10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

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

For the quarterly period ended March 31, 2017

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

For the transition period from to

Commission file number: 001-35436

TECNOGLASS INC.

(Exact Name of Registrant as Specified in Its Charter)

Cayman Islands	98-1271120
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Avenida Circunvalar a 100 mts de la Via 40, Barrio Las Flores Barranquilla, Colombia

(Address of principal executive offices)

(57)(5) 3734000

(Issuer’s telephone number)

N/A

(Former name, former address and former fiscal year, if changed since last report):

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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

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

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

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

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 33,487,982 ordinary shares as of March 31, 2017.

TECNOGLASS INC.

FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2017

TABLE OF CONTENTS

		Page
Part I. Financial Information
	Item 1. Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Income	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Shareholders’ Equity	6
	Notes to Condensed Consolidated Financial Statements	7
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
	Item 4. Controls and Procedures	29
Part II. Other Information
	Item 1. Legal Proceedings	30
	Item 6. Exhibits	30
Signatures		31

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Tecnoglass Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

	March 31, 2017			December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	54,372		$	26,918
Investments		1,751			1,537
Trade accounts receivable, net		103,310			92,297
Due from related parties		11,167			10,995
Inventories		56,731			55,092
Other current assets		23,294			23,897
Total current assets	$	250,625		$	210,736
Long term assets:
Property, plant and equipment, net	$	176,238		$	170,797
Deferred taxes		464			-
Intangible Assets		12,851			4,555
Goodwill		20,174			1,330
Other long term assets		7,470			7,312
Total long term assets		217,197			183,994
Total assets	$	467,822		$	394,730
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long term debt	$	6,624		$	2,651
Trade accounts payable and accrued expenses		41,960			42,546
Due to related parties		1,808			3,668
Note payable associated to GM&P acquisition		35,000			-
Dividends payable		2,170			3,486
Current portion of customer advances on uncompleted contracts		7,627			7,780
Other current liabilities		22,979			18,255
Total current liabilities	$	118,168		$	78,386
Long term liabilities:
Deferred income taxes	$	5,388		$	3,523
Customer advances on uncompleted contracts		2,246			2,310
Long term debt		220,714			196,946
Total Long Term Liabilities		228,348			202,779
Total liabilities	$	346,516		$	281,165
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2017 and December 31, 2016 respectively	$	-		$	-
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 33,487,982 and 33,172,144 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively		3			3
Legal Reserves		1,367			1,367
Additional paid-in capital		115,725			114,847
Retained earnings		27,457			26,548
Accumulated other comprehensive (loss)		(24,399	)		(29,200	)
Shareholders’ equity attributable to controlling interest		120,153			113,565
Shareholders’ equity attributable to non-controlling interest		1,153			-
Total shareholders’ equity		121,306			113,565
Total liabilities and shareholders’ equity	$	467,822		$	394,730

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

3

Tecnoglass Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Other Comprehensive Income

(In thousands, except share and per share data)

(Unaudited) 

	Three months ended March 31,
	2017			2016
Operating revenues:
External customers	$	64,443		$	60,884
Related parties		1,374			2,971
Total operating revenues		65,817			63,855
Cost of sales		43,565			39,165
Gross Profit		22,252			24,690
Operating expenses:
Selling expense		(6,906	)		(6,202	)
General and administrative expense		(7,501	)		(6,740	)
Provision for bad debt and write offs		(983	)		-
Total Operating Expenses		(15,390	)		(12,942	)
Operating income		6,862			11,748
Gain on change in fair value of earnout shares liabilities		-			3,704
Gain on change in fair value of warrant liability		-			5,911
Non-operating income		1,027			1,017
Foreign currency transactions gains (losses)		2,425			(1,257	)
Loss on extinguishment of debt		(3,159	)		-
Interest expense		(5,082	)		(3,124	)
Income before taxes		2,073			17,999
Income tax provision		1,042			3,643
Income after tax		1,031			14,356
Less: Income attributable to non-controlling interest		(12	)		-
Net income	$	1,019		$	14,356
Comprehensive income:
Net income	$	1,019		$	14,356
Foreign currency translation adjustments		4,801			1,742
Total comprehensive income	$	5,820		$	16,098
Basic income per share	$	0.03		$	0.51
Diluted income per share	$	0.03		$	0.46
Basic weighted average common shares outstanding		33,480,430			28,220,885
Diluted weighted average common shares outstanding		34,195,579			31,360,003

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

4

Tecnoglass Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

	Three months ended March 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,019		$	14,356
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for bad debts		983			-
Provision for obsolete inventory		-			-
Depreciation and amortization		4,905			3,331
Change in fair value of investments held for trading		4			(21	)
Loss on disposition of assets		3			-
Change in value of derivative liability		(23	)		(10	)
Change in fair value of earnout share liability		-			(3,704	)
Change in fair value of warrant liability		-			(5,911	)
Deferred income taxes		(1,690	)		387
Extinguishment of debt		2,583			-
Director stock compensation		71			-
Changes in operating assets and liabilities:
Trade accounts receivables		15,178			(11,620	)
Inventories		603			(5,792	)
Prepaid expenses		(2	)		270
Other assets		(5,183	)		(6,445	)
Trade accounts payable and accrued expenses		(8,771	)		2,233
Taxes payable		2,720			3,316
Labor liabilities		(424	)		(228	)
Related parties		73			(3,620	)
Customer advances on uncompleted contracts		(654	)		4,261
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	11,395		$	(9,197	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments		173			234
ESW acquisition		(1,672	)		-
Cash acquired from GM&P and Componenti		509			-
Purchase of investments		(450	)		(23,622	)
Acquisition of property and equipment		(1,947	)		-
CASH USED IN INVESTING ACTIVITIES	$	(3,387	)	$	(23,388	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt		20,253			124,570
Cash dividend		(550	)		-
Proceeds from bond issuance		201,884			-
ESW distributions prior to acquisition		-			(772	)
Repayments of debt		(202,900	)		(91,743	)
CASH PROVIDED BY FINANCING ACTIVITIES	$	18,687		$	32,055
Effect of exchange rate changes on cash and cash equivalents	$	759		$	305
NET (DECREASE) INCREASE IN CASH		27,454			(225	)
CASH - Beginning of period		26,918			22,671
CASH - End of period	$	54,372		$	22,446
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	6,795		$	2,203
Income Tax	$	3,993		$	4,440
NON-CASH INVESTING AND FINANCING ACTIVITES:
Assets acquired under capital lease and debt	$	-		$	6,883

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

5

Tecnoglass Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(Amounts in thousands, except share and per share data)

(Unaudited)

	Ordinary Shares, $0.0001 Par Value				Additional Paid in		Legal		Retained Earnings (Accumulated			Accumulated Other Comprehensive			Non-Controlling		Total Shareholders'
	Shares		Amount		Capital		Reserve		Deficit)			Loss			Interest		Equity
Balance at December 31, 2016		33,172,144	$	3	$	114,847	$	1,367	$	26,548		$	(29,200	)	$	-	$	113,565
Stock dividend		-		-		870		-		(110	)		-			-		760
Share based compensation		-		-		8		-		-			-			-		8
Non-controlling Interest in Componenti		-		-		-		-		-			-			1,153		1,153
Foreign currency translation		-		-		-		-		-			4,801			-		4,801
Net income		-		-		-		-		1,019			-			-		1,019
Balance at March 31, 2017		33,172,144	$	3	$	115,725	$	1,367	$	27,457		$	(24,399	)	$	1,153	$	121,306

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

6

Tecnoglass Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Note 1. General

Business Description

Tecnoglass Inc. (“TGI,” the “Company,” “we,” “us” or “our”) was incorporated in the Cayman Islands on September 21, 2011 under the name “Andina Acquisition Corporation” (“Andina”) as a blank check company. Andina’s registration statement for its initial public offering (the “Public Offering”) was declared effective on March 16, 2012. Andina consummated the Public Offering, the private placement of warrants (“Private Placement”) and the sale of options to the Underwriters on March 22, 2012, receiving proceeds, net of transaction costs, of $43,163, of which $42,740 was placed in a trust account.

Andina’s objective was to acquire, through a merger, share exchange, asset acquisition, share purchase recapitalization, reorganization or other similar business combination, one or more operating businesses. On December 20, 2013, Andina consummated a merger transaction (the “Merger”) with Tecno Corporation (“Tecnoglass Holding”) as ultimate parent of Tecnoglass S.A. (“TG”) and C.I. Energía Solar S.A. ES. Windows (“ES”). The surviving entity was renamed Tecnoglass Inc. The Merger transaction was accounted for as a reverse merger and recapitalization where Tecnoglass Holding was the acquirer and TGI was the acquired company.

The Company manufactures hi-specification, architectural glass and windows for the global residential and commercial construction industries. Currently the Company offers design, production, marketing, and installation of architectural systems for buildings of high, medium and low elevation size. Products include windows and doors in glass and aluminum, office partitions and interior divisions, floating façades and commercial window showcases. The Company sells to customers in North, Central and South America, and exports about half of its production to foreign countries. On March 29, 2017 we established ESWindows Europe SRL, a subsidiary based in Italy out of which we expect expand our sales to European and Middle Eastern markets.

TG manufactures both glass and aluminum products. Its glass products include tempered glass, laminated glass, thermo-acoustic glass, curved glass, silk-screened glass, acoustic glass and digital print glass. Its Alutions plant produces mill finished, anodized, painted aluminum profiles and rods, tubes, bars and plates. Alutions’ operations include extrusion, smelting, painting and anodizing processes, and exporting, importing and marketing aluminum products.

ES designs, manufactures, markets and installs architectural systems for high, medium and low rise construction, glass and aluminum windows and doors, office dividers and interiors, floating facades and commercial display windows.

In 2014, the Company established two Florida limited liability companies, Tecnoglass LLC (“Tecno LLC”) and Tecnoglass RE LLC (“Tecno RE”) to acquire manufacturing facilities, manufacturing machinery and equipment, customer lists and exclusive design permits.

In December 2016, as part of our strategy to vertically integrate our operations, we acquired 100% of the stock of ESW LLC, 85.06% of which was acquired directly by Tecnoglass and 14.94% by our subsidiary ES, for a total purchase price of $13,500, which consisted of (i) 734,400 ordinary shares issued in connection with the transaction for approximately $9,200 based on a stock price of $12.50, (ii) approximately $2,300 in cash, and (iii) approximately $2,000 related to the assignment of certain accounts receivable. The acquisition was deemed to be a transaction between entities under common control, which, under applicable accounting guidelines, requires the assets and liabilities to be transferred at historical cost of the entity, with prior periods retroactively adjusted to furnish comparative information.

7

On March 1, 2017, the Company acquired Giovanni Monti and Partners Consulting and Glazing Contractors, Inc. (“GM&P”), a Florida-based commercial consulting, glazing and engineering company, specializing in windows and doors for commercial contractors, including its 60% owned subsidiary, Componenti USA LLC. The purchase price for the acquisition was $35,000 of which $6,000 of the purchase price will be paid in cash by the Company with the remaining amount payable by the Company in cash, stock of the Company or a combination of both at the Company´s sole discretion within 180 days after closing. For more information on this acquisition, please refer to Note 3. Acquisitions.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting purposes. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the information contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by US GAAP.

Prior year financial information has been retroactively adjusted for an acquisition under common control. As the acquisition of ESW LLC was deemed to be a transaction between entities under common control, the assets and liabilities were transferred at the historical cost of ESW LLC, with prior periods retroactively adjusted to include the historical financial results of the acquired company for the period they were controlled by ESW LLC in the Company’s financial statements. The accompanying financial statements and related notes have been retroactively adjusted to include the historical results and financial position of the acquired company prior to the acquisition date during the periods the assets were under common control. All financial information presented for the periods after the ESW LLC acquisition represent the consolidated results of operations, financial position and cash flows of the Company with retroactive adjustments of the results of operations, financial position and cash flows of the acquired company during the periods the assets were under common control.

The preparation of these unaudited, condensed consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of the Company’s financial statements. Actual results may differ from these estimates under different assumptions and conditions. Estimates inherent in the preparation of these condensed consolidated financial statements relate to the collectability of account receivables, the valuation of inventories, estimated earnings on uncompleted contracts, useful lives and potential impairment of long-lived assets. Based on information known before these unaudited, condensed consolidated financial statements were available to be issued, there are no estimates included in these statements for which it is reasonably possible that the estimate will change in the near term up to one year from the date of these financial statements and the effect of the change will be material . These financial statements reflect all adjustments that in the opinion of management are necessary for a fair statement of the financial position, results of operations and cash flows for the period presented, and are of a normal, recurring nature.

Principles of Consolidation

These unaudited condensed consolidated financial statements consolidate TGI, its subsidiaries TG, ES and ESW LLC, Tecno LLC, Tecno RE, GM&P and Componenti USA LLC, which are entities in which we have a controlling financial interest because we hold a majority voting interest. To determine if we hold a controlling financial interest in an entity, we first evaluate if we are required to apply the variable interest entity (“VIE”) model to the entity, otherwise the entity is evaluated under the voting interest model. All significant intercompany accounts and transactions are eliminated in consolidation, including unrealized intercompany profits and losses.

8

Non-controlling interest

When the company owns a majority (but less than 100%) of a subsidiary’s stock, the company include in its condensed consolidated Financial Statements the non-controlling interest in the subsidiary. The non-controlling interest in the Condensed Consolidated Statements of Operations and Other Comprehensive Income is equal to the non-controlling proportionate share of the subsidiary’s net income and, as included in Shareholders’ Equity on the Consolidated Balance Sheet, is equal to the non-controlling proportionate share of the subsidiary’s net assets.

Foreign Currency Translation

The condensed consolidated financial statements are presented in U.S. Dollars, the reporting currency. Our foreign subsidiaries’ local currency is the Colombian Peso, which is also their functional currency as determined by the analysis of markets, costs and expenses, assets, liabilities, financing and cash flow indicators. As such, our subsidiaries’ assets and liabilities are translated at the exchange rate in effect at the balance sheet date, with equity being translated at the historical rates. Revenues and expenses of our foreign subsidiaries are translated at the average exchange rates for the period. The resulting cumulative foreign currency translation adjustments from this process are included as a component of accumulated other comprehensive income (loss). Therefore, the U.S. Dollar value of these items in our financial statements fluctuates from period to period.

Also, exchange gains and losses arising from transactions denominated in a currency other than the functional currency are included in the condensed consolidated statement of operations as foreign exchange gains and losses .

Business combinations

We allocate the total purchase price of the acquired tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the business combination date, with the excess purchase price recorded as goodwill. The purchase price allocation process required us to use significant estimates and assumptions, including fair value estimates, as of the business combination date. Although we believe the assumptions and estimates we have made are reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired company, in part based on valuation models that incorporate projections of expected future cash flows and operating plans and are inherently uncertain. Valuations are performed by management or third party valuation specialists under management’s supervision. In determining the fair value of assets acquired and liabilities assumed in business combinations, as appropriate, we may use one of the following recognized valuation methods: the income approach (including the cost saving method and the discounted cash flows from relief from royalty), the market approach and/or the replacement cost approach.

Examples of significant estimates used to value certain intangible assets acquired include but are not limited to:

● sales volume, pricing and future cash flows of the business overall

● future expected cash flows from customer relationships, and other identifiable intangible assets, including future price levels, rates of increase in revenue and appropriate attrition rate

● the acquired company’s brand and competitive position, royalty rate, as well as assumptions about the period of time the acquired brand will continue to benefit to the combined company’s product portfolio

● cost of capital, risk-adjusted discount rates and income tax rates

However, different assumptions regarding projected performance and other factors associated with the acquired assets may affect the amount recorded under each type of assets and liabilities, mainly between property, plant and equipment, intangibles assets, goodwill and deferred income tax liabilities and subsequent assessment could result in future impairment charges. The purchase price allocation process also entails us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained surrounding facts and circumstances existing at acquisition date.

Acquisitions under common control are recorded retroactively starting from the first date of common control. Instead of using fair value, the Company consolidates the financial statements of the entity acquired using the existing carrying values.

9

Revenue Recognition

Our principal sources of revenue are derived from product sales of manufactured glass and aluminum products. Revenue is recognized when (i) persuasive evidence of an arrangement exists in the form of a signed purchase order or contract, (ii) delivery has occurred per contracted terms, (iii) fees and prices are fixed and determinable, and (iv) collectability of the sale is reasonably assured. All revenue is recognized net of discounts, returns and allowances. Delivery to the customer is deemed to have occurred when the title is passed to the customer. Generally, title passes to the customer upon shipment, but title transfer may occur when the customer receives the product based on the terms of the agreement with the customer.

Revenues from fixed price contracts, which amount to 33% and 17% of the Company’s sales for the three months ended March 31, 2017 and 2016, respectively, and are recognized using the percentage-of-completion method, measured by the percentage of costs incurred to date to total estimated costs for each contract. Revenues recognized in advance of amounts billable pursuant to contracts terms are recorded as unbilled receivables on uncompleted contracts based on work performed and costs to date. Unbilled receivables on uncompleted contracts are billable upon various events, including the attainment of performance milestones, delivery and installation of products, or completion of the contract. Revisions to cost estimates as contracts progress have the effect of increasing or decreasing expected profits each period. Changes in contract estimates occur for a variety of reasons, including changes in contract scope, estimated revenue and estimated costs to complete. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in contract performance and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined and have not had a material effect on the Company’s financial statements.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Significant improvements and renewals that extend the useful life of the asset are capitalized. Interest incurred while acquired property is under construction and installation are capitalized. Repairs and maintenance are charged to expense as incurred. When property is retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any related gains or losses are included in income as a reduction to, or increase in operating expenses. Depreciation is computed on a straight-line basis, based on the following estimated useful lives:

Buildings	20 years
Machinery and equipment	10 years
Furniture and fixtures	10 years
Office equipment and software	5 years
Vehicles	5 years

10

Intangible Assets

Intangible assets with definite lives subject to amortization are amortized on a straight-line basis. We also review these intangibles for impairment when events or significant changes in circumstance indicate that the carrying value may not be recoverable. Events or circumstances that indicate that impairment testing may be required include the loss of a significant customer, loss of key personnel or a significant adverse change in business climate or regulations. There were no triggering events or circumstances noted and as such no impairment was needed for the intangible assets subject to amortization. See Note 8 - Goodwill and Intangible Assets for additional information.

Earn out shares liability

In accordance with ASC 815 - Derivatives and hedging, the earn out shares are not considered indexed to the Company’s own stock and therefore are accounted for as a liability with fair value changes being recorded in the condensed consolidated statements of operations and comprehensive income. Earnout shares are released from the escrow account upon achievement of the conditions set forth in the earnout share agreement. At this time the shares are recorded out of the earnout share liability and into common stock and additional paid in capital within the shareholders equity section of the Company’s condensed consolidated balance sheets. As of March 31, 2017 there is no earnout shares liability recorded.

Warrant liability

An aggregate 9,200,000 warrants were issued as a result of the Public Offering, the Private Placement and the Merger. Of the aggregate total, 4,200,000 warrants were issued in connection with the Public Offering (“IPO Warrants”), 4,800,000 warrants were issued in connection with the Private Placement (“Insider Warrants”), and 200,000 warrants were issued upon conversion of a promissory note at the closing of the Merger (“Working Capital Warrants”). The Company classifies the warrant instruments as a liability at their fair value because the warrants do not meet the criteria for equity treatment under guidance contained in ASC 815-40-15-7D. The aggregate liability is subject to re-measurement at each balance sheet date and adjusted at each reporting period until exercised or expired, and any change in fair value is recognized in the Company’s condensed consolidated statement of operations.

When the warrants are exercised for ordinary shares, the Company re-measures the fair value of the exercised warrants as of the date of exercise using available fair value methods and records the change in fair value in the condensed consolidated statement of operations, and records the fair value of the exercised warrants as additional paid in capital in the shareholders equity section of the Company’s condensed consolidated balance sheet. The Company’s warrants expired per their own terms on December 20, 2016.

Income Taxes

The Company’s operations in Colombia are subject to the taxing jurisdiction of the Republic of Colombia. ESW LLC, GM&P, Componenti USA LLC, Tecnoglass LLC and Tecno RE LLC are subject to the taxing jurisdiction of the United States . TGI and Tecnoglass Holding are subject to the taxing jurisdiction of the Cayman Islands. Annual tax periods prior to December 2014 are no longer subject to examination by taxing authorities in Colombia.

The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position. There are no significant uncertain tax positions requiring recognition in the Company’s condensed consolidated financial statements. The Company records interest and penalties, if any, as a component of income tax expense.

The Company accounts for income taxes under the asset and liability model (ASC 740 “Income Taxes”) and recognizes deferred tax assets and liabilities for the expected impact of differences between the financial statements and tax bases of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. A valuation allowance is established when management determines that it is more likely than not that all or a portion of deferred tax assets will not be realized.

11

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.

Earnings per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the period. Income per share assuming dilution (diluted earnings per share) would give effect to dilutive options, warrants, earnout shares, and other potential ordinary shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

The calculation of diluted earnings per share for the three months ended March 31, 2017 reflect 718,102 dilutive securities related to the annualized dividend declared of $0.50 per share authorized on August 4, 2016 by the Board of Directors. For the three months ended March 31, 2016, the Company considered the dilutive effect of warrants to purchase ordinary shares, unit purchase options exercisable into ordinary shares, and shares issuable under the earnout agreement in the calculation of diluted income per share, which resulted in 3,139,118 shares of dilutive securities.

The following table sets forth the computation of the basic and diluted earnings per share for the three months ended March 31, 2017 and 2016:

	Three months ended March 31,
	2017		2016
Net Income	$	1,019	$	14,356
Denominator
Denominator for basic earnings per ordinary share - weighted average shares outstanding		33,480,430		28,220,885
Effect of dilutive warrants, options, earnout shares, and stock dividends declared		718,103		3,139,118
Denominator for diluted earnings per ordinary share - weighted average shares outstanding		34,198,533		31,360,003
Basic earnings per ordinary share	$	0.03	$	0.51
Diluted earnings per ordinary share	$	0.03	$	0.46

Product Warranties

The Company offers product warranties in connection with the sale and installation of its products that are competitive in the markets in which the products are sold. Standard warranties depend upon the product and service, and are generally from five to ten years for architectural glass, curtain wall, laminated and tempered glass, window and door products. Warranties are not priced or sold separately and do not provide the customer with services or coverages in addition to the assurance that the product complies with original agreed-upon specifications. Claims are settled by replacement of the warrantied products. The Company evaluated historical information regarding claims for replacements under warranties and concluded that the costs that the Company has incurred in relation to these warranties have not been material.

Recently acquired GM&P provides certain product warranties based on warranty contracts with its customers at the time of sale. Warranty expense is charged to operating expenses. 

Non-Operating Income, net

The Company recognizes non-operating income from foreign currency transaction gains and losses, interest income on receivables, proceeds from sales of scrap materials and other activities not related to the Company’s operations. Foreign currency transaction gains and losses occur when monetary assets, liabilities, payments and receipts that are denominated in currencies other than the Company’s functional currency are recorded in the Colombian peso accounts of the Company in Colombia.

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Shipping and Handling Costs

The Company classifies amounts billed to customers related to shipping and handling as product revenues. The Company records and presents shipping and handling costs in selling expenses. Shipping and handling costs for the three months ended March 31, 2017 and 2016 were $3,132 and $2,930, respectively.

Dividends Payable

The company accounts for its dividend declared as a liability under ASC 480 - Distinguishing Liabilities from Equity since the shareholder have the option to elect cash or stock, and reclassifies from dividend payable to additional paid-in capital when shareholders elects a stock dividend instead of cash. The dividend payable is not subject to re-measurement at each balance sheet date since the dividend is a fixed monetary amount known at inception and thus no change in fair value adjustment is necessary.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)” (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASU 2016-02, a lessee will recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-to-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current GAAP. ASU 2016-02 retains a distinction between finance leases (i.e. capital leases under current GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP. The amendments of this ASU are effective for reporting periods beginning after December 15, 2018, with early adoption permitted. An entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements. We evaluated the impact of ASU 2016-09 and its related disclosures, and these standards had no material impact on our consolidated financial statements

In May 2016, the FASB also issued ASU 2016-12, Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), which provides clarification on certain topics within ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), including assessing collectability, presentation of sales taxes, the measurement date for non-cash consideration and completed contracts at transition, as well as providing a practical expedient for contract modifications at transition. The effective date and transition requirements for the amendments in ASU 2016-08, ASU 2016-10 and ASU 2016-12 are the same as the effective date and transition requirements of ASU 2014-09, which is effective for fiscal years, and for interim periods within those years, beginning after December 15, 2017. The Company already started with the planning phase of the adoption of this ASU and is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 reduces diversity in practice by providing guidance on the classification of certain cash receipts and payments in the statement of cash flows. ASU 2016-15 clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. ASU 2016-15 is effective on a retrospective basis for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

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On October 24, 2016, the FASB issued Accounting Standards Update 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The ASU is part of the Board’s simplification initiative aimed at reducing complexity in accounting standards. Under current GAAP, the tax effects of intra-entity asset transfers (intercompany sales) are deferred until the transferred asset is sold to a third party or otherwise recovered through use. This is an exception to the principle in ASC 740, Income Taxes, that generally requires comprehensive recognition of current and deferred income taxes. The new guidance eliminates the exception for all intra-entity sales of assets other than inventory. As a result, a reporting entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The new guidance does not apply to intra-entity transfers of inventory. The income tax consequences from the sale of inventory from one member of a consolidated entity to another will continue to be deferred until the inventory is sold to a third party. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Restricted Cash” (“ASU 2016-18”). ASU 2016-18 provides amendments to ASC No. 230, “Statement of Cash Flows,” which require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents. The amendments in this update are effective retrospectively during interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In December 2016, the FASB issued Accounting Standards Update 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, (“ASU 2016-20”). The purpose of ASU 2016-20 is to amend certain narrow aspects of the guidance issued in ASU 2014-09 including guidance related to the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Clarifying the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 provides amendments to ASC No. 805, “Business Combinations,” which clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update are effective prospectively during interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 provides amendments to ASC No. 350, “Intangibles - Goodwill and Other” (“ASC 350”), which eliminate Step 2 from the goodwill impairment test. Entities should perform their goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The amendments in this update are effective prospectively during interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

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Note 3. Acquisitions

ESWindows Acquisition

On December 2, 2016, we acquired 100% of the stock of ESW LLC, 85.06% of which was acquired directly by Tecnoglass and 14.94% by our subsidiary ES, for a total purchase price of $13,500, which consisted of (i) 734,400 ordinary shares issued in connection with the transaction for approximately $9,200 based on a stock price of $12.50, (ii) approximately $2,300 in cash, and (iii) approximately $2,000 related to the assignment of certain accounts receivable from Ventana Solar S.A. (“VS”).

VS, a Panama sociedad anonima, is an importer and installer of the Company’s products in Panama. Family members of the Company’s CEO and COO and other related parties own 100% of the equity in VS. During 2015 and 2014, the Company and VS executed a short-term payment agreement and a three-year payment agreement that were mainly created to fund working capital to VS due the timing difference between the collections from VS’s customers. On December 2, 2016 the outstanding amount of $2,016 was reassigned to the former shareholders of ESW LLC as part of the consideration paid for the acquisition of ESW. As a result, the Company does not have any outstanding receivable under these payment agreements as of December 31, 2016. See Note 13 – Related Parties for more information.

As the Acquisition of ESW LLC was deemed to be a transaction between entities under common control, the assets and liabilities were transferred at the historical cost of ESW LLC, with prior periods retroactively adjusted to include the historical financial results of the acquired company for the period they were controlled by the previous owners of ESW LLC in the Company’s financial statements.

The following table includes the financial information as originally reported and the net effect of the ESW acquisition after elimination of intercompany transactions.

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	March 31, 2016
	Without acquisition			Net effect of acquisition		Considering acquisition
Net revenues	$	60,903		$	2,959	$	63,855
Net income (loss)	$	13,664		$	692	$	14,356
Basic income per share	$	0.50		$	0.01	$	0.51
Diluted income per share	$	0.45		$	0.01	$	0.46
Basic weighted average common shares outstanding		27,486,485			734,400		28,220,885
Diluted weighted average common shares outstanding		30,625,603			734,400		31,360,003
Cash provided by operating activities	$	(10,136	)	$	939	$	(9,197	)
Net decrease in cash	$	(302	)	$	77	$	(225	)

The number of basic and diluted weighted average common shares outstanding prior to the acquisition of ESW LLC includes 579,094 shares issued after the financial statements for three months ended March 31, 2016 were issued related to a stock dividend during 2016 and 2017.

GM&P Acquisition

On March 1, 2017, the Company acquired a 100% controlling interest in Giovanni Monti and Partners Consulting and Glazing Contractors, Inc. (“GM&P”), a Florida-based commercial consulting, glazing and engineering company, specializing in windows and doors for commercial contractors. The primary reasons for the business combination are to continue Tecnoglass’ long-term strategy of being vertically integrated, to streamline its distribution logistics, and to fabricate in the United States when economically advantageous. The purchase price for the acquisition was $35,000, of which $6,000 of the purchase price will be paid in cash by the Company with the remaining amount payable by the Company in cash, stock of the Company or a combination of both at the Company´s sole discretion within 180 days after closing. The total amount of acquisition-related costs was $189, which is included in the Statement of operations for the period ending December 31, 2016.

The following table summarizes the consideration transferred to acquire GM&P and the amounts of identified assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the noncontrolling interest in Componenti USA LLC as of the acquisition date. Under ASC 805, a company can apply measurement period adjustments during the twelve-month period after the date of acquisition. During this period, the acquirer may adjust preliminary amounts recognized at the acquisition date to their subsequently determined final fair values . The allocation of the consideration transferred was based on management’s judgment after evaluation of several factors, including a preliminary valuation assessment. Finalization of the analysis has not been completed and could result in measurement periods adjustments that could change the composition of current asset, fixed assets, intangible assets, goodwill, and liabilities. The goodwill is not expected to be deductible for tax purposes.

The following table summarizes the purchase price allocation of the total consideration transferred:

Consideration Transferred:
Notes payable (Cash or Stock)	$	35,000
Fair value of the noncontrolling interest in Componenti		1,141
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and equivalents	$	509
Accounts receivable		42,314
Cost and estimated earnings in excess of billings		4,698
Other current assets		589
Property, plant, and equipment		684
Other non-current tangible assets		59
Trade name		980
Non-compete agreement		165
Contract backlog		3,090
Customer relationships		4,140
Accounts payable		(22,330	)
Other current liabilities assumed		(13,967	)
Non-current liabilities assumed		(3,634	)
Total identifiable net assets		17,297
Goodwill (including Workforce)	$	18,844

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The excess of the consideration transferred over the estimated fair values of assets acquired and liabilities assumed was recorded as goodwill. The identifiable intangible asset subject to amortization was the tradename, customer relationships, non-compete agreement, and backlog, which have a remaining useful life of two to five years. See Note 8 – Goodwill and Intangible Assets for additional information.

The following unaudited pro forma financial information assumes the acquisition had occurred at the beginning of the earliest period presented that does not include GM&P actual results for the entire period. Pro forma results have been prepared by adjusting our historical results to include the results of GM&P adjusted for the amortization expense related to the intangible assets arising from the acquisition. The unaudited pro forma results below do not necessarily reflect the results of operations that would have resulted had the acquisition been completed at the beginning of the earliest periods presented, nor does it indicate the results of operations in future periods. The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future market conditions which could alter the following unaudited pro forma results.

	Three Months Ended			Three Months Ended
(in thousands, except per share amounts)	March 31, 2017			March 31, 2016
Pro Forma Results
Net sales	$	75,804		$	75,771
Net income	$	(35	)	$	14,706
Net income per common share:
Basic	$	(0.00	)	$	0.52
Diluted	$	(0.00	)	$	0.47

The actual sales and net income that is included within the Statement of Operations for the three-month period ended March 31, 2017 is $8,126 and $1,660, respectively.

Non-controlling interest

With the Acquisition of GM&P, the Company also acquired a 60% equity interest in Componenti USA LLC, a subsidiary of GM&P that provides architectural specialties in the US, specializing in design-build systems for individual projects and with experience in value engineering to create products that comply with the architects original design intent, while maintaining focus on affordable construction methods and materials. The 40% non-controlling interest in Componenti is included in the opening balance sheet as of the acquisition date and its fair value amounted to $1,141. When the company owns a majority (but less than 100%) of a subsidiary’s stock, the Company includes in its Consolidated Financial Statements the non-controlling interest in the subsidiary. The non-controlling interest in the Condensed Consolidated Statements of Operations and Other Comprehensive Income is equal to the non-controlling interests’ proportionate share of the subsidiary’s net income and, as included in Shareholders’ Equity on the Condensed Consolidated Balance Sheet, is equal to the non-controlling interests’ proportionate share of the subsidiary’s net assets.

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Note 4. – Trade accounts receivable

Trade accounts receivable consists of the following:

	March 31, 2017			December 31, 2016
Trade accounts receivable	$	106,824		$	94,380
Less: Allowance for doubtful accounts		(3,514	)		(2,083	)
	$	103,310		$	92,297

The changes in allowances for doubtful accounts for the years ended December 31, 2016 and 2015 are as follows:

	March 31, 2017			December 31, 2016
Balance at beginning of year	$	2,083		$	189
Provision for bad debts		983			4,686
Allowance from acquired business		1,000			-
Deductions and write-offs, net of foreign currency adjustment		(552	)		(2,792	)
Balance at end of year	$	3,514		$	2,083

Note 5. - Inventories, net

Inventories are comprised of the following:

	March 31, 2017			December 31, 2016
Raw materials	$	36,332		$	40,219
Work in process		7,799			5,606
Finished goods		6,734			4,124
Stores and spares		5,599			5,016
Packing material		362			284
		56,826			55,249
Less: inventory allowance		(95	)		(157	)
	$	56,731		$	55,092

Note 6. Other Current Assets and Other Long Term Assets

Other current assets are comprised of the following:

	March 31, 2017		December 31, 2016
Unbilled receivables on uncompleted contracts	$	1,306	$	6,625
Prepaid Expenses		1,223		1,183
Prepaid Taxes		18,857		14,080
Advances and other receivables		1,908		2,009
Other current assets	$	23,294	$	23,897

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Other long term assets are comprised of the following:

	March 31, 2017		December 31, 2016
Real estate investments	$	4,930	$	5,125
Cost method investment		500		500
Other long term assets		2,040	$	1,687
	$	7,470	$	7,312

Note 7. Property, Plant and Equipment, Net

Property, plant and equipment consist of the following:

	March 31, 2017			December 31, 2016
Building	$	54,617		$	50,887
Machinery and equipment		138,449			132,333
Office equipment and software		5,201			4,980
Vehicles		1,884			1,648
Furniture and fixtures		2,335			2,141
Total property, plant and equipment		202,486			191,989
Accumulated depreciation and amortization		(55,508	)		(49,277	)
Net value of property and equipment		146,978			142,712
Land		29,260			28,085
Total property, plant and equipment, net	$	176,238		$	170,797

Depreciation expense for the three months ended March 31, 2017 and 2016 amounted to $4,295 and $3,137, respectively.

Note 8. Goodwill and Intangible Assets

Goodwill

The table below provides a reconciliation of the beginning and ending balances of the Goodwill recorded on the Company’s balance sheet:

Beginning balance - December 31, 2016	$	1,330
GM&P Acquisition		18,844
Ending balance – March 31, 2017	$	20,174

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Intangible Assets

Intangible assets include Miami-Dade County Notices of Acceptances (NOA’s), which are certificates in the required to market hurricane- resistant glass in Florida. Also, it includes the intangibles acquired from the acquisition of GM&P and Componenti.

	March 31, 2017							December 31, 2016
	Gross		Acc. Amort.			Net		Gross		Acc. Amort.			Net
Trade Names	$	980	$	(16	)	$	964	$	-	$	-		$	-
Notice of Acceptances (NOAs)		8,770		(4,072	)		4,698		8,524		(3,969	)		4,555
Non-compete Agreement		165		(3	)		162		-		-			-
Contract Backlog		3,090		(129	)		2,961		-		-			-
Customer Relationships		4,140		(74	)		4,066		-					-
	$	17,145	$	(4,294	)	$	12,851	$	8,524	$	(3,969	)	$	4,555

During the three months ended March 31, 2017 and March 31, 2016, the amortization expense amounted to $610 and $194, respectively, and was included within the general and administration expenses in our condensed consolidated statement of operations. The weighted average amortization period is 5 years for the tradename, customer relationships, and non-complete agreement; and for the contract backlog is 2 years.

The estimated aggregate amortization expense for each of the five succeeding years as of March 31, 2017 is as follows:

Year Ending	(in thousands)
2017 (nine months)	$	2,305
2018		3,073
2019		1,785
2020		1,405
2021		1,381
Thereafter		2,902
	$	12,851

Note 9. Debt

As of March 31, 2017, the Company owed $227,338 under its various borrowing arrangements. The obligations have maturities ranging from six months to 15 years that bear interest at rates ranging from 2.9% to 11.0% and a weighted average of 7.7%.

On January 23, 2017, the Company issued a U.S. dollar denominated, $210,000 offering of a 5-year senior unsecured note at a coupon rate of 8.2% in the international debt capital markets under Rule 144A/Reg S of the Securities Act to qualified institutional buyers. The Company used approximately $182,189 of the proceeds to repay outstanding indebtedness and as a result achieved a lower cost of debt and strengthened its capital structure given the non-amortizing structure of the new facility. Of these repayments, $59,444 were used to refinance short term debt into long term debt. The Company’s condensed consolidated balance sheets as of December 31, 2016 reflects the effect of this refinance of the Company’s current portion of long term debt and other current borrowings into long term debt based on the Company’s intent as of that date, as per guidance of ASC 470, which states that a short-term obligation shall be excluded from current liabilities if the entity intends to refinance the obligation on a long-term basis and the intent to refinance the short-term obligation on a long-term basis is supported by a post-balance-sheet-date issuance of a long-term obligation.

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In accordance with ASC Topic No. 470, “Debt – Modifications and Extinguishments” (Topic 470), a company needs to determine whether a modification or exchange of a term loan or debt security should be accounted for as a modification or an extinguishment. The Company determined that the issuance of the 5-year senior unsecured note under Rule 144A/Reg S was not considered a modification existing since the note issuance proceeds were used to extinguished debt and the note issuance was accounted for as a liability equal to the proceeds received. As such, the payoff of the January 2016 credit facility was determined to be an extinguishment of the existing debt. As a result, we recorded a loss on the extinguishment of debt in the amount of $3,159 in the line item “Loss on Extinguishment of Debt” in our Condensed Consolidated Statements of Operations and Comprehensive Income. The loss represented $2,583 of write off of deferred financing fees related to the extinguished debt facilities and $576 of penalties fees related to the early payoff of the syndicate loans. The write-off was added back as a non-cash item in the Cash Flows from Operations.

The Company’s debt is comprised of the following:

	March 31, 2017			December 31, 2016
Revolving lines of credit	$	1,297		$	13,168
Capital lease		-			23,696
Unsecured senior note		210,000			-
Other loans		24,276			165,330
Less: Deferred cost of financing		(8,235	)		(2,597	)
Total obligations under borrowing arrangements		227,338			199,597
Less: Current portion of long-term debt and other current borrowings		6,624			2,651
Long-term debt	$	220,714		$	196,946

Maturities of long term debt and other current borrowings are as follows as of March 31, 2017:

2018	$	6,624
2019		2,305
2020		2,315
2021		2,326
2022		212,336
Thereafter		9,667
Total	$	235,573

The Company had $0 and $8,366 of property, plant and equipment as well as $4,717 and $4,757 of other long term assets pledged to secure $3,490 and $109,193 under various lines of credit as of March 31, 2017 and December 31, 2016, respectively. Differences between pledged assets and the amount secured is related to the difference between carrying value of such assets recorded at historical cost and the guarantees issued to the banks which are based on the market value of the real estate.

Note 10. Income Taxes

The Company files income tax returns for TG and ES in the Republic of Colombia. On December 28, 2016, the Colombian Congress enacted a structural tax reform that took effect on January 1, 2017 which reduces corporate income tax from 42% to 40% for fiscal year 2017, 37% in 2018 and 33% in 2019 and thereafter. As a result of the Colombian tax reform from December 28, 2016, the Company’s net deferred tax liability decreased $586 as of December 31, 2016.

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ESW LLC is an LLC that was not subject to income taxes during the year 2015 and the eleven months period ending December 2, 2016, since it was a pass-through entity for tax purposes. ESW LLC was converted to a C-Corporation and will be subject to income taxes starting on December 3, 2016. The estimated income tax rate for C-Corporations ranges between 10% and 39.5%. Tecnoglass Inc. as well as all the other subsidiaries in the Cayman Islands and Panama do not currently have any tax obligations.

The components of income tax expense (benefit) are as follows:

	Three months ended March 31,
	2017			2016
Current income tax:
United States	$	452		$	-
Foreign		2,280			3,256
Total current income tax		2,732			3,256
Deferred income tax:
United States		380			-
Foreign		(2,070	)		387
Total deferred income tax		(1,690	)		387
Total Provision for Income tax	$	1,042		$	3,643
Effective tax rate		50.3	%		20.0	%

The Company’s effective tax rate of 20% for the three month period ended March 31, 2016 reflects non-taxable gains of $5,911 due to the change in fair value of the Company’s warrant liability relative to their fair value as of December 31, 2015 and non-taxable gain of $3,704 due to the change in fair value of the Company’s earn out share liability relative to their fair value as of December 31, 2015. There were no other individual items with significant contributions in the reconciliation of the Company’s effective tax rate and the statutory rate during the three months ended March 31, 2017.

Note 11. Fair Value Measurements

The Company accounts for financial assets and liabilities in accordance with accounting standards that define fair value and establish a framework for measuring fair value. The hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. The classification of a financial asset or liability within the hierarchy is determined by the lowest level inputs that are significant to the fair value measurement. Results of operations are impacted by the movement in the level 2 and 3 instruments on a periodic basis.

The Company has marketable equity securities with fair values obtained from a quoted price in an active market (Level 1) amounting to $533 and $505 as of December 31, 2016 and March 31, 2017. As of December 31, 2016 the Company had Interest rate swap derivative liability with fair value obtained using significant other observable inputs (Level 2) amounting to $23.

As of March 31, 2017 and December 31, 2016, financial instruments carried at amortized cost that do not approximate fair value consist of long-term debt. See Note 9 - Debt. The fair value of long term debt was calculated based on an analysis of future cash flows discounted with our weighted average cost of debt based on market rates, which are Level 2 inputs. Other financial instruments such as accounts receivable have carrying values that approximate fair value as they are short-term in nature.

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The following table summarizes the fair value and carrying amounts of our long term debt:

	March 31, 2017		December 31, 2016
Fair Value	$	239,736	$	190,190
Net Carrying Value	$	227,338	$	196,786

Note 12. Segment and Geographic Information

	Three months ended March 31,
	2017		2016
Colombia	$	16,428	$	18,578
United States		46,308		40,118
Panama		1,263		2,914
Other		1,818		2,245
Total Revenues	$	65,817	$	63,855

Note 13. Related Parties

The following is a summary of assets, liabilities, and income and expense transactions with all related parties, shareholders, directors and managers:

	Three months ended March 31,
	2017		2016
Sales to related parties	$	1,374	$	2,971
Expenses:
Fees paid to directors and officers	$	710	$	359
Payments to other related parties	$	806	$	1,283

	March 31, 2017		December 31, 2016
Current Assets:
Due from VS	$	9,433	$	9.143
Due from other related parties		1,734		1,852
	$	11,167	$	10,995
Liabilities:
Due to related parties	$	1,808	$	3,668

Ventanas Solar S.A. (“VS”), a Panama sociedad anonima, is an importer and installer of the Company’s products in Panama. Family members of the Company’s CEO and COO and other related parties own 100% of the equity in VS. The Company’s sales to VS for the year three months ended March 31, 2017 and 2016 were $1,150 and $2,689 respectively.

Payments to other related parties during three months ended March 31, 2017 include charitable contributions to the Company’s foundation for $416 and sales commissions for $241.

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Due to related party includes a balance of $631 and $2,303 payable to the former shareholders of ESW LLC as part of the consideration paid for the acquisition as of March 31, 2017 and December 16, 2016. (See Note 3 – Acquisitions for further details). The change amounting to $1,672 is related to the payment to former ESW shareholders which is reflected in the Cash Flow from Investing Activities.

Note 14. Dividends Payable

On August 4, 2016, the Company’s Board of Directors authorized the payment of regular quarterly dividends to holders of ordinary shares at a quarterly rate of $0.125 per share, or $0.50 per share on an annual basis. The dividend is being paid in cash or ordinary shares, chosen at the option of holders of ordinary shares and the value of the ordinary shares to be used to calculate the number of shares to be issued with respect to that portion of the dividend payable in ordinary shares was the average of the closing price of the Company’s ordinary shares on NASDAQ during the three trading days prior to the end of the election period. Those holders that did not provide a choice during the election period for the first quarterly dividend were paid out in cash, whereas from the second quarterly dividend going forwards, holders that do not provide a choice during the election period are paid in ordinary shares. Energy Holding Corporation, the majority shareholder of the Company, has irrevocably elected to receive such dividend for the full year in ordinary shares, as opposed to cash As a result, the Company has a dividend payable amounting to $2,170 as of March 31, 2017. On April 28, 2017, the Company paid $668 and issued 341,843 shares in connection with the third quarterly dividend to the holders of record as of March 31, 2017.

The company analyzed the accounting guidance under ASC 505 and determined that this guidance is not applicable since the dividend are shares of the same class in which each shareholder is given an election to receive cash or shares. As such, the company analyzed the dividend under ASC 480 — Distinguishing Liabilities from Equity and concluded that the dividend should be accounted for as a liability since the dividend is a fixed monetary amount known at inception. A reclassification from dividend payable to additional paid-in capital was done for the stocks dividend elections that shareholders have already made.

Note 15. Commitments and Contingencies

Guarantees

As of March 31, 2017, the Company does not have guarantees on behalf of other parties.

Legal Matters

On March 2, 2016 ES filed a lawsuit against Bagatelos Architectural Glass Systems, Inc. (“Bagatelos”) in Colombia. In addition, we also filed a lawsuit against Bagatelos in the State of California for breach of contract. To lift the lien declared by the Court in California, Bagatelos submitted a bond for $2,000 in favor of ES and its release is subject to the court’s ruling. This bond is a “mechanics lien surety bond” which guarantees ES payment of the amounts due with interest and costs should the Company win the case. Mediation scheduled for February 17, 2017 was unsuccessful and parties continue discovery. Bagatelos as defendant presented a cross complaint on September 23, 2016 seeking damages of approximately $3,000. Although we already received a payment order from the Colombian judge, the Company continues to pursue its rights, remedies and defenses in the U.S. We received on January 31, 2017 a case update from our U.S. counsel stating that due to ES’ favorable terms and conditions and the fact that Bagatelos has overstated their claim and ignored their contractual duties, it is probable that the Company will be able to recover the outstanding amount of $2,000.

General Legal Matters

From time to time, the Company is involved in legal matters arising in the ordinary course of business. While management believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, will not have a material adverse effect on its business, financial condition or results of operations.

Note 16. Subsequent Events

On May 11, 2017, Tecnoglass Inc. announced the timing for the last payment of its declared regular quarterly dividend of $0.125 per share for the second quarter of 2017. The dividend will be payable on July 28^th, 2017 to shareholders of record as of the close of business on June 30, 2017. The dividend will be paid in cash or ordinary shares, to be chosen at the option of holders of ordinary shares during an election period beginning July 3rd, 2017 and lasting until 5:00 P.M. Eastern Time on July 21st, 2017. The value of the ordinary shares to be used to calculate the number of shares to be issued with respect to that portion of the dividend payable in ordinary shares shall be the average of the closing price of the Company’s ordinary shares on NASDAQ during the period from July 10, 2017 through July 21, 2017. If no choice is made during this election period, the dividend for this election period will be paid in ordinary shares of the Company.

The Company further announced that commencing with the quarterly dividend for the third quarter of 2017 through the dividend for the second quarter of 2018, the divided will be increased to $0.14 per share, or $0.56 per share on an annual basis. The quarterly dividend of $0.14 per share for the third quarter of 2017 will be payable to shareholders of record as of the close of business on September 29, 2017.

Energy Holding Corp., the majority shareholder of the Company, has irrevocably elected to receive any quarterly dividends declared through the second quarter of 2018 in ordinary shares, as opposed to cash.

Dividend declarations and the establishment of future record and payment dates are subject to the Board of Directors’ continuing determination that the dividend policy is in the best interests of the Company and its shareholders. The dividend policy may be changed or cancelled at the discretion of the Board of Directors at any time.

Management concluded that no additional subsequent events required disclosure other than those disclosed in these financial statements.

24

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. References to “we”, “us” or “our” are to Tecnoglass Inc. (formerly Andina Acquisition Corporation), except where the context requires otherwise. The following discussion should be read in conjunction with our condensed consolidated financial statements and related notes thereto included elsewhere in this report.

Overview

We are a leading manufacturer of hi-spec architectural glass and windows for the western hemisphere residential and commercial construction industries, operating through our direct and indirect subsidiaries. Headquartered in Barranquilla, Colombia, we operate out of a 2.7 million square foot vertically-integrated, state-of-the-art manufacturing complex that provides easy access to the Americas, the Caribbean, and the Pacific.

We manufacture hi-specification architectural glass and windows for the global residential and commercial construction industries. Currently we offer design, production, marketing, and installation of architectural systems for buildings of high, medium and low elevation size. Products include windows and doors in glass and aluminum, floating façades, office partitions and interior divisions, and commercial window showcases.

In recent years, we have expanded our US sales outside of the Florida market, entering into high-tech markets for curtain walls, obtaining a niche market access since this product is in high demand and marks a new trend in architecture. This product is a very sophisticated product and therefore garners high margins for us. These products involve high performance materials that are produced by Alutions and TG with state of the art technology.

The Company’ glass products include tempered glass, laminated glass, thermo-acoustic glass, curved glass, silk-screened glass, and digital print glass as well as mill finished, anodized, painted aluminum profiles and produces rods, tubes, bars and plates. Window production lines are defined depending on the different types of windows: normal, impact resistant, hurricane-proof, safety, soundproof and thermal. The Company produces fixed body, sliding windows, projecting windows, guillotine windows, sliding doors and swinging doors. ES produces façade products which include: floating facades, automatic doors, bathroom dividers and commercial display windows.

Recent Developments

In March of 2017, the Company acquired Giovanni Monti and Partners Consulting and Glazing Contractors, Inc. , a Florida-based commercial consulting, glazing and engineering company, specializing in windows and doors for commercial contractors. The purchase price for the acquisition was $35 million, of which $6 million of the purchase price will be paid in cash by the Company with the remaining amount payable by the Company in cash, stock of the Company or a combination of both at the Company´s sole discretion within 180 days after closing.

On March 29, 2017 we established ESWindows Europe SRL, a subsidiary based in Italy out of which we expect expand our sales to European and Middle Eastern markets.

25

RESULTS OF OPERATIONS

	Three Months Ended March 31,
	2017			2016
Operating Revenues	$	65,817		$	63,855
Cost of sales		43,565			39,165
Gross profit		22,252			24,690
Operating expenses		(15,390	)		(12,942	)
Operating income		6,862			11,748
Change in fair value of earnout shares liability		-			3,704
Change in fair value of warrant liability		-			5,911
Non-operating income		1,027			1,017
Foreign currency transactions gains (losses)		2,425			(1,257	)
Loss on extinguishment of debt		(3,159	)		-
Interest Expense		(5,082	)		(3,124	)
Income tax provision		(1,042	)		(3,643	)
Income attributable to non-controlling interest		(12	)		-
Net income	$	1,019		$	14,356

Comparison of quarterly periods ended March 31, 2017 and March 31, 2016

Revenues

The Company’s net operating revenues increased $2.0 million or 3% from $63.9 million to $65.8 million for the quarterly period ended March 31, 2017 compared with the quarterly period ended March 31, 2016.

Sales in the U.S. market for the first quarter of 2017 increased $4.3 million or 11% compared to the same period of 2016. The Company’s sales in the American market continue to have a large importance in the South Florida market but constantly diversifying away into other regions. Our increase in sales in overall terms and into the U.S market were mainly derived from the recent acquisition of GM&P which contributed its results from the March 1, 2017 date of acquisition. The acquisition of GM&P, a Florida-based commercial consulting, glazing and engineering company, specializing in windows and doors for commercial contractors, is in line with our long-term strategy to further vertically integrate our operations and strengthen our presence in U.S Markets. GM&P contributed $8.1 million to net revenues during the first quarter of 2017. U.S. revenues contributed 70% of total sales, compared to 63% during the first quarter of 2016 as the Company maintains focus on expanding US operations to new regions and in new end market.

Sales in the Colombian market decreased $2.1 million, or 12%, partly due to a general delay in local construction mainly associated with market factors that have had positive outcomes during the first quarter of the year. Sales to Panama decreased $1.7 million or 57% in the three months ended March 31, 2017 compared to the three months ended March 31, 2016. As evidenced in the preceding breakdown of revenues by geography, the Company´s revenues have increasingly continued to weigh toward the U.S market, accounting for 70% of the total for the three month period ended March 31, 2017 versus 63% for the comparable period ended March 31, 2016.

Margins

Sales margins calculated by dividing the gross profit by operating revenues decreased from 38.7% to 33.8% in the quarterly periods ended March 31, 2016 and 2017, respectively. The reduction in margins is a higher depreciation and amortization expense associated with the capital expenditure investment phase that concluded in 2016, carrying a more robust structure with higher fixed costs being diluted over a seasonally low revenue quarter, and by the acquisition of GM&P which carries lowers margins in line with the services it provides.

26

Expenses

Operating expenses increased 18.0% from $12.9 million to $15.4 million, for the quarterly period ended  March 31, 2017 when compared to the quarterly period ended March 31, 2016. The increase was primarily the result of having a higher amount of fixed costs as a percentage of sales against the lowest revenue generating quarter of the year. The individual item with the largest increase was personnel expense, which increased $1.1 million. Additionally, during the first quarter of 2017, the Company recorded an accounts receivable provision of $0.9 million associated to a particular project, $0.4 million higher amortization of intangible assets acquired and $0.5 million attributable to GM&P

Loss on extinguishment of debt

Upon the issuance of the 5-year senior unsecured note under Rule 144A mentioned below in the liquidity section, the Company determined that issuance was not considered a modification or exchange of the seven-year senior secured credit facility issued in January 2016 however proceeds from the new issuance were used to repay the previous credit facility and the new issuance was accounted for as a liability equal to the proceeds received. As such, the payoff of the January 2016 credit facility was determined to be an extinguishment of the existing debt. As a result, we recorded a loss on the extinguishment of debt in the amount of $3,159 in the line item “Loss on Extinguishment of Debt” in our Condensed Consolidated Statements of Operations and Comprehensive Income. The loss represented the write off of deferred financing fees related to the extinguished debt facilities and penalties fees related to the early payoff of several loans and capital leases.

Non-operating Income (Loss)

During the three months ended March 31, 2017 and 2016, the Company reported net non-operating gain of $1.0 and $1.0 million, respectively, comprised primarily of income from rental properties and gains on sale of scrap materials. Additionally, the Company recorded a gain of $2.4 million associated to foreign currency transactions as the Colombian peso to US dollar exchange rate decreased 4% during the quarter, comparable with a loss in foreign currency transactions of $1.3 million

Interest Expense

Interest expense increased $2.0 million, or 63% as a result of debt increase to finance 2016 capital expenditures and one month of double interest expense between the issuance of the bond discussed below and repayment of previous debt.

As a result of the foregoing, the Company recorded net income for the three months ended March 31, 2017 of $1.0 million compared to net income of $14.4 million in the three months ended March 31, 2016.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2017 and December 31, 2016, the Company had cash and cash equivalents of approximately $54.4 million and $26.9 million, respectively. The Company’s primary sources of liquidity to support its working capital needs and short term capital expenditures will be its readily available cash balance and cash flow generated from operating activities.

Cash Flow from Operations, Investing and Financing Activities

	Three months ended March 31,
	2017			2016
Cash Flow from Operating Activities	$	11,395		$	(9,197	)
Cash Flow from Investing Activities		(3,387	)		(23,388	)
Cash Flow from Financing Activities		18,687			32,055
Effect of exchange rates on cash and cash equivalents		759			305
Cash Balance - Beginning of Period		26,918			22,671
Cash Balance - End of Period	$	54,372		$	22,446

During the three months ended March 31, 2017 and 2016, $11.4 million and $9.2 million were provided by and used in operating activities, respectively. The principal source of cash during the first quarter of 2017 is related to account receivables management associated with the Company´s ongoing growth and industry related common practices which derive in longer cash collection cycles. Accounts receivable provided and used $15.2 million and $11.6 million during the first quarters of 2017 and 2016, respectively. These receivables are often associated to sophisticated, long-lead projects that typically have longer collection periods as distributors also have to collect from general contractors and in turn, they have to collect from end-users (which will only provide a “good receipt” once certain performance conditions have been met). In addition to this industry related cycle, the company must invoice its products from the port of departure in order to successfully export into the U.S (thus generating a sale and receivable, earlier than the delivery time from which our sales terms start to count). In addition to the shipping time into the U.S, there are often, additional days to clear customs and getting the product to the end client which also increases the  days sales outstanding metric.

27

For the three months ended March 31, 2017, the acquisition of GM&P needs to be normalized in order to properly assess the Company´s days sales outstanding as only one month of sales is being incorporated, however, the full accounts receivable balance of this entity is included on the balance sheet as of the quarter end. Had the Company not acquired GM&P, days sales outstanding calculated using revenues from the twelve months ended March 31, 2017 would have decreased 23 days relative to the 110 days outstanding as of December 31, 2016 to 87 days, as opposed to 121 days including the effect of the GM&P acquisition, which is an increase of 11 days relative to fiscal year end.

Additionally, in order to have a normalized calculation, the exchanged rate must be brought to constant terms (given the fact that balance sheet accounts are translated at spot rates and sales are translated at period average rates). Finally, further consideration needs to be given to the fact that in Colombia and Latin American markets, it is a common industry practice for end clients to withhold between 10-15% of a job cost until final delivery of all conditions have been met (thus increasing the overall duration of receivables). Given effect to the normalization of the GM&P acquisition, foreign currency exchange rates and customer withholdings, the company´s Days Sales Outstanding ratio would have decreased by 34 days.

The Company continues to optimize transport and delivery times as well as collection efforts in order to further improve its working capital usage from accounts receivable. Notwithstanding, the aforementioned factors, the Company has not seen a deterioration in its receivables or its ability to collect from its clients (as evidenced by its low historical bad debt write-off).

The principal use of cash during the quarter ended March 31, 2017 was trade accounts payable, which used $8.8 million, in contrast with the $2.2 million provided during the first quarter of 2016. However, the trade accounts payable balance on the face of the balance sheet of $42.0 million as of March 31, 2017 represents a very subtle increase relative to the balance of $42.5 million as of December 31, 2016 because of the effect of consolidating the newly acquired GM&P.

During the three months ended March 31, 2017, cash used in investing activities decreased to $3.4 million compared with $23.4 million during the same period of 2016, primarily as a result of one-time purchase of a $25.0 million U.S Dollar denominated time deposit during the first quarter of 2016 with a Colombian peso denominated obligation for the same amount to hedge balance sheet foreign exchange gains and losses on its monetary assets and liabilities. Although more cash was used for the purchase of property and equipment during the first quarter of 2017 compared to the same period of 2016, the acquisition of property, plant and equipment which increased from $0 to $1.9 million, total purchases of property plant and equipment, including property plant and equipment acquired with the issuance of debt or capital lease. decreased from $6.9 million in 2016 to $1.9 million in 2017. Our Capital expenditures have decreased significantly as we expect that current installed capacity will be enough to service our backlog and expected sales through the year 2018. Capital expenditures in the near future are expected to be limited to maintaining installed capacity and to address our solar panel initiatives.

Cash provided by financing activities, decreased from $32.1 million during the first three months of 2016 to $18.7 million during the first three months of 2017. During the first quarter of 2016, the significant generation of cash was associated to the funding of a $109.5 million credit facility, out of which $83.5 million were used to refinance existing debt at the time, as well as a to a Colombian peso denominated obligation for $25 million that the company entered into to acquire a US Dollar denominated deposit for the same amount to hedge foreign exchange gains and losses from of its monetary assets and liabilities. On January 23, 2017, the Company issued a U.S. dollar denominated, $210 million offering of a 5-year senior unsecured note at a coupon rate of 8.2% in the international debt capital markets under Rule 144A of the Securities Act to Qualified Institutional Buyers. The Company used approximately $182.2 million of the proceeds to repay outstanding indebtedness and as a result achieved a lower cost of debt and strengthened its capital structure given the non-amortizing structure of the new facility. Cash proceeds in excess of the amount used to pay down outstanding debt have been invested in liquid, short-term time deposits which will be used to support ongoing growth and general corporate purposes, and are partially the reason for the increase in the Company’s cash balance alongside with its positive cashflow from operations generation.

28

Off-Balance Sheet Arrangements

None

Item 3. Quantitative and Qualitative Disclosures about Market Risk

None

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We performed an evaluation required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of Tecnoglass, Inc.´s design and operating effectiveness of the internal controls over financial reporting as of the end of the period covered by this Quarterly Report. Based on this evaluation, our principal executive officer and principal financial officer concluded that, due to the material weakness in our internal control over financial reporting as described in our Annual Report on Form 10-K for the year ended December 31, 2016, our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, were not effective as of March 31, 2017. Notwithstanding the material weakness in our internal control over financial reporting, we believe the condensed consolidated financial statements are fairly stated in all material respects in accordance with generally accepted accounting principles in the United States of America for each of the periods presented herein.

Remediation Plan for Material Weaknesses  

During the first quarter of 2017, we have been executing our remediation plan, as designed, to strengthen our internal control system regarding the material weakness in Entity Level Controls.

Changes in Internal Control over Financial Reporting

For the quarter ended March 31, 2017, 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.

29

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

General Legal Matters

From time to time, the Company is involved in legal matters arising in the ordinary course of business. While management believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, will not have a material adverse effect on its business, financial condition or results of operations.

Item 6. Exhibits

Exhibit No.	Description
10.1	Purchase Agreement with Giovanni Monti
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officers pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Financial statements from the Quarterly Report on Form 10-Q of Tecnoglass Inc. for the quarter ended March 31, 2017, 2016 , formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statement of Changes in Stockholders’ Equity, (iv) Condensed Consolidated Statement of Cash Flows and (v) Notes to Unaudited Condensed Consolidated Financial Statements, as blocks of text and in detail.
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

30

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TECNOGLASS INC.
	By:	/s/ Jose M. Daes
		Jose M. Daes
		Chief Executive Officer
		(Principal executive officer)
	By:	/s/ Joaquin Fernandez
		Joaquin Fernandez
		Chief Financial Officer
		(Principal financial and accounting officer)
Date: May 12, 2017

31

EX-10.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jose M. Daes, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Tecnoglass Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2017

/s/ Jose M. Daes

Jose M. Daes

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joaquin Fernandez, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Tecnoglass Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2017

/s/ Joaquin Fernandez

Joaquin Fernandez

Chief Financial Officer

(Principal financial and accounting officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Tecnoglass Inc. (the “Company”) on Form 10-Q, for the period ended March 31, 2017 as filed with the Securities and Exchange Commission (the “Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated May 12, 2017

By:	/s/ Jose M. Daes
	Jose M. Daes
	Chief Executive Officer
	(Principal executive officer)
By:	/s/ Joaquin Fernandez
	Joaquin Fernandez
	Chief Financial Officer
	(Principal financial and accounting officer)

XML

Document And Entity Information	3 Months Ended
	Mar. 31, 2017 shares
Document And Entity Information [Abstract]
Entity Registrant Name	Tecnoglass Inc.
Entity Central Index Key	0001534675
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	33,487,982
Trading Symbol	TGLS
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2017

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 54,372	$ 26,918
Investments	1,751	1,537
Trade accounts receivable, net	103,310	92,297
Due from related parties	11,167	10,995
Inventories	56,731	55,092
Other current assets	23,294	23,897
Total current assets	250,625	210,736
Long term assets:
Property, plant and equipment, net	176,238	170,797
Deferred taxes	464
Intangible Assets	12,851	4,555
Goodwill	20,174	1,330
Other long term assets	7,470	7,312
Total long term assets	217,197	183,994
Total assets	467,822	394,730
Current liabilities:
Short-term debt and current portion of long term debt	6,624	2,651
Trade accounts payable and accrued expenses	41,960	42,546
Due to related parties	1,808	3,668
Note payable associated to GM&P acquisition	35,000
Dividends payable	2,170	3,486
Current portion of customer advances on uncompleted contracts	7,627	7,780
Other current liabilities	22,979	18,255
Total current liabilities	118,168	78,386
Long term liabilities:
Deferred income taxes	5,388	3,523
Customer advances on uncompleted contracts	2,246	2,310
Long term debt	220,714	196,946
Total Long Term Liabilities	228,348	202,779
Total liabilities	346,516	281,165
SHAREHOLDERS' EQUITY
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2017 and December 31, 2016 respectively
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 33,487,982 and 33,172,144 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively	3	3
Legal Reserves	1,367	1,367
Additional paid-in capital	115,725	114,847
Retained earnings	27,457	26,548
Accumulated other comprehensive (loss)	(24,399)	(29,200)
Shareholders' equity attributable to controlling interest	120,153	113,565
Shareholders' equity attributable to non-controlling interest	1,153
Total shareholders' equity	121,306	113,565
Total liabilities and shareholders' equity	$ 467,822	$ 394,730

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred shares, par value	$ 0.0001	$ 0.0001
Preferred shares, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred shares, shares outstanding	0	0
Ordinary shares, par value	$ 0.0001	$ 0.0001
Ordinary shares, shares authorized	100,000,000	100,000,000
Ordinary shares, shares, issued	33,487,982	33,172,144
Ordinary shares, shares, outstanding	33,487,982	33,172,144

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Condensed Consolidated Statements of Operations and Other Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating revenues:
External customers	$ 64,443	$ 60,884
Related parties	1,374	2,971
Total operating revenues	65,817	63,855
Cost of sales	43,565	39,165
Gross Profit	22,252	24,690
Operating expenses:
Selling expense	(6,906)	(6,202)
General and administrative expense	(7,501)	(6,740)
Provision for bad debt and write offs	(983)
Total Operating Expenses	(15,390)	(12,942)
Operating income	6,862	11,748
Gain on change in fair value of earnout shares liabilities		3,704
Gain on change in fair value of warrant liability		5,911
Non-operating income	1,027	1,017
Foreign currency transactions gains (losses)	2,425	(1,257)
Loss on extinguishment of debt	(3,159)
Interest expense	(5,082)	(3,124)
Income before taxes	2,073	17,999
Income tax provision	1,042	3,643
Income after tax	1,031	14,356
Less: Income attributable to non-controlling interest	(12)
Net income	1,019	14,356
Comprehensive income:
Net income	1,019	14,356
Foreign currency translation adjustments	4,801	1,742
Total comprehensive income	$ 5,820	$ 16,098
Basic income per share	$ 0.03	$ 0.51
Diluted income per share	$ 0.03	$ 0.46
Basic weighted average common shares outstanding	33,480,430	28,220,885
Diluted weighted average common shares outstanding	34,195,579	31,360,003

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 1,019	$ 14,356
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for bad debts	(983)
Provision for obsolete inventory
Depreciation and amortization	4,905	3,331
Change in fair value of investments held for trading	4	(21)
Loss on disposition of assets	3
Change in value of derivative liability	(23)	(10)
Change in fair value of earnout share liability		(3,704)
Change in fair value of warrant liability		(5,911)
Deferred income taxes	(1,690)	387
Extinguishment of debt	2,583
Director stock compensation	71
Changes in operating assets and liabilities:
Trade accounts receivables	15,178	(11,620)
Inventories	603	(5,792)
Prepaid expenses	(2)	270
Other assets	(5,183)	(6,445)
Trade accounts payable and accrued expenses	(8,771)	2,233
Taxes payable	2,720	3,316
Labor liabilities	(424)	(228)
Related parties	73	(3,620)
Customer advances on uncompleted contracts	(654)	4,261
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	11,395	(9,197)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments	173	234
ESW acquisition	(1,672)
Cash acquired from GM&P and Componenti	509
Purchase of investments	(450)	(23,622)
Acquisition of property and equipment	(1,947)
CASH USED IN INVESTING ACTIVITIES	(3,387)	(23,388)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt	20,253	124,570
Cash dividend	(550)
Proceeds from bond issuance	201,884
ESW distributions prior to acquisition		(772)
Repayments of debt	(202,900)	(91,743)
CASH PROVIDED BY FINANCING ACTIVITIES	18,687	32,055
Effect of exchange rate changes on cash and cash equivalents	759	305
NET (DECREASE) INCREASE IN CASH	27,454	(225)
CASH - Beginning of period	26,918	22,671
CASH - End of period	54,372	22,446
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest	6,795	2,203
Income Tax	3,993	4,440
NON-CASH INVESTING AND FINANCING ACTIVITES:
Assets acquired under capital lease and debt		$ 6,883

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands	Ordinary Shares [Member]	Additional Paid-in Capital [Member]	Legal Reserve [Member]	Retained Earnings (Accumulated Deficit) [Member]	Accumulated Other Comprehensive Loss [Member]	Non-Controlling Interest [Member]	Total
Balance beginning at Dec. 31, 2016	$ 3	$ 114,847	$ 1,367	$ 26,548	$ (29,200)		$ 113,565
Balance beginning, shares at Dec. 31, 2016	33,172,144
Stock dividend		870		(110)			760
Share based compensation		8					8
Non-controlling Interest in component						1,153	1,153
Foreign currency translation					4,801		4,801
Net income				1,019			1,019
Balance ending at Mar. 31, 2017	$ 3	$ 115,725	$ 1,367	$ 27,457	$ (24,399)	$ 1,153	$ 121,306
Balance ending, shares at Mar. 31, 2017	33,172,144

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Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Statement of Stockholders' Equity [Abstract]
Ordinary shares, par value	$ 0.0001	$ 0.0001

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General

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

Note 1. General

Business Description

Tecnoglass Inc. (“TGI,” the “Company,” “we,” “us” or “our”) was incorporated in the Cayman Islands on September 21, 2011 under the name “Andina Acquisition Corporation” (“Andina”) as a blank check company. Andina’s registration statement for its initial public offering (the “Public Offering”) was declared effective on March 16, 2012. Andina consummated the Public Offering, the private placement of warrants (“Private Placement”) and the sale of options to the Underwriters on March 22, 2012, receiving proceeds, net of transaction costs, of $43,163, of which $42,740 was placed in a trust account.

Andina’s objective was to acquire, through a merger, share exchange, asset acquisition, share purchase recapitalization, reorganization or other similar business combination, one or more operating businesses. On December 20, 2013, Andina consummated a merger transaction (the “Merger”) with Tecno Corporation (“Tecnoglass Holding”) as ultimate parent of Tecnoglass S.A. (“TG”) and C.I. Energía Solar S.A. ES. Windows (“ES”). The surviving entity was renamed Tecnoglass Inc. The Merger transaction was accounted for as a reverse merger and recapitalization where Tecnoglass Holding was the acquirer and TGI was the acquired company.

The Company manufactures hi-specification, architectural glass and windows for the global residential and commercial construction industries. Currently the Company offers design, production, marketing, and installation of architectural systems for buildings of high, medium and low elevation size. Products include windows and doors in glass and aluminum, office partitions and interior divisions, floating façades and commercial window showcases. The Company sells to customers in North, Central and South America, and exports about half of its production to foreign countries. On March 29, 2017 we established ESWindows Europe SRL, a subsidiary based in Italy out of which we expect expand our sales to European and Middle Eastern markets.

TG manufactures both glass and aluminum products. Its glass products include tempered glass, laminated glass, thermo-acoustic glass, curved glass, silk-screened glass, acoustic glass and digital print glass. Its Alutions plant produces mill finished, anodized, painted aluminum profiles and rods, tubes, bars and plates. Alutions’ operations include extrusion, smelting, painting and anodizing processes, and exporting, importing and marketing aluminum products.

ES designs, manufactures, markets and installs architectural systems for high, medium and low rise construction, glass and aluminum windows and doors, office dividers and interiors, floating facades and commercial display windows.

In 2014, the Company established two Florida limited liability companies, Tecnoglass LLC (“Tecno LLC”) and Tecnoglass RE LLC (“Tecno RE”) to acquire manufacturing facilities, manufacturing machinery and equipment, customer lists and exclusive design permits.

In December 2016, as part of our strategy to vertically integrate our operations, we acquired 100% of the stock of ESW LLC, 85.06% of which was acquired directly by Tecnoglass and 14.94% by our subsidiary ES, for a total purchase price of $13,500, which consisted of (i) 734,400 ordinary shares issued in connection with the transaction for approximately $9,200 based on a stock price of $12.50, (ii) approximately $2,300 in cash, and (iii) approximately $2,000 related to the assignment of certain accounts receivable. The acquisition was deemed to be a transaction between entities under common control, which, under applicable accounting guidelines, requires the assets and liabilities to be transferred at historical cost of the entity, with prior periods retroactively adjusted to furnish comparative information.

On March 1, 2017, the Company acquired Giovanni Monti and Partners Consulting and Glazing Contractors, Inc. (“GM&P”), a Florida-based commercial consulting, glazing and engineering company, specializing in windows and doors for commercial contractors, including its 60% owned subsidiary, Componenti USA LLC. The purchase price for the acquisition was $35,000 of which $6,000 of the purchase price will be paid in cash by the Company with the remaining amount payable by the Company in cash, stock of the Company or a combination of both at the Company´s sole discretion within 180 days after closing. For more information on this acquisition, please refer to Note 3. Acquisitions.

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Basis of Presentation and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting purposes. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the information contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by US GAAP.

Prior year financial information has been retroactively adjusted for an acquisition under common control. As the acquisition of ESW LLC was deemed to be a transaction between entities under common control, the assets and liabilities were transferred at the historical cost of ESW LLC, with prior periods retroactively adjusted to include the historical financial results of the acquired company for the period they were controlled by ESW LLC in the Company’s financial statements. The accompanying financial statements and related notes have been retroactively adjusted to include the historical results and financial position of the acquired company prior to the acquisition date during the periods the assets were under common control. All financial information presented for the periods after the ESW LLC acquisition represent the consolidated results of operations, financial position and cash flows of the Company with retroactive adjustments of the results of operations, financial position and cash flows of the acquired company during the periods the assets were under common control.

The preparation of these unaudited, condensed consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of the Company’s financial statements. Actual results may differ from these estimates under different assumptions and conditions. Estimates inherent in the preparation of these condensed consolidated financial statements relate to the collectability of account receivables, the valuation of inventories, estimated earnings on uncompleted contracts, useful lives and potential impairment of long-lived assets. Based on information known before these unaudited, condensed consolidated financial statements were available to be issued, there are no estimates included in these statements for which it is reasonably possible that the estimate will change in the near term up to one year from the date of these financial statements and the effect of the change will be material . These financial statements reflect all adjustments that in the opinion of management are necessary for a fair statement of the financial position, results of operations and cash flows for the period presented, and are of a normal, recurring nature.

Principles of Consolidation

These unaudited condensed consolidated financial statements consolidate TGI, its subsidiaries TG, ES and ESW LLC, Tecno LLC, Tecno RE, GM&P and Componenti USA LLC, which are entities in which we have a controlling financial interest because we hold a majority voting interest. To determine if we hold a controlling financial interest in an entity, we first evaluate if we are required to apply the variable interest entity (“VIE”) model to the entity, otherwise the entity is evaluated under the voting interest model. All significant intercompany accounts and transactions are eliminated in consolidation, including unrealized intercompany profits and losses.

Non-controlling interest

When the company owns a majority (but less than 100%) of a subsidiary’s stock, the company include in its condensed consolidated Financial Statements the non-controlling interest in the subsidiary. The non-controlling interest in the Condensed Consolidated Statements of Operations and Other Comprehensive Income is equal to the non-controlling proportionate share of the subsidiary’s net income and, as included in Shareholders’ Equity on the Consolidated Balance Sheet, is equal to the non-controlling proportionate share of the subsidiary’s net assets.

Foreign Currency Translation

The condensed consolidated financial statements are presented in U.S. Dollars, the reporting currency. Our foreign subsidiaries’ local currency is the Colombian Peso, which is also their functional currency as determined by the analysis of markets, costs and expenses, assets, liabilities, financing and cash flow indicators. As such, our subsidiaries’ assets and liabilities are translated at the exchange rate in effect at the balance sheet date, with equity being translated at the historical rates. Revenues and expenses of our foreign subsidiaries are translated at the average exchange rates for the period. The resulting cumulative foreign currency translation adjustments from this process are included as a component of accumulated other comprehensive income (loss). Therefore, the U.S. Dollar value of these items in our financial statements fluctuates from period to period.

Also, exchange gains and losses arising from transactions denominated in a currency other than the functional currency are included in the condensed consolidated statement of operations as foreign exchange gains and losses .

Business combinations

We allocate the total purchase price of the acquired tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the business combination date, with the excess purchase price recorded as goodwill. The purchase price allocation process required us to use significant estimates and assumptions, including fair value estimates, as of the business combination date. Although we believe the assumptions and estimates we have made are reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired company, in part based on valuation models that incorporate projections of expected future cash flows and operating plans and are inherently uncertain. Valuations are performed by management or third party valuation specialists under management’s supervision. In determining the fair value of assets acquired and liabilities assumed in business combinations, as appropriate, we may use one of the following recognized valuation methods: the income approach (including the cost saving method and the discounted cash flows from relief from royalty), the market approach and/or the replacement cost approach.

Examples of significant estimates used to value certain intangible assets acquired include but are not limited to:

● sales volume, pricing and future cash flows of the business overall

● future expected cash flows from customer relationships, and other identifiable intangible assets, including future price levels, rates of increase in revenue and appropriate attrition rate

● the acquired company’s brand and competitive position, royalty rate, as well as assumptions about the period of time the acquired brand will continue to benefit to the combined company’s product portfolio

● cost of capital, risk-adjusted discount rates and income tax rates

However, different assumptions regarding projected performance and other factors associated with the acquired assets may affect the amount recorded under each type of assets and liabilities, mainly between property, plant and equipment, intangibles assets, goodwill and deferred income tax liabilities and subsequent assessment could result in future impairment charges. The purchase price allocation process also entails us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained surrounding facts and circumstances existing at acquisition date.

Acquisitions under common control are recorded retroactively starting from the first date of common control. Instead of using fair value, the Company consolidates the financial statements of the entity acquired using the existing carrying values.

Revenue Recognition

Our principal sources of revenue are derived from product sales of manufactured glass and aluminum products. Revenue is recognized when (i) persuasive evidence of an arrangement exists in the form of a signed purchase order or contract, (ii) delivery has occurred per contracted terms, (iii) fees and prices are fixed and determinable, and (iv) collectability of the sale is reasonably assured. All revenue is recognized net of discounts, returns and allowances. Delivery to the customer is deemed to have occurred when the title is passed to the customer. Generally, title passes to the customer upon shipment, but title transfer may occur when the customer receives the product based on the terms of the agreement with the customer.

Revenues from fixed price contracts, which amount to 33% and 17% of the Company’s sales for the three months ended March 31, 2017 and 2016, respectively, and are recognized using the percentage-of-completion method, measured by the percentage of costs incurred to date to total estimated costs for each contract. Revenues recognized in advance of amounts billable pursuant to contracts terms are recorded as unbilled receivables on uncompleted contracts based on work performed and costs to date. Unbilled receivables on uncompleted contracts are billable upon various events, including the attainment of performance milestones, delivery and installation of products, or completion of the contract. Revisions to cost estimates as contracts progress have the effect of increasing or decreasing expected profits each period. Changes in contract estimates occur for a variety of reasons, including changes in contract scope, estimated revenue and estimated costs to complete. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in contract performance and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined and have not had a material effect on the Company’s financial statements.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Significant improvements and renewals that extend the useful life of the asset are capitalized. Interest incurred while acquired property is under construction and installation are capitalized. Repairs and maintenance are charged to expense as incurred. When property is retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any related gains or losses are included in income as a reduction to, or increase in operating expenses. Depreciation is computed on a straight-line basis, based on the following estimated useful lives:

Buildings	20 years
Machinery and equipment	10 years
Furniture and fixtures	10 years
Office equipment and software	5 years
Vehicles	5 years

Intangible Assets

Intangible assets with definite lives subject to amortization are amortized on a straight-line basis. We also review these intangibles for impairment when events or significant changes in circumstance indicate that the carrying value may not be recoverable. Events or circumstances that indicate that impairment testing may be required include the loss of a significant customer, loss of key personnel or a significant adverse change in business climate or regulations. There were no triggering events or circumstances noted and as such no impairment was needed for the intangible assets subject to amortization. See Note 8 - Goodwill and Intangible Assets for additional information.

Earn out shares liability

In accordance with ASC 815 - Derivatives and hedging, the earn out shares are not considered indexed to the Company’s own stock and therefore are accounted for as a liability with fair value changes being recorded in the condensed consolidated statements of operations and comprehensive income. Earnout shares are released from the escrow account upon achievement of the conditions set forth in the earnout share agreement. At this time the shares are recorded out of the earnout share liability and into common stock and additional paid in capital within the shareholders equity section of the Company’s condensed consolidated balance sheets. As of March 31, 2017 there is no earnout shares liability recorded.

Warrant liability

An aggregate 9,200,000 warrants were issued as a result of the Public Offering, the Private Placement and the Merger. Of the aggregate total, 4,200,000 warrants were issued in connection with the Public Offering (“IPO Warrants”), 4,800,000 warrants were issued in connection with the Private Placement (“Insider Warrants”), and 200,000 warrants were issued upon conversion of a promissory note at the closing of the Merger (“Working Capital Warrants”). The Company classifies the warrant instruments as a liability at their fair value because the warrants do not meet the criteria for equity treatment under guidance contained in ASC 815-40-15-7D. The aggregate liability is subject to re-measurement at each balance sheet date and adjusted at each reporting period until exercised or expired, and any change in fair value is recognized in the Company’s condensed consolidated statement of operations.

When the warrants are exercised for ordinary shares, the Company re-measures the fair value of the exercised warrants as of the date of exercise using available fair value methods and records the change in fair value in the condensed consolidated statement of operations, and records the fair value of the exercised warrants as additional paid in capital in the shareholders equity section of the Company’s condensed consolidated balance sheet. The Company’s warrants expired per their own terms on December 20, 2016.

Income Taxes

The Company’s operations in Colombia are subject to the taxing jurisdiction of the Republic of Colombia. ESW LLC, GM&P, Componenti USA LLC, Tecnoglass LLC and Tecno RE LLC are subject to the taxing jurisdiction of the United States . TGI and Tecnoglass Holding are subject to the taxing jurisdiction of the Cayman Islands. Annual tax periods prior to December 2014 are no longer subject to examination by taxing authorities in Colombia.

The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position. There are no significant uncertain tax positions requiring recognition in the Company’s condensed consolidated financial statements. The Company records interest and penalties, if any, as a component of income tax expense.

The Company accounts for income taxes under the asset and liability model (ASC 740 “Income Taxes”) and recognizes deferred tax assets and liabilities for the expected impact of differences between the financial statements and tax bases of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. A valuation allowance is established when management determines that 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.

Earnings per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the period. Income per share assuming dilution (diluted earnings per share) would give effect to dilutive options, warrants, earnout shares, and other potential ordinary shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

The calculation of diluted earnings per share for the three months ended March 31, 2017 reflect 718,102 dilutive securities related to the annualized dividend declared of $0.50 per share authorized on August 4, 2016 by the Board of Directors. For the three months ended March 31, 2016, the Company considered the dilutive effect of warrants to purchase ordinary shares, unit purchase options exercisable into ordinary shares, and shares issuable under the earnout agreement in the calculation of diluted income per share, which resulted in 3,139,118 shares of dilutive securities.

The following table sets forth the computation of the basic and diluted earnings per share for the three months ended March 31, 2017 and 2016:

	Three months ended March 31,
	2017		2016
Net Income	$	1,019	$	14,356
Denominator
Denominator for basic earnings per ordinary share - weighted average shares outstanding		33,480,430		28,220,885
Effect of dilutive warrants, options, earnout shares, and stock dividends declared		718,103		3,139,118
Denominator for diluted earnings per ordinary share - weighted average shares outstanding		34,198,533		31,360,003
Basic earnings per ordinary share	$	0.03	$	0.51
Diluted earnings per ordinary share	$	0.03	$	0.46

Product Warranties

The Company offers product warranties in connection with the sale and installation of its products that are competitive in the markets in which the products are sold. Standard warranties depend upon the product and service, and are generally from five to ten years for architectural glass, curtain wall, laminated and tempered glass, window and door products. Warranties are not priced or sold separately and do not provide the customer with services or coverages in addition to the assurance that the product complies with original agreed-upon specifications. Claims are settled by replacement of the warrantied products. The Company evaluated historical information regarding claims for replacements under warranties and concluded that the costs that the Company has incurred in relation to these warranties have not been material.

Recently acquired GM&P provides certain product warranties based on warranty contracts with its customers at the time of sale. Warranty expense is charged to operating expenses. 

Non-Operating Income, net

The Company recognizes non-operating income from foreign currency transaction gains and losses, interest income on receivables, proceeds from sales of scrap materials and other activities not related to the Company’s operations. Foreign currency transaction gains and losses occur when monetary assets, liabilities, payments and receipts that are denominated in currencies other than the Company’s functional currency are recorded in the Colombian peso accounts of the Company in Colombia.

Shipping and Handling Costs

The Company classifies amounts billed to customers related to shipping and handling as product revenues. The Company records and presents shipping and handling costs in selling expenses. Shipping and handling costs for the three months ended March 31, 2017 and 2016 were $3,132 and $2,930, respectively.

Dividends Payable

The company accounts for its dividend declared as a liability under ASC 480 - Distinguishing Liabilities from Equity since the shareholder have the option to elect cash or stock, and reclassifies from dividend payable to additional paid-in capital when shareholders elects a stock dividend instead of cash. The dividend payable is not subject to re-measurement at each balance sheet date since the dividend is a fixed monetary amount known at inception and thus no change in fair value adjustment is necessary.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)” (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASU 2016-02, a lessee will recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-to-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current GAAP. ASU 2016-02 retains a distinction between finance leases (i.e. capital leases under current GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP. The amendments of this ASU are effective for reporting periods beginning after December 15, 2018, with early adoption permitted. An entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements. We evaluated the impact of ASU 2016-09 and its related disclosures, and these standards had no material impact on our consolidated financial statements

In May 2016, the FASB also issued ASU 2016-12, Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), which provides clarification on certain topics within ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), including assessing collectability, presentation of sales taxes, the measurement date for non-cash consideration and completed contracts at transition, as well as providing a practical expedient for contract modifications at transition. The effective date and transition requirements for the amendments in ASU 2016-08, ASU 2016-10 and ASU 2016-12 are the same as the effective date and transition requirements of ASU 2014-09, which is effective for fiscal years, and for interim periods within those years, beginning after December 15, 2017. The Company already started with the planning phase of the adoption of this ASU and is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 reduces diversity in practice by providing guidance on the classification of certain cash receipts and payments in the statement of cash flows. ASU 2016-15 clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. ASU 2016-15 is effective on a retrospective basis for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

On October 24, 2016, the FASB issued Accounting Standards Update 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The ASU is part of the Board’s simplification initiative aimed at reducing complexity in accounting standards. Under current GAAP, the tax effects of intra-entity asset transfers (intercompany sales) are deferred until the transferred asset is sold to a third party or otherwise recovered through use. This is an exception to the principle in ASC 740, Income Taxes, that generally requires comprehensive recognition of current and deferred income taxes. The new guidance eliminates the exception for all intra-entity sales of assets other than inventory. As a result, a reporting entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The new guidance does not apply to intra-entity transfers of inventory. The income tax consequences from the sale of inventory from one member of a consolidated entity to another will continue to be deferred until the inventory is sold to a third party. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Restricted Cash” (“ASU 2016-18”). ASU 2016-18 provides amendments to ASC No. 230, “Statement of Cash Flows,” which require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents. The amendments in this update are effective retrospectively during interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In December 2016, the FASB issued Accounting Standards Update 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, (“ASU 2016-20”). The purpose of ASU 2016-20 is to amend certain narrow aspects of the guidance issued in ASU 2014-09 including guidance related to the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Clarifying the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 provides amendments to ASC No. 805, “Business Combinations,” which clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update are effective prospectively during interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 provides amendments to ASC No. 350, “Intangibles - Goodwill and Other” (“ASC 350”), which eliminate Step 2 from the goodwill impairment test. Entities should perform their goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The amendments in this update are effective prospectively during interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

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Acquisitions

3 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

Acquisitions

Note 3. Acquisitions

ESWindows Acquisition

On December 2, 2016, we acquired 100% of the stock of ESW LLC, 85.06% of which was acquired directly by Tecnoglass and 14.94% by our subsidiary ES, for a total purchase price of $13,500, which consisted of (i) 734,400 ordinary shares issued in connection with the transaction for approximately $9,200 based on a stock price of $12.50, (ii) approximately $2,300 in cash, and (iii) approximately $2,000 related to the assignment of certain accounts receivable from Ventana Solar S.A. (“VS”).

VS, a Panama sociedad anonima, is an importer and installer of the Company’s products in Panama. Family members of the Company’s CEO and COO and other related parties own 100% of the equity in VS. During 2015 and 2014, the Company and VS executed a short-term payment agreement and a three-year payment agreement that were mainly created to fund working capital to VS due the timing difference between the collections from VS’s customers. On December 2, 2016 the outstanding amount of $2,016 was reassigned to the former shareholders of ESW LLC as part of the consideration paid for the acquisition of ESW. As a result, the Company does not have any outstanding receivable under these payment agreements as of December 31, 2016. See Note 13 – Related Parties for more information.

As the Acquisition of ESW LLC was deemed to be a transaction between entities under common control, the assets and liabilities were transferred at the historical cost of ESW LLC, with prior periods retroactively adjusted to include the historical financial results of the acquired company for the period they were controlled by the previous owners of ESW LLC in the Company’s financial statements.

The following table includes the financial information as originally reported and the net effect of the ESW acquisition after elimination of intercompany transactions.

	March 31, 2016
	Without acquisition			Net effect of acquisition		Considering acquisition
Net revenues	$	60,903		$	2,959	$	63,855
Net income (loss)	$	13,664		$	692	$	14,356
Basic income per share	$	0.50		$	0.01	$	0.51
Diluted income per share	$	0.45		$	0.01	$	0.46
Basic weighted average common shares outstanding		27,486,485			734,400		28,220,885
Diluted weighted average common shares outstanding		30,625,603			734,400		31,360,003
Cash provided by operating activities	$	(10,136	)	$	939	$	(9,197	)
Net decrease in cash	$	(302	)	$	77	$	(225	)

The number of basic and diluted weighted average common shares outstanding prior to the acquisition of ESW LLC includes 579,094 shares issued after the financial statements for three months ended March 31, 2016 were issued related to a stock dividend during 2016 and 2017.

GM&P Acquisition

On March 1, 2017, the Company acquired a 100% controlling interest in Giovanni Monti and Partners Consulting and Glazing Contractors, Inc. (“GM&P”), a Florida-based commercial consulting, glazing and engineering company, specializing in windows and doors for commercial contractors. The primary reasons for the business combination are to continue Tecnoglass’ long-term strategy of being vertically integrated, to streamline its distribution logistics, and to fabricate in the United States when economically advantageous. The purchase price for the acquisition was $35,000, of which $6,000 of the purchase price will be paid in cash by the Company with the remaining amount payable by the Company in cash, stock of the Company or a combination of both at the Company´s sole discretion within 180 days after closing. The total amount of acquisition-related costs was $189, which is included in the Statement of operations for the period ending December 31, 2016.

The following table summarizes the consideration transferred to acquire GM&P and the amounts of identified assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the noncontrolling interest in Componenti USA LLC as of the acquisition date. Under ASC 805, a company can apply measurement period adjustments during the twelve-month period after the date of acquisition. During this period, the acquirer may adjust preliminary amounts recognized at the acquisition date to their subsequently determined final fair values . The allocation of the consideration transferred was based on management’s judgment after evaluation of several factors, including a preliminary valuation assessment. Finalization of the analysis has not been completed and could result in measurement periods adjustments that could change the composition of current asset, fixed assets, intangible assets, goodwill, and liabilities. The goodwill is not expected to be deductible for tax purposes.

The following table summarizes the purchase price allocation of the total consideration transferred:

Consideration Transferred:
Notes payable (Cash or Stock)	$	35,000
Fair value of the noncontrolling interest in Componenti		1,141
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and equivalents	$	509
Accounts receivable		42,314
Cost and estimated earnings in excess of billings		4,698
Other current assets		589
Property, plant, and equipment		684
Other non-current tangible assets		59
Trade name		980
Non-compete agreement		165
Contract backlog		3,090
Customer relationships		4,140
Accounts payable		(22,330	)
Other current liabilities assumed		(13,967	)
Non-current liabilities assumed		(3,634	)
Total identifiable net assets		17,297
Goodwill (including Workforce)	$	18,844

The excess of the consideration transferred over the estimated fair values of assets acquired and liabilities assumed was recorded as goodwill. The identifiable intangible asset subject to amortization was the tradename, customer relationships, non-compete agreement, and backlog, which have a remaining useful life of two to five years. See Note 8 – Goodwill and Intangible Assets for additional information.

The following unaudited pro forma financial information assumes the acquisition had occurred at the beginning of the earliest period presented that does not include GM&P actual results for the entire period. Pro forma results have been prepared by adjusting our historical results to include the results of GM&P adjusted for the amortization expense related to the intangible assets arising from the acquisition. The unaudited pro forma results below do not necessarily reflect the results of operations that would have resulted had the acquisition been completed at the beginning of the earliest periods presented, nor does it indicate the results of operations in future periods. The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future market conditions which could alter the following unaudited pro forma results.

	Three Months Ended			Three Months Ended
(in thousands, except per share amounts)	March 31, 2017			March 31, 2016
Pro Forma Results
Net sales	$	75,804		$	75,771
Net income	$	(35	)	$	14,706
Net income per common share:
Basic	$	(0.00	)	$	0.52
Diluted	$	(0.00	)	$	0.47

The actual sales and net income that is included within the Statement of Operations for the three-month period ended March 31, 2017 is $8,126 and $1,660, respectively.

Non-controlling interest

With the Acquisition of GM&P, the Company also acquired a 60% equity interest in Componenti USA LLC, a subsidiary of GM&P that provides architectural specialties in the US, specializing in design-build systems for individual projects and with experience in value engineering to create products that comply with the architects original design intent, while maintaining focus on affordable construction methods and materials. The 40% non-controlling interest in Componenti is included in the opening balance sheet as of the acquisition date and its fair value amounted to $1,141. When the company owns a majority (but less than 100%) of a subsidiary’s stock, the Company includes in its Consolidated Financial Statements the non-controlling interest in the subsidiary. The non-controlling interest in the Condensed Consolidated Statements of Operations and Other Comprehensive Income is equal to the non-controlling interests’ proportionate share of the subsidiary’s net income and, as included in Shareholders’ Equity on the Condensed Consolidated Balance Sheet, is equal to the non-controlling interests’ proportionate share of the subsidiary’s net assets.

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Trade Accounts Receivable

3 Months Ended

Mar. 31, 2017

Receivables [Abstract]

Trade Accounts Receivable

Note 4. – Trade accounts receivable

Trade accounts receivable consists of the following:

	March 31, 2017			December 31, 2016
Trade accounts receivable	$	106,824		$	94,380
Less: Allowance for doubtful accounts		(3,514	)		(2,083	)
	$	103,310		$	92,297

The changes in allowances for doubtful accounts for the years ended December 31, 2016 and 2015 are as follows:

	March 31, 2017			December 31, 2016
Balance at beginning of year	$	2,083		$	189
Provision for bad debts		983			4,686
Allowance from acquired business		1,000			-
Deductions and write-offs, net of foreign currency adjustment		(552	)		(2,792	)
Balance at end of year	$	3,514		$	2,083

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Inventories, Net

3 Months Ended

Mar. 31, 2017

Inventory Disclosure [Abstract]

Inventories, Net

Note 5. - Inventories, net

Inventories are comprised of the following:

	March 31, 2017			December 31, 2016
Raw materials	$	36,332		$	40,219
Work in process		7,799			5,606
Finished goods		6,734			4,124
Stores and spares		5,599			5,016
Packing material		362			284
		56,826			55,249
Less: inventory allowance		(95	)		(157	)
	$	56,731		$	55,092

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Other Current Assets and Other Long Term Assets

3 Months Ended

Mar. 31, 2017

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Current Assets and Other Long Term Assets

Note 6. Other Current Assets and Other Long Term Assets

Other current assets are comprised of the following:

	March 31, 2017		December 31, 2016
Unbilled receivables on uncompleted contracts	$	1,306	$	6,625
Prepaid Expenses		1,223		1,183
Prepaid Taxes		18,857		14,080
Advances and other receivables		1,908		2,009
Other current assets	$	23,294	$	23,897

Other long term assets are comprised of the following:

	March 31, 2017		December 31, 2016
Real estate investments	$	4,930	$	5,125
Cost method investment		500		500
Other long term assets		2,040	$	1,687
	$	7,470	$	7,312

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Property, Plant and Equipment, Net

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, Net

Note 7. Property, Plant and Equipment, Net

Property, plant and equipment consist of the following:

	March 31, 2017			December 31, 2016
Building	$	54,617		$	50,887
Machinery and equipment		138,449			132,333
Office equipment and software		5,201			4,980
Vehicles		1,884			1,648
Furniture and fixtures		2,335			2,141
Total property, plant and equipment		202,486			191,989
Accumulated depreciation and amortization		(55,508	)		(49,277	)
Net value of property and equipment		146,978			142,712
Land		29,260			28,085
Total property, plant and equipment, net	$	176,238		$	170,797

Depreciation expense for the three months ended March 31, 2017 and 2016 amounted to $4,295 and $3,137, respectively.

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Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 8. Goodwill and Intangible Assets

Goodwill

The table below provides a reconciliation of the beginning and ending balances of the Goodwill recorded on the Company’s balance sheet:

Beginning balance - December 31, 2016	$	1,330
GM&P Acquisition		18,844
Ending balance – March 31, 2017	$	20,174

Intangible Assets

Intangible assets include Miami-Dade County Notices of Acceptances (NOA’s), which are certificates in the required to market hurricane- resistant glass in Florida. Also, it includes the intangibles acquired from the acquisition of GM&P and Componenti.

	March 31, 2017							December 31, 2016
	Gross		Acc. Amort.			Net		Gross		Acc. Amort.			Net
Trade Names	$	980	$	(16	)	$	964	$	-	$	-		$	-
Notice of Acceptances (NOAs)		8,770		(4,072	)		4,698		8,524		(3,969	)		4,555
Non-compete Agreement		165		(3	)		162		-		-			-
Contract Backlog		3,090		(129	)		2,961		-		-			-
Customer Relationships		4,140		(74	)		4,066		-					-
	$	17,145	$	(4,294	)	$	12,851	$	8,524	$	(3,969	)	$	4,555

During the three months ended March 31, 2017 and March 31, 2016, the amortization expense amounted to $610 and $194, respectively, and was included within the general and administration expenses in our condensed consolidated statement of operations. The weighted average amortization period is 5 years for the tradename, customer relationships, and non-complete agreement; and for the contract backlog is 2 years.

The estimated aggregate amortization expense for each of the five succeeding years as of March 31, 2017 is as follows:

Year Ending	(in thousands)
2017 (nine months)	$	2,305
2018		3,073
2019		1,785
2020		1,405
2021		1,381
Thereafter		2,902
	$	12,851

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Debt

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Debt

Note 9. Debt

As of March 31, 2017, the Company owed $227,338 under its various borrowing arrangements. The obligations have maturities ranging from six months to 15 years that bear interest at rates ranging from 2.9% to 11.0% and a weighted average of 7.7%.

On January 23, 2017, the Company issued a U.S. dollar denominated, $210,000 offering of a 5-year senior unsecured note at a coupon rate of 8.2% in the international debt capital markets under Rule 144A/Reg S of the Securities Act to qualified institutional buyers. The Company used approximately $182,189 of the proceeds to repay outstanding indebtedness and as a result achieved a lower cost of debt and strengthened its capital structure given the non-amortizing structure of the new facility. Of these repayments, $59,444 were used to refinance short term debt into long term debt. The Company’s condensed consolidated balance sheets as of December 31, 2016 reflects the effect of this refinance of the Company’s current portion of long term debt and other current borrowings into long term debt based on the Company’s intent as of that date, as per guidance of ASC 470, which states that a short-term obligation shall be excluded from current liabilities if the entity intends to refinance the obligation on a long-term basis and the intent to refinance the short-term obligation on a long-term basis is supported by a post-balance-sheet-date issuance of a long-term obligation.

In accordance with ASC Topic No. 470, “Debt – Modifications and Extinguishments” (Topic 470), a company needs to determine whether a modification or exchange of a term loan or debt security should be accounted for as a modification or an extinguishment. The Company determined that the issuance of the 5-year senior unsecured note under Rule 144A/Reg S was not considered a modification existing since the note issuance proceeds were used to extinguished debt and the note issuance was accounted for as a liability equal to the proceeds received. As such, the payoff of the January 2016 credit facility was determined to be an extinguishment of the existing debt. As a result, we recorded a loss on the extinguishment of debt in the amount of $3,159 in the line item “Loss on Extinguishment of Debt” in our Condensed Consolidated Statements of Operations and Comprehensive Income. The loss represented $2,583 of write off of deferred financing fees related to the extinguished debt facilities and $576 of penalties fees related to the early payoff of the syndicate loans. The write-off was added back as a non-cash item in the Cash Flows from Operations.

The Company’s debt is comprised of the following:

	March 31, 2017			December 31, 2016
Revolving lines of credit	$	1,297		$	13,168
Capital lease		-			23,696
Unsecured senior note		210,000			-
Other loans		24,276			165,330
Less: Deferred cost of Financing		(8,235	)		(2,597	)
Total obligations under borrowing arrangements		227,338			199,597
Less: Current portion of long-term debt and other current borrowings		6,624			2,651
Long-term debt	$	220,714		$	196,946

Maturities of long term debt and other current borrowings are as follows as of March 31, 2017:

2018	$	6,624
2019		2,305
2020		2,315
2021		2,326
2022		212,336
Thereafter		9,667
Total	$	235,573

The Company had $0 and $8,366 of property, plant and equipment as well as $4,717 and $4,757 of other long term assets pledged to secure $3,490 and $109,193 under various lines of credit as of March 31, 2017 and December 31, 2016, respectively. Differences between pledged assets and the amount secured is related to the difference between carrying value of such assets recorded at historical cost and the guarantees issued to the banks which are based on the market value of the real estate.

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Income Taxes

3 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Note 10. Income Taxes

The Company files income tax returns for TG and ES in the Republic of Colombia. On December 28, 2016, the Colombian Congress enacted a structural tax reform that took effect on January 1, 2017 which reduces corporate income tax from 42% to 40% for fiscal year 2017, 37% in 2018 and 33% in 2019 and thereafter. As a result of the Colombian tax reform from December 28, 2016, the Company’s net deferred tax liability decreased $586 as of December 31, 2016.

ESW LLC is an LLC that was not subject to income taxes during the year 2015 and the eleven months period ending December 2, 2016, since it was a pass-through entity for tax purposes. ESW LLC was converted to a C-Corporation and will be subject to income taxes starting on December 3, 2016. The estimated income tax rate for C-Corporations ranges between 10% and 39.5%. Tecnoglass Inc. as well as all the other subsidiaries in the Cayman Islands and Panama do not currently have any tax obligations.

The components of income tax expense (benefit) are as follows:

	Three months ended March 31,
	2017			2016
Current income tax:
United States	$	452		$	-
Foreign		2,280			3,256
Total current income tax		2,732			3,256
Deferred income tax:
United States		380			-
Foreign		(2,070	)		387
Total deferred income tax		(1,690	)		387
Total Provision for Income tax	$	1,042		$	3,643
Effective tax rate		50.3	%		20.0	%

The Company’s effective tax rate of 20% for the three month period ended March 31, 2016 reflects non-taxable gains of $5,911 due to the change in fair value of the Company’s warrant liability relative to their fair value as of December 31, 2015 and non-taxable gain of $3,704 due to the change in fair value of the Company’s earn out share liability relative to their fair value as of December 31, 2015. There were no other individual items with significant contributions in the reconciliation of the Company’s effective tax rate and the statutory rate during the three months ended March 31, 2017.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 11. Fair Value Measurements

The Company accounts for financial assets and liabilities in accordance with accounting standards that define fair value and establish a framework for measuring fair value. The hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. The classification of a financial asset or liability within the hierarchy is determined by the lowest level inputs that are significant to the fair value measurement. Results of operations are impacted by the movement in the level 2 and 3 instruments on a periodic basis.

The Company has marketable equity securities with fair values obtained from a quoted price in an active market (Level 1) amounting to $533 and $505 as of December 31, 2016 and March 31, 2017. As of December 31, 2016 the Company had Interest rate swap derivative liability with fair value obtained using significant other observable inputs (Level 2) amounting to $23.

As of March 31, 2017 and December 31, 2016, financial instruments carried at amortized cost that do not approximate fair value consist of long-term debt. See Note 9 - Debt. The fair value of long term debt was calculated based on an analysis of future cash flows discounted with our weighted average cost of debt based on market rates, which are Level 2 inputs. Other financial instruments such as accounts receivable have carrying values that approximate fair value as they are short-term in nature.

The following table summarizes the fair value and carrying amounts of our long term debt:

	March 31, 2017		December 31, 2016
Fair Value	$	239,736	$	190,190
Net Carrying Value	$	227,338	$	196,786

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Segment and Geographic Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment and Geographic Information

Note 12. Segment and Geographic Information

	Three months ended March 31,
	2017		2016
Colombia	$	16,428	$	18,578
United States		46,308		40,118
Panama		1,263		2,914
Other		1,818		2,245
Total Revenues	$	65,817	$	63,855

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Related Parties

3 Months Ended

Mar. 31, 2017

Related Party Transactions [Abstract]

Related Parties

Note 13. Related Parties

The following is a summary of assets, liabilities, and income and expense transactions with all related parties, shareholders, directors and managers:

	Three months ended March 31,
	2017		2016
Sales to related parties	$	1,374	$	2,971
Expenses:
Fees paid to directors and officers	$	710	$	359
Payments to other related parties	$	806	$	1,283

	March 31, 2017		December 31, 2016
Current Assets:
Due from VS	$	9,433	$	9.143
Due from other related parties		1,734		1,852
	$	11,167	$	10,995
Liabilities:
Due to related parties	$	1,808	$	3,668

Ventanas Solar S.A. (“VS”), a Panama sociedad anonima, is an importer and installer of the Company’s products in Panama. Family members of the Company’s CEO and COO and other related parties own 100% of the equity in VS. The Company’s sales to VS for the year three months ended March 31, 2017 and 2016 were $1,150 and $2,689 respectively.

Payments to other related parties during three months ended March 31, 2017 include charitable contributions to the Company’s foundation for $416 and sales commissions for $241.

Due to related party includes a balance of $631 and $2,303 payable to the former shareholders of ESW LLC as part of the consideration paid for the acquisition as of March 31, 2017 and December 16, 2016. (See Note 3 – Acquisitions for further details). The change amounting to $1,672 is related to the payment to former ESW shareholders which is reflected in the Cash Flow from Investing Activities.

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Dividends Payable

3 Months Ended

Mar. 31, 2017

Dividends Payable

Dividends Payable

Note 14. Dividends Payable

On August 4, 2016, the Company’s Board of Directors authorized the payment of regular quarterly dividends to holders of ordinary shares at a quarterly rate of $0.125 per share, or $0.50 per share on an annual basis. The dividend is being paid in cash or ordinary shares, chosen at the option of holders of ordinary shares and the value of the ordinary shares to be used to calculate the number of shares to be issued with respect to that portion of the dividend payable in ordinary shares was the average of the closing price of the Company’s ordinary shares on NASDAQ during the three trading days prior to the end of the election period. Those holders that did not provide a choice during the election period for the first quarterly dividend were paid out in cash, whereas from the second quarterly dividend going forwards, holders that do not provide a choice during the election period are paid in ordinary shares. Energy Holding Corporation, the majority shareholder of the Company, has irrevocably elected to receive such dividend for the full year in ordinary shares, as opposed to cash As a result, the Company has a dividend payable amounting to $2,170 as of March 31, 2017. On April 28, 2017, the Company paid $668 and issued 341,843 shares in connection with the third quarterly dividend to the holders of record as of March 31, 2017.

The company analyzed the accounting guidance under ASC 505 and determined that this guidance is not applicable since the dividend are shares of the same class in which each shareholder is given an election to receive cash or shares. As such, the company analyzed the dividend under ASC 480 — Distinguishing Liabilities from Equity and concluded that the dividend should be accounted for as a liability since the dividend is a fixed monetary amount known at inception. A reclassification from dividend payable to additional paid-in capital was done for the stocks dividend elections that shareholders have already made.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 15. Commitments and Contingencies

Guarantees

As of March 31, 2017, the Company does not have guarantees on behalf of other parties.

Legal Matters

On March 2, 2016 ES filed a lawsuit against Bagatelos Architectural Glass Systems, Inc. (“Bagatelos”) in Colombia. In addition, we also filed a lawsuit against Bagatelos in the State of California for breach of contract. To lift the lien declared by the Court in California, Bagatelos submitted a bond for $2,000 in favor of ES and its release is subject to the court’s ruling. This bond is a “mechanics lien surety bond” which guarantees ES payment of the amounts due with interest and costs should the Company win the case. Mediation scheduled for February 17, 2017 was unsuccessful and parties continue discovery. Bagatelos as defendant presented a cross complaint on September 23, 2016 seeking damages of approximately $3,000. Although we already received a payment order from the Colombian judge, the Company continues to pursue its rights, remedies and defenses in the U.S. We received on January 31, 2017 a case update from our U.S. counsel stating that due to ES’ favorable terms and conditions and the fact that Bagatelos has overstated their claim and ignored their contractual duties, it is probable that the Company will be able to recover the outstanding amount of $2,000.

General Legal Matters

From time to time, the Company is involved in legal matters arising in the ordinary course of business. While management believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, will not have a material adverse effect on its business, financial condition or results of operations.

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Subsequent Events

3 Months Ended

Mar. 31, 2017

Subsequent Events [Abstract]

Subsequent Events

Note 16. Subsequent Events

On May 11, 2017, Tecnoglass Inc. announced the timing for the last payment of its declared regular quarterly dividend of $0.125 per share for the second quarter of 2017. The dividend will be payable on July 28^th, 2017 to shareholders of record as of the close of business on June 30, 2017. The dividend will be paid in cash or ordinary shares, to be chosen at the option of holders of ordinary shares during an election period beginning July 3rd, 2017 and lasting until 5:00 P.M. Eastern Time on July 21st, 2017. The value of the ordinary shares to be used to calculate the number of shares to be issued with respect to that portion of the dividend payable in ordinary shares shall be the average of the closing price of the Company’s ordinary shares on NASDAQ during the period from July 10, 2017 through July 21, 2017. If no choice is made during this election period, the dividend for this election period will be paid in ordinary shares of the Company.

The Company further announced that commencing with the quarterly dividend for the third quarter of 2017 through the dividend for the second quarter of 2018, the divided will be increased to $0.14 per share, or $0.56 per share on an annual basis. The quarterly dividend of $0.14 per share for the third quarter of 2017 will be payable to shareholders of record as of the close of business on September 29, 2017.

Energy Holding Corp., the majority shareholder of the Company, has irrevocably elected to receive any quarterly dividends declared through the second quarter of 2018 in ordinary shares, as opposed to cash.

Dividend declarations and the establishment of future record and payment dates are subject to the Board of Directors’ continuing determination that the dividend policy is in the best interests of the Company and its shareholders. The dividend policy may be changed or cancelled at the discretion of the Board of Directors at any time.

Management concluded that no additional subsequent events required disclosure other than those disclosed in these financial statements.

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation and Use of Estimates

Basis of Presentation and Use of Estimates

The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting purposes. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the information contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by US GAAP.

Prior year financial information has been retroactively adjusted for an acquisition under common control. As the acquisition of ESW LLC was deemed to be a transaction between entities under common control, the assets and liabilities were transferred at the historical cost of ESW LLC, with prior periods retroactively adjusted to include the historical financial results of the acquired company for the period they were controlled by ESW LLC in the Company’s financial statements. The accompanying financial statements and related notes have been retroactively adjusted to include the historical results and financial position of the acquired company prior to the acquisition date during the periods the assets were under common control. All financial information presented for the periods after the ESW LLC acquisition represent the consolidated results of operations, financial position and cash flows of the Company with retroactive adjustments of the results of operations, financial position and cash flows of the acquired company during the periods the assets were under common control.

The preparation of these unaudited, condensed consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of the Company’s financial statements. Actual results may differ from these estimates under different assumptions and conditions. Estimates inherent in the preparation of these condensed consolidated financial statements relate to the collectability of account receivables, the valuation of inventories, estimated earnings on uncompleted contracts, useful lives and potential impairment of long-lived assets. Based on information known before these unaudited, condensed consolidated financial statements were available to be issued, there are no estimates included in these statements for which it is reasonably possible that the estimate will change in the near term up to one year from the date of these financial statements and the effect of the change will be material . These financial statements reflect all adjustments that in the opinion of management are necessary for a fair statement of the financial position, results of operations and cash flows for the period presented, and are of a normal, recurring nature.

Principles of Consolidation

Principles of Consolidation

These unaudited condensed consolidated financial statements consolidate TGI, its subsidiaries TG, ES and ESW LLC, Tecno LLC, Tecno RE, GM&P and Componenti USA LLC, which are entities in which we have a controlling financial interest because we hold a majority voting interest. To determine if we hold a controlling financial interest in an entity, we first evaluate if we are required to apply the variable interest entity (“VIE”) model to the entity, otherwise the entity is evaluated under the voting interest model. All significant intercompany accounts and transactions are eliminated in consolidation, including unrealized intercompany profits and losses.

Non-controlling Interest

Non-controlling interest

When the company owns a majority (but less than 100%) of a subsidiary’s stock, the company include in its condensed consolidated Financial Statements the non-controlling interest in the subsidiary. The non-controlling interest in the Condensed Consolidated Statements of Operations and Other Comprehensive Income is equal to the non-controlling proportionate share of the subsidiary’s net income and, as included in Shareholders’ Equity on the Consolidated Balance Sheet, is equal to the non-controlling proportionate share of the subsidiary’s net assets.

Foreign Currency Translation

Foreign Currency Translation

The condensed consolidated financial statements are presented in U.S. Dollars, the reporting currency. Our foreign subsidiaries’ local currency is the Colombian Peso, which is also their functional currency as determined by the analysis of markets, costs and expenses, assets, liabilities, financing and cash flow indicators. As such, our subsidiaries’ assets and liabilities are translated at the exchange rate in effect at the balance sheet date, with equity being translated at the historical rates. Revenues and expenses of our foreign subsidiaries are translated at the average exchange rates for the period. The resulting cumulative foreign currency translation adjustments from this process are included as a component of accumulated other comprehensive income (loss). Therefore, the U.S. Dollar value of these items in our financial statements fluctuates from period to period.

Also, exchange gains and losses arising from transactions denominated in a currency other than the functional currency are included in the condensed consolidated statement of operations as foreign exchange gains and losses .

Business combinations

Business combinations

We allocate the total purchase price of the acquired tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the business combination date, with the excess purchase price recorded as goodwill. The purchase price allocation process required us to use significant estimates and assumptions, including fair value estimates, as of the business combination date. Although we believe the assumptions and estimates we have made are reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired company, in part based on valuation models that incorporate projections of expected future cash flows and operating plans and are inherently uncertain. Valuations are performed by management or third party valuation specialists under management’s supervision. In determining the fair value of assets acquired and liabilities assumed in business combinations, as appropriate, we may use one of the following recognized valuation methods: the income approach (including the cost saving method and the discounted cash flows from relief from royalty), the market approach and/or the replacement cost approach.

Examples of significant estimates used to value certain intangible assets acquired include but are not limited to:

● sales volume, pricing and future cash flows of the business overall

● future expected cash flows from customer relationships, and other identifiable intangible assets, including future price levels, rates of increase in revenue and appropriate attrition rate

● the acquired company’s brand and competitive position, royalty rate, as well as assumptions about the period of time the acquired brand will continue to benefit to the combined company’s product portfolio

● cost of capital, risk-adjusted discount rates and income tax rates

However, different assumptions regarding projected performance and other factors associated with the acquired assets may affect the amount recorded under each type of assets and liabilities, mainly between property, plant and equipment, intangibles assets, goodwill and deferred income tax liabilities and subsequent assessment could result in future impairment charges. The purchase price allocation process also entails us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained surrounding facts and circumstances existing at acquisition date.

Acquisitions under common control are recorded retroactively starting from the first date of common control. Instead of using fair value, the Company consolidates the financial statements of the entity acquired using the existing carrying values.

Revenue Recognition

Revenue Recognition

Our principal sources of revenue are derived from product sales of manufactured glass and aluminum products. Revenue is recognized when (i) persuasive evidence of an arrangement exists in the form of a signed purchase order or contract, (ii) delivery has occurred per contracted terms, (iii) fees and prices are fixed and determinable, and (iv) collectability of the sale is reasonably assured. All revenue is recognized net of discounts, returns and allowances. Delivery to the customer is deemed to have occurred when the title is passed to the customer. Generally, title passes to the customer upon shipment, but title transfer may occur when the customer receives the product based on the terms of the agreement with the customer.

Revenues from fixed price contracts, which amount to 33% and 17% of the Company’s sales for the three months ended March 31, 2017 and 2016, respectively, and are recognized using the percentage-of-completion method, measured by the percentage of costs incurred to date to total estimated costs for each contract. Revenues recognized in advance of amounts billable pursuant to contracts terms are recorded as unbilled receivables on uncompleted contracts based on work performed and costs to date. Unbilled receivables on uncompleted contracts are billable upon various events, including the attainment of performance milestones, delivery and installation of products, or completion of the contract. Revisions to cost estimates as contracts progress have the effect of increasing or decreasing expected profits each period. Changes in contract estimates occur for a variety of reasons, including changes in contract scope, estimated revenue and estimated costs to complete. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in contract performance and estimated profitability may result in revisions to costs and income and are recognized in the period in which the revisions are determined and have not had a material effect on the Company’s financial statements.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Significant improvements and renewals that extend the useful life of the asset are capitalized. Interest incurred while acquired property is under construction and installation are capitalized. Repairs and maintenance are charged to expense as incurred. When property is retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any related gains or losses are included in income as a reduction to, or increase in operating expenses. Depreciation is computed on a straight-line basis, based on the following estimated useful lives:

Buildings	20 years
Machinery and equipment	10 years
Furniture and fixtures	10 years
Office equipment and software	5 years
Vehicles	5 years

Intangible Assets

Intangible Assets

Intangible assets with definite lives subject to amortization are amortized on a straight-line basis. We also review these intangibles for impairment when events or significant changes in circumstance indicate that the carrying value may not be recoverable. Events or circumstances that indicate that impairment testing may be required include the loss of a significant customer, loss of key personnel or a significant adverse change in business climate or regulations. There were no triggering events or circumstances noted and as such no impairment was needed for the intangible assets subject to amortization. See Note 8 - Goodwill and Intangible Assets for additional information.

Earnout Shares Liability

Earn out shares liability

In accordance with ASC 815 - Derivatives and hedging, the earn out shares are not considered indexed to the Company’s own stock and therefore are accounted for as a liability with fair value changes being recorded in the condensed consolidated statements of operations and comprehensive income. Earnout shares are released from the escrow account upon achievement of the conditions set forth in the earnout share agreement. At this time the shares are recorded out of the earnout share liability and into common stock and additional paid in capital within the shareholders equity section of the Company’s condensed consolidated balance sheets. As of March 31, 2017 there is no earnout shares liability recorded.

Warrant Liability

Warrant liability

An aggregate 9,200,000 warrants were issued as a result of the Public Offering, the Private Placement and the Merger. Of the aggregate total, 4,200,000 warrants were issued in connection with the Public Offering (“IPO Warrants”), 4,800,000 warrants were issued in connection with the Private Placement (“Insider Warrants”), and 200,000 warrants were issued upon conversion of a promissory note at the closing of the Merger (“Working Capital Warrants”). The Company classifies the warrant instruments as a liability at their fair value because the warrants do not meet the criteria for equity treatment under guidance contained in ASC 815-40-15-7D. The aggregate liability is subject to re-measurement at each balance sheet date and adjusted at each reporting period until exercised or expired, and any change in fair value is recognized in the Company’s condensed consolidated statement of operations.

When the warrants are exercised for ordinary shares, the Company re-measures the fair value of the exercised warrants as of the date of exercise using available fair value methods and records the change in fair value in the condensed consolidated statement of operations, and records the fair value of the exercised warrants as additional paid in capital in the shareholders equity section of the Company’s condensed consolidated balance sheet. The Company’s warrants expired per their own terms on December 20, 2016.

Income Taxes

Income Taxes

The Company’s operations in Colombia are subject to the taxing jurisdiction of the Republic of Colombia. ESW LLC, GM&P, Componenti USA LLC, Tecnoglass LLC and Tecno RE LLC are subject to the taxing jurisdiction of the United States . TGI and Tecnoglass Holding are subject to the taxing jurisdiction of the Cayman Islands. Annual tax periods prior to December 2014 are no longer subject to examination by taxing authorities in Colombia.

The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position. There are no significant uncertain tax positions requiring recognition in the Company’s condensed consolidated financial statements. The Company records interest and penalties, if any, as a component of income tax expense.

The Company accounts for income taxes under the asset and liability model (ASC 740 “Income Taxes”) and recognizes deferred tax assets and liabilities for the expected impact of differences between the financial statements and tax bases of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. A valuation allowance is established when management determines that 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.

Earnings Per Share

Earnings per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during the period. Income per share assuming dilution (diluted earnings per share) would give effect to dilutive options, warrants, earnout shares, and other potential ordinary shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

The calculation of diluted earnings per share for the three months ended March 31, 2017 reflect 718,102 dilutive securities related to the annualized dividend declared of $0.50 per share authorized on August 4, 2016 by the Board of Directors. For the three months ended March 31, 2016, the Company considered the dilutive effect of warrants to purchase ordinary shares, unit purchase options exercisable into ordinary shares, and shares issuable under the earnout agreement in the calculation of diluted income per share, which resulted in 3,139,118 shares of dilutive securities.

The following table sets forth the computation of the basic and diluted earnings per share for the three months ended March 31, 2017 and 2016:

	Three months ended March 31,
	2017		2016
Net Income	$	1,019	$	14,356
Denominator
Denominator for basic earnings per ordinary share - weighted average shares outstanding		33,480,430		28,220,885
Effect of dilutive warrants, options, earnout shares, and stock dividends declared		718,103		3,139,118
Denominator for diluted earnings per ordinary share - weighted average shares outstanding		34,198,533		31,360,003
Basic earnings per ordinary share	$	0.03	$	0.51
Diluted earnings per ordinary share	$	0.03	$	0.46

Product Warranties

Product Warranties

The Company offers product warranties in connection with the sale and installation of its products that are competitive in the markets in which the products are sold. Standard warranties depend upon the product and service, and are generally from five to ten years for architectural glass, curtain wall, laminated and tempered glass, window and door products. Warranties are not priced or sold separately and do not provide the customer with services or coverages in addition to the assurance that the product complies with original agreed-upon specifications. Claims are settled by replacement of the warrantied products. The Company evaluated historical information regarding claims for replacements under warranties and concluded that the costs that the Company has incurred in relation to these warranties have not been material.

Recently acquired GM&P provides certain product warranties based on warranty contracts with its customers at the time of sale. Warranty expense is charged to operating expenses. 

Non-Operating Income, net

Non-Operating Income, net

The Company recognizes non-operating income from foreign currency transaction gains and losses, interest income on receivables, proceeds from sales of scrap materials and other activities not related to the Company’s operations. Foreign currency transaction gains and losses occur when monetary assets, liabilities, payments and receipts that are denominated in currencies other than the Company’s functional currency are recorded in the Colombian peso accounts of the Company in Colombia.

Shipping and Handling Costs

Shipping and Handling Costs

The Company classifies amounts billed to customers related to shipping and handling as product revenues. The Company records and presents shipping and handling costs in selling expenses. Shipping and handling costs for the three months ended March 31, 2017 and 2016 were $3,132 and $2,930, respectively.

Dividends Payable

Dividends Payable

The company accounts for its dividend declared as a liability under ASC 480 - Distinguishing Liabilities from Equity since the shareholder have the option to elect cash or stock, and reclassifies from dividend payable to additional paid-in capital when shareholders elects a stock dividend instead of cash. The dividend payable is not subject to re-measurement at each balance sheet date since the dividend is a fixed monetary amount known at inception and thus no change in fair value adjustment is necessary.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)” (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASU 2016-02, a lessee will recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-to-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current GAAP. ASU 2016-02 retains a distinction between finance leases (i.e. capital leases under current GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP. The amendments of this ASU are effective for reporting periods beginning after December 15, 2018, with early adoption permitted. An entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements. We evaluated the impact of ASU 2016-09 and its related disclosures, and these standards had no material impact on our consolidated financial statements

In May 2016, the FASB also issued ASU 2016-12, Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”), which provides clarification on certain topics within ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), including assessing collectability, presentation of sales taxes, the measurement date for non-cash consideration and completed contracts at transition, as well as providing a practical expedient for contract modifications at transition. The effective date and transition requirements for the amendments in ASU 2016-08, ASU 2016-10 and ASU 2016-12 are the same as the effective date and transition requirements of ASU 2014-09, which is effective for fiscal years, and for interim periods within those years, beginning after December 15, 2017. The Company already started with the planning phase of the adoption of this ASU and is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 reduces diversity in practice by providing guidance on the classification of certain cash receipts and payments in the statement of cash flows. ASU 2016-15 clarifies that when cash receipts and cash payments have aspects of more than one class of cash flows and cannot be separated, classification will depend on the predominant source or use. ASU 2016-15 is effective on a retrospective basis for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

On October 24, 2016, the FASB issued Accounting Standards Update 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The ASU is part of the Board’s simplification initiative aimed at reducing complexity in accounting standards. Under current GAAP, the tax effects of intra-entity asset transfers (intercompany sales) are deferred until the transferred asset is sold to a third party or otherwise recovered through use. This is an exception to the principle in ASC 740, Income Taxes, that generally requires comprehensive recognition of current and deferred income taxes. The new guidance eliminates the exception for all intra-entity sales of assets other than inventory. As a result, a reporting entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The new guidance does not apply to intra-entity transfers of inventory. The income tax consequences from the sale of inventory from one member of a consolidated entity to another will continue to be deferred until the inventory is sold to a third party. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Restricted Cash” (“ASU 2016-18”). ASU 2016-18 provides amendments to ASC No. 230, “Statement of Cash Flows,” which require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents. The amendments in this update are effective retrospectively during interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In December 2016, the FASB issued Accounting Standards Update 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, (“ASU 2016-20”). The purpose of ASU 2016-20 is to amend certain narrow aspects of the guidance issued in ASU 2014-09 including guidance related to the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Clarifying the Definition of a Business” (“ASU 2017-01”). ASU 2017-01 provides amendments to ASC No. 805, “Business Combinations,” which clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update are effective prospectively during interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 provides amendments to ASC No. 350, “Intangibles - Goodwill and Other” (“ASC 350”), which eliminate Step 2 from the goodwill impairment test. Entities should perform their goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The amendments in this update are effective prospectively during interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

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Basis of Presentation and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Schedule of Property, Plant and Equipment Estimated Useful Lives

Depreciation is computed on a straight-line basis, based on the following estimated useful lives:

Buildings	20 years
Machinery and equipment	10 years
Furniture and fixtures	10 years
Office equipment and software	5 years
Vehicles	5 years

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth the computation of the basic and diluted earnings per share for the three months ended March 31, 2017 and 2016:

	Three months ended March 31,
	2017		2016
Net Income	$	1,019	$	14,356
Denominator
Denominator for basic earnings per ordinary share - weighted average shares outstanding		33,480,430		28,220,885
Effect of dilutive warrants, options, earnout shares, and stock dividends declared		718,103		3,139,118
Denominator for diluted earnings per ordinary share - weighted average shares outstanding		34,198,533		31,360,003
Basic earnings per ordinary share	$	0.03	$	0.51
Diluted earnings per ordinary share	$	0.03	$	0.46

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Acquisitions (Tables)

3 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

Schedule of ESWindows Acquisition

The following table includes the financial information as originally reported and the net effect of the ESW acquisition after elimination of intercompany transactions.

	March 31, 2016
	Without acquisition			Net effect of acquisition		Considering acquisition
Net revenues	$	60,903		$	2,959	$	63,855
Net income (loss)	$	13,664		$	692	$	14,356
Basic income per share	$	0.50		$	0.01	$	0.51
Diluted income per share	$	0.45		$	0.01	$	0.46
Basic weighted average common shares outstanding		27,486,485			734,400		28,220,885
Diluted weighted average common shares outstanding		30,625,603			734,400		31,360,003
Cash provided by operating activities	$	(10,136	)	$	939	$	(9,197	)
Net decrease in cash	$	(302	)	$	77	$	(225	)

Summary of Purchase Price Allocation of Total Consideration Transferred

The following table summarizes the purchase price allocation of the total consideration transferred:

Consideration Transferred:
Notes payable (Cash or Stock)	$	35,000
Fair value of the noncontrolling interest in Componenti		1,141
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and equivalents	$	509
Accounts receivable		42,314
Cost and estimated earnings in excess of billings		4,698
Other current assets		589
Property, plant, and equipment		684
Other non-current tangible assets		59
Trade name		980
Non-compete agreement		165
Contract backlog		3,090
Customer relationships		4,140
Accounts payable		(22,330	)
Other current liabilities assumed		(13,967	)
Non-current liabilities assumed		(3,634	)
Total identifiable net assets		17,297
Goodwill (including Workforce)	$	18,844

Schedule of Pro Forma Results of Operations

The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future market conditions which could alter the following unaudited pro forma results.

	Three Months Ended			Three Months Ended
(in thousands, except per share amounts)	March 31, 2017			March 31, 2016
Pro Forma Results
Net sales	$	75,804		$	75,771
Net income	$	(35	)	$	14,706
Net income per common share:
Basic	$	(0.00	)	$	0.52
Diluted	$	(0.00	)	$	0.47

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Trade Accounts Receivable (Tables)

3 Months Ended

Mar. 31, 2017

Receivables [Abstract]

Schedule of Trade accounts receivable

Trade accounts receivable consists of the following:

	March 31, 2017			December 31, 2016
Trade accounts receivable	$	106,824		$	94,380
Less: Allowance for doubtful accounts		(3,514	)		(2,083	)
	$	103,310		$	92,297

Schedule of Changes in Allowance for Doubtful Accounts Receivable

The changes in allowances for doubtful accounts for the years ended December 31, 2016 and 2015 are as follows:

	March 31, 2017			December 31, 2016
Balance at beginning of year	$	2,083		$	189
Provision for bad debts		983			4,686
Allowance from acquired business		1,000			-
Deductions and write-offs, net of foreign currency adjustment		(552	)		(2,792	)
Balance at end of year	$	3,514		$	2,083

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Inventories, Net (Tables)

3 Months Ended

Mar. 31, 2017

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories are comprised of the following:

	March 31, 2017			December 31, 2016
Raw materials	$	36,332		$	40,219
Work in process		7,799			5,606
Finished goods		6,734			4,124
Stores and spares		5,599			5,016
Packing material		362			284
		56,826			55,249
Less: inventory allowance		(95	)		(157	)
	$	56,731		$	55,092

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Other Current Assets and Other Long Term Assets (Tables)

3 Months Ended

Mar. 31, 2017

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Other Current Assets

Other current assets are comprised of the following:

	March 31, 2017		December 31, 2016
Unbilled receivables on uncompleted contracts	$	1,306	$	6,625
Prepaid Expenses		1,223		1,183
Prepaid Taxes		18,857		14,080
Advances and other receivables		1,908		2,009
Other current assets	$	23,294	$	23,897

Schedule of Other Long Term Assets

Other long term assets are comprised of the following:

	March 31, 2017		December 31, 2016
Real estate investments	$	4,930	$	5,125
Cost method investment		500		500
Other long term assets		2,040	$	1,687
	$	7,470	$	7,312

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Property, Plant and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

Property, plant and equipment consist of the following:

	March 31, 2017			December 31, 2016
Building	$	54,617		$	50,887
Machinery and equipment		138,449			132,333
Office equipment and software		5,201			4,980
Vehicles		1,884			1,648
Furniture and fixtures		2,335			2,141
Total property, plant and equipment		202,486			191,989
Accumulated depreciation and amortization		(55,508	)		(49,277	)
Net value of property and equipment		146,978			142,712
Land		29,260			28,085
Total property, plant and equipment, net	$	176,238		$	170,797

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The table below provides a reconciliation of the beginning and ending balances of the Goodwill recorded on the Company’s balance sheet:

Beginning balance - December 31, 2016	$	1,330
GM&P Acquisition		18,844
Ending balance – March 31, 2017	$	20,174

Schedule of Finite-Lived Intangible Assets

Intangible assets include Miami-Dade County Notices of Acceptances (NOA’s), which are certificates in the required to market hurricane- resistant glass in Florida. Also, it includes the intangibles acquired from the acquisition of GM&P and Componenti.

	March 31, 2017							December 31, 2016
	Gross		Acc. Amort.			Net		Gross		Acc. Amort.			Net
Trade Names	$	980	$	(16	)	$	964	$	-	$	-		$	-
Notice of Acceptances (NOAs)		8,770		(4,072	)		4,698		8,524		(3,969	)		4,555
Non-compete Agreement		165		(3	)		162		-		-			-
Contract Backlog		3,090		(129	)		2,961		-		-			-
Customer Relationships		4,140		(74	)		4,066		-					-
	$	17,145	$	(4,294	)	$	12,851	$	8,524	$	(3,969	)	$	4,555

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The estimated aggregate amortization expense for each of the five succeeding years as of March 31, 2017 is as follows:

Year Ending	(in thousands)
2017 (nine months)	$	2,305
2018		3,073
2019		1,785
2020		1,405
2021		1,381
Thereafter		2,902
	$	12,851

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Debt (Tables)

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Schedule of Long Term Debt

The Company’s debt is comprised of the following:

	March 31, 2017			December 31, 2016
Revolving lines of credit	$	1,297		$	13,168
Capital lease		-			23,696
Unsecured senior note		210,000			-
Other loans		24,276			165,330
Less: Deferred cost of Financing		(8,235	)		(2,597	)
Total obligations under borrowing arrangements		227,338			199,597
Less: Current portion of long-term debt and other current borrowings		6,624			2,651
Long-term debt	$	220,714		$	196,946

Schedule of Maturities of Long Term Debt

Maturities of long term debt and other current borrowings are as follows as of March 31, 2017:

2018	$	6,624
2019		2,305
2020		2,315
2021		2,326
2022		212,336
Thereafter		9,667
Total	$	235,573

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense (benefit) are as follows:

	Three months ended March 31,
	2017			2016
Current income tax:
United States	$	452		$	-
Foreign		2,280			3,256
Total current income tax		2,732			3,256
Deferred income tax:
United States		380			-
Foreign		(2,070	)		387
Total deferred income tax		(1,690	)		387
Total Provision for Income tax	$	1,042		$	3,643
Effective tax rate		50.3	%		20.0	%

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Summary of Fair Value and Carrying Amounts of Long Term Debt

The following table summarizes the fair value and carrying amounts of our long term debt:

	March 31, 2017		December 31, 2016
Fair Value	$	239,736	$	190,190
Net Carrying Value	$	227,338	$	196,786

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Segment and Geographic Information (Tables)

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Schedule of Segment and Geographic Information

	Three months ended March 31,
	2017		2016
Colombia	$	16,428	$	18,578
United States		46,308		40,118
Panama		1,263		2,914
Other		1,818		2,245
Total Revenues	$	65,817	$	63,855

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Related Parties (Tables)

3 Months Ended

Mar. 31, 2017

Related Party Transactions [Abstract]

Schedule of Related Parties

The following is a summary of assets, liabilities, and income and expense transactions with all related parties, shareholders, directors and managers:

	Three months ended March 31,
	2017		2016
Sales to related parties	$	1,374	$	2,971
Expenses:
Fees paid to directors and officers	$	710	$	359
Payments to other related parties	$	806	$	1,283

	March 31, 2017		December 31, 2016
Current Assets:
Due from VS	$	9,433	$	9.143
Due from other related parties		1,734		1,852
	$	11,167	$	10,995
Liabilities:
Due to related parties	$	1,808	$	3,668

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General (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended
	Mar. 01, 2017	Dec. 02, 2016	Mar. 22, 2012	Mar. 31, 2017	Mar. 31, 2016
Proceeds from issuance of equity			$ 43,163
Equity proceeds held in trust account			$ 42,740
Purchase price of business acquired				$ (1,672)
Cash				$ 509
ESW LLC [Member]
Business combination, step acquisition, equity interest in acquiree, percentage		100.00%
Purchase price of business acquired		$ 13,500
Ordinary shares issued, shares		734,400
Ordinary shares issued, amount		$ 9,200
Sale of stock, price per share		$ 12.50
Cash		$ 2,300
Accounts receivable		$ 2,000
Parent Company [Member]
Business combination, step acquisition, equity interest in acquiree, percentage		85.06%
Subsidiary ES [Member]
Business combination, step acquisition, equity interest in acquiree, percentage		14.94%
Giovanni Monti and Partners Consulting and Glazing Contractors, Inc [Member]
Business combination, step acquisition, equity interest in acquiree, percentage	100.00%			60.00%
Purchase price of business acquired	$ 35,000
Cash	$ 6,000

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Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Significant Accounting Policies [Line Items]
Percentage of revenues	33.00%	17.00%
Antidilutive securities excluded from computation of earnings per share, amount	718,102	3,139,118
Dividends authorized, per share	$ 0.50
Product warranties description	The Company offers product warranties in connection with the sale and installation of its products that are competitive in the markets in which the products are sold. Standard warranties depend upon the product and service, and are generally from five to ten years for architectural glass, curtain wall, laminated and tempered glass, window and door products.
Shipping and handling costs	$ 3,132	$ 2,930
Public Offering, Private Placement and Merger [Member]
Significant Accounting Policies [Line Items]
Warrant issued	9,200,000
Public Offering [Member]
Significant Accounting Policies [Line Items]
Warrant issued	4,200,000
Private Placement [Member]
Significant Accounting Policies [Line Items]
Warrant issued	4,800,000
Merger [Member]
Significant Accounting Policies [Line Items]
Warrant issued	200,000
Maximum [Member]
Significant Accounting Policies [Line Items]
Percentage of non-controlling interest	100.00%

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Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Property, Plant and Equipment Estimated Useful Lives (Details)	3 Months Ended
	Mar. 31, 2017
Buildings [Member]
Property, plant and equipment, useful life	20 years
Machinery and Equipment [Member]
Property, plant and equipment, useful life	10 years
Furniture and Fixtures [Member]
Property, plant and equipment, useful life	10 years
Office Equipment and Software [Member]
Property, plant and equipment, useful life	5 years
Vehicles [Member]
Property, plant and equipment, useful life	5 years

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Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Accounting Policies [Abstract]
Net Income	$ 1,019	$ 14,356
Denominator for basic earnings per ordinary share - weighted average shares outstanding	33,480,430	28,220,885
Effect of dilutive warrants, options, earnout shares, and stock dividends declared	718,103	3,139,118
Denominator for diluted earnings per ordinary share - weighted average shares outstanding	34,198,533	31,360,003
Basic earnings per ordinary share	$ 0.03	$ 0.51
Diluted earnings per ordinary share	$ 0.03	$ 0.46

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Acquisitions (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended		12 Months Ended
	Mar. 01, 2017	Dec. 02, 2016	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Purchase price of business acquired			$ (1,672)
Cash			$ 509
Number of basic and diluted weighted average common shares outstanding prior to acquisition			579,094	579,094
Fair value of non-controlling interest amount	$ 1,141
Actual Sales			$ 8,126
Actual net income			$ 1,660
Maximum [Member]
Percentage of non-controlling interest			100.00%
ESW LLC [Member]
Business combination, step acquisition, equity interest in acquiree, percentage		100.00%
Purchase price of business acquired		$ 13,500
Ordinary shares issued, shares		734,400
Ordinary shares issued, amount		$ 9,200
Sale of stock, price per share		$ 12.50
Cash		$ 2,300
Accounts receivable from related party		$ 2,000
Parent Company [Member]
Business combination, step acquisition, equity interest in acquiree, percentage		85.06%
Subsidiary ES [Member]
Business combination, step acquisition, equity interest in acquiree, percentage		14.94%
Ventanas Solar SA [Member]
Business combination, step acquisition, equity interest in acquiree, percentage		100.00%
Accounts receivable from related party		$ 2,016
Giovanni Monti and Partners Consulting and Glazing Contractors, Inc [Member]
Business combination, step acquisition, equity interest in acquiree, percentage	100.00%		60.00%
Purchase price of business acquired	$ 35,000
Cash	$ 6,000
Acquisition related costs					$ 189
Percentage of non-controlling interest			40.00%
Fair value of non-controlling interest amount			$ 1,141
Componenti USA LLC [Member]
Business combination, step acquisition, equity interest in acquiree, percentage	60.00%
Percentage of non-controlling interest	40.00%
Fair value of non-controlling interest amount	$ 1,141

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Acquisitions - Schedule of ESWindows Acquisition (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Net revenues	$ 65,817	$ 63,855
Net Income (Loss)	$ 1,019	$ 14,356
Basic income per share	$ 0.03	$ 0.51
Diluted income per share	$ 0.03	$ 0.46
Basic weighted average common shares outstanding	33,480,430	28,220,885
Diluted weighted average common shares outstanding	34,195,579	31,360,003
Cash provided by operating activities	$ 11,395	$ (9,197)
Net decrease in cash	$ 27,454	(225)
Without Acquisition [Member]
Net revenues		60,903
Net Income (Loss)		$ 13,664
Basic income per share		$ 0.50
Diluted income per share		$ 0.45
Basic weighted average common shares outstanding		27,486,485
Diluted weighted average common shares outstanding		30,625,603
Cash provided by operating activities		$ (10,136)
Net decrease in cash		(302)
Net Effect of Acquisition [Member]
Net revenues		2,959
Net Income (Loss)		$ 692
Basic income per share		$ 0.01
Diluted income per share		$ 0.01
Basic weighted average common shares outstanding		734,400
Diluted weighted average common shares outstanding		734,400
Cash provided by operating activities		$ 939
Net decrease in cash		$ 77

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Acquisitions - Summary of Purchase Price Allocation of Total Consideration Transferred (Details) $ in Thousands	Mar. 01, 2017 USD ($)
Business Combinations [Abstract]
Notes payable (Cash or Stock)	$ 35,000
Fair value of the noncontrolling interest in Componenti	1,141
Cash and equivalents	509
Accounts receivable	42,314
Cost and estimated earnings in excess of billings	4,698
Other current assets	589
Property, plant, and equipment	684
Other non-current tangible assets	59
Trade name	980
Non-compete agreement	165
Contract backlog	3,090
Customer relationships	4,140
Accounts payable	(22,330)
Other current liabilities assumed	(13,967)
Non-current liabilities assumed	(3,634)
Total identifiable net assets	17,297
Goodwill (including Workforce)	$ 18,844

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Acquisitions - Schedule of Pro Forma Results of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Business Combinations [Abstract]
Net sales	$ 75,804	$ 75,771
Net income	$ (35)	$ 14,706
Basic	$ (0.00)	$ 0.52
Diluted	$ 0.00	$ 0.47

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Trade Accounts Receivable - Schedule of Trade Accounts Receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Receivables [Abstract]
Trade accounts receivable	$ 106,824	$ 94,380
Less: Allowance for doubtful accounts	(3,514)	(2,083)	$ (189)
Trade accounts receivable, Net	$ 103,310	$ 92,297

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Trade Accounts Receivable - Schedule of Changes in Allowance for Doubtful Accounts Receivable (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Receivables [Abstract]
Balance at beginning of year	$ 2,083	$ 189	$ 189
Provision for bad debts	(983)		4,686
Allowance from acquired business	1,000
Deductions and write-offs, net of foreign currency adjustment	(552)		(2,792)
Balance at end of year	$ 3,514		$ 2,083

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Inventories, Net - Schedule of Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Raw materials	$ 36,332	$ 40,219
Work in process	7,799	5,606
Finished goods	6,734	4,124
Stores and spares	5,599	5,016
Packing material	362	284
Total Inventories	56,826	55,249
Less: inventory allowances	(95)	(157)
Total inventories, net	$ 56,731	$ 55,092

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Other Current Assets and Other Long Term Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Unbilled receivables on uncompleted contracts	$ 1,306	$ 6,625
Prepaid Expenses	1,223	1,183
Prepaid Taxes	18,857	14,080
Advances and other receivables	1,908	2,009
Other current assets	$ 23,294	$ 23,897

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Other Current Assets and Other Long Term Assets - Schedule of Other Long Term Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Real estate Investments	$ 4,930	$ 5,125
Cost method investment	500	500
Other Long Term Assets	2,040	1,687
Other Assets, Noncurrent, Total	$ 7,470	$ 7,312

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Property, Plant and Equipment, Net (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 4,295	$ 3,137

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Property, Plant and Equipment, Net - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	$ 202,486	$ 191,989
Accumulated depreciation	(55,508)	(49,277)
Net value of property and equipment	146,978	142,712
Land	29,260	28,085
Total property, plant and equipment, net	176,238	170,797
Buildings [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	54,617	50,887
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	138,449	132,333
Office Equipment and Software [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	5,201	4,980
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	1,884	1,648
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total property, plant and equipment	$ 2,335	$ 2,141

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Goodwill and Intangible Assets (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Amortization expense	$ 610	$ 194
Customer Relationships [Member]
Weighted average amortization period	5 years
Noncompete Agreements [Member]
Weighted average amortization period	5 years
Contract Backlog [Member]
Weighted average amortization period	2 years
Trade Names [Member]
Weighted average amortization period	5 years

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Goodwill and Intangible Assets - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Income Tax [Line Items]
Gross amount	$ 17,145	$ 8,524
Accumulated Amortization	(4,294)	(3,969)
Intangible assets, net	12,851	4,555
Trade Names [Member]
Income Tax [Line Items]
Gross amount	980
Accumulated Amortization	(16)
Intangible assets, net	964
Notice of Acceptances (NOAs) [Member]
Income Tax [Line Items]
Gross amount	8,770	8,524
Accumulated Amortization	(4,072)	(3,969)
Intangible assets, net	4,698	4,555
Non-compete Agreement [Member]
Income Tax [Line Items]
Gross amount	165
Accumulated Amortization	(3)
Intangible assets, net	162
Contract Backlog [Member]
Income Tax [Line Items]
Gross amount	3,090
Accumulated Amortization	(129)
Intangible assets, net	2,961
Customer Relationships [Member]
Income Tax [Line Items]
Gross amount	4,140
Accumulated Amortization	(74)
Intangible assets, net	$ 4,066

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Goodwill and Intangible Assets - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
2017 (nine months)	$ 2,305
2018	3,073
2019	1,785
2020	1,405
2021	1,381
Thereafter	2,902
Intangible assets, net	$ 12,851	$ 4,555

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Debt (Details Narrative) - USD ($) $ in Thousands		3 Months Ended
	Jan. 23, 2016	Mar. 31, 2017	Mar. 31, 2016	Jan. 23, 2017	Dec. 31, 2016
Borrowings under guaranteed investment agreements		$ 227,338			$ 199,597
Debt instrument, term	5 years
Senior unsecured notes		210,000		$ 210,000
Unsecured notes coupon rate	8.20%
Proceeds to repay outstanding indebtedness	$ 182,189
Repayment of debt	$ 59,444
Loss on extinguishment of debt		(3,159)
Write off of deferred financing fees		2,583
Penalties fees		576
Property, Plant and Equipment [Member]
Debt instrument, collateral amount		0			8,366
Other Long Term Assets [Member]
Debt instrument, collateral amount		$ 3,490			$ 109,193
Minimum [Member]
Debt instrument, term		6 months
Percentage of debt instrument, interest rate		2.90%
Maximum [Member]
Debt instrument, term		15 years
Percentage of debt instrument, interest rate		11.00%

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Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Jan. 23, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Revolving lines of credit	$ 1,297		$ 13,168
Capital Lease			23,696
Unsecured senior note	210,000	$ 210,000
Other loans	24,276		165,330
Less: Deferred cost of Financing	(8,235)		(2,597)
Obligations under borrowing arrangements	227,338		199,597
Less: Current portion of long-term debt and other current borrowings	6,624		2,651
Long-term debt	$ 220,714		$ 196,946

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Debt - Schedule of Maturities of Long Term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
2018	$ 6,624
2019	2,305
2020	2,315
2021	2,326
2022	212,336
Thereafter	9,667
Total	$ 227,338	$ 199,597

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Income Taxes (Details Narrative) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
	Dec. 28, 2016	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2015	Dec. 31, 2016
Income Tax [Line Items]
Effective income tax rate reconciliation, percent		50.30%	20.00%
Net deferred tax liability					$ 586
Non deductible income loss, fair value adjustment warrant liability			$ 5,911
Effective income tax rate reconciliation nondeductible expense change fair value of warrant liability			20.00%
Earnout Share Liability [Member]
Income Tax [Line Items]
Effective income tax rate reconciliation, nondeductible expense, amount, total				$ 3,704
Maximum [Member] | ESW LLC [Member]
Income Tax [Line Items]
Effective income tax rate reconciliation, percent		39.50%
Minimum [Member] | ESW LLC [Member]
Income Tax [Line Items]
Effective income tax rate reconciliation, percent		10.00%
Tax Year 2017 [Member] | Maximum [Member]
Income Tax [Line Items]
Effective income tax rate reconciliation, percent	42.00%
Tax Year 2017 [Member] | Minimum [Member]
Income Tax [Line Items]
Effective income tax rate reconciliation, percent	40.00%
Tax Year 2018 [Member]
Income Tax [Line Items]
Effective income tax rate reconciliation, percent	37.00%
Tax Year 2019 and Thereafter[Member]
Income Tax [Line Items]
Effective income tax rate reconciliation, percent	33.00%

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Income Taxes - Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Tax Disclosure [Abstract]
Current income tax, United States	$ 452
Current income tax, Foreign	2,280	3,256
Total current income tax	2,732	3,256
Deferred income tax, United States	380
Deferred income Tax, Foreign	(2,070)	387
Total deferred income tax	(1,690)	387
Total Provision for Income tax	$ 1,042	$ 3,643
Effective tax rate	50.30%	20.00%

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Fair Value Measurements (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable Equity Securities	$ 505	$ 533
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest Rate Swap Derivative Liability		$ 23

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Fair Value Measurements - Summary of Fair Value and Carrying Amounts of Long Term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Summary of The Fair Value And Carrying Amounts of Long Term Debt [Line Items]
Net Carrying Value	$ 227,338	$ 199,597
Fair Value, Inputs, Level 2 [Member]
Summary of The Fair Value And Carrying Amounts of Long Term Debt [Line Items]
Fair Value	239,736	190,190
Net Carrying Value	$ 227,338	$ 196,786

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Segment and Geographic Information - Schedule of Segment and Geographic Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Segment Reporting Information [Line Items]
Total Revenues	$ 65,817	$ 63,855
Colombia [Member]
Segment Reporting Information [Line Items]
Total Revenues	16,428	18,578
United States [Member]
Segment Reporting Information [Line Items]
Total Revenues	46,308	40,118
Panama [Member]
Segment Reporting Information [Line Items]
Total Revenues	1,263	2,914
Others [Member]
Segment Reporting Information [Line Items]
Total Revenues	$ 1,818	$ 2,245

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Related Parties (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 16, 2016
Related Party Transactions [Line Items]
Sales revenue	$ 64,443	$ 60,884
Payment to former ESW shareholders	1,672
ESW LLC [Member]
Related Party Transactions [Line Items]
Due to former shareholders	631		$ 2,303
Ventanas Solar SA [Member]
Related Party Transactions [Line Items]
Sales revenue	$ 1,150	$ 2,689
CEO,COO and Other Related Parties [Member]
Related Party Transactions [Line Items]
Equity percentage	100.00%

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Related Parties - Schedule of Related Parties (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Related Party Transactions [Line Items]
Due from Related Parties, Current	$ 11,167		$ 10,995
Due to related parties	1,808		3,668
Sales to related parties	1,374	$ 2,971
Fees paid to Directors and Officers	710	359
Payments to other related parties	806	$ 1,283
Ventanas Solar SA [Member]
Related Party Transactions [Line Items]
Due From Related Parties	9,433		9,143
Related Parties,Other [Member]
Related Party Transactions [Line Items]
Due from other related parties	$ 1,734		$ 1,852

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Dividends Payable (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Aug. 04, 2016
Dividends payable, amount per share	$ 0.50
Dividend payable	$ 2,170
Dividend paid to shareholders shares	341,843
Dividend paid to shareholders	$ 668
Quarterly Rate [Member]
Dividends payable, amount per share		$ 11.74
Annual Basis [Member]
Dividends payable, amount per share		$ 0.50

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Commitments and Contingencies (Details Narrative) - Bagatelos Architectural Glass Systems, Inc [Member] - USD ($) $ in Thousands	Jan. 31, 2017	Sep. 23, 2016	Mar. 02, 2016
Value of bonds submitted for surety			$ 2,000
Seeking damages		$ 3,000
Recover the outstanding amount	$ 2,000

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Subsequent Events (Details Narrative) - $ / shares	May 11, 2017	Mar. 31, 2017
Dividends price, per share		$ 0.50
Subsequent Event [Member]
Dividends price, per share	$ 0.125
Dividends payable, date declared	Jul. 28, 2017
Subsequent Event [Member] | Second Quarter of 2018 [Member]
Dividends annual basis price, per share	$ 0.56
Subsequent Event [Member] | Second Quarter of 2018 [Member] | Maximum [Member]
Dividends price, per share	0.14
Subsequent Event [Member] | Third Quarter of 2017 [Member]
Dividends price, per share	$ 0.14
Dividends payable, date declared	Sep. 29, 2017