UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the quarterly period ended November 30, 2012
|
|
|
|
|
¨
|
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: 001-35234
BLUE WOLF MONGOLIA HOLDINGS CORP.
(Exact name of registrant as specified in
its charter)
British Virgin Islands
|
|
|
|
66-0762833
|
(State or other jurisdiction of
incorporation or organization)
|
|
|
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(I.R.S. Employer
Identification Number)
|
Two Greenwich Office Park, Suite 300
Greenwich, CT
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06831
|
(Address of principal executive offices)
|
(Zip Code)
|
(203) 622-4903
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes
x
No
¨
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes
x
No
¨
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large
accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer
¨
|
|
Accelerated filer
¨
|
Non-accelerated filer
x
|
|
Smaller reporting company
¨
|
(Do not check if a smaller reporting company)
|
|
|
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes
x
No
¨
As of December 28, 2012, there were 10,062,500 ordinary shares
of the Company issued and outstanding.
BLUE WOLF MONGOLIA HOLDINGS
CORP.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
|
2
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|
|
ITEM 1. FINANCIAL STATEMENTS
|
2
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|
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Interim Balance Sheets
|
2
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Interim Statements of Operations (Unaudited)
|
3
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Interim Statements of Changes in Shareholders’ Equity (Unaudited)
|
4
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Interim Statements of Cash Flows (Unaudited)
|
5
|
Notes to Interim Financial Statements
|
6
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|
|
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
15
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Overview
|
15
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Results of Operations
|
15
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Liquidity and Capital Resources
|
15
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Critical Accounting Policies
|
16
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|
|
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
18
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ITEM 4. CONTROLS AND PROCEDURES
|
18
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PART II. OTHER INFORMATION
|
18
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ITEM 1. LEGAL PROCEEDINGS
|
18
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ITEM 1A. RISK FACTORS
|
18
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|
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
18
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
|
19
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ITEM 4. MINE SAFETY DISCLOSURES
|
19
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ITEM 5. OTHER INFORMATION
|
19
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ITEM 6. EXHIBITS
|
19
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BLUE WOLF MONGOLIA HOLDINGS CORP.
(A Corporation in the Development Stage)
INTERIM BALANCE SHEET
S
|
|
November 30, 2012
|
|
|
February 29, 2012
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|
|
|
(Unaudited)
|
|
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(Audited)
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|
ASSETS
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|
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Current assets:
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|
|
|
|
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|
Cash
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|
$
|
114,670
|
|
|
$
|
392,625
|
|
Prepaid insurance and other current assets
|
|
|
30,803
|
|
|
|
88,329
|
|
Total current assets
|
|
|
145,473
|
|
|
|
480,954
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account
|
|
|
80,247,812
|
|
|
|
80,241,787
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
80,393,285
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|
|
$
|
80,722,741
|
|
|
|
|
|
|
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LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
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Current liabilities:
|
|
|
|
|
|
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Accrued expenses
|
|
$
|
40,066
|
|
|
$
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37,204
|
|
|
|
|
|
|
|
|
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Other liabilities:
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|
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Deferred underwriters' compensation
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|
2,415,000
|
|
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|
2,415,000
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|
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Total liabilities
|
|
|
2,455,066
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|
|
|
2,452,204
|
|
|
|
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|
|
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Commitments and contingencies
|
|
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|
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Ordinary shares subject to possible redemption; 7,315,769 shares
|
|
|
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and 7,349,100 shares, respectively (at redemption value)
|
|
|
72,938,217
|
|
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|
73,270,527
|
|
|
|
|
|
|
|
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Shareholders' equity:
|
|
|
|
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Preferred shares, no par value; five classes of unlimited shares authorized; none issued and outstanding
|
|
|
-
|
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-
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|
Ordinary shares, no par value; unlimited shares authorized; 2,746,731 and 2,713,400 issued and outstanding
|
|
|
|
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|
(which excludes 7,315,769 and 7,349,100 shares subject to possible redemption, respectively)
|
|
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2,604,973
|
|
|
|
2,272,663
|
|
Additional paid-in capital
|
|
|
3,125,000
|
|
|
|
3,125,000
|
|
Deficit accumulated during the development stage
|
|
|
(729,971
|
)
|
|
|
(397,653
|
)
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity
|
|
|
5,000,002
|
|
|
|
5,000,010
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
80,393,285
|
|
|
$
|
80,722,741
|
|
See accompanying notes to interim financial statements.
BLUE WOLF MONGOLIA HOLDINGS CORP.
(A Corporation in the Development Stage)
INTERIM STATEMENTS OF OPERATIONS (UNAUDITED)
|
|
|
|
|
|
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|
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For the Period
from
|
|
|
For the Period
from
|
|
|
|
|
|
|
|
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|
Nine Months
|
|
|
March 11, 2011
|
|
|
March 11, 2011
|
|
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|
Three
Months Ended
|
|
|
Ended
|
|
|
(date
of inception) to
|
|
|
(date
of inception) to
|
|
|
|
November
30, 2012
|
|
|
November
30, 2011
|
|
|
November
30, 2012
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November
30, 2011
|
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November
30, 2012
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
Revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
General and administrative
expenses
|
|
|
85,610
|
|
|
|
168,913
|
|
|
|
338,342
|
|
|
|
209,735
|
|
|
|
740,282
|
|
Loss from operations
|
|
|
(85,610
|
)
|
|
|
(168,913
|
)
|
|
|
(338,342
|
)
|
|
|
(209,735
|
)
|
|
|
(740,282
|
)
|
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
2,022
|
|
|
|
2,022
|
|
|
|
6,024
|
|
|
|
2,264
|
|
|
|
10,312
|
|
Net
loss attributable to ordinary shares not subject to possible redemption
|
|
$
|
(83,588
|
)
|
|
$
|
(166,891
|
)
|
|
$
|
(332,318
|
)
|
|
$
|
(207,471
|
)
|
|
$
|
(729,971
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of ordinary shares outstanding, excluding shares subject to possible redemption, basic and diluted
|
|
|
2,738,347
|
|
|
|
2,677,585
|
|
|
|
2,726,286
|
|
|
|
2,348,248
|
|
|
|
2,562,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per ordinary share, excluding shares subject to possible redemption, basic and diluted
|
|
$
|
(0.03
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.28
|
)
|
See accompanying notes to interim financial statements.
BLUE WOLF MONGOLIA HOLDINGS
CORP.
(A Corporation in the Development Stage)
INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)
For the Period from March
11, 2011 (date of inception) to November 30, 2012
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
Total
|
|
|
|
Ordinary
Shares
|
|
|
Paid-in
|
|
|
Development
|
|
|
Shareholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of ordinary shares to Sponsor on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 11, 2011 at $0.012 per share
|
|
|
2,012,500
|
|
|
$
|
25,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale on July 20, 2011 of 8,050,000 units at
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$10 per unit (including 7,349,100 shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subject to possible redemption)
|
|
|
8,050,000
|
|
|
|
80,500,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
80,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriters' discount and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
offering expenses
|
|
|
-
|
|
|
|
(4,981,810
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,981,810
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale on July 20, 2011 of 4,166,667 private
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
placement warrants to the Sponsor at $0.75 per
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
warrant
|
|
|
-
|
|
|
|
-
|
|
|
|
3,125,000
|
|
|
|
-
|
|
|
|
3,125,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds subject to possible redemption
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of 7,349,100 ordinary shares at redemption value
|
|
|
(7,349,100
|
)
|
|
|
(73,270,527
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(73,270,527
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to ordinary shares not
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subject to possible redemption
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(397,653
|
)
|
|
|
(397,653
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at February 29, 2012 (audited)
|
|
|
2,713,400
|
|
|
|
2,272,663
|
|
|
|
3,125,000
|
|
|
|
(397,653
|
)
|
|
|
5,000,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in proceeds subject to possible redemption
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of 7,315,769 ordinary shares at redemption value
|
|
|
33,331
|
|
|
|
332,310
|
|
|
|
-
|
|
|
|
-
|
|
|
|
332,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to ordinary shares not
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subject to possible redemption
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(332,318
|
)
|
|
|
(332,318
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at November 30, 2012 (unaudited)
|
|
|
2,746,731
|
|
|
$
|
2,604,973
|
|
|
$
|
3,125,000
|
|
|
$
|
(729,971
|
)
|
|
$
|
5,000,002
|
|
See accompanying notes to interim financial statements.
BLUE WOLF MONGOLIA HOLDINGS
CORP.
(A Corporation in the Development Stage)
INTERIM STATEMENTS OF CASH
FLOWS (UNAUDITED)
|
|
|
|
|
For the Period
from
|
|
|
For the Period
from
|
|
|
|
Nine Months
|
|
|
March 11, 2011
|
|
|
March 11, 2011
|
|
|
|
Ended
|
|
|
(date of inception)
to
|
|
|
(date of inception)
to
|
|
|
|
November
30, 2012
|
|
|
November
30, 2011
|
|
|
November
30, 2012
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(332,318
|
)
|
|
$
|
(207,471
|
)
|
|
$
|
(729,971
|
)
|
Adjustments to reconcile net
loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) attributable
to changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid insurance and other
current assets
|
|
|
57,526
|
|
|
|
(107,696
|
)
|
|
|
(30,803
|
)
|
Accrued
expenses
|
|
|
2,861
|
|
|
|
22,003
|
|
|
|
40,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
used in operating activities
|
|
|
(271,931
|
)
|
|
|
(293,164
|
)
|
|
|
(720,708
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal deposited in Trust
Account
|
|
|
-
|
|
|
|
(80,237,500
|
)
|
|
|
(80,237,500
|
)
|
Interest
reinvested in Trust Account
|
|
|
(6,024
|
)
|
|
|
(2,264
|
)
|
|
|
(10,312
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
used in investing activities
|
|
|
(6,024
|
)
|
|
|
(80,239,764
|
)
|
|
|
(80,247,812
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from notes payable
to affiliate
|
|
|
-
|
|
|
|
200,000
|
|
|
|
200,000
|
|
Payment of notes payable to
affiliate
|
|
|
-
|
|
|
|
(200,000
|
)
|
|
|
(200,000
|
)
|
Proceeds from sale of ordinary
shares to Sponsor
|
|
|
-
|
|
|
|
25,000
|
|
|
|
25,000
|
|
Proceeds from public offering
|
|
|
-
|
|
|
|
80,500,000
|
|
|
|
80,500,000
|
|
Proceeds from issuance of Sponsor
Warrants
|
|
|
-
|
|
|
|
3,125,000
|
|
|
|
3,125,000
|
|
Payment
of offering costs
|
|
|
-
|
|
|
|
(2,566,810
|
)
|
|
|
(2,566,810
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
provided by financing activities
|
|
|
-
|
|
|
|
81,083,190
|
|
|
|
81,083,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
|
|
|
(277,955
|
)
|
|
|
550,262
|
|
|
|
114,670
|
|
Cash at beginning of the period
|
|
|
392,625
|
|
|
|
-
|
|
|
|
-
|
|
Cash at end of the period
|
|
$
|
114,670
|
|
|
$
|
550,262
|
|
|
$
|
114,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Schedule of Non-Cash
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
underwriters' compensation
|
|
$
|
-
|
|
|
$
|
2,415,000
|
|
|
$
|
2,415,000
|
|
See accompanying notes to interim financial statements.
BLUE WOLF MONGOLIA HOLDINGS
CORP.
(A Corporation in the Development Stage)
NOTES TO INTERIM FINANCIAL STATEMENTS
(Unaudited)
Note 1. Interim Financial
Information and Basis of Presentation
The accompanying condensed interim financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”),
and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary
for a fair presentation of the financial position as of November 30, 2012 and the results of operations for the three months and
nine months ended November 30, 2012, the three months ended November 30, 2011, the period from March 11, 2011 (date of inception)
to November 30, 2011 and the period from March 11, 2011 (date of inception) to November 30, 2012. Certain information and disclosures
normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations.
Interim results are not necessarily indicative of the results of operations to be expected for a full fiscal year.
These unaudited condensed financial statements should
be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K
filed with the SEC on May 22, 2012.
Note 2. Organization and
Business Operations
Incorporation
Blue Wolf Mongolia Holdings Corp. (the “Company”)
was incorporated in the British Virgin Islands on March 11, 2011.
Sponsor
The Company’s sponsor is Blue Wolf MHC Ltd.,
an exempt company incorporated in the Cayman Islands with limited liability (the “Sponsor”).
Fiscal Year End
The Company has selected the last day of February
as its fiscal year end.
Business Purpose
The Company was formed to effect a merger, capital
share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (an
“Initial Business Combination”).
Financing
The registration statement for the Company’s
initial public offering (the “Public Offering”) (as described in Note 4) was declared effective on July 14, 2011. On
July 20, 2011, simultaneously with the closing of the Public Offering, the Sponsor purchased $3,125,000 of warrants in a private
placement (Note 5).
Upon the closing of the Public Offering and the private
placement, $80,237,500 was placed in the Trust Account (discussed below).
Trust Account
The trust account (the “Trust Account”)
may only be invested in United States government treasury bills having a maturity of 180 days or less or in money market funds
meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act and which invest solely in U.S. Treasuries.
The funds in the Trust Account are held in the name of Blue Wolf Mongolia Holdings Corp. (see Note 7).
Except for a portion of the interest income (net
of taxes payable) that may be released to the Company to pay any taxes and to fund the Company’s working capital requirements,
and any amounts necessary to purchase up to 15% of the Company’s Public Shares (as defined in Note 4) if the Company seeks
shareholder approval of its Initial Business Combination, as discussed below, none of the funds will be released from the Trust
Account until the earlier of: (i) the consummation of an Initial Business Combination no later than April 20, 2013, (ii) a redemption
to public shareholders prior to any voluntary winding-up in the event the Company does not consummate an Initial Business Combination
or (iii) pursuant to any liquidation.
Business Combination
An Initial Business Combination is subject to the
following size, focus and shareholder approval provisions:
Size
— The prospective
target business will not have a limitation to size, except that it must have an aggregate fair market value of at least 80% of
the value of the Trust Account (excluding any taxes) at the time of the agreement to enter the Initial Business Combination. The
Company will not consummate an Initial Business Combination unless it acquires a controlling interest in a target company or is
otherwise not required to register as an investment company under the Investment Company Act.
Focus
— The
Company’s efforts in identifying prospective target businesses will initially be focused on businesses within Mongolia that
complement the management team’s background such as in the natural resources sectors and related sectors. The
Company may, however, pursue opportunities in other business sectors or geographic regions.
Tender Offer/Shareholder Approval
— The Company, after signing a definitive agreement for an Initial Business Combination, will either (i) provide
shareholders with the opportunity to sell their shares to the Company by means of a tender offer for an amount in cash equal to
their pro rata share of the aggregate amount then on deposit in the Trust Account, including interest but less taxes payable, or
(ii) seek shareholder approval of the Initial Business Combination at a meeting called for such purpose in connection with which
shareholders may seek to redeem their shares, regardless of whether they vote for or against the Initial Business Combination,
for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, including interest but less
(a) taxes payable, (b) amounts released to fund working capital requirements and (c) any amounts released to the Company and used
to purchase up to 15% of the Public Shares sold in the Public Offering. The decision as to whether the Company will seek shareholder
approval of the Initial Business Combination or will allow shareholders to sell their shares in a tender offer will be made by
the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether
the terms of the transaction would otherwise require the Company to seek shareholder approval. If the Company seeks shareholder
approval, it will consummate its Initial Business Combination only if a majority of the ordinary shares voted are voted in favor
of the Initial Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause
its net tangible assets to be less than $5,000,001. In certain circumstances, the number of Public Shares the Company offers
to redeem may be further limited if the terms and conditions of the Initial Business Combination require the Company to retain
more than $5,000,001 in net tangible assets. In such case, if the Company were unable to satisfy the terms and conditions of the
Initial Business Combination, it would not proceed with the redemption of its Public Shares and the related Initial Business Combination,
and instead may search for an alternate Initial Business Combination.
Regardless of whether the Company holds a shareholder
vote or a tender offer in connection with an Initial Business Combination, a public shareholder will have the right to redeem its
shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account, including
interest but less taxes payable plus amounts released to fund working capital requirements and any amounts necessary to purchase
up to 15% of the Public Shares sold in the Public Offering. As a result, such ordinary shares are recorded at conversion/tender
value and classified as temporary equity, in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards
Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.”
Permitted Purchase of Public Shares
— If the Company seeks shareholder approval of its Initial Business Combination and does not conduct redemptions
pursuant to the tender offer rules, prior to the Initial Business Combination, the Company’s Memorandum and Articles of Association
will permit the release to the Company from the Trust Account, amounts necessary to purchase up to 15% of the Public Shares sold
in the Public Offering. All shares so purchased by the Company will be immediately cancelled.
Liquidation/Going Concern Consideration
If the Company does not consummate an Initial Business
Combination by April 20, 2013, the Company (i) will distribute the aggregate amount then on deposit in the Trust Account (less
up to $50,000 of the net interest earned thereon to pay dissolution expenses), pro rata, to holders of Public Shares by way of
redemption and (ii) intends to cease all operations except for the purposes of winding up of its affairs. This redemption of Public
Shares from the Trust Account shall be done automatically by function of the Company’s Memorandum and Articles of Association
and prior to any voluntary winding up, although at all times subject to the BVI Business Companies Act, 2004 of the British Virgin
Islands.
In the event of liquidation, it is likely that the
per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than
the initial public offering price per share in the Public Offering (assuming no value is attributed to the warrants contained in
the units offered in the Public Offering discussed in Note 4).
The Company will pay the costs of liquidation from
its remaining assets outside the Trust Account. If such funds are insufficient to cover these costs and expenses, up to $50,000
of the net interest earned on the Trust Account may be released to the Company to pay these costs. This mandatory liquidation and
subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern.
Note 3. Significant Accounting Policies
Development Stage Company
The Company is considered to be in the development
stage as defined by FASB ASC 915, “Development Stage Entities,” and is subject to the risks associated with activities
of development stage companies. Through November 30, 2012, the Company’s efforts have been limited to organizational activities,
activities relating to its Public Offering and activities relating to identifying and evaluating prospective acquisition candidates.
The Company has not generated any revenues, other than interest income earned on the proceeds held in the Trust Account. The Company
will not generate any operating revenues until after completion of an Initial Business Combination, at the earliest. The Company
will continue to generate non-operating income in the form of interest income on the designated Trust Account.
Cash Equivalents
The Company considers all highly-liquid investments
with original maturities of three months or less to be cash equivalents. Cash equivalents at November 30, 2012 and February 29,
2012 principally consist of cash in a money market account held by the Company through its Trust Account.
Net Loss Per Share
Basic net loss per share is computed by dividing
net loss by the weighted average number of ordinary shares outstanding during the period in accordance with FASB ASC 260, “Earnings
Per Share”. Diluted net loss per share is computed by dividing net loss by the weighted average number of ordinary
shares outstanding, plus to the extent dilutive, the incremental number of ordinary shares to settle warrants issued in the Public
Offering and private placement, as calculated using the treasury stock method. As the Company reported a net loss for
all periods presented in the accompanying interim statements of operations, the effect of the 12,216,667 warrants (including 4,166,667
warrants issued to the members of the Sponsor in the private placement), have not been considered in the diluted loss per ordinary
share because their effect would be anti-dilutive. As a result, dilutive loss per ordinary share is equal to basic loss per ordinary
share.
Reclassifications
Certain reclassifications have been made to amounts
previously reported for 2012 to conform with the current presentation. Such reclassifications have no effect on previously reported
net loss.
Redeemable Ordinary Shares
As discussed in Note 2, all of the 8,050,000 ordinary
shares sold as part of a Public Unit in the Public Offering contain a redemption feature which allows for their redemption under
the Company's liquidation or tender offer/stockholder approval provisions. In accordance with ASC 480, redemption provisions not
solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation
events, which involve the redemption and liquidation of all of the entity's equity instruments, are excluded from the provisions
of ASC 480. Although the Company does not specify a maximum redemption threshold, its Memorandum and Articles of Association provides
that in no event will the Company redeem its public shares in an amount that would cause its net tangible assets (shareholders'
equity) to be less than $5,000,001.
The Company recognizes changes in redemption value
immediately as they occur and will adjust the carrying value of the security to equal the redemption value at the end of each reporting
period. Increases or decreases in the carrying amount of redeemable ordinary shares shall be affected by charges against paid-in
capital.
Accordingly, at November 30, 2012 and February 29,
2012, 7,315,769 and 7,349,100 shares respectively of the 8,050,000 Public Shares were classified outside of permanent equity at
their redemption value. The redemption value (approximately $9.97 per share at November 30, 2012 and February 29, 2012) is equal
to the pro rata share of the aggregate amount then on deposit in the Trust Account, including interest but less taxes payable.
Use of Estimates
The preparation of financial statements in conformity
with 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 revenue and
expenses during the reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
Financial instruments that potentially subject the
Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times may exceed the federal
depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the
Company is not exposed to significant risks on such accounts.
Income Taxes
Under the laws of the British Virgin Islands, the
Company is generally not subject to income taxes. Accordingly, no provision for income taxes has been made in the accompanying
financial statements.
The Company is required to determine whether its
tax positions are more likely than not to be sustained upon examination by the applicable taxing authority, including resolution
of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit recognized is measured
as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with
the relevant taxing authority. De-recognition of a tax benefit previously recognized results in the Company recording a tax liability
that increases ending deficit accumulated during the development stage. Based on its analysis, the Company has determined that
it has not incurred any liability for unrecognized tax benefits as of November 30, 2012 or February 29, 2012. The Company’s
conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, ongoing analyses
of and changes to tax laws, regulations and interpretations thereof.
The Company recognizes interest and penalties related
to unrecognized tax benefits in interest expense and other expenses, respectively. No interest expense or penalties have been recognized
as of November 30, 2012 and for the period from March 11, 2011 (date of inception) to November 30, 2012. The Company is subject
to income tax examinations by major taxing authorities since inception.
The Company may be subject to potential examination
by U.S. federal, U.S. states or foreign jurisdiction 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
U.S. federal, U.S. state and foreign tax laws. The Company’s management does not expect that the total amount of unrecognized
tax benefits will materially change over the next twelve months.
Fair Value of Financial Instruments
Unless otherwise disclosed, the fair values of financial
instruments, including cash, approximate their carrying amount due primarily to their short-term nature.
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 the Company’s financial statements.
Note 4. Public Offering
Public Units
On July 20, 2011, the Company
sold 8,050,000 units (including units sold pursuant to the underwriters’ exercise of their over-allotment option) at a price
of $10.00 per unit (the “Public Units”) in the Public Offering. Each unit consists of one ordinary share
of the Company, no par value (the “Public Shares”), and one warrant to purchase one ordinary share (the “Public
Warrants”).
Public Warrant Terms and Conditions
Exercise Conditions
— Each
Public Warrant will entitle the holder to purchase from the Company one ordinary share at an exercise price of $12.00 per share
commencing on the later of: (i) 30 days after the consummation of an Initial Business Combination, or (ii) July 20, 2012, provided
that the Company has an effective registration statement covering the ordinary shares issuable upon exercise of the Public Warrants
and such shares are registered or qualified under the securities laws of the state of the exercising holder. The Public Warrants
expire five years from the date of the Initial Business Combination, unless earlier redeemed. The Public Warrants will be redeemable
in whole and not in part at a price of $0.01 per warrant upon a minimum of 30 days notice after the warrants become exercisable,
only in the event that the last sale price of the Company’s ordinary shares exceeds $18.00 per share for any 20 trading days
within a 30-trading day period. If the Public Warrants are redeemed by the Company, management will have the option to require
all holders that wish to exercise warrants to do so on a cashless basis.
Registration Risk
— In
accordance with a warrant agreement relating to the Public Warrants, the Company will be required to use its best efforts to maintain
the effectiveness of a registration statement relating to the ordinary shares which would be issued upon exercise of the Public
Warrants. The Company will not be obligated to deliver securities, and there are no contractual penalties for failure to deliver
securities, if a registration statement is not effective at the time of exercise. Additionally, in the event that a registration
statement is not effective at the time of exercise, the holders of such Public Warrants will not be entitled to exercise such Public
Warrants (except on a cashless basis under certain circumstances) and in no event (whether in the case of a registration statement
not being effective or otherwise) will the Company be required to net cash settle or cash settle the Public Warrants. Consequently,
the Public Warrants may expire unexercised, unredeemed and worthless, and an investor in the Public Offering may effectively pay
the full unit price solely for the ordinary shares included in the Public Units.
Underwriting Agreement
—
The Company paid an underwriting discount of $2,012,500, or 2.5% of the Public Unit offering price, to the underwriters
at the closing of the Public Offering, with an additional fee of $2,415,000, or 3.0% of the gross offering proceeds, payable upon
the Company’s consummation of an Initial Business Combination. The underwriters will not be entitled to any interest accrued
on the deferred discount.
Note 5. Related Party Transactions
Founder Shares
— In
March 2011, the Sponsor purchased 2,012,500 ordinary shares (the “Founder Shares”) for $25,000, or approximately $0.012
per share.
Earnout Shares
— In
addition, a portion of the Founder Shares in an amount equal to 591,912 shares will be subject to forfeiture by the Sponsor as
follows: (1) 304,924 shares are subject to forfeiture in the event the last sale price of the Company’s shares does not equal
or exceed $15.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for
any 20 trading days within at least one 30-trading day period within 36 months following the closing of the Company’s Initial
Business Combination and (2) 286,988 shares are subject to forfeiture in the event the last sale price of the Company’s
shares does not equal or exceed $12.50 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within at least one 30-trading day period within 36 months following the closing of the Company’s
Initial Business Combination.
Rights
— The
Founder Shares are identical to the Public Shares except that (i) the Founder Shares are subject to certain transfer restrictions,
as described in more detail below, and (ii) the Sponsor agreed to waive its redemption rights with respect to (A) the Founder Shares
and any Public Shares it purchases in connection with the Initial Business Combination and (B) the Founder Shares upon liquidation
if the Company fails to consummate an Initial Business Combination by April 20, 2013.
Voting
— If the Company
seeks shareholder approval of its Initial Business Combination, the Sponsor will vote the Founder Shares and any Public Shares
it has purchased in favor of the Initial Business Combination.
Liquidation
—
Although the Sponsor has, and its permitted transferees must agree to, waive their redemption rights with respect to the Founder
Shares if the Company fails to consummate an Initial Business Combination by April 20, 2013, they will be entitled to redemption
rights with respect to any Public Shares they may own.
Sponsor Warrants
— The Sponsor
purchased 4,166,667 warrants (the “Sponsor Warrants”) at $0.75 per warrant (for an aggregate purchase price of $3,125,000)
from the Company on a private placement basis simultaneously with the closing of the Public Offering.
Exercise Conditions
— Each Sponsor Warrant is exercisable for one ordinary share at $12.00 per share. The Sponsor Warrants are identical to the
Public Warrants except that the Sponsor Warrants (i) are not redeemable by the Company as long as they are held by the Sponsor,
members of the Sponsor or any of their permitted transferees, (ii) are subject to certain transfer restrictions described in more
detail below and (iii) may be exercised for cash or on a cashless basis.
Accounting
— Since the
Company is not required to net-cash settle the Sponsor Warrants, the Sponsor Warrants are recorded at fair value and classified
within shareholders’ equity as “Additional paid-in capital” upon their issuance in accordance with FASB ASC 815-40
“Derivatives and Hedging”.
Transfer Restrictions
The Sponsor has agreed not to transfer, assign or
sell any of its Founder Shares (except in limited circumstances to permitted transferees) until the earlier of (1) one year after
the completion of the Company’s Initial Business Combination and (2) the date on which the Company consummates a liquidation,
share exchange, share reconstruction and amalgamation, or other similar transaction after its Initial Business Combination that
results in all of its shareholders having the right to exchange their ordinary shares for cash, securities or other property (the
“Lock-Up Period”). Notwithstanding the foregoing, if the Company’s share price reaches or exceeds
$11.50 for any 20 trading days within at least one 30-trading day period during the Lock-Up Period, 50% of the Founder Shares will
be released from the lock-up and, if the Company’s share price reaches or exceeds $15.00 for any 20 trading days within at
least one 30-trading day period during such Lock-Up Period, the remaining 50% of the Founder Shares shall be released from the
lock-up. In addition, notwithstanding the above, the Sponsor has agreed not to transfer, sell or assign the Founder
earnout shares (whether to a permitted transferee or otherwise) before the applicable forfeiture condition lapses. The Sponsor
has agreed not to transfer, assign or sell any of the Sponsor Warrants including the ordinary shares issuable upon exercise of
the Sponsor Warrants until 30 days after the completion of an Initial Business Combination.
Registration Rights
The holders of the Founder Shares, Sponsor Warrants
and warrants that may be issued upon conversion of working capital loans hold registration rights to require the Company to register
a sale of any of the securities held by them pursuant to a registration rights agreement entered into in connection with the Public
Offering. These shareholders are entitled to make up to three demands, excluding short form demands, that the Company register
such securities for sale under the Securities Act of 1933 (the “Securities Act”). In addition, these shareholders have
“piggy-back” registration rights to include their securities in other registration statements filed by the Company.
However, the registration rights agreement provides that the Company will not permit any registration statement filed under the
Securities Act to become effective until termination of the applicable Lock-Up Period, which occurs (i) in the case of the Founder
Shares, upon the earlier of (1) one year after the completion of the Company’s Initial Business Combination or (2) the date
on which the Company consummates a liquidation, merger, share exchange or other similar transaction after the Company’s Initial
Business Combination that results in all of the Company’s shareholders having the right to exchange their ordinary shares
for cash, securities or other property, and (ii) in the case of the Sponsor Warrants and the respective ordinary shares underlying
such warrants, 30 days after the completion of the Company’s Initial Business Combination. The Company will bear
the costs and expenses of filing any such registration statements.
Note 6. Other Related Party Transactions
Administrative Services
The Company has agreed to pay up to $10,000 a
month for office space, utilities and secretarial and administrative services to the Sponsor. Services commenced on July 15,
2011 (the date the Company’s securities were first listed on the NASDAQ Capital Market) and will terminate upon the
earlier of (i) the consummation of an Initial Business Combination or (ii) the liquidation of the Company. Approximately
$30,000, $90,000, $30,000, $50,000 and $170,000 was incurred under this agreement for the three and nine months ended
November 30, 2012, the three months ended November 30, 2012, the period from March 11, 2011 (date of inception) to November
30, 2011 and the period from March 11, 2011 (date of inception) to November 30, 2012, respectively. As of November 30, 2012
and February 29, 2012, $20,000 and nil was payable to Sponsor for unpaid administrative fees, which is included in accrued
expenses on the accompanying balance sheets.
Notes Payable
On April 1, 2011, the Company issued an unsecured
promissory note for $200,000 to Blue Wolf MHC Ltd. The proceeds from the note were used to fund a portion of the organizational
and offering costs owed by the Company to third parties. This note was repaid on July 20, 2011.
Note 7. Trust Account
A total of $80,237,500, which includes $77,112,500
of the net proceeds from the Public Offering and $3,125,000 from the proceeds of the private placement, has been placed in the
Trust Account. The trust proceeds are invested in a money market fund which invests exclusively in U.S. Treasuries and meets certain
conditions under Rule 2a-7 under the Investment Company Act.
Note 8. Fair Value Measurement
The Company complies with FASB ASC 820, Fair Value
Measurements, 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 following tables present
information about the Company’s assets that are measured at fair value on a recurring basis as of November 30, 2012 and February
29, 2012, respectively, and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such
fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical
assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices,
interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability,
and include situations where there is little, if any, market activity for the asset or liability:
Fair Value of Financial Assets as of November
30, 2012
|
|
Balances, at
|
|
|
Quoted Prices
in
|
|
|
Significant Other
Observable
|
|
|
Significant Other
Unobservable
|
|
|
|
November 30,
|
|
|
Active Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
Description
|
|
2012
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
114,670
|
|
|
$
|
114,670
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account
|
|
|
80,247,812
|
|
|
|
80,247,812
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
80,362,482
|
|
|
$
|
80,362,482
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fair Value of Financial Assets as of February
29, 2012
|
|
Balances, at
|
|
|
Quoted Prices
in
|
|
|
Significant Other
Observable
|
|
|
Significant Other
Unobservable
|
|
|
|
February 29,
|
|
|
Active Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
Description
|
|
2012
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
392,625
|
|
|
$
|
392,625
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in Trust Account
|
|
|
80,241,787
|
|
|
|
80,241,787
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
80,634,412
|
|
|
$
|
80,634,412
|
|
|
$
|
—
|
|
|
$
|
—
|
|
The fair values of the Company’s investments
held in the Trust Account are determined through market, observable and corroborated sources.
Note 9. Commitments and Contingencies
The Company has committed to pay a deferred underwriters’
compensation of $2,415,000, or 3.0% of the gross Public Offering proceeds, to the underwriters upon the Company’s consummation
of an Initial Business Combination. This deferred underwriters’ compensation is reflected in the accompanying
interim balance sheets. The underwriters will not be entitled to any interest accrued on such deferred compensation.
Note 10. Shareholders’ Equity
Ordinary Shares
— The Company
has unlimited ordinary shares authorized. Holders of the Company’s ordinary shares are entitled to one vote for each ordinary
share. At November 30, 2012 and February 29, 2012, there were 2,746,731 and 2,713,400 ordinary shares outstanding, respectively.
Ordinary shares outstanding at November 30, 2012 and February 29, 2012 excludes 7,315,769 and 7,349,100 ordinary shares subject
to possible redemption, respectively.
Preferred Shares
— The Company
is authorized to issue an unlimited number of preferred shares in five different classes with such designations, voting and other
rights and preferences as may be determined from time to time by the Board of Directors. At November 30, 2012 and February 29,
2012, there were no preferred shares outstanding.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Special Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included
in this Form 10-Q 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-Q, words such as “anticipate,”
“believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate
to us or our management, identify forward-looking statements. Such forward looking statements are based on the beliefs of management,
as well as assumptions made by, and information currently available to, our management. 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 (the “SEC”). 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 formed on March 11, 2011 for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination
with one or more businesses (an “Initial Business Combination”). The Company’s efforts in identifying prospective
target businesses will initially be focused on businesses within Mongolia that complement the management team’s background
such as in the natural resources sectors and any related sectors. The Company may, however, pursue opportunities in other business
sectors or geographic regions. We intend to effectuate our initial business combination using cash from the proceeds of our initial
public offering (“Public Offering”) and the private placement of the Sponsor Warrants, our shares, debt or a combination
of cash, shares and debt. In addition, we will not effect a business combination with another blank check company or a similar
company with nominal operations.
Results of Operations
Through November 30, 2012, our efforts have been limited
to organizational activities, activities relating to our Public Offering, activities relating to identifying and evaluating
prospective acquisition candidates and activities relating to general corporate matters. We have not generated any revenues,
other than interest income earned on the proceeds held in the Trust Account. As of November 30, 2012, $80,247,812 was held in
the Trust Account (including $2.415 million of deferred underwriting discounts and commissions, $3.125 million from the sale
of the Sponsor Warrants and $10,312 in accrued interest) and we had cash outside of the Trust Account of $114,760. Interest
income on the balance of the Trust Account (net of taxes payable) may be available to us to fund our working capital
requirements but given the current interest rates, it is doubtful that we will earn a significant amount of interest. The
current low interest rate environment has made it more difficult for such investments to generate sufficient funds, together
with the amounts available outside the Trust Account, to locate, conduct due diligence, structure, negotiate and close our
Initial Business Combination. Through November 30, 2012, the Company had not withdrawn any funds from interest earned on the
trust proceeds. Other than the deferred underwriting discounts and commissions, no amounts are payable to the underwriters of
our Public Offering in the event of a business combination.
For the three months ended November 30, 2012, we had a net loss
of $85,610 and earned $2,022 in interest income. For the period from March 11, 2011 (date of inception) to November 30, 2012, we
had a net loss of $729,971 and earned $10,312 in interest income. All of our funds in the Trust Account are invested in a money
market fund which invests exclusively in U.S. Treasuries and meets certain conditions under Rule 2a-7 under the Investment Company
Act.
Liquidity and Capital Resources
On July 20, 2011, we consummated our Public Offering of 8,050,000
units at a price of $10.00 per unit. Simultaneously with the consummation of our initial public offering, we consummated the private
sale of 4,166,667 warrants (the “Sponsor Warrants”) to Blue Wolf MHC Ltd. (our “Sponsor”) for $3,125,000.
We received net proceeds from our Public Offering and the sale of the Sponsor Warrants of $80,237,500 (including the deferred portion
of the underwriting commission of $2.415 million) net of the non-deferred portion of the underwriting commissions of approximately
$2.013 million and other offering costs of approximately $665,000 and cash deposited outside of our trust account. For a description
of the proceeds generated in our Public Offering and a discussion of the use of such proceeds, we refer you to Note 4 of the unaudited
interim financial statements included in Part I, Item 1 of this report. As of November 30, 2012, we had cash of $114,670.
We will depend on sufficient interest being earned on
the proceeds held in the Trust Account to provide us with additional working capital to identify one or more target
businesses, conduct due diligence and complete our initial business combination, as well as to pay any taxes that we may owe.
As described elsewhere in this Report, the amounts in the Trust Account may be invested only in U.S. government treasury
bills with a maturity of 180 days or less or in money market funds investing solely in U.S. Treasuries and meeting
certain conditions under Rule 2a-7 promulgated under the Investment Company Act . The current low interest rate environment
has made it more difficult for such investments to generate sufficient funds, together with the amounts available outside the
Trust Account, to locate, conduct due diligence, structure, negotiate and close our Initial Business Combination. As a
result, we will need to seek additional capital to continue our operations. We intend to borrow sufficient funds from our
Sponsor or management team to operate until we close our Initial Business Combination. Neither our Sponsor nor our management team is
under any obligation to advance funds to us. If our Sponsor or its affiliate or our management team loans us any funds, they
may, at their option, convert up to $500,000 of those loans into warrants at $0.75 per warrant. These warrants would
have the same terms as the Sponsor Warrants. Any such loans would be repaid only from funds held outside the Trust Account or
from funds released to us upon completion of our Initial Business Combination. If we are unable to complete our
Initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations
and liquidate the Trust Account.
For the period from July 20, 2011 (consummation of our IPO)
through November 30, 2012, we disbursed an aggregate of approximately $613,295 out of the proceeds of our Public Offering not held
in trust, for legal expenses, accounting expenses and filing fees relating to our SEC reporting obligations, general corporate
matters, and miscellaneous expenses.
Off-balance sheet financing arrangements
We have no obligations, assets or liabilities which would be
considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated
entities or financial partnerships, often referred to as variable interest entities, which would have been established for the
purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial
assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations,
operating lease obligations or long-term liabilities other than a monthly fee of $10,000 payable to Blue Wolf MHC Ltd., our Sponsor,
for office space, utilities, secretarial and administrative services.
We began incurring these fees on July 15, 2011 ( the date the
Company’s securities were first listed on the NASDAQ Capital Market) and will terminate upon the earlier of (i) the consummation
of an Initial Business Combination or (ii) the liquidation of the Company. We had a balance outstanding of $20,000 for unpaid fees
as of November 30, 2012.
Critical Accounting Policies
The preparation of interim financial statements and related
disclosures in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the interim financial statements, and income and expenses during the periods reported. Actual results
could materially differ from those estimates. We have identified the following as our critical accounting policies:
Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.
Development Stage Company
The Company is considered to be in the development stage as
defined by FASB ASC 915, “Development Stage Entities,” and is subject to the risks associated with activities of development
stage companies. Through November 30, 2012, the Company’s efforts have been limited to organizational activities, activities
relating to its Public Offering, activities relating to identifying and evaluating prospective acquisition candidates and activities
relating to general corporate matters. The Company has not generated any revenues, other than interest income earned on the proceeds
held in the Trust Account. The Company will not generate any operating revenues until after completion of an Initial Business Combination,
at the earliest. The Company will continue to generate non-operating income in the form of interest income on the designated Trust
Account.
Redeemable Ordinary Shares
All of the 8,050,000 ordinary shares sold as part of a Public
Unit in the Public Offering contain a redemption feature which allows for the redemption of ordinary shares under the Company's
liquidation or tender offer/stockholder approval provisions. In accordance with ASC 480, redemption provisions not solely within
the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which
involve the redemption and liquidation of all of the entity's equity instruments, are excluded from the provisions of ASC 480.
Although the Company does not specify a maximum redemption threshold, its Memorandum and Articles of Association provides that
in no event will the Company redeem its public shares in an amount that would cause its net tangible assets (shareholders' equity)
to be less than $5,000,001.
The Company recognizes changes in redemption value immediately
as they occur and will adjust the carrying value of the security to equal the redemption value at the end of each reporting period.
Increases or decreases in the carrying amount of redeemable ordinary shares shall be affected by charges against paid-in capital.
Accordingly, at November 30, 2012, 7,315,769 of the 8,050,000
public shares are classified outside of permanent equity at their redemption value. The redemption value is equal to the pro rata
share of the aggregate amount then on deposit in the Trust Account, including interest but less taxes payable (approximately $9.97
at November 30, 2012).
Loss Per Ordinary Share
Loss per share is computed by dividing net loss applicable to
ordinary shareholders by the weighted average number of ordinary shares outstanding for the period. The 12,216,667 warrants related
to our Public Offering and the private placement of the Sponsor Warrants are contingently issuable shares and are excluded from
the calculation of diluted earnings per share because they are anti-dilutive.
Use of Estimates
The preparation of financial statements in conformity with 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 revenue and expenses during
the reporting period. Actual results could differ from those estimates.
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 the Company’s interim financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Market risk is the sensitivity of income to changes in interest
rates, foreign exchanges, commodity prices, equity prices and other market driven rates or prices. We are not presently engaged
in and, if we do not consummate a suitable business combination prior to the prescribed liquidation date of the trust account,
we may not engage in, any substantive commercial business. Accordingly, we are not and, until such time as we consummate a business
combination, we will not be, exposed to significant risks associated with foreign exchange rates, commodity prices, equity prices
or other market driven rates or prices. The net proceeds of our Public Offering held in the trust account may be invested by the
trustee only in U.S. government treasury bills with a maturity of 180 days or less or in money market funds investing solely in
U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Given our limited risk in our
exposure to government securities and money market funds, we do not view the interest rate risk to be significant.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures
that are designed to ensure that the information required to be disclosed in our reports filed or submitted under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange
Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow
timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange
Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of our disclosure controls
and procedures as of November 30, 2012. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
were effective.
During the most recently completed fiscal quarter, there has
been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Factors that could cause our actual results to differ materially
from those in this Report are any of the risks described in our Annual Report on Form 10-K for the fiscal year ended February 29,
2012, as filed with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations
or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair
our business or results of operations.
As of the date of this Report, there have been no material changes
to the risk factors disclosed in our Form 10-K for the fiscal year ended February 29, 2012, as filed with the SEC, except we may
disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit Number
|
|
Description
|
|
|
|
31.1
|
|
Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.
|
|
|
|
31.2
|
|
Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended.
|
|
|
|
32.1
|
|
Certification of the Principal Executive Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
|
|
|
|
32.2
|
|
Certification of the Principal Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
|
|
|
|
101.INS *
|
|
XBRL Instance Document
|
|
|
|
101.SCH *
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL *
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF *
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB *
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE *
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
*
|
|
XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
|
SIGNATURES
In accordance with the requirements 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.
|
BLUE WOLF MONGOLIA HOLDINGS CORP.
|
|
|
Dated: December 28, 2012
|
/s/ Lee Kraus
|
|
Lee Kraus
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
Dated: December 28, 2012
|
/s/ Paul Nicholas Edwards
|
|
Paul Nicholas Edwards
|
|
President and Chief Financial Officer
|
|
(Principal Financial Officer)
|
Blue Wolf Mongolia Holdings Corp. - Ordinary Shares (MM) (NASDAQ:MNGL)
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