UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

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

 

For the fiscal year ended November 30, 2017

 

[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to ______________

 

Commission File Number 001-37628

 

ANDINA ACQUISITION CORP. II

(Exact Name of Registrant as Specified in Its Charter)

 

Cayman Islands		47-5245051
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

 

250 West 57th St, Suite 2223, New York, NY		10107
(Address of Principal Executive Offices)		(Zip Code)

 

(646) 565-3861

(Registrant’s Telephone Number, Including Area Code)

 

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

 

Title of each class		Name of each exchange on which registered
Ordinary Shares, par value $0.0001 per share		The NASDAQ Stock Market LLC
Redeemable Warrants, each to purchase one half of one Ordinary Share		The NASDAQ Stock Market LLC
Rights, each exchangeable into one seventh of one Ordinary Share		The NASDAQ Stock Market LLC
Units, each consisting of one Ordinary Share, one Redeemable Warrant and one Right		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 [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. [  ]

 

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

 

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

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) 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. [X]

 

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

 

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

 

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

 

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

 

As of May 31, 2017, the aggregate market value of the ordinary shares held by non-affiliates of the registrant was approximately $40,480,000 (based on the closing sales price of the ordinary shares on May 31, 2017 of $10.12).

 

As of February 7, 2018, there were 3,441,879 ordinary shares, $.0001 par value per share, outstanding.

 

Documents Incorporated by Reference: None.

 

 

 

PART I

 

ITEM 1. BUSINESS

 

Andina Acquisition Corp. II (the “Company” or “we”) is a blank check company formed on July 1, 2015 to acquire, through a merger, share exchange, asset acquisition, stock purchase, plan of arrangement, recapitalization, reorganization or other similar business combination, one or more businesses or entities. The Company’s efforts in identifying a prospective target businesses are not limited to a particular industry or geographic region of the world.

 

On December 1, 2015, we closed our initial public offering of 4,000,000 units at $10.00 per unit, generating gross proceeds of $40.0 million. Each unit consists of one ordinary share, par value $.0001 per share (“Ordinary Share”), one right (“Right”) to receive one-seventh of one Ordinary Share upon consummation of an initial business combination and one redeemable warrant (“Warrant”) entitling the holder to purchase one-half of one Ordinary Share at a price of $11.50 per full share commencing on the consummation of an initial business combination. Simultaneous with the consummation of the initial public offering, we consummated the private placement of 310,000 private Units (“Private Placement Units”) at a price of $10.00 per Private Placement Unit, generating total proceeds of $3,100,000. The Private Placement Units were purchased by the Company’s shareholders prior to the initial public offering (the “initial shareholders”) and their affiliates and designees and EarlyBirdCapital, Inc., the representative of the underwriters in the initial public offering.

 

Following the consummation of the initial public offering, the underwriters notified the Company that they would not be exercising the over-allotment option. As a result, the initial shareholders had 150,000 ordinary shares held by them compulsorily repurchased by the Company for an aggregate purchase price of $0.01 so that they collectively owned 20.0% of the Company’s issued and outstanding ordinary shares after the initial public offering (not including the Ordinary Shares underlying the Private Placement Units (“Private Shares”)).The Company’s amended and restated memorandum and articles of association originally contemplated that the Company had until September 1, 2017 to complete an initial business combination. On August 30, 2017, the Company’s shareholders approved an extension of the time to complete a business combination to November 1, 2017 (“First Extension”). At the meeting to approve such extension, public shareholders holding 432,769 shares converted their shares for their pro rata share of the funds in the trust account aggregating approximately $4.4 million, leaving 3,567,231 public shares outstanding and approximately $36.4 million in the trust account. On October 31, 2017, the Company’s shareholders approved a second extension of time to complete a business combination to February 1, 2018 (“Second Extension”). At this second meeting, public shareholders holding 727,300 shares converted their shares for their pro rata share of the funds in the trust account aggregating approximately $7.4 million, leaving 2,839,931 public shares outstanding and approximately $29.2 million in the trust account. On January 31, 2018, the Company held an extraordinary general meeting of shareholders. At the meeting, the shareholders approved to extend the date by which the Company has to consummate a business combination to April 1, 2018 (“Third Extension”). Public shareholders holding 708,052 shares converted their shares for their pro rata share of the funds in the trust account aggregating approximately $7.3 million (or $10.30 per share), leaving 2,131,879 public shares outstanding and approximately $22 million in the trust account. The Company now has until April 1, 2018 to complete an initial business combination.

 

On October 27, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Andina II Holdco Corp., a Delaware corporation and wholly owned subsidiary of the Company (“Holdco”), Andina II Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Holdco (“Merger Sub”), Lazy Days’ R.V. Center, Inc., a Delaware corporation (“Lazydays”), and, solely for certain purposes set forth in the Merger Agreement, A. Lorne Weil, an individual (“Weil”). Lazydays operates recreational vehicle dealerships in Seffner, FL, Tucson, AZ and Loveland, Denver and Longmont, CO. Lazydays carries more than 2,500 new and pre-owned recreational vehicles, and also has over 300 service bays and two on-site campgrounds with over 700 recreational vehicle campsites. Lazydays welcomes over 500,000 visitors annually, and employs over 700 people in its facilities.

 

Pursuant to the Merger Agreement, (a) the Company will merge with and into Holdco, with Holdco surviving and becoming a new public company and (b) Merger Sub will merge with and into Lazydays, with Lazydays surviving and becoming a direct wholly owned subsidiary of Holdco.

 

The consummation of the transactions contemplated by the Merger Agreement are subject to the approval of the shareholders of the Company and Lazydays and the satisfaction or waiver of other customary closing conditions, as described in our Current Report on Form 8-K filed on October 30, 2017 (the “Merger Form 8-K”) and in the Merger Agreement.

 

The description of the Merger Agreement and the transactions contemplated thereby contained in the Merger Form 8-K is incorporated herein by reference.

 

Effecting a Business Combination

 

Fair Market Value of Target Business

 

Pursuant to 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 (excluding taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for our initial business combination, although we may acquire a target business whose fair market value significantly exceeds 80% of the trust account balance. Our board of directors determined that this test was met in connection with the proposed business combination with Lazydays..

 

 

Business Combination Procedures

 

In connection with the proposed business combination with Lazydays, we will seek shareholder approval of such initial business combination at a meeting called for such purpose at which public shareholders may seek to convert their public shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), subject to the limitations described herein. Notwithstanding the foregoing, as described below, our initial shareholders have agreed, pursuant to written letter agreements with us, not to convert any public shares held by them into their pro rata share of the aggregate amount then on deposit in the trust account in connection with a proposed business combination. 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. Our initial shareholders and our officers and directors have agreed (1) to vote any ordinary shares owned by them in favor of the proposed business combination with Lazydays and (2) not to convert any ordinary shares owned by them in connection with a shareholder vote to approve the proposed initial business combination with Lazydays.

 

Conversion Rights

 

At any meeting called to approve an initial business combination, public shareholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due but not yet paid. In such event, the conversion rights will be effected under our amended and restated memorandum and articles of association and Cayman Islands law as repurchases. A holder will always have the ability to vote against a proposed business combination and not seek conversion of his shares.

 

Notwithstanding the foregoing, a public shareholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 20% or more of the ordinary shares sold in our initial public offering. Accordingly, all shares in excess of 20% of the shares sold in our initial public offering held by a holder will not be converted to cash. We believe this restriction will prevent shareholders from accumulating large blocks of shares before the vote held to approve a proposed business combination and attempt to use the conversion right as a means to force us or our management to purchase their shares at a significant premium to the then current market price. By limiting a shareholder’s ability to convert no more than 20% of the ordinary shares sold in our initial public offering, we believe we have limited the ability of a small group of shareholders to unreasonably attempt to block a transaction which is favored by our other public shareholders.

 

Our initial shareholders will not have conversion rights with respect to any ordinary shares owned by them, directly or indirectly, whether acquired prior to our initial public offering or purchased by them in our initial public offering or in the aftermarket. EarlyBirdCapital will not have conversion rights with respect to the shares included in the Private Placement Units, or “private shares.”

 

We will also require public shareholders, whether they are a record holder or hold their shares in “street name,” to either tender their certificates to our transfer agent at any time through the vote on the business combination 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. Once the shares are converted by the beneficial holder, and effectively repurchased by us under Cayman Island law, the transfer agent will then update our Register of Shareholders to reflect all conversions. The proxy solicitation materials that we will furnish to shareholders in connection with the vote for any proposed business combination will further describe these delivery requirements. Accordingly, a shareholder would have from the time the shareholder received our proxy statement through the vote on the business combination to deliver his shares if he wishes to seek to exercise his conversion rights. Under our amended and restated memorandum and articles of association, we are required to provide at least 5 days’ advance notice of any shareholder meeting, which would be the minimum amount of time a shareholder would have to determine whether to exercise conversion rights.

 

There is a nominal cost associated with this 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 and it would be up to the broker whether or not to pass this cost on to the converting holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise conversion rights. The need to deliver shares is a requirement of exercising conversion rights regardless of the timing of when such delivery must be effectuated. However, in the event we require shareholders seeking to exercise conversion rights prior to the consummation of the proposed business combination and the proposed business combination is not consummated this may result in an increased cost to shareholders.

 

Any request to convert such shares once made, may be withdrawn at any time up to the vote on the proposed business combination. Furthermore, if a holder of a public share delivered his certificate in connection with an election of their conversion and subsequently decides prior to the vote on the business combination not to elect to exercise such rights, he may simply request that the transfer agent return the certificate (physically or electronically).

 

If the initial business combination is not approved or completed for any reason, then our public shareholders who elected to exercise their conversion rights would not be entitled to convert their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any shares delivered by public holders.

 

 

Automatic Liquidation of Trust Account if No Business Combination

 

If we do not complete a business combination by April 1, 2018 (or such later date as may be approved by our shareholders), it will trigger our automatic winding up, dissolution and liquidation pursuant to the terms of our amended and restated memorandum and articles of association. As a result, this has the same effect as if we had formally gone through a voluntary liquidation procedure under the Companies Law. Accordingly, no vote would be required from our shareholders to commence such a voluntary winding up, dissolution and liquidation.

 

The amount in the trust account (less $284 representing the aggregate nominal par value of the shares of our public shareholders) under the Companies Law will be treated as share premium which is distributable under the Cayman Companies Law provided that immediately following the date on which the proposed distribution is proposed to be made, we are able to pay our debts as they come due in the ordinary course of business. If we are forced to liquidate the trust account, we anticipate that we would distribute to our public shareholders the amount in the trust account calculated as of the date that is two days prior to the distribution date (including any accrued interest). Prior to such distribution, we would be required to assess all claims that may be potentially brought against us by our creditors for amounts they are actually owed and make provision for such amounts, as creditors take priority over our public shareholders with respect to amounts that are owed to them. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our shareholders could potentially be liable for any claims of creditors to the extent of distributions received by them as an unlawful payment in the event we enter an insolvent liquidation. Furthermore, while we will seek to have all vendors and service providers (which would include any third parties we engaged to assist us in any way in connection with our search for a target business) and prospective target businesses execute agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they will execute such agreements. Nor is there any guarantee that, even if such entities execute such agreements with us, they will not seek recourse against the trust account or that a court would conclude that such agreements are legally enforceable.

 

Each of our initial shareholders has agreed to waive its rights to participate in any liquidation of our trust account or other assets with respect to the insider shares and private shares. There will be no distribution from the trust account with respect to our rights or warrants, which will expire worthless.

 

If we are unable to complete an initial business combination and 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 initial per-share distribution from the trust account would be approximately $10.23 as of November 30, 2017.

 

The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would be prior to the claims of our public shareholders. Although we will seek to have all vendors, including lenders for money borrowed, prospective target businesses or other entities we engage 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 a claim against our assets, including the funds held in the trust account. If any third party refused to execute an agreement waiving such claims to the monies held in the trust account, we would perform an analysis of the alternatives available to us if we chose not to engage such third party and evaluate if such engagement would be in the best interest of our shareholders if such third party refused to waive such claims. Examples of possible instances where we may engage a third party that refused 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 provider of required services willing to provide the waiver. In any event, our management would perform an analysis of the alternatives available to it and would only enter into an agreement with a third party that did not execute a waiver if management believed that such third party’s engagement would be significantly more beneficial to us than any alternative. 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.

 

B. Luke Weil, one of our directors and non-executive Chairman of the Board, has agreed that, if we liquidate the trust account prior to the consummation of a business combination, he will be personally liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us in excess of the net proceeds of our initial public offering not held in the trust account, but only to the extent necessary to ensure that such debts or obligations do not reduce the amounts in the trust account and only if such parties have not executed a waiver agreement. However, we cannot assure you that Mr. Weil will be able to satisfy those obligations if it is required to do so. Accordingly, the actual per-share distribution could be less than $10.23, plus interest, due to claims of creditors. Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return to our public shareholders at least $10.23 per share.

 

 

Competition

 

If we succeed in effecting a business combination with Lazydays, there will be, in all likelihood, significant competition from its competitors. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively. Information regarding Lazydays’ competition will be set forth in the proxy statement for the meeting to be called to approve the business combination and in other future filings.

 

Prior to the completion of a business combination, we may encounter intense competition from other entities having a business objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors.

 

Employees

 

We have four executive officers. These individuals are not obligated to devote any specific number of hours to our matters and intend to devote only as much time as they deem necessary to our affairs. We do not intend to have any full time employees prior to the consummation of the business combination with Lazydays.

 

ITEM 1A. RISK FACTORS

 

An investment in our securities involves a high degree of risk. You should consider carefully the material risks described below, which we believe represent the material risks related to our business and our securities, together with the other information contained in this Form 10-K, before making a decision to invest in our securities. This Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks described below.

 

In addition to the risks and uncertainties set forth below, we face certain material risks and uncertainties related to the business combination with Lazydays. In addition, if we succeed in effecting the business combination, we will face additional and different risks and uncertainties related to the business of Lazydays. Such material risks will be set forth in the proxy statement that we will file with the SEC in connection with the meeting to be called to approve the business combination.

 

If we are unable to consummate a business combination, our public shareholders may be forced to wait until April 1, 2018 (or such later date as may be approved by our shareholders) before receiving liquidation distributions.

 

We have until April 1, 2018 (or such later date as may be approved by our shareholders) in which to complete a business combination. We have no obligation to return funds to investors prior to such date unless we consummate a business combination prior thereto and only then in cases where investors have sought to convert their shares. Only after the expiration of this full-time period will public shareholders be entitled to liquidation distributions if we are unable to complete a business combination. Accordingly, investors’ funds may be unavailable to them until after such date and to liquidate your investment, you may be forced to sell your securities potentially at a loss.

 

We may issue ordinary or preferred shares or debt securities to complete a business combination, which would reduce the equity interest of our shareholders and likely cause a change in control of our ownership.

 

We may issue a substantial number of additional ordinary shares or preferred shares, or a combination of ordinary shares and preferred shares, to complete a business combination. The issuance of additional ordinary shares or preferred shares:

 

●	may significantly reduce the equity interest of investors;
●	may subordinate the rights of holders of ordinary shares if we issue preferred shares with rights senior to those afforded to our ordinary shares;
●	may cause a change in control if a substantial number of ordinary shares are 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 ordinary shares.

 

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

 

 

●	default and foreclosure on our assets if our operating revenues after a 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; and
●	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.

 

If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by shareholders may be less than $10.23.

 

Our placing of funds in trust may not protect those funds from third party claims against us. Although we will seek to have all vendors and service providers we engage and prospective target businesses we negotiate with 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, they may not execute such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse against the monies held in the trust account. A court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims which could take priority over those of our public shareholders. If we liquidate the trust account before the completion of a business combination, B. Luke Weil has agreed that he will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us and which have not executed a waiver agreement. However, he may not be able to meet such obligation. Therefore, the per-share distribution from the trust account in such a situation may be less than $10.23, plus interest, due to such claims.

 

Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, or if we otherwise enter compulsory or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our public shareholders at least $10.23.

 

Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them.

 

Our amended and restated memorandum and articles of association provide that we will continue in existence only until April 1, 2018 (or such later date as may be approved by our shareholders) unless we complete an initial business combination by such date.

 

As such, our shareholders could potentially be liable for any claims to the extent of distributions received by them pursuant to such process and any liability of our shareholders may extend beyond the date of such distribution. Accordingly, we cannot assure you that third parties, or us under the control of an official liquidator, will not seek to recover from our shareholders amounts owed to them by us.

 

If we are unable to consummate a transaction within the required time period, upon notice from us, the trustee of the trust account will distribute the amount in our trust account to our public shareholders. Concurrently, we shall pay, or reserve for payment, from funds not held in trust, our liabilities and obligations, although we cannot assure you that there will be sufficient funds for such purpose. If there are insufficient funds held outside the trust account for such purpose, B. Luke Weil has agreed that he will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us and which have not executed a waiver agreement.

 

If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, and thereby exposing themselves and our company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable to a fine of US$15,000 and to imprisonment for five years in the Cayman Islands.

 

 

Holders of rights and warrants will not have redemption rights 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 redeem 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 such rights and warrants, respectively.

 

We have no obligation to net cash settle the rights or warrants.

 

In no event will we have any obligation to net cash settle the rights or warrants. Furthermore, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of an initial business combination. Accordingly, the rights and warrants may expire worthless.

 

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

 

Our rights have been issued in registered form under a rights agreement between Continental Stock Transfer & Trust Company, as rights agent, and us. The rights agreement provides that the terms of the rights may be amended without the consent of any holder to cure any ambiguity or correct any defective provision. The rights agreement requires the approval by the holders of a majority of the then outstanding rights (including the rights underlying the Private Placement Units) in order to make any change that adversely affects the interests of the registered holders.

 

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 then 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 warrants 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 warrants included in the Private Placement Units, or “private 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 have 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 have been issued in registered form under 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) in order to make any change that adversely affects the interests of the registered holders.

 

If Nasdaq delists our securities from quotation on its exchange, we would not be required to complete a business combination with a target business or businesses meeting specific fair market value requirements.

 

If Nasdaq delists our securities from quotation on its exchange, we would not be required to satisfy the fair market value requirement described above and could complete a business combination with a target business having a fair market value substantially below 80% of the balance in the trust account.

 

Our officers’ and directors’ personal and financial interests may have influenced their motivation in approving the proposed business combination with Lazydays.

 

Our officers and directors have waived their right to convert their insider shares, private shares or any other ordinary shares, or to receive distributions with respect to their insider 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. Their private rights, private warrants and any other rights or warrants they acquire will also be worthless if we do not consummate an initial business combination. In addition, our officers and directors may loan funds to us after our initial public offering and may be owed reimbursement for expenses incurred in connection with certain activities on our behalf which would only be repaid if we complete an initial business combination. The personal and financial interests of our directors and officers may have influenced their motivation in approving the proposed business combination with Lazydays.

 

Nasdaq may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

 

Our securities are listed on Nasdaq, a national securities exchange. However, we cannot assure you that our securities will continue to be listed on Nasdaq in the future prior to an initial business combination. Additionally, in connection with our initial business combination, it is likely that Nasdaq 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 Nasdaq 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;
●	reduced liquidity with respect to our securities;
●	a determination that our ordinary shares are “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.

 

In connection with the meeting held to approve the initial business combination with Lazydays, we will offer each public shareholder the option to vote in favor of the proposed business combination and still seek conversion of his, her or its shares, which may make it more likely that we will consummate the business combination.

 

In connection with the meeting held to approve the initial business combination with Lazydays, we will offer each public shareholder (other than our initial shareholders subject to certain exceptions) the right to have his, her or its ordinary shares converted to cash (subject to the limitations described elsewhere herein) regardless of whether such shareholder votes for or against such proposed business combination. Furthermore, 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 shares voted are voted in favor of the business combination. Accordingly, public shareholders owning shares sold in our initial public offering may exercise their conversion rights and we could still consummate the proposed business combination so long as a majority of shares voted at the meeting are voted in favor of the proposed business combination. This is different than other similarly structured blank check companies where shareholders are offered the right to convert their shares only when they vote against a proposed business combination. This is also different than other similarly structured blank check companies where there is a specific number of shares sold in the offering which must not exercise conversion rights for the company to complete a business combination. This threshold and the ability to seek conversion while voting in favor of a proposed business combination may make it more likely that we will consummate our initial business combination.

 

 

In connection with the meeting held to approve an initial business combination, public shareholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a “group,” will be restricted from seeking conversion rights with respect to more than 20% of the shares sold in our initial public offering.

 

In connection with the meeting held to approve the initial business combination with Lazydays, we will offer each public shareholder (other than our initial shareholders subject to certain exceptions) the right to have his, her, or its ordinary shares converted into cash. Notwithstanding the foregoing, a public shareholder, together with any of its affiliates or any other person with whom it is acting in concert or as a “group” will be restricted from seeking conversion rights with respect to more than 20% of the shares sold in our initial public offering. Accordingly, if you hold more than 20% of the shares sold in our initial public offering and a proposed business combination is approved, you will not be able to seek conversion rights with respect to the full amount of your shares and may be forced to hold such shares following the business combination over 20% or sell them in the open market. We cannot assure you that the value of such shares will appreciate over time following a business combination or that the market price of our ordinary shares will exceed the per-share conversion price.

 

In connection with the shareholder meeting called to approve our proposed initial business combination, we will require shareholders who wish to convert their shares in connection with a proposed business combination to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights.

 

In connection with the shareholder meeting called to approve our proposed initial business combination, each public shareholder will have the right, regardless of whether it is voting for or against such proposed business combination, to demand that we convert its shares into a share of the trust account. Such conversion will be effectuated under Cayman Islands law as a repurchase of the shares, with the repurchase price to be paid being the applicable pro-rata portion of the monies held in the trust account. We will require public shareholders who wish to convert their 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. In order to obtain a physical share 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 share 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. Accordingly, if it takes longer than we anticipate for shareholders to deliver their shares, shareholders who wish to convert may be unable to meet the deadline for exercising their conversion rights and thus may be unable to convert their shares.

 

Investors may not have sufficient time to comply with the delivery requirements for conversion.

 

Pursuant to our memorandum and articles of association, we are required to give a minimum of only ten days’ notice for each general meeting. As a result, if we require public shareholders who wish to convert their public shares into the right to receive a pro rata portion of the funds in the trust account to comply with specific delivery requirements for conversion, holders may not have sufficient time to receive the notice and deliver their shares for conversion. Accordingly, investors may be forced to retain our securities when they otherwise would not want to.

 

Converting shareholders may be unable to sell their securities when they wish to in the event that the proposed business combination is not approved.

 

If our proposed business combination is not consummated, we will promptly return any certificates to the tendering public shareholders who sought conversion of such shares. Accordingly, investors who attempted to convert their shares in such a circumstance will be unable to sell their securities after the failed acquisition until we have returned their securities to them. The market price for our shares may decline during this time and you may not be able to sell your securities when you wish to, even while other shareholders that did not seek conversion may be able to sell their securities.

 

Our initial shareholders control a substantial interest in us and thus may influence certain actions requiring a shareholder vote.

 

Our initial shareholders collectively own approximately 38.1% of our issued and outstanding ordinary shares. In connection with any vote for a proposed business combination, all of our initial shareholders, as well as all of our officers and directors, have agreed to vote the ordinary shares owned by them immediately before our initial public offering as well as any ordinary shares acquired in our initial public offering or in the aftermarket in favor of such proposed business combination.

 

 

Our board of directors is and will be 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. As a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for election at any given shareholder meeting and our initial shareholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial shareholders will continue to exert control at least until the consummation of a business combination.

 

Our outstanding rights, warrants and unit purchase options may have an adverse effect on the market price of our ordinary shares and make it more difficult to effect a business combination.

 

We have outstanding rights, warrants and unit purchase options that may result in the issuance of additional securities. Additionally, to the extent we issue ordinary shares to effect a business combination, the potential for the issuance of a substantial number of additional shares upon exercise of these warrants could make us a less attractive acquisition vehicle in the eyes of a target business. Such securities, when exercised, will increase the number of issued and outstanding ordinary shares and reduce the value of the shares issued to complete the business combination. Accordingly, our warrants and unit purchase options may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying the warrants and unit purchase options could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent these warrants and options are exercised, you may experience dilution to your holdings.

 

We may redeem the warrants at a time that is not beneficial to public investors.

 

We may call the public warrants for redemption at any time after the redemption criteria described elsewhere have been satisfied. If we call the public warrants for redemption, public shareholders may be forced to accept a nominal redemption price or sell or exercise the warrants when they may not wish to do so.

 

If our shareholders exercise their registration rights with respect to their securities, it may have an adverse effect on the market price of our ordinary shares and the existence of these rights may make it more difficult to effect a business combination.

 

Our initial shareholders are entitled to make a demand that we register the resale of their insider shares at any time commencing three months prior to the date on which their shares may be released from escrow. Additionally, the purchasers of the Private Placement Units and our initial shareholders, officers and directors are entitled to demand that we register the resale of the Private Placement Units (and the underlying ordinary shares and warrants) and any securities our initial shareholders, officers, directors or their affiliates may be issued in payment of working capital loans made to us at any time after we consummate a business combination. The presence of these additional securities trading in the public market may have an adverse effect on the market price of our securities. In addition, the existence of these rights may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business, as the shareholders of the target business may be discouraged from entering into a business combination with us or will request a higher price for their securities because of the potential effect the exercise of such rights may have on the trading market for our ordinary shares.

 

EarlyBirdCapital may have had a conflict of interest in rendering services to us in connection with our initial business combination.

 

We have engaged EarlyBirdCapital to assist us in connection with our initial business combination. We will pay EarlyBirdCapital a cash fee of $1,600,000 for such services upon the consummation of our initial business combination. This financial interest may have resulted in EarlyBirdCapital having a conflict of interest when providing the services to us in connection with our initial business combination with Lazydays.

 

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

 

A company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment Company Act of 1940. Since we will invest the proceeds held in the trust account, it is possible that we could be deemed an investment company. Notwithstanding the foregoing, we do not believe that our anticipated principal activities will subject us to the Investment Company Act of 1940. To this end, the proceeds held in trust may be invested by the trustee only in United States government treasury bills, notes or bonds having a maturity of 180 days or less or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in United States treasuries. By restricting the investment of the proceeds to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act of 1940.

 

If we are nevertheless deemed to be an investment company under the Investment Company Act of 1940, we may be subject to certain restrictions that may make it more difficult for us to complete a business combination, including:

 

●	restrictions on the nature of our investments; and
●	restrictions on the issuance of securities.

 

 

In addition, we may have imposed upon us certain burdensome requirements, including:

 

●	registration as an investment company;
●	adoption of a specific form of corporate structure; and
●	reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations.

 

Compliance with these additional regulatory burdens would require additional expense for which we have not allotted.

 

We did not seek an opinion from an unaffiliated third party as to the fair market value of Lazydays or that the price we are paying for Lazydays is fair to our shareholders from a financial point of view.

 

We were not required to, and did not, obtain an opinion from an unaffiliated third party that Lazydays has a fair market value in excess of at least 80% of the balance of the trust account. We were also not required to, and did not, obtain an opinion from an unaffiliated third party indicating that the price we are paying is fair to our shareholders from a financial point of view. Accordingly, our shareholders will be relying on the judgment of our board of directors, whose collective experience in business evaluations for blank check companies like ours is not significant. Furthermore, our directors may have had a conflict of interest in analyzing the transaction due to their personal and financial interests.

 

Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal courts may be limited.

 

We are an exempted company incorporated under the laws of the Cayman Islands. In addition, certain of our directors and officers are nationals or residents of jurisdictions other than the United States and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or executive officers, or enforce judgments obtained in the United States courts against our directors or officers.

 

Our corporate affairs will be governed by our amended and restated memorandum and articles of association, the Companies Law (as the same may be supplemented or amended from time to time) or the common law of the Cayman 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 Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws as compared to the United States, and certain states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.

 

We have been advised by our Cayman Islands legal counsel that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere. There is recent Privy Council authority (which is binding on the Cayman Islands Court) in the context of a reorganization plan approved by the New York Bankruptcy Court which suggests that due to the universal nature of bankruptcy/insolvency proceedings, foreign money judgments obtained in foreign bankruptcy/insolvency proceedings may be enforced without applying the principles outlined above. However, a more recent English Supreme Court authority (which is highly persuasive but not binding on the Cayman Islands Court), has expressly rejected that approach in the context of a default judgment obtained in an adversary proceeding brought in the New York Bankruptcy Court by the receivers of the bankruptcy debtor against a third party, and which would not have been enforceable upon the application of the traditional common law principles summarized above and held that foreign money judgments obtained in bankruptcy/insolvency proceedings should be enforced by applying the principles set out above, and not by the simple exercise of the Courts’ discretion. Those cases have now been considered by the Cayman Islands Court. The Cayman Islands Court was not asked to consider the specific question of whether a judgment of a bankruptcy court in an adversary proceeding would be enforceable in the Cayman Islands, but it did endorse the need for active assistance of overseas bankruptcy proceedings. We understand that the Cayman Islands Court’s decision in that case has been appealed and it remains the case that the law regarding the enforcement of bankruptcy/insolvency related judgments is still in a state of uncertainty.

 

 

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, members of the board of directors or controlling shareholders than they would as public shareholders of a United States company.

 

Compliance with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs of completing an acquisition.

 

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls and may require us to have such system audited by an independent registered public accounting firm. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or shareholder litigation. Any inability to provide reliable financial reports could harm our business. A target may also not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of 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. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our securities.

 

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. However, if our non-convertible debt issued within a three-year period exceeds $1 billion or our total revenue exceeds $1.07 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. Additionally, as an emerging growth company, we have elected to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As such, our consolidated financial statements may not be comparable to companies that comply with public company effective dates. We cannot predict if investors will find our shares less attractive because we may rely on these provisions. If some investors find our 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.

 

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 consolidated 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.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

 

ITEM 2. PROPERTY

 

We maintain our principal executive offices at 250 West 57^th Street, Suite 2223, New York, New York 10107. The space is provided to us at no cost by a third party affiliated with B. Luke Weil, one of our directors. We consider our current office space, combined with the other office space otherwise available to our executive officers, adequate for our current operations.

 

ITEM 3. LEGAL PROCEEDINGS

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

PART II

 

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Market Information

 

Our units are listed on the Nasdaq Capital Market, or Nasdaq, under the symbol “ANDAU.” The ordinary shares, rights and warrants are listed on the Nasdaq under the symbols “ANDA,” “ANDAR” and “ANDAW,” respectively. Units not separated continue to be listed under the symbol “ANDAU.”

 

The following table sets forth the range of high and low sales prices for the units, ordinary shares, rights and warrants for the periods indicated since the units commenced public trading on November 25, 2015, and since the ordinary shares, rights and warrants commenced public trading on December 7, 2015.

 

		Units								Ordinary Shares								Rights								Warrants
		High				Low				High				Low				High				Low				High				Low
2016-2017:
Fourth Quarter			12.00				10.20				10.40				9.51				1.29				0.4499				1.24				0.249
Third Quarter			11.13				10.60				10.16				9.64				0.54				0.36				0.32				0.15
Second Quarter			11.00				10.50				10.17				10.00				0.67				0.42				0.39				0.20
First Quarter			11.10				10.49				10.35				9.93				0.65				0.33				0.39				0.20
2015-2016:
Fourth Quarter			10.50				10.27				9.95				9.81				0.80				0.23				0.25				0.12
Third Quarter			10.70				10.06				10.05				9.67				0.43				0.1601				0.18				0.08
Second Quarter			11.00				9.84				9.78				9.53				0.26				0.16				0.15				0.1001
First Quarter			10.66				9.7999				9.65				9.40				0.30				0.22				0.16				0.10
2014-2015:
Fourth Quarter			9.97				9.90				N/A				N/A				N/A				N/A				N/A				N/A

 

Holders

 

As of January [_], 2018, there were 15 holders of record of our units, 18 holders of record of our ordinary shares, 1 holder of record of our rights and 1 holder of record of our warrants. We believe we have in excess of 300 beneficial holders of our securities.

 

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 an 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 a business combination. The payment of any dividends subsequent to a business combination will be within the discretion of our board of directors at such time and any restrictions on payment of dividends pursuant to our outstanding securities. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future. Further, if we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.

 

 

Initial Public Offering - Use of Proceeds

 

On December 1, 2015, we closed our initial public offering of 4,000,000 units at $10.00 per unit, generating gross proceeds of $40.0 million. Each unit consisting of one Ordinary Share, one Right to automatically receive one-seventh of one Ordinary Share upon consummation of an initial business combination and one Warrant entitling the holder to purchase one-half of one Ordinary Share at a price of $11.50 per full share commencing on the consummation of an initial business combination. Simultaneous with the consummation of the initial public offering, we consummated the private placement of 310,000 Private Placement Units at a price of $10.00 per Private Placement Unit, generating total proceeds of $3.1 million. Of the Private Placement Units, 265,000 were sold to the initial shareholders and their affiliates and designees and 45,000 were sold to EarlyBirdCapital, Inc., the representative of the underwriters in the initial public offering.

 

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

 

EarlyBirdCapital, Inc. acted as representative of the underwriters for the initial public offering. The securities sold in the offering were registered under the Securities Act of 1933 on a registration statement on Form S-1 (No. 333-207037). The Securities and Exchange Commission declared the registration statement effective on November 24, 2015.

 

We paid a total of $1.3 million in underwriting discounts and commissions and approximately $454,000 for other costs and expenses related to the offering and the over-allotment option. An aggregate of $40.6 million ($10.15 per unit) from the net proceeds of the sale of the units in the initial public offering and the private placement was deposited into the trust account, and the remaining proceeds became available to be used to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses.

 

Generally, except as otherwise described herein, the proceeds held in the trust account will not be released to us until the earlier of the completion of an initial business combination and our liquidation upon our failure to consummate a business combination within the required time period.

 

Subject to the foregoing, our management has broad discretion with respect to the specific application of the net proceeds of the offering and the private placement of Private Placement Units, although substantially all of the net proceeds are intended to be generally applied toward consummating our initial business combination with Lazydays.

 

Purchases of Equity Securities by Issuer and Affiliates

 

On October 31, 2017, the Company’s shareholders approved a second extension of time to complete a business combination to February 1, 2018. At this second meeting, public shareholders holding 727,300 shares sought conversion. Such shares were technically repurchased under Cayman Islands law for an aggregate of $7,425,733 (or $10.21 per share).

 

Other than as set forth above, no purchases of our equity securities have been made by us or affiliated purchasers within the fourth quarter of the fiscal year ended November 30, 2017.

 

ITEM 6. SELECTED FINANCIAL DATA

 

Not applicable.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS

 

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

 

 

Forward-Looking Statements

 

All statements other than statements of historical fact included in this Form 10-K including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward looking statements. When used in this Form 10-K, words such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions, as they relate to us or our management, identify forward looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. References to “we”, “us”, “our” or the “Company” are to Andina Acquisition Corp II, except where the context requires otherwise. Such forward looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. No assurance can be given that results in any forward-looking statement will be achieved and actual results could be affected by one or more factors, which could cause them to differ materially. The cautionary statements made in this Annual Report on Form 10-K should be read as being applicable to all forward-looking statements whenever they appear in this Annual Report. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the Securities and Exchange Commission. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by this paragraph.

 

Overview

 

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

 

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

 

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

 

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

 

On August 30, 2017, we held an extraordinary general meeting of shareholders (the “August Meeting”). At the August Meeting, the shareholders approved each of the following items: (i) an amendment to our Amended and Restated Memorandum and Articles of Association (the “Charter”) to extend the date by which we have to consummate a Business Combination (“Liquidation Date”) from September 1, 2017 to November 1, 2017 and (ii) an amendment to the Charter to allow the holders of our ordinary shares issued in the Company’s Initial Public Offering to elect to convert their public shares into their pro rata portion of the funds held in the Trust Account (the “First Extension”). Shareholders holding 432,769 Public Shares exercised their right to convert such shares into a pro rata portion of the Trust Account. As a result, an aggregate of approximately $4.4 million (or $10.15 per share) was removed from the Trust Account to pay such holders in September 2017. In connection with the First Extension, certain of our shareholders prior to the Initial Public Offering agreed to loan us $0.03 for each Public Share that was not converted, or $107,017, for each month following the First Extension. The loans will not bear interest and will be repayable by us to the lenders upon consummation of an initial Business Combination. If an initial Business Combination is not consummated by the required time period, the loans will be forgiven.

 

On October 31, 2017, we held another extraordinary general meeting of shareholders (the “October Meeting”). At the October Meeting Accordingly, an aggregate of approximately $85,198 was contributed to us and deposited in the Trust Account for each month through February 1, 2018 , the shareholders approved an amendment to our Charter to extend the date by which we have to consummate a Business Combination (the “Second Extension”) to February 1, 2018. At the October Meeting, shareholders holding 727,300 Public Shares exercised their right to convert such shares into a pro rata portion of the funds in the Trust Account. As a result, an aggregate of approximately $7.4 million (or approximately $10.21 per share) was removed from the Trust Account in November 2017 to pay such shareholders. In connection with the Second Extension, certain of our shareholders prior to the Initial Public Offering agreed to contribute to us as a loan $0.03 for each public share that was not converted for each month of the Extension that is utilized. . The contributions will not bear interest and will be repayable by us to the lenders upon consummation of an initial Business Combination. If an initial Business Combination is not consummated by the required time period, the loans will be forgiven.

 

 

On January 31, 2018, we held another extraordinary general meeting of shareholders. At the meeting, shareholders agreed to extend the date by which we have to consummate a Business Combination (the “Third Extension”) to April 1, 2018. Under Cayman Islands law, all amendments to the Charter took effect upon approval. Accordingly, we now have until April 1, 2018 to consummate our initial Business Combination. At the meeting, shareholders holding 708,052 Public Shares exercised their right to convert such shares into a pro rata portion of the funds in the Trust Account for an aggregate amount of approximately $7.3 million (or approximately $10.30 per share).

 

During the year ended November 30, 2017, we received an aggregate of $100,000 and $536,732 from certain shareholders under convertible notes and non-convertible notes, of which an aggregate of approximately $384,400 was deposited to the Trust Account in connection with the First and Second Extension. The loans are unsecured and non-interest bearing and are due upon consummation of a Business Combination.

 

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

 

On October 27, 2017, the Company entered into the Merger Agreement by and among the Company, Holdco, Merger Sub, Lazydays and Weil. Lazydays operates recreational vehicle dealerships in Seffner, FL, Tucson, AZ and Loveland, Denver and Longmont, CO. Lazydays carries more than 2,500 new and pre-owned recreational vehicles, and also has over 300 service bays and two on-site campgrounds with over 700 recreational vehicle campsites. Lazydays welcomes over 500,000 visitors annually, and employs over 700 people in its facilities.

 

Pursuant to the Merger Agreement, (a) the Company will merge with and into Holdco, with Holdco surviving and becoming a new public company and (b) Merger Sub will merge with and into Lazydays, with Lazydays surviving and becoming a direct wholly owned subsidiary of Holdco.

 

The consummation of the transactions contemplated by the Merger Agreement are subject to the approval of the shareholders of the Company and Lazydays and the satisfaction or waiver of other customary closing conditions.

 

Critical Accounting Policy

 

Ordinary Shares Subject to Possible Conversion

 

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

 

Results of Operations

 

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

 

For the year ended November 30, 2017, we had net losses of approximately $722,000, which consisted of operating expenses of approximately $1 million offset by interest income from our Trust Account of approximately $279,000.

 

For the year ended November 30, 2016, we had net losses of approximately $359,000, which consisted of operating expenses of approximately $514,000 offset by interest income from our Trust Account of approximately $154,000.

 

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

 

Liquidity and Capital Resources

 

As of November 30, 2017, we had approximately $31,000 in our operating bank account, approximately $135,000 of interest income held in the Trust Account available to be released to us, and a working capital deficit of approximately $782,000.

 

 

We presently have no revenue. Our net losses of approximately $722,000 for the year ended November 30, 2017, and consist primarily of professional fees, and costs related to our search for a business combination. Through November 30, 2017, our liquidity needs were satisfied through receipt of approximately $686,000 held outside of the Trust Account from the sale of the units upon closing of the initial public offering, $25,000 from the sale of the insider shares, advances from B. Luke Weil in an aggregate amount of $139,000, which we repaid on December 1, 2015 from the proceeds received upon closing of the initial public offering, promissory notes for up to approximately $661,500 from related parties, of which an aggregate of $636,700 was received. During the year ended November 30, 2017 and 2016, we received an aggregate of approximately $302,000 and $103,000 from interest released from the Trust Account for working capital purposes.

 

Subsequent to November 30, 2017, we issued an aggregate of $99,666 in promissory notes to related parties for working capital purposes. These notes are unsecured and non-interest bearing and are due upon consummation of a Business Combination. In January 2018, one of our non-executive Chairman provided a commitment letter to fund us up to $350,000 for working capital purposes. If we do not consummate a Business Combination, the loan will be forgiven except to the extent that we have funds available to us outside of the Trust Account. We have not borrowed any amount under the commitment letter.

 

If needed to finance transaction costs in connection with consummating our business combination with Lazydays, our initial shareholders, officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Such loans would be evidenced by promissory notes. The notes would either be paid upon consummation of our initial business combination, without interest, or, at the lender’s discretion, up to $500,000 of the notes may be converted upon consummation of our business combination into additional Private Placement Units at a price of $10.00 per unit (which, for example, would result in the holders being issued 57,142 Ordinary Shares if $500,000 of notes were so converted as the rights included in the units would result in an additional 7,142 shares being issued, as well as 50,000 Warrants to purchase 25,000 Ordinary Shares).

 

Based on the foregoing, we believe that we have sufficient funds available to operate our business through the earlier of consummation of a Business Combination or April 1, 2018 (or such later date as may be approved by shareholders at a meeting called for such purpose). Over this time period, we will be using these funds for paying existing accounts payable, identifying and evaluating prospective Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business, and structuring, negotiating and consummating the Business Combination.

 

Related Party Transactions

 

Convertible Notes

 

Following the commitment letter from one of our directors and non-executive Chairman of the Board to provide working capital to us, on April 28, 2017, we issued a $100,000 convertible promissory note to such non-executive Chairman. The loan is unsecured, non-interest bearing and is payable upon consummation of a Business Combination. Upon consummation of a Business Combination, the principal balance of the note may be converted, at the holder’s option, to Private Placement Units at a price of $10.00 per Private Placement Unit. If the lender converts the entire principal balance of the convertible promissory note, he would receive 10,000 Private Placement Units. If a Business Combination is not consummated, the note will not be repaid by us and all amounts owed thereunder by us will be forgiven except to the extent that we have funds available to it outside of its Trust Account established in connection with the Initial Public Offering. As of November 30, 2017, the $100,000 convertible promissory note was outstanding.

 

Notes Payable

 

Prior to the closing of the Initial Public Offering, a director advanced an aggregate of approximately $139,000 to cover expenses related to our formation and the Initial Public Offering. We repaid this amount on December 1, 2015 from the proceeds received upon closing of the Initial Public Offering.

 

During the year ended November 30, 2017, we issued an aggregate of approximately $561,500 in promissory notes to related parties. Of these, we received an aggregate of $536,732 from certain shareholders under promissory notes, of which an aggregate of approximately $384,400 was deposited to the Trust Account in connection with the First and Second Extension as of November 30, 2017. The loans are unsecured and non-interest bearing and are due upon consummation of a Business Combination.

 

Subsequent to November 30, 2017, we issued an aggregate of $99,666 in promissory notes to related parties for working capital purposes. These notes are unsecured and non-interest bearing and are due upon consummation of a Business Combination.

 

In January 2018, one of our non-executive Chairman provided a commitment letter to fund us up to $350,000 for working capital purposes. If we do not consummate a Business Combination, the loan will be forgiven except to the extent that we have funds available to us outside of the Trust Account. We have not borrowed any amount under the commitment letter.

 

 

Others

 

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

 

If we consummate the Merger Agreement with Lazydays, we have agreed to pay Hydra Management LLC, an affiliate of A. Lorne Weil, an initial shareholder and father of B. Luke Weil, $450,000 as compensation for advisory services rendered to us in connection with the business combination.

 

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

 

Recent Accounting Pronouncements

 

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

 

Contractual Obligations

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide this information.

 

Off-Balance Sheet Arrangements

 

We did not have any off-balance sheet arrangements as of November 30, 2017.

 

JOBS Act

 

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

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As of November 30, 2017, we were not subject to any market or interest rate risk. Following the consummation of the initial public offering, the net proceeds of our initial public offering, including amounts in the Trust Account, may be invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that invest solely in US treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

This information appears following Item 15 of this Report and is incorporated herein by reference.

 

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

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal year ended November 30, 2017, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective.

 

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

 

Management’s Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting refers to the process designed by, or under the supervision of, our principal executive, principal financial and principal accounting officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:

 

1)	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
2)	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and
3)	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on the financial statements.

 

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the company.

 

Our management’s assessment of the effectiveness of our internal control system as of November 30, 2016 was based on the framework for effective internal control over financial reporting described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO. Based on this assessment, our principal executive, principal financial and principal accounting officer has concluded that our internal control over financial reporting was effective as of November 30, 2017.

 

This Form 10-K does not include an attestation report of internal controls from our registered public accounting firm due to our status as an emerging growth company under the JOBS Act and as a smaller reporting company.

 

Changes in Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended November 30, 2017 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 current directors and executive officers are as follows:

 

Name		Age		Position
Julio A. Torres		50		Chief Executive Officer and Director
Mauricio Orellana		52		Chief Financial Officer and Director
Eric Carrera		28		Senior Vice President
Marjorie Hernandez		38		Secretary and Treasurer
B. Luke Weil		38		Director (Non-Executive Chairman)
Matthew S. N. Kibble		38		Director
Edward G. Navarro		63		Director

 

Julio A. Torres has served as our Chief Executive Officer and a member of our board of directors since August 2015. Since March 2013, Mr. Torres has served as the managing partner at Multiple Equilibria Capital, a financial advisory firm. From October 2011 through January 2013, Mr. Torres served as Co-Chief Executive Officer of Andina 1. He also served as a member of the board of Andina 1 from October 2011 until its merger in December 2013 and has continued to serve on the board of Tecnoglass Inc. since such time. From March 2008 to February 2013, Mr. Torres served as managing director of Nexus Capital Partners, a private equity firm. From April 2006 to February 2008, Mr. Torres served with the Colombian Ministry of Finance acting as director general of public credit and the treasury. From June 2002 to April 2006, Mr. Torres served as managing director of Diligo Advisory Group, an investment banking firm. From September 1994 to June 2002, Mr. Torres served as vice president with JPMorgan Chase Bank. Mr. Torres graduated from the Universidad de los Andes and received an M.B.A. from the Kellogg Graduate School of Management at Northwestern University and a master in public administration from the J.F. Kennedy School of Government at Harvard University.

 

Mauricio Orellana has served as our Chief Financial Officer and a member of our board of directors since August 2015. Since 2013, Mr. Orellana has served as a financial consultant to companies in Latin America in the media, infrastructure and services sectors. From 2005 to 2013, Mr. Orellana was a Managing Director at Stephens Inc., a private investment banking firm. From 2000 to 2005, Mr. Orellana was a Vice President and Managing Director at Cori Capital Partners, L.P., a financial services firm. Prior to this, he served as Investment Officer for Emerging Markets Partnership and Inter-American Investment Corporation, each private investment firms. Mr. Orellana received a degree in electrical engineering from the Universidad Central de Venezuela and an M.B.A. from the Instituto de Education Superior de Administracion.

 

Eric Carrera has served as our Senior Vice President since August 2015. Since May 2015, Mr. Carrera has served as a financial consultant to Hydra Management LLC, an asset management firm. Since February 2015, Mr. Carrera has also served as a financial analyst to Runa LLC, a beverage company that processes and sells guayusa in the United States and Ecuador. From June 2011 to February 2015, Mr. Carrera was an international business development associate with Scientific Games Corporation, a supplier of technology-based products, systems and services to gaming markets worldwide. From September 2011 to December 2013, Mr. Carrera also acted as an advisor to Andina 1. Mr. Carrera received a B.S. from Boston University School of Management. Mr. Carrera is also a CFA charterholder.

 

Marjorie Hernandez has served as our Secretary since August 2015 and as our Treasurer since October 2015. Since June 2008, Ms. Hernandez has served as Senior Vice President, FX Strategist, Latin America for HSBC Securities (USA), Inc. Prior to this, from April 2005 to June 2008, she was the lead analyst for HSBC covering Colombia, Peru, Ecuador and Venezuela. From July 2003 to April 2005, Ms. Hernandez was a Senior Program Associate, public policy, for Council of the Americas, a forum dedicated to education, debate, and dialogue in the Americas aimed at fostering an understanding of the contemporary political, social, and economic issues confronting Latin America, the Caribbean, and Canada, and to increase public awareness and appreciation of the diverse cultural heritage of the Americas and the importance of the inter-American relationship. Ms. Hernandez received a B.A. from Columbia University.

 

B. Luke Weil served as our Chief Executive Officer from our inception until August 2015, has served as a member of our Board of Directors since our inception and has served as Non-Executive Chairman of the Board since February 2016. In October 2014, he founded the Long Island Marine Purification Initiative, a non-profit foundation established to improve the water quality on Long Island, New York, and has served as its Chairman since such time. In November 2012, he also co-founded Rios Nete, a clinic in the upper amazon region of Peru. From 2008 to 2013, Mr. Weil was Vice President, International Business Development - Latin America for Scientific Games Corporation, a supplier of technology-based products, systems and services to gaming markets worldwide. From January 2013 until its merger in December 2013, Mr. Weil served as Chief Executive Officer of Andina 1 and previously served as a member of its board from September 2011 until March 2012. From 2006 to 2008, Mr. Weil attended Columbia Business School. From January 2004 to January 2006, Mr. Weil served as an associate of Business Strategies & Insight, a public affairs and business consulting firm. In January 2007, Mr. Weil pleaded guilty to two counts of misdemeanor assault in connection with physical altercations that took place in 2004 and 2006. From June 2002 to December 2004, Mr. Weil served as an analyst at Bear Stearns. From September 1998 to May 2002, Mr. Weil attended Brown University. Mr. Weil received a B.A. from Brown University and an M.B.A. from Columbia Business School.

 

Matthew S. N. Kibble has served as a member of our Board since August 2015. In November 2013, Mr. Kibble founded Australy International LLC, a boutique investment bank, and has served as a Partner since. Since July 2013, he has also served as Principal and an advisor to Cap-Meridian Ventures, a venture capital firm. From October 2010 to July 2013, Mr. Kibble was the Founder and Chief Operating Officer of Everlight Capital, LLC, a boutique investment bank. From June 2009 to June 2010, Mr. Kibble served as Executive Director of The Westrock Group, Inc., a broker-dealer and asset management firm. From November 2005 to May 2009, Mr. Kibble was with JPMorgan Securities Inc. where he worked in the institutional equities and derivatives section. Prior to this, Mr. Kibble was an analyst at JPMorgan Chase and GMCG, LLC. Mr. Kibble received a Bachelor of Science and a Bachelor of Commerce from the University of Queensland in Australia.

 

 

Edward G. Navarro has served as a member of our Board since October 2015 and served as Non-Executive Chairman from October 2015 to February 2016. Since November 2014, Mr. Navarro has served as the President of Engage Insurance Group Inc., an insurance agency he founded involved in multi-risk insurance placements. From July 2013 to November 2014, Mr. Navarro acted as a consultant for several companies. From December 2010 to July 2013, Mr. Navarro was with Starr Companies, a global insurance and financial services organization, most recently acting as Head of International Insurance Operations. From November 2008 to December 2010, Mr. Navarro served as Global Head, Accident and Health Business for Zurich Insurance Group, a Swiss insurance company. From October 2005 to November 2008, Mr. Navarro served as Vice President, Regional Head Insurance, for Citibank N.A. in Singapore. Prior to this, Mr. Navarro served in various positions with Prudential Plc and its affiliates.

 

Audit Committee

 

Effective November 24, 2015, we established an audit committee of the board of directors, which consists of B. Luke Weil, Matthew S. N. Kibble and Edward G. Navarro, each of whom is an independent director under the Nasdaq’s listing standards. The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to:

 

●	reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommend to the board whether the audited financial statements should be included in our Form 10-K;
●	discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements;
●	discussing with management major risk assessment and risk management policies;
●	monitoring the independence of the independent auditor;
●	verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;
●	reviewing and approving all related-party transactions;
●	inquiring and discussing with management our compliance with applicable laws and regulations;
●	pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed;
●	appointing or replacing the independent auditor;
●	determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
●	establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and
●	approving reimbursement of expenses incurred by our management team in identifying potential target businesses.

 

Financial Experts on Audit Committee

 

The audit committee will at all times be composed exclusively of “independent directors” who are “financially literate” as defined under Nasdaq listing standards. Nasdaq listing standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement.

 

In addition, we must certify to Nasdaq that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. The board of directors has determined that Edward G. Navarro qualifies as an “audit committee financial expert,” as defined under rules and regulations of the SEC.

 

 

Nominating Committee

 

Effective November 24, 2015, we have established a nominating committee of the board of directors, which consists of B. Luke Weil, Matthew S. N. Kibble and Edward G. Navarro, each of whom is an independent director under Nasdaq’s listing standards. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating committee considers persons identified by its members, management, shareholders, investment bankers and others.

 

Guidelines for Selecting Director Nominees

 

The guidelines for selecting nominees, which are specified in the Nominating Committee Charter, generally provide that the persons to be nominated:

 

●	should have demonstrated notable or significant achievements in business, education or public service;
●	should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and
●	should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders.

 

Compensation Committee

 

Effective November 24, 2015, we established a compensation committee of the board of directors, which consists of B. Luke Weil, Matthew S. N. Kibble and Edward G. Navarro, each of whom is an independent director under Nasdaq’s listing standards. The compensation committee’s duties, which are specified in our Compensation Committee Charter, include, but are not limited to:

 

●	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;
●	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;
●	if required, 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.

 

Notwithstanding the foregoing, as indicated below, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing shareholders, including our directors, or any of their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation of a business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934 requires our officers, directors and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and ten percent stockholders are required by regulation to furnish us with copies of all Section 16(a) forms they file. Based solely on copies of such forms received or written representations from certain reporting persons that no Form 5s were required for those persons, we believe that, during the fiscal year ended November 30, 2016, all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with.

 

 

Code of Ethics

 

On November 24, 2015, our board of directors adopted a code of ethics that applies to our executive officers, directors and employees. The code of ethics codifies the business and ethical principles that governs aspects of our business.

 

ITEM 11. EXECUTIVE COMPENSATION

 

No executive officer has received any cash compensation for services rendered to us. No compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing shareholders, including our directors, or any of their respective affiliates, prior to, or for any services they render in order to effectuate, the consummation of a business combination. However, such individuals 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. There is no limit on the amount of these out-of-pocket expenses and there will be no review of the reasonableness of the expenses by anyone other than our board of directors and audit committee, which includes persons who may seek reimbursement, or a court of competent jurisdiction if such reimbursement is challenged. Additionally, we may pay consulting fees to our officers, directors, shareholders or their affiliates for assisting us in consummating our initial business combination in an amount not to exceed an aggregate of $500,000.

 

It is anticipated that Mr. Weil will remain a director of Holdco following consummation of our business combination with Lazydays. Any compensation paid to him as a director will be publicly disclosed at the time of its determination in a Current Report on Form 8-K, as required by the SEC.

 

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 November 30, 2017, by:

 

●	each person known by us to be the beneficial owner of more than 5% of our outstanding ordinary;
●	each of our officers and directors; and
●	all our 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 ordinary shares beneficially owned by them. The following table does not reflect record of beneficial ownership of any Ordinary Shares issuable upon exercise of Warrants or Rights as such securities are not exercisable or convertible within 60 days.

 

Name and Address of Beneficial Owner(1)		Amount and Nature of Beneficial Ownership				Percent of Class
Julio A. Torres			46,798				1.1	%
Mauricio Orellana			91,473				2.2	%
Eric Carrera			13,600	(2)			*
Marjorie Hernandez			74,438				1.8	%
B. Luke Weil			501,890	(3)			12.1	%
Matthew S. N. Kibble			28,500				*
Edward G. Navarro			7,000				*
Barry Rubenstein(4)			338,701	(5)			8.2	%
Marilyn Rubenstein(4)			338,701	(6)			8.2	%
River North Capital Management, LLC(7)			597,882				14.4	%
All directors and executive officers as a group (seven individuals)			763,699				18.4	%

 

*Less than one percent.

 

(1)	Unless otherwise indicated, the business address of each of the individuals is c/o Andina Acquisition Corp. II, 250 West 57th Street, Suite 2223, New York, New York 10107.

 

 

 

(2)	These shares will vest in full upon consummation of our initial business combination provided he is still affiliated with us at such time.
(3)	Includes an aggregate of 63,000 ordinary shares held by two limited liability companies that Mr. Weil Controls. Does not include the ordinary shares he may receive in the event that Eric Carrera’s shares do not vest as described in footnote 3 above.
(4)	The business address of Barry Rubenstein and Marilyn Rubenstein is 68 Wheatley Road, Brookville, New York 11545. Information derived from a Schedule 13G filed on December 7, 2015.
(5)	Represents ordinary shares held by Woodland Partners, Woodland Venture Fund and Seneca Ventures. Barry Rubenstein is a general partner of Woodland Partners, Woodland Venture Fund and Seneca Ventures, and an officer and director of Woodland Services Corp. Mr. Rubenstein is the husband of Marilyn Rubenstein.
(6)	Represents ordinary shares held by Woodland Partners, Woodland Venture Fund and Seneca Ventures. Marilyn Rubenstein is a general partner of Woodland Partners and an officer of Woodland Services Corp. Marilyn Rubenstein is the wife of Barry Rubenstein.
(7)	The business address of RiverNorth Capital Management, LLC is 325 N. LaSalle Street, Suite 645, Chicago, IL 60654. Information derived from a Schedule 13G filed on September 11, 2017. Shares listed post-business combination assumes the holder has not sought redemption of any of the public shares it holds.

 

All of the insider shares have been placed in escrow with Continental Stock Transfer & Trust Company, as escrow agent, until (1) with respect to 50% of the insider shares, the earlier of one year after the date of the consummation of our initial business combination and the date on which the closing price of our ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after our initial business combination and (2) with respect to the remaining 50% of the insider shares, 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 liquidation, merger, share exchange or other similar transaction which results in all of our shareholders having the right to exchange their shares for cash, securities or other property. On December 4, 2015, the underwriters advised us that the over-allotment option would not be exercised. As a result, 150,000 insider shares were released from escrow and we repurchased such shares for an aggregate purchase price of $0.01.

 

During the escrow period, the holders of these shares will not be able to sell or transfer their securities except (i) for transfers to an entity’s members upon its liquidation, (ii) to relatives and trusts for estate planning purposes, (iii) by virtue of the laws of descent and distribution upon death, (iv) pursuant to a qualified domestic relations order, (v) by certain pledges to secure obligations incurred in connection with purchases of our securities, (vi) by private sales made at or prior to the consummation of a business combination at prices no greater than the price at which the shares were originally purchased or (vii) to us for no value for cancellation in connection with the consummation of our initial business combination, in each case (except for clause (vii)) where the transferee agrees to the terms of the escrow agreement, but will retain all other rights as our shareholders, including, without limitation, the right to vote their ordinary shares and the right to receive cash dividends, if declared. If dividends are declared and payable in ordinary shares, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate the trust account, none of our initial shareholders will receive any portion of the liquidation proceeds with respect to their insider shares.

 

Equity Compensation Plans

 

As of November 30, 2017, we had no compensation plans (including individual compensation arrangements) under which equity securities were authorized for issuance.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Initial Shares

 

In July 2015, the Company issued 1,150,000 Initial Shares to the Initial Shareholders for an aggregate purchase price of $25,000. The Initial Shares included an aggregate of up to 150,000 shares subject to compulsory repurchase for an aggregate purchase price of $0.01 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 after the initial public offering (excluding the sale of the Private Placement Units). On December 4, 2015, the underwriters advised the Company that the over-allotment option would not be exercised. As a result, 150,000 Initial Shares were compulsory repurchased in December 2015.

 

 

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

 

Convertible Notes

 

Following the commitment letter from one of the Company’s directors and non-executive Chairman of the Board to provide working capital to the Company, on April 28, 2017, the Company issued a $100,000 convertible promissory note to a related party. The loan is unsecured, non-interest bearing and is payable upon consummation of a Business Combination. Upon consummation of a Business Combination, the principal balance of the note may be converted, at the holder’s option, to Private Placement Units at a price of $10.00 per Private Placement Unit. If the lender converts the entire principal balance of the convertible promissory note, he would receive 10,000 Private Placement Units. If a Business Combination is not consummated, the note will not be repaid by the Company and all amounts owed thereunder by the Company will be forgiven except to the extent that the Company has funds available to it outside of its Trust Account established in connection with the Initial Public Offering. As of November 30, 2017, the $100,000 convertible promissory note was outstanding.

 

Notes Payable

 

Prior to the closing of the Initial Public Offering, a director advanced an aggregate of approximately $139,000 to cover expenses related to the Company’s formation and the Initial Public Offering. The Company repaid this amount on December 1, 2015 from the proceeds received upon closing of the Initial Public Offering.

 

During the year ended November 30, 2017, the Company issued an aggregate of approximately $561,500 in promissory notes to related parties. Of these, the Company received an aggregate of $536,732 from certain shareholders under promissory notes, of which an aggregate of approximately $384,400 was deposited to the Trust Account in connection with the First and Second Extension as of November 30, 2017. The loans are unsecured and non-interest bearing and are due upon consummation of a Business Combination.

 

Office Space

 

We maintain our principal executive offices at office space provided at no cost by a third party affiliated with one of our directors.

 

Consulting Fees

 

If we consummate the Merger Agreement with Lazydays, we have agreed to pay Hydra Management LLC, an affiliate of A. Lorne Weil, an initial shareholder and father of B. Luke Weil, $450,000 as compensation for advisory services rendered to us in connection with the business combination.

 

Related Party Policy

 

Our Code of Ethics, which we adopted upon consummation of our initial public offering, requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our ordinary shares, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.

 

We also require each of our directors and executive officers to annually complete a directors’ and officers’ questionnaire that elicits information about related party transactions.

 

 

Our audit committee, pursuant to its written charter, is responsible for reviewing and approving related-party transactions to the extent we enter into such transactions. All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require prior approval by our audit committee and a majority of our uninterested “independent” directors, or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our audit committee and a majority of our disinterested “independent” directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties. Additionally, we require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.

 

These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.

 

To further minimize potential conflicts of interest, we have agreed not to consummate a business combination with an entity which is affiliated with any of our initial shareholders unless we obtain an opinion from an independent investment banking firm that the business combination is fair to our unaffiliated shareholders from a financial point of view. Furthermore, in no event will any of our existing officers, directors, special advisors or initial shareholders, or any entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of a business combination.

 

Director Independence

 

Currently B. Luke Weil, Matthew S. N. Kibble and Edward G. Navarro would each be considered an “independent director” under the Nasdaq listing rules, 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. Our independent directors will have regularly scheduled meetings at which only independent directors are present.

 

We will only enter into a business combination if it is approved by a majority of our independent directors. Additionally, we will only enter into transactions with our officers and directors and their respective affiliates that are on terms no less favorable to us than could be obtained from independent parties. Any related-party transactions must be approved by our audit committee and a majority of disinterested independent directors.

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

The firm of Marcum LLP acts as our independent registered public accounting firm. The following is a summary of fees paid to Marcum LLP for services rendered.

 

Audit Fees

 

During the fiscal years ended November 30, 2017 and 2016, audit fees for our independent registered public accounting firm were approximately $65,000 and $53,000, respectively.

 

Audit-Related Fees

 

During the fiscal years ended November 30, 2017 and 2016, audit-related fees for our independent registered public accounting firm were approximately $17,000 and $0.

 

Tax Fees

 

During the fiscal years ended November 30, 2017 and 2016, fees for tax services for our independent registered public accounting firm were $0.

 

All Other Fees

 

During the fiscal years ended November 30, 2017 and 2016, fees for other services were approximately $202,000 and $0.

 

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a) The following Exhibits are filed as part of this report.

 

Exhibit No.		Description
1.1		Form of Underwriting Agreement.*
1.2		Business Combination Marketing Agreement between the Registrant and EarlyBirdCapital, Inc.*
2.1		Agreement and Plan of Merger, dated as of October 27, 2017, by and among Andina Acquisition Corp. II, Andina II Holdco Corp., Andina II Merger Sub Inc., Lazy Days’ R.V. Center, Inc., and A. Lorne Weil.**
3.1		Amended and Restated Memorandum and Articles of Association.*
4.1		Specimen Unit Certificate.*
4.2		Specimen Ordinary Share Certificate.*
4.3		Specimen Right Certificate.*
4.4		Form of Rights Agreement between Continental Stock Transfer & Trust Company and the Registrant.*
4.5		Form of Unit Purchase Option between the Registrant and EarlyBirdCapital, Inc.*
4.6		Specimen Warrant Certificate.*
4.7		Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant.*
10.1		Form of Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and the Company’s officers, directors and shareholders.*
10.2		Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant.*
10.3		Form of Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Initial Shareholders.*
10.4		Form of Registration Rights Agreement among the Registrant and the Initial Shareholders and EarlyBirdCapital.*
10.5		Form of Subscription Agreement among the Registrant, Graubard Miller and the Initial Shareholders and EarlyBirdCapital.*
10.6		Advisory Agreement between the Registrant and B. Riley & Co. LLC.*
14		Form of Code of Ethics.*
31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

101.INS		XBRL Instance Document		Herewith
101.SCH		XBRL Taxonomy Extension Schema		Herewith
101.CAL		XBRL Taxonomy Extension Calculation Linkbase		Herewith
101.DEF		XBRL Taxonomy Extension Definition Linkbase		Herewith
101.LAB		XBRL Taxonomy Extension Label Linkbase		Herewith
101.PRE		XBRL Taxonomy Extension Presentation Linkbase		Herewith

 

*

Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (SEC File No. 333-207037).

 

**

Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on October 30, 2017

 

 

ANDINA ACQUISITION CORP. II

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

	Page No.
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Financial Statements:
Consolidated Balance Sheets as of November 30, 2017 and 2016	F-3
Consolidated Statements of Operations for the fiscal years ended November 30, 2017 and 2016	F-4
Consolidated Statements of Changes in Shareholders’ Equity for the years ended November 30, 2017 and 2016	F-5
Consolidated Statements of Cash Flows for the fiscal years ended November 30, 2017 and 2016	F-6
Notes to Consolidated Financial Statements	F-7

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Audit Committee of the

Board of Directors and Shareholders

of Andina Acquisition Corp. II

 

We have audited the accompanying consolidated balance sheets of Andina Acquisition Corp. II (the “Company”) as of November 30, 2017 and 2016, and the related consolidated statements of operations, changes in shareholders’ equity (deficit) and cash flows for the year ended November 30, 2017 and 2016. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audits 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 consolidated 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 audits 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 consolidated 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 audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of November 30, 2017 and 2016, and the results of its consolidated operations and its cash flows for the year ended November 30, 2017 and 2016 in conformity with accounting principles generally accepted in the United States of America.

 

/s/ Marcum LLP
Marcum LLP
New York, NY
February 7, 2018

 

 

ANDINA ACQUISITION CORP. II

Consolidated Balance Sheets

 

		As of November 30,
		2017				2016
Assets
Current assets
Cash		$	31,390			$	63,789
Prepaid expenses			278,538				259,053
Total current assets			309,928				322,842
Cash and marketable securities held in Trust Account			29,194,458				40,651,426
Total assets		$	29,504,386			$	40,974,268
Liabilities and Shareholders’ Equity
Current liabilities:
Accrued expenses		$	44,729			$	2,166
Accounts payable			410,218				18,944
Convertible notes payable - related parties			100,000				-
Notes payable - related parties			536,732				-
Total current liabilities			1,091,679				21,110
Commitments
Ordinary shares subject to possible conversion, $0.0001 par value, 2,277,503 and 3,537,686 shares at conversion value at November 30, 2017 and 2016, respectively			23,412,705				35,953,149
Shareholders’ Equity:
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding at November 30, 2017 and 2016			-				-
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized; 1,872,428 and 1,772,314 shares issued and outstanding at November 30, 2017 and 2016, respectively (excluding 2,277,503 and 3,537,686 shares subject to possible conversion at November 30, 2017 and 2016, respectively)			187				177
Additional paid-in capital			6,138,872				5,416,776
Accumulated deficit			(1,139,057	)			(416,944	)
Total shareholders’ equity			5,000,002				5,000,009
Total Liabilities and Shareholders’ Equity		$	29,504,386			$	40,974,268

 

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

 

 

ANDINA ACQUISITION CORP. II

Consolidated Statements of Operations

 

		For The Years Ended November 30,
		2017				2016
General and administrative		$	1,001,068			$	513,552
Loss from operations			(1,001,068	)			(513,552	)
Interest income			278,955				154,441
Net loss		$	(722,113	)		$	(359,111	)
Weighted average shares outstanding, basic and diluted (1)			1,783,593				1,753,259
Basic and diluted net loss per ordinary share			(0.40	)			(0.20	)

 

(1) This number excludes 2,277,503 and 3,537,686 ordinary shares subject to possible conversion at November 30, 2017 and 2016, respectively.

 

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

 

 

ANDINA ACQUISITION CORP. II

Consolidated Statement of Changes in Shareholders’ Equity

 

		Ordinary Shares (1)								Additional Paid-In				Accumulated				Total Shareholders’
		Shares				Amount				Capital				Deficit				Equity
Balance - November 30, 2015			1,150,000			$	115			$	24,985			$	(57,833	)		$	(32,733	)
Sale of units in initial public offering, net of offering costs			4,000,000				400				38,244,602				-				38,245,002
Sale of units to insiders and underwriter in private placement			310,000				31				3,099,969				-				3,100,000
Compulsory repurchase of ordinary shares			(150,000	)			(15	)			15				-				-
Ordinary shares subject to possible conversion			(3,537,686	)			(354	)			(35,952,795	)			-				(35,953,149	)
Net loss			-				-				-				(359,111	)			(359,111	)
Balance - November 30, 2016			1,772,314			$	177			$	5,416,776			$	(416,944	)		$	5,000,009
Ordinary shares subject to possible conversion (1)			100,114				10				722,096				-				722,106
Net loss			-				-				-				(722,113	)			(722,113	)
Balance - November 30, 2017			1,872,428			$	187			$	6,138,872			$	(1,139,057	)		$	5,000,002

 

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

 

 

ANDINA ACQUISITION CORP. II

Consolidated Statement of Cash Flows

 

		For The Years Ended November 30,
		2017				2016
Cash Flows from Operating Activities
Net loss		$	(722,113	)		$	(359,111	)
Adjustments to reconcile net loss to net cash used in operation activities:
Interest earned on cash and marketable securities held in Trust Account			(278,925	)			(154,421	)
Expenses paid by related parties under notes payable			47,500				-
Changes in operating assets and liabilities:
Prepaid expenses			(19,485	)			(233,429	)
Accrued expenses			42,563				2,166
Accounts payable			391,274				(57,746	)
Net cash used in operating activities			(539,186	)			(802,541	)
Cash Flows from Investing Activities
Principal deposited in Trust Account			(277,413	)			(40,600,000	)
Interest released from Trust Account			301,985				102,995
Withdrawal from Trust Account upon redemption of ordinary shares			11,818,338				-
Net cash provided by (used in) investing activities			11,842,910				(40,497,005	)
Cash Flows from Financing Activities
Proceeds received under note payable to related parties			482,215				-
Redemption of ordinary shares			(11,818,338	)
Proceeds from initial public offering, net of costs			-				38,699,151
Proceeds from private placement			-				3,100,000
Repayment of advance from related party			-				(139,172	)
Payment of deferred offering costs included in accounts payable			-				(76,121	)
Payment of deferred offering costs included in accrued expenses			-				(220,623	)
Net cash (used in) provided by financing activities			(11,336,123	)			41,363,235
Net change in cash			(32,399	)			63,689
Cash - beginning of the period			63,789				100
Cash - ending of the period		$	31,390			$	63,789
Supplemental disclosure of noncash investing and financing activities:
Reclassification of deferred offering costs to equity		$	-			$	454,149
Initial value of ordinary shares subject to possible conversion		$	-			$	36,313,487
Change in value of ordinary shares subject to possible conversion		$	(722,106	)		$	(360,338	)
Proceeds under  notes payables to related parties deposited in Trust Account		$	107,017			$	-

 

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

 

 

ANDINA ACQUISITION CORP. II

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 - Organization, Plan of Business Operations

 

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

 

All activity through November 30, 2017 relates to the Company’s formation, the initial public offering described below and the search for a Business Combination candidate. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

 

The registration statement for the Company’s initial public offering (“Initial Public Offering”) was declared effective on November 24, 2015. The Company consummated the Initial Public Offering of 4,000,000 units (“Units”) at $10.00 per unit on December 1, 2015, generating gross proceeds of $40.0 million. Offering costs were approximately $1.8 million, inclusive of $454,000 of offering costs incurred prior to the closing of the Initial Public Offering (Note 3).

 

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 310,000 Units (“Private Placement Units”) at a price of $10.00 per Private Placement Unit, of which 265,000 Private Placement Units were sold to certain shareholders of the Company and their affiliates and designees, and 45,000 Private Placement Units were sold to EarlyBirdCapital, Inc. (“EBC”), the representative of the underwriters in the Initial Public Offering, generating gross proceeds of an aggregate of $3.1 million (Note 4).

 

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

 

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

 

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

 

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

 

 

In connection with any proposed initial Business Combination, the Company will either (1) seek shareholder approval of such initial Business Combination at a meeting called for such purpose at which holders of the outstanding ordinary shares sold in the Initial Public Offering (“Public Shareholders”) may seek to convert such shares (“Public Shares”), regardless of whether they vote for or against the proposed Business Combination, into their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable) or (2) provide Public Shareholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable). As of November 30, 2017, the amount in the Trust Account $10.23 per Public Share (excluding interest in the amount of approximately $135,400 that may be released to the Company as described above).

 

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

 

The Initial Shareholders have agreed to certain obligations and restrictions relating to their securities, including to vote in favor of any proposed Business Combination and in certain cases not to convert any shares in connection with a shareholder vote to approve, or sell their shares to the Company in any tender offer in connection with, a proposed initial Business Combination (See Note 5). The Representative has also agreed to vote its shares included in the Private Placement Units (the “private shares”) in favor of any proposed Business Combination.

 

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

 

On August 30, 2017, the Company held an extraordinary general meeting of shareholders (the “August Meeting”). At the August Meeting, the shareholders approved each of the following items: (i) an amendment to the Charter to extend the date by which the Company has to consummate a Business Combination (“Liquidation Date”) from September 1, 2017 to November 1, 2017 and (ii) an amendment to the Amended and Restated Memorandum and Articles of Association (the “Charter”) to allow the holders of the Company’s ordinary shares issued in the Company’s Initial Public Offering to elect to convert their public shares into their pro rata portion of the funds held in the Trust Account (the “First Extension”). Shareholders holding 432,769 Public Shares exercised their right to convert such shares into a pro rata portion of the Trust Account. As a result, an aggregate of approximately $4.4 million (or $10.15 per share) was removed from the Trust Account to pay such holders in September 2017. In connection with the First Extension, certain of the Company’s shareholders prior to the Initial Public Offering agreed to loan the Company $0.03 for each Public Share that was not converted, or $107,017, for each month following the First Extension. The loans will not bear interest and will be repayable by the Company to the lenders upon consummation of an initial Business Combination. If an initial Business Combination is not consummated by the required time period, the loans will be forgiven.

 

On October 31, 2017, the Company held another extraordinary general meeting of shareholders (the “October Meeting”). At the October Meeting, the shareholders approved an amendment to the Company’s Charter to extend the date by which the Company has to consummate a business combination (the “Second Extension”) to February 1, 2018. At the October Meeting, shareholders holding 727,300 Public Shares exercised their right to convert such shares into a pro rata portion of the funds in the Trust Account. As a result, an aggregate of approximately $7.4 million (or approximately $10.21 per share) was removed from the Trust Account in November 2017 to pay such shareholders. In connection with the Second Extension, certain of the Company’s shareholders prior to the Initial Public Offering will contribute to the Company as a loan $0.03 for each public Share that was not converted for each month of the Extension that is utilized. The Company’s board of directors will have the sole discretion whether to continue extending for additional months until February 1, 2018 and if the board determines not to continue extending for additional months, the shareholders’ obligation to make additional loans will terminate . Accordingly, an aggregate of approximately $85,198 will be contributed to the Company and deposited in the Trust Account for each month that is utilized through February 1, 2018. The contributions will not bear interest and will be repayable by the Company to the lenders upon consummation of an initial Business Combination. If an initial Business Combination is not consummated by the required time period, the loans will be forgiven.

 

On January 31, 2018, the Company held another extraordinary general meeting of shareholders. At the meeting, shareholders agreed to extend the date by which the Company has to consummate a Business Combination (the “Third Extension”) to April 1, 2018. Under Cayman Islands law, all amendments to the Charter took effect upon approval. Accordingly, the Company now has until April 1, 2018 to consummate the initial Business Combination. At the meeting, shareholders holding 708,052 Public Shares exercised their right to convert such shares into a pro rata portion of the funds in the Trust Account for an aggregate amount of approximately $7.3 million (or approximately $10.30 per share).

 

During the year ended November 30, 2017, the Company received an aggregate of $100,000 and $536,732 from certain shareholders under convertible notes and non-convertible notes, of which an aggregate of approximately $384,400 was deposited to the Trust Account in connection with the First and Second Extension. The loans are unsecured and non-interest bearing and are due upon consummation of a Business Combination.

 

 

If the Company has not completed a Business Combination by the Liquidation Date, it will trigger the automatic liquidation of the Trust Account and the voluntary liquidation of the Company. In such event, holders of Public Shares will share ratably in the Trust Account, including any interest not previously released to the Company, and any net assets remaining available for distribution to them after payment of liabilities. The Representative and the holders of the insider shares (as defined in Note 5), private shares, and rights and warrants included in the Private Placement Units (the “private rights” and “private warrants” respectively) will not participate in any liquidation distribution with respect to their insider shares, private shares, private rights or private warrants.

 

On November 22, 2017, Andina II Holdco Corp. (“Holdco”), a Delaware corporation and a wholly-owned subsidiary of the Company, filed a registration statement on Form S-4 (the “Registration Statement”) with the U.S. Securities and Exchange Commission, which includes a preliminary proxy statement of the Company, and constitutes a preliminary prospectus of Holdco.

 

The Registration Statement was filed in connection with the agreement and plan of merger, dated as of October 27, 2017 (the “Merger Agreement”), among the Company, Holdco, Andina II Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Holdco (“Merger Sub”), Lazy Days’ R.V. Center, Inc., a Delaware corporation (“Lazydays”) and, solely for certain purposes set forth in the Merger Agreement, pursuant to which (a) the Company will merge with and into Holdco, with Holdco surviving and becoming a new public company and (b) Merger Sub will merge with and into Lazydays, with Lazydays surviving and becoming a direct wholly owned subsidiary of Holdco. The consummation of the transactions contemplated by the Merger Agreement are subject to the approval of the shareholders of the Company and Lazydays and the satisfaction or waiver of other customary closing conditions.

 

Liquidity

 

As of November 30, 2017, the Company had approximately $31,000 in its operating bank account and approximately $135,000 of interest income held in the Trust Account available to be released to the Company.

 

Through November 30, 2017, the Company’s liquidity needs were satisfied through receipt of approximately $686,000 from the sale of the Units held outside of the Trust Account upon closing of the Initial Public Offering, $25,000 from the sale of the insider shares (as described in Note 6), advances from a director in an aggregate amount of $139,000, which was repaid on December 1, 2015 from the proceeds received upon closing of the Initial Public Offering, promissory notes for up to approximately $661,500 from related parties, of which an aggregate of $636,700 was received. During the year ended November 30, 2017 and 2016, the Company received an aggregate of approximately $302,000 and $103,000 from interest released from the Trust Account for working capital purposes.

 

Subsequent to November 30, 2017, the Company issued an aggregate of $99,666 in promissory notes to related parties for working capital purposes. These notes are unsecured and non-interest bearing and are due upon consummation of a Business Combination. In January 2018, one of the Company’s non-executive Chairman provided a commitment letter to fund the Company up to $350,000 for working capital purposes. If the Company does not consummate a Business Combination, the loan will be forgiven except to the extent that the Company has funds available to it outside of the Trust Account. The Company has not borrowed any amount under the commitment letter.

 

Based on the foregoing, the Company believes that it has sufficient funds available to operate its business through the earlier of consummation of a Business Combination or April 1, 2018 (or such later date as may be approved by shareholders at a meeting called for such purpose). Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business, and structuring, negotiating and consummating the Business Combination.

 

Note 2 – Significant Accounting Policies

 

Principles of Consolidation

 

The consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries. All material intercompany transactions and balances have been eliminated in the accompanying consolidated financial statements.

 

Basis of Presentation

 

The accompanying consolidated financial statements are presented in U.S. dollars and has been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the SEC.

 

Emerging Growth Company

 

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act of 1933, as amended (“Securities Act”), declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

 

 

Cash and Cash Equivalents

 

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

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. At November 30, 2017, the Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.

 

Fair Value of Financial Instruments

 

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

 

Cash and Marketable Securities Held in Trust Account

 

The amounts held in the Trust Account represent substantially all of the proceeds of the Initial Public Offering and are classified as restricted assets since such amounts can only be used by the Company in connection with the consummation of a Business Combination. As of November 30, 2017, cash and cash equivalents held in the Trust Account consisted of approximately $29.1 million in United States Treasury Bills and approximately $86,000 in cash. At November 30, 2017, there was approximately $135,000 of interest income held in the Trust Account available to be released to the Company.

 

Ordinary Shares Subject to Possible Conversion

 

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

 

Offering Costs

 

Offering costs consist principally of legal, accounting and underwriting costs incurred through the balance sheet date that are directly related to the Initial Public Offering. Offering costs amounting to approximately $1.8 million (including $1.3 million in underwriters’ fees) were charged to shareholder’s equity upon completion of the Initial Public Offering.

 

Net Loss per Share

 

Loss per share is computed by dividing net loss by the weighted-average number of Ordinary Shares outstanding during the period. An aggregate of 2,277,503 and 3,537,686 Ordinary Shares subject to possible redemption at November 30, 2017 and 2016, respectively, have been excluded from the calculation of basic loss per ordinary share since such Ordinary Shares, if redeemed, only participate in their pro rata share of the trust earnings. The Company has not considered the effect of (i) warrants sold in the Public Offering and Private Placement to purchase 2,155,000 Ordinary Shares of the Company, (ii) rights to acquire 615,713 Ordinary Shares of the Company and (iii) 400,000 Ordinary Shares, warrants to purchase 200,000 Ordinary Shares and rights to acquire 57,142 Ordinary Shares included in the unit purchase option sold to the underwriter, and (iv), up to 10,000 Ordinary Shares, warrants to purchase 5,000 Ordinary Shares, and rights to acquire 1,429 Ordinary Shares under the outstanding convertible note, in the calculation of diluted loss per share, since the exercise of the unit purchase option and warrants as well as the conversion of rights is contingent on the occurrence of future events.

 

 

Use of Estimates

 

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

 

Income Taxes

 

The Company was registered as an Exempted Company in the Cayman Islands, and therefore, is not subject to Cayman Islands income taxes for 20 years from the Date of Inception. The Company would be subject to United States income taxes based on such activities that would occur in the United States. The Company accounts for income taxes under ASC Topic 740 “Income Taxes”. ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the consolidated 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 consolidated financial statements and prescribes a recognition threshold and measurement process for consolidated 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 period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s consolidated financial statements. 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 might be subject to major tax jurisdictions in United States and New York. The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest as of November 30, 2016. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.

 

Recent Accounting Standards

 

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

 

Note 3 - Initial Public Offering

 

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

 

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

 

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

 

 

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

 

Note 4 - Private Placement

 

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

 

Note 5 - Related Party Transactions

 

Initial Shares

 

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

 

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

 

 

Related Party Transactions

 

Convertible Notes

 

Following the commitment letter from one of the Company’s directors and non-executive Chairman of the Board to provide working capital to the Company, on April 28, 2017, the Company issued a $100,000 convertible promissory note to such non-executive Chairman. The loan is unsecured, non-interest bearing and is payable upon consummation of a Business Combination. Upon consummation of a Business Combination, the principal balance of the note may be converted, at the holder’s option, to Private Placement Units at a price of $10.00 per Private Placement Unit. If the lender converts the entire principal balance of the convertible promissory note, he would receive 10,000 Private Placement Units. If a Business Combination is not consummated, the note will not be repaid by the Company and all amounts owed thereunder by the Company will be forgiven except to the extent that the Company has funds available to it outside of its Trust Account established in connection with the Initial Public Offering. As of November 30, 2017, the $100,000 convertible promissory note was outstanding.

 

Notes Payable

 

Prior to the closing of the Initial Public Offering, a director advanced an aggregate of approximately $139,000 to cover expenses related to the Company’s formation and the Initial Public Offering. The Company repaid this amount on December 1, 2015 from the proceeds received upon closing of the Initial Public Offering.

 

During the year ended November 30, 2017, the Company issued an aggregate of approximately $561,500 in promissory notes to related parties. Of these, the Company received an aggregate of $536,732 from certain shareholders under promissory notes, of which an aggregate of approximately $384,400 was deposited to the Trust Account in connection with the First and Second Extension as of November 30, 2017. The loans are unsecured and non-interest bearing and are due upon consummation of a Business Combination.

 

Others

 

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

 

If the Company consummates the transactions contemplated by the Merger Agreement with Lazydays, the Company has agreed to pay Hydra Management LLC, an affiliate of A. Lorne Weil, an initial shareholder and father of B. Luke Weil, the Company’s Non-Executive Chairman, $450,000 as compensation for advisory services rendered to the Company in connection with such transaction. The Company is not obligated to pay these fees if no business combination is consummated. These fees are an unrecognized contingent liability, as closing of a potential business combination was not considered probable as of November 30, 2017.

 

Note 6 - Commitments and Contingencies

 

Underwriting Agreement

 

On November 24, 2015, the Company entered into an agreement with EBC (“Underwriting Agreement”), pursuant to which the Company paid an underwriting discount of $1.3 million. The Company has further engaged EBC to assist the Company with its initial Business Combination. Pursuant to this arrangement, the Company anticipates that EBC will assist the Company in holding meetings with shareholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities, assist the Company in obtaining shareholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The Company will pay EBC a cash fee of $1,600,000 for such services upon the consummation of its initial Business Combination (exclusive of any applicable finders’ fees which might become payable); provided that up to 25% of the fee may be allocated at the Company’s sole discretion to one or more advisors that assist the Company in identifying and consummating an initial Business Combination. The Company will also reimburse EBC for up to $20,000 of its reasonable costs and expenses incurred by it (including reasonable fees and disbursements of counsel) in connection with the performance of its services pursuant to the agreement; provided, however, all expenses in excess of $5,000 in the aggregate shall be subject to prior written approval, which approval will not be unreasonably withheld. The Company is not obligated to pay these fees if no business combination is consummated. These fees are an unrecognized contingent liability, as closing of a potential business combination was not considered probable as of November 30, 2017.

 

Unit Purchase Option

 

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

 

 

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

 

Other Agreements

 

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

 

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

 

In July 2017, the Company entered into a financial advisory and private placement agreement with an advisor in connection with a potential Business Combination. Pursuant to the agreement, the Company agreed to pay the advisor a cash fee of $200,000, plus placement agent fees, as well as issue the advisor warrants to purchase ordinary shares of the Company, if the Business Combination is consummated and a capital raise is closed. The fees and warrants are all payable upon the closing of the Business Combination. The Company is not obligated to pay these fees if no Business Combination is consummated. These fees are an unrecognized contingent liability, as closing of a potential Business Combination was not considered probable as of November 30, 2017.

 

In August 2017, the Company entered into an engagement letter for legal advisory services in connection with a potential Business Combination, pursuant to which the legal counsel agreed to defer all additional fee charges (“deferred charges”) after the certain retainer amount is used. The Company is not obligated to pay deferred fees if no Business Combination is consummated. As of November 30, 2017, no material services were provided yet. The deferred charges are an unrecognized contingent liability, as closing of a potential Business Combination was not considered probable as of November 30, 2017.

 

Registration Rights

 

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

 

Note 7 - Shareholder Equity

 

Preferred Shares

 

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

 

As of November 30, 2017, there are no preferred shares issued or outstanding.

 

Ordinary Shares

 

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

 

As of November 30, 2017, after the consummation of the Initial Public Offering and the Private Placement, the Company has an aggregate of 5,310,000 ordinary shares outstanding, inclusive of 2,277,503 and 3,537,686 ordinary shares subject to possible conversion classified as temporary equity in the accompanying Balance Sheet as of November 30, 2017 and November 30, 2016, respectively.

 

 

In connection with the First and Second Extension, shareholders holding 432,769 and 727,300 Public Shares exercised their right to convert such shares into a pro rata portion of the Trust Account. As a result, an aggregate of approximately $4.4 million (or $10.15 per share) and $7.4 million (or approximately $10.21 per share) was removed from the Trust Account to pay such holders in September and November 2017.

 

Note 8 - Fair Value Measurements

 

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

 

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

 

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

 

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

 

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

 

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

 

		Quoted Prices in Active Markets
		(Level 1)
Description		November 30, 2017				November 30, 2016
Cash and marketable securities held in Trust Account		$	29,194,458				40,651,426

 

Approximately $86,000 and $44,000 of the balance in the Trust Account was held in cash as of November 30, 2017 and 2016.

 

Note 9 – Merger Agreement

 

On October 27, 2017, the Company entered into a Merger Agreement with Lazydays. The Merger Agreement provides for a business combination transaction by means of (i) the merger of Andina with and into Holdco, with Holdco surviving and becoming a new public company (the “Redomestication Merger”) and (ii) the merger of Merger Sub with and into Lazydays, with Layzdays surviving and becoming a direct wholly owned subsidiary of Holdco (the “Transaction Merger” and together with the Redomestication Merger, the “Mergers”). As a result of the Mergers, the shareholders of Andina and stockholders of Lazydays will become stockholders of Holdco.

 

Under the Merger Agreement, upon consummation of the Redomestication Merger, (i) each ordinary share of Andina will be exchanged for one share of common stock of Holdco (“Holdco Shares”), except that holders of the Company’s Public Shares shall be entitled to elect instead to receive a pro rata portion of Andina’s Trust Account, (ii) each Andina right will entitle the holder to receive one-seventh of a Holdco Share and (iii) each Andina warrant will entitle the holder to purchase one-half of one Holdco Share at a price of $11.50 per whole share. Upon consummation of the Transaction Merger, the stockholders of Lazydays (the “Stockholders”) will receive their pro rata portion of: (i) 2,857,143 Holdco Shares; and (ii) $85,000,000 in cash, subject to adjustments based on Lazydays’ working capital and debt as of closing and also subject to any such Holdco Shares and cash that are issued and paid to Lazydays’ optionholders and participants under Lazydays’ transaction incentive plan.

 

As the sole and exclusive remedy for amounts (if any) owed to Holdco as adjustments to the merger consideration based on Lazydays’ working capital and debt as of closing, an aggregate of $2,000,000 in cash to be paid as part of the merger consideration (the “Adjustment Escrow Cash”) shall be deposited in escrow. The escrow agent shall release the Adjustment Escrow Cash following its receipt of a notice specifying the amounts to be released as provided for in the Merger Agreement.

 

Upon the consummation of the Mergers, Holdco will be the new public entity and will change its name to “Lazydays Holdings, Inc.” The Mergers are expected to be consummated in the first quarter of 2018 after the required approvals by the shareholders of Andina and the Company are obtained and the fulfillment of certain other conditions, all as described herein and in the Merger Agreement.

 

 

PIPE Investment

 

Simultaneously with entering into the Merger Agreement, Holdco has entered into a series of securities purchase agreements with institutional investors for the sale of convertible preferred stock, common stock, and warrants of Holdco for an aggregate purchase price of $88.5 million (the “PIPE Investment”) in a private placement which will close simultaneously with the consummation of the Mergers (the “Closing”). As a result of the PIPE Investment, on the Closing, Holdco would issue an aggregate of 600,000 shares of Series A Preferred Stock of Holdco (with a stated value of $60.0 million), 3,261,852 Holdco Shares and five-year warrants to purchase an additional 2,503,934 Holdco Shares exercisable at $11.50 per share; provided that the number of Holdco Shares being issued in the PIPE Investment may be reduced in order to ensure that two investors that will be investing an aggregate of $22,750,000 in the PIPE Investment will hold less than up to 9.99% of the outstanding Holdco Shares at Closing and to the extent such number is reduced, they will receive pre-funded warrants in lieu of such Holdco Shares. The investors in the PIPE Investment will be granted certain registration rights as set forth in the securities purchase agreements.

 

The material terms of the Series A Preferred Stock are as follows:

 

The Series A Preferred Stock will rank senior to all outstanding capital stock of Holdco. Holders of the Series A Preferred Stock will be entitled to vote on an as-converted basis together with the holders of the Common Stock of Holdco, and not as a separate class, at any annual or special meeting of Holdco’s stockholders. Each share of Series A Preferred Stock will be convertible at the holder’s election at any time, at an initial conversion price of $10.0625 per share, subject to adjustment (as applicable, the “Conversion Price”). Upon any conversion of the Series A Preferred Stock, Holdco will be required to pay each holder converting shares of Series A Preferred Stock all accrued and unpaid dividends, in either cash or shares of Common Stock, at Holdco’s option. The Conversion Price will be subject to adjustment for stock dividends, forward and reverse splits, combinations and similar events, as well as for certain dilutive issuances.

 

Dividends on the Series A Preferred Stock will accrue at an initial rate of 8% per annum (the “Dividend Rate”), compounded quarterly, on each $100 of Series A Preferred Stock (the “Issue Price”) and be payable quarterly in arrears. Accrued and unpaid dividends, until paid in full in cash, will accrue at the then applicable Dividend Rate plus 2%. The Dividend Rate will be increased to 11% per annum, compounded quarterly, in the event Holdco’s senior indebtedness less unrestricted cash during any trailing twelve month period ending at the end of any fiscal quarter is greater than 2.25 times EBITDA. The Dividend Rate will be reset to 8% at the end of the first fiscal quarter when Holdco’s senior indebtedness less unrestricted cash during the trailing twelve month period ending at the end such quarter is less than 2.25 times EBITDA.

 

If, at any time following the second anniversary of the issuance of the Series A Preferred Stock, the volume weighted average price of Holdco’s Common Stock equals or exceeds $25.00 (as adjusted for stock dividends, splits, combinations and similar events) for a period of thirty consecutive trading days, Holdco may elect to force the conversion of any or all of the outstanding Series A Preferred Stock at the Conversion Price then in effect. From and after the eighth anniversary of the issuance of the Series A Preferred Stock, Holdco may elect to redeem all, but not less than all, of the outstanding Series A Preferred Stock in cash at the Issue Price plus all accrued and unpaid dividends. From and after the ninth anniversary of the issuance of the Series A Preferred Stock, each holder of Series A Preferred Stock has the right to require Holdco to redeem all of the holder’s outstanding shares of Series A Preferred Stock in cash at the Issue Price plus all accrued and unpaid dividends.

 

In the event of any liquidation, merger, sale, dissolution or winding up of Holdco, holders of the Series A Preferred Stock will have the right to (i) payment in cash of the Issue Price plus all accrued and unpaid dividends, or (ii) convert the shares of Series A Preferred Stock into Common Stock and participate on an as-converted basis with the holders of Common Stock.

 

So long as the Series A Preferred Stock is outstanding, the holders thereof, by the vote or written consent of the holders of a majority in voting power of the outstanding Series A Preferred Stock, shall have the right to designate two members to the board of directors of Holdco.

 

Support Agreement

 

Concurrently with the execution of the Merger Agreement, certain Stockholders (the “Supporting Stockholders”) have entered into a support agreement with Andina (the “Support Agreement”), pursuant to which each of the Supporting Stockholders has agreed, among other things, to vote all of the shares of the Company’s common stock beneficially owned by such Supporting Stockholder in favor of the Transaction Merger, and to not take any action to solicit, knowingly encourage, initiate, engage in or otherwise knowingly facilitate discussions or negotiations with, provide any information to, or enter into any agreement with any person (other than the parties to the Merger Agreement) concerning any merger, sale of a significant portion of assets or similar transaction involving the Company prior to April 27, 2018.

 

Lock-Up

 

Certain of the Stockholders will not be able to sell any of the Holdco Shares that they receive as a result of the Transaction Merger (subject to limited exceptions) until the earlier of (i) the nine-month anniversary of the Closing and (ii) the date on which Holdco consummates a liquidation, merger, stock exchange or other similar transaction in which Holdco is not the surviving company or which results in a change of control of Holdco. Such Stockholders will be required to enter into a lock-up agreement to such effect as a condition to the Closing.

 

 

Registration Rights

 

At Closing, Holdco will enter into a Registration Rights Agreement providing the Stockholders with certain demand registration rights and piggy-back registration rights with respect to registration statements filed by Holdco after the Closing. Andina and Holdco shall amend any existing registration rights agreements to which it is a party or similar agreements or instruments to which it is a party providing for registration rights with respect to Andina’s or Holdco’s securities held by any person such that the securities of Andina or Holdco held by the Stockholders will be equal in priority with all other securities of Andina or Holdco.

 

Indemnification of Andina and Holdco

 

Pursuant to the Merger Agreement, Andina and Holdco shall be entitled to certain limited indemnification for any inaccuracies or breaches of Lazydays’ representations and warranties in the Merger Agreement or for the non-fulfillment or breach prior to the Closing of any covenant or agreement of Lazydays contained in the Merger Agreement.

 

To provide a fund for payment to Holdco with respect to its post-closing rights to indemnification under the Merger Agreement, there will be placed in escrow (with an independent escrow agent): (i) an aggregate of $4,250,000 of cash to be paid as part of the merger consideration and (ii) 142,857 of the Holdco Shares to be issued as part of the merger consideration (“Indemnity Escrow Fund”) under the Merger Agreement. The escrow will be the sole remedy for Holdco with respect to their rights to indemnification under the Merger Agreement, except with respect to indemnification arising out of the inaccuracy or breach of certain specified representations of Lazydays set forth in the Merger Agreement.

 

The escrow agent shall release the Indemnity Escrow Fund (less any amounts for pending claims) on the first anniversary of the Closing.

 

No amount for indemnification shall be payable to Holdco unless and until the aggregate amount of all indemnifiable losses otherwise payable exceeds a deductible amount of $1,000,000, in which event all indemnifiable losses so due in excess of the deductible amount shall be paid out of the Indemnity Escrow Fund. The aggregate liability for losses of Holdco shall not in any event exceed the cash and Holdco Shares that constitute the Indemnity Escrow Fund. Holdco shall have no claim for indemnity against the Stockholders other than for any of the cash and Holdco Shares placed in escrow.

 

Representations and Warranties

 

The Merger Agreement contains representations and warranties of Andina, Lazydays and Holdco relating to, among other things, (a) organization and qualification, (b) subsidiaries, (c) capitalization, (d) authority relative to the Merger Agreement, (e) no conflict; required filings and consents, (f) compliance, (g) SEC reports and financial statements, (h) undisclosed liabilities, (i) absence of certain changes or events, (j) litigation, (k) employee benefit plans, (l) labor matters, (m) certain business activities, (n) title to property, (o) taxes, (p) environmental matters, (q) brokers, (r) intellectual property, (s) agreements, contracts and commitments, (t) insurance, (u) government actions/filings, (v) interested party transactions, (w) board approval, (x) listing of Andina’s securities, (y) the PIPE Investment and (z) Andina’s trust account.

 

The obligations of each party to consummate the Merger are subject to the satisfaction or waiver of customary conditions and Closing deliverables.

 

Termination

 

The Merger Agreement may be terminated at any time, but not later than the Closing, as follows:

 

	●	by mutual written agreement of Andina and Lazydays;
	●	by either Andina or Lazydays in certain circumstances if the Closing has not occurred on or before June 30, 2018;
	●	by either Andina or Lazydays if a governmental entity shall have issued an order, or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the Mergers, which order, decree, ruling or other action is final and nonappealable;
	●	by either Andina or Lazydays if the other party has materially breached any of its covenants or representations and warranties set forth in the Merger Agreement such that the applicable condition to Closing would not be satisfied and has not cured its breach within thirty days of a notice of such breach, provided that the terminating party is itself not in uncured material breach;
	●	by either Andina or Lazydays if, at the Andina extraordinary general meeting, the Mergers are not approved by holders of Andina shares or Andina will have less than $5,000,001 of net tangible assets upon consummation of the Mergers and after giving effect to the exercise by the holders of public shares of their rights to convert the public shares held by them into cash;
	●	by either Andina or Lazydays by written notice after Lazydays or Andina, as applicable, delivers a disclosure supplement under the Merger Agreement to Andina or Lazydays, as applicable, and the matter(s) disclosed in such disclosure supplement shall have resulted in a Material Adverse Effect (as defined in the Merger Agreement) on Lazydays or Andina, as applicable; or
	●	by Lazydays by written notice to Andina if at any time prior to obtaining the Lazydays stockholder approval, the Board of Directors of Lazydays authorizes Lazydays to terminate the Merger Agreement as a result of it receiving a “Superior Proposal” (as defined in the Merger Agreement).

 

 

If Lazydays terminates the Merger Agreement in connection with its receipt of a Superior Proposal as set forth in the Merger Agreement, it will owe Andina an aggregate of $2,200,000 within one business day of the termination.

 

Note 10 - Subsequent Events

 

The Company evaluates events that have occurred after the balance sheet date through the date, the financial statements were issued.

 

Subsequent to November 30, 2017, the Company borrowed an aggregate of $99,666 for working capital purposes and issued promissory notes to related parties in exchange. These notes are unsecured and non-interest bearing and are due upon consummation of a Business Combination.

 

In January 2018, the Company’s non-executive Chairman provided a commitment letter to fund the Company up to $350,000 for working capital purposes. If the Company does not consummate a Business Combination, the loan will be forgiven except to the extent that the Company has funds available to it outside of its Trust Account. The Company has not borrowed any amount under the commitment letter.

 

 

SIGNATURES

 

Pursuant to the requirements of the Section 13 or 15 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 7th day of January 2018.

 

	ANDINA ACQUISITION CORP. II
	By:
		Julio A. Torres
		Chief Executive Officer

 

In accordance with 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		Title		Date
		Chief Executive Officer (Principal		February 7, 2018
Julio A. Torres		Executive Officer) and Director
		Chief Financial Officer (Principal		February 7, 2018
Mauricio Orellana		Financial and Accounting Officer) and Director
		Director		February 7, 2018
B. Luke Weil
		Director		February 7, 2018
Matthew S. N. Kibble
		Director		February 7, 2018
Edward G. Navarro