NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2020
(Unaudited)
Note
1 — Organization and Plan of Business Operations
Andina
Acquisition Corp. III (the “Company”) was incorporated in the Cayman Islands on July 29, 2016 as a blank check company
for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or
other similar business combination with one or more businesses or entities (a “Business Combination”). The Company’s
efforts to identify a prospective target business are not limited to a particular industry or geographic region, although the
Company initially intended to focus on target businesses in the Americas.
All
activity through June 30, 2020 relates to the Company’s formation, its initial public offering (the “Initial Public
Offering”), which is described below, and , since the closing of the Initial Public Offering, the search for a prospective
initial Business Combination and the proposed acquisition of EMMAC Life Sciences Limited, an independent European cannabis company
(“EMMAC”), as discussed in Note 6.
Initial
Public Offering
The
registration statement for the Initial Public Offering (the “IPO”) was declared effective on January 24, 2019
pursuant to Section 8(a) of the Securities Act of 1933, as amended. On January 31, 2019, the Company consummated the Initial Public
Offering of 10,800,000 units (the “Units” and, with respect to the ordinary shares included in the Units offered,
the “Public Shares”), which included a partial exercise by the underwriters of their over-allotment option in the
amount of 800,000 Units, at $10.00 per Unit, generating gross proceeds of $108,000,000, which is described in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 395,000 units (the “Private Units”)
at a price of $10.00 per Private Unit in a private placement (the “Private Placement”) to certain shareholders, or
their affiliates (collectively, the “Initial Shareholders”) and the underwriters, generating gross proceeds of $3,950,000,
which is described in Note 4.
Transaction
costs amounted to $3,204,451, consisting of $2,700,000 of underwriting fees and $504,451 of offering costs. In addition, as of
June 30, 2020, cash of $168,224 was held outside of the Trust Account (defined below) and is available for working capital purposes.
Following
the closing of the Initial Public Offering on January 31, 2019, an amount of $108,000,000 ($10.00 per Unit) from the net proceeds
of the sale of the Units in the Initial Public Offering and the sale of the Private Units was placed in a trust account (the “Trust
Account”), which has been invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or
in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment
Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution
of the Trust Account to its shareholders, as described below. The Company’s management has broad discretion with respect
to the specific application of the net proceeds of the Initial Public Offering and sale of the Private Units, although substantially
all of the net proceeds are intended to be applied generally toward consummating a Business Combination. Placing funds in the
Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have
all vendors, service providers, prospective target businesses or other entities it engages, execute agreements with the Company
waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute
such agreements. One of the Company’s directors has agreed to be personally liable if the Company liquidates the Trust Account
prior to the consummation of a Business Combination to ensure that the proceeds held 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 the Company for services rendered or
contracted for or products sold to the Company. However, such director may not be able to satisfy those obligations should they
arise. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence
on prospective acquisitions and continuing general and administrative expenses. Additionally, the interest earned on the Trust
Account balance may be released to the Company to pay the Company’s tax obligations and up to $100,000 may be released to
pay for the Company’s working capital obligations, including any necessary liquidation or dissolution expenses.
In
order to meet its working capital needs following the consummation of the Initial Public Offering, the Company’s 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 initial
Business Combination into additional Private Units at a price of $10.00 per unit. In the event that the initial Business Combination
does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts,
but no proceeds from the Trust Account would be used for such repayment.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2020
(Unaudited)
Initial
Business Combination
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 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. There are no limitations on the Company’s ability to incur debt or issue securities
in order to consummate a Business Combination. Since the Company has no specific Business Combination under consideration, the
Company has not entered into any arrangement to issue debt or equity securities. If the net proceeds of Initial Public Offering
prove to be insufficient, either because of the size of the Business Combination, the depletion of the available net proceeds
in search of a target business, or the obligation to convert a significant number of shares from shareholders into cash, the Company
will be required to seek additional financing in order to complete its initial Business Combination. In addition, if the Company
consummates a Business Combination, it may require additional financing to fund the operations or growth of the target business.
The failure to secure additional financing could have a material adverse effect on the continued development or growth of the
target business. None of the Company’s officers, directors or shareholders is required to provide any financing to the Company
in connection with or after a Business Combination.
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 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) 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), in each case subject
to the limitations described herein. Notwithstanding the foregoing, the Initial Shareholders have agreed, pursuant to written
letter agreements with the Company, 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. 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. The decision as to whether the Company will seek shareholder approval of a proposed Business Combination or
will allow shareholders to sell their Public 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, whether the terms of the transaction would otherwise require it to seek shareholder
approval or whether the Company is deemed to be a foreign private issuer (which would require us to conduct a tender offer rather
than seeking shareholder approval under the U.S. Securities and Exchange Commission (the “SEC”) rules). If the Company
engages in a tender offer in connection with an initial Business Combination, the Company will file tender offer documents with
the 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 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 issued and outstanding ordinary shares voted are voted in favor of the Business Combination. The $5,000,001 net
tangible asset value would be determined once a target business is located and the Company can assess all of the assets and liabilities
of the combined company.
The
Initial Shareholders have agreed (i) to vote their insider shares, Private Shares (as defined in Note 4) and any Public Shares
purchased in or after the Initial Public Offering in favor of any proposed Business Combination and (ii) not to convert any shares
(including the insider 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.
Failure
to Consummate a Business Combination
The
Company initially had until July 31, 2020 to complete a Business Combination. On July 29, 2020, the Company held a special meeting
pursuant to which the Company’s shareholders approved extending the date by which the Company had to complete a Business
Combination from July 31, 2020 to October 31, 2020 (or December 31, 2020 if the Company has executed a definitive agreement for
a Business Combination by October 31, 2020) (such date or later date, as applicable, the “Extended Date”).In connection
with the approval of the extension, shareholders elected to redeem an aggregate of 4,303,096
ordinary shares. As a result, an aggregate
of $44,063,656 (or approximately $10.24
per share) was released from the Company’s Trust Account
to pay such shareholders and 9,591,904
ordinary
shares are now issued and outstanding.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2020
(Unaudited)
Pursuant
to the terms of the Company’s amended and restated memorandum and articles of association, failure to consummate a Business
Combination by the Extended Date will trigger the automatic winding up, dissolution and liquidation of the Company. As a result,
this has the same effect as if the Company had formally gone through a voluntary liquidation procedure under Cayman Islands
Companies Law. Accordingly, no vote would be required from shareholders to commence such a voluntary winding up, dissolution and
liquidation. The holders of the insider shares will not participate in any liquidation distribution from the Trust Account with
respect to their insider shares.
Liquidity
and Going Concern
As
of June 30, 2020, the Company had $168,224 in its operating bank accounts, $110,579,759 in marketable securities held in the Trust
Account to be used for a Business Combination or to repurchase or redeem its Public Shares in connection therewith and working
capital deficit of $523,584. As of June 30, 2020, approximately $2,580,000 of the amount on deposit in the Trust Account represented
interest income, which is available to pay the Company’s tax obligations, if any. On April 9, 2020, pursuant to the prospectus
relating to the IPO and the terms and conditions of the Investment Management Trust Agreement, dated January 28, 2019, by and
between the Company and Continental Stock Transfer and Trust Company, the Company withdrew $100,000 of interest income on the
funds held in the trust account to support the Company’s working capital obligations.
Until
the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying
and evaluating target businesses, performing due diligence on prospective target businesses, traveling to and from the offices,
plants or similar location of prospective target businesses or their representatives or owners, reviewing corporate documents
and material agreements of prospective target businesses and structuring, negotiating and completing a Business Combination.
The
Company will need to raise additional capital through loans or additional investments from its Sponsor, an affiliate of the Sponsor,
or its officers or directors. The Company’s officers, directors and Sponsor, 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,
to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If
the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which
could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and
reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially
acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going
concern through the Extended Date, which is the date the Company is required cease all operations except for the purpose of winding
up if it has not completed a Business Combination. These condensed financial statements do not include any adjustments relating
to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be
unable to continue as a going concern.
Note
2 — Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements are presented in U.S. dollars and have been prepared in accordance with
accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information
and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission
(the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance
with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly,
they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results
of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include
all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position,
operating results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on
Form 10-K for the year ended December 31, 2019 as filed with the SEC on March 16, 2020, which contains the audited financial statements
and notes thereto. The financial information as of December 31, 2019 is derived from the audited financial statements presented
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The interim results for the three and
six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020
or for any future interim periods.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2020
(Unaudited)
Use
of Estimates
The
preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States
of America 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 condensed financial statements and the reported amounts of
expenses during the reporting period. Actual results could differ from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of June 30, 2020 and December 31, 2019.
Cash
and Marketable Securities Held in Trust Account
At
June 30, 2020 and December 31, 2019, the assets held in the Trust Account were substantially held in U.S. Treasury Bills.
Ordinary
Shares Subject to Possible Redemption
The
Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory
redemption 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 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 feature 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 redemption are presented at redemption value as temporary equity, outside of
the shareholders’ equity section of the Company’s condensed balance sheets.
Net
Loss per Ordinary Share
Net
loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding for the
period. The Company applies the two-class method in calculating earnings per share. Ordinary shares subject to possible redemption
at June 30, 2020 and 2019, which are not currently redeemable and are not redeemable at fair value, have been excluded from the
calculation of basic net loss per ordinary share since such shares, if redeemed, only participate in their pro rata share of the
Trust Account earnings. The Company has not considered the effect of (1) warrants sold in the Initial Public Offering and the
Private Placement to purchase 11,195,000 ordinary shares, and (2) rights sold in the Initial Public Offering and the Private Placement
that convert into 1,119,500 ordinary shares, in the calculation of diluted loss per share, since the exercise of the warrants
and the conversion of the rights into ordinary shares are contingent upon the occurrence of future events. As a result, diluted
net loss per ordinary share is the same as basic net loss per ordinary share for the periods presented.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2020
(Unaudited)
Reconciliation
of Net Loss per Ordinary Share
The
Company’s net (loss) income is adjusted for the portion of income that is attributable to ordinary shares subject to possible
redemption, as these shares only participate in the earnings of the Trust Account and not the income or losses of the Company.
Accordingly, basic and diluted loss per ordinary share is calculated as follows:
Schedule
of Basic and Diluted Loss Per Ordinary Share
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
Three
Months Ended June 30,
|
|
|
Six
Months Ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net (loss) income
|
|
$
|
(781,003
|
)
|
|
$
|
585,796
|
|
|
$
|
(447,824
|
)
|
|
$
|
894,562
|
|
Less: Income attributable to ordinary shares subject to possible redemption
|
|
|
(50,465
|
)
|
|
|
(660,373
|
)
|
|
|
(504,105
|
)
|
|
|
(1,057,349
|
)
|
Adjusted net
loss
|
|
$
|
(831,468
|
)
|
|
$
|
(74,577
|
)
|
|
$
|
(951,929
|
)
|
|
|
(162,787
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic and diluted
|
|
|
3,562,575
|
|
|
|
3,529,693
|
|
|
|
3,556,513
|
|
|
|
3,350,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per ordinary share
|
|
$
|
(0.23
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
(0.05
|
)
|
Income
Taxes
The
Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an
asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities
are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future
taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected
to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
ASC
Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions 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. The Company’s management determined that the Cayman Islands is the
Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits
as income tax expense. As of June 30, 2020 and December 31, 2019, there were no unrecognized tax benefits and no amounts accrued
for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments,
accruals or material deviation from its position over the next twelve months.
The
Company may be subject to potential examination by foreign taxing authorities in the areas of income taxes. These potential examinations
may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance
with foreign tax laws.
The
Company is considered an exempted Cayman Islands company and is presently not subject to income taxes or income tax filing requirements
in the Cayman Islands or the United States. As such, the Company’s tax provision is zero for all periods presented.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution,
which, at times may exceed the federal depository insurance coverage of $250,000. The Company has not experienced losses on this
account and management believes the Company is not exposed to significant risks on such account.
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 Measurement,” approximates the carrying amounts represented in the accompanying condensed financial statements, primarily
due to their short-term nature.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2020
(Unaudited)
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 condensed financial statements.
Note
3 — Initial Public Offering
Pursuant
to the Initial Public Offering, the Company sold 10,800,000 Units at a purchase price of $10.00 per Unit, which included a partial
exercise by the underwriters of their over-allotment option in the amount of 800,000 Units at $10.00 per Unit. Each Unit consists
of one ordinary share of the Company, one right (the “Public Right”) and one redeemable warrant (the “Public
Warrant”). Each Public Right entitles the holder to receive one-tenth (1/10) of an ordinary share upon consummation of a
Business Combination. Each Public Warrant entitles the holder to purchase one ordinary share at an exercise price of $11.50 per
share (see Note 7).
If the Company is unable to complete an initial
Business Combination by the Extended Date and the Company redeems the public shares for the funds held in the Trust Account,
holders of the 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 Units
Simultaneously with the closing of the Initial
Public Offering, certain of the Initial Shareholders, including the underwriters in the Initial Public Offering (and their respective
designees), purchased an aggregate of 395,000 Private Units at a price of $10.00 per Private Unit, for an aggregate purchase price
of $3,950,000. Each Private Unit consists of one ordinary share (“Private Share”), one right (the “Private Right”)
and one redeemable warrant (each, a “Private Warrant”). The proceeds from the Private Units have been added to the
proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination by
the Extended Date, the proceeds of the sale of the Private Units will be used to fund the redemption of the public shares
(subject to the requirements of applicable law), and the Private Units and all underlying securities will expire worthless.
The
Private Units are identical to the Units sold in the Initial Public Offering except that the Private Warrants are non-redeemable
and exercisable on a cashless basis so long as they are held by the initial purchasers or their permitted transferees. Additionally,
the purchasers of the Private Units 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 amended and restated memorandum and articles of association
with respect to its pre-Business Combination activities prior to the consummation of such a Business Combination unless the Company
provides public shareholders with the opportunity to convert their Public Shares in connection with any such vote, (C) not to
convert any Private Shares into the right to receive cash from the Trust Account in connection with a shareholder vote to approve
a proposed initial Business Combination or a vote to amend the provisions of the Company’s amended and restated memorandum
and articles of association relating to shareholders’ rights or pre-Business Combination activity and (D) that the Private
Shares shall not participate in any liquidating distribution from the Trust Account upon winding up if a Business Combination
is not consummated. The purchasers of the Private Units have also agreed not to transfer, assign or sell any of the Private Units
or underlying securities (except to permitted transferees) until the completion of an initial Business Combination.
Note
5 — Related Party Transactions
Promissory
Note – Related Party
On
November 7, 2016, the Company issued a promissory note to a director of the Company, pursuant to which the Company borrowed an
aggregate of $34,259. The promissory note was payable without interest on the earlier of (i) July 1, 2019, (ii) the date on which
the Company consummated the Initial Public Offering or (iii) the date on which the Company determined to not proceed with such
Initial Public Offering. The promissory note was repaid upon the consummation of the Initial Public Offering on January 31, 2019.
Advance
from Related Party
A
director of the Company advanced the Company an aggregate of $81,280 to cover expenses related to the Initial Public Offering.
The advances were non-interest bearing and due on demand. The advances were repaid upon the consummation of the Initial Public
Offering.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2020
(Unaudited)
Note
6 — Commitments
Business
Combination Marketing Agreement
The
Company engaged the joint book-running managers in the Initial Public Offering as advisors in connection with a Business Combination
to assist the Company in holding meetings with its 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 in connection
with a Business Combination, 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 the joint
book-running managers aggregate cash fees for such services upon the consummation of a Business Combination in an amount equal
to $3,240,000 (exclusive of any applicable finders’ fees which might become payable). If a proposed Business Combination
is not consummated for any reason during the 18-month period from the closing of the Initial Public Offering (as such period may
be extended), no fee will be due or payable to the advisors.
Fee
Arrangements
Following
the Initial Public Offering, the Company entered into a letter agreement with a member of the Company’s board of directors
that provides for a success fee to be paid to such director upon consummation of a Business Combination with a target business
introduced to the Company by such director in an amount equal to 0.6% of the total consideration paid by the Company in the transaction,
subject to certain minimum and maximum amounts set forth in the agreement.
In
addition, the Company entered into several letter agreements with unaffiliated third parties that provide for a success fee to
be paid to each such third party upon consummation of a Business Combination with a target business introduced to the Company
by such third party in amounts ranging from 0.75% to 1.0% of the total consideration paid by the Company in the transaction, subject
to certain minimum and maximum amounts set forth in the various agreements.
Registration
Rights
Pursuant
to a registration rights agreement entered into on January 28, 2019, the holders of the insider shares, as well as the holders
of the Private Units (and underlying securities) and any securities issued in payment of working capital loans made to the Company,
are entitled to registration rights. The holders of a majority of these securities are entitled to make up to three demands that
the Company register such securities. Notwithstanding anything to the contrary, the underwriters (and their designees) may only
make a demand registration (i) on one occasion and (ii) during the five-year period beginning on January 28, 2019. 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 Units (and
underlying securities) and securities issued in payment of working capital loans (or underlying securities) 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. Notwithstanding anything to the contrary, the underwriters (and their designees) may participate in a “piggy-back”
registration only during the seven-year period beginning January 28, 2019. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.
Letter
of Intent
On
July 22, 2020, the Company announced that it had entered into a non-binding letter of intent (the “Letter of Intent”)
with EMMAC relating to a proposed business combination transaction, pursuant to which the Company and EMMAC would combine, with
the former shareholders of both entities holding equity in the combined public company listed on Nasdaq and with EMMAC’s
shareholders owning a majority of that equity. Completion of the proposed transaction is subject to the negotiation and execution
of a definitive agreement and satisfaction of the conditions therein, including approval of the transaction by the Company’s
shareholders. There is no assurance that the proposed business combination transaction will be consummated on the terms
or timeframe currently contemplated, or at all.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2020
(Unaudited)
Note
7 — Shareholders’ 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 June 30, 2020 and December
31, 2019, no preferred shares were 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 June 30, 2020 and December
31, 2019, there were 3,634,473 and 3,550,450 ordinary shares issued and outstanding, excluding 10,260,527 and 10,344,550 ordinary shares subject to possible redemption, respectively.
In
connection with the organization of the Company, a total of 2,875,000 ordinary shares were sold to the Initial Shareholders for
an aggregate purchase price of $25,000. The 2,875,000 shares included an aggregate of up to 375,000 shares subject to forfeiture
to the extent that the underwriters’ over-allotment option was not exercised in full or in part so that the Company’s
Initial Shareholders would own 20% of the issued and outstanding shares after the Initial Public Offering. As a result of the
underwriters’ election to partially exercise their over-allotment option to purchase an additional 800,000 Units, 200,000
shares are no longer subject to forfeiture and 175,000 shares were forfeited, resulting in an aggregate of 2,700,000 shares issued
and outstanding at the Initial Public Offering date.
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 an initial
Business Combination and the date on which the closing price of the Company’s 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 an initial Business Combination and (2) with respect to the remaining 50% of the insider
shares, one year after the date of the consummation of an initial Business Combination, or earlier, in either case, if, subsequent
to an initial Business Combination, the Company consummates a liquidation, merger, stock exchange or other similar transaction
which results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities
or other property.
Rights
Each
holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination, even if a holder
of such right converted all ordinary shares held by it in connection with a Business Combination. No fractional shares will be
issued upon exchange of the rights. No additional consideration will be required to be paid by a holder of rights in order to
receive its additional shares upon consummation of a Business Combination as the consideration related thereto has been included
in the Unit purchase price paid for by investors in the Initial Public Offering. If the Company enters into a definitive agreement
for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the
holders of rights to receive the same per share consideration the holders of the ordinary shares will receive in the transaction
on an as-converted into ordinary shares basis and each holder of rights will be required to affirmatively covert its rights in
order to receive 1/10 of an ordinary share underlying each right (without paying additional consideration). The ordinary shares
issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company).
If
the Company is unable to complete a Business Combination by the Extended Date and the Company liquidates the funds held
in the Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive
any distribution from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights
will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights
upon consummation of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights.
Accordingly, the rights may expire worthless.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2020
(Unaudited)
Warrants
The
Public Warrants will become exercisable on the later of the completion of an initial Business Combination or January 28, 2020.
However, except as set forth below, no Public Warrants will be exercisable for cash unless the Company has an effective and current
registration statement covering the ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating
to such ordinary shares. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon
exercise of the Public Warrants is not effective within 90 days from the consummation of an initial Business Combination, warrant
holders may, until such time as there is an effective registration statement and during any period when the Company shall have
failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption from registration
provided by Section 3(a)(9) of the Securities Act provided that such exemption is available. If an exemption from registration
is not available, holders will not be able to exercise their Public Warrants on a cashless basis. The warrants will expire five
years from the consummation of an initial Business Combination.
The
Company may call the Public Warrants for redemption (excluding the Private Warrants), in whole and not in part, at a price of
$.01 per warrant:
|
●
|
at
any time while the warrants are exercisable,
|
|
●
|
upon
not less than 30 days’ prior written notice of redemption to each warrant holder,
|
|
●
|
if,
and only if, the reported last sale price of the ordinary shares equals or exceeds $18.00 per share, for any 20 trading days
within a 30 trading day period ending on the third business day prior to the notice of redemption to warrant holders, and
|
|
●
|
if,
and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants
at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until
the date of redemption.
|
The
Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the
Private Warrants and the ordinary shares issuable upon the exercise of the Private Warrants will not be transferable, assignable
or salable until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private
Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their
permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees,
the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise
the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and
number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event
of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. In addition, if
(x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection with
the closing of its initial Business Combination at an issue price or effective issue price of less than $8.50 per ordinary share
(with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and
in the case of any such issuance to Company affiliates, without taking into account any insider shares held by such affiliates
prior to such issuance) (where “insider shares” refers to the 2,875,000 ordinary shares held by the Company’s
Initial Shareholders prior to the Company’s Initial Public Offering), (y) the aggregate gross proceeds from such issuances
represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s initial
Business Combination on the date of the consummation of its initial Business Combination (net of redemptions) and (z) the volume
weighted average trading price of the Company’s ordinary shares during the 20 trading day period starting on the trading
day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”)
is below $8.50 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the
greater of (i) the Market Value or (ii) the price at which the Company issues the additional ordinary shares or equity-linked
securities. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to
complete a Business Combination within the required time period and the Company liquidates the funds held in the Trust Account,
holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution
from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may
expire worthless.
ANDINA
ACQUISITION CORP. III
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2020
(Unaudited)
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 the Company’s 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 at fair value on a recurring basis at
June 30, 2020 and December 31, 2019 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine
such fair value:
Schedule of Fair Value Assets Measured on Recurring Basis
Description
|
|
Level
|
|
|
June
30, 2020
|
|
|
December
31, 2019
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities held
in Trust Account
|
|
|
1
|
|
|
$
|
110,579,759
|
|
|
$
|
110,149,122
|
|
Note
9 — Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed
financial statements were issued. Other than as described below, the Company did not identify any subsequent events that would
have required adjustment or disclosure in the condensed financial statements.
On
July 22, 2020, the Company announced that it had entered into a Letter of Intent with EMMAC relating to a proposed business combination
transaction, pursuant to which the Company and EMMAC would combine, with the former shareholders of both entities holding equity
in the combined public company listed on Nasdaq and with EMMAC’s shareholders owning a majority of that equity. Completion
of the proposed transaction is subject to the negotiation and execution of a definitive agreement and satisfaction of the conditions
therein, including approval of the transaction by the Company’s shareholders. There is no assurance that the proposed
business combination transaction will be consummated on the terms or timeframe currently contemplated, or at all.
On
July 29, 2020, the Company held a special meeting pursuant to which the Company’s shareholders approved extending the date
by which the Company had to complete a Business Combination from July 31, 2020 to October 31, 2020 (or December 31, 2020 if the
Company has executed a definitive agreement for a Business Combination by October 31, 2020) (such date or later date, as applicable,
the “Extended Date”). In connection with the approval of the extension, shareholders elected to redeem an aggregate
of 4,303,096
ordinary shares. As a result, an aggregate
of $44,063,656 (or approximately $10.24
per share) was released from the Company’s Trust Account
to pay such shareholders and 9,591,904
ordinary shares are issued and outstanding
at the date these condensed financial statements were issued.