Annual report pursuant to section 13 and 15(d)

Restatement of Previously Issued Financial Statements

v2.4.0.6
Restatement of Previously Issued Financial Statements
12 Months Ended
Dec. 31, 2011
Restatement Of Previously Issued Financial Statements [Abstract]  
Restatement Of Previously Issued Financial Statements Disclosure [Text Block]

Note 2 – Restatement of Previously Issued Financial Statements

 

The Company has restated its financial statements as of December 31, 2011 to correct its accounting for adjustment made for its warrants. The Company’s original accounting treatment didn’t recognize a derivative liability and did not recognize changes in the fair value of that derivate liability in its condensed statement of operations.

 

In December 2012, the Company concluded it should correct its accounting related to the Company’s outstanding warrants. The Company had initially accounted for the warrants as a component of equity but upon further evaluation of the terms of the warrant, concluded that the warrants should be accounted for as a derivative liability. The warrants contain a restructuring price adjustment provision, such that, in the event the Company completes a business combination subsequent to the initial Business Combination which results in the Company’s shares no longer being listed on a national exchange or the OTC Bulletin Board, the exercise price of the warrants will decrease by formula that causes the warrants to not be indexed to the Company’s own shares. As a result of this provision, the Company has restated its financial statements to reflect the Company’s warrants as a derivative liability with changes in the fair value recorded in the current period earnings.

 

The following table summarizes the adjustments made to the previously reported December 31, 2011 balance sheet, statement of operations, statement of cash flows, and statement of shareholders’ equity.

 

Selected audited balance sheet information as of December 31, 2011:

 

    December 31,
2011 (as
previously
reported)
    Effect of
Restatement
    December 31,
2011
(As Restated)
 
                   
Liabilities:                  
Warrant liability   $     $ 4,483,334     $ 4,483,334  
Total liabilities     2,261,706       4,483,334       6,745,040  
                         
Maximum ordinary shares subject to possible redemption     43,611,572       (4,483,334 )     39,128,238  
                         
Equity                        
Ordinary shares     1,909       450       2,359  
Additional paid-in capital     5,333,060       (179,783 )     5,153,277  
Deficit accumulated during the development stage     (334,968 )     179,333       (155,635 )
Total equity     5,000,001             5,000,001  
Total liabilities and equity   $ 50,873,279     $     $ 50,873,279  

 

Selected statement of operations information for the year ended December 31, 2011:

 

    For the year
ended December
31, 2011 
(as previously
reported)
    Effect of
Restatement
    For the year
ended December
31, 2011
(As Restated)
 
                   
Gain on change in fair value of warrant liability   $     $ 179,333     $ 179,333  
Net (loss) income   $ (311,559 )   $ 179,333     $ (132,226 )
                         
Basic and diluted earnings (net loss) per share   $ (0.07 )   $ 0.04     $ (0.03 )

 

Selected statement of cash flow information for the year ended December 31, 2011:

 

    For the year ended
December 31, 2011 
(as previously
reported)
    Effect of
Restatement
    For the year ended
December 31, 2011
(As Restated)
 
                   
Operating activities:                  
Net (loss) income   $ (311,559 )   $ 179,333     $ (132,226 )
Loss on change in fair value of warrant liability   $     $ (179,333 )   $ (179,333 )