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 ~~September~~June 30, ~~2019~~2020

[ ]	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):

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary Shares ~~par value $0.0001 per share~~		TGLS		The NASDAQ Stock Market LLC

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~~preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing ~~requirements~~requirement for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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~~definition of “large accelerated ~~filer,”~~filer”, “accelerated filer,” “smaller reporting ~~company,”~~company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

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

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~~As of ~~shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 45,519,472~~July 31, 2020, there were 46,117,631 ordinary shares, ~~as of September 30, 2019.~~$0.0001 par value per share, outstanding.

TECNOGLASS INC.

FORM 10-Q FOR THE PERIOD ENDED ~~SEPTEMBER~~JUNE 30, ~~2019~~2020

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	1920

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	2526

	Item 4. Controls and Procedures	2526

Part II. Other Information
	Item 1. Legal Proceedings	2527

	Item 6. Exhibits	2527
Signatures		2628

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)

							June 30,			December 31,
	September 30, 2019			December 31, 2018			2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	41,739		$	33,040		$	63,424		$	47,862
Investments		2,273			1,163			1,818			2,304
Trade accounts receivable, net		112,687			92,791			91,010			110,558
Due from related parties		8,388			8,239			8,777			8,057
Inventories		82,140			91,849			79,454			82,714
Contract assets – current portion		43,384			46,018			34,879			42,014
Other current assets		24,906			20,299			24,298			29,340
Total current assets	$	315,517		$	293,399		$	303,660		$	322,849

Long term assets:
Long-term assets:
Property, plant and equipment, net	$	146,581		$	149,199		$	136,666		$	154,609
Deferred income taxes		7,339			4,770			11,676			4,595
Contract assets – non-current		9,104			6,986			8,707			7,059
Due from related parties - long term								1,089			1,786
Long-term trade accounts receivable								1,101			-
Intangible assets		7,135			9,006			5,695			6,703
Goodwill		23,561			23,561			23,561			23,561
Long term investments		45,273			-
Other long term assets		3,079			2,853
Total long term assets		242,072			196,375
Long-term investments								45,691			45,596
Other long-term assets								2,892			2,910
Total long-term assets								237,078			246,819
Total assets	$	557,589		$	489,774		$	540,738		$	569,668

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt	$	16,168		$	21,606		$	18,744		$	16,084
Trade accounts payable and accrued expenses		67,210			65,510			51,855			61,878
Accrued interest expense		3,184			7,567			7,502			7,645
Due to related parties		5,099			1,500			5,134			4,415
Dividends payable		1,615			736			1,309			67
Contract liability – current portion		12,750			16,789			18,834			12,459
Due to equity partners		10,900			-			10,900			10,900
Other current liabilities		13,973			8,887			6,894			15,563
Total current liabilities	$	130,899		$	122,595		$	121,172		$	129,011

Long term liabilities:
Long-term liabilities:
Deferred income taxes	$	542		$	2,706		$	817		$	411
Long term payable associated to GM&P acquisition		8,500			8,500
Long term liabilities from related parties		617			600
Long-term payable associated to GM&P acquisition								8,500			8,500
Long-term liabilities from related parties								634			622
Contract liability – non-current		177			1,436			83			187
Long term debt		247,776			220,709
Total long term liabilities		257,612			233,951
Long-term debt								243,808			243,727
Total long-term liabilities								253,842			253,447
Total liabilities	$	388,511		$	356,546		$	375,014		$	382,458

SHAREHOLDERS’ EQUITY
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2019 and December 31, 2018 respectively	$	-		$	-
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 45,519,472 and 38,092,996 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		5			4
Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding at June 30, 2020 and December 31, 2019 respectively							$	-		$	-
Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 46,117,631 and 46,117,631 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively								5			5
Legal Reserves		1,367			1,367			2,273			1,367
Additional paid-in capital		208,250			157,604			208,390			208,283
Retained earnings		5,320			10,439			10,127			16,213
Accumulated other comprehensive (loss)		(46,767	)		(37,058	)		(55,632	)		(39,264	)
Shareholders’ equity attributable to controlling interest		168,175			132,356			165,163			186,604
Shareholders’ equity attributable to non-controlling interest		903			872			561			606
Total shareholders’ equity		169,078			133,228			165,724			187,210
Total liabilities and shareholders’ equity	$	557,589		$	489,774		$	540,738		$	569,668

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

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 Nine months ended
Sept 30, Sept 30,
2019 2018 2019 2018
Operating revenues:
External customers $ 106,741 $ 95,325 $ 323,808 $ 269,317
Related parties 1,729 1,667 5,713 3,804
Total operating revenues 108,470 96,992 329,521 273,121
Cost of sales 72,729 62,299 223,051 187,038
Gross profit 35,741 34,693 106,470 86,083

Operating expenses:
Selling expense (11,334 ) (10,922 ) (32,115 ) (28,626 )
General and administrative expense (8,855 ) (8,504 ) (26,303 ) (24,578 )
Total operating expenses (20,189 ) (19,426 ) (58,418 ) (53,204 )

Operating income 15,552 15,267 48,052 32,879

Non-operating income 450 780 1,078 2,588
Equity method income 295 - 273 -
Foreign currency transactions (losses) gains (12,006 ) (2,494 ) (9,921 ) (828 )
Interest expense and deferred cost of financing (5,876 ) (5,140 ) (17,220 ) (15,551 )

(Loss) Income before taxes (1,585 ) 8,413 22,262 19,088

Income tax benefit (provision) 266 (2,261 ) (8,590 ) (6,187 )

Net (loss) income $ (1,319 ) $ 6,152 $ 13,672 $ 12,901

Loss (Income) attributable to non-controlling interest 144 145 (30 ) 429

(Loss) Income attributable to parent $ (1,175 ) $ 6,297 $ 13,642 $ 13,330

Comprehensive income:
Net income (loss) $ (1,319 ) $ 6,152 $ 13,672 $ 12,901
Foreign currency translation adjustments (8,486 ) (1,998 ) (8,768 ) 564
Change in fair value derivative contracts (941 ) - (941 ) -

Total comprehensive income (loss) $ (10,746 ) $ 4,154 $ 3,963 $ 13,465
Comprehensive (income) loss attributable to non-controlling interest 144 145 (30 ) 429

Total comprehensive income (loss) attributable to parent $ (10,602 ) $ 4,299 $ 3,933 $ 13,894

Basic income (loss)per share $ (0.03 ) $ 0.15 $ 0.31 $ 0.33

Diluted income (loss) per share $ (0.03 ) $ 0.15 $ 0.31 $ 0.32

Basic weighted average common shares outstanding 45,519,472 40,294,762 43,793,163 39,301,161

Diluted weighted average common shares outstanding 45,519,472 40,887,997 44,386,398 39,894,396

	Three months ended						Six months ended
	June 30,						June 30,
	2020			2019			2020			2019
Operating revenues:
External customers	$	81,590		$	112,259		$	167,696		$	217,067
Related parties		352			1,624			1,544			3,984
Total operating revenues		81,942			113,883			169,240			221,051
Cost of sales		50,146			75,046			107,017			150,322
Gross profit		31,796			38,837			62,223			70,729
Operating expenses:
Selling expense		(8,961	)		(11,219	)		(18,629	)		(20,781	)
General and administrative expense		(7,610	)		(9,354	)		(15,220	)		(17,448	)
Total operating expenses		(16,571	)		(20,573	)		(33,849	)		(38,229	)
Operating income		15,225			18,264			28,374			32,500
Non-operating income (expenses), net		7			353			(94	)		628
Equity method (loss) income		(166	)		(22	)		94			(22	)
Foreign currency transactions gains(losses)		13,309			(1,201	)		(19,157	)		2,085
Interest expense and deferred cost of financing		(5,446	)		(5,757	)		(11,089	)		(11,344	)
Income (Loss) before taxes		22,929			11,637			(1,872	)		23,847
Income tax provision		(6,875	)		(3,977	)		(742	)		(8,856	)
Net income (loss)	$	16,054		$	7,660		$	(2,614	)	$	14,991
Loss (Income) attributable to non-controlling interest		143			(181	)		45			(174	)
Income (Loss) attributable to parent	$	16,197		$	7,479		$	(2,569	)	$	14,817
Comprehensive income:
Net income (loss)	$	16,054		$	7,660		$	(2,614	)	$	14,991
Foreign currency translation adjustments		4,367			(2,052	)		(14,921	)		(282	)
Change in fair value derivative contracts		2,618			-			(1,447	)		-
Total comprehensive income (loss)	$	23,039		$	5,608		$	(18,982	)	$	14,709
Comprehensive loss (income) attributable to non-controlling interest		143			(181	)		45			(174	)
Total comprehensive income (loss) attributable to parent	$	23,182		$	5,427		$	(18,937	)	$	14,535
Basic income (loss) per share	$	0.35		$	0.17		$	(0.06	)	$	0.35
Diluted income (loss) per share	$	0.35		$	0.17		$	(0.06	)	$	0.34
Basic weighted average common shares outstanding		46,117,631			45,653,893			46,117,631			42,989,592
Diluted weighted average common shares outstanding		46,117,631			46,144,017			46,117,631			43,479,716

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

Tecnoglass Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

	Six months ended June 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(2,614	)	$	14,991
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Provision for bad debts		691			524
Depreciation and amortization		10,206			11,558
Deferred income taxes		(6,478	)		(317	)
Equity method (loss) income		(94	)		22
Deferred cost of financing		861			808
Other non-cash adjustments		42			28
Unrealized currency translation losses (gains)		23,585			(59	)
Changes in operating assets and liabilities:
Trade accounts receivables		13,785			(22,065	)
Inventories		(8,252	)		2,078
Prepaid expenses		(1,017	)		(1,232	)
Other assets		1,363			(1,367	)
Trade accounts payable and accrued expenses		(10,358	)		12,635
Accrued interest expense		(84	)		194
Taxes payable		(5,911	)		(1,787	)
Labor liabilities		(982	)		(327	)
Contract assets and liabilities		11,246			(9,682	)
Related parties		(1,200	)		1,250
CASH PROVIDED BY OPERATING ACTIVITIES	$	24,789		$	7,253
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments		364			608
Joint Venture investment		-			(34,100	)
Purchase of investments		(167	)		(676	)
Acquisition of property and equipment		(7,395	)		(13,778	)
CASH USED IN INVESTING ACTIVITIES	$	(7,198	)	$	(47,946	)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividend		(1,265	)		(2,170	)
Proceeds from equity offering		-			36,478
Proceeds from debt		17,796			38,480
Repayments of debt		(14,698	)		(17,660	)
CASH PROVIDED BY FINANCING ACTIVITIES	$	1,833		$	55,127
Effect of exchange rate changes on cash and cash equivalents	$	(3,862	)	$	164
NET INCREASE IN CASH		15,562			14,598
CASH - Beginning of period		47,862			33,040
CASH - End of period	$	63,424		$	47,638
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	9,513		$	9,529
Income Tax	$	7,014		$	8,369
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Assets acquired under credit or debt	$	907		$	1,389

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

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			Accumulated Other Comprehensive			Total Shareholders’			Non-Controlling			Total Shareholders’ Equity and Non-Controlling
	Shares		Amount		Capital		Reserve		Earnings			Loss			Equity			Interest			Interest
Balance at December 31, 2019		46,117,631		5		208,283		1,367		16,213			(39,264	)		186,604			606			187,210

Dividend		-		-		107		-		(1,344	)		-			(1,237	)		-			(1,237	)

Financial Instruments		-		-		-		-		-			(4,065	)		(4,065	)		-			(4,065	)

Foreign currency translation		-		-		-		-		-			(19,288	)		(19,288	)		-			(19,288	)

Net income		-		-		-		-		(18,766	)		-			(18,766	)		98			(18,668	)

Balance at March 31, 2020		46,117,631		5		208,390		1,367		(3,897	)		(62,617	)		143,248			704			143,952

Dividend		-		-		-		-		(1,267	)		-			(1,267	)		-			(1,267	)

Legal Reserve		-		-		-		906		(906	)		-			-			-			-

Financial Instruments		-		-		-		-		-			2,618			2,618			-			2,618

Foreign currency translation		-		-		-		-		-			4,367			4,367			-			4,367

Net income		-		-		-		-		16,197			-			16,197			(143	)		16,054

Balance at June 30, 2020		46,117,631		5		208,390		2,273		10,125			(55,632	)		165,163			561			165,724

	Ordinary Shares, $0.0001 Par Value				Additional Paid in		Legal		Retained			Accumulated Other Comprehensive			Total Shareholders’			Non-Controlling			Total Shareholders’ Equity and Non-Controlling
	Shares		Amount		Capital		Reserve		Earnings			Loss			Equity			Interest			Interest
Balance at December 31, 2018		38,092,996		4		157,604		1,367		10,439			(37,058	)		132,356			872			133,228

Issuance of common stock		5,000,000		-		33,050		-		-			-			33,050			-			33,050

Adoption ASC 606		-		-		-		-					-			-			-			-

Stock dividend		538,657		-		5,162		-		(6,109	)		-			(947	)		-			(947	)

Foreign currency translation		-		-		-		-		-			1,770			1,770			-			1,770

Net income		-		-		-		-		7,338			-			7,338			(7	)		7,331

Balance at March 31, 2019		43,631,653		4		195,816		1,367		11,668			(35,288	)		173,567			865			174,432

Issuance of common stock		551,423		-		3,428		-		-			-			3,428			-			3,428

Adoption ASC 606		-		-		-		-					-			-			-			-

Stock dividend		675,366		-		4,416		-		(6,280	)		-			(1,864	)		-			(1,864	)

Foreign currency translation		-		-		-		-		-			(2,052	)		(2,052	)		-			(2,052	)

Net income		-		-		-		-		7,479			-			7,479			181			7,660

Balance at June 30, 2019		44,858,442		4		203,660		1,367		12,867			(37,340	)		180,558			1,046			181,604

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

Tecnoglass Inc. and Subsidiaries

~~Condensed Consolidated Statements of Cash Flows~~

~~(Amounts in thousands)~~

~~(Unaudited)~~

Nine months ended September 30,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 13,672 $ 12,901
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for bad debts 1,046 (231 )
Provision for obsolete inventory - 26
Depreciation and amortization 17,189 17,483
Deferred income taxes (5,140 ) 1,233
Director stock compensation - 213
Equity method income (273 ) -
Deferred cost of financing 1,213 1,078
Other non-cash adjustments 41 (100 )
Changes in operating assets and liabilities:
Trade accounts receivables (30,040 ) (10,551 )
Inventories 3,939 (17,025 )
Prepaid expenses (3,013 ) (509 )
Other assets (5,081 ) (3,834 )
Trade accounts payable and accrued expenses 16,501 4,677
Accrued interest expense (4,362 ) (4,368 )
Taxes payable 3,645 (6,361 )
Labor liabilities 626 934
Contract assets and liabilities (5,139 ) (5,480 )
Related parties 2,724 440
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 7,548 $ (9,474 )

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investments 858 1,093
Acquisition of businesses (34,100 ) (6,000 )
Purchase of investments (1,172 ) (828 )
Acquisition of property and equipment (19,887 ) (7,195 )
CASH USED IN INVESTING ACTIVITIES $ (54,301 ) $ (12,930 )

CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividend (3,714 ) (2,044 )
Proceeds from equity offering 36,478 -
Proceeds from debt 70,880 16,272
Repayments of debt (47,168 ) (5,288 )
CASH PROVIDED BY FINANCING ACTIVITIES $ 56,476 $ 8,940

Effect of exchange rate changes on cash and cash equivalents $ (1,024 ) $ 492

NET INCREASE (DECREASE) IN CASH 8,699 (12,972 )
CASH - Beginning of period 33,040 40,923
CASH - End of period $ 41,739 $ 27,951

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 19,206 $ 9,516
Income Tax $ 11,090 $ 6,984

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Assets acquired under credit or debt $ 1,667 $ 1,249
Gain in extinguishment of GM&P payment settlement $ - $ 3,606

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

~~Tecnoglass Inc. and Subsidiaries~~

Notes to Condensed Consolidated Financial 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 Accumulated Other Comprehensive Total Shareholders' Non-Controlling Total Shareholders' Equity and Non-Controlling
Shares Amount Capital Reserve Earnings Loss Equity Interest Interest
Balance at December 31, 2018 38,092,996 4 157,604 1,367 10,439 (37,058 ) 132,356 872 133,228

Issuance of common stock 5,000,000 - 33,050 - - - 33,050 - 33,050

Stock dividend 538,657 - 5,162 - (6,109 ) - (947 ) - (947 )

Foreign currency translation - - - - - 1,770 1,770 - 1,770

Net income - - - - 7,338 - 7,338 (7 ) 7,331

Balance at March 31, 2019 43,631,653 4 195,816 1,367 11,668 (35,288 ) 173,567 865 174,432
Issuance of common stock 551,423 - 3,428 - - - 3,428 - 3,428

Stock dividend 675,366 - 4,416 - (6,280 ) - (1,864 ) - (1,864 )

Foreign currency translation - - - - - (2,052 ) (2,052 ) - (2,052 )

Net income - - - - 7,479 - 7,479 181 7,660

Balance at June 30, 2019 44,858,442 4 203,660 1,367 12,867 (37,340 ) 180,558 1,046 181,604

Stock dividend 661,030 1
4,590
- (6,372 ) - (1,781 ) - (1,781 )

Derivative financial instruments - - - - - (941 ) (941 ) - (941 )

Foreign currency translation - - - - - (8,486 ) (8,486 ) - (8,486 )

Net income - - - - (1,175 ) - (1,175 ) (144 ) (1,319 )

Balance at September 30, 2019 45,519,472 5 208,250 1,367 5,320 (46,767 ) 168,175 903 169,078

Ordinary Shares, $0.0001 Par Value Additional Paid in Legal Retained Accumulated Other Comprehensive Total Shareholders’ Non- Controlling Total Shareholders’ Equity and Non-Controlling
Shares Amount Capital Reserve Earnings Loss Equity Interest Interest
Balance at December 31, 2017 34,836,575 3 125,317 1,367 22,212 (28,651 ) 120,248 1,417 121,665

Issuance of common stock 4,564 - 34 - - - 34 - 34

Adoption of ASC 606 - - - - (187 ) - (187 ) - (187 )

Stock dividend 499,080 1 4,128 - (4,947 ) - (818 ) - (818 )

Foreign currency translation - - - - - 8,701 8,701 - 8,701
��
Net income - - - - 10,691 - 10,691 (72 ) 10,619

Balance at March 31, 2018 35,340,219 4 129,479 1,367 27,769 (19,950 ) 138,669 1,345 140,014

Issuance of common stock 1,238,095 - 14,500 - - - 14,500 - 14,500

Stock dividend 463,355 - 4,396 - (5,082 ) - (686 ) - (686 )

Foreign currency translation - - - - - (6,139 ) (6,139 ) - (6,139 )

Net income - - - - (3,658 ) - (3,658 ) (212 ) (3,870 )

Balance at June 30, 2018 37,041,669 4 148,375 1,367 19,029 (26,089 ) 142,686 1,133 143,819

Stock dividend 492,747 - 4,544 - (5,255 ) - (711 ) - (711 )

Foreign currency translation - - - - - (1,998 ) (1,998 ) - (1,998 )

Net income - - - - 6,297 - 6,297 (145 ) 6,152

Balance at September 30, 2018 37,534,416 4 152,919 1,367 20,071 (28,087 ) 146,274 988 147,262

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

~~Tecnoglass Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

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

Note 1. General

Business Description

Tecnoglass Inc., a Cayman Islands exempted company (the “Company”, “Tecnoglass,” “TGI,” “we, “us” or “our”) 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 facades and commercial window showcases. The Company exports most of its production to foreign countries, selling to customers in North, Central and South America.

The Company 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.

The Company also 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.

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, ~~2018.~~2019. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by US GAAP.

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 unaudited 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. Changes in estimates are reflected in the periods during which they become known. Actual amounts may differ from these estimates and could differ materially. 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.

The Company has one operating segment, Architectural Glass and Windows, which is also its reporting segment, comprising the design, manufacturing, distribution, marketing and installation of high-specification architectural glass and window product sold to the construction industry.

Principles of Consolidation

These unaudited condensed consolidated financial statements consolidate TGI, its subsidiaries Tecnoglass S.A.S (“TG”), C.I. Energía Solar S.A.S E.S. Windows (“ES”), ES Windows LLC (“ESW LLC”), Tecnoglass LLC (“Tecno LLC”), Tecno RE LLC (“Tecno RE”), GM&P Consulting and Glazing Contractors (“GM&P”), Componenti USA LLC (“Componenti”) and ES Metals SAS (“ES Metals”), 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. The equity method of accounting is used for investments in affiliates and other joint ventures over which the Company has significant influence but does not have effective control.

Derivative Financial Instruments

The Company recognizes all derivative financial instruments as either assets or liabilities at fair value on the consolidated balance sheet. The unrealized gains or losses arising from changes in fair value of derivative instruments that are designated and qualify as cash flow hedges, ~~the unrealized gains or losses on the derivatives~~ are recorded in the consolidated statement of comprehensive income. Amounts in ~~Accumulated~~accumulated other comprehensive loss on the consolidated balance sheet are reclassified into the consolidated statement of income in the same period or periods during which the hedged transactions are settled.

Impairment

We review goodwill and long-lived assets for impairment each year on December 31^st or more frequently when events or significant changes in circumstances indicate that the carrying value may not be recoverable. The novel coronavirus global outbreak and its associated economic impact, including a significant decrease in the market price of our ordinary shares, was considered a triggering event as of the first quarter of 2020, requiring us to reassess our goodwill and long-lived asset valuations, as well as assumptions of future income from underlying assets, and there was no new trigger in the second quarter To the extent the impact of the pandemic depends on future developments which are highly uncertain we will continue to evaluate in future periods whether these assumptions are reasonable and will update the forecasts and impairment analysis as appropriate.

Based on our analysis as of June 30, 2020 we concluded that no impairment needs to be recorded to our goodwill using the market approach as the market capitalization of our company, which has a single reporting unit, exceeds the book value of shareholders equity.

Based on our analysis as of June 30, 2020 we concluded that no impairment needs to be recorded to our long-lived assets as their carrying value are below their realizable values based on projected future cashflows estimated with assumptions deemed reasonable by management based on information currently available. The Company continuously monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term revenue growth projections, profitability, discount rates, recent market valuations from transactions by comparable companies, volatility in the Company’s market capitalization, and general industry, market and macro-economic conditions.

Recently Issued Accounting Pronouncements

In June 2016, FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326). This ASU represents a significant change in the allowance for credit losses accounting model by requiring immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The new model is applicable to all financial instruments that are not accounted for at fair value through net income, thereby bringing consistency in accounting treatment across different types of financial instruments and requiring consideration of a broader range of variables when forming loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, (with early application permitted). The FASB ~~has announced that it will issue an update~~issued ASU 2019-10 and ASU 2019-11 during the fourth quarter of 2019 that will postpone the effective date ~~further into~~to the ~~future. During 2019,~~year beginning after December 15, 2022. In February 2020, the FASB issued ASU ~~2019-04 and ASU 2019-05 with Codification Improvements to Topic 326, Financial~~2020-02 “Financial Instruments – Credit ~~Losses.~~Losses (Topic 326) and Leases (Topic 842), which amends SEC Staff Accounting Bulletin No. 119 (SAB119) which contains interpretative guidance from the SEC aligned to the FASB’s ASC 326. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 8485): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. The amendments in this Update provide optional expedients and exceptions for contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments in this Update is effective for the Company on December 31, 2022 with early adoption permitted. The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” The amendments under ASU 2017-12 refine and expand hedge accounting requirements for both financial (e.g., interest rate) and commodity risks. Its provisions create more transparency around how economic results are presented, both on the faceNote 3. – Revised Presentation of ~~the financial statements and in the footnotes. It also makes certain targeted improvements to simplify the application~~Statement of hedge accounting guidance. ASU 2017-12 became effective for us in the first quarter of 2019. During the quarter ended September 30, 2019, we entered into foreign currency non-delivery forward and collar contracts which we have designated as cash flow hedges and are accounting for as derivative financial instruments to which we are applying the provisions of ASU 2017-12. Prior to the quarter ended September 30, 2019 we did not have any hedging derivatives and therefore prior periods will not be affected by this pronouncement.

~~New Accounting Standards Implemented~~Cash Flows

~~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. 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, which for the Company is the fiscal year beginning January 1, 2019.

The Company did not adjust the comparative periods presented as the FASB provided entities the option to instead apply the provisions of the new leases guidance using the modified retrospective application approach.~~The new standard provided a number of optional practical expedients in transition. We elected the ‘package of practical expedients’, which allowed the company to not reassess our prior conclusions about lease identification, lease classification and direct costs.~~The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualified, primarily for certain equipment leases that are month-to-month leases. This means, for those leases, we did not recognize right-of-use assets or lease liabilities. We also elected the practical expedient to not separate lease and non-lease components for all classes of underlying assets.

We have identified and analyzed our lease portfolio and evaluated the new reporting and disclosure requirements of the new guidance, and our lease-related processes and internal controls. The adoption of this standard had no material impact to the Company’s financial statements, as, under prior guidance, we had recognized capital leases which correspond to the right-of-use asset and lease liability described under the new guidance. This standard does not have a significant impact on our liquidity or on our debt covenant compliance under our current agreements.

As of January 1, 2019, the Company had $378 finance lease right-of-use assets related to computing equipment and a lease liability for $380 on its Condensed Consolidated Balance Sheet. As of September 30, 2019, the Company had $449 finance lease right-of-use assets related to computing equipment and a lease liability for $559 on its Condensed Consolidated Balance Sheet. The lease agreements include terms to extend the lease, however the Company does not intend to extend its current leases. The weighted average remaining lease term approximates 2.8 years. The right-of-use assets are depreciated and interest expense from the lease liability are recorded on our Condensed Consolidated Statement of ~~Operations.~~Cashflows for the six months ended June 30, 2019 has been revised to correct errors in the classification of the impact of unrealized foreign currency transaction gains and losses resulting from the remeasurement of our monetary assets and liabilities denominated in any currency other than the functional currency. The Company assessed the materiality of the misstatement and concluded it was not material to any previously reported quarterly or annual period financial statements.

~~Additionally,~~Unrealized foreign currency transaction gains and losses, which include currency translation differences on monetary items that form part of investing or financing activities, such as long-term loans, are presented as a reconciling item from net income to cashflow from operating activities in the Consolidated Statement of Cashflows as of ~~September~~June 30, 2020 and 2019 contained herein,. The effect of exchange rate changes on cash and cash equivalents denominated in currencies other than the ~~Company had~~reporting currency has been and continues to be presented in a commitment for $66 under operating leases related to short term apartment leases, installation equipment and computing equipment which expire during the current year that have not been capitalized due to their short-term nature. Rental expense from these leases is recognized on our Condensed Consolidated Income Statement as incurred. Finance lease costs, including amortization of the right-of-use assets and interest expense, short term lease cost, and related cashflows have not been material as of September 30, 2019.

~~Leases Accounting Policy~~

~~We determine if an arrangement is a lease at inception. We include finance lease right-of-use assets~~separate line item as part of ~~property and equipment and~~ the ~~lease liability as part~~reconciliation of ~~our current portion of long-term debt and long-term debt on our Condensed Consolidated Balance Sheet. Leases considered short-term are not capitalized, given our election not~~the change in cash equivalents during the period.

The revisions to ~~recognize right-of-use assets and lease liabilities arising from short-term leases, but instead considered operating leases and~~ the ~~resulting rental expense is recognized on our Condensed~~ Consolidated Statement of ~~Operations~~Cashflows as ~~incurred.~~of June 30, 2019, which had no effect on the net change in cash and cash equivalents, are summarized in the following table:

Finance lease right-of-use assets and lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

	Six months ended June 30, 2019
	As previously reported			Revision adjustment			As revised
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	9,048		$	(1,795	)	$	7,253
CASH USED IN INVESTING ACTIVITIES		(47,916	)		(30	)		(47,946	)
CASH PROVIDED BY FINANCING ACTIVITIES		53,303			1,824			55,127
Effect of exchange rate changes on cash and cash equivalents	$	163		$	1		$	164
NET INCREASE (DECREASE) IN CASH		14,598			-			14,598
CASH - Beginning of period		33,040			-			33,040
CASH - End of period	$	47,638		$	-		$	47,638

Note 3.4. – Long-term Investments

Saint-Gobain Joint Venture

On January 11, 2019, we entered into a joint venture agreement with Saint-Gobain, a world leader in the production of float glass, a key component of our manufacturing process, whereby we acquired a 25.8% minority ownership interest in Vidrio Andino Holdings S.A.S (“Vidrio Andino”), a Colombia-based subsidiary of Compagnie de Saint-Gobain S.A. (“Saint-Gobain”). The purchase price for our interest in this entity was $45 million, of which $34.1 was paid in cash, and $10.9 million is to be paid with a piece of land near our existing facility in ~~Barranquilla. The land~~Barranquilla, which will be contributed ~~on our behalf~~ by a related party owned by members of our Chief Executive ~~Officer and Chief Operating Officer, José M. Daes and Christian T. Daes in exchange for cash or shares of the Company and subject~~Officer´s family with a third party valuation conducted to ~~an external valuation to support an~~ensure arm´s length ~~transaction.~~terms. The land will serve the purpose of developing a second float glass plant nearby our existing manufacturing facilities which we expect to carry significant efficiencies for us once it becomes operative. Vidrio Andino’s float glass plant located in the outskirts of Bogota, Colombia, has been one of our main suppliers of raw glass. We believe this transaction will solidify our vertical integration strategy by acquiring an interest in the first stage of our production chain, while securing ample glass supply for our expected production needs.

On May 3, 2019, we consummated the joint venture agreement acquiring a 25.8% minority ownership interest in Vidrio Andino with a cash payment of $34.1 million, and the land still to be contributed ~~by January 2020,~~once a complete assessment of the project timing is completed based on the overall market conditions as ~~per~~they relate to the ~~agreement.~~ongoing COVID-19 pandemic. As of that date, the Company recorded the investment within Long-term assets on the Company’s ~~Condensed~~ Consolidated Balance Sheet for $45.0 million and a liability for $10.9 million within current liabilities on the Company’s ~~Condensed~~ Consolidated Balance to be settled with the contribution of the aforementioned piece of land. Since the date of the acquisition, we have recognized the proportional share of Vidrio Andino’s net income using the equity method on the ~~Condensed~~ Consolidated Statement of Operations and Other Comprehensive Income as the Company is deemed to have significant influence, but does not have effective control of Vidrio Andino.

Establishment of a new subsidiary

In January 2019 we established E.S. Windows California, LLC., a wholly-owned U.S. entity to serve as a distributor of our products in certain jurisdictions within the U.S. markets.

In April 2019, ESMetals, a Colombian entity in which the Company has 70% equity interest began operations. ESMetals serves as a metalwork contractor to supply the Company with steel accessories used in the assembly of certain architectural systems as part of our vertical integration strategy. 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. In determining the fair value, we used the income approach and the market approach which was performed by third party valuation specialists under management.

Note 4.5. - Inventories, net

	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Raw materials	$	44,009		$	43,744		$	46,683		$	44,175
Work in process		24,390			25,957			20,240			24,262
Finished goods		5,405			14,251			4,486			5,203
Stores and spares		7,557			7,437			7,610			8,130
Packing material		860			540			499			981
		82,221			91,929			79,518			82,751
Less: Inventory allowance		(81	)		(80	)		(64	)		(37	)
	$	82,140		$	91,849		$	79,454		$	82,714

Note 5.6. – Revenues, Contract Assets and Contract Liabilities

Disaggregation of Total Net Sales

The Company disaggregates its sales with customers by revenue recognition method for its only segment, as the Company believes these factors affect the nature, amount, timing, and uncertainty of the Company’s revenue and cash flows.

	Three months ended				Nine months ended				Three months ended				Six months ended
	September 30,				September 30,				June 30,				June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Fixed price contracts	$	37,352	$	39,703	$	126,249	$	119,733	$	21,533	$	46,721	$	46,560	$	88,897
Product sales		71,118		57,289		203,272		153,388		60,409		67,162		122,680		132,154
Total Revenues	$	108,470	$	96,992	$	329,521	$	273,121	$	81,942	$	113,883	$	169,240	$	221,051

The following table presents geographical information about revenues.

	Three months ended				Nine months ended				Three months ended				Six months ended
	September 30,				September 30,				June 30,				June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Colombia	$	13,037	$	12,138	$	38,190	$	49,519	$	1,820	$	12,165	$	8,292	$	25,153
United States		92,848		82,223		284,208		215,068		79,148		99,326		157,946		191,360
Panama		668		1,253		2,344		3,110		150		913		830		1,676
Other		1,917		1,378		4,779		5,424		824		1,479		2,172		2,862
Total Revenues	$	108,470	$	96,992	$	329,521	$	273,121	$	81,942	$	113,883	$	169,240	$	221,051

Contract Assets and Liabilities

Contract assets represent accumulated incurred costs and earned profits on contracts with customers that have been recorded as sales, but have not been billed to customers and are classified as current and a portion of the amounts billed on certain fixed price contracts that are withheld by the customer as a retainage until a final good receipt of the complete project to the customers satisfaction. Contract liabilities consist of advance payments and billings in excess of costs incurred and deferred revenue, and represent amounts received in excess of sales recognized on contracts. The Company classifies advance payments and billings in excess of costs incurred as current, and deferred revenue as current or non-current based on the expected timing of sales recognition. Contract assets and contract liabilities are determined on a contract by contract basis at the end of each reporting period. The non-current portion of contract liabilities is included in other liabilities in the Company’s consolidated balance sheets.

The table below presents the components of net contract assets (liabilities).

	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Contract assets — current	$	43,384		$	46,018		$	34,879		$	42,014
Contract assets — non-current		9,104			6,986			8,707			7,059
Contract liabilities — current		(12,750	)		(16,789	)		(18,834	)		(12,459	)
Contract liabilities — non-current		(177	)		(1,436	)		(83	)		(187	)
Net contract assets	$	39,561		$	34,779		$	24,669		$	36,427

The components of contract assets are presented in the table below.

	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Unbilled contract receivables, gross	$	22,813	$	21,703	$	18,100	$	20,729
Retainage		29,675		31,301		25,486		28,344
Total contract assets		52,488		53,004		43,586		49,073
Less: current portion		43,384		46,018		34,879		42,014
Contract Assets – non-current	$	9,104	$	6,986	$	8,707	$	7,059

The components of contract liabilities are presented in the table below.

	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Billings in excess of costs	$	3,358		4,393	$	2,138		2,077
Advances from customers on uncompleted contracts		9,569		13,832		16,779		10,569
Total contract liabilties		12,927		18,225
Total contract liabilities						18,917		12,646
Less: current portion		12,750		16,789		18,834		12,459
Contract liabilities – non-current	$	177		1,436	$	83		187

During the three ~~months~~ and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the Company recognized ~~$162~~$370 and ~~$4,203~~1,649 of sales related to its contract liabilities aton January 1, ~~2019,~~2020, respectively. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, the Company recognized ~~$1,903~~$1,759 and ~~$6,381~~$4,041 of sales related to its contract liabilities aton January 1, ~~2018,~~2019, respectively.

Remaining Performance Obligations

As of ~~September~~June 30, ~~2019,~~2020, the Company had ~~$269.1~~$323.4 million of remaining performance obligations, which represents the transaction price of firm orders minus sales recognized from inception to date. Remaining performance obligations exclude unexercised contract options, verbal commitments, Letters of Intent or written mandates, and potential orders under basic ordering agreements. The Company expects to recognize 100% of sales relating to existing performance obligations within three years, of which ~~$92.8~~$173.0 million are expected to be recognized during the year ending December 31, ~~2019, $136.8~~2020, and $150.4 million during the year ending December 31, ~~2020 and $39.6 million thereafter.~~2021.

Note 6.7. Intangible Assets

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

	June 30, 2020
	Gross		Acc. Amort.			Net
Trade Names	$	980	$	(653	)	$	327
Notice of Acceptances (NOAs), product designs and other intellectual property		8,851		(4,771	)		4,080
Non-compete Agreement		165		(110	)		55
Customer Relationships		4,140		(2,907	)		1,233
Total	$	14,136	$	(8,441	)	$	5,695

September 30, 2019
Gross Acc.
Amort. Net
Trade Names $ 980 $ (506 ) $ 474
Notice of Acceptances (NOAs), product designs and other intellectual property 10,778 (6,046 ) 4,732
Non-compete Agreement 165 (85 ) 80
Customer Relationships 4,140 (2,291 ) 1,849
Total $ 16,063 $ (8,928 ) $ 7,135

	December 31, 2018							December 31, 2019
	Gross		Acc. Amort.			Net		Gross		Acc. Amort.			Net
Trade Names	$	980	$	(359	)	$	621	$	980	$	(555	)	$	425
Notice of Acceptances (NOAs), product designs and other intellectual property		10,881		(5,373	)		5,508		8,903		(4,323	)		4,580
Non-compete Agreement		165		(60	)		105		165		(94	)		71
Contract Backlog		3,090		(2,832	)		258		3,090		(3,090	)		-
Customer Relationships		4,140		(1,626	)		2,514		4,140		(2,513	)		1,627
Total	$	19,256	$	(10,250	)	$	9,006	$	17,278	$	(10,575	)	$	6,703

The weighted average amortization period is 5.4 years.

During the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, the amortization expense amounted to ~~$2,088 and $2,732,~~$1,099and $1,485, respectively, and was included within the general and administration expenses in our Condensed Consolidated Statement of Operations. ~~Similarly, amortization~~Amortization expense for the three months ended ~~September~~June 30, 2020 and 2019, ~~and 2018~~the amortization expense amounted to ~~$603~~$549 and ~~$956, respectively.~~$609, respectively

The estimated aggregate amortization expense for each of the five succeeding years as of ~~September~~June 30, ~~2019~~2020 is as follows:

Year ending	(in thousands)		(in thousands)
2019	$	575
2020		2,163	$	1,083
2021		2,131		2,083
2022		1,257		1,087
2023		823		773
2024				457
Thereafter		186		212
	$	7,135	$	5,695

Note 7.8. Debt

The Company’s debt is comprised of the following:

September 30, 2019 December 31, 2018
Revolving lines of credit $ 13,559 $ 19,146
Finance lease 559 380
Unsecured senior note 210,000 210,000
Other loans 15,758 17,804
Syndicated loan 28,000 -
Less: Deferred cost of financing (3,932 ) (5,015 )
Total obligations under borrowing arrangements 263,944 242,315
Less: Current portion of long-term debt and other current borrowings 16,168 21,606
Long-term debt $ 247,776 $ 220,709

	June 30, 2020			December 31, 2019
Revolving lines of credit	$	24,935		$	17,455
Finance lease		372			493
Unsecured senior note		210,000			210,000
Other loans		14,641			15,578
Syndicated loan		15,003			19,999
Less: Deferred cost of financing		(2,399	)		(3,714	)
Total obligations under borrowing arrangements		262,552			259,811
Less: Current portion of long-term debt and other current borrowings		18,744			16,084
Long-term debt	$	243,808		$	243,727

As of ~~September~~June 30, ~~2019~~2020, and December 31, ~~2018,~~2019, the Company had ~~$263,495~~$261,874 and ~~$242,106~~$259,574 of debt denominated in US Dollars with the remaining amounts denominated in Colombian Pesos.

The Company had ~~$7,140~~$6,524 and ~~$5,037~~$6,979 of property, plant and equipment pledged as collateral for various lines of credit as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

On May 2, 2019, the Company closed a $30 million five-year term debt facility with Banco de Crédito del Perú and Banco Sabadell which bears interest at Libor +2.95%. Proceeds from this long-term debt facility were used towards refinancing short-term debt and partially supporting expected capital expenditure needs for capacity expansion and the automatization of some of our processes. This facility also contains a covenant requiring that the company maintain certain leverage and fixed charge coverage ratios measured biannually at December and June, with which the Company is in compliance.

~~As of September 30, 2019, the~~The Company was obligated under various finance leases under which the aggregate present value of the minimum lease payments amounted to ~~$559. Differences between finance~~$372 and $493 as of June 30, 2020 and December 31, 2019, respectively. In line with this, the Company recorded right-of-use assets related to computing equipment for $212 and $378 as of June 30, 2020 and December 31, 2019, respectively. The lease ~~obligations~~agreements include terms to extend the lease, however the Company does not intend to extend its current leases. The weighted average remaining lease term approximates 2 years. The right-of-use assets are depreciated and interest expense from the ~~value~~lease liability are recorded on our Condensed Consolidated Statement of ~~property, plant~~Operations.

Additionally, as of June 30, 2020, the Company had a commitment for $12 under operating leases related to short term apartment leases, installation equipment and computing equipment ~~under finance lease arises~~which expire during the current year that have not been capitalized due to their short-term nature. Rental expense from ~~differences between the maturities of finance lease obligations and the useful lives of the underlying assets.~~these leases is recognized on our Condensed Consolidated Income Statement as incurred.

Maturities of long-term debt and other current borrowings are as follows as of ~~September~~June 30, ~~2019:~~2020:

2020	$	16,359
2021		5,378	$	18,779
2022		220,340		216,489
2023		11,760		11,562
2024		10,245		13,207
2025				2,376
Thereafter		3,793		2,538
Total	$	267,875	$	264,951

The Company’s loans have maturities ranging from a few weeks to 10 years. Our credit facilities bear interest at a weighted average of rate ~~7.35%~~7.07%.

Note 8.9. Hedging Activity and Fair Value Measurements

Hedging Activity

During the quarter ended September 30, 2019, we entered into several foreign currency non-delivery forward and collar contracts to hedge the fluctuations in the exchange rate between the Colombian Peso and the U.S. Dollar. Our contracts are designated as cash flow hedges since they are highly effective in offsetting changes in the cash flows attributable to forecasted Colombian Peso denominated costs and expenses.

Guidance under the Financial Instruments Topic 825 of the Codification requires us to record our hedge contracts at fair value and consider our credit risk for contracts in a liability position, and our counter-party’s credit risk for contracts in an asset position, in determining fair value. We assess our counter-party’s risk of non-performance when measuring the fair value of financial instruments in an asset position by evaluating their financial position, including cash on hand, as well as their credit ratings.

As of ~~September~~June 30, ~~2019,~~2020, the fair value of foreign currency ~~non-delivery forward and~~ collar contracts was in a net liability position of ~~$1,390.~~$1,379. We had 2024 outstanding ~~forward and~~ collar contracts to exchange 4426 million U.S. Dollars to Colombian Pesos through ~~August 2020.~~February 2021. We assessed the risk of non-performance of the Company to these contracts and determined it was insignificant and, therefore, did not record any adjustment to fair value as of ~~September~~June 30, ~~2019.~~2020.

We assess the effectiveness of our foreign currency ~~non-delivery forward and~~ collar contracts by comparing the change in the fair value of the ~~forward contract~~collar contracts to the change in the expected cash to be paid for the hedged item. The effective portion of the gain or loss on our foreign currency ~~non-delivery forward and~~ collar contracts is reported as a component of accumulated other comprehensive loss and is reclassified into earnings in the same line item in the income statement as the hedged item in the same period or periods during which the transaction affects earnings. The amount of losses, net, recognized in the “accumulated other comprehensive loss” line item in the accompanying condensed consolidated balance sheet as of ~~September~~June 30, ~~2019,~~2020, that we expect will be reclassified to earnings within the next ~~eleven~~eight months, is ~~$1,390.~~$1,379.

The fair value of our foreign currency hedges ~~are~~is classified in the accompanying consolidated balance sheets as of ~~September~~June 30, 2020, are as follows:

Derivative Assets

Derivative Liabilities

June 30, 2020

Derivatives designated as hedging instruments under Subtopic 815-20:

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair Value

Derivative instruments:

Non-Delivery Collar Contracts

Other current assets

Accrued liabilities

(1,379

)

Total derivative instruments

Total derivative assets

Total derivative liabilities

(1,379

)

The fair value of our foreign currency hedges is classified in the accompanying consolidated balance sheets as of December 31, 2019, are as follows:

Derivative Assets

Derivative Liabilities

Derivative Assets

Derivative Liabilities

September 30, 2019

December 31, 2019

Derivatives designated as hedging instruments under Subtopic 815-20:

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair
Value

Balance Sheet Location

Fair Value

Derivative instruments:

Non-Delivery forward and collar contracts

Other current assets

Accrued liabilities

(1,445

)

Other current assets

749

Accrued liabilities

Total derivative instruments

Total derivative assets

Total derivative liabilities

(1,445

)

Total derivative assets

749

Total derivative liabilities

The ending accumulated balance for the foreign currency ~~non-delivery forward and~~ collar contracts included in accumulated other comprehensive losses, net of tax, was ~~$941~~$938 as of ~~September~~June 30, ~~2019,~~2020, comprised of a derivative loss of ~~$1,390~~$1,379 and an associated net tax benefit of ~~$449.~~

$441.

The following table presents the gains (losses) on derivative financial instruments, and their classifications within the accompanying condensed consolidated financial statements, for the three and ~~nine~~six months ended ~~September, 2019:~~June 2020:

Derivatives in Cash Flow Hedging Relationships
Amount of Gain or (Loss)
Location of Gain or (Loss)
Reclassified from
Accumulated

Amount of Gain or (Loss)
Reclassified from

Recognized in OCI (Loss) on
OCI (Loss) into
Accumulated
Derivatives Income OCI (Loss) into Income
Three Months Ended Three Months Ended
September 30, September 30, September 30, September 30,
2019 2018 2019 2018

Non-delivery Forwards and Collar Contracts $ (1,390 ) $ - General and administrative expense $ (28 ) $ -

	Derivatives in Cash Flow Hedging Relationships
	Amount of Gain or (Loss)					Location of Gain or (Loss) Reclassified from Accumulated	Amount of Gain or (Loss) Reclassified from
	Recognized in OCI (Loss) on					OCI (Loss) into	Accumulated
	Derivatives					Income	OCI (Loss) into Income
	Three Months Ended						Three Months Ended
	June 30,			June 30,			June 30,		June 30,
	2020			2019			2020		2019

Non-delivery Collar Contracts	$	(1,379	)	$	-	Operating Revenues	$	1,330	$	-

Derivatives in Cash Flow Hedging Relationships
Amount of Gain or (Loss)
Location of Gain or (Loss)
Reclassified from
Accumulated

Amount of Gain or (Loss)
Reclassified from

Recognized in OCI (Loss) on OCI (Loss) into Accumulated
Derivatives Income OCI (Loss) into Income
Nine Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2019 2018 2019 2018

Non-delivery Forwards and Collar Contracts $ (1,390 ) $ - General and administrative expense $ (28 ) $ -

	Derivatives in Cash Flow Hedging Relationships
	Amount of Gain or (Loss)					Location of Gain or (Loss) Reclassified from Accumulated	Amount of Gain or (Loss) Reclassified from
	Recognized in OCI (Loss) on					OCI (Loss) into	Accumulated
	Derivatives					Income	OCI (Loss) into Income
	Six Months Ended						Six Months Ended
	June 30,			June 30,			June 30,		June 30,
	2020			2019			2020		2019

Non-delivery Collar Contracts	$	(6,607	)	$	-	Operating Revenues	$	2,007	$	-

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. A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and advances from customers approximate their fair value due to their relatively short-term maturities. The Company bases its fair value estimate for long term debt obligations on its internal valuation that all debt is floating rate debt based on current interest rates in Colombia.

As of ~~September~~June 30, ~~2019,~~2020, financial instruments carried at amortized cost that do not approximate fair value consist of long-term debt. See Note 78 - Debt. The fair value of long-term debt was calculated based on an analysis of future cash flows discounted with our average cost of debt, which is based on market rates, which are level 2 inputs.

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

	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Fair Value		266,906		234,163		239,890		259,814
Carrying Value		247,776		220,709		243,808		243,727

Note 9.10. Income Taxes

The Company files income tax returns for TG, ES and ES Metals in the Republic of Colombia. On December 28, 2018, a tax reform was implemented in Colombia which decreased the corporate income tax rate to 33% for fiscal year 2019, 32% for fiscal year 2020, 31% for fiscal year 2021 and 30% for fiscal year 2022, in comparison with a tax rate of 37% for 2018.

GM&P, Componenti and ESW LLC are U.S. entities based in Florida subject to U.S. federal and state income taxes. The estimated combined state and federal income tax rate is estimated at a rate of 26.5% based on the recently enacted U.S. Tax Reform. Tecnoglass Inc. as well as all the other subsidiaries in the Cayman Islands do not currently have any tax obligations.

The components of income tax expense are as follows:

	Three months ended September 30,						Nine months ended September 30,						Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Current income tax
United States	$	(146	)	$	528		$	(1,561	)	$	1,250		$	(193	)	$	(903	)	$	(344	)	$	(1,415	)
Colombia		(4,411	)		(3,683	)		(12,169	)		(6,205	)		(4.129	)		(4,338	)		(6,876	)		(7,758	)
		(4,557	)		(3,155	)		(13,730	)		(4,955	)		(4,322	)		(5,241	)		(7,220	)		(9,173	)
Deferred income Tax
United States		349			(88	)		1,475			(1,249	)		63			957			(256	)		1,126
Colombia		4,474			982			3,665			17			(2,616	)		307			6,734			(809	)
		4,823			894			5,140			(1,232	)		(2,553	)		1,264			6,478			317
Total income tax benefit (provision)	$	266		$	(2,261	)	$	(8,590	)	$	(6,187	)
Total income provision													$	(6,875	)	$	(3,977	)	$	(742	)	$	(8,856	)

Effective tax rate		17	%		27	%		39	%		37	%		30	%		(34,0	)%		40	%		(37	)%

The ~~Company’s~~ weighted average statutory income tax rate isfor the three months ended June 30, 2020 and 2019 was 28.0% and 33%., respectively. The ~~Company’s~~ effective income tax rate ~~of 17%~~ for the ~~quarter~~six months ended ~~September~~June 30, ~~2019 differs from~~2020 of 40% reflects the ~~weighted average statutory rate primarily as a result~~impact of ~~a 17.3% point decrease related to permanent differences, a 10.8% decrease related to non-deductible expense, partially offset by~~ unrealized foreign currency transaction losses related to the remeasurement of long-term liabilities of our Colombian subsidiaries which ~~contribute~~are expected to ~~an increase of 12.1% points~~be realized at a later year in ~~the reconciliation of effective~~which a lower income tax rate is expected to ~~statutory rate.~~apply.

~~No additional individual items contributed more than 5% points in the reconciliation of effective income tax rate to statutory tax rates during any of the periods presented.~~

Note ~~10.~~11. 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
September 30,

Nine months ended
September 30,

2019 2018 2019 2018
Sales to related parties $ 1,729 $ 1,667 $ 5,713 $ 3,804

Fees paid to directors and officers $ 836 $ 833 $ 2,658 $ 2,461
Payments to other related parties $ 964 $ 863 $ 2,797 $ 2,525

September 30, 2019 December 31, 2018
Current Assets:
Due from VS $ 5,885 $ 6,229
Due from other related parties 2,503 2,010
$ 8,388 $ 8,239

Liabilities:
Due to related parties - current $ 5,099 $ 1,500
Due to related parties - long term $ 617 $ 600

	Three months ended June 30,				Six months ended June 30,
		2020		2019		2020		2019
Sales to related parties	$	352	$	1,624	$	1,544	$	3,984

Fees paid to directors and officers	$	957	$	1,013	$	2,179	$	1,822
Payments to other related parties	$	903	$	907	$	1,717	$	1,833

	June 30, 2020		December 31, 2019
Current Assets:
Due from VS	$	5,608	$	4,203
Due from other related parties		3,149		3,854
	$	8,777	$	8,057

Long Term due from VS		1,089		1,786

Liabilities:
Due to related parties - current	$	5,134	$	4,415
Due to related parties – Non-current	$	634	$	622

The Company also has a note payable which matures in 2022 related to the acquisition GM&P for $8,500 due to the former owner who holds shares of the Company and a management position within the Company.

Ventana Solar S.A. (“VS”), a Panama Sociedad anónima,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 three months ended ~~September~~June 30, 2020 and 2019 were $151 and ~~2018 were $631 and $853,~~$855, respectively.

The Company’s sales to VS for the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019 were $794 and ~~2018 were $1,156 and $2,067,~~$1,525, respectively.

Payments to other related parties during the three ~~and nine~~ months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 include the following:

	Three months ended September 30,				Nine months ended September 30,				Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018			2020		2019		2020		2019
Charitable contributions	$	354	$	282	$	959	$	849	$	213	$	178	$	562	$	605
Sales commissions	$	357	$	360	$	1,119	$	1,037	$	288	$	286	$	547	$	762

Charitable contributions are donations made to the Company’s foundation, Fundación Tecnoglass-ESW.

Note ~~11.~~12. Shareholders’ Equity

Dividends

The Company originally authorized the payment of four regular quarterly dividends to holders of ordinary shares at a quarterly rate of $0.125 per share, with the first quarterly dividend being paid on November 1, 2016. The dividends were payable in cash or ordinary shares, at the option of the holders of ordinary shares. On May 11, 2017, the Company announced that commencing with the declared quarterly dividend for the third quarter of 2017 through any future dividends to be declared and paid through the second quarter of 2018, a 12% increase to $0.14 per share.

~~On November 5, 2019,~~June 23, 2020, the Company declared a regular quarterly dividend of ~~$0.14~~$0.0275 per share, or $0.11 per share on an annualized basis, for the ~~third~~first quarter of ~~2019, which~~2020. The quarterly dividend will be paid in cash on ~~December 20, 2019~~July 31, 2020 to shareholders of record as of the close of business on November 29, 2019. 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 December 2, 2019 and lasting until 5:00 P.M. Eastern Time on December 13, 2019. 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 December 2, 2019 through December 13, 2019. 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 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 stock dividend elections.

~~As a result, the Company issued 1,875,053 shares for the share dividends resulting in $14,169 being credited to Capital and paid $2,170 in cash during the nine months ended September 30, 2019.~~

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.July 8, 2020.

Follow-on Equity Offering

On March 25, 2019, the Company closed an underwritten follow-on public offering of 5,000,000 ordinary shares at a price to the public of $7.00 per share. As a result of this offering, the Company received a net amount of $33,050 after deducting underwriting and other related fees, which were credited to share capital and additional paid in capital.Additionally, the Company granted the underwriters a 30-day option to purchase up to an additional 750,000 ordinary shares at the public offering price, less the underwriting discount, which option was exercised on April 3, 2019 with respect to 551,423 ordinary shares.

Proceeds from the offering were subsequently used to complete the joint venture transaction with Saint-Gobain discussed in ~~Note 3. Vidrio Andino Acquisition.~~“Note 4. Long-term Investments – Saint-Gobain Joint Venture.”

Earnings per Share

The following table sets forth the computation of the basic and diluted earnings per share for the ~~nine~~three and six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018:~~2019:

	Three months ended September 30,					Nine months ended September 30,				Three months ended June 30,				Six months ended June 30,
	2019			2018		2019		2018			2020		2019		2020			2019
Numerator for basic and diluted earnings per shares
Net Income (loss)	$	(1,319	)	$	6,152	$	13,672	$	12,901	$	16,054	$	7,660	$	(2,614	)	$	14,991

Denominator
Denominator for basic earnings per ordinary share - weighted average shares outstanding		45,519,472			40,294,762		43,793,163		39,301,161		46,117,631		45,653,893		46,117,631			42,989,592
Effect of dilutive securities and stock dividend		-			593,235		593,235		593,235		-		490,124		-			490,124
Denominator for diluted earnings per ordinary share - weighted average shares outstanding		45,519,472			40,887,997		44,386,398		39,894,396		46,117,631		46,144,017		46,117,631			43,479,716
Basic earnings (loss) per ordinary share	$	(0.03	)	$	0.15	$	0.31	$	0.33	$	0.35	$	0.17	$	(0.06	)	$	0.35
Diluted earnings (loss) per ordinary share	$	(0.03	)	$	0.15	$	0.31	$	0.32	$	0.35	$	0.17	$	(0.06	)	$	0.34

The effect of dilutive securities as of June 30, 2019 includes the effect of ~~593,235~~551,423 shares potentially issued in relation to the ~~dividends declared. For~~underwriters’ option of the three months ended September 30, 2019, the effect of dilutive securities is excluded from the calculation of diluted earnings per share because including them would be anti-dilutive given the net loss during the period. follow-on equity offering described above.

Note ~~12.~~13. Commitments and Contingencies

Commitments

As of ~~September~~June 30, ~~2019,~~2020, the Company had an outstanding obligation to purchase an aggregate of at least ~~$21,795~~$14,449 of certain raw materials from a specific supplier before May 2026.

On May 3, 2019, we consummated the joint venture agreement with Saint-Gobain whereby we acquired a 25.8% minority ownership interest in Vidrio Andino. The purchase price for our interest in Vidrio Andino was $45 million, of which $34.1 million was paid in cash and $10.9 million to be paid through the contribution of land to be contributed on our behalf by a related party owned by members of our Chief Executive Officer once a complete assessment of the project timing is completed based on the overall market conditions as they relate to the ongoing COVID-19 pandemic. The joint venture agreement includes plans to build a new plant in Galapa, Colombia that will be located approximately 20 miles from our primary manufacturing facility, in which we will also have a 25.8% interest. The new plant will be funded with proceeds from the original cash contribution made by the Company, operating cashflows from the Bogota plant, debt incurred at the joint venture level that will not consolidate into the Company and an additional contribution by us of approximately $12.5 million to be paid between 2020 and 2021 if needed (based on debt availability).

General Legal Matters

From time to time, the Company is involved in legal matters arising in the regular course of business. Some disputes are derived directly from our construction projects, related to supply and installation, and even though deemed ordinary, they may involve significant monetary damages. We are also subject to other type of litigations arising from employment practices, worker’s compensation, automobile claims and general liability. It is very difficult to predict precisely what the outcome of these litigations might be. However, with the information at our disposition as this time, there are no indications that such claims will result in a material adverse effect on the business, financial condition or results of operations of the Company.

Note ~~13.~~14. Subsequent Events

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

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 unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this report.

Overview

We are a ~~vertically-integrated~~vertically integrated manufacturer, supplier and installer of architectural glass, windows and associated aluminum products for the global commercial and residential construction markets. With a focus on innovation, combined with providing highly specified products with the highest quality standards at competitive prices, we have developed a leadership position in each of our core markets. In the United States, which is our largest market, we were ranked as the second largest glass fabricator in 2019 by Glass Magazine. In addition, we believe we are the leading glass transformation company in Colombia. Based on our analysis of third-party industry sources we had an estimated market share of over ~~45%~~49% of the Colombian market in ~~2017.~~2019. Our customers, which include developers, general contractors or installers for hotels, office buildings, shopping centers, airports, universities, hospitals and multi-family and residential buildings, look to us as a value-added partner based on our product development capabilities, our high-quality products and our unwavering commitment to exceptional service.

We have more than 30 years of experience in architectural glass and aluminum profile structure assembly, we transform a variety of glass products, including tempered safety, double thermo-acoustic and laminated glass. Our finished glass products are installed in a wide variety of buildings across a number of different applications, including floating facades, curtain walls, windows, doors, handrails, interior and bathroom spatial dividers. We also produce aluminum products such as profiles, rods, bars, plates and other hardware used in the manufacturing of windows.

Our products are manufactured in a 2.7 million square foot, state-of-the-art manufacturing complex in Barranquilla, Colombia that provides easy access to North, Central and South America, the Caribbean and the Pacific. Our products can be found on some of the most distinctive buildings in these regions including El Dorado Airport (Bogota), 50 United Nations Plaza (New York), Trump Plaza (Panama), Icon Bay (Miami), and Salesforce Tower (San Francisco). Our track record of successfully delivering high profile projects has earned us an increasing number of opportunities across the United States, evidenced by our expanding backlog and overall revenue growth.

Our structural competitive advantage is underpinned by our low-cost manufacturing footprint, vertically integrated business model and geographic location. Our integrated facilities in Colombia and distribution and services operations in Florida provide us with a significant cost advantage in both manufacturing and distribution, and we continue to invest in these operations to expand our operational capabilities. Our lower cost manufacturing footprint allows us to offer competitive prices for our customers, while also providing innovative, high quality and high value-added products, together with consistent and reliable service. We have historically generated high margin organic growth based on our position as a value-added solutions provider for our customers.

We have a strong presence in the Florida market, which represents a substantial portion of our revenue stream and backlog. Our success in Florida has primarily been achieved through sustained organic growth, with further penetration now taking place into other highly populated areas of the United States. As part of our strategy to become a fully vertically integrated company, we have supplemented our organic growth with some ~~recent~~ acquisitions that have allowed us added control over our supply ~~chain. In March 2017, we completed~~chain allowed for further vertical integration of our business and will act as a platform for our future expansion in the ~~acquisition of GM&P, a consulting and glazing installation business that was previously our largest installation customer.~~United States. In 2016, we completed the acquisition of ESW, which gave us control over the distribution of products into the United States from our manufacturing facilities in Colombia. ~~These acquisitions allowed for further vertical integration~~In March 2017, we completed the acquisition of GM&P, a consulting and glazing installation business that was previously our ~~business and will act as a platform for our future expansion in the United States. Furthermore, on~~largest installation customer.

On May 3, 2019, we consummated the joint venture agreement with Saint-Gobain, acquiring a 25.8% minority ownership interest in Vidrio Andino, a Colombia-based subsidiary of Saint-Gobain, solidifying our vertical integration strategy by acquiring an interest in the first stage of our production chain, while securing ample glass supply for our expected production needs. Additionally, in April 2019, ESMetals, a Colombian entity in which the Company has 70% equity interest began operations. ESMetals serves as a metalwork contractor to supply the Company with steel accessories used in the assembly of certain architectural systems as part of our vertical integration strategy.

The continued diversification of the group’s presence and product portfolio is a core component of our strategy. In particular, we are actively seeking to expand our presence in United States outside of Florida. We also launched a residential windows offering which, we believe, will help us expand our presence in the United States and generate additional organic growth. We believe that the quality of our products, coupled with our ability to price competitively given our structural advantages on cost, will allow us to generate further growth in the future.

On March 24, 2020, Colombia went into a mandatory lockdown as a result of the novel coronavirus outbreak. As a result, the Company temporarily suspended production at its facilities in Colombia through April 13, 2020 during the initial phase of the nationwide shelter-in-place order. While the shelter-in-place order was subsequently extended to May 25, 2020, the Company resumed full operations at its facilities on April 14, 2020 given its exempted designation as a supplier of critical products to essential business sectors such as infrastructure and construction. At the same time as most of our customers in the United States and Colombia are resuming their activities. During the period that production was suspended, vacation days were used to retain eligible employees and the Company used the time to implement broad safety measures before returning to normal operations.

The Company entered the pandemic with a strong financial position along with the flexibility required to support its global operations during this volatile period. As of June 30, 2020, we had had cash of $63.4 million plus an additional $73.4 million of availability under existing lines of credit, providing sufficient access to capital. In addition, we have implemented strict cost controls, reduced operating expenses and limited all non-critical capital expenditures beyond the completion of initiatives started in 2019. We anticipate that working capital will continue to be a net benefit to cash flow for the full year 2020.

RESULTS OF OPERATIONS

	Three months ended Sept 30,						Nine months ended Sept 30,						Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Operating Revenues	$	108,470		$	96,992		$	329,521		$	273,121		$	81,942		$	113,883		$	169,240		$	221,051
Cost of sales		72,729			62,299			223,051			187,038			50,146			75,046			107,017			150,322
Gross profit		35,741			34,693			106,470			86,083			31,796			38,837			62,223			70,729
Operating expenses		(20,189	)		(19,426	)		(58,418	)		(53,204	)		(16,571	)		(20,573	)		(33,849	)		(38,229	)
Operating income		15,552			15,267			48,052			32,879			15,225			18,264			28,374			32,500
Non-operating income		450			780			1,078			2,588
Foreign currency transactions (losses) gains		(12,006	)		(2,494	)		(9,921	)		(828	)
Non-operating income and expenses, net														7			353			(94	)		628
Foreign currency transactions gains (losses)														13,309			(1,201	)		(19,157	)		2,085
Equity method income		295			-			273			-			(166	)		(22	)		94			(22	)
Interest Expense and deferred cost of financing		(5,876	)		(5,140	)		(17,220	)		(15,551	)		(5,446	)		(5,757	)		(11,089	)		(11,344	)
Income tax Benefit (provision)		266			(2,261	)		(8,590	)		(6,187	)
Net income		(1,319	)		6,152			13,672			12,901
(Income) loss attributable to non-controlling interest		144			145			(30	)		429
Income attributable to parent	$	(1,175	)	$	6,297		$	13,642		$	13,330
Income tax provision														(6,875	)		(3,977	)		(742	)		(8,856	)
Net income(loss)														16,054			7,660			(2,614	)		14,991
Loss (Income) attributable to non-controlling interest														143			(181	)		45			(174	)
Income (Loss) attributable to parent													$	16,197		$	7,479		$	(2,569	)	$	14,817

Comparison of quarterly periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

Revenues

The Company’s operating revenues ~~increased $11.5~~decreased $31.9 million or ~~12%~~28% from ~~$97.0~~$113.9 million to ~~$108.5~~$81.9 million for the quarter ended ~~September~~June 30, ~~2019~~2020 compared with the quarter ended ~~September~~June 30, ~~2018.~~

2019. The ~~increase~~decrease in sales was ~~driven~~impacted by ~~sales~~15 days less of work in early April as we shut down our manufacturing facility in Colombia during the ~~U.S. markets, which increased $10.6 million or 13% in the third quarter of 2019 compared to the same period of 2018. A portion~~initial stages of the ~~Company’s sales growth~~COVID-19 nationwide shelter-in-place order. Though some mandatory shelter-in-place measures are still in ~~the American market have~~place, our business has been ~~driven by~~deemed essential and we resumed operations in mid-April, since then, our ~~Elite and Prestige lines aimed towards residential markets, in which we did not actively participate prior to 2017. U.S. revenues contributed 86% and 85% of total sales~~invoicing increased sequentially month-to-month during the ~~third quarter~~quarter. Additionally, some of ~~2019 and 2018, respectively. The increase~~our Latin American markets continue to present challenges to come back to full operations as job sites prepare to operate in ~~U.S revenues is aligned with our strategy to penetrate new geographical and end markets.~~a safely manner.

Sales in the ~~Colombian market increased 7% year-over—year~~U.S. markets decreased $20.2 million or 20.3% in the second quarter of 2020 to $79.1 million compared with $99.3 during the same period of 2019. US Single Family residential sales decreased $4.8 million, or 23%, from ~~$12.1~~$20.6 million in 2019 to ~~$13.0~~$15.8 million in 2020 mainly as a result of the aforementioned reduced operational activity related to COVID-19 shelter in place orders.

Sales in our Latin American markets, including Colombia, have been slow to return to activity after mandatory Coronavirus lockdowns in March and April. Despite construction having been deemed essential businesses, construction sites have been slow to prepare to operate under new safety standards. Sales to these regions decreased $11.8 million, or 80.8%, from $14.6 million in the ~~third~~second quarter of ~~2018 and~~ 2019 ~~respectively. The moderate increase~~to $2.8 million in ~~the Colombian market sales could be indicative of a slow recovery the Company expects in the near and mid-term future following a two-year period of economic slowdown.~~2020.

Gross profit

Gross profit ~~increased $1.0~~decreased $7.0 million, or 3%18.1% to ~~$35.7~~$31.8 million during the three months ended ~~September~~June 30, ~~2019,~~2020, compared with ~~$34.7~~$38.8 million during the same period of ~~2018.~~2019. Gross profit margins, ~~were compressed~~however increased notoriously to ~~33.0% during the third quarter of 2019, from 35.8%~~38.8% during the second quarter of ~~2018 as a~~2020, from 34.1% during the second quarter of 2019.

The margin enhancement was the result of increased raw material efficiency derived from advantageous aluminum commodity prices, waste reduction benefit from our automation initiatives and better control efforts, a ~~different~~reduction in cost of installation work as manufacturing represented a higher portion of our revenue mix, and a reduction of ~~sales between both periods. This effect was~~labor costs driven by the automation of manufacturing processes paired with favorable foreign currency exchange rates. These margin improvements were partially offset by ~~diluting our~~a negative effect of fixed ~~costs~~cost being diluted over ~~higher sales.~~a lower revenue base.

Expenses

Operating expenses ~~increased $0.8~~decreased $4.0 million, or ~~3.9%~~19.5%, from ~~$19.4~~$20.6 million to ~~$20.2~~$16.6 million for the quarters ended ~~September~~June 30, ~~2018~~2019 and ~~2019,~~2020, respectively. ~~This~~The decrease was ~~primarily related~~the result of $1.1 million decrease in shipping expense due to ~~$0.9 million increase~~lower sales, as well as the result of our efforts to enhance our lean administrative structure and tight cost controls paired with favorable exchange rates as a significant portion of our general and administrative expenses are denominated in ~~sales commission related to~~COP which experienced a ~~higher overall amount of sales~~significant depreciation during the quarter, primarily related to sales of our Elite and Prestige product lines aimed towards residential U.S. markets. Additionally, increases of a $0.5 million warranty cost to service a specific project without a comparable expense during prior period and a $0.3 million increase in accounts receivable provision were offset by lower shipping expense, which decreased $0.8 million, or 16% from $5.3 million to $4.5 million, despite nearly 12% higher sales, as a result of several initiatives undertaken by management to use transportation resources more efficiently.period.

Non-operating ~~Income~~income and expenses, net

During the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, the Company recorded ~~net~~a non-operating expense of $0.8 million and non-operating income of ~~$0.5 million and $0.8~~$0.1 million, respectively. Non-operating income is comprised primarily of income from rental properties and gains on sale of scrap ~~materials.~~

materials as well as non-operating expenses related to certain charitable contributions outside of the Company’s direct sphere of influence.

Foreign currency transaction gains and losses

During the quarter ended ~~September~~June 30, ~~2019,~~2020, the Company recorded a non-cash ~~loss~~gain of ~~$12.0~~$13.3 million associated with foreign currency transactions. Most of this impact is associated with the remeasurement of a net liability position of ~~$126.3~~$129.0 million U.S. dollar denominated monetary assets and liabilities held by the Company’s subsidiaries with the Colombian peso as their functional currency ~~during a period in which~~while the Colombian peso ~~depreciated by~~appreciated 8%. during the quarter. Comparatively, the Company recorded a net loss of ~~$2.5~~$1.2 million during the three months ended ~~September~~June 30, ~~2018~~2019 while the Colombian peso depreciated ~~1.4%~~1% during the quarter.

Interest Expense

Interest expense and deferred cost of financing ~~was $5.9~~remained decreased to $5.4 million ~~and $5.1~~from $5.8 million during the quarters ended ~~September~~June 30, 2020 and 2019, respectively. This reflects a moderate improvement in our overall cost of financing as out total indebtedness has remained relatively stable between both periods.

Income Taxes

During the quarters ended June 30, 2020 and ~~2018, respectively. The 14% increase in interest expense is related to a relatively proportional increase~~2019, the Company recorded an income tax provision of ~~12% in~~$6.9 million and $4.0 million, respectively, reflecting an effective income tax rate of 30% and 34%, which approximate the ~~Company’s total debt at September 30, 2019 compared with September 30, 2018 to support its ongoing growth.~~weighted average statutory rates.

As a result of the foregoing, the Company recorded a net ~~loss~~income for the three months ended ~~September~~June 30, ~~2019~~2020 of ~~$1.4~~$16.1 million compared to net income of ~~$6.2~~$7.4 million in the three months ended ~~September~~June 30, ~~2018.~~2019.

~~Income Taxes~~

During the quarter ended September 30, 2019, the Company recorded an income tax benefit of $0.3 million related to a net loss before tax, largely associated with the large loss on foreign currency transactions during the period. The Company’s effective income tax rate of 17% for the quarter differs from the weighted average statutory rate of 32%, related to unrealized non-deductible expenses, (which given the net loss, decrease effective tax rate), and permanent differences, partially offset by foreign currency transaction losses. Comparable, the Company recorded an income tax provision of $2.2 million during the quarter ended September 30, 2019 which reflected an effective rate of 27%.

Comparison of ~~nine-month~~six-months periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

Revenues

The Company’s operating revenues ~~increased $56.4~~decreased $51.8 million or ~~20.7%~~23.4% from ~~$273.1~~$221.1 million to ~~$329.5~~$169.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared with the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The decrease in sales was impacted by three weeks less of work in March and April as we shut down our manufacturing facility in Colombia during the initial stages of the COVID-19 nationwide shelter-in-place order. Additionally, our Latin American markets have been impacted by a slow return to operations as job sites are getting prepared to operate on a safely manner given COVID-19 restrictions.

~~The increase was driven by sales~~Sales in the U.S. markets ~~which increased $69.1~~decreased $33.4 million or ~~32.1%~~17.5% in the first ~~nine months~~half of ~~2019~~2020 to $157.9 million compared towith $191.4 during the same period of ~~2018. A portion~~2019. US Single Family residential sales decreased $3.4 million, or 10%, from $32.8 million in 2019 to $29.5 million in 2020 mainly as a result of having three full weeks of less work related to the ~~Company’s sales growth~~aforementioned mandatory shelter in ~~the~~place.

Sales in Latin American ~~market~~markets, including Colombia, have been ~~driven by our Elite~~slow to return to activity after mandatory Coronavirus lockdowns in March and ~~Prestige lines aimed towards residential markets, in which we did not actively participate prior~~April. Despite construction having been deemed essential businesses, construction sites have been slow to ~~2017. U.S. revenues contributed 86.2% and 78.7% of total~~prepare to operate under new safety standards, sales ~~during the nine month periods of 2019 and 2018, respectively. The increase in U.S revenues is aligned with our strategy~~ to ~~penetrate new geographical end markets.~~

~~This growth more than offset a slowdown of sales in the Colombian market, which went~~these regions decreased $18.4 million, or 62%, from ~~$49.5 million to $38.2~~$29.7 million in the ~~nine month period~~first six months of ~~2018 and~~ 2019 ~~respectively. The decrease~~to $11.3 million in the Colombian market sales was mostly related to reduced activity in the construction industry, following a two-year period of economic slowdown, which we expect to undergo a slow recovery in the near and mid-term future.2020.

Gross profit

Gross profit ~~increased $20.4~~decreased $8.5 million, or ~~23.7%~~12.0% to ~~$106.5~~$62.2 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared with ~~$86.1~~$70.7 million during the same period of ~~2018.~~2019. Gross profit margins, ~~improved~~however increased notoriously to ~~32.3%~~36.8% during the ~~nine month period~~first half of ~~2019,~~2020, from ~~31.5%~~32.0% during the ~~nine month period~~first half of ~~2018.~~2019. The margin enhancement ~~is mainly related to~~was the result of increased raw material efficiency derived from advantageous aluminum commodity prices, waste reduction benefit from our automation initiatives and better control efforts, a reduction in cost of installation work as manufacturing represented a higher portion of our revenue mix, and a reduction of labor costs driven by the automation of manufacturing processes paired with favorable foreign currency exchange rates. These margin improvements were partially offset by a negative effect of fixed ~~costs~~cost being diluted over ~~higher sales.,~~

a lower revenue base.

Expenses

Operating expenses ~~increased $5.2~~decreased $4.4 million, or ~~9.8%~~11.5%, from ~~$53.2~~$38.2 million to ~~$58.4 million~~$33.8million for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2019,~~2020, respectively. The ~~increase was related, in part, to $1.9 million higher sales commissions related to a higher overall amount of sales during~~decrease has been the quarter, especially related to sales of our Elite and Prestige product lines aimed towards residential U.S. markets, a $1.3 million increase in provision of trade accounts receivable expense, which amounted to $1.0 million during the first nine months of 2019, compared with a net recovery of previously provisioned amounts for $0.2 million during 2018. Through the nine months ended September 30, 2019, the Company managed to maintain its shipping expense relatively stable despite increasing sales by 21% as a result of our efforts ~~for efficient logistics favoring maritime freights~~to enhance our lean administrative structure and ~~minimizing costlier land transportation.~~tight cost controls paired with favorable exchange rates as a significant portion of our general and administrative expenses are denominated in Colombian Pesos.

Non-operating ~~Income~~income and expenses, net

During the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, the Company recorded net a ~~net~~non-operating expense of $0.1 million and non-operating income of ~~$1.1 million and $2.6~~$0.6 million, respectively. Non-operating income is comprised primarily of income from rental properties and gains on sale of scrap ~~materials.~~materials as well as non-operating expenses related to certain charitable contributions outside of the Company’s direct sphere of influence.

Foreign currency transaction gains and losses

During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the Company recorded a non-cash loss of ~~$9.9~~$19.2 million associated towith foreign currency transactions. Most of this impact is associated towith the remeasurement of a net liability position of ~~$126.3~~$129.0 million U.S. dollar denominated monetary assets and liabilities held by the Company’s subsidiaries with the Colombian peso as their functional currency ~~during a period in which~~while the Colombian peso depreciated ~~6.5%.~~by 15% during the six-month period. Comparatively, the Company recorded a net ~~loss~~gain of ~~$0.8~~$2.1 million during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 while the Colombian peso appreciated ~~0.5%.~~14% during the quarter.

Interest Expense

Interest expense ~~was $17.2~~and deferred cost of financing decreased moderately to $11.1 million ~~and $15.6~~from $11.3 million during the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, ~~and 2018,~~ respectively. ~~The 11% increase~~This reflects a moderate improvement in ~~interest expense is related to a proportional increase~~our overall cost of ~~12% in the Company’s~~financing as out total ~~debt at September 30, 2019 compared with September 30, 2018 to support its ongoing growth.~~

~~As a result of the foregoing, the Company recorded net income for the nine months ended September 30, 2019 of $13.7 million compared to $12.9 million in the nine months ended September 30, 2018.~~indebtedness remained stable between both periods.

Income Taxes

During the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, the Company recorded an income tax provision of ~~$8.6~~$0.7 million and ~~$6.2~~$8.9 million, respectively. The effective ~~income tax~~ rate of -40% is related to the large loss on foreign currency transactions during the period.

As a result of the foregoing, the Company recorded a net loss for the ~~nine~~six months ended ~~September~~June 30, ~~2019 was 39%, up from 38% during~~2020 of $2.6 million compared to net income of $15.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019.

Liquidity

As of ~~September~~June 30, ~~2019,~~2020, and December 31, ~~2018,~~2019, we had cash and cash equivalents of approximately ~~$41.7~~$63.4 million and ~~$33.0~~$47.9 million, respectively. During the nine months ended September 30, 2019, the main source of cash were derived from our operations, an underwritten follow-on public offering of 5,551,423 ordinary shares, including the underwriters’ over-allotment option, for net proceeds of $36.5 million, and proceeds from a $30 million long-term syndicate loan facility further described below under “Cash Flow from Operations, Investing and Financing Activities”. While operating cashflow supported strong growth during the period, proceeds from the equity issuance were used to finance our joint venture with Saint-Gobain.

As of ~~September~~June 30, ~~2019,~~2020, the Company had ~~$62.5~~$73.4 million of borrowings available under several committed and uncommitted facilities with relationship ~~banks,~~banks. The Company examines its capital/debt profile from time to time and evaluates overall market conditions to assess if it is opportunistic to repurchase debt or shares in the open market when conditions are favorable to the company and its stakeholders. The Company will base its decisions on factors such as ~~most~~pricing, liquidity projections, general economic and market conditions, and other considerations, as determined by management.

We are actively focusing on expanding banking relationships to further diversify our sources of funding and optimize our cost of capital given the restrictions that some entities may have in lending in an efficient matter as a result of the ~~outstanding balances under such lines were repaid with~~coronavirus pandemic. We anticipate that working capital will continue be a net benefit to cash flow for the ~~long-term syndicate loan facility issued~~full year 2020, which in ~~April of this year.~~addition to our current liquidity position, provides ample flexibility to service our obligations through the next twelve months.

Capital Resources

~~On January 11,~~We transform glass and aluminum into high specification architectural glass and custom-made aluminum profiles which require significant investments in state-of-the-art technology. During the six months ended June 30, 2020 and 2019, we ~~entered into~~made investments primarily in building and construction, and machinery and equipment in the amounts of $8.3 million, and $15.2 million, respectively.

In 2019, we carried out enhancements at our glass and aluminum facilities to increase production capacity and automate operations. The Company completed this aluminum capacity expansion in July 2019 and implemented its glass transformation process automation initiative in the first quarter of 2020.

On May 3, 2019, we consummated a joint venture agreement with Saint-Gobain, a world leader in the production of float glass, a key component of our manufacturing process, whereby we acquired a 25.8% minority ownership interest in Vidrio Andino, ~~Holdings S.A.S,~~ a Colombia-based subsidiary of Saint-Gobain. The purchase price for our interest in ~~this entity~~Vidrio Andino was $45 million, of which $34.1 million ~~were~~was paid in cash and a $10.9 million ~~lot~~to be paid through the contribution of land ~~near our facility in Barranquilla, which will~~to be contributed on our behalf by a related party owned by members of our Chief Executive ~~Officer and Chief Operating Officer, José M. Daes and Christian T. Daes with~~Officer’s family once a ~~third-party valuation~~complete assessment of the project timing is completed based on the overall market conditions as they relate to ~~be conducted. Vidrio Andino’s float glass plant located in~~ the outskirts of Bogota, Colombia, had been one of our main suppliers of raw glass. We believe this transaction solidifies our vertical integration strategy by acquiring an interest in the first stage of our production chain, while securing ample glass supply for our expected production needs. The acquisition was consummated on May 3, 2019, and under the joint venture agreement, Saint Gobain will retain a majority ownership position and will have control over the operations of Vidrio Andino Holdings SAS and as such, the transaction is being accounted for under the equity method.

ongoing COVID-19 pandemic. The joint venture agreement ~~also~~ includes plans to build a new plant in Galapa, Colombia that will be located approximately 20 miles from our ~~main~~primary manufacturing facility, in which we will also have a 25.8% interest. The new plant will be funded with proceeds from the original cash contribution made by the Company, operating cashflows from the Bogota plant, debt incurred at the joint venture level that will not consolidate into the Company and an additional contribution by us of approximately $12.5 million to be paid between 2020 and ~~2021.~~2021 if needed (based on debt availability).

Additionally, the Company is carrying out enhancements at its glass and aluminum facilities to increase production capacity and automate operations. The Company anticipates that these high return investments will speed up production processes in response to strong customer demand, especially for aluminum products. The Company expects to improve efficiency in its glass production by automating certain processes to increase capacity, while reducing material waste and overall lead times. In its aluminum operations, the Company intends to benefit from a 25% increase in capacity and favorable operating leverage with the addition of an aluminum furnace and a new extrusion line, along with working capital improvements through the automation of warehousing systems. The Company completed this aluminum capacity expansion in the middle of July of 2019 and expects the full implementation of its automation initiatives by the end of 2019, with a total anticipated investment of approximately $23 million with this funding being executed since the end of 2018 and expected to be completed by the first quarter of 2020 (as some payments are expected post completion based on certain performance conditions). The Company expects to continue funding these capital investments mainly with cash on hand.

Cash Flow from Operations, Investing and Financing Activities

	Nine months ended September 30,						Six months ended June 30,
	2019			2018			2020			2019
Cash Flow provided by (used in) Operating Activities	$	7,548		$	(9,474	)	$	24,789		$	7,253
Cash Flow used in Investing Activities		(54,301	)		(12,930	)
Cash Flow provided from Financing Activities		56,476			8,940
Cash Flow (used in) Investing Activities								(7,198	)		(47,946	)
Cash Flow (used in) provided by Financing Activities								1,833			55,127
Effect of exchange rates on cash and cash equivalents		(1,024	)		492			(3,862	)		164
Cash Balance - Beginning of Period		33,040			40,923			47,862			33,040
Cash Balance - End of Period	$	41,739		$	27,951		$	63,424		$	47,639

During the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, operating activities generated ~~$7.5~~$24.8 million ~~in contrast to a use of $9.5~~and $7.3 million, ~~during the nine months ended September 30, 2018.~~

~~While growing sales 20.7% year-over-year~~respectively. The positive cashflow from operations during the first ~~nine months~~half of ~~2019, the Company was able~~2020 has been related to ~~generate cashflow from operating activities through careful management of inventories and better supplier terms. The main source of operating cashflow~~a much higher profitability year over year, enhanced working capital efforts, easing working capital requirements to serve tapered sales during the ~~first nine months of 2019 was trade accounts payable~~period, and accrued expenses, generating $16.5 million, compared with $4.7 million in 2018. Despite the aforementioned growth, inventory levels have remained relatively stable and even generated moderate $3.9 million as a result of our efforts to ~~streamline~~preserve cash and solidify our ~~vertically integrated operation~~liquidity position and ~~speed up inventory turnover.~~

~~Main use of cash within operating activities was trade accounts receivable, which used $30.0 million during~~preparedness as we continue to weather through the nine-month period ended September 30, 2019 as the Company grew sales nearly 21% year over year. Despite the balance of receivables increasing as of September 30, 2019 relative to fiscal year end, Days Sales Outstanding ratio increased only slightly to 92 days as of September 30, 2019, up from 90 days as of December 31, 2018. Comparably, trade accounts receivable used $10.6 million during the first nine months of 2018. Contract assets and liabilities used $5.1 million during the nine months ended September 30, 2019, as per industry common practice, retainage receivables associated with installation work, are built up throughout the life of a project and released upon completion. Comparably, contract assets and liabilities used $5.5 million during the nine months ended September 30, 2018.

pandemic. The main source of cash was trade accounts receivables, which generated $13.8 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019 came from Financing Activities,~~2020, in contrast with a use of $22.1 million, and our main use of operating cashflow was trade accounts payables, which used $10.4 million, in contrast with $12.6 million generated ~~$56.5 million. In March 2019,~~during the Company closed an underwritten follow-on public offering of 5,551,423 ordinary shares, including the underwriters’ over-allotment option, for net proceeds of $36.5 million. Additionally, the Company generated proceeds of debt for $70.9 million, mostly related to a $30 million fiveprior year term facility, proceeds which were mostly used to repay then existing short-term debt the Company had accumulated to fund working capital required to support nine quarters with consecutive quarter-over-quarter sales growth. Net of repayments, we generated $23.7 million from debt while continuing the decrease of its leverage metrics given the Company´s continued growth and profitability.period.

~~The Company~~For the period ended June 30, 2019 we have modified the way we present the impact of foreign currency transactions on our Statement of Cash Flows as there has been volatility and significant fluctuations in the exchange rates between the U.S. Dollar and the Colombian Peso, which is the functional currency of our subsidiaries that carry most of our operations. Previously, the impact of unrealized non-cash foreign currency transaction gains and losses resulting from the remeasurement of our monetary assets and liabilities denominated in any currency other than the functional currency have been included within the individual line item affected within cashflows from operating activities, investing activities or financing activities, as appropriate. As of June 30, 2020, unrealized foreign currency transaction gains and losses, which include currency translation differences on monetary items that form part of investing or financing activities, such as long-term loans, are presented as a reconciling item from net income to cashflow from operating activities. While during prior periods, unrealized currency translation differences on monetary items that form part of operating activities, such as trade accounts receivables and payables, were presented within each line item, we are now presenting them within the reconciliation of net income to cashflow from operations, so as to better present the economic reality of the cashflows during the period. As a result of this, we have revised the cash flows for the six months ended June 30, 2019 and are currently reporting a use of $7.3 million, compared with an originally reported use of $9.0 million.

We used ~~$54.8~~$7.2 million and ~~$12.9~~$47.9 million in investing activities during the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, respectively. The main use of cash in investing activities during the six months ended June 30, 2020 was related to scheduled maintenance Capex and ~~2018. Main~~the completion of our previously announced expansion and automation initiatives that are now mostly completed. During 2019, the main use of cash in investing activities was a payment for the acquisition of 25.8% equity interest in Vidrio Andino Holding, a ~~joint-venture~~joint venture with Saint-Gobain described above under Capital Resources. Additionally, during the first ~~nine months~~half of 2019, the company paid ~~$19.9~~$13.8 million to acquire property plant and equipment, which in combination with $1.4 million acquired under credit, amount to total Capital Expenditures of $15.2 million. During 2020, we used $7.4 million for the acquisition or property and equipment. Including assets acquired with debt or supplier credit, total capital expenditures during the period were $8.3 million.

Financing activities generated $1.8 million, mainly from proceeds of debt as ~~part~~we have secured our strong liquidity position. During the six months ended June 30, 2019, financing activities generated $55.1 million as a result of an underwritten follow-on public offering of 5,551,423 ordinary shares, including the underwriters’ over-allotment option, for net proceeds of $36.5 million, in addition to proceeds from debt for $38.5 million, mostly related to a $30 million five-year term facility, proceeds which were mostly used to repay then existing short-term debt we had accumulated to fund working capital required to support sales growth over fiscal year 2018. Net of repayments, debt generated $20.8 million during the first half of 2019 while our ~~high return investment plan further described above in~~decreasing our leverage metrics during the ~~Capital Resources section as well as some additional Capital Expenditure associated to maintaining our current capacity.~~period.

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 ~~Chief~~principal executive ~~Officer~~officer and ~~Chief Financial Officer,~~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 ~~Chief~~principal executive ~~Officer~~officer and ~~Chief Financial Officer~~principal financial officer concluded that ~~due to the material weakness described on our Annual Report on form 10-K for the year ended December 31, 2018 which continue to exist,~~ our disclosure controls and procedures ~~over financial reporting~~as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, were ~~not~~ effective as of ~~September~~June 30, 2019. Notwithstanding the material weakness in our internal control over financial reporting referenced above, we believe the 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.

We identified and disclosed a material weakness in the accounting for income taxes as of December 31, 2018, and have started to design and implement certain remediating controls gradually. We intend to continue our remediation plan to address the material weakness.

~~We currently have most of our enhanced review procedures and documentation standards in place and operating. Our main objective is to remediate this material weakness by the end of fiscal year 2019,~~2020, in order to ~~have enough opportunities to conclude, through our testing,~~provide reasonable assurance that the ~~enhanced monitoring~~information disclosed in our reports is recorded, processed, summarized, and ~~control activities are operating effectively~~reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as ~~of year-end.~~appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

For the quarter ended ~~September~~June 30, ~~2019,~~2020, there ~~have~~has been no ~~changes~~change in our internal control over financial reporting that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting.

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

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 ~~September~~June 30, ~~2019,~~2020, 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

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/ Santiago Giraldo
		Santiago Giraldo
		Chief Financial Officer
		(Principal financial and accounting officer)

Date: ~~November 8, 2019~~August 6, 2020

	Three months ended						Nine months ended
	Sept 30,						Sept 30,
	2019			2018			2019			2018
Operating revenues:
External customers	$	106,741		$	95,325		$	323,808		$	269,317
Related parties		1,729			1,667			5,713			3,804
Total operating revenues		108,470			96,992			329,521			273,121
Cost of sales		72,729			62,299			223,051			187,038
Gross profit		35,741			34,693			106,470			86,083

Operating expenses:
Selling expense		(11,334	)		(10,922	)		(32,115	)		(28,626	)
General and administrative expense		(8,855	)		(8,504	)		(26,303	)		(24,578	)
Total operating expenses		(20,189	)		(19,426	)		(58,418	)		(53,204	)

Operating income		15,552			15,267			48,052			32,879

Non-operating income		450			780			1,078			2,588
Equity method income		295			-			273			-
Foreign currency transactions (losses) gains		(12,006	)		(2,494	)		(9,921	)		(828	)
Interest expense and deferred cost of financing		(5,876	)		(5,140	)		(17,220	)		(15,551	)

(Loss) Income before taxes		(1,585	)		8,413			22,262			19,088

Income tax benefit (provision)		266			(2,261	)		(8,590	)		(6,187	)

Net (loss) income	$	(1,319	)	$	6,152		$	13,672		$	12,901

Loss (Income) attributable to non-controlling interest		144			145			(30	)		429

(Loss) Income attributable to parent	$	(1,175	)	$	6,297		$	13,642		$	13,330

Comprehensive income:
Net income (loss)	$	(1,319	)	$	6,152		$	13,672		$	12,901
Foreign currency translation adjustments		(8,486	)		(1,998	)		(8,768	)		564
Change in fair value derivative contracts		(941	)		-			(941	)		-

Total comprehensive income (loss)	$	(10,746	)	$	4,154		$	3,963		$	13,465
Comprehensive (income) loss attributable to non-controlling interest		144			145			(30	)		429

Total comprehensive income (loss) attributable to parent	$	(10,602	)	$	4,299		$	3,933		$	13,894

Basic income (loss)per share	$	(0.03	)	$	0.15		$	0.31		$	0.33

Diluted income (loss) per share	$	(0.03	)	$	0.15		$	0.31		$	0.32

Basic weighted average common shares outstanding		45,519,472			40,294,762			43,793,163			39,301,161

Diluted weighted average common shares outstanding		45,519,472			40,887,997			44,386,398			39,894,396

	Ordinary Shares, $0.0001 Par Value				Additional Paid in		Legal		Retained			Accumulated Other Comprehensive			Total Shareholders'			Non-Controlling			Total Shareholders' Equity and Non-Controlling
	Shares		Amount		Capital		Reserve		Earnings			Loss			Equity			Interest			Interest
Balance at December 31, 2018		38,092,996		4		157,604		1,367		10,439			(37,058	)		132,356			872			133,228

Issuance of common stock		5,000,000		-		33,050		-		-			-			33,050			-			33,050

Stock dividend		538,657		-		5,162		-		(6,109	)		-			(947	)		-			(947	)

Foreign currency translation		-		-		-		-		-			1,770			1,770			-			1,770

Net income		-		-		-		-		7,338			-			7,338			(7	)		7,331

Balance at March 31, 2019		43,631,653		4		195,816		1,367		11,668			(35,288	)		173,567			865			174,432
Issuance of common stock		551,423		-		3,428		-		-			-			3,428			-			3,428

Stock dividend		675,366		-		4,416		-		(6,280	)		-			(1,864	)		-			(1,864	)

Foreign currency translation		-		-		-		-		-			(2,052	)		(2,052	)		-			(2,052	)

Net income		-		-		-		-		7,479			-			7,479			181			7,660

Balance at June 30, 2019		44,858,442		4		203,660		1,367		12,867			(37,340	)		180,558			1,046			181,604

Stock dividend		661,030		1		4,590		-		(6,372	)		-			(1,781	)		-			(1,781	)

Derivative financial instruments		-		-		-		-		-			(941	)		(941	)		-			(941	)

Foreign currency translation		-		-		-		-		-			(8,486	)		(8,486	)		-			(8,486	)

Net income		-		-		-		-		(1,175	)		-			(1,175	)		(144	)		(1,319	)

Balance at September 30, 2019		45,519,472		5		208,250		1,367		5,320			(46,767	)		168,175			903			169,078

	Derivatives in Cash Flow Hedging Relationships
	Amount of Gain or (Loss)					Location of Gain or (Loss) Reclassified from Accumulated	Amount of Gain or (Loss) Reclassified from
	Recognized in OCI (Loss) on					OCI (Loss) into	Accumulated
	Derivatives					Income	OCI (Loss) into Income
	Three Months Ended						Three Months Ended
	September 30,			September 30,			September 30,			September 30,
	2019			2018			2019			2018

Non-delivery Forwards and Collar Contracts	$	(1,390	)	$	-	General and administrative expense	$	(28	)	$	-