To determine whether an impairment is other than temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in.

 

  

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 2 — Significant Accounting Policies (cont.)

 

Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective-interest method. Such amortization and accretion is included in the “interest income” line item in the statements of operations. Interest income is recognized when earned. As of March 31 2016, the Company has sold its investment in held-to-maturity securities and invested in money market fund.

 

As of March 31, 2015, cash held in trust account consists of investment in Treasury bill and interests generated from it with restriction less than one year. As of March 31, 2015, the cash held in trust account is $69,984,444, which is held for public shareholders who have the rights to redeem ordinary shares upon business combination. The Company considers all investments with original maturities of more than three months but less than one year to be short-term investments. The carrying value approximates the fair value due to the short term maturity.

 

As of March 31 2016, cash held in trust account consists of investment in money markets and interests from Treasury bill with restriction less than one year. As of March 31, 2016, the cash held in trust account is $70,091,214, which is held for public shareholders who have the rights to redeem ordinary shares upon business combination. The Company considers all investments with original maturities of more than three months but less than one year to be short-term investments. The carrying value approximates the fair value due to the short term maturity.

 

Fair Value Measurements

 

FASB ASC Topic 820 “Fair Value Measurements and Disclosures” defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. FASB ASC Topic 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.

 

The fair value hierarchy is categorized into three levels based on the inputs as follows:

 

Level 1 —	Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.
Level 2 —	Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means.
Level 3 —	Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

 

The fair value of the Company’s cash and cash equivalents held in trust account regarding the ordinary shares subject to possible redemption which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet. The fair values of cash and cash equivalents, and other current assets, accrued expenses, redeemed Ordinary shares payable and commitment and contingencies, due to sponsor and directors, deferred legal fee, convertible note, promissory note and cash held in trust are estimated to approximate the carrying values as of March 31, 2016 due to the short term maturities of such instruments.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 2 — Significant Accounting Policies (cont.)

 

The following table presents information about the Company’s assets and liabilities that were measured at fair value on a recurring basis as of March 31 2016 and 2015 respectively, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

 

Description		March 31, 2016				Quoted Prices In Active Markets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Other Unobservable Inputs (Level 3)
Assets:
U.S. Money Market held in Trust Account*		$	70,091,214			$	70,091,214			$	—			$	—

 

Description		March 31, 2015				Quoted Prices In Active Markets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Other Unobservable Inputs (Level 3)
Assets:
U.S. Treasury Securities held in Trust Account*		$	69,983,829			$	69,983,829			$	—			$	—

 ____________

*         included in cash and investments held in trust account on the Company’s balance sheet.

 

At business combination, DT Asia ordinary share public shareholders have the right to redeem their ordinary shares at $10.20 per share. To Comply with the shareholders’ request upon future redemption, the Company selected to invest in US Money market fund with no maturity date, which the Company could liquidate the fund at the Company’s discretion at any time.

 

Offering Costs

 

The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public Offering and that were charged to stockholders’ equity upon the completion of the Public Offering.

 

Redeemable Ordinary Shares

 

As discussed in Note 3, all of the 6,860,063 ordinary shares sold as part of the units in the Public Offering and Over-Allotment exercise contain a redemption feature which allows for the redemption of ordinary shares under the Company’s liquidation or tender offer/shareholder approval provisions. In accordance with ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. However, the Company will consummate an Initial Business Combination only if it has net tangible assets of at least $5,000,001 upon such consummation and a majority of the outstanding ordinary shares are voted in favor of the business combination. As a result of this requirement for the Company to maintain at least $5,000,001 of net tangible assets, the amount of the security to be classified outside of permanent equity is limited. As of March 31, 2016 and 2015, the number of Ordinary Shares classified outside of permanent equity was limited to 1,000,756 and 6,388,104 respectively. The redemption price is $10.20 per share, the redeemable ordinary shares are valued to their maximum redemption amount at the balance sheet date. As of March 31 2016 and 2015, the value of redeemable ordinary shares is 10,207,711 and 65,158,661 respectively.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 2 — Significant Accounting Policies (cont.)

 

The following table presents the movement for the redeemable ordinary shares account for the period from April 8, 2014 to March 31, 2016:

 

		No. of redeemable ordinary shares outstanding
Balance as of April 8, 2014			—
Reclassification of shares subject to possible redemption at redemption value on October 6, 2014			5,555,102
Change in shares subject to possible redemption to 6,388,104 shares on March 31, 2015			833,002
Balance as of March 31, 2015			6,388,104
Change in shares subject to possible redemption to 6,256,413 shares on March 31, 2016			(131,691	)
5,255,657 shares were redeemed on March 31, 2016			(5,255,657	)
Balance as of March 31, 2016			1,000,756

 

Accounting for Warrants

 

Since the Company is not required to net-cash settle any of the Public Warrant, Sponsor Warrants or EBC Warrants, the Company recorded all such warrants at their relative fair value and classified within shareholders’ equity as “Additional paid-in capital” upon their issuance in accordance with FASB ASC 815-40 (“Derivatives and Hedging”).

 

Use of estimates

 

The preparation of the financial statements in conformity with US 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.

 

Income taxes

 

The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

 

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company has identified the British Virgin Islands as its only “major” tax jurisdiction, as defined. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. Since the Company was incorporated on April 8, 2014, the evaluation was performed for the tax years ended March 31, 2016 and 2015 which will be the only periods subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense.

 

The Company is incorporated under the BVI Business Companies Act, 2004 (No. 16 of 2004) and is exempted from BVI taxes.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 2 — Significant Accounting Policies (cont.)

 

Net Loss Per Share

 

Basic net loss per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of ordinary shares outstanding, adjusted to include any dilutive effect from ordinary share equivalents.

 

Recent Accounting Pronouncements

 

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-15 during the period for guiding company’s management to evaluate the company’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 defines management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and provides related footnote disclosure requirements. Under U.S. GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting establishes the fundamental basis for measuring and classifying assets and liabilities. The Update provides guidance on when there is substantial doubt about an organization’s ability to continue as a going concern and how the underlying conditions and events should be disclosed in the footnotes. It is intended to reduce diversity that existed in footnote disclosures because of the lack of guidance about when substantial doubt existed. The amendments in this Update is effective for us beginning in the period ended December 31, 2016. Early application is permitted. We are currently evaluating the effect that the updated standard will have on our financial statements and related disclosures.

 

The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial condition, or cash flows, based on current information.

 

Note 3 — Public Offering

 

On October 6, 2014, in its Public Offering, the Company sold 6,000,000 Units at an offering price of $10.00 per Unit and on October 14, 2014 the Company sold an additional 860,063 Units upon the underwriters’ exercise of its Over-Allotment option. Each Unit consists of one ordinary share (“Share”), one right (“Right(s)”), and one warrant (“Warrant”). Each Right entitles the holder to receive one-tenth (1/10) of a Share upon consummation of an Initial Business Combination. Each Warrant entitles the holder to purchase one-half of one ordinary share at a price of $12.00 per full share commencing on the later of the Company’s completion of its Initial Business Combination or 12 months from September 30, 2014, the effective date of the registration statement relating to the Public Offering (the “Effective Date”), and expiring five years from the completion of the Company’s Initial Business Combination. As a result, investors must exercise Warrants in multiples of two Warrants, at a price of $12.00 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 $18.00 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 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 an Initial 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. In the event that a registration statement is not effective at the time of 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.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 3 — Public Offering(cont.)

 

The Units sold in the Public Offering began trading on October 1, 2014, the day after the Effective Date. Each of the Shares, Rights and Warrants were eligible to trade separately effective as of October 22, 2014. Security holders now have the option to continue to hold Units or separate their Units into the component pieces. Holders will need to have their brokers contact the Company’s transfer agent in order to separate the Units into Shares, Rights and Warrants. Upon consummation of an Initial Business Combination, the units will cease trading.

 

If the Company is unable to consummate an Initial Business Combination, there would be no distribution from the Trust Account with respect to the Rights and Warrants, and such Rights and Warrants would expire worthless.

 

Underwriting Agreement

 

The Company paid an underwriting discount on Units sold in the Public Offering, of 3.25% of the Unit offering price, to the underwriters at the closing of the Public Offering (or an aggregate of $2,229,520, including discounts for the Public Units sold in the Over-Allotment exercise). The Company also sold to EBC and/or its designees, at the time of the closing of the Public Offering, for an aggregate of $100.00, an option (“Unit Purchase Option” or “UPO”) to purchase 600,000 Units. The UPO will be exercisable at any time, in whole or in part, during the period commencing on the later of the first anniversary of the Effective Date and the closing of the Company’s Initial Business Combination and terminating on the fifth anniversary of the Effective Date (September 30, 2019) at a price per Unit equal to $11.75. Accordingly, after the Initial Business Combination, the purchase option will be to purchase 660,000 ordinary shares (which includes 60,000 ordinary shares to be issued for the rights included in the units) and 600,000 Warrants to purchase 300,000 ordinary shares. The Units issuable upon exercise of this option are identical to the Units in the Offering.

 

Accounting for UPO

 

The Company accounted for the fair value of the UPO, inclusive of the receipt of a $100 cash payment, as an expense of the Offering resulting in a charge directly to shareholders’ equity. The Company estimated that the fair value of the unit purchase option when issued was approximately $1,669,000 (or $2.782 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 35%, (2) risk-free interest rate of 1.73% and (3) expected life of five years. The UPO may be exercised for cash or on a “cashless” basis, at the holder’s option (except in the case of a forced cashless exercise upon the Company’s redemption of the Warrants, as described above), such that the holder may use the appreciated value of the UPO (the difference between the exercise prices of the UPO and the underlying Warrants and the market price of the Units and underlying ordinary shares) to exercise the UPO without the payment of any cash. The Company will have no obligation to net cash settle the exercise of the UPO or the Warrants underlying the UPO. The holder of the UPO will not be entitled to exercise the UPO or the Warrants underlying the UPO unless a registration statement covering the securities underlying the UPO is effective or an exemption from registration is available. If the holder is unable to exercise the UPO or underlying Warrants, the UPO or Warrants, as applicable, will expire worthless.

 

The Company granted to the holders of the UPO demand and “piggy back” registration rights for periods of five and seven years, respectively, from the Effective Date, including securities directly and indirectly issuable upon exercise of the UPO.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 4 — Related Party Transactions

 

Private Placement — Founders

 

In June 2014, the Company’s Initial Shareholders purchased an aggregate of 1,725,000 of ordinary shares, (“Founder Shares”) for an aggregate purchase price of $25,000, or approximately $0.014 per share. The 1,725,000 Founder Shares held by our initial shareholders included an aggregate of up to 225,000 shares subject to forfeiture by our Sponsor to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the initial shareholders would collectively own 20.0% of issued and outstanding shares of the Company (excluding the sale of the Private Units and Sponsor Warrants). Since the underwriters exercised the over-allotment option in part on October 14, 2014, and purchased 860,063 of the total possible 900,000 additional Units, the Sponsor forfeited 9,985 shares, which were canceled by the Company, in order to maintain this 20.0% limitation.

 

Shares Escrowed

 

The Founder Shares were placed into an escrow account maintained by Continental Stock Transfer & Trust Company acting as escrow agent. Subject to certain limited exceptions, 50% of these shares will not be transferred, assigned, sold or released from escrow until the earlier of (i) one year after the date of the consummation of our Initial Business Combination or (ii) the date on which the closing price of our ordinary shares equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our Initial Business Combination and the remaining 50% of the Founder Shares will not be transferred, assigned, sold or released from escrow until one year after the date of the consummation of our Initial Business Combination, or earlier in certain situations.

 

Private Placements — Concurrent with Public Offering & Over-Allotment Exercise

 

Simultaneously with the closing of our Public Offering, the Company consummated a private placement of (i) 320,000 Private Units, at $10.00 per unit, of which 290,000 units were purchased by our Sponsor and 30,000 units were purchased by EBC, and (ii) 1,800,000 Sponsor Warrants, at $0.50 per warrant, purchased by our Sponsor.

 

Simultaneously with the sale of the Over-Allotment Units, the Company consummated a private placement of (i) 32,253 Private Units, at $10.00 per unit, of which 29,119 units were purchased by our Sponsor and 3,134 units were purchased by EBC, and (ii) 258,007 Sponsor Warrants, at $0.50 per warrant, purchased by our Sponsor.

 

Each Private Unit is comprised of one Share, one Right, and one Warrant, each with the same terms as the securities comprising the Units sold in our Public Offering. The Sponsor Warrants also have the same terms as the Warrants contained in the Units sold in our Public Offering.

 

Terms of Private Placement Securities

 

The Founder Shares and the Private Units are identical to the Shares included in the Units that were sold in the Public Offering except that (i) the Founder Shares and the Private Units are subject to certain transfer restrictions, and (ii) each of the Initial Shareholders and EBC has agreed not to redeem any of the Founder Shares and the Private Units, as the case may be, held by them in connection with the consummation of an Initial Business Combination, and each has also waived its rights to participate in any redemption with respect to its Founder Shares and the Private Units, as the case may be, if the Company fails to consummate an Initial Business Combination.

 

However, each of the Initial Shareholders and EBC (as applicable) will be entitled to redeem any public shares it acquires in or after the Public Offering in the event the Company fails to consummate an Initial Business Combination within the required time period.

 

In connection with a shareholder vote to approve an Initial Business Combination, if any, each of the Company’s Initial Shareholders has agreed to vote their Initial Shares and/or Private Units, as the case may be, in favor of the Initial Business Combination. In addition, the Company’s Initial Shareholders, officers and directors have each also agreed to vote any ordinary shares acquired in the Public Offering or in the aftermarket in favor of the Initial Business Combination submitted to shareholders for approval, if any.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 4 — Related Party Transactions (cont.)

 

The initial holders of the Founder Shares, the Private Units and the Sponsor Warrants, and their permitted transferees, will be entitled to registration rights pursuant to a registration rights agreement. Such holders are entitled to demand registration rights and certain “piggy-back” registration rights with respect to the Founder Shares, the Private Units, the Sponsor Warrants and the ordinary shares underlying the Sponsor Warrants, Private Units and Rights, commencing, in the case of the Founder Shares, one year after the consummation of the Initial Business Combination and commencing, in the case of the Private Units, the Sponsor Warrants and the ordinary shares underlying the Sponsor Warrants, Private Units and Rights, 30 days after the consummation of the Initial Business Combination.

 

Expense Advance Agreement and Convertible Promissory Note and Due to related party

 

All expenses incurred by the Company prior to an Initial Business Combination may be paid only from the net proceeds of the Public Offering and related private placements not held in the Trust Account.

 

Thus, in order to meet the Company’s working capital needs following the consummation of the Public Offering if the funds not held in the Trust Account and interest earned on the funds held in the Trust Account available to the Company are insufficient, the Sponsor, an affiliate of the Sponsor or the Company’s officers and directors 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 an Initial Business Combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon consummation of an business combination into additional Insider Units at a price of $10.00 per unit (which, for example, would result in the holders being issued 55,000 ordinary shares if $500,000 of notes were so converted since the 50,000 rights would result in the issuance of 5,000 ordinary shares upon the closing of an Initial Business Combination as well as 50,000 warrants to purchase 25,000 shares at an exercise price of $12.00 per share). Under ASC 470-20-35, the impact from such contingency would not be recognized until the contingency is resolved. Therefore, there would be no accounting impact on the date that the convertible promissory note was issued. The Company’s shareholders have approved the issuance of the ordinary shares upon conversion of such notes, to the extent the holder wishes to so convert them at the time of the consummation of an Initial Business Combination. If we do not complete an Initial Business Combination, the loans will only be repaid with funds not held in the Trust Account, to the extent available.

 

On September 13, 2015, the Company issued a non-interest bearing convertible promissory note in the amount of up to $500,000 (the “Note”) to the Sponsor. Payment on all of the Note is due on the earlier of: (i) July 6, 2016 (Further amended on May 27, 2016) and (ii) the date on which the Company consummates its Initial Business Combination. and will be repaid prior to amount due to remaining shareholders. Its liability shall be unconditional, without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee. Pursuant to the terms of the Note, until the maturity date, up to $500,000 can be drawn down in one or more installments of at least $1,000 each. On December 1, 2015, the promissory note was amended to allow for an additional $400,000 to be drawn down. On February 5, 2016, the promissory note was amended to allow for an additional $500,000 to be drawn down. The total amount can be drawn down as of March 31, 2016 is $1,400,000 and the actual drawn down is $1,187,989. As of March 31, 2016 and 2015, the balance for the convertible promissory note with related party is $500,000 and $0, respectively, and promissory note with related party is $687,989 and $0, respectively. As of March 31, 2016, the amount due to related party which includes director and sponsor is $17,482.

 

Payment of Company Expense by the Sponsor

 

In the event the Sponsor pays for any expense or liability on behalf of the Company, then such payments would be accounted for as loan to the Company by the Sponsor and recognized on the Company’s financial statement in the same period of the payments. In connection with the Company’s planned business combination, announced on January 11, 2016, the Sponsor entered into an agreement in October 2014 with a party (the “Finder”) which later introduced Adrie to the Company. Such agreement was subsequently reaffirmed in December 2015 by the Sponsor, at which time the Sponsor committed to transfer 380,000 of its Founder Shares to the Finder at the closing of the business combination in return for its services under the October 2014 agreement. If such payment is determined to be predominately for the benefit of the Company, then the value of the shares transferred should be reflected as an expense with a corresponding credit to additional paid-in-capital at the date of share transfer.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 4 — Related Party Transactions (cont.)

 

Administrative Service Agreement

 

The Company agreed to pay an aggregate of $10,000 a month for office space and general and administrative services to the Sponsor commencing on October 1, 2014 and will terminate upon the earlier of: (i) the consummation of an Initial Business Combination; or (ii) the liquidation of the Company. For the periods ended March 31, 2016 and 2015, the Company paid an aggregate of $120,000 and $60,000 respectively under the Administrative Services Agreement.

 

Note 5 — Cash and Investment held in Trust Account

 

As of March 31, 2016, investment in the Company’s Trust Account consisted of $69,979,963 in United States Money Market and $111,251 in cash held in trust account. The Company classifies its United States Treasury and equivalent securities as held-to-maturity in accordance with FASB ASC 320 “Investments — Debt and Equity Securities”. Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts. As of March 31 2015, the held-to-maturity securities is $69,983,829. In March 2016, to comply with the shareholders’ request upon future redemption, the Company decided to invest in US Money market fund with no maturity date, which would allow the Company could liquidate the fund at the Company’s discretion at any time. The Company considers all investments with original maturities of more than three months but less than one year to be short-term investments. The carrying value approximates the fair value due to the short term maturity. As of March 31, 2016, cash and cash equivalents held in trust account is $69,979,963. The carrying value, excluding gross unrealized holding gain and fair value of held to maturity securities on March 31, 2016 and 2015 respectively are as follows:

 

		Carrying Value as of March 31, 2016				Gross Unrealized Holding Gain				Fair Value as of March 31, 2016
U.S. Money Market		$	69,979,963			$	—			$	69,979,963

 

		Carrying Value as of March 31, 2015				Gross Unrealized Holding Gain				Fair Value as of March 31, 2015
Held-to-maturity:
U.S. Treasury Securities		$	69,983,829			$	171			$	69,984,000

 

Note 6 — Commitments and Contingencies

 

Deferred Legal Fees

 

The Company has committed to pay its attorneys a deferred legal fee of $100,000 upon the consummation of the Initial Business Combination relating to services performed in connection with the Public Offering. This amount has been accrued in the accompanying financial statements.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 6 — Commitments and Contingencies (cont.)

 

Deferred PR Fees

 

The Company has committed to pay its PR firm (i) a one-time $20,000 fee and (ii) a monthly fee of $9,000 commencing in November 2015, upon the consummation of the Initial Business Combination, relating to services performed in connection with the Initial Business Combination. This amount has not been accrued in the accompanying financial statements, because even though management believes that a successful consummation is possible, it is outside of the Company’s control and thus cannot be determined to be probable. As of March 31, 2016, the amount owed upon a successful consummation is $65,000 and increasing by $9,000 each month thereafter until such consummation.

 

Underwriters M&A Engagement

 

The Company agreed to engage EBC as an investment banker in connection with its Initial Business Combination to provide it with assistance in negotiating and structuring the terms of the Initial Business Combination. The Company anticipates that these services will include holding meetings with the Company’s shareholders to discuss the potential Initial Business Combination and the target business’ attributes, introducing the Company to potential investors that are interested in purchasing the Company’s securities, assisting the Company in obtaining shareholder approval for the Initial Business Combination and assisting the Company with its press releases and public filings in connection with the Initial Business Combination. The Company will pay EBC a fee pursuant to such agreement upon the consummation of the Initial Business Combination in an amount equal to 4% of the total gross proceeds raised in the Public Offering (approximately $2,400,000). The Company will have the option to pay up to 25% of the aforementioned fee in Shares at $10.00 per Share.

 

Note 7 — Stockholder’s Equity

 

Ordinary Shares

 

The Company is authorized to issue unlimited ordinary shares. Holders of the Company’s ordinary shares are entitled to one vote for each share. As of March 31, 2016, there were 3,671,674 ordinary shares issued and outstanding (including 1,000,756 shares subject to possible redemption). As of March 31, 2015, there were 8,927,331 ordinary shares issued and outstanding (including 6,388,104 shares subject to possible redemption).

 

Preferred Shares

 

The Company is authorized to issue unlimited preferred shares, in one or more series, with such designations, voting and other rights and preferences as may be determined from time to time by the board of directors. As of March 31, 2016 and 2015, the Company has not issued any shares of preferred share.

 

Note 8 — Subsequent Event

 

On April 1, 2016, DeTiger Holdings Limited (“Sponsor”) deposited into the Trust Account approximately $96,000 (the “Contribution”), which amount was equal to $0.06 for each of the 1,604,406 public shares of the Company that were not redeemed in connection with the Extension Amendment. According to the Extension Amendment, the Company’s memorandum and articles of association extending the date by which the Company must consummate its initial business combination and the date for cessation of operations of the Company if the Company has not completed an initial business combination until July 6, 2016. As a result of the Contribution and following redemption of the public shares in connection with the Extension Amendment, the pro rata portion of the funds available in the Trust Account for the public shares that were not redeemed will increase from approximately $10.20 per share to approximately $10.26 per share.

 

 

DT ASIA INVESTMENTS LIMITED
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2016

 

Note 8 — Subsequent Event (cont.)

 

The Company filed preliminary proxy statement on June 8, 2016 and June 21, 2016 and its definitive proxy statement on June 21, 2016. The acquisition will be consummated only if the Business Combination Proposal is approved at the special meeting of the Company’s shareholders.

 

On May 18, 2016, after the Company provided required documentations to the bank to conclude the review, the bank account was unfrozen.

 

On May 27, 2016, the sponsor paid the remaining funds available to the Company for $59,683, resulting in a total loan balance payable to the sponsor of $1,400,000.

 

On June 14, 2016, the promissory note payable to the sponsor was amended to allow for an additional $200,000 available for draw down. On June 14, 2016 the sponsor paid the remaining funds available to the Company, resulting in a total loan balance payable to the sponsor of $1,600,000. There is no additional loan available as of June 29, 2016 under the current sponsor loan, as amended.

 

As of June 28, 2016 the Company has received signed subscription agreements for an aggregate subscription amount of $10,320,000 for the Series A preferred stock, a reduction of $1,200,000 from the balance of agreements as of May 25, 2016, which were subjected to certain conditional precedents. As of June 28, 2016 the Series A preferred stock subscribers have deposited $8,239,212 into escrow account.

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

June 29, 2016	DT ASIA INVESTMENTS LIMITED
	/s/ Stephen N. Cannon
	Name:	Stephen N. Cannon
	Title:	Chief Executive Officer, President and Director
		(Principal Executive Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Name		Position		Date
/s/ Stephen N. Cannon		Chief Executive Officer, President and Director		June 29, 2016
Stephen N. Cannon		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
/s/ Emily Chui-Hung Tong		Chairman of the Board of Directors		June 29, 2016
Emily Chui-Hung Tong
/s/ Haibin Wang		Director		June 29, 2016
Haibin Wang
/s/ Hai Wang		Director		June 29, 2016
Hai Wang
/s/ Jason Kon Man Wong		Director		June 29, 2016
Jason Kon Man Wong

 

 

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