Notes
to Condensed Financial Statements
(Unaudited)
Note
1 - Organization and Plan of Business Operations
Garnero
Group Acquisition Company (the “Company”) was incorporated in the Cayman Islands on February 11, 2014 as a blank check
company whose objective is to acquire, through a merger, share exchange, asset acquisition, stock purchase, recapitalization,
reorganization or other similar business combination, 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
of the world although the Company has focused on target businesses located in Latin America or Europe operating in the energy
(including renewables) and biotechnology industries or target businesses in such industries operating outside of those geographic
locations which the Company believes would benefit from expanding their operations to such locations.
All
activity through March 31, 2016 relates to the Company’s formation, issuance of ordinary shares to the initial shareholders
of the Company (“Initial Shareholders”), the offering described below, the identification and due diligence related
to potential target businesses and the proposed transaction with Q1 Comercial de Roupas S.A., a Brazilian company (“Colombo”),
described below.
The
registration statement for the Company’s initial public offering (“Initial Public Offering”) was declared effective
on June 25, 2014. The Company consummated the Initial Public Offering of 12,500,000 units on July 1, 2014 at an offering price
of $10.00 per unit, generating gross proceeds of $125,000,000 and net proceeds of $120,375,090 after deducting $4,624,910 of transaction
costs, which is discussed in Note 5. Simultaneously with the consummation of the Initial Public Offering, the Company consummated
a private placement of 563,750 units (“Private Units”) generating gross proceeds of $5,637,500 to an affiliate of
one of the Initial Shareholders and the underwriters which is described in Note 6.
On
July 1, 2014, the underwriters exercised their full over-allotment option to the extent of 1,875,000 units and on July 7, 2014,
the Company consummated the closing of the overallotment option (“Overallotment”). The Initial Public Offering and
the Overallotment are collectively referred to as the “Offering.” The 1,875,000 units sold pursuant to the Overallotment
were sold at an offering price of $10.00 per Unit, generating gross proceeds of $18,750,000 and net proceeds of $18,140,625 after
deducting the underwriter’s discount of $609,375. In a private placement that took place simultaneously with the consummation
of the exercise of the Overallotment, the affiliate of one of the Initial Shareholders and the underwriters purchased an additional
70,313 Private Units at $10.00 per unit generating gross proceeds of $703,130.
Following
the closing of the Overallotment on July 7, 2014, an amount of $144,468,755 (or $10.05 per share sold to the public in the Offering)
from the sale of the units in the Offering and the Private Units was placed in a trust account (“Trust Account”) and
was invested in United States government treasury bills having a maturity of 180 days or less or in money market funds meeting
the applicable conditions of Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended. The $144,468,755 placed
into the Trust Account may not be released until the earlier of (i) the consummation of the Company’s initial Business Combination
and (ii) the Company’s failure to consummate a Business Combination within the prescribed time. Placing funds in the Trust
Account may not protect those funds from third party claims against the Company. Although the Company has obtained and will continue
to 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. The Company’s Chief Executive Officer 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. However,
there can be no assurance that he will 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. In addition, (i) interest income on the funds held in the Trust Account can be
released to the Company to pay its income and other tax obligations and (ii) interest income on the funds held in the Trust Account
of up to $500,000 after payment of taxes can be released to the Company to pay for its working capital requirements in connection
with searching for a Business Combination.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Offering and
Private Units, although substantially all of the net proceeds are intended to be generally applied toward consummating a Business
Combination. The Company’s shares are listed on the Nasdaq Capital Market (“NASDAQ”). Pursuant to the NASDAQ
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. There is no assurance
that the Company will be able to effect a Business Combination successfully.
Garnero
Group Acquisition Company
Notes
to Condensed Financial Statements
(Unaudited)
In
connection with any proposed Business Combination, the Company will seek shareholder approval of an initial Business Combination
at a meeting called for such purpose at which shareholders who acquired ordinary shares in the Offering (“Public Shareholders”)
may seek to convert their shares (“Public Shares”), regardless of whether they vote for or against the proposed Business
Combination. If the Company seeks shareholder approval of an initial Business Combination, any Public Shareholder voting either
for or against such proposed Business Combination will be entitled to demand that his ordinary shares be converted into a full
pro rata portion of the amount then in the Trust Account (initially $10.05 per share, plus any pro rata interest earned on the
funds held in the Trust Account and not previously released to the Company or necessary to pay its taxes). However, the Company
is not permitted to consummate an initial Business Combination unless it has at least $5,000,001 of net tangible assets upon the
close of such Business Combination and a majority of the outstanding ordinary shares voted are voted in favor of the business
combination. The Initial Shareholders have agreed that they will vote any shares they then hold in favor of any proposed Business
Combination and will waive any conversion rights with respect to such shares. The Rights and Warrants (discussed in Note 5 - Initial
Public Offering) sold as part of the Units will not be entitled to vote on the proposed Business Combination and will have no
conversion or liquidation rights.
Notwithstanding
the foregoing, a Public Shareholder, together with any affiliate or other person with whom such Public Shareholder is acting in
concert or as a “group” (within the meaning of Section 13 of the Securities Act of 1934, as amended), will be restricted
from seeking conversion rights with respect to 30% or more of the shares of ordinary shares sold in the Offering. A “group”
will be deemed to exist if Public Shareholders (i) file a Schedule 13D or 13G indicated the presence of a group or (ii) acknowledge
to the Company that they are acting, or intend to act, as a group.
Pursuant
to the Company’s amended and restated memorandum and articles of association, if the Company does not consummate a Business
Combination by June 25, 2016, it will trigger the Company’s automatic winding up, dissolution and liquidation. As a result,
this has the same effect as if the Company had formally gone through a voluntary liquidation procedure under the Companies Law.
Accordingly, no vote would be required from the Company’s shareholders to commence such a voluntary winding up, dissolution
and liquidation. If the Company is unable to consummate an initial Business Combination, each Public Shareholder will receive
a full pro rata portion of the amount then in the Trust Account, plus any pro rata interest earned on the funds held in the Trust
Account and not previously released to the Company or necessary to pay any of its taxes. Holders of Rights, Warrants and unit
purchase options will receive no proceeds in connection with the liquidation with respect to such rights. The Initial Shareholders
and the holders of Private Units will not participate in any distribution with respect to their initial shares and Private Units,
including the ordinary shares included in the Private Units.
If
the Company is unable to conclude its initial Business Combination and expends all of the net proceeds of the Offering not deposited
in the Trust Account, without taking into account any interest earned on the Trust Account, the Company expects that the per-share
liquidation price of ordinary shares will be $10.05. The proceeds deposited in the Trust Account could, however, become subject
to claims of the Company’s creditors that are in preference to the claims of the Company’s shareholders. In addition,
if the Company is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it that is not dismissed,
the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate
and subject to the claims of third parties with priority over the claims of the Company’s ordinary shareholders. Therefore,
the actual per-share liquidation price may be less than $10.05.
The Company has
principally financed its operations from inception using proceeds from the sale of its equity securities to its initial shareholders,
proceeds from the Offering and loans from a related party. As of March 31, 2016, the Company had $975 in its operating account.
Interest earned on the Trust Account balance through March 31, 2016 available to be released to the Company amounted to approximately
$172,000. The Company’s Chief Executive Officer, Mario Garnero, has also committed to provide loans to the Company of up
to $1,820,000,
of which $1,544,696 was loaned to the Company through March 31, 2016.
$725,878 of
these loans was evidenced by notes entered into on September 28, 2015.
All loans will either be repaid upon the consummation of a Business Combination or, at the option of the holder, up to $500,000
may be converted into additional Private Units at a price of $10.00 per Private Unit (see Note 3). Based on the foregoing, the
Company believes it will have sufficient cash to meet its needs through the earlier of consummation of a Business Combination or
June 26, 2016, the date the Company’s liquidation will be triggered if a Business Combination is not consummated.
Garnero
Group Acquisition Company
Notes
to Condensed Financial Statements
(Unaudited)
Note
2 - Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. 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 (“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 of the
information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows.
In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included.
Operating results for the nine months ended March 31, 2016 are not necessarily indicative of the results that may be expected
for the year ending June 30, 2016. For further information refer to the financial statements and footnotes thereto included in
the Company’s Annual Report on Form 10-K for the year ended June 30, 2015.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect
of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered
in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the 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 maintains cash balances that at times may be uninsured or in deposit accounts that exceed Federal Deposit Insurance
Corporation limits. The Company maintains its cash deposits with major financial institutions.
Restricted
Cash and Cash Equivalents Held in Trust
The
amounts held in the Trust Account represent substantially all of the proceeds of the 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
March 31, 2016, cash and cash equivalents held in the Trust Account consisted of $144,662,784 in United States Treasury Bills
with a maturity date of 180 days or less.
Ordinary
Shares Subject to Possible Conversion
The
Company accounts for its ordinary shares subject to possible conversion in accordance with the guidance provided in Accounting
Standards Codification (“ASC”) 480 “Distinguishing Liabilities from Equity”. Ordinary shares subject to
mandatory conversion (if any) are classified as a liability instrument and measured at fair value. Conditionally convertible ordinary
shares (including ordinary shares that feature conversion rights that are either within the control of the holder or subject to
conversion 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 conversion rights that are considered by the Company to be outside of the Company’s control and subject
to the occurrence of uncertain future events. Accordingly at March 31, 2016, the ordinary shares subject to possible conversion
are presented as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.
Garnero
Group Acquisition Company
Notes
to Condensed Financial Statements
(Unaudited)
Income
Taxes
The
Company accounts for income taxes under ASC Topic 740 “Income Taxes” (“ASC 740”). ASC 740 requires the
recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement
and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry
forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a
portion of deferred tax assets will not be realized.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized
in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized,
a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance
on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company
determined that the Cayman Islands is its only major tax jurisdiction. Based on the Company’s evaluation, it has been concluded
that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements as of
March 31, 2016. The Company believes that its income tax positions would be sustained on audit and does not anticipate any adjustments
that would result in material changes to its financial position.
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 March 31, 2016. Management is currently unaware
of any issues under review that could result in significant payments, accruals or material deviations from its position.
Loss
per Share
Loss
per share is computed by dividing net loss by the weighted-average number of ordinary shares outstanding during the period. Ordinary
shares subject to possible conversion of 13,708,294 and 13,819,990 shares at March 31, 2016 and 2015 have been excluded from the
calculation of basic loss per share since such shares, if converted, only participate in their pro rata share of the Trust Account
earnings. The Company has not considered the effect of (i) warrants and rights included in the units sold in the Offering to acquire
9,005,438 Ordinary Shares and (ii) 1,250,000 Ordinary Shares and warrants and rights to acquire 750,000 Ordinary Shares included
in the unit purchase option sold to the underwriter, in the calculation of diluted loss per share, since the exercise of the warrants
and automatic conversion of the rights are contingent on the occurrence of future events.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
impact on the accompanying financial statements.
Subsequent
Events
The
Company evaluates events that have occurred after the balance sheet date through the date which these financial statements were
issued. Other than as described in Note 3, the Company did not identify any subsequent events that would have required adjustment
or disclosure in the financial statements.
Note
3 - Shareholder Commitment
The Company’s
Chief Executive Officer, Mario Garnero, has committed to provide the Company loans up to an aggregate of $1,820,000, of which
$1,544,696 was loaned to the Company through March 31, 2016. $725,878 of these loans were evidenced by notes entered into on September
28, 2015 and $818,818 are advances. Both the notes and advances are subject to the terms of the commitment letters provided by
the Company’s Chief Executive Officer, as described in Note 1. Subsequent to March 31, 2016, Mr. Garnero loaned the Company
an additional $96,745.
Note
4 - Investment Agreement
On
August 26, 2015, the Company entered into an Investment Agreement with Q1 Comercial de Roupas S.A., a Brazilian company (“Colombo”),
Alvaro Jabur Maluf Junior and Paulo Jabur Maluf (the “Controlling Persons”) and the persons listed under the caption
“Optionholder” on the signature pages in the Investment Agreement (the “Optionholders”). On December 17,
2015, the parties executed an amended and restated Investment Agreement (such amended and restated Investment Agreement referred
to herein as the “Investment Agreement”).
Pursuant
to the Investment Agreement, (A) the Controlling Persons will contribute all of the issued and outstanding ordinary shares of
Colombo (the “Outstanding Shares”) to the Company (the “Share Contribution”) and will receive in consideration
an aggregate of 3,640,000 newly issued ordinary shares of the Company (“GGAC Ordinary Shares”) and (B) the Optionholders
will exercise certain options held by them, will contribute the underlying ordinary shares of Colombo to the Company (the “Option
Contribution,” and together with the Share Contribution, the “Equity Contributions”), and will receive in consideration
an aggregate of 360,000 GGAC Ordinary Shares.
Garnero
Group Acquisition Company
Notes
to Condensed Financial Statements
(Unaudited)
Pursuant
to the Investment Agreement, the Controlling Persons have committed to use their commercially reasonable best efforts to purchase,
directly or indirectly, at least US$30 million of ordinary shares of the Company in the open market, and to vote such shares in
favor of the Business Combination and not to exercise their conversion rights with respect to such shares.
If
the Equity Contributions are consummated, Colombo will become a wholly-owned subsidiary of the Company, the Company will change
its name to “Grupo Colombo Inc.” and the former stockholders and management of Colombo will become shareholders of
the Company.
The
transaction is subject to approval by the Company’s shareholders and certain other conditions, as described in the Investment
Agreement.
Note
5 - Initial Public Offering
On
July 1, 2014, the Company sold 12,500,000 units (“Units”) at a price of $10 per Unit in the Initial Public Offering.
Each unit consists of one ordinary share of the Company, par value $0.0001, one right (“Right”) and one warrant (“Warrant”).
Each Right entitles the holder to receive one-tenth (1/10) of an ordinary share on the consummation of an initial business combination.
Each Warrant entitles the holder to purchase one-half of one ordinary share at a price of $11.50 per full ordinary share. Each
Warrant will become exercisable upon the completion of an initial business combination and will expire five years after the completion
of an initial business combination. The Company will not issue fractional shares.
On
July 1, 2014, the underwriters exercised their full over-allotment option to the extent of 1,875,000 units and on July 7, 2014,
the Company consummated the closing of the Overallotment. The 1,875,000 units sold pursuant to the Overallotment were sold at
an offering price of $10.00 per Unit.
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 $21.00 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 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. In the event that a registration statement is not
effective at the time of exercise, the holder of such Warrant shall not be entitled to exercise such Warrant for cash and in no
event (whether in the case of a registration statement being effective or otherwise) will the Company be required to net cash
settle the Warrant exercise.
The
Company paid the underwriters in the Offering an underwriting discount of 3.25% of the gross proceeds from the Initial Public
Offering and the Overallotment. The Company also issued, for $100, a unit purchase option to purchase up to a total of 1,250,000
units exercisable at $10.00 per unit (or an aggregate exercise price of $12,500,000) commencing upon the consummation of a Business
Combination. The unit purchase option expires June 25, 2019. The units issuable upon exercise of this option are identical to
the Units in the Offering. Accordingly, after the Business Combination, the purchase option will be to purchase 1,375,000 ordinary
shares (which includes 125,000 ordinary shares to be issued for the rights included in the units) and 1,250,000 Warrants to purchase
625,000 ordinary shares. The Company has agreed to grant to the holders of the unit purchase option, demand and “piggy back”
registration rights for periods of five and seven years, respectively, from June 25, 2014, including securities directly and indirectly
issuable upon exercise of the unit purchase option.
Garnero
Group Acquisition Company
Notes
to Condensed Financial Statements
(Unaudited)
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 Offering resulting in a charge directly to shareholders’ equity. The Company estimated that the fair value of this
unit purchase option was approximately $4,175,000 (or $3.34 per unit) using the Black-Scholes option-pricing model. The fair value
of the unit purchase option was estimated as of the date of grant using the following assumptions: (1) expected volatility of
35%, (2) risk-free interest rate of 1.70% 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 (except in the case of a forced cashless exercise upon the
Company’s redemption of the Warrants, as described above), such that the holder may use the appreciated value of the unit
purchase option (the difference between the exercise prices of the unit purchase option and the underlying Warrants 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 the Warrants underlying the unit purchase
option. The holder of the unit purchase option will not be entitled to exercise the unit purchase option or the Warrants underlying
the unit purchase option unless a registration statement covering the securities underlying the unit purchase option is effective
or an exemption from registration is available. If the holder is unable to exercise the unit purchase option or underlying Warrants,
the unit purchase option or Warrants, as applicable, will expire worthless.
Note
6 - Private Units
Simultaneously
with the Initial Public Offering, an affiliate of one of the Initial Shareholders of the Company and the underwriters purchased
an aggregate of 563,750 Private Units at $10.00 per Private Unit (for an aggregate purchase price of $5,637,500) from the Company.
In a private sale that took place simultaneously with the consummation of the Overallotment, an affiliate of one of the Initial
Shareholders of the Company and the underwriters purchased an additional 70,313 Private Units at $10.00 per Private Unit for an
aggregate purchase price of $703,130. All of the proceeds received from these purchases were placed in the Trust Account.
The
Private Units are identical to the Units sold in the Offering except the Warrants included in the Private Units will be 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, the holders of the Private Units have agreed (A) to vote the shares underlying their Private
Units 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 the Company’s pre-Business Combination activities
prior to the consummation of such a Business Combination, (C) not to convert any shares underlying the Private Units into the
right to receive cash from the Trust Account in connection with a shareholder vote to approve an 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 shares underlying the Private Units 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 the same permitted transferees
as the insider shares and provided the transferees agree to the same terms and restrictions as the permitted transferees of the
insider shares must agree to, each as described above) until the completion of an initial Business Combination.
Note
7 - Commitments and Contingencies
Business
Combination Consulting
The
Company has engaged the representative of the underwriters for the Offering (“Representative”) to assist the Company
with its initial Business Combination. Pursuant to this arrangement, the Company anticipates that the Representative 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 the Representative a cash fee of $4,600,000 for
such services upon the consummation of its initial Business Combination.
Registration
Rights
The
Initial Shareholders and the holders of the Private Units (or underlying securities) are entitled to registration rights with
respect to their Initial Shares and Private Units (or underlying securities) pursuant to agreements signed on June 25, 2014. The
holders of the majority of the Initial Shares are entitled to demand that the Company register these shares at any time commencing
three months prior to the first anniversary of the consummation of a Business Combination. The holders of the Private Units (or
underlying securities) are entitled to demand that the Company register these securities at any time after the Company consummates
a Business Combination. In addition, the Initial Shareholders and holders of the Private Units (or underlying securities) have
certain “piggy-back” registration rights on registration statements filed after the Company’s consummation of
a Business Combination.
Garnero
Group Acquisition Company
Notes
to Condensed Financial Statements
(Unaudited)
Office
Space
The
Company presently occupies office space provided by the Affiliate. Such Affiliate has agreed that, until the Company consummates
a Business Combination, it will make such office space, as well as certain office and secretarial services, available to the Company,
as may be required by the Company from time to time. The Company has agreed to pay such Affiliate $10,000 per month for such services
commencing on July 1, 2014. During the three and nine month periods ended March 31, 2016 and 2015, the Company incurred approximately
$30,000 and $90,000, respectively, for such rent and services, which is reflected in the Statement of Operations as Office expense
- related party. At March 31, 2016 and June 30, 2015, $10,000 and $0 of rent payable is included in accounts payable and accrued
expenses in the accompanying condensed balance sheet.
Note
8 - 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 March 31, 2016, there
are no preferred shares issued or outstanding.
Ordinary
Shares
The
Company is authorized to issue 120,000,000 ordinary shares with a par value of $0.0001 per share.