Tecnoglass Inc.
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018[ ]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 ofIncorporation or Organization) (I.R.S. EmployerIdentification Number) Avenida Circunvalar a 100 mts de la Via 40Barrio Las Flores, BarranquillaColombia (Address of Principal Executive Offices) (Zip Code) (57)(5)3734000(Registrant’s Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Ordinary Shares, par value $0.0001 per share The NASDAQ Stock Market LLC Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.Yes [ ] No [X] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for thepast 90 days.Yes [X] No [ ] Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232 405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files).Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to thebest of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K.[X] Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. Seedefinition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.: Large accelerated filer [ ] Accelerated filer [X]Non-accelerated filer [ ] Smaller reporting company [X](Do not check if a smaller reporting company) 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 orrevised 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] As of June 30, 2018 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the ordinary sharesheld by non-affiliates of the registrant was approximately $109,957,829 based on its last reported sales price of $8.69 on the NASDAQ Capital Market. As of December 31, 2018, there were 38,092,996 ordinary shares, $0.0001 par value per share, outstanding. Documents Incorporated by Reference: None.  TECNOGLASS INC.FORM 10-KTABLE OF CONTENTS PART I Item 1.Business.4Item 1A.Risk Factors.15Item 1B.Unresolved Staff Comments.34Item 2.Properties.34Item 3.Legal Proceedings.34Item 4.Mine Safety Disclosures.34 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.35Item 6.Selected Financial Data.37Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations.38Item 7A.Quantitative and Qualitative Disclosures About Market Risk.48Item 8.Financial Statements and Supplementary Data.49Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.49Item 9A.Controls and Procedures.49Item 9B.Other Information.51 PART III Item 10.Directors, Executive Officers and Corporate Governance.51Item 11.Executive Compensation.56Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.58Item 13.Certain Relationships and Related Transactions, and Director Independence.60Item 14.Principal Accounting Fees and Services.61 PART IV Item 15.Exhibits, Financial Statement Schedules.62Item 16.Form 10-K Summary.63 2  FORWARD LOOKING STATEMENTS AND INTRODUCTION All statements other than statements of historical fact included in this Annual Report on Form 10-K (this “Form 10-K”) including, withoutlimitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our financial position,business strategy and the plans and objectives of management for future operations, are forward looking statements. When used in this Form 10-K, words suchas “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or our management, identify forward lookingstatements. Such forward looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to,our management. Actual results could differ materially from those contemplated by the forward looking statements as a result of certain factors detailed in ourfilings with the Securities and Exchange Commission. All subsequent written or oral forward looking statements attributable to us or persons acting on ourbehalf are qualified in their entirety by this paragraph. Unless the context otherwise requires:●references to the “Company”, “Tecnoglass” and to “we, “ “us” or “our” are to Tecnoglass Inc., a Cayman Islands exempted company, and its subsidiaries; ●references to “Tecnoglass Holding” are to Tecno Corporation; ●references to “TG” are to Tecnoglass S.A.S; ●references to “ES” are to C.I. Energía Solar S.A.S E.S. Windows; ●references to “ESW” are to ES Windows LLC, our indirect wholly-owned subsidiary, based in Florida. ●References to “VS” are to Ventana Solar S.A., a Panama-based company with which we have a strategic commercial relationship ●references to “Tecno LLC” are to Tecnoglass LLC; ●references to “Tecno RE” are to Tecno RE LLC; and ●references to “GM&P” are to Giovanni Monti and Partners Consulting and Glazing Contractors. We recently acquired GM&P, which was formerly acustomer of ours. 3  PART I Item 1.Business. Overview and Recent Developments Tecnoglass is a leading vertically-integrated manufacturer, supplier and installer of architectural glass, windows, and associated aluminum productsfor the global commercial and residential construction industries. Tecnoglass was rated the second largest glass & metal fabricator serving the United Statesin 2018 by Glass Magazine. Headquartered in Barranquilla, Colombia, the Company operates out of a 2.7 million square foot vertically-integrated, state-of-the-art manufacturing complex that provides easy access to the Americas, the Caribbean, and the Pacific. Tecnoglass supplies over 1,000 customers in North,Central and South America, with the United States accounting for 80% of revenues. Tecnoglass’ tailored, high-end products are found on some of the world’smost distinctive properties, including the El Dorado Airport (Bogota), 50 United Nations Plaza (New York), Trump Plaza (Panama), Icon Bay (Miami), andSalesforce Tower (San Francisco). On March 1, 2017, the Company acquired GM&P, a South Florida glazing contracting company that sells and installs our products, acting as an“arm” to support a broader geographical reach to reach new clients while providing a comprehensive offering. The primary reasons for the acquisitions wereto expand into different markets in the U.S. while streamlining its distribution logistics of Company products, and to be able to carry out light fabrication inthe United States when economically advantageous. 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 componentof our manufacturing process, whereby we will acquire an approximate 25% minority ownership interest in Vidrio Andino Holdings S.A.S, a Colombia-basedsubsidiary of Saint-Gobain. The purchase price for our interest in this entity is $34.1 million in cash and land worth $10.9 million near our facility inBarranquilla, which will be contributed on our behalf by our Chief Executive Officer and Chief Operating Officer, José M. Daes and Christian T. Daes with athird party valuation to be conducted. Vidrio Andino’s float glass plant located in the outskirts of Bogota, Colombia, had been one of our main suppliers ofraw glass. We beleive this transaction will solidify our vertical integration strategy by acquiring an interest in the first stage of our production chain, whilesecuring ample glass supply for our expected production needs. Additionally, the joint venture agreement includes plans to build a new plant in Galapa, Colombia that will be located approximately 20 miles fromour primary manufacturing facility, in which we will also have a 25% interest. The new plant will be funded with proceeds the original cash contributionmade by the Company, operating cashflows from the Bogota plant, debt incurred at the joint venture level that will not consolidate into the Company and anadditional contribution by us of approximately $12.5 million to be paid between 2020 and 2021. Under the joint venture agreement, Saint Gobain will retaina majority ownership position and will have control over the operations of both plants and as such, the transaction will be accounted for under the equitymethod. The acquisition will be consummated on or before May 2019, once the original cash and land contributions have been completed and the shares ofVidrio Andino have been contributed. 4  Our Business General We are a vertically-integrated manufacturer, supplier and installer of architectural glass, windows and associated aluminum products for the globalcommercial and residential construction markets. With a focus on innovation, combined with providing highly specified products with the highest qualitystandards at competitive prices, we have developed a leadership position in each of our core markets. In the United States, which is our largest market, wewere ranked as the second largest glass and metal fabricator in 2018 by Glass Magazine. In addition, we believe we are the leading glass transformationcompany in Colombia. Based on our analysis of third-party industry sources we had an estimated market share of over 45% of the Colombian market in 2017.Our customers, which include developers, general contractors or installers for hotels, office buildings, shopping centers, airports, universities, hospitals andmulti-family and residential buildings, look to us as a value-added partner based on our product development capabilities, our high quality products and ourunwavering 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 anumber of different applications, including floating facades, curtain walls, windows, doors, handrails, interior and bathroom spatial dividers. We also producealuminum 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 easyaccess to North, Central and South America, the Caribbean and the Pacific. Our products can be found on some of the most distinctive buildings in theseregions, including El Dorado Airport (Bogota), 50 United Nations Plaza (New York), Trump Plaza (Panama), Icon Bay (Miami), and Salesforce Tower (SanFrancisco). 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 geographiclocation. Our integrated facilities in Colombia and distribution and services operations in Florida provide us with a significant cost advantage in bothmanufacturing and distribution, and we continue to invest in these operations to expand our operational capabilities. Our lower cost manufacturing footprintallows us to offer competitive prices for our customers, while also providing innovative, high quality and high value-added products, together withconsistent and reliable service. We have historically generated high margin organic growth based on our position as a value-added solutions provider for ourcustomers. We have a strong presence in the Florida market, which represents a substantial portion of our revenue stream and backlog. Our success in Floridahas primarily been achieved through sustained organic growth, with further penetration now taking place into other highly populated areas of the UnitedStates. As part of our strategy to become a fully vertically integrated company, we have supplemented our organic growth with some recent acquisitions thathave allowed us added control over our supply chain. In March 2017, we completed the acquisition of GM&P, a consulting and glazing installation businessthat was previously our largest installation customer. In 2016, we completed the acquisition of ESW, which gave us control over the distribution of productsinto the United States from our manufacturing facilities in Colombia. These acquisitions allowed for further vertical integration of our business and will act asa platform for our future expansion in the United States. The continued diversification of the group’s presence and product portfolio is a core component of our strategy. In particular, we are activelyseeking to expand our presence in the United States outside of Florida. We also recently launched a residential windows offering which, we believe, will helpus expand our presence in the United States and generate additional organic growth. We believe that the quality of our products, coupled with our ability toprice competitively given our structural advantages on cost, will allow us to generate further growth in the future. 5  Competitive Strengths Our success has been grounded in our ability to offer high quality products at the most competitive prices. We are able to competitively price ourproducts, while still achieving strong margins, due to a number of unique cost advantages. In addition to our vertically integrated business model, we benefitfrom structural cost advantages in manufacturing and distribution due to our geographic location. Alongside these structural advantages, we are committed toquality, product innovation and customer service. We believe these competitive strengths create a significant barrier to entry, which is underpinned andsustained by the experience of our senior management team and the loyalty of our highly motivated employees. Vertical Integration We believe we are unique within the industry in vertically integrating the purchasing of raw materials and the manufacturing, distribution andinstallation of our products. By vertically integrating each of these functions, we are able to eliminate inefficiencies throughout the supply chain andgenerate strong margins. These efficiencies are only enhanced as our business grows and we benefit from operating leverage and economies of scale. This business model also allows us to maintain strict quality control, from the sourcing of input materials to the installation of our finished products.Our vertically integrated business model therefore enables us to provide consistent high quality products to our end-customers. Ownership of the entireproduction process also reduces our dependence on third parties, allowing us to respond more quickly to our customers’ needs and reducing lead-times fornew or customized products. Cost of Production Advantages We enjoy significant cost advantages because of our location in Colombia that we would not be able to realize if our production facility was locatedin the United States. We believe we are able to offer competitive prices, in part, as a result of our low labor and energy costs relative to those in the UnitedStates while maintaining efficient transportation costs into the markets we serve. Employees at our manufacturing facilities in Colombia earn above the localminimum wage, yet these wages are typically less than one quarter of the cost of a comparable employee located within the United States. In 2018, wecompleted a solar panel project with the capacity to generate approximately five megawatts of eco-friendly energy on-site at our manufacturing facilities.This investment has allowed us to reduce energy costs, while also having a positive tax effect due to our ability to deduct the investment from our taxableincome in compliance with applicable Colombian tax regulations. Low-Cost Distribution Our principal manufacturing facility is located in Barranquilla, Colombia, which is strategically located near three of the country’s major ports:Barranquilla, Cartagena and Santa Marta. These ports provide us with maritime access to all major global markets. The Barranquilla port is just 16 kilometersaway from our production facility. From there, our products can be shipped to Miami in three days and New York in four days. In addition, for short lead-timeprojects, our products can be transported by air from Barranquilla to Houston or Miami within a few hours. As a result of the significant trade imbalance between Colombia and the United States for goods transported in container ships, we are able totransport our products to the United States in containers that would otherwise return empty to the United States. We are therefore able to distribute ourproducts to the eastern, southern and western regions of the United States at very attractive rates, which are often lower than a comparable domestic landshipment within the United States. Demand for high-specification architectural glass is typically highest in large coastal cities, which we are able to ship todirectly, while most of our competitors must utilize relatively expensive land transportation services to deliver finished goods to these sites by land. 6  Commitment to Quality and Innovation Our commitment to quality is evidenced by our significant recent investments in machinery and equipment. Since 2012, we have invested over$270 million in the latest technologies to enhance the efficiency and accuracy of our production lines, and ultimately to improve the quality of the productsthat we deliver to our customers. We believe these significant investments position us to meet our growth objectives over the next several years. We operatestate-of-the-art glass making equipment, glass laminating lines, aluminum presses and high-volume insulating equipment which facilitate more precisemanufacturing, enabling us to offer a broader selection of and higher quality products and remain agile in responding to customer demands, while generatingless raw material waste. We believe our investments in technology within recent years have positioned us well for continued growth, improved profitability and enhancedcash generation in the years ahead. Recent examples of our investments include: ●our acquisition of three aluminum extrusion presses that together added more than 1,000 tons of production capacity per month, alongsideassociated investments in new aluminum paint lines and foundries; ●our purchase of equipment used to produce soft-coated, low emissivity glass; ●our completion of our solar panel project that generates approximately five megawatts of eco-friendly energy at our manufacturing facilities. Weestimate these investments will continue to reduce our energy costs, with a total cost reduction target of approximately 6%-8%; ●our purchase of glass-laminating and tempering furnaces that use state-of the-art technology to produce curved glass in a broad range of easilymodifiable curvatures (“TecnoBend”). TecnoBend uses a flexible mold to produce customized shapes for architectural structures; and ●our investment in a jumbo tempering oven capable of producing extra-large slabs of laminated glass. These products are sought after in high-specification designs, allowing us to supply these high profile projects. For example, our extra-large glass slabs were recently installed in the ElDorado Airport, located in Bogotá, Colombia. Our quality assurance department maintains rigorous oversight over the production process to ensure the consistent production of high qualityproducts. In addition, we adhere to quality standards that meet all guidelines and requirements for the Insulating Glass Certification Council (IGCC) andSafety Glazing Certification Council (SGCC) certification programs. Finally, our commitment to quality also extends to our partnerships and alliances. Most notably, for certain products we offer Kuraray Sentryglass®.These laminated glass interlayers are five times stronger than conventional laminating materials. On September 20, 2018, we entered an agreement with Schüco USA LLLP (“Schüco”), a division of the Schüco International KG, a worldwide leaderof architectural systems headquartered in Germany, with more than 60 years of experience and a presence in over 80 countries. Schüco is known for itsexpertise in the innovative design of building envelopes, windows, doors and facade systems, for the construction industry. This agreement enablesTecnoglass to manufacture and sell Schüco’s architectural systems to customers in North, Central and South America, alongside our existing ESWindowsproducts. Additionally, Tecnoglass will extrude and paint aluminum profile designs as part of Schüco’s global supply chain primarily for products sold in theUnited States. This agreement also allows Tecnoglass to expand its portfolio and offer more solutions to its clients with high-end, renowned designs. Superior Customer Service In addition to manufacturing high quality products at competitive prices, our customer value proposition is supplemented by short lead-times, on-time delivery and after-sale support. Through the coordinated efforts of our sales teams, product specialists and field service teams, we deliver high qualityservice to our customers, from the initial order to the delivery and installation of our products. We believe our ability to accompany our clients throughoutevery phase of their projects’ engineering, consulting, manufacturing and installation services along with our ability to coordinate these efforts as a one-stop-shop is a key differentiator from our competition. 7  High Barriers to Entry The ability of new competitors to enter the markets that we serve is limited due to the technical certifications required on high specification buildingprojects, such as IGCC, IqNet Icontec 14001 and ISO9001. We attribute our success, in large part, to our ability to produce a broad range of sophisticatedproducts, as well as our reputation for delivering high quality, made-to-order architectural glass on time. Our employees have extensive training, knowledgeand experience at manufacturing high specification products. We believe the vertically-integrated nature of our operations means that there are high barriersto successfully entering our markets and competing with us on price, quality and agility. In addition, the equipment needed to operate in the glass andwindow industry is expensive, therefore requiring significant upfront capital investment. Loyal and Highly Motivated Employees Capitalizing on our various competitive advantages also requires a skilled and dedicated workforce. We actively encourage and facilitate thedevelopment of our employees through rolling training programs, with multiple training sessions held every week. These programs increase the skills of ouremployees and are designed to allow our employees to keep pace with the new technologies being installed at our manufacturing facilities. We arecommitted to developing our employees and remaining at the forefront of technology in our industry. These investments have also helped us manageworkplace injuries, with our rate of one accident per 24 workers per year, being substantially lower than the average of one accident per 12 workers per yearfor manufacturing companies in Colombia. We value our employees and invest in them and their communities. For several decades, we have committed resources to improving the quality oflife of our local communities. Our local foundation, “Fundación Tecnoglass,” provides local communities with assistance purchasing or improving homesand facilitating higher education scholarships. During 2018, over 160 families benefited from these initiatives. Fundación Tecnoglass provides funding fordifferent local schools looking to improve social transformation and community development. Vive Bailando, a program recently developed in the LasFlores neighborhood (local community near Tecnoglass’ headquarters) has positively impacted more than 100 families in less than a year. Additionally, wedonate our recyclable glass to the foundation, which sells it to local recycling cooperatives and uses the proceeds to fund scholarships for Companyemployees. We believe these initiatives have allowed us to maintain a strong relationship with our employees, which in turn has ensured a skilled, motivatedand loyal workforce with low levels of turnover. We have remained union-free since our incorporation in 1984. Strategy We have identified the following strategic priorities that we believe are important in advancing our business: Further Geographic Penetration in the United States We have successfully established a leading reputation in the Florida construction market by providing high value, impact-resistant architecturalglass products. Our products have become widely regarded in Florida for their quality and are certified in compliance with all U.S. regulations. In recent years, we have begun to successfully grow our geographic presence in the United States outside of Florida, particularly into markets alongthe east coast. Sales from Florida, where we have a significant presence comprised 84% of United States revenue in the year ended December 31, 2018.Coastal markets are particularly attractive to us, as they can be directly accessed by ship, resulting in transportation costs from our manufacturing facilitiesthat are similar to our transportation costs to Florida. These regions are also affected by hurricanes, significant temperature fluctuations and other extremeforms of weather that foster demand for our products. We are actively expanding our sales presence in these markets and have already successfully completedseveral projects in large U.S. markets such as New York, Boston, Washington D.C. and Baltimore as well as cities along the U.S. Gulf Coast, such as Houston. 8  We intend to continue growing the business organically outside of Florida. As we explore growth opportunities in new U.S. markets, we intend toleverage the strong reputation we have developed with national commercial construction contractors, architects and designers for providing high qualityproducts at the most competitive prices. Penetrate the U.S. Residential Market In April 2017 we launched “ES Windows: Elite Collection” and “ES Windows: Prestige Collection” to target the U.S. residential new andreplacement sectors. We have received positive interest for the new products to date and positive reactions from our customers. Although residential salesrepresent a relatively small portion of our sales today, we believe it will be a significant source of growth for us in the future. Our U.S. residential market salesrepresent 10% of our total sales for the year ended December 31, 2018. The U.S. residential housing construction market exceeded $544 billion in spendingduring the twelve months ended November 30, 2018 according to the United States Census Bureau. Deutsche Bank published a research report estimatingthat new residential housing starts in the United States will grow at an annual rate of 5% in each of 2019 and 2020. We believe that our core strengths thathave facilitated our success to date, namely the quality of our products and the structural cost advantages that allows us to price our products competitively,will similarly contribute to our success in residential window sales. Continued Investment in Technology to Meet Evolving Demands We have a track record of developing innovative new products, and we intend to continue our focus on new product opportunities in the future. Weare constantly identifying shifts in global trends and customer needs, and designing new products to meet those changes in demand. In order to continue thissuccess, it is critical that we invest in the latest technologies available in our industry. For example, with the installation of our soft-coating facility, we arenow able to manufacture low emissivity glass that is energy efficient and will allow us to meet growing demand for “green” products. Our recent investment in new tempering equipment, which uses air cushion technology to offer greater transparency and less distortion, furtherboosts the quality of our products. Further investments are planned to expand our offering of value-added glass products, such as soft-coated, low-emissivitywindow panes that minimize the effects of solar heat. We are committed to investing in technology and remaining at the forefront of the industry. We operate state-of-the-art architectural glass making equipment, glass laminating lines, aluminum presses and high-volume insulating equipment,which facilitate more precise manufacturing and generate less raw material waste. We will seek to leverage this platform of cutting-edge equipment to adaptour products to evolving demands in both current and new markets. We expect that our focus on innovation, which is founded upon our investments intechnology, will position us well to take advantage of new opportunities. Rigorous Adherence to Quality Standards Maintaining the high quality standards for which we have become known is essential to the execution of our strategy. All of our internal processesare continually and independently supervised by Tecnoglass’ Quality Assurance department. The Quality Assurance department maintains rigorous oversightof optimization indicators covering energy, water, recyclable waste and other facets of the production process. Constant monitoring of these indicators isintegral to ensuring that we consistently produce high quality products. Between 5% and 10% of our production is randomly selected to verify compliancewith a variety of quality standards, such as water leaks, functionality, manufacturing and accessories, according to ASTM International (ASTM) andAmerican Architectural Manufacturers Association (AAMA) rules. These measures allow us to effectively detect issues and take specific actions to mitigate their reoccurrence. As we grow and our use of technologyevolves, our Quality Assurance team must also evolve its tests, controls and remedies. We believe this rigorous adherence to quality control will ensure thatwe will continue to provide the highest quality products and, ultimately, promote customer satisfaction. 9  Products We manufacture and sell the following products: ● Low-e Glass – Low emissivity glass manufactured by depositing metal particles on the surface of the glass inside a vacuum chamber. This product offersexcellent thermal insulation designed to improve energy efficiency of buildings. ● Laminated/Thermo-Laminated Glass - produced by bonding two glass sheets with an intermediate film in-between. As a safety feature, this productfractures into small pieces if it breaks. ● Thermo-Acoustic Glass - manufactured with two or more glass sheets separated by an aluminum or micro-perforated steel profile. This product has adouble-seal system that ensures the unit’s tightness, buffering noise and improving thermal control. This product serves as an excellent noise barrier,which is used especially in zones close to airports, traffic or wherever there are unpleasant sounds. ●Tempered Glass - glass subject to a tempering process through elevated temperatures resulting in greater superficial elasticity and resistance thanconventional glass. ●Silk-Screened Glass - special paint is applied to glass using automatic machinery and numerical control, which ensures paint homogeneity and anexcellent finish. ●Curved Glass - produced by bending a flat glass sheet over a mold, using an automated heat process, which maintains the glass’ physical properties. ●Digital Print Glass - digital printing allows any kind of appearance required by the client, offering versatility to projects. ● Aluminum products - sold through our Alutions brand include bars, plates, profiles, rods and tubes used primarily in the manufacture of architecturalglass settings including windows, doors, spatial separators and similar products. ●Curtain Wall / Floating facades - a non-structural window screen suspended outside a building and are available in many technical specifications forhigh performance required in high-rise buildings, resistant to strong winds and ensuring high quality standards. ●Stick facade systems – are glass and aluminum facade elements fixed to the structure of the building and the glass and spandrel are inserted in the grid onsite available in many combinations to define colors, thickness, glass types and finishes, and types of ventilation and design complements. ●Windows and Doors - line of window and door products defined by the different types of glass finish, such as normal, impact resistant, hurricane-proof,safety, soundproof and thermal. Additionally, they are available in numerous structures, including fixed body, sliding windows, casement windows,hung windows, sliding doors and swinging doors. ● Interior dividers and Commercial display windows - commercial and interior display windows with a broad range of profiles, colors and crystal finishes,as well as bathroom stall dividers, office cubicle separators and closets Products combine functionality, aesthetics and elegance and are available in abroad range of structures and materials. 10  ●Hurricane-proof windows - combine heavy-duty aluminum or vinyl frames with special laminated glass to provide protection from hurricane-force windsup to 180 mph and wind-borne debris by maintaining their structural integrity and preventing penetration by impacting objects. ●Other – awnings, structures, automatic doors and other components of architectural systems. Brands and Trademarks Our main brands are Tecnoglass, ESWindows and Alutions. Our registered trademarks include “Alutions by Tecnoglass”, “ECOMAX byESWINDOWS”, “Tecnobend”, “Tecnoair”, “ESWINDOWS Interiors”, “ESW Windows and Walls”, “Solartec by Tecnoglass”, “Prestige by ESWINDOWS”,“Eli by ESWINDOWS”, “Alessia by ESWINDOWS”. Sales, Marketing and Customer Service Sales and Marketing Our sales strategy primarily focuses on attracting and retaining customers by consistently providing exceptional customer service, leading productquality, and competitive pricing. Our customers also value our shorter lead times, knowledge of building code requirements and technical expertise, whichcollectively generate significant customer loyalty. Our products are marketed using a combination of internal sales representatives, independent salesrepresentatives and directly to distributors. Our internal sales representatives receive a portion of their performance-based compensation based on sales andprofitability metrics. We primarily market our products based on product quality, outstanding service, shorter lead times and on-time delivery. We employ a highly efficient number of in-house sales employees. Some of our sales and marketing efforts are handled by area sales representativeswho work on a commission basis. We do not rely on significant traditional advertising expenditures to drive net sales. We have established and maintain credibility primarily throughthe strength of our products, our customer service and quality assurance, the speed at which we deliver finished products and the attractiveness of our pricing.Our advertising expenditures consist primarily of maintaining our subsidiaries’ websites. Customer Service We believe that our ability to provide customers outstanding service quality serves as a strong competitive differentiator. Our customer relationshipsare established and maintained through the coordinated efforts of our sales and production teams. We employ a highly responsive and efficient team ofprofessionals devoted to addressing customer support with the goal of resolving any issue in a timely manner. In order to promote customer loyalty andemployee development, we developed an employee training program with the primary objectives of educating our staff to be aware of client and supplierneeds and familiarizing them with our strategic goals in order to improve the competitiveness, productivity and quality of all products offered. Working Capital Requirements During the year ended December 31, 2018, $5.0 million was used in operating activities, related to the working capital required to support an 18%growth in sales. The main use of cash from operating activities in 2018 was inventory purchases, which used $28.1 million as the Company’s inventoriesgrew to address an increased level of activity for project deliveries during the first quarter of 2019. While it is expected that the Company will have workingcapital needs as it undergoes continued growth, management continues to seek ways of optimizing the collection of its receivables and its inventoryprocurement. The growth in sales during 2018 required a use $23.7 million in trade account receivables albeit with a lower days sales outstanding ratio givencontinued efforts on the collection front and the growth in the residential market which carries a shorter cash cycle. On a similar note, also related to theincrease in sales and procurement of inventories, trade accounts payable were the primary source of operating cash flows during 2018, generating $34.6million. 11  Customers Our customers include architects, building owners, general contractors and glazing subcontractors in the commercial construction market. We haveover 1,000 customers. Of our 100 most representative customers, which represent over 80% of our sales, about 70% are located in North America, 1% inCentral America and the Caribbean, and 29% in South America. Only one customer, GM&P, accounted for more than 10% or more of our net sales during2016 with 26%. On March 1, 2017 we entered into and consummated a purchase agreement with Giovanni Monti, the owner of 100% of the outstandingshares of GM&P. With the acquisition of GM&P, we have reduced our customer risk concentration, as no single customer accounted for more than 10% of ourrevenues during the years ended December 31, 2018 and 2017. Backlog We had a combined backlog of $515 million as of December 31, 2018, $499 million as of December 31, 2017 and $396 million as of December 31,2016. We do not believe that backlog is indicative of our future results of operations or prospects. Although we seek commitments from customers well inadvance of shipment dates, actual confirmed orders are typically not received until close to the required shipment dates. Materials and Suppliers Our primary manufacturing materials include glass, ionoplast, polyvinyl butyral, and aluminum and vinyl extrusions. Although in some instanceswe have agreements with our suppliers, these agreements are generally terminable by us or the supplier counterparties on limited notice. Typically, all of ourmaterials are readily available from a number of sources, and no supplier delays or shortages are anticipated. We source raw materials and glass necessary to manufacture our products from a variety of domestic and foreign suppliers. During the year endedDecember 31, 2018 three suppliers individually accounted for more than 10% of total raw material purchases, which in aggregate represented 37% of rawmaterial purchases, including Vidrio Andino SAS, from which we purchased $14.8 million, representing 12% of our raw material purchases, and with whomwe entered into a joint venture agreement in January 2019 further described in the “Overview” section of Item 1. Business on this annual report. During theyear ended December 31, 2017 two suppliers individually accounted for more than 10% of total raw material purchases, which in aggregate represented 30%of raw material purchases. For the year ended December 31, 2016, three suppliers individually accounted for more than 10% of total raw material purchases,which in aggregate represented 38% of raw material purchases. Warranties We offer product warranties, which we believe are competitive for the markets in which our products are sold. The nature and extent of thesewarranties depend upon the product. Our standard warranties are generally from five to ten years for architectural glass, curtain wall, laminated and temperedglass, window and door products. Warranties are not priced or sold separately and do not provide the customer with services or coverages in addition to theassurance that the product complies with original agreed-upon specifications. In the event of a claim against a product for which we have received a warrantyfrom the supplier, we transfer the claim back to the supplier. We evaluated historical information regarding claims for replacements under warranties andconcluded that the costs that we have incurred in relation to these warranties have not been material. Certifications Among our many designations and certifications, Tecnoglass has earned the Miami-Dade County Notice of Acceptance (“NOA”), one of the mostdemanding certificates in the industry and a requirement to market hurricane-resistant glass in Florida. Tecnoglass’ products comply with Miami-Dadecounty’s safety code standards as its laminated anti-hurricane glass resists impact, pressure, water and wind. Tecnoglass is also the only company in LatinAmerica authorized by PPG Industries and Guardian Industries to manufacture floating glass facades. 12  Our subsidiaries have received a number of other certifications from other national and international standard-setting bodies. TG Certifications include: ●NTC-1578●ASTM E774 1997●ISO 9001: 2008 Certificate of Quality Assurance●ISO 14001: 2004 Certificate of Environmental Management●Safety Glazing Certification Council (SGCC) for tempered and laminated glass: ANZI●Z97 1-2004●International Glass Certification Council (IGCC) for insulated glass: ASTM E774 - 97●Pittsburgh Plate Glass (PPG) certified supplier●Member of ACOLVISE (Colombia Association of Safety Glass Transformers)●OHSAS 18001:2007. Occupational Health and Safety management System ES Certifications include: ●NTC-ISO 9001: 2008 Certificate of Quality Assurance●NTC-ISO 14001: 2004 Certificate of Environmental Management●Member of the American Architectural Manufacturers Association (AAMA)●Complies with Miami-Dade County’s stringent safety code regulations for hurricane-proof windows Competitors We have local and international competitors that also focus on glass and aluminum transformation, window ensemble and installation and designingin the commercial and residential construction markets. The market in the United States in which we compete is mainly comprised of manufacturers,distributors and installers of glass curtain walls, windows and doors for commercial and residential buildings. Based on our analysis of IBIS World Report, weestimate that we capture 1% of the US consolidated market by revenue (manufacturing and services), which represents an attractive opportunity for furtherpenetration. In Colombia, we believe we are the leading producer of high-end windows, with more than 30 years of experience in the glass and aluminumstructure assembly market. We captured over 45% of the market share by revenue based on our analysis of external industry sources in 2017. The industryhas a few well-known players and is mostly atomized and comprised of small competitors. The key factors on which we and our competitors compete for business include: quality, price, reputation, breadth of products and service offerings,and production speed. We face intense competition from both smaller and larger market players who compete against us in our various markets includingglass, window and aluminum manufacturing. The principal methods of competition in the window and door industry are the development of long-term relationships with window and doordistributors and dealers, and the retention of customers by delivering a full range of high-quality customized products on demand with short turnaround timeswhile offering competitive pricing. The vertical integration of our operations, our geographic scope, low labor costs and economies of scale have helped oursubsidiaries consolidate their leading position in Colombia and bolstered their expansion in the United States and other foreign markets. Government Regulations We are subject to extensive and varied federal, state and local government regulation in the jurisdictions in which we operate, including laws andregulations relating to our relationships with our employees, public health and safety and fire codes. Additionally, certain of the jurisdictions in which weoperate require that installation of doors and windows be approved by competent authorities that grant distribution licenses. Although our business andfacilities are subject to federal, state and local environmental regulation, environmental regulation does not have a material impact on our operations. 13  Also, we are subject to a potential revision of the United States-Colombia Free Trade Agreement (“USCOFTA”), which allows Colombian entities toexport to USA without any tariffs. The President of the United States, Mr. Donald Trump, has made public announcements about the intention to re-negotiatecertain terms of free trade agreements, which could potentially implement a tariff. However, we can mitigate this risk by transferring the price to ourconsumers and diversifying business operations. Employees As of December 31, 2018, we had a total of 5,852 employees, none of whom is represented by a union. As of December 31, 2017, and 2016 we had atotal of 5,326 employees and 5,853 employees, respectively. Most of our employees are hired through seven temporary staffing companies and are employedunder one-year fixed-term employment contracts. During 2017 we went through an employee reduction plan related to some projects that were delayed into2018 since we had overhired to meet those projects. This led to a total reduction in the work force, despite the GM&P acquisition, as GM&P subcontracts aportion of its operational work. Management believes it has good relations with our employees. We provide ongoing training programs to our employeesthrough the self-established programs. Company History We are an exempted company incorporated under the laws of the Cayman Islands. We were founded in 2013 in connection with a businesscombination between Tecnoglass subsidiaries TG and ES, and Andina Acquisition Corporation. TG and ES are corporations formed under the laws ofColombia and founded in 1994 and 1984, respectively, by José M. Daes, our Chief Executive Officer, and Christian T. Daes, our Chief Operating Officer. Although TG and ES have been in operation since 1994 and 1984, respectively, we were originally formed on September 21, 2011, under the name“Andina Acquisition Corporation” as an exempted company incorporated in the Cayman Islands in order to effect a merger, share exchange, assetacquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. Tecnoglasschanged its name to Tecnoglass Inc. on December 20, 2013 and registered under incorporation number 262514. From the consummation of our initial public offering until August 17, 2013, we sought out suitable target businesses to acquire. On August 17,2013, we entered into an agreement and plan of reorganization, which agreement, as amended, we sometimes refer to as the “business combinationagreement,” with Tecnoglass Holding, TG and ES, pursuant to which we acquired TG and ES as wholly-owned indirect subsidiaries, or the BusinessCombination. Pursuant to the Business Combination, our wholly-owned subsidiary was merged with and into Tecnoglass Holding, with Tecnoglass Holdingsurviving as our wholly-owned subsidiary. In connection with the Business Combination, our business became the business of Tecnoglass Holding, TG andES, and we changed our name to Tecnoglass Inc. 14  Additional Information About the Company We maintain websites for our subsidiaries, TG, ES and GM&P, which can be found at www.tecnoglass.com, www.energiasolarsa.com, andwww.gmpglazing.com, respectively. The corporate filings of Tecnoglass Inc., including our Annual Reports on Form 10-K, our Quarterly Reports on Form10-Q, our Current Reports on Form 8-K, our proxy statements and reports filed by our executive officers and directors under Section 16(a) of the SecuritiesExchange Act, and any amendments to those filings, are available free of charge on the Investor Relations page at investors.tecnoglass.com, which areupdated as soon as reasonably practicable after we electronically file (or furnish in certain cases) such material with the Securities and Exchange Commission,and can also be found at the SEC’s website at http://sec.gov. We do not intend for information contained in either subsidiary website, including the InvestorRelations pages, to be a part of this Form 10-K. Also, the public may read and copy any materials the Company files with the SEC at the SEC’ publicreference room at 100 F St NE, Washington D.C, 20549 or by calling 1-800-SEC-0330. Item 1A.Risk Factors. Risks Related to Our Business Operations We may not realize the anticipated benefit through our joint venture with Saint-Gobain and the planned construction of a new plant as part of the jointventure may not be completed as planned. We entered into a joint venture agreement with Saint-Gobain to acquire an approximately 25% minority interest in Vidrio Andino’s float glass plantin the outskirts of Bogota, Colombia. We believe this transaction will solidify our vertical integration strategy by acquiring the first stage of our productionchain while securing ample glass supply for our expected production needs. However, we may be unable to realize the planned synergies and fail to integratethe facility’s production capacity into our manufacturing process, which may have a negative impact on our financial condition. Additionally, the jointventure agreement includes plans to build a new plant in Galapa, Colombia that will be located approximately 20 miles from our primary manufacturingfacility in which we will also have a 25% interest. The new plant will be funded with the original cash contribution made by the Company, operatingcashflows from the Bogota plant, debt incurred at the joint venture level that will not consolidate into the Company and an additional contribution by us ofapproximately $12.5 million to be paid between 2020 and 2021. There can be no assurance that the anticipated joint venture cost synergies, increases in capacity or production and optimization of certainmanufacturing processes associated with the reduction of raw material waste, and supply chain synergies, including purchasing raw materials at moreadvantageous prices, will be achieved, or that they might not be significantly and materially less than anticipated, or that the completion of the joint venturewith Saint-Gobain will be timely or effectively accomplished. In addition, our ability to realize the anticipated cost synergies and production capacityincreases are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control, such aschanges to government regulation governing or otherwise impacting our industry, operating difficulties, client preferences, changes in competition andgeneral economic or industry condition. Constructing a new manufacturing facility involves risks, including financial, construction and governmental approval risks. If Vidrio Andino’splant fails to produce the anticipated cash flow, if we are unable to allocate the required capital to the new plant, if we are unable to secure the necessarypermits, approvals or consents or if we are unable to enter into a contract for the construction of the plant on suitable terms, we will fail to realize the expectedbenefits of the joint venture. 15  We operate in competitive markets, and our business could suffer if we are unable to adequately address potential downward pricing pressures and otherfactors that may reduce operating margins. The principal markets that we serve are highly competitive. Competition is based primarily on the precision and range of achievable tolerances,quality, price and the ability to meet delivery schedules dictated by customers. Our competition comes from companies of various sizes, some of which havegreater financial and other resources than we do and some of which have more established brand names in the markets that we serve. We currently competewith companies such as Viracon (a subsidiary within the Apogee Enterprises Inc. Group), PGT, Cardinal Glass and Oldcastle Glass among others in the UnitedStates and companies such as Vidrio Andino, Vitro, Vitelco and others in the Colombia and Latin America. Any of these competitors may foresee the courseof market development more accurately than we will, develop products that are superior to ours, have the ability to produce similar products at a lower costthan us or adapt more quickly than we can to new technologies or evolving customer requirements. Increased competition could force us to lower our pricesor to offer additional services at a higher cost to us, which could reduce gross profit and net income. Accordingly, we may not be able to adequately addresspotential downward pricing pressures and other factors, which may adversely affect our financial condition and results of operations. Failure to maintain the performance, reliability and quality standards required by our customers could have a materially negative impact on our financialcondition and results of operation. If our products or services have performance, reliability or quality problems, or products are installed with incompatible glazing materials, we mayexperience additional warranty and service expenses, reduced or canceled orders, diminished pricing power, higher manufacturing or installation costs ordelays in the collection of accounts receivable. Additionally, performance, reliability or quality claims from our customers, with or without merit, could resultin costly and time-consuming litigation that could require significant time and attention of management and involve significant monetary damages thatcould negatively affect our financial results. The volatility of the cost of raw materials used to produce our products could materially adversely affect our results of operations in the future. The cost of raw materials included in our products, including aluminum extrusion and polyvinyl butyral, are subject to significant fluctuationsderived from changes in price or volume. A variety of factors over which we have no control, including global demand for aluminum, fluctuations in oilprices, speculation in commodities futures and the creation of new laminates or other products based on new technologies, impact the cost of raw materialswhich we purchase for the manufacture of our products. We quote our prices of aluminum products based on the price of aluminum in the London MetalExchange plus a premium, and our suppliers of glass and polyvinyl butyral provide us with price lists that are updated annually, thus reducing the risk ofchanging prices for orders in the short term. While we may attempt to minimize the risk from severe price fluctuations by entering into aluminum forwardcontracts to hedge these fluctuations in the purchase price of aluminum extrusion we use in production, substantial, prolonged upward trends in aluminumprices could significantly increase the cost of our aluminum needs and have an adverse impact on our results of operations. If we are not able to pass onsignificant cost increases to our customers, our results in the future may be negatively affected by a delay between the cost increases and price increases inour products. Accordingly, the price volatility of raw materials could adversely affect our financial condition and results of operations in the future. We depend on third-party suppliers for our raw materials and any failure of such third-party suppliers in providing raw materials could negatively affectour ability to manufacture our products. Our ability to offer a wide variety of products to our customers depends on receipt of adequate material supplies from manufacturers and othersuppliers. It is possible in the future that our competitors or other suppliers may create products based on new technologies that are not available to us or aremore effective than our products at surviving hurricane-force winds and wind-borne debris or that they may have access to products of a similar quality atlower prices. Although in some instances we have agreements with our suppliers, these agreements are generally terminable by us or the suppliercounterparties on limited notice. We have a fixed set of maximum price rates, and from those prices we negotiate with the supplier of the material dependingon the project. We source raw materials and glass necessary to manufacture our products from a variety of domestic and foreign suppliers. During the yearended December 31, 2018, three suppliers individually accounted for more than 10% of total raw material purchases, which in aggregate represent 37% ofraw material purchases, including Vidrio Andino SAS, from which we purchased $14.8 million, or 12% of our raw material purchases, and with whom weentered into a joint venture agreement in January 2019 further described in the “Overview” section of Item 1. Business on this annual report. Failures of third-party suppliers to provide raw materials to us in the future could have an adverse impact on our operating results or our ability to manufacture our products. 16  The home building industry and the home repair and remodeling sector are regulated and any increased regulatory restrictions could negatively affect oursales and results of operations. The home building industry and the home repair and remodeling sector are subject to various local, state and federal statutes, ordinances, rules andregulations concerning zoning, building design and safety, hurricane and floods, construction, and similar matters, including regulations that imposerestrictive zoning and density requirements in order to limit the number of homes that can be built within the boundaries of a particular area. Increasedregulatory restrictions could limit demand for new homes and home repair and remodeling products, which could negatively affect our sales and results ofoperations. We may not be able to satisfy any future regulations, which consequently could have a negative effect on our sales and results of operations. Changes in building codes could lower the demand for our impact-resistant windows and doors. The market for our impact-resistant windows and doors depends in large part on our ability to satisfy state and local building codes that requireprotection from wind-borne debris. If the standards in such building codes are raised, we may not be able to meet such requirements, and demand for ourproducts could decline. Conversely, if the standards in such building codes are lowered or are not enforced in certain areas, demand for impact-resistantproducts may decrease. If we are unable to satisfy future regulations, including building code standards, it could negatively affect our sales and results ofoperations. Further, if states and regions that are affected by hurricanes but do not currently have such building codes fail to adopt and enforce hurricaneprotection building codes, our ability to expand our business in such markets may be limited. Equipment failures, delays in deliveries and catastrophic loss at our manufacturing facility could lead to production curtailments or shutdowns thatprevent us from producing our products. An interruption in production capabilities at any of our facilities because of equipment failure or other reasons could result in our inability toproduce our products, which would reduce our sales and earnings for the affected period. In addition, we generally manufacture our products only afterreceiving the order from the customer and thus do not hold large inventories. If there is a stoppage in production at our manufacturing facilities, even if onlytemporarily, or if they experience delays because of events that are beyond our control, delivery times could be severely affected. Any significant delay indeliveries to our customers could lead to increased product returns or cancellations and cause us to lose future sales. Our manufacturing facilities are alsosubject to the risk of catastrophic loss due to unanticipated events such as fires, explosions or violent weather conditions. If we experience plant shutdownsor periods of reduced production because of equipment failure, delays in deliveries or catastrophic loss, it could have a material adverse effect on our resultsof operations or financial condition. Further, we may not have adequate insurance to compensate for all losses that result from any of these events. Our reliance on a single facility subjects us to concentrated risks. We currently operate the vast majority of our business from a single production facility in Barranquilla, Colombia. Due to the lack of diversificationin our assets and geographic location, an adverse development at or impacting our facility or in local or regional economic or political conditions, couldhave a significantly greater impact on our results of operations and financial condition than if we maintained more diverse assets and locations. While weimplement preventative and proactive maintenance at our facility, it is possible that we could experience prolonged periods of reduced production andincreased maintenance and repair costs due to equipment failures. In addition, because of our single facility and location, in certain cases we rely on limitedor single suppliers for significant inputs, such as electricity. We are also reliant on the adequacy of the local skilled labor force to support our operations.Supply interruptions to or labor shortages or stoppages at our facility could be caused by any of the aforementioned factors, many of which are beyond ourcontrol, and would adversely affect our operations and we would not have any ability to offset this concentrated impact with activities at any alternativefacilities or locations. 17  Our business involves complex manufacturing processes that may cause personal injury or property damage, subjecting us to liabilities and possible lossesother disruptions of our operations in the future, which may not be covered by insurance. Our business involves complex manufacturing processes. Some of these processes involve high pressures, temperatures, hot metal and other hazardsthat present certain safety risks to workers employed at our manufacturing facilities. The potential exists for accidents involving death or serious injury.Although our management is highly committed to health and safety, since January 2014, two fatalities have occurred at our operations. The potentialliability resulting from any such accident, to the extent not covered by insurance, could result in unexpected cash expenditures, thereby reducing the cashavailable to operate our business. Such an accident could disrupt operations at any of our facilities, which could adversely affect our ability to deliverproducts to our customers on a timely basis and to retain our current business. Operating hazards inherent in our business, some of which may be outside of our control, can cause personal injury and loss of life, damage to ordestruction of property, plant and equipment and environmental damage. We maintain insurance coverage in amounts and against the risks we believe areconsistent with industry practice, but this insurance may not be adequate or available to cover all losses or liabilities we may incur in our operations. Ourinsurance policies are subject to varying levels of deductibles. Losses up to our deductible amounts accrue based upon our estimates of the ultimate liabilityfor claims incurred and an estimate of claims incurred but not reported. However, liabilities subject to insurance are difficult to estimate due to unknownfactors, including the severity of an injury, the determination of our liability in proportion to other parties, the number of incidents not reported and theeffectiveness of our safety programs. If we were to experience insurance claims or costs above our estimates, we might also be required to use working capitalto satisfy these claims. Our results may not match our provided guidance or the expectations of securities analysts or investors, which likely would have an adverse effect on themarket price of our securities. Our results may fall below provided guidance and the expectations of securities analysts or investors in future periods. Our results may varydepending on a number of factors, including, but not limited to, fluctuating customer demand, delay or timing of shipments, construction delays orcancellations due to lack of financing for construction projects or market acceptance of new products. Manufacturing or operational difficulties that mayarise due to quality control, capacity utilization of our production equipment or staffing requirements may also adversely affect annual net sales andoperating results. Moreover, where we participate in fixed-price contracts for installation services, changes in timing of construction projects or difficulties orerrors in their execution caused by us or other parties, could result in a failure to achieve expected results. In addition, competition, including new entrantsinto our markets, the introduction of new products by competitors, adoption of improved technologies by competitors and competitive pressures on prices ofproducts and services, could adversely affect our results. Finally, our results may vary depending on raw material pricing, the potential for disruption ofsupply and changes in legislation that could have an adverse impact on labor or other costs. Our failure to meet our provided guidance or the expectations ofsecurities analysts or investors would likely adversely affect the market price of our securities. If new construction levels and repair and remodeling markets decline, such market pressures could negatively affect our results of operations. The architectural glass industry is subject to the cyclical market pressures of the larger new construction and repair and remodeling markets. In turn,these larger markets may be affected by adverse changes in economic conditions such as demographic trends, employment levels, interest rates, commodityprices, availability of credit and consumer confidence, as well as by changing needs and trends in the markets, such as shifts in customers’ preferences andarchitectural trends. Any future downturn or any other negative market pressures could negatively affect our results of operations in the future, as marginsmay decrease as a direct result of an overall decrease in demand for our products. Additionally, we may have idle capacity which may have a negative effecton our cost structure. 18  We may be adversely affected by disruptions to our manufacturing facilities or disruptions to our customer, supplier or employee base. Any disruption to our facilities resulting from weather-related events, fire, an act of terrorism or any other cause could damage a significant portionof our inventory, affect our distribution of products and materially impair our ability to distribute products to customers. We could incur significantly highercosts and longer lead times associated with distributing our products to customers during the time that it takes for us to reopen or replace a damaged facility.In addition, if there are disruptions to our customer and supplier base or to our employees caused by weather-related events, acts of terrorism or any othercause, our business could be temporarily adversely affected by higher costs for materials, increased shipping and storage costs, increased labor costs,increased absentee rates and scheduling issues. Any interruption in the production or delivery of our supplies could reduce sales of our products and increasecosts. Customer concentration and related credit, commercial and legal risk may adversely impact our future earnings and cash flows. Our ten largest third-party customers worldwide collectively accounted for 38% of our total sales revenue for the year ended December 31, 2018,though no single customer accounted for more than 10% of annual revenues. We also do not have any long-term requirements contracts pursuant to which wewould be required to fulfill customers on an as-needed basis. Although the customary terms of our arrangements with customers require a significant upfront payment ranging between 30% and 50% of the costof an order, if a large customer were to experience financial difficulty, or file for bankruptcy or similar protection, or if we were unable to collect amounts duefrom customers that are currently under bankruptcy or similar protection, it could adversely impact our results of operations, cash flows and asset valuations.Therefore, the risk we face in doing business with these customers may increase. Financial problems experienced by our customers could result in theimpairment of our assets, a decrease in our operating cash flows and may also reduce or curtail our customers’ future use of our products and services, whichmay have an adverse effect on our revenues. Disagreements between the parties can arise as a result of the scope and nature of the relationship and ongoing negotiations. Although we do nothave any disputes with any major customers as of the date hereof that are expected to have a material adverse effect on our financial position, results ofoperations or cash flows, we cannot predict whether such disputes will arise in the future. The nature of our business exposes each of our subsidiaries to product liability and warranty claims that, if adversely determined, could negatively affectour financial condition and results of operations and the confidence of customers in our products. Our subsidiaries are, from time to time, involved in product liability and product warranty claims relating to the products they manufacture and distributethat, if adversely determined, could adversely affect our financial condition, results of operations and cash flows. In addition, they may be exposed topotential claims arising from the conduct of homebuilders and home remodelers and their sub-contractors. We may not be able to maintain insurance onacceptable terms or insurance may not provide adequate protection against potential liabilities in the future. Product liability claims can be expensive todefend and can divert the attention of management and other personnel for significant periods, regardless of the ultimate outcome. Claims of this naturecould also have a negative impact on customer confidence in our products and us. We are not aware of any such claims at this time. We are subject to potential exposure to environmental liabilities and are subject to environmental regulation and any such liabilities or regulation maynegatively affect our costs and results of operations in the future. Our subsidiaries are subject to various national, state and local environmental laws, ordinances and regulations that are frequently changing andbecoming more stringent. Although we believe that our facilities are materially in compliance with such laws, ordinances and regulations, we cannot becertain that we will, at all times, be able to maintain compliance. Furthermore, as owners of real property, our subsidiaries can be held liable for theinvestigation or remediation of contamination on such properties, in some circumstances, without regard to whether we knew of or were responsible for suchcontamination. Remediation may be required in the future because of spills or releases of petroleum products or hazardous substances, the discovery ofunknown environmental conditions, or more stringent standards regarding existing residual contamination. Environmental regulatory requirements maybecome more burdensome, increase our general and administrative costs, and increase the risk that our subsidiaries incur fines or penalties or be held liablefor violations of such regulatory requirements. 19  Weather can materially affect our business and we are subject to seasonality. Seasonal changes and other weather-related conditions can adversely affect our business and operations through a decline in both the use andproduction of our products and demand for our services. Adverse weather conditions, such as extended rainy and cold weather in the spring and fall, canreduce demand for our products and reduce sales or render our distribution operations less efficient. Major weather events such as hurricanes, tornadoes,tropical storms and heavy snows with quick rainy melts could adversely affect sales in the near term. Construction materials production and shipment levels follow activity in the construction industry, which typically occurs in the spring, summerand fall. Warmer and drier weather during the second and third quarters typically result in higher activity and revenue levels during those quarters. The firstquarter typically has lower levels of activity partially due to inclement weather conditions. The activity level during the second quarter varies greatly withvariations in temperature and precipitation. Our success depends upon our ability to develop new products and services, integrate acquired products and services and enhance existing products andservices through product development initiatives and technological advances; any failure to make such improvements could harm our future business andprospects. We have continuing programs designed to develop new products and to enhance and improve our existing products. We are expending resources forthe development of new products in all aspects of our business, including products that can reach a broader customer base. Some of these new products mustbe developed due to changes in legislative, regulatory or industry requirements or in competitive technologies that render certain of our existing productsobsolete or less competitive. The successful development of our products and product enhancements are subject to numerous risks, both known andunknown, including unanticipated delays, access to significant capital, budget overruns, technical problems and other difficulties that could result in theabandonment or substantial change in the design, development and commercialization of these new products. The events could have a materially adverseimpact on our results of operations. Given the uncertainties inherent with product development and introduction, including lack of market acceptance, we cannot provide assurance thatany of our product development efforts will be successful on a timely basis or within budget, if at all. Failure to develop new products and productenhancements on a timely basis or within budget could harm our business and prospects. In addition, we may not be able to achieve the technologicaladvances necessary for us to remain competitive, which could have a materially negative impact on our financial condition. We are dependent on sales to customers outside Colombia and any failure to make these sales may adversely affect our operating results in the future. In the year ended December 31, 2018, 83% of our sales were to customers outside Colombia, including to the United States and Panama, and weexpect sales into the United States and other foreign markets to continue to represent a significant portion of our net sales. Foreign sales and operations aresubject to changes in local government regulations and policies, including those related to tariffs and trade barriers, investments, property ownership rights,taxation, exchange controls and repatriation of earnings. An increase in tariffs on products shipped to countries like the United States, which President Trumphas indicated is possible, or changes in the relative values of currencies occur from time to time and could affect our operating results. This risk and the otherrisks inherent in foreign sales and operations could adversely affect our operating results in the future. We are dependent on certain key personnel, the loss of whom could materially affect our financial performance and prospects in the future. Our continued success depends largely upon the continued services of our senior management and certain key employees. Each member of oursenior management teams has substantial experience and expertise in his or her industry and has made significant contributions to our growth and success.We face the risk, however, that members of our senior management may not continue in their current positions and the loss of the services of any of theseindividuals could cause us to lose customers and reduce our net sales, lead to employee morale problems and the loss of other key employees or causedisruptions to production. In addition, we may be unable to find qualified individuals to replace any senior executive officers who leave our employ or thatof our subsidiaries. 20  Our results of operations could be significantly affected by foreign currency fluctuations and currency regulations. We are subject to risks relating to fluctuations in currency exchange rates that may affect our sales, cost of sales, operating margins and cash flows.During the year ended December 31, 2018, approximately 17% of our revenues and 51% of our expenses were in Colombian pesos. The remainder of ourexpenses and revenues were denominated, priced and realized in U.S. dollars. In the future, and especially as we further expand our sales in other markets, ourcustomers may increasingly make payments in non-U.S. currencies. In addition, currency devaluation can result in a loss to us if we hold monetary assets inthat currency. Hedging foreign currencies can be difficult and costly, especially if the currency is not actively traded. We cannot predict the effect of futureexchange rate fluctuations on our operating results. In addition, we are subject to risks relating to governmental regulation of foreign currency, which may limit our ability to: ●transfer funds from or convert currencies in certain countries; ●repatriate foreign currency received in excess of local currency requirements; and ●repatriate funds held by foreign subsidiaries to the United States at favorable tax rates. Furthermore, the Colombian government and the Colombian Central Bank intervene in the country’s economy and occasionally make significantchanges in monetary, fiscal and regulatory policy, which may include the following measures: ●controls on capital flows; ●international investments and exchange regime. For a more detailed description of foreign exchange regulations in Colombia, see “Disclosure Regarding Foreign Exchange Rates in Colombia” and“Risk factors – Risks Related to Colombia and Other Countries Where We Operate – The Colombian government and the Central Bank exercise significantinfluence on the Colombian economy”. As we continue to increase our operations in foreign countries, there is an increased risk that foreign currency controls may create difficulty inrepatriating profits from foreign countries in the form of taxes or other restrictions, which could restrict our cash flow. We have entered into significant transactions with affiliates or other related parties, which may result in conflicts of interest. We have entered into transactions with affiliates or other related parties in the past and may do so again in the future. While we believe suchtransactions have been and will continue to be negotiated on an arm’s length basis, giving us a competitive advantage with vertical integration, there can beno assurance that such transactions could not give rise to conflicts of interest that could adversely affect our financial condition and results of operations. The interests of our controlling shareholders could differ from the interests of our other shareholders. Energy Holding Corporation exercises significant influence over us as a result of its majority shareholder position and voting rights. As of December31, 2018, Energy Holding Corporation beneficially owned approximately 63.7% of our outstanding ordinary shares. Energy Holding Corporation, in turn, iscontrolled by members of the Daes family, who together own 100% of the shares of Energy Holding Corporation. See “Principal Securityholders.”Accordingly, our controlling shareholders would have considerable influence regarding the outcome of any transaction that requires shareholder approval. Inaddition, if we are unable to obtain requisite approvals from Energy Holding Corporation, we may be prevented from executing critical elements of ourbusiness strategy. 21  We conduct all of our operations through our subsidiaries, and will rely on payments from our subsidiaries to meet all of our obligations and may fail tomeet our obligations if our subsidiaries are unable to make payments to us. We are a holding company and derive substantially all of our operating income from our subsidiaries. All of our assets are held by our subsidiaries,and we rely on the earnings and cash flows of our subsidiaries to meet our debt service obligations or dividend payments. The ability of our subsidiaries tomake payments to us will depend on their respective operating results and may be restricted by, among other things, the laws of their jurisdiction oforganization including Colombian foreign exchange regulations (which may limit the amount of funds available for distributions to us), the terms of existingand future indebtedness and other agreements of our subsidiaries, including their credit facilities, and the covenants of any future outstanding indebtednesswe or our subsidiaries incur. See “Disclosure Regarding Foreign Exchange Rates in Colombia” and “Risk Factors – Risks Related to Colombia and OtherCountries Where We Operate – The Colombian government and the Central Bank exercise significant influence on the Colombian economy.” If oursubsidiaries are unable to declare dividends, our ability to meet debt service or dividend payments may be impacted. The ability of our subsidiaries inColombia to declare dividends up to the total amount of their capital is not restricted by current laws, covenants in debt agreements or other agreements butcould be restricted pursuant to applicable law in the future or if our Colombian subsidiaries undergo a transformation to other types of corporate entities. We may be adversely affected by any disruption in our information technology systems. Our operations are dependent upon our information technologysystems, which encompass all of our major business functions. Increased global information technology security requirements, vulnerabilities, threats and a rise in sophisticated and targeted cybercrime pose arisk to the security of our systems, our information networks, and to the confidentiality, availability and integrity of our data, as well as to the functionality ofour manufacturing process. A disruption in our information technology systems for any prolonged period could result in delays in executing certainproduction activities, logging and processing operational and financial data, communication with employees and third parties or fulfilling customer ordersresulting in potential liability or reputational damage or otherwise adversely affect our financial results. We employ a number of measures to prevent, detectand mitigate these threats, which include employee education, password encryption, frequent password change events, firewall detection systems, anti-virussoftware in-place and frequent backups; however, there is no guarantee such efforts will be successful in preventing a cyber-attack. We rely on third party transportation, which subjects us to risks and costs that we cannot control, and which risks and costs may materially adversely affectour operations. We rely on third party trucking companies to transport raw materials to the manufacturing facilities used by each of our businesses and, to a lesserdegree, to ship finished products to customers. These transport operations are subject to various hazards and risks, including extreme weather conditions,work stoppages and operating hazards, as well as interstate transportation regulations. In addition, the methods of transportation we utilize may be subject toadditional, more stringent and more costly regulations in the future. If we are delayed or unable to ship finished products or unable to obtain raw materials asa result of any such new regulations or public policy changes related to transportation safety, or these transportation companies fail to operate properly, or ifthere were significant changes in the cost of these services due to new or additional regulations, or otherwise, we may not be able to arrange efficientalternatives and timely means to obtain raw materials or ship goods, which could result in a material adverse effect on our revenues and costs of operations.Transportation costs represent a significant part of our cost structure. If our transportation costs increased substantially, due to prolonged increases in fuelprices or otherwise, we may not be able to control them or pass the increased costs onto customers, and our profitability would be negatively impacted. 22  The success of our business depends, in part, on our ability to execute on our acquisition strategy, to successfully integrate acquisitions and to retain keyemployees of our acquired businesses. A significant portion of our historical growth has occurred through acquisitions and we will likely enter into acquisitions in the future. We may atany time be engaged in discussions or negotiations with respect to possible acquisitions, including transactions that would be significant to us. We regularlymake, and we expect to continue to make, acquisition proposals, and we may enter into letters of intent for acquisitions. We cannot predict the timing of anycontemplated transactions. To successfully finance such acquisitions, we may need to raise additional equity capital and indebtedness, which could increaseour leverage level above our leverage level at the time of, and prior to the contemplated use of proceeds of, this offering. We cannot assure you that we willenter into definitive agreements with respect to any contemplated transactions or that transactions contemplated by any definitive agreements will becompleted on time or at all. Our growth has placed, and will continue to place, significant demands on our management and operational and financialresources. Acquisitions involve risks that the businesses acquired will not perform as expected and that business judgments concerning the value, strengthsand weaknesses of acquired businesses will prove incorrect. Acquisitions may require integration of acquired companies’ sales and marketing, distribution, purchasing, finance and administrativeorganizations, as well as exposure to different legal and regulatory regimes in jurisdictions in which we have not previously operated. We may not be able tointegrate successfully any business we may acquire or have acquired into our existing business, and any acquired businesses may not be profitable or asprofitable as we had expected. Our inability to complete the integration of new businesses in a timely and orderly manner could increase costs and lowerprofits. Factors affecting the successful integration of acquired businesses include, but are not limited to, the following: ●We may become liable for certain liabilities of any acquired business, whether or not known to us. These risks could include, among others, taxliabilities, product liabilities, asbestos liabilities, environmental liabilities, pension liabilities and liabilities for employment practices and theycould be significant. ●Substantial attention from our senior management and the management of the acquired business may be required, which could decrease the timethat they have to service and attract customers. ●The complete integration of acquired companies depends, to a certain extent, on the full implementation of our financial systems and policies. ●We may actively pursue a number of opportunities simultaneously and we may encounter unforeseen expenses, complications and delays,including difficulties in employing sufficient staff and maintaining operational and management oversight. Increasing interest rates could materially adversely affect our ability to generate positive cashflows and secure financing required to carry out ourstrategic plans. Historically, portions of our debt have been indexed to variable interest rates. A variety of factors over which we have no control. A rise in interestrates could negatively impact the cost of financing for a portion of our debt with variable interest rates which could negatively impact our cash flowgeneration. Furthermore, a rise in interest rates could limit our ability to obtain financing required to support our growth through our continuing programsdesigned to develop new products, the expand of the installed capacity of our manufacturing facilities and execute our acquisition strategy. While we maymitigate the risk derived from interest rate fluctuations by entering into derivative contracts or by obtaining fixed rate financing, general increases in interestrates would still have an impact on the cost of financing and our ability to obtain appropriate funding. Furthermore, the architectural glass industry is directly impacted by general construction activity trends. In turn, these markets may be affected byadverse changes in economic conditions such as interest rates, and availability of credit. Any future downturn or any other negative market pressures couldnegatively affect our results of operations in the future, as margins may decrease as a direct result of an overall decrease in demand for our products. Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations. We have a significant amount of indebtedness. As of December 31, 2018, we and our subsidiaries on a consolidated basis had $242.3 millionprincipal amount of USD denominated debt outstanding. Our substantial indebtedness could have important consequences to our financial health. Forexample, it could: ●make it more difficult for us to satisfy our obligations with respect to the notes of our other debt; ●increase our vulnerability to general adverse economic and industry conditions or a downturn in our business; ●require us to dedicate a portion of our cash flow from operations to debt service, thereby reducing the availability of our cash flow to fundworking capital, capital expenditures and other general corporate purposes; ●limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; ●place us at a competitive disadvantage compared to our competitors that are not as highly leveraged; ●limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additionalfunds; and ●result in an event of default if we fail to satisfy our obligations under the notes or our other debt or fail to comply with the financial andother restrictive covenants contained in the indenture or our other debt instruments, which event of default could result in all of our debtbecoming immediately due and payable and could permit certain of our lenders to foreclose on our assets securing such debt. Any of the above listed factors could have a material adverse effect on our business, financial condition and results of operations. Further, the termsof our existing debt agreements do not, and any future debt may not, fully prohibit us from incurring additional debt. If new debt is added to our current debtlevels, the related risks that we now face could intensify. 23  Risks Related to Colombia and Other Countries Where We Operate Our operations are located in Colombia, which may make it more difficult for U.S. investors to understand and predict how changing market andeconomic conditions will affect our financial results. Our operations are located in Colombia and, consequently, are subject to the economic, political and tax conditions prevalent in that country. Theeconomic conditions in Colombia are subject to different growth expectations, market weaknesses and business practices than economic conditions in theU.S. market. We may not be able to predict how changing market conditions in Colombia will affect our financial results. As of the date of this annual report, Colombia’s long-term foreign currency sovereign credit ratings were affirmed “Baa2” by Moody’s, “BBB-” byS&P and “BBB” by Fitch, three of the main rating agencies worldwide. The Colombian economy is expected to experience a modest recovery in growth in2019, along with a decrease in the current account deficit and a marginal increase in debt in the coming three years. The stable outlook reflects theirexpectation that Colombia’s established political institutions and track record of consensus on key economic policies will contribute to economic stabilityand continuity over the coming two to three years. Colombia’s economy, just like most of Latin-American countries, continues suffering from the effects of lower commodity prices, mainly oil,reflected in its elevated level of external debt. Even though the country has taken measures to stabilize the economy, it is uncertain how will these measuresbe perceived and if the intended goal of increasing investor’s confidence, achieved. Economic and political conditions in Colombia may have an adverse effect on our financial condition and results of operations. Our financial condition and results of operations depend significantly on macroeconomic and political conditions prevailing in Colombia.Decreases in the growth rate, periods of negative growth, increases in inflation, changes in law, regulation, policy, or future judicial rulings andinterpretations of policies involving exchange controls and other matters such as (but not limited to) currency depreciation, foreign exchange regulations,inflation, interest rates, taxation, employment and labor laws, banking laws and regulations and other political or economic developments in or affectingColombia may affect the overall business environment and may, in turn, adversely impact our financial condition and results of operations in the future.Colombia’s fiscal deficit and growing public debt could adversely affect the Colombian economy. See “Disclosure Regarding Foreign Exchange Rates inColombia” and “Risk Factors – Risks Related to Colombia and Other Countries Where We Operate – The Colombian government and the Central Bankexercise significant influence on the Colombian economy”. The Colombian government frequently intervenes in Colombia’s economy and from time to time makes significant changes in monetary, fiscal andregulatory policy. Our business and results of operations or financial condition may be adversely affected by changes in government or fiscal policies, andother political, diplomatic, social and economic developments that may affect Colombia. We cannot predict what policies the Colombian government willadopt and whether those policies would have a negative impact on the Colombian economy or on our business and financial performance in the future. Wecannot assure you as to whether current stability in the Colombian economy will be sustained. If the conditions of the Colombian economy were todeteriorate, our financial conditions and results of operations would be adversely affected. In addition, Colombia held presidential elections in May 2018 with runoffs in June. Iván Duque Márquez was elected president and took office inAugust 2018. President Duque’s administration inherited high levels of spending, and if they fail to make significant reductions in investments, Colombiamay be unable to meet its fiscal deficit targets. On December 28, 2018, Colombian Congress enacted a tax reform effective as of January 1, 2019, which isfocused on a reduction of corporate taxes, an effort to encourage investment and economic growth growth and which introduced other substantial changes tothe then-existing tax legal framework. The reform could have a mixed effect on the corporate sector, given that the proposal also includes an increase in taxeson individuals with high-income and dividends received, as well as a greater reduction in expenses, which could have a negative impact on consumption in2019. See “Business- New Colombian Tax Reform” and “Risk Factors – Risks Related to Colombia and Other Countries Where We Operate – New or highertaxes resulting from changes in tax regulations or the interpretation thereof in Colombia could adversely affect our results of operations and financialcondition in the future.” 24  In addition, the uncertainty surrounding this election may adversely affect the Colombian economy. The Colombian government has historicallyexercised substantial influence on the local economy, and governmental policies are likely to continue to have an important effect on companies operatingin Colombia like our Colombian subsidiaries, market conditions and the prices of the securities of local issuers. The President of Colombia has considerablepower to determine governmental policies and actions relating to the economy and may adopt policies that may negatively affect us. We cannot predictwhich policies will be adopted by the new government and whether those policies would have a negative impact on the Colombian economy in which weoperate or our business and financial performance. Furthermore, recent political and economic actions in the Latin American region, including the corruption investigations and proceedings in Brazilmay negatively affect international investor perception of the region. For example, on December 21, 2016, the United States Department of Justiceannounced that Odebrecht S.A., or Odebrecht, a global construction conglomerate based in Brazil, pled guilty and agreed to pay a monetary penalty toresolve charges with authorities in the United States, Brazil and Switzerland arising out of their schemes to pay approximately $800 million dollars in bribesto government officials in twelve countries around the world, including $11.5 million dollars in Colombia, where the company admitted to offering bribes inorder to obtain and extend infrastructure contracts. Odebrecht further admitted to effecting these payments directly from its Brazilian headquarters through itsdivision of structured operations. On January 12, 2017, the Colombian Fiscalía General de la Nación initiated a corruption investigation into the activities of Odebrecht. While theinvestigation is still ongoing, the Colombian Fiscalía General de la Nación has expanded its investigation to include politicians, public officials andprivate industry members. On September 14, 2018, the Superintendencia de Industria y Comercio initiated a corruption investigation in Colombia intoOdebrecht’s actions in relation to the awarding of the Ruta del Sol II highway concession. Allegations and ongoing investigations of alleged improperpayments or corruption involving the Colombian government, politicians and private industry participants could create economic and political uncertainty,which in turn could adversely affect our results of operation and financial condition. The Colombian Government and the Central Bank exercise significant influence on the Colombian economy. Although the Colombian government has not imposed foreign exchange restrictions since 1990, Colombia’s foreign currency markets havehistorically been extremely regulated. Colombian law permits the Central Bank to impose foreign exchange controls to regulate the remittance of dividendsand/or foreign investments in the event that the foreign currency reserves of the Central Bank fall below a level equal to the value of three months of importsof goods and services into Colombia. An intervention that precludes our Colombian subsidiaries from possessing, utilizing or remitting U.S. Dollars wouldimpair our financial condition and results of operations, and would impair the Colombian subsidiary’s ability to convert any dividend payments to U.S.dollars. The Colombian government and the Central Bank may also seek to implement new policies aimed at controlling further fluctuation of theColombian peso against the U.S. dollar and fostering domestic price stability. The Central Bank may impose certain mandatory deposit requirements inconnection with foreign-currency denominated loans obtained by Colombian residents, including TG and ES. We cannot predict or control future actions bythe Central Bank in respect of such deposit requirements, which may involve the establishment of a different mandatory deposit percentage. The U.S.dollar/Colombian peso exchange rate has shown some instability in recent years. Please see “Disclosure Regarding Foreign Exchange Controls andExchange Rates in Colombia” for actions the Central Bank could take to intervene in the exchange market. 25  The Colombian Government has considerable power to shape the Colombian economy and, consequently, affect the operations and financialperformance of businesses. The Colombian Government may seek to implement new policies aimed at controlling further fluctuation of the Colombian pesoagainst the U.S. dollar and fostering domestic price stability. The president of Colombia has considerable power to determine governmental policies andactions relating to the economy and may adopt policies that are inconsistent with those of the prior government or that negatively affect us. Factors such as Colombia’s growing public debt and fluctuating exchange rates could adversely affect the Colombian economy. Colombia’s fiscal deficit and growing public debt could adversely affect the Colombian economy. The fiscal rules impose on the Colombiangovernment the need to reduce the fiscal deficit from 3.6% of GDP in 2017 to 3.1% and 2.4% of GDP in 2018 and 2019, respectively, and have therebyprevented the Colombian government from taking counter-cyclical measures to stimulate the economy. In addition, public indebtedness represented 49.4%of GDP in 2017. Although the country has gone through three tax reforms in the last five years, the Colombian government continues to face serious budgetaryconstraints and pressure from rating agencies that could lead to future tax reforms, with potential adverse consequences on our financial results. Since 2016, the Colombian currency had shown relative stability vis-à-vis the U.S. dollar, appreciating by 4.72% in 2016 and 0.56% in 2017.However, The Colombian peso depreciated by 9.3% vis-à-vis the U.S. dollar in 2018. Any international conflicts or related events have the potential to createan exchange mismatch, given the vulnerability and dependence of the Colombian economy on external financing and its vulnerability to any disruption inits external capital flows and its trade balance. We cannot assure you that any measures taken by the Colombian government and the Central Bank would be sufficient to control any resultingfiscal or exchange imbalances. Any further disruption in Colombia’s fiscal and trade balance may therefore cause Colombia’s economy to deteriorate andadversely affect our business, financial condition and results of operations. We are subject to regional and national economic conditions in the United States. The economy in Florida and throughout the United States could negatively impact demand for our products as it has in the past, and macroeconomicforces such as employment rates and the availability of credit could have an adverse effect on our sales and results of operations. Our U.S. business isconcentrated geographically in Florida, which optimizes manufacturing efficiencies and logistics, but further concentrates our business, and anotherprolonged decline in the economy of the state of Florida or of nearby coastal regions, a change in state and local building code requirements for hurricaneprotection, or any other adverse condition in the state or certain coastal regions, could cause a decline in the demand for our products, which could have anadverse impact on our sales and results of operations. Our strategy of continued geographic diversification seeks to reduce our exposure to such region-specific risks. Economic instability in Colombia could negatively affect our ability to sell our products. A significant decline in economic growth of any of Colombia’s major trading partners - in particular, the United States, China, and Mexico - couldhave a material adverse effect on each country’s balance of trade and economic growth. In addition, a “contagion” effect, where an entire region or class ofinvestments becomes less attractive to, or subject to outflows of funds by, international investors could negatively affect the Colombian economy. 26  The 2008 global economic and financial crisis, which began in the U.S. financial system and spread to different economic sectors and countriesaround the world, had negative effects on the Colombian economy. During 2009, the economies of the United States and most major European countriescontracted, which, in turn, affected the Colombian economy. The economic recovery in the United States since 2013 has been fragile and at lower rates thanin the past recoveries. Several European Union countries have been obliged to severely reduce their public expenditures due to their high indebtedness,which has severely affected the Eurozone’s economic growth. The ability of governments and companies in certain countries, such as Greece, Italy, Portugal,and Spain to repay their debt obligations or remain in the euro currency system remains uncertain. In addition, certain events, such as the outbreak of civiland political unrest in several countries in Africa and the Middle East, including, Libya, Syria, Iraq, and Yemen, might further strain and adversely affect theglobal economy and the global financial system. Due to financial and economic crises that may occur in countries around the world and recent turmoil in emerging markets economies, such asTurkey, South Africa and Argentina, investors may view investments in emerging markets with heightened caution. As a result of such financial andeconomic crises, flows of investments into Colombia may be reduced. Crises in other countries may hamper investors’ enthusiasm for securities of Colombianissuers, which may, in turn, adversely affect market prices for the Securities and make it difficult for us to access the international capital markets and financeits operations and capital expenditures. Even though exports from Colombia, principally petroleum and petroleum products, and gold, have grown in recent years, fluctuations incommodity prices pose a significant challenge to their contribution to the country’s balance of payments and fiscal revenues. Unemployment continues to behigh in Colombia compared to other economies in Latin America. Furthermore, recent political and economic actions in the Latin American region,including actions taken by the Argentine and Venezuelan governments, may negatively affect international investor perception of the region. We cannotassure you that growth achieved over the past decade by the Colombian economy will continue in future periods. The long-term effects of the globaleconomic and financial crisis on the international financial system remain uncertain. In addition, the effect on consumer confidence of any actual orperceived deterioration of household incomes in the Colombian economy may have a material adverse effect on our results of operations and financialcondition. Global trade tensions and political conditions in the United States, as well as the U.S. government’s approach to NAFTA and/or other trade agreements,treaties or policies, may adversely affect our results of operations and financial condition. Our operations are located in Colombia and may be, to varying degrees, affected by economic and market conditions in other countries. Tradebarriers being erected by major economies may limit our ability to sell products in other markets and execute our growth strategies. Economic conditions inColombia are correlated with economic conditions in the United States. As a result, any downturn in economic activity, could have a negative impact on ourbusiness in the United States, which at the year ended December 31, 2018, accounted for 80% of our net operating revenues. In 2018, the United States levied a steel and aluminum tariff under which certain aluminum products we manufacture in Colombia are subject to a10% tariff. Most of our imports to the United States of assembled architectural systems are not subject to the tariff, however our extruded aluminum productsare subject to this tariff. The tariff resulted in an expense of $1.5 million as of the end of the latest reportable period at December 31, 2018. For the time being,the burden of this tax is being passed on to our clients through increased sales prices. Additionally, the U.S. government has indicated its intent to alter its approach to international trade policy and in some cases to renegotiate, orpotentially terminate, certain existing bilateral or multi-lateral trade agreements and treaties with foreign countries. On September 30, 2018, the United StatesTrade Representative announced that the United States has agreed to a new trade deal between the member countries of the North American Free TradeAgreement, the United States-Mexico-Canada Agreement, or USMCA. It remains unclear what the U.S. Administration or U.S. Congress will or will not dowith respect to USMCA or other international trade agreements, treaties and policies. If the U.S. government takes action to materially modify the USMCA orother international trade agreements, treaties or policies, it has the potential to adversely impact our business, customers and/or suppliers directly bydisrupting trade and commercial transactions and/or indirectly by adversely affecting the U.S. economy or certain sectors thereof, thereby impacting demandfor our customers’ products, and in turn negatively affecting demand for our products. Key building materials for our customers could be negativelyimpacted by a withdrawal from or significant change to USMCA or other international trade agreements. As such, if the United States withdraws from ornegotiates material modifications to the terms of USMCA or other significant trade agreements and/or treaties, or makes significant changes to its tradepolicies, such actions could materially adversely affect our sales, financial results and cash flows. 27  Additionally, if the U.S. government takes action to materially modify the United States-Colombia Free Trade Agreement, or USCOFTA, it has thepotential to adversely impact our business by increasing the costs of selling our product into the U.S. market. As such, if the United States withdraws from ornegotiates material modifications to the terms of USCOFTA, such actions could materially adversely affect our sales, financial results and cash flows. The termination or re-negotiation of free trade agreements or other related events could also indirectly have an adverse effect on the Colombianeconomy. Although economic conditions in other emerging market countries and in the United States may differ significantly from economic conditions inColombia, investors’ reactions to developments in other countries may have an adverse effect on the market value of securities of Colombian companies.There can be no assurance that future developments in other emerging market countries and in the United States, over which we have no control, will nothave a material adverse effect on our liquidity. Further, on March 8, 2018, the Trump administration announced that it will implement trade actions against unfairly traded steel and impose a 25%tariff on steel imports from all countries in connection with Section 232 of the Trade Expansion Act of 1962. The tariff is expected to decrease the volume ofsteel imports in the United States, which may have a negative impact on construction projects in the United States and could materially adversely affect oursales, financial results and cash flow. Colombia has experienced and continues to experience internal security issues that have had or could have a negative effect on the Colombian economyand our financial condition. Colombia has experienced and continues to experience internal security issues, primarily due to the activities of guerrilla groups, such as dissidentsfrom the former Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia, or “FARC”) and the National Liberation Army(Ejercito de Liberación Nacional, or “ELN,”) paramilitary groups and drug cartels. In remote regions of the country with minimal governmental presence,these groups have exerted influence over the local population and funded their activities by protecting, and rendering services to, drug traffickers. Eventhough the Colombian government’s policies have reduced guerilla presence and criminal activity, particularly in the form of terrorist attacks, homicides,kidnappings and extortion, such activity persists in Colombia, and possible escalation of such activity and the effects associated with them have had andmay have in the future a negative effect on the Colombian economy and on us, including on our customers, employees, results of operations and financialcondition. The Colombian government commenced peace talks with the FARC in August 2012, and peace negotiations with the ELN began in November2016. The Colombian government and the FARC signed a peace deal on September 26, 2016, which was amended after voters rejected it in the referendumheld on October 2, 2016. The new agreement was signed on November 24, 2016 and was ratified by the Colombian Congress on November 30, 2016 and isbeing implemented after four years of negotiations. Pursuant to the peace agreements negotiated between the FARC and the Colombian government in 2016,the FARC occupies five seats in the Colombian Senate and five seats in the Colombian House of Representatives. The new deal clarifies protection to privateproperty, is expected to increase the government’s presence in rural areas and bans former rebels from running for office in certain newly createdcongressional districts in post-conflict zones. As a result, during the transition process, Colombia may experience an increase in internal security issues, drug-related crime and guerilla and paramilitary activities, which may have a negative impact on the Colombian economy. Our business or financial conditioncould be adversely affected by rapidly changing economic or social conditions, including the Colombian government’s response to implementation of theagreement with FARC and ongoing peace negotiations, if any, which may result in legislation that increases the tax burden of Colombian companies. 28  Despite efforts by the Colombian government, drug-related crime, guerrilla paramilitary activity and criminal bands continue to exist in Colombia,and allegations have surfaced regarding members of the Colombian congress and other government officials having ties to guerilla and paramilitary groups.Although the Colombian government and ELN have been in talks since February 2017 to end a five-decade war, the Colombian government has suspendedthe negotiations after a series of rebel attacks. On January 17, 2019, a car with explosives burst through the gates at a police academy in Bogotá resulting in21 people dead and many injured. The Colombian Defense Minister confirmed that the terrorist attack was perpetrated by the ELN. Any possible escalationin the violence associated with this terrorist attack and/or these activities may have a negative impact on the Colombian economy. In addition, the currentadministration has not honored the peace protocols to be applied in the event of a suspension of peace negotiations entered into by the prior administration,on the grounds that these protocols are only binding to the administration that agreed to them. This situation could result in escalated violence by the ELNand may have a negative impact on the credibility of the Colombian government which could in turn have a negative impact on the Colombian economy. Tensions with neighboring countries, including Venezuela and other Latin American countries may affect the Colombian economy and, consequently, ourresults of operations and financial condition in the future. Diplomatic relations with Venezuela, and neighboring countries, have from time to time been tense and affected by events surrounding theColombian armed forces, particularly on Colombia’s borders with Venezuela. Political tensions in Venezuela have risen in January 2019 as a number ofCountries, including Colombia, have not recognized the legitimacy of Nicolás Maduro as Venezuelan head of state. In addition, on January 25, 2019,President Trump signed an Executive Order amending prior economic sanctions targeting the Maduro government. Moreover, in November 2012, theInternational Court of Justice placed a sizeable area of the Caribbean Sea within Nicaragua’s exclusive economic zone. Until then, Colombia had deemed thisarea as part of its own exclusive economic zone. Any future deterioration in relations with Venezuela and Nicaragua may result in the closing of borders, riskof financial condition. Government policies and actions, and judicial decisions, in Colombia could significantly affect the local economy and, as a result, our results ofoperations and financial condition in the future. Our results of operations and financial condition may be adversely affected by changes in Colombian governmental policies and actions, andjudicial decisions, involving a broad range of matters, including interest rates, exchange rates, exchange controls, inflation rates, taxation, banking andpension fund regulations and other political or economic developments affecting Colombia. The Colombian government has historically exercisedsubstantial influence over the economy, and its policies are likely to continue to have a significant effect on Colombian companies, including oursubsidiaries. The President of Colombia has considerable power to determine governmental policies and actions relating to the economy, and may adoptpolicies that negatively affect our subsidiaries. Future governmental policies and actions, or judicial decisions, could adversely affect our results ofoperations or financial condition. Changes in Colombia’s customs, import and export laws and foreign policy, may have an adverse effect on our financial condition and results ofoperations. Our business depends significantly on Colombia’s customs and foreign exchange laws and regulations, including import and export laws, as well ason fiscal and foreign policies. In the past we have benefited from, and now currently benefit from, certain customs and tax benefits granted by Colombianlaws, such as free trade zones and Plan Vallejo which incentivizes the import of machinery and equipment by providing tax breaks, as well as fromColombian foreign policy, such as free trade agreements with countries like the United States. As a result, our business and results of operations or financialcondition may be adversely affected by changes in government or fiscal policies, foreign policy or customs and foreign exchange laws and regulations. Wecannot predict what policies the Colombian government will adopt and whether those policies would have a negative impact on the Colombian economy oron our business and financial performance in the future. It may be difficult or impossible to enforce judgments of courts of the United States and other jurisdictions against our Colombian subsidiaries or any oftheir directors, officers and controlling persons. Most of our assets are located in Colombia. As such, it may be difficult or impossible for you to effect service of process on, or to enforce judgmentsof United States courts against our Colombian subsidiaries and/or against their directors and officers based on the civil liability provisions of the U.S. federalsecurities laws. 29  Colombian courts will enforce a U.S. judgment predicated on the U.S. securities laws through a procedural system known under Colombian law asexequatur. Colombian courts will enforce a foreign judgment, without reconsideration of the merits, only if the judgment satisfies the requirements set out inArticles 605 through 607 of Law 1564 of 2012, or the Colombian General Code of Procedure (Código General del Proceso), which provides that the foreignjudgment will be enforced if certain conditions are met. New or higher taxes resulting from changes in tax regulations or the interpretation thereof in Colombia could adversely affect our results of operationsand financial condition in the future. New tax laws and regulations, and uncertainties with respect to future tax policies pose risks to us. In recent years, the Colombian Congressapproved different tax reforms imposing additional taxes and enacted modifications to existing taxes related to financial transactions, dividends, income,value added tax (VAT), and taxes on net worth. On December 28, 2018, a tax reform was implemented by means of Law 1943 intended to strengthen themechanisms to prevent tax evasion, reduce corporate taxes, and encourage investment and economic growth and introduced other substantial changes to thethen-existing tax legal framework. As a result, the corporate income tax rate decreased to 33% for fiscal year 2019, 32% for fiscal year 2020, 31% for fiscal year 2021 and 30% for fiscalyear 2022. Law 1943 also includes increased withholding tax rates resulting from payments made to foreign entities to a general rate of 20% (from the current15%), however this general rate does not apply to foreign indebtedness exceeding one year, in which case the applicable income tax withholding remains at15%. Dividends paid out of profits that were subject to corporate income tax are now subject to a withholding tax of 7.5% (from 5%) and dividends paidout of profits that were not subject to corporate income tax are now subject to a withholding tax of 33% for 2019, 32% for 2020, 31% for 2021 and 30% for2022 etc., plus the foregoing 7.5%, which applies to the amount remaining after the 33%, 32%, 31% or 30% withholding is applied, in accordance with theapplicable taxable year. As a result, withholding taxes on dividends paid by our Colombian subsidiaries increased. See “Business- New Colombian TaxReform.” Changes in tax-related laws and regulations, and interpretations thereof, can create additional tax burdens on us and our businesses by increasingtax rates and fees, creating new taxes, limiting tax deductions, and/or eliminating tax-based incentives and non-taxed income. In addition, tax authorities andcompetent courts may interpret tax regulations differently than us, which could result in tax litigation and associated costs and penalties in part due to thenovelty and complexity of new regulation. We are subject to various U.S. export controls and trade and economic sanctions laws and regulations that could impair our ability to compete ininternational markets and subject us to liability if we are not in full compliance with applicable laws. Our business activities are subject to various U.S. export controls and trade and economic sanctions laws and regulations, including, withoutlimitation, the U.S. Commerce Department’s Export Administration Regulations and the U.S. Treasury Department’s Office of Foreign Assets Control’s(“OFAC”) trade and economic sanctions programs (collectively, “Trade Controls”). Such Trade Controls may prohibit or restrict our ability to, directly orindirectly, conduct activities or dealings in or with certain countries that are the subject of comprehensive embargoes (presently, Cuba, Iran, North Korea,Syria, and the Crimea region of Ukraine (collectively, “Sanctioned Countries”)), as well as with individuals or entities that are the target of Trade Controls-related prohibitions and restrictions (collectively, “Sanctioned Parties”). Although we have implemented compliance measures designed to prevent transactions with Sanctioned Countries and Sanctioned Parties, ourfailure to successfully comply with applicable Trade Controls may expose us to negative legal and business consequences, including civil or criminalpenalties, government investigations, and reputational harm. 30  Natural disasters in Colombia could disrupt our business and affect our results of operations and financial condition in the future. Our operations are exposed to natural disasters in Colombia, such as earthquakes, volcanic eruptions, tornadoes, tropical storms and hurricanes.Heavy rains in Colombia, attributable in part to the La Niña weather pattern, have resulted in severe flooding and mudslides. La Niña is a recurring weatherphenomenon, and it may contribute to flooding, mudslides or other natural disasters on an equal or greater scale in the future. In the event of a naturaldisaster, our disaster recovery plans may prove to be ineffective, which could have a material adverse effect on its ability to conduct our businesses. Inaddition, if a significant number of our employees and senior managers were unavailable because of a natural disaster, our ability to conduct our businessescould be compromised. Natural disasters or similar events could also result in substantial volatility in our results of operations for any fiscal quarter or year. Risks Related to Us and Our Securities Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect yourrights through the U.S. Federal courts may be limited. We are a company incorporated under the laws of the Cayman Islands, and substantially all of our assets are located outside the United States. Inaddition, a majority of our directors and officers are nationals or residents of jurisdictions other than the United States and all or substantial portions of theirassets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon our directorsor executive officers, or enforce judgments obtained in the United States courts against our directors or officers. Our corporate affairs are governed by our third amended and restated memorandum and articles of association, the Companies Law (2018 Revision)of the Cayman Islands (as the same may be supplemented or amended from time to time) and the common law of the Cayman Islands. The rights ofshareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under CaymanIslands law are largely governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparativelylimited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are notbinding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law aredifferent from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has adifferent body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judiciallyinterpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholder’s derivative action in a Federalcourt of the United States. We have been advised by our Cayman Islands legal counsel, Maples and Calder, that the courts of the Cayman Islands are unlikely (i) to recognizeor enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or anyState; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the securitieslaws of the United States or any State, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is nostatutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce aforeign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competentforeign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For aforeign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect oftaxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in amanner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multipledamages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are beingbrought elsewhere. There is recent Privy Council authority (which is binding on the Cayman Islands Court) in the context of a reorganization plan approvedby the New York Bankruptcy Court which suggests that due to the universal nature of bankruptcy/insolvency proceedings, foreign money judgmentsobtained in foreign bankruptcy/insolvency proceedings may be enforced without applying the principles outlined above. However, a more recent EnglishSupreme Court authority (which is highly persuasive but not binding on the Cayman Islands Court), has expressly rejected that approach in the context of adefault judgment obtained in an adversary proceeding brought in the New York Bankruptcy Court by the receivers of the bankruptcy debtor against a thirdparty, and which would not have been enforceable upon the application of the traditional common law principles summarized above and held that foreignmoney judgments obtained in bankruptcy/insolvency proceedings should be enforced by applying the principles set out above, and not by the simpleexercise of the Courts’ discretion. Those cases have now been considered by the Cayman Islands Court. The Cayman Islands Court was not asked to considerthe specific question of whether a judgment of a bankruptcy court in an adversary proceeding would be enforceable in the Cayman Islands, but it did endorsethe need for active assistance of overseas bankruptcy proceedings. We understand that the Cayman Islands Court’s decision in that case has been appealedand it remains the case that the law regarding the enforcement of bankruptcy/insolvency related judgments is still in a state of uncertainty. 31  If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements could be impaired, which could adverselyaffect our business. Our financial reporting obligations as a public company place a significant strain on our management, operational and financial resources, andsystems. We may not be able to implement effective internal controls and procedures to detect and prevent errors in our financial reports, file our financialreports on a timely basis in compliance with SEC requirements, or prevent and detect fraud. Our management may not be able to respond adequately tochanging regulatory compliance and reporting requirements. We are both a “smaller reporting company” and an “accelerated filer” as defined under Rule12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and no longer qualify as an “emerging growth company.” Our auditors arerequired to attest to our evaluation of internal controls over financial reporting. If we are not able to adequately implement the requirements of Section 404,we may not be able to assess whether internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences andcould harm investor confidence, the market price of our ordinary shares and our ability to raise additional capital. We identified deficiencies in our internal controls over financial reporting related the completeness, accuracy, existence, valuation and presentationof the balances of income tax related accounts. These deficiencies in internal control over financial reporting could have resulted in a material misstatementof our annual or interim financial statements that would not be prevented or detected on a timely basis. Accordingly, our management determined that thesecontrol deficiencies constituted a material weakness related to the accounting for income taxes. Management intends to implement a remediation plan to address the control deficiency that led to the material weakness. The remediation planincludes implementing specific review procedures designed to enhance our income tax control and strengthening our income tax control with improveddocumentation standards, technical oversight and training. We currently plan to have our enhanced review procedures and documentation standards in placeand operating in the first quarter of 2019. Our main objective is to remediate this material weakness by the end of fiscal year 2019, in order to have enoughopportunities to conclude, through our testing, that the enhanced control is operating effectively. Anti-takeover provisions in our organizational documents and Cayman Islands law may discourage or prevent a change of control, even if an acquisitionwould be beneficial to our shareholders, which could depress the price of our ordinary shares and prevent attempts by our shareholders to replace orremove our current management. Our memorandum and articles of association contain provisions that may discourage unsolicited takeover proposals that shareholders may consider to be intheir best interests. Our board of directors is divided into three classes with staggered, three year terms. Our board of directors has the ability to designate theterms of and issue preferred shares without shareholder approval. We are also subject to certain provisions under Cayman Islands law that could delay orprevent a change of control. Together these provisions may make more difficult the removal of management and may discourage transactions that otherwisecould involve payment of a premium over prevailing market prices for our ordinary shares. See “Description of Share Capital.” 32  We are a “controlled company,” controlled by Energy Holding Corp., whose interest in our business may be different from ours or yours. We are a “controlled company” within the meaning of the NASDAQ Capital Market listing standards. Under these rules, a company of which morethan 50% of the voting power is held by an individual, a group or another company is a “controlled company” and may elect not to comply with certaincorporate governance requirements of the NASDAQ Capital Market, including (i) the requirement that a majority of the board of directors consist ofindependent directors, (ii) the requirement that we have a nominating and corporate governance committee that is composed entirely of independentdirectors with a written charter addressing the committee’s purpose and responsibilities and (iii) the requirement that we have a compensation committee thatis composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. Although we meet thedefinition of a “controlled company,” we have determined at this time not to take advantage of this designation and comply with all the corporategovernance rules applicable to listed companies that are not controlled companies. We may, however, determine to take advantage of these exemptions in thefuture. If we did, you would not have the same protections afforded to stockholders of companies subject to all of the corporate governance requirements ofthe NASDAQ Capital Market. We cannot assure you that we will continue to pay dividends on our ordinary shares, and our indebtedness, future investments or cashflow generationcould limit our ability to continue to pay dividends on our ordinary shares. Prior to August 2016, we had not paid any cash dividends on our ordinary shares. Since such time, we have paid regular quarterly dividends. Wecurrently intend to continue to pay cash or stock dividends on our ordinary shares for at least the short term, subject to our compliance with applicable law,and depending on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions,restrictions in our debt agreements and in any preferred stock, business prospects and other factors that our Board of Directors may deem relevant. However,the payment of any future dividends will be solely at the discretion of our Board of Directors and there can be no assurance that we will continue to paydividends in the future. For more information, see “Dividends” contained in Item 5 below. If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volumecould decline. The trading market for our ordinary shares relies in part on the research and reports that industry or financial analysts publish about us or our business. Wedo not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of ourcompetitors, or publish inaccurate or unfavorable research about our business, the price of our stock could decline. If one or more of these analysts ceasescoverage of us or fail to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume todecline. If a United States person is treated as owning at least 10% of the value or voting power of our shares, such holder may be subject to adverse U.S. federalincome tax consequences. If a United States person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our shares, suchperson may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any). While our parent companyowns one or more U.S. subsidiaries, we, and certain of our non-U.S. subsidiaries, could be treated as controlled foreign corporations. Furthermore, while ourgroup includes one or more U.S. subsidiaries, certain of our non-U.S. subsidiaries could be treated as controlled foreign corporations (regardless of whether ornot we are treated as a controlled foreign corporation). A United States shareholder of a controlled foreign corporation generally is required to report annuallyand include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property bycontrolled foreign corporations, regardless of whether we make any such United States shareholder receives any actual distributions. An individual that is aUnited States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits thatwould be allowed to a United States shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject a United Statesshareholder to significant monetary penalties and may prevent the statute of limitations with respect to such shareholder’s U.S. federal income tax return forthe year for which reporting was due from starting. We cannot provide any assurances that we will assist investors in determining whether any of our non-U.S.subsidiaries are treated as a controlled foreign corporation or whether any investor is treated as a United States shareholder with respect to any of suchcontrolled foreign corporations or furnish to any United States shareholders information that may be necessary to comply with the aforementioned reportingand tax paying obligations. There is substantial uncertainty as to the application of each of the foregoing rules as well as the determination of any relevantcalculations in applying the foregoing rules. United States persons are strongly advised to avoid acquiring, directly, indirectly or constructively, 10% ormore of the value or voting power of our shares. A United States investor should consult its advisors regarding the potential application of these rules to aninvestment in the ordinary shares. 33  Item 1B.Unresolved Staff Comments. Not Applicable. Item 2.Properties. We own and operate a 2.7 million square foot manufacturing complex located in Barranquilla, Colombia. This manufacturing campus houses a glassproduction plant, aluminum plant and window and facade assembly plant. The glass plant has eight lamination machines with independent assembly rooms,ten specialized tempering furnaces and glass molding furnaces, a computer numerical-controlled profile bending machine, as well as a coater to produce lowemissivity glass with high thermal insulation specifications using soft coat technology. The Alutions plant has an effective installed capacity of 2,100 tonsper month and can create a variety of shapes and forms for windows, doors and related products. We also own six natural gas power generation plants with anaggregate capacity of 10 megawatts which supply the electricity requirements of the entire manufacturing complex and are supported by three emergencygenerators. We also own and operate a 123,399 square foot manufacturing and warehousing facility in a 215,908 square foot lot size in Miami-Dade County,Florida, United States. The facility houses manufacturing and assembly equipment, warehouse space, and administrative and sales offices. We believe that our existing properties are adequate for the current operating requirements of our business and that additional space will be availableas needed. Item 3.Legal Proceedings. From time to time, the Company is involved in legal matters arising in the regular course of business. Some disputes are derived directly from ourconstruction projects, related to supply and installation, and even though deemed ordinary, they may involve significant monetary damages. We are alsosubject to other type of litigations arising from employment practices, worker’s compensation, automobile claims and general liability. It is very difficult topredict precisely what the outcome of these litigations might be. However, with the information at out disposition as this time, there are no indications thatsuch claims will result in a material adverse effect on the business, financial condition or results of operations of the Company. Item 4.Mine Safety Disclosures. Not Applicable. 34  PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our ordinary shares are listed on the NASDAQ Capital Market under the symbol TGLS. Effective January 6, 2016, the Company’s shares alsocommenced trading on the Bolsa de Valores de Colombia (“BVC”), the principal stock exchange of Colombia, under the symbol TGLSC. The listing of theCompany’s shares on the BVC is secondary to the primary listing on the NASDAQ Market. No new shares were issued in connection with the admission totrading on the BVC. Comparative Stock Performance The following graph compares the cumulative total shareholder return for Tecnoglass, Inc. Ordinary Shares on a $100 investment for the last five fiscal yearswith the cumulative total return on a $100 investment in the Standard & Poor’s Small Cap 600 Growth Index and the Russell 2000 Index. The graph assumesan investment at the close of trading on December 31, 2013, and also assumes the shareholder opted for share dividends during all periods. Holders As of December 31, 2018, there were 331 holders of record of our ordinary shares. 35  Dividends Prior to August 2016, we had not paid any cash dividends on our ordinary shares. On August 4, 2016, our Board of Directors authorized the paymentof regular quarterly dividends to holders of our ordinary shares at a quarterly rate of $0.125 per share (or $0.50 per share on an annual basis). Our Board ofDirectors subsequently authorized an increase in the dividends to $0.14 per share (or $0.56 per share on an annual basis) beginning in the third quarter of2017 and going forward. The dividends were paid in cash or ordinary shares, at the option of holders of ordinary shares during an election period. The valueof the ordinary shares used to calculate the number of shares issued with respect to that portion of the dividend payable in ordinary shares was the average ofthe closing price of our ordinary shares on the NASDAQ Capital Market during a set period. If no choice was made during the election periods, the dividendwas paid in ordinary shares. We currently intend to continue to pay dividends on our ordinary shares for at least the short term, subject to our compliance with applicable law,and depending on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions,restrictions in our debt agreements and in any preferred stock, business prospects and other factors that our Board of Directors may deem relevant. However,the payment of any future dividends will be solely at the discretion of our Board of Directors and there can be no assurance that we will continue to paydividends in the future. Our bond indenture currently restricts the type of dividend we can make while the bonds are outstanding. See “Description ofIndebtedness” below for further information. The payment of dividends in the future, if any, will therefore also be contingent upon limitations imposed byour outstanding indebtedness. Because we are a holding company, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, whichmay further restrict our ability to pay dividends as a result of the laws of their jurisdictions of organization, agreements of our subsidiaries or covenants underany existing and future outstanding indebtedness we or our subsidiaries incur. The ability of our subsidiaries in Colombia to declare dividends up to the totalamount of their capital is not restricted by current laws, covenants in debt agreements or other agreements. The following table summarizes the dividends paid by the Company: Fiscal 2018: Fourth Quarter $0.14 Third Quarter $0.14 Second Quarter $0.14 First Quarter $0.14 Fiscal 2017: Fourth Quarter $0.14 Third Quarter $0.14 Second Quarter $0.125 First Quarter $0.125 Fiscal 2016: Fourth Quarter $0.125 Third Quarter $0.125 Second Quarter $- First Quarter $- The dividends indicated above were paid to the holder of record on dates close to the end of the above referenced quarter, however, the dividendpayments were made during the quarter immediately after. 36  Purchases of Equity Securities by Issuer and Affiliates No purchases of our equity securities have been made by us or affiliated purchasers within the fourth quarter of the fiscal year ended December 31,2018. Information about our equity compensation plans Information required by Item 5 of Form 10K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of thisAnnual Report on Form 10-K. Item 6.Selected Financial Data. The following Selected Financial Data should be read in conjunction with Management’s Discussion and Analysis of Financial Condition andResults of Operations, included in Item 7 of this Report, and our consolidated financial statements and related notes, included herein by reference. Years ended December 31, 2018(1) 2017 2016 2015 2014 (2) Operating Revenues $370,984 $314,456 $305,016 $242,239 $210,579 Cost of Sales 250,767 215,274 192,369 151,381 139,647 Gross profit 120,217 99,182 112,647 90,858 70,932 Operating Expenses 73,022 64,818 64,799 51,267 41,751 Operating Income 47,195 34,364 47,848 39,591 29,181 Foreign currency gains (losses) (14,461) (3,028) (1,387) 10,059 10,790 Other expenses and losses, net (18,272) (19,818) (7,209) (39,979) (19,970)Income tax provision (5,976) (5,793) (16,072) (20,691) (8,538)Net Income (loss) 8,486 5,725 23,180 (11,020) 11,463 Net Income (loss) attributable to parent 9,031 5,449 23,180 (11,020) 11,463 Basic earnings per share 0.23 0.16 0.71 (0.37) 0.40 Diluted earnings per share 0.22 0.15 0.69 (0.37) 0.39 Current Assets 293,399 261,898 210,736 171,167 138,025 Total Assets 489,774 468,000 394,730 321,411 253,849 Current Liabilities 122,595 121,449 78,386 133,903 110,342 Long Term Liabilities 233,951 224,886 202,779 149,695 91,655 Total Liabilities 356,546 346,335 281,165 283,598 201,997 Total Shareholder’s Equity 133,228 121,665 113,565 37,813 51,852 Dividends per share (3) $0.56 $0.53 $0.25 $- $- (1) Results for fiscal year 2018 reflect the adoption of the new revenue recognition accounting standard ASC 606. Prior periods are reported underthe previous revenue recognition accounting standard ASC 605.(2) Figures here reported for fiscal year 2014 differ from previously reported audited amounts as they have been recast to include the consolidatedresults of ESW, an entity under common control, which was acquired by the Company in December 2016.(3) Dividends are payable in cash or ordinary shares, at the option of the shareholder. 37  Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion of the Company’s financial condition and results of operations should be read in conjunction with the Company’sconsolidated financial statements and notes to those statements included in this Form 10-K. This discussion contains forward-looking statements thatinvolve risks and uncertainties. Please see the section entitled “Forward-Looking Statements and Introduction” in this Form 10-K. Overview We are a vertically-integrated manufacturer, supplier and installer of architectural glass, windows and associated aluminum products for the globalcommercial and residential construction markets. With a focus on innovation, combined with providing highly specified products with the highest qualitystandards at competitive prices, we have developed a leadership position in each of our core markets. In the United States, which is our largest market, wewere ranked as the second largest glass and metal fabricator in 2018 by Glass Magazine. In addition, we believe we are the leading glass transformationcompany in Colombia. Based on our analysis of third party industry sources we had an estimated market share of over 45% of the Colombian market in 2017.Our customers, which include developers, general contractors or installers for hotels, office buildings, shopping centers, airports, universities, hospitals andmulti-family and residential buildings, look to us as a value-added partner based on our product development capabilities, our high quality products and ourunwavering 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 anumber of different applications, including floating facades, curtain walls, windows, doors, handrails, interior and bathroom spatial dividers. We also producealuminum 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 easyaccess to North, Central and South America, the Caribbean and the Pacific. Our products can be found on some of the most distinctive buildings in theseregions including El Dorado Airport (Bogota), 50 United Nations Plaza (New York), Trump Plaza (Panama), Icon Bay (Miami), and Salesforce Tower (SanFrancisco). 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 geographiclocation. Our integrated facilities in Colombia and distribution and services operations in Florida provide us with a significant cost advantage in bothmanufacturing and distribution, and we continue to invest in these operations to expand our operational capabilities. Our lower cost manufacturing footprintallows us to offer competitive prices for our customers, while also providing innovative, high quality and high value-added products, together withconsistent and reliable service. We have historically generated high margin organic growth based on our position as a value-added solutions provider for ourcustomers. We have a strong presence in the Florida market, which represents a substantial portion of our revenue stream and backlog. Our success in Floridahas primarily been achieved through sustained organic growth, with further penetration now taking place into other highly populated areas of the UnitedStates. As part of our strategy to become a fully vertically integrated company, we have supplemented our organic growth with some recent acquisitions thathave allowed us added control over our supply chain. Most recently, in March 2017, we completed the acquisition of GM&P, a consulting and glazinginstallation business that was previously our largest installation customer. In 2016, we completed the acquisition of ESW, which gave us control over thedistribution of products into the United States from our manufacturing facilities in Colombia. These acquisitions allowed for further vertical integration ofour business and will act as a platform for our future expansion in the United States. 38  The continued diversification of the group’s presence and product portfolio is a core component of our strategy. In particular, we are activelyseeking to expand our presence in United States outside of Florida. We also launched a residential windows offering which, we believe, will help us expandour presence in the United States and generate additional organic growth. We believe that the quality of our products, coupled with our ability to pricecompetitively given our structural advantages on cost, will allow us to generate further growth in the future. How We Generate Revenue We are a leading manufacturer of hi-spec architectural glass and windows for the western hemisphere residential and commercial constructionindustries, operating through our direct and indirect subsidiaries. Headquartered in Barranquilla, Colombia, we operate out of a 2.7 million square footvertically-integrated, state-of-the-art manufacturing complex that provides easy access to North, Central and South America, the Caribbean, and the Pacific. Our glass products include tempered glass, laminated glass, thermo-acoustic glass, curved glass, silk-screened glass, and digital print glass as well asmill finished, anodized, painted aluminum profiles and produces rods, tubes, bars and plates. Window production lines are defined depending on the differenttypes of windows: normal, impact resistant, hurricane-proof, safety, soundproof and thermal. We produce fixed body, sliding windows, projecting windows,guillotine windows, sliding doors and swinging doors. ES produces facade products which include: floating facades, automatic doors, bathroom dividers andcommercial display windows. We sell to over 1,000 customers using several sales teams based out of Colombia and the United States to specifically target regional markets inSouth, Central and North America. The United States accounted for 80%, 76% and 62% of our combined revenues in 2018, 2017 and 2016, respectively,while Colombia accounted for approximately 17%, 20% and 32%, and Panama accounted for approximately 1%, 1% and 3% in those years, respectively. We sell our products through our main offices/sales teams based out of Colombia and the United States. The Colombia sales team is our largest salesgroup, which has deep contacts throughout the construction industry. The Colombia sales team markets both our products as well as our installation services.In the United States, we sell out of subsidiaries established in Florida, which have an expanding customer base and provide installation service in addition toour products. Sales forces in Panama are not via subsidiaries but under agreements with sales representatives. In 2017 we established two branches in Boliviaand Italy to expand geographical reach into South America, Europe and the Middle East. We have two types of sales operations: Contract sales, which are thehigh-dollar, customer tailored projects, and standard form sales. Standard form sales reflect low-value installations that are of short duration. We expect to benefit from growth in both of our largest markets, the United States and Colombia. One indicator of the non-residential constructionoutlook, the Architectural Billing Index, has generally pointed towards an improved construction outlook since late 2012. Deutsche Bank published aresearch report estimating that new residential housing starts in the United States will grow at an annual rate of 5% in each of 2019 and 2020. We believe ourUnited States business will grow with this increase in construction spending.​ In Colombia, despite the slow-down in the overall economy, construction spending continues to experience growth, offsetting the impact of theweak commodity price environment. Colombia’s GDP grew 2.7% in as of the third quarter of 2018, with residential and non-residential building constructionoutpacing that growth and expanding 4.1%. According to EMIS research, the Colombian construction industry is expected to grow at a compound annualrate of 9.2% through 2021. 39  As part of our strategies to grow our United States business and further vertically integrate our operations, we acquired ESW and GM&P. ESW hasserved as one of our key importers and distributors in the United States. ESW is also a member of the American Architectural Manufacturers Association, atechnical information center for the architecture industry with some of the highest industry standards. We also consummated a purchase agreement withGiovanni Monti, the owner of 100% of the outstanding shares of GM&P. GM&P is a consulting and glazing contracting company located in Miami, Florida.GM&P has over 15 years of experience in the design and installation of building enclosure systems such as curtain walls. GM&P also has a long-standingrelationship with us, working alongside us on different projects across the United States by providing engineering and installation services. Liquidity As of December 31, 2018 and 2017, we had cash and cash equivalents of approximately $33.0 million and $40.9 million, respectively. During theyear ended December 31, 2018, the main sources of cash were cash available at the beginning of period and cash provided from financing activities, whichgenerated $17.0 million, mostly from short term debt to finance the working capital required to support 18% sales growth. A discussion of our cash flow fromoperations is included below in the sub-section headed “Cash Flow From Operations, Investing and Financing Activities” under the Results of Operationssection of this management discussion and analysis. As of December 31, 2018, the Company had $18.3 million of borrowings available under its bank facilities as most of the outstanding balancesunder such lines were fully repaid with the Senior Notes issued on January, 2017. Capital Resources We transform glass and aluminum into high specification architectural glass and custom-made aluminum profiles which require significantinvestments in state of the art technology. During the years ended December 31, 2018, 2017 and 2016, we made investments primarily in building andconstruction, and machinery and equipment in the amounts of $13.6 million, $8.8 million and $42.5 million, respectively. 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 componentof our manufacturing process, whereby we will acquire an approximate 25% minority ownership interest in Vidrio Andino Holdings S.A.S, a Colombia-basedsubsidiary of Saint-Gobain. The purchase price for our interest in this entity is $34.1 million in cash and land worth $10.9 million near our facility inBarranquilla, which will be contributed on our behalf by our Chief Executive Officer and Chief Operating Officer, José M. Daes and Christian T. Daes with athird party valuation to be conducted. Vidrio Andino’s float glass plant located in the outskirts of Bogota, Colombia, had been one of our main suppliers ofraw glass. We beleive this transaction will solidify our vertical integration strategy by acquiring an interest in the first stage of our production chain, whilesecuring ample glass supply for our expected production needs. Additionally, the joint venture agreement includes plans to build a new plant in Galapa, Colombia that will be located approximately 20 miles fromour primary manufacturing facility, in which we will also have a 25% interest. The new plant will be funded with proceeds the original cash contributionmade by the Company, operating cashflows from the Bogota plant, debt incurred at the joint venture level that will not consolidate into the Company and anadditional contribution by us of approximately $12.5 million to be paid between 2020 and 2021. Under the joint venture agreement, Saint Gobain will retaina majority ownership position and will have control over the operations of both plants and as such, the transaction will be accounted for under the equitymethod. The acquisition will be consummated on or before May 2019, once the original cash and land contributions have been completed and the shares ofVidrio Andino have been contributed. 40  Results of Operations (Amounts in thousands) For the Years ended December 31, 2018 2017 2016 Operating revenue $370,984 $314,456 $305,016 Cost of sales 250,767 215,274 192,369 Gross Profit 120,217 99,182 112,647 Operating expenses 73,022 64,818 64,799 Operating income 47,195 34,364 47,848 Change in fair value of warrant liability - - 776 Change in fair value of earnout share liability - - 4,674 Non-operating income, net 2,915 3,190 4,155 Foreign currency transaction gains (losses) (14,461) (3,028) (1,387)Interest expense (21,187) (19,872) (16,814)Loss on extinguishment of debt - (3,136) - Income before taxes 14,462 11518 39252 Income tax provision 5,976 5,793 16,072 Net income 8,486 5,725 23,180 Loss (income) attributable to non-controlling interest 545 (276) - Net income attributable to parent $9,031 $5,449 $23,180 Comparison of years ended December 31, 2018 and December 31, 2017 Operating Revenues Our operating revenue increased $56.5 million, or 18%, from $314.5 million in the year ended December 31, 2017 to $371.0 million in the yearended December 31, 2018. The increase was mostly driven by executing our strategy to further penetrate the U.S. market, which continues to be key. We aremainly focused on the South Florida region, but we are continuously diversifying into other regions. Sales in the United States market increased $58.0 million, or 24%, from $238.5 million in in the year ended December 31, 2017, to $296.5 million inin the year ended December 31, 2018, and represent 80% and 76% of our consolidated sales during the years ended December 31, 2018 and 2017,respectively. Sales in the Colombian market decreased $1.1 million, or 2%, from $63.5 million in the year ended December 31, 2017, to $62.4 million in the yearended December 31, 2018. Despite an increase during early 2018 after pent up demand from 2017, a slow construction market and sales comprised mainly ofsmaller projects with only few medium-to-large projects being executed led to the moderate decrease. Cost of sales and gross profit margins Cost of sales increased $35.5million, or 16%, from $215.3 million in the year ended December 31, 2017, to $250.8 million for the year endedDecember 31, 2018. This increase was driven primarily by an increase in cost of raw materials of $17.8 million, or 19%, from $93.2 million in the year endedDecember 31, 2017 to $111.1 million in the year ended December 31, 2018, largely proportional with the increase in sales. Additionally, labor cost increased$8.0 million, or 19%, from $42.2 million in the year ended December 31, 2017 to $50.1 million in the year ended December 31, 2018, as a result of increasedoperations and including GM&P’s labor cost for the full year during 2018, whereas 2017 results only include GM&P’s expense since the date of theacquisition in March 2017. 41  As a result, gross profit increased $21.0 million, or 21%, from $99.2 million in the year ended December 31, 2017, to $120.2 million for the yearended December 31, 2018. The increase was the result of a robust fixed costs structure put in place during 2017 over a higher amount of sales. Gross profitmargins, calculated by dividing the gross profit by operating revenues, increased from 31.5% to 32.4% between the years ended December 31, 2017 and2018. Operating Expenses Operating expenses increased $8.2 million, or 13%, from $64.8 million in the year ended December 31, 2017 to $73.0 million in the year endedDecember 31, 2018, improving as a percentage of sales from 20.6% to 19.7%. Selling expense increased $5.6 million, or 17%, from $33.8 million in the yearended December 31, 2017 to $39.4 million in the year ended December 31, 2018. The increase was driven by an increase in shipping expense of $5.5 million,or 42%, from $13.1 million in the year ended December 31, 2017 to $18.6 million in the year ended December 31, 2018 as a result of higher United Statesland transportation costs and higher exports of architectural systems from Colombia into farther regions of United States. Additionally, the increase was alsorelated to the United States aluminum and steel tariff implemented in 2018, which resulted in an expense of $1.5 million related to the importation ofaluminum product manufactured in Colombia (fully offset by an equal amount of revenues related to a pass-through on to clients), as well as an increase insales commissions of $0.9 million, partially offset by a reduction in accounts receivable provisions of $2.8 million, from $3.1 million in the year endedDecember 31, 2017 to $0.4 million in the year ended December 31, 2018. General and Administrative expenses increased $2.6 million, or 8%, from $31.0 million in the year ended December 31, 2017 to $33.6 million in theyear ended December 31, 2018. The increase was related to personnel expenses, which increased $1.7 million, and professional fees for engineeringconsulting and accounting, which increased $0.5 million, or 12%. Additionally, we recorded $0.5 million higher depreciation and amortization expenserelated to the intangible assets acquired through the acquisition of GM&P in March of 2017. These increases were partially offset by a decrease in bankcharges. Interest Expense Interest expense increased $1.3 million, or 7%, from $19.9 million in the year ended December 31, 2017 to $21.2 million in the year endedDecember 31, 2018. Interest expense includes amortization of deferred cost of financing resulting primarily from a $210 million senior note issued during thefirst quarter of 2017, which increased $0.3 million, or 22%, from $1.2 million in the year ended December 31, 2017 to $1.5 million in the year endedDecember 31, 2018 as a result of the debt refinancing. The additional $1.0 million increase in interest expense is related to rising interest rates in the UnitedStates during the year and a nominal increase in our gross debt as of December 31, 2018 relative to December 31, 2017. Non-Operating Income and Foreign Currency Transaction Gains and Losses Non-operating income decreased $0.3 million, or 9%, from $3.2 million in the year ended December 31, 2017 to $2.9 million in the year endedDecember 31, 2018. Non-operating income is primarily comprised of interest income, commissions and recoveries. During the years ended December 31, 2018 and 2017, the Company recorded a foreign currency transaction loss of $14.5 million and $3.0 million,respectively, related to the Company’s Colombian subsidiaries ES and TG, which have the Colombian Peso as functional currency but a substantial portionof their monetary assets and liabilities denominated in US Dollars. Foreign currency transaction losses during the year ended December 31, 2018 wereassociated with a net US Dollar liability position of the Colombian subsidiaries, which coupled with a 9% devaluation of the Colombian Peso during theyear, ended up signifying a higher amount of liabilities in Pesos when compared against the US Dollar. 42  Income Tax Expense Income tax expense increased $0.2 million, or 3%, from $5.8 million in the year ended December 31, 2017 to $6.0 million in the year endedDecember 31, 2018. Despite an increase of $2.9 million, or 26%, in income before tax in the year ended December 31, 2018, income tax expense increasedonly slightly as a result of a reduction of corporate income tax rates in Colombia from 40% in 2017 to 37% in 2018, as well as the effect of the passage of theTax Cuts and Jobs Act in December 2017, which reduced United States federal corporate income tax rate to 21%. Additionally, the Company obtained aclean energy income tax deduction for $2.6 million associated with the installation of solar panels with the capacity to generate approximately fivemegawatts of eco-friendly energy on-site at our manufacturing facilities, of which, however, only a small portion is reflected in the income tax expense forfiscal year 2018 in accordance with US GAAP, and has been capitalized on our balance sheet to be amortized over the next ten years. Comparison of years ended December 31, 2017 and December 31, 2016 Revenue Our operating revenue increased $9.4 million, or 3%, from $305.0 million in the year ended December 31, 2017 to $314.5 million in the year endedDecember 31, 2016. The increase was mostly driven by the GM&P acquisition and successfully executing our strategy to continue increasing ourparticipation in the U.S. market. Sales in the U.S. market increased $48.5 million, or 26%, from $190.0 million in the year ended December 31, 2017 to$238.5 million in the year ended December 31, 2016. Our sales in the United States market continue to be key, primarily in the South Florida region but we are continually diversifying into other regionsin the United States. Our increase in sales, particularly into the United States market, was partially a result of our acquisition of GM&P, which was acquiredand consolidated with our results of operations on March 1, 2017. The acquisition of GM&P is in line with our strategy to strengthen our presence in U.Smarkets. Sales in the Colombian market decreased $35.2 million, or 36%, from $98.8 million in the year ended December 31, 2017, to $63.5 million in theyear ended December 31,2016. This decrease was partly due to overall market conditions and to the postponements of construction as Colombia underwent astructural tax reform, which was preceded by a period of high inflation and high interest rates. Sales in the Panama market decreased $5.2 million, or 55%,from $9.4 million in the year ended December 31, 2017, to $4.3 million in the year ended December 31,2016. Gross Profit Gross profit decreased $13.5 million, or 12%, from $112.6 million in the year ended December 31, 2017, to $99.2 million in the year endedDecember 31, 2016. This decrease was due primarily to a more robust fixed cost structure which was put in place based on a higher amount of anticipatedsales and by costs associated with the acquisition of GM&P, related to the integration of our installation and design of our products. Gross profit marginsdecreased from 37% to 32%, for the years ended December 31, 2017 and 2016, respectively. Expenses Operating expenses remained stable at $64.8 million for the year ended December 31, 2017, as compared to December 31, 2016. Selling expensedecreased $3.2 million, or 9%, from $37.0 million in the year ended December 31, 2016, to $33.8 million in the year ended December 31, 2017. The decreasewas mainly caused by a reduction in shipping expense, which decreased $2.5 million, and offset an increase in sales of 3%. The decrease was also the result ofadded efficiencies in our logistical process. This was partially offset by higher personnel expense associated with the GM&P acquisition and by a higher costof packaging. General and Administrative expenses increased $3.2 million, or 11%, from $27.8 million in the year ended December 31, 2017, to $31.0 million inthe year ended December 31,2016. The increase was largely related to an increase in personnel expense of $2.7 million, or 34%, as we prepared for higherthan realized sales, and $1.1 million personnel expense associated with GM&P. Depreciation and amortization expense increased $2.6 million, or 146%, from$1.8 million in the year ended December 31, 2016, to $4.4 million in the year ended December 31, 2017. This increase was related to the intangible assetsacquired through the acquisition of GM&P. These increases were partially offset by a decrease in bank charges and professional fees. 43  Non-Operating Income Non-operating income decreased $1.0 million, or 23%, from $4.2 million in the year ended December 31, 2017, to $3.2 million in the year endedDecember 31, 2016. This decrease was primarily a result of a decrease in interest income and scrap recoveries. Foreign Currency Transaction Gains and Losses We recorded foreign currency transaction loss of $3.0 million for the year ended December 31, 2017, compared to a foreign currency transaction lossof $1.4 million for the year ended December 31, 2016. These losses were related to our Colombian subsidiaries ES and TG, which have the Colombian pesoas functional currency but a substantial portion of their monetary assets and liabilities denominated in U.S. dollars. Interest Expense Interest expense increased $3.1 million, or 18%, from $16.8 million in the year ended December 31, 2017 to $19.9 million in the year endedDecember 31, 2016. This increase was associated with an increase in the level of debt we incurred to finance capital expenditures in 2016 and one month ofdouble interest expense between the issuance of the bond discussed below and repayment of previous debt (as we sought favorable exchange rates to repayour local currency debt). Income Tax Expense Income tax expense decreased $10.3 million, from $16.1 million in the year ended December 31, 2017, to $5.8 million in the year ended December31, 2016. This decrease was largely the result of lower taxable income. We also incurred a tax expense of $2.8 million in the year ended December 31, 2017for a withholding tax which, under Colombian regulation, is assessed when local companies make certain foreign payments, including interests on foreigndebt. Cash Flow From Operations, Investing and Financing Activities During the year ended December 31, 2018, 2017 and 2016, $5.0 million were used, $14.2 million generated, and $3.1 million used by operatingactivities, respectively. The use of cash in operating activities during 2018 is related to the working capital required to support the 18% sales growth duringthe year. The main use of cash from operating activities in 2018 was inventory purchases, which used $28.1 million as our inventories grew in relation to theshort-term expected growth. Inventory turnover increased by 12 days as of December 31, 2018 relative to December 31, 2017, primarily due to anaccumulation of work in progress as we continue to grow our vertically integrated operation. While it is expected that we will have working capital needs aswe undergo continued growth, management continues to seek ways of optimizing the collection of our receivables and our inventory procurement. Thegrowth in sales during 2018 also caused trade accounts receivable to result in a negative cash flow of $23.7 million albeit with a lower days sales outstandingratio. This compares with trade accounts receivable providing a $2.5 million positive cash flow in 2017 in contrast to a $26.0 million negative cash flow in2016 as a result of a more tapered growth during 2017 versus the preceding year. Despite the cash generated by accounts receivables, the balance of tradeaccount receivable increased as of December 31, 2017 relative to December 31 2016 in part due to $41.8 million receivables acquired from GM&P in March2017, which amounts do not impact cash flows. It is expected that given the industry related longer cash cycle, during periods of accelerated growth,accounts receivable may remain a significant use of operating cashflow. 44  On a similar note, also related to the increase in sales and procurement of inventories, trade accounts payable were the primary source of operatingcash flows during 2018, generating $34.6 million of positive cash flow. Trade accounts payable generated a positive cash flow of $13.1 million during theyear ended December 31, 2017, compared with a negative cash flow of $1.0 million during the year ended December 31, 2016. The accrual of interests on the$210 million unsecured senior notes as of December 31, 2017 which are payable semi-annually in January and July generated a $3.8 million negative cashflow during the year ended December 31, 2017. During 2017, we had a negative cash flow of $8.5 million for taxes payable. We used $18.7 million, $14.9 million and $24.7 million in investing activities during the years ended December 31, 2018, 2017 and 2016,respectively. Capital expenditures, including assets acquired with credit or debt (which are not reflected in cash flows from investing activities) have beenrelatively low during each of 2018 and 2017, amounting to $13.6 million and $8.8 million, respectively, compared with $42.5 million in 2016. A significantuse of cash in investing activities was related to the acquisition of GM&P, for which $6.0 million was paid during each 2018 and 2017, with the remainder ofthe purchase price being settled in ordinary shares of the Company and a note payable due in 2022 for $8.5 million. The main source of cash has been cash provided by financing activities, generating $17.0 million, $14.9 million and $31.5 million during the yearsended December 31, 2018, 2107 and 2016, respectively. During 2018 cashflows from financing activities was primarily comprised $19.7 million netproceeds of debt as the Company used its available lines of credit to finance the working capital required for increasing operations as described above in thediscussion of cashflow from operating activities. Off-Balance Sheet Arrangements We did not have any material off-balance sheet arrangements as of December 31, 2018. Contractual Obligations Future contractual obligations represent an impact to future cash flows as shown in the table as of December 31, 2018: Payments Due by Period (In thousands) Contractual Obligations TOTAL Less than1 year 1-3 years 3-5 years More than5 years Long Term Debt Obligations $246,950 $21,476 $4,679 $214,720 $6,075 Minimum lease payments 380 130 179 71 - Interest Obligations 56,616 18,420 35,592 2,164 440 Raw Material Purchase Obligations 31,264 4,500 9,000 9,000 8,764 Total $335,210 $44,526 $49,450 $225,955 $15,279 Future interest obligations are estimated assuming constant reference rates for obligations with variable interest rates in addition to stable rates relatedto fixed interest debt. The average interest rate is approximately 7.65% per annum for long term debt obligations respectively, and varies up or down inaccordance with Central Bank rates. 45  Critical Accounting Policies The preparation of financial statements in conformity with U.S. GAAP requires management to make significant estimates and assumptions that affectthe assets, liabilities, revenues and expenses, and other related amounts during the periods covered by the financial statements. Management routinely makesjudgments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the future resolutionof the uncertainties increases, these judgments become more subjective and complex. We have identified the following accounting policies as the mostimportant to the presentation and disclosure of our financial condition and results of operations. Revenue Recognition Our principal sources of revenue are derived from product sales, and supply and installation contracts. We identified one single performanceobligation for both forms of sales. Revenue is recognized when control is transferred to our customers. For product sales, the performance obligations aresatisfied at a point in time and control is deemed to be transferred upon delivery. For supply and installation contracts, the performance obligations aresatisfied over time and control is deemed to be transferred when the contract is accepted by our customers. Revenues from supply and installation contractsare recognized using the cost-to-cost method, measured by the percentage of costs incurred to date to total estimated costs for each contract. Contractmodifications routinely occur to account for changes in contract specifications or requirements. In most cases, contract modifications are for goods or servicesthat are not distinct and, therefore, are accounted for as part of the existing contract. Transaction price estimates include additional consideration forsubmitted contract modifications or claims when the Company believes it has an enforceable right to the modification or claim, the amount can be reliablyestimated and its realization is reasonably assured. Amounts representing modifications accounted for as part of the existing contract are included in thetransaction price and recognized as an adjustment to sales on a cumulative catch-up basis. Related party transactions The Company has related party transactions such as sales, purchases, leases, guarantees, and other payments done during the ordinary course ofbusiness and at arm´s length. We perform a related party analysis to identify transactions to be disclosed on a quarterly basis, and depending on thosetransactions, we aggregate the information by party so the relationship with the Company is properly understood. Foreign currency transactions The functional currency of most of the Company’s foreign subsidiaries and branches is the applicable local currency. Assets and liabilities aretranslated into U.S. dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the averageexchange rates during the period. The resulting translation adjustments are recorded as a component of accumulated other comprehensive income withinshareholders’ equity. The Company also recognizes gains and losses associated with transactions that are denominated in foreign currencies within non-operating income in the Company’s consolidated statement of operations. Income taxes The Company is subject to income taxes in some jurisdictions. Significant judgment is required when determining the worldwide provision forincome taxes. The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach,deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Theprovision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes resultfrom differences between the financial and tax basis of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax laws whenchanges are enacted. For each tax jurisdiction in which the Company operates, deferred tax assets and liabilities are offset and are presented as a singlenoncurrent amount within the consolidated balance sheets. 46  There are many transactions and calculations for which the ultimate tax determination is uncertain. The Company recognizes liabilities for anticipatedtax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts thatwere initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination ismade. The Company recognizes the financial statement effects of uncertain income tax positions when it is more likely than not, based on the technicalmerits, that the position will be sustained upon examination. The Company accrues for other tax contingencies when it is probable that a liability to a taxingauthority has been incurred and the amount of the contingency can be reasonably estimated. Interest accrued related to unrecognized tax and income taxrelated penalties are included in the provision for income taxes. The uncertain income taxes positions are recorded in “Taxes payable” in the consolidatedbalance sheets. Business combinations We allocate the total purchase price of the acquired tangible and intangible assets acquired and liabilities assumed based on their estimated fair valuesas of the business combination date, with the excess purchase price recorded as goodwill. The purchase price allocation process required us to use significantestimates and assumptions, including fair value estimates, as of the business combination date. Although we believe the assumptions and estimates we havemade are reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired company, inpart based on valuation models that incorporate projections of expected future cash flows and operating plans and are inherently uncertain. Valuations areperformed by management or third party valuation specialists under management’s supervision. In determining the fair value of assets acquired and liabilitiesassumed in business combinations, as appropriate, we may use one of the following recognized valuation methods: the income approach (including the costsaving method and the discounted cash flows from relief from royalty), the market approach and/or the replacement cost approach. Examples of significant estimates used to value certain intangible assets acquired include but are not limited to: ●sales volume, pricing and future cash flows of the business overall ●future expected cash flows from customer relationships, and other identifiable intangible assets, including future price levels, rates of increase in revenueand appropriate attrition rate ●the acquired company’s brand and competitive position, royalty rate, as well as assumptions about the period of time the acquired brand will continue tobenefit to the combined company’s product portfolio ●cost of capital, risk-adjusted discount rates and income tax rates However, different assumptions regarding projected performance and other factors associated with the acquired assets may affect the amount recordedunder each type of assets and liabilities, mainly between property, plant and equipment, intangibles assets, goodwill and deferred income tax liabilities andsubsequent assessment could result in future impairment charges. The purchase price allocation process also entails us to refine these estimates over ameasurement period not to exceed one year to reflect new information obtained surrounding facts and circumstances existing at acquisition date. Acquisitions of entities under common control are recorded retroactively starting from the first date of common control. Instead of using fair value, theCompany consolidates the financial statements of the entity acquired using the existing carrying values. 47  Dividend payments We account for dividends declared as a liability under ASC 480, Distinguishing Liabilities from Equity, since our shareholders have the option toelect cash or stock. When the dividend is declared, we record the transaction as a reduction to retained earnings and an increase to dividends payable. Wethen reclassify stock dividends from dividends payable to additional paid-in capital when the shareholder elects a stock dividend instead of cash. Thedividend payable is not subject to remeasurement at each balance sheet date since the dividend is a fixed monetary amount known at inception and thus nochange in fair value adjustment is necessary. Long Lived Assets The Company periodically reviews the carrying values of its long lived assets when events or changes in circumstances would indicate that it is morelikely than not that their carrying values may exceed their realizable values, and record impairment charges when considered necessary. When circumstances indicate that an impairment may have occurred, the Company tests such assets for recoverability by comparing the estimatedundiscounted future cash flows expected to result from the use of such assets and their eventual disposition to their carrying amounts. If the undiscountedfuture cash flows are less than the carrying amount of the asset, an impairment loss, measured as the excess of the carrying value of the asset over its estimatedfair value, is recognized. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values andthird-party independent appraisals, as considered necessary. Goodwill We review goodwill for impairment each year on December 31st or more frequently when events or significant changes in circumstances indicate thatthe carrying value may not be recoverable. Under ASC 350-20-35-4 through 35-8A, the goodwill impairment test requires a comparison of the fair value ofthe reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit is greater than zero and its fair value exceeds itscarrying amount, goodwill of the reporting unit is considered not impaired. The Company has only one reporting unit and as such the impairment analysiswas done by comparing the Company’s market capitalization with its book value of equity. As of December 31, 2018, the Company’s market capitalizationsubstantially exceeded its book value of equity and as such no impairment of goodwill was indicated. See Note 9- Goodwill and Intangible Assets foradditional information. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to ongoing market risk related to changes in interest rates and foreign currency exchange rates. As of December 31, 2018, a rise in interest rates could negatively affect the cost of financing for a portion of our debt with variable interest rates. Ifinterest rates were to increase over the next 12 months by 200 basis points, net earnings would decrease by approximately $0.7 million. Conversely, ifinterest rates were to decrease over the next 12 months by 200 basis points, net earnings would be increase by approximately $0.7 million. As of December31, 2017, if interest rates were to increase over the following 12 months by 200 basis points, net earnings would decrease by approximately $0.3 million.Conversely, if interest rates were to decrease over the following 12 months by 200 basis points, net earnings would be increase by approximately $0.3million. We currently do not use derivative financial instruments to manage interest rate risk. We are also subject to market risk due to changes in the value of foreign currencies in relation to our reporting currency, the U.S. dollar. Two of oursubsidiaries with significant operations are based in Colombia, and primarily transact business in local currency. A significant portion of the revenues andcosts of these subsidiaries are generally denominated in Colombian pesos, thereby mitigating some of the risk associated with changes in foreign exchangerates. As of December 31, 2018, a 1% devaluation of the Colombian Peso would result in our revenues decreasing by $0.6 million and our expensesdecreasing by approximately $1.2 million, resulting in a $0.6 million increase to net earnings. A strengthening of the Colombian Peso by 1% would increaseour revenues by $0.6 million and expenses by $1.2 million resulting in $0.6 lower earnings. As of December 31, 2017, a 1% devaluation of the ColombianPeso would result in our revenues decreasing by $0.6 million and our expenses decreasing by approximately $1.1 million, resulting in a $0.5 million increaseto net earnings. A strengthening of the Colombian Peso by 1% would increase our revenues by $0.6 million and expenses by $1.1 million resulting in $0.5lower earnings. We currently do not use derivative financial instruments to manage foreign currency exchange rate risk. 48  Similarly, a significant portion of the monetary assets and liabilities of these subsidiaries are generally denominated in US Dollars, while theirfunctional currency is the Colombian peso, thereby resulting in gains or losses from remeasurement of assets and liabilities using end of period spot exchangerate. These subsidiaries have both monetary assets and monetary liabilities denominated in US Dollars, thereby mitigating some of the risk associated withchanges in foreign exchange rate. However, the Colombian subsidiaries’ US Dollar denominated monetary liabilities exceed their monetary assets by $146.9million, such that a 1% devaluation of the Colombian peso will result in a loss of $1.5 million recorded in the Company’s Consolidated Statement ofOperations as of December 31, 2018. As of December 31, 2017, the Colombian subsidiaries’ US Dollar denominated monetary liabilities exceed theirmonetary assets by $149.5 million, such that a 1% devaluation of the Colombian peso will result in a loss of $1.5 million recorded in the Company’sConsolidated Statement of Operations. Additionally, the results of the foreign subsidiaries have to be translated into US Dollar, our reporting currency, in the Company’s consolidatedfinancial statements. The currency translation of the financial statements using different exchange rates, as appropriate, for different parts of the financialstatements generates a translation adjustment, which is recorded within other comprehensive income on the Company’s Consolidated Statement ofComprehensive Income and Consolidated Balance Sheet. Item 8. Financial Statements and Supplementary Data. This information appears following Item 15 of this Report and is included herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. None. Item 9A. 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 andwith the participation of our management, including our principal executive officer and principal financial officer, of Tecnoglass, Inc.´s design and operatingeffectiveness of the internal controls over financial reporting as of the end of the period covered by this Annual Report. Based on this evaluation, ourprincipal executive officer and principal financial officer concluded that, due to the material weakness in our internal control over financial reportingdescribed below, our disclosure controls and procedures 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 December 31, 2018. Notwithstanding the material weakness in our internal control over financial reporting as of December 31, 2018described below, we believe the consolidated financial statements are fairly stated in all material respects in accordance with generally accepted accountingprinciples in the United States of America for each of the periods presented herein. 49  Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rules13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. A company’s internal control over financial reporting includes policies and procedures that: (i) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (ii) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the UnitedStates, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of thecompany, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’sassets that could have a material effect on the financial statements. Our management, including the participation of our principal executive officer and principal financial officer, conducted an evaluation of theeffectiveness of our internal control over financial reporting, as of December 31, 2018, based on criteria set forth in the “Internal Control - IntegratedFramework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)”. Based on this evaluation, our management concluded that, due to the material weakness described below, our internal control over financialreporting as of December 31, 2018, was not effective. A “material weakness” is a deficiency or combination of deficiencies, in internal control over financial reporting, such that there is a reasonablepossibility that a material misstatement of the company´s annual or interim financial statements will not be prevented or detected on a timely basis. We did not design and maintain effective controls over the completeness, accuracy, existence, valuation and presentation of the balances of theincome tax related accounts. Specifically, the Company’s monitoring and control activities related to i) the unrealized foreign exchange amount, ii) the useof the applicable tax rates and iii) the application of the revenue recognition methodology for tax purposes in the United States, were not effective. As a resultof this material weakness, immaterial adjustments to the deferred income taxes and income tax provision as of and for the year ended December 31, 2018,were identified. Additionally, this material weakness could result in misstatements of the aforementioned accounts and disclosures that would result in amaterial misstatement of the consolidated financial statements that would not be prevented or detected. PricewaterhouseCoopers Ltda. has independently assessed the effectiveness of our internal control over financial reporting and its report is includedbelow. Management’s Remediation Plan We identified and disclosed a material weakness in the accounting for income taxes as of June 30, 2018 and had started to design and implementcertain remediating controls gradually. We intend to continue our remediation plan to address the material weakness. The remediation plan includes thefollowing: ●Strengthening the existing internal controls related to estimating and accounting for deferred income taxes and determining the effective tax rate;●Implementing specific review procedures designed to enhance our income tax monitoring control; and ●Strengthening our current income tax control activities with improved documentation standards, technical oversight and training. We currently plan to have our enhanced review procedures and documentation standards in place and operating in the first quarter of 2019. Our mainobjective is to remediate this material weakness by the end of fiscal year 2019, in order to have enough opportunities to conclude, through our testing, thatthe enhanced monitoring and control activities are operating effectively as of year-end. 50  Changes in Internal Control Over Financial Reporting As discussed in the section “Management’s Report on Internal Control over Financial Reporting”, there were changes in our internal control overfinancial reporting during the year 2018. Item 9B. Other Information. None. PART III Item 10. Directors, Executive Officers and Corporate Governance. Directors and Executive Officers Our current directors and executive officers are as follows: Name Age PositionJosé M. Daes 59 Chief Executive Officer and DirectorChristian T. Daes 55 Chief Operating Officer and DirectorSantiago Giraldo 43 Chief Financial OfficerA. Lorne Weil 73 Non-Executive Chairman of the BoardSamuel R. Azout 59 DirectorLuis Fernando Castro Vergara 52 DirectorMartha (Stormy) L. Byorum 70 DirectorJulio A. Torres 52 Director José M. Daes has served as our chief executive officer and a director since December 2013. Mr. Daes has over 30 years’ experience starting and operatingvarious businesses in Colombia and the United States. Mr. Daes has served as chief executive officer of C.I. Engeria Solar S.A. E.S. Windows (“ES”) since itsinception in 1984, responsible for all aspects of ES’s operations. Mr. Daes also co-founded Tecnoglass S.A.S. (“TG”) in 1994. Mr. Daes began his career intextiles, importing textiles from Japan to Colombia and later owned and operated an upscale clothing store with multiple locations in Miami. Mr. Daes is theolder brother of Christian T. Daes, our chief operating officer and a director. We believe Mr. Daes is well-qualified to serve as a member of our board of directors due to his operational experience with ES and TG, our operatingsubsidiaries, and his knowledge of the industry within which they operate. Christian T. Daes has served as our chief operating officer and a director since December 2013. Mr. Daes has served as the chief executive officer of TG sinceits inception in 1994, responsible for all aspects of TG’s operations. Mr. Daes’s philanthropic activities include founding the Tecnoglass-ES WindowsFoundation, which promotes local development, health and social programs in Barranquilla, Colombia. Mr. Daes is the younger brother of José M. Daes, ourchief executive officer and a director. We believe Mr. Daes is well-qualified to serve as a member of our board of directors due to his operational experience with ES and TG and his knowledge ofthe industry within which they operate. Santiago Giraldo served as our deputy chief financial officer from February 2016 until August 2017 and has served as our chief financial officer since suchtime. From February 2013 to February 2016, Mr. Giraldo was the Chief Financial Officer and Business Development and Strategy Head of Oleoducto CentralS.A., the owner and operator of the Ocensa pipeline in Colombia (subsidiary of the Ecopetrol Group, the National Oil Company). From October 2009 toFebruary 2013, Mr. Giraldo was Vice President of Oil & Gas Corporate Banking at Citibank. Prior to this, Mr. Giraldo was with JPMorgan Chase where hemost recently held the position of Vice President of Corporate Banking for diversified industries. 51  A. Lorne Weil has served as a member of our board of directors and non-executive chairman of the board since our inception. Mr. Weil serves as ExecutiveChairman of Inspired Entertainment, Inc., a position he has held since December 2016. Previously, Mr. Weil served as Chairman and Chief Executive Officerof Inspired’s predecessor, Hydra Industries Acquisition Corp., from October 2014 to December 2016. Since September 2017, Mr. Weil has also served asExecutive Chairman of Leisure Acquisition Corp., a blank check company seeking to consummate an initial business combination. He has also served as aprincipal of Hydra Management, an investment vehicle formed by Mr. Weil, since September 2014. Mr. Weil has also served as a director of Sportech Plc, oneof the largest suppliers and operators of pools/tote (often also referred to as pari-mutuel) betting in the world, since October 2010. From October 1991 toNovember 2013, Mr. Weil served as chairman of the board of Scientific Games Corporation, a supplier of technology-based products, systems and services togaming markets worldwide, and served as its chief executive officer from April 1992 until November 2013. Mr. Weil also served as president of ScientificGames from August 1997 to June 2005. From 1979 to November 1992, Mr. Weil was president of Lorne Weil, Inc., a firm providing strategic planning andcorporate development services to high technology industries. Previously, Mr. Weil was vice president of corporate development at General InstrumentCorporation, working with wagering and cable systems. We believe Mr. Weil is well-qualified to serve as a member of our board of directors due to his extensive business experience in strategic planning andcorporate development, his contacts he has fostered throughout his career, as well as his operational experience. Samuel R. Azout has served on our board of directors since December 2013 and on the board of TG since February 2009. Since March 2013, Mr. Azout hasserved as an investment manager for Abacus Real Estate. From January 2012 to March 2013, Mr. Azout served as the chief executive officer of the NationalAgency for Overcoming Extreme Poverty in Colombia, an organization formed by the government of Colombia to assist families in poverty. From September2010 to January 2012, Mr. Azout was the senior presidential advisor for Social Prosperity, employed by the administration of the President of Colombia. Priorto this, Mr. Azout served as chief executive officer of Carulla Vivero S.A., the second largest retailer in Colombia, for 10 years, until he led its sale to GrupoExito in 2006. We believe Mr. Azout is well-qualified to serve as a member of our board of directors due to his contacts and business relationships in Colombia. Luis Fernando Castro Vergara has served on our board of directors since November 2018. Since 2017, Mr. Castro Vergara has been serving as a fundmanager in the agroindustry sector and overseeing his investments in the construction, infrastructure and agroindustry sectors. Mr. Castro Vergara served asthe Chief Executive Officer of Banco de Comercio Exterior de Colombia S.A., Colombia’s development bank, from 2013 to 2017. From 2007 to 2008 and2012 to 2013, Mr. Castro Vergara was the General Manager of Agrodex International SAS, an import and marketing food company. From 2008 to 2012, hewas the Regional Development Agency President of the Barranquilla Chamber of Commerce. Previously, he was General Manager of Provyser S.A., acommercialization and logistics services company in the food industry. He is on the board of directors of Unimed Pharmaceuticals Limited, where he alsoserves as member of the Audit Committee, and of Colombian the Colombian companies Accenorte SAS and Devimed SAS. Mr. Castro Vergara received a B.S.from Fordham University, a B.S. from Columbia University and a M.B.A. from the Universidad de los Andes Bogota in Colombia. He has complementaryeducation in economic development from Harvard University, strategy and leadership from Pennsylvania University and management from NorthwesternUniversity. We believe Mr. Castro Vergara is well-qualified to serve as a member of our board of directors due to his contacts and business relationships. Martha (Stormy) L. Byorum has served as a member of our board of directors since November 2011. Ms. Byorum is founder and chief executive officer ofCori Investment Advisors, LLC (Cori Capital), a financial services entity that was most recently (January 2005 through August 2013) a division of StephensInc., a private investment banking firm founded in 1933. Ms. Byorum was also an executive vice president of Stephens Inc. from January 2005 until August2013. From March 2003 to December 2004, Ms. Byorum served as chief executive officer of Cori Investment Advisors, LLC, which was spun off from VB&Pin 2003. Ms. Byorum co-founded VB&P in 1996 and served as a Partner until February 2003. Prior to co-founding VB&P in 1996, Ms. Byorum had a 24-yearcareer at Citibank, where, among other things, she served as chief of staff and chief financial officer for Citibank’s Latin American Banking Group from 1986to 1990, overseeing $15 billion of loans and coordinating activities in 22 countries. She was later appointed the head of Citibank’s U.S. Corporate BankingBusiness and a member of the bank’s Operating Committee and a Customer Group Executive with global responsibilities. 52  Ms. Byorum is a Life Trustee of Amherst College and a chairman of the finance committee of the board of directors of Northwest Natural Gas, a largedistributor of natural gas services in the Pacific Northwest. She also serves on the board of directors of JELD-WEN Holding, Inc., a vertically integrated globalmanufacturer and distributor of windows and doors, and Opes Acquisition Corp., a blank check company seeking to consummate an initial businesscombination. We believe Ms. Byorum is well-qualified to serve as a member of the board of directors due to her operational experience with Cori Capital Advisors, VB&Pand Citibank and her financial background, which includes having served on the audit committees of four publicly-traded companies. Julio A. Torres has served on our board of directors since October 2011. He previously served as our co-chief executive officer from October 2011 throughJanuary 2013. Since March 2013, Mr. Torres has served as the managing partner at Multiple Equilibria Capital, a financial advisory firm. From August 2015to March 2018, Mr. Torres served as Chief Executive Officer and a member of the board of directors of Andina Acquisition Corp. II, a blank check companythat consummated an initial business combination with Lazy Days’ R.V. Center, Inc. From March 2008 to February 2013, Mr. Torres served as managingdirector of Nexus Capital Partners, a private equity firm. From April 2006 to February 2008, Mr. Torres served with the Colombian Ministry of Finance actingas director general of public credit and the treasury. From June 2002 to April 2006, Mr. Torres served as managing director of Diligo Advisory Group, aninvestment banking firm. From September 1994 to June 2002, Mr. Torres served as vice president with JPMorgan Chase Bank. We believe Mr. Torres is well-qualified to serve as a member of our board of directors due to his operational experience with Nexus Capital Partners, his workwith the Colombian government and his extensive contacts he has fostered while working at Nexus Capital Partners, JPMorgan Chase Bank and in theColombian government. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires our officers, directors and persons who own more than ten percent of a registered class ofour equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and ten percentshareholders are required by regulation to furnish us with copies of all Section 16(a) reports they file. Based solely on a review of such reports received by usand written representations from certain reporting persons that no Form 5s were required for those persons, we believe that, during the fiscal year endedDecember 31, 2018, all reports required to be filed by our officers, directors and persons who own more than ten percent of a registered class of our equitysecurities were filed on a timely basis. Code of Conduct In March 2012, we adopted a code of ethics that applies to all of our executive officers, directors and employees setting forth the business and ethicalprinciples that govern all aspects of our business. This Code of Ethics was subsequently updated and transformed into a Code of Conduct, based on the sameprinciples but with additional requirements of the expected behavior of our stakeholders. The Code of Conduct is available athttp://investors.tecnoglass.com/corporate-governance.cfm. We will also provide, without charge, upon request, copies of our Code of Ethics. Requests forcopies of our Code of Ethics should be sent in writing to Tecnoglass Inc., Avenida Circunvalar a 100 mts de la Via 40, Barrio Las Flores, Barranquilla,Colombia, Attn: Corporate Secretary. 53  Corporate Governance As part of our constant commitment to improve our corporate governance and entity level controls, in August and December 2017 we made certainadjustments to our guidelines, functions and corporate bodies. As a result, we established Corporate Governance Guidelines which contain Board specificfunctions, Committee Charters, Officer’s responsibilities and authority delegations, our sustainability policy and ethics and compliance hotline. TheCorporate Governance Guidelines are available at http://investors.tecnoglass.com/corporate-governance.cfm. Audit Committee We have a standing audit committee of the board of directors, which consists of Martha L. Byorum, Samuel R. Azout and Julio Torres, with MarthaL. Byorum serving as chairman. Each of the members of the audit committee is independent under the applicable NASDAQ Capital Market listing standards. The audit committee has a written charter, a copy of which is included in our compendium of Corporate Governance Guidelines. The purpose of theaudit committee is to assist the Board in monitoring the integrity of the Company’s financial statements, to appoint, retain, set compensation of, andsupervise our independent accountants, review the results and scope of the audit and other accounting related services and review our accounting practicesand systems of internal accounting and disclosure controls. The audit committee’s duties, which are specified in the audit committee charter, include, but arenot limited to: ●reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the boardwhether the audited financial statements should be included in our Form 10-K, and 10-Qs; ●discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with thepreparation of our financial statements; ●discussing with management major risk assessment and risk management policies; ●monitoring the independence of the independent auditor; ●verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible forreviewing the audit as required by law; ●reviewing and approving all related-party transactions; ●inquiring and discussing with management our compliance with applicable laws and regulations; ●pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of theservices to be performed; ●appointing or replacing the independent auditor; ●determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between managementand the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; and ●establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls orreports which raise material issues regarding its financial statements or accounting policies. The audit committee has discussed with the independent auditors the matters required by the Public Company Accounting Oversight Board (“PCAOB”)auditing standard No. 16 - Communication with Audit Committees, including independent accountant’s independence. 54  Financial Experts on Audit Committee The audit committee will at all times be composed exclusively of “independent directors,” as defined for audit committee members under theNASDAQ Capital Market listing standards and the rules and regulations of the Securities and Exchange Commission, who are “financially literate,” asdefined under the NASDAQ Capital Market’s listing standards. The NASDAQ Capital Market’s listing standards define “financially literate” as being able toread and understand fundamental financial statements, including a company’s balance sheet, statement of operations and cash flow statement. The board ofdirectors has determined that Martha Byorum satisfies the NASDAQ Capital Market’s definition of financial sophistication and also qualifies as an “auditcommittee financial expert” as defined under rules and regulations of the Securities and Exchange Commission. Nominating Committee We have a standing nominating committee, which consists of A. Lorne Weil, Martha L. Byorum and Samuel R. Azout, with A. Lorne Weil serving aschairperson. Each member of the nominating committee is an “independent director” as defined under the NASDAQ Capital Market listing standards.Pursuant to its written charter, a copy of which is included in our compendium of Corporate Governance Guidelines, our nominating committee is responsiblefor overseeing the selection of persons to be nominated to serve on our board of directors. Guidelines for Selecting Director Nominees The nominating committee considers persons identified by its members, management, shareholders, investment bankers and others. Currently, theguidelines for selecting nominees, which are specified in the nominating committee charter, generally provide that persons to be nominated: ●should have demonstrated notable or significant achievements in business, education or public service, that is consistent with the image andreputation of the Company; ●should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range ofskills, diverse perspectives and backgrounds to its deliberations; and ●should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the shareholders. The nominating committee will consider a number of qualifications relating to management and leadership experience, background and integrityand professionalism in evaluating a person’s candidacy for membership on the board of directors. The nominating committee may require certain skills orattributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experienceand makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nomineesrecommended by shareholders and other persons. There have been no material changes to the procedures by which shareholders may recommend nominees to the nominating committee. Compensation Committee We have a standing compensation committee consisting of Julio Torres, Samuel R. Azout and Luis F. Castro, with Julio Torres serving aschairperson. Pursuant to the compensation committee charter, a copy of which is included in our compendium of Corporate Governance Guidelines, thecompensation committee oversees our compensation and employee benefit plans and practices, including our executive, director and other incentive andequity-based compensation plans. The specific responsibilities of the compensation committee include making recommendations to the board regardingexecutive compensation of our executive officers and non-employee directors, approving a corporate compensation policy, and preparing and reviewingcompensation-related disclosure, including a compensation discussion and analysis and compensation committee report (if required), for our filings with theSecurities and Exchange Commission. 55  Indemnification of Directors and Officers Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification ofofficers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provideindemnification against willful fraud, willful misconduct, civil fraud or the consequences of committing a crime. Our third amended and restatedmemorandum and articles of association provides for indemnification of our officers and directors to the maximum extent permitted by law, including for anyliability incurred in their capacities as such, except through their own actual fraud or willful neglect or willful default. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuantto the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed inthe Securities Act and is, therefore, unenforceable. Item 11. Executive Compensation. Overview; Compensation Discussion and Analysis Our policies with respect to the compensation of our executive officers are administered by our board in consultation with our compensationcommittee. Our compensation policies are intended to provide for compensation that: ●is sufficient to attract and retain executives of outstanding ability and potential;●is tailored to the unique characteristics and needs of our company;●considers individual value and contribution to our success;●is designed to motivate our executive officers to achieve our annual and long-term goals by rewarding performance based on the attainment ofthose goals;●is designed to appropriately take into account risk and reward in the context of our business environment;●reflects an appropriate relationship between executive compensation and the creation of shareholder value; and●is sensitive to market benchmarks. The compensation committee is charged with recommending executive compensation packages to our board that meet these goals. In makingdecisions about executive compensation, the compensation committee relies on the experience of its members as well as subjective considerations of variousfactors, including individual and corporate performance, our strategic business goals, each executive’s position, experience, level of responsibility, andfuture potential, and compensation paid by companies of similar size in our industry. The compensation committee does not set specific targets orbenchmarks for overall compensation or for allocations between different elements of compensation. Our compensation committee is charged with performing an annual review of our executive officers’ cash compensation and equity holdings todetermine whether they provide adequate incentives and motivation to executive officers and whether they adequately compensate the executive officersrelative to comparable officers in other companies. As part of this review, management submits recommendations to the compensation committee. We believe it is important when making compensation-related decisions to be informed as to current practices of similarly situated publicly heldcompanies in our industry. Our compensation committee stays appraised of the cash and equity compensation practices of publicly held companies in theglass and aluminum industries through the review of such companies’ public reports and through other resources. The companies chosen for inclusion in anybenchmarking group would have business characteristics comparable to our company, including revenues, financial growth metrics, stage of development,employee headcount and market capitalization. While benchmarking may not always be appropriate as a stand-alone tool for setting compensation due to theaspects of our business and objectives, we generally believe that gathering this information is an important part of our compensation-related decision-makingprocess. 56  Base Salaries Each of our named executive officers is employed on an at-will basis. Base salaries for our executive officers are individually determined by ourcompensation committee each year to ensure that each executive’s base salary forms part of a compensation package which appropriately rewards theexecutive for the value he or she brings to our company. Each executive’s base salary may be increased or decreased in the discretion of the compensationcommittee in accordance with our compensation philosophy. Bonuses In addition to their base salaries, our named executive officers are entitled to receive annual performance bonuses based on the company’s financialperformance and achievement of certain targets throughout the year. Other Compensation and Benefits Named executive officers receive additional compensation in the form of vacation, medical, 401(k),2 and other benefits generally available to all ofour employees. We do not provide any other perquisites or other personal benefits to our named executive officers. Summary Compensation Table The following table summarizes the total compensation for the years ended December 31, 2018 and 2017 of each of our named executive officers (asdefined in Item 402(m) of Regulation S-K). Name and principal position Year Salary Bonus Total Jose M. Daes (1) 2018 $1,020,000 $102,000 $1,122,000 Chief Executive Officer 2017 $965,805 $- $965,805 Christian T. Daes (2) 2018 $1,020,000 $102,000 $1,122,000 Chief Operating Officer 2017 $873,262 $- $873,262 Santiago Giraldo (3) (4) 2018 $183,971 $50,000 $233,971 Chief Financial Officer 2017 $160,000 $11,451 $171,451 (1)Mr. Daes was appointed Chief Executive Officer in December 2013 in connection with the Business Combination. Mr. Daes also serves as ChiefExecutive Officer of ES.(2)Mr. Daes was appointed Chief Operating Officer in December 2013 in connection with the Business Combination. Mr. Daes also serves as ChiefExecutive Officer of Tecnoglass.(3)Mr. Giraldo was appointed Chief Financial Officer in July, 2017. Mr. Giraldo also serves as Chief Financial Officer of TG and ES.(4)Mr. Giraldo’s 2018 salary was paid in Colombian pesos. The $183,971 salary represents Mr. Giraldo’s receipt of an aggregate of $588 million pesos,converted to US dollars at an exchange rate of 3,196.15 pesos per dollar, which was the spot rate exchange rate on December 4, 2018. Compensation Arrangements with Named Executive Officers On November 29, 2018, our compensation committee approved the following compensation arrangements for 2019 for each of Messrs. Daes, Daes,and Giraldo: (i) with respect to each of Messrs. Daes and Daes, a base salary of $1,200,000 plus a bonus of up to $240,000; and (ii) with respect to Mr.Giraldo, a base salary of approximately $184,000 payable in pesos and a bonus of up to $55,000 per year. Each of the bonuses will be based on our 2019financial performance and achievement of certain to-be-agreed upon targets throughout the year. Equity Awards at Fiscal Year End As of December 31, 2018, we had not granted any share options, share appreciation rights or any other awards under long-term incentive plans toany of our executive officers. 2 In Colombia? 57  Director Compensation Each of our non-employee directors receives an annual award of ordinary shares of the Company with a grant date fair value equal to approximately$50,000. Additionally, our chairwoman of the Audit Committee and each other member of our Audit Committee receives an annual award of ordinary sharesof the Company with a grant date fair value equal to approximately $18,000 and $8,000, respectively, for serving on our Audit Committee. Non-employeedirectors do not receive cash compensation for their service. On November 29, 2018, our compensation committee approved increases in compensation for our non-employee directors to $52,000 per year, forthe Audit Committee chair to $8,640 and for each other member of our Audit Committee to $8,320, all payable annually and in cash. The following table summarizes the compensation of our non-employee directors for the year ended December 31, 2018. Name Total AnnualComensation Samuel R. Azout $58,000 Martha L. Byorum $68,000 Luis Fernando Castro Vergara (1) $7,692 Julio A. Torres $58,000 Juan Carlos Vilariño $50,000 A. Lorne Weil $50,000 (1)Reflects the pro-rated non-executive director compensation owed to Mr. Castro Vergara for his service as a director beginning on November 6, 2018.Director compensation is paid annually in cash. Compensation Committee Interlocks and Insider Participation During 2018, each of Julio Torres, Samuel R. Azout, Juan Carlos Vilariño (through November 6, 2018), and Luis Fernando Castro Vergara(beginning on November 6, 2018) served on our compensation committee. No member of the compensation committee during 2018 was an officer, employeeor former officer of ours or any of our subsidiaries or had any relationship that would be considered a compensation committee interlock and would requiredisclosure pursuant to SEC rules and regulations. None of our executive officers served as a member of a compensation committee or a director of anotherentity under the circumstances requiring disclosure pursuant to SEC rules and regulations. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The table and accompanying footnotes set forth certain information as of December 31, 2018 with respect to the ownership of our ordinary sharesby: ●each person known to be the beneficial owner of more than 5% of our outstanding ordinary shares;●each director and each named executive officer; and●all current executive officers and directors as a group. 58  Beneficial ownership for the purposes of the following table is determined in accordance with the rules and regulations of the SEC. Under the rulesof the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or todirect the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. Except withrespect to Energy Holding Corporation, the ownership figures below do not reflect any shares received by the individuals as a result of our regular dividendspayable in cash or ordinary shares at the option of the holders, as described under “Dividends” elsewhere in this annual report. Name and Address of Beneficial Owner(1) Number of OrdinaryShares BeneficiallyOwned ApproximatePercentage ofOrdinary SharesOutstanding Directors and Named Executive Officers Jose M. Daes 227,664(2) * Chief Executive Officer and Director Christian T. Daes 168,912(2) * Chief Operating Officer and Director Samuel R. Azout 12,520 * Director Luis F. Castro Vergara - * Director Santiago Giraldo - * Chief Financial Officer A. Lorne Weil 106,974(3) * Chairman of the Board Julio A. Torres 105,520 * Director Martha L. Byorum 81,764 * Director All directors and executive officers as a group (8 persons) 703,354 1.9%Five Percent Holders: Energy Holding Corporation 24,282,197(4) 63.7% * Less than 1% (1)Unless otherwise indicated, the business address of each of the individuals is Avenida Circunvalar a 100 mts de la Via 40, Barrio Las Flores,Barranquilla, Colombia. (2)Does not include shares held by Energy Holding Corporation, in which this person has an indirect ownership interest. (3)Does not include 253,000 ordinary shares held by Child’s Trust f/b/o Francesca Weil u/a dated March 4, 2010 and 253,000 ordinary shares heldby Child’s Trust f/b/o Alexander Weil u/a dated March 4, 2010, irrevocable trusts established for the benefit of Mr. Weil’s children. (4)Represents all ordinary shares held by Energy Holding Corporation, of which Messrs. Joaquin Fernandez and Alberto Velilla Becerra aredirectors and may be deemed to share voting and dispositive power over such shares. 59  Equity Compensation Plans Category Number of securitiesto be issued uponexercise ofoutstanding options,warrants and rights Weighted-averageexercise price ofoutstanding options,warrants and rights Number of securitiesremaining availablefor future issuanceunder equitycompensation plans(excluding securitiesreflected in firstcolumn Equity compensation plans approved by security holders - - 1,593,917 Equity compensation plans not approved by security holders - - - Total - - 1,593,917 On December 20, 2013, our shareholders approved our 2013 Long-Term Equity Incentive Plan (“2013 Plan”). Under the 2013 Plan, 1,593,917ordinary shares are reserved for issuance in accordance with the plan’s terms to eligible employees, officers, directors and consultants. As of December 31,2018, no awards had been made under the 2013 Plan. Item 13. Certain Relationships and Related Transactions, and Director Independence. Related Transactions Ventanas Solar S.A. Ventanas Solar S.A., a Panama sociedad anonima, is an importer and installer of the Company’s products in Panama. Family members of theCompany’s CEO and COO and other related parties own 100% of the equity in VS. The Company’s sales to VS for the year ended December 31, 2018, 2017and 2016 were $2.9 million, $3.7 million and $8.3 million, respectively. Outstanding receivables from VS at December 31, 2018, 2017 and 2016 were $6.2million, $6.3 million and $9.1 million, respectively, as a portion of receivables is tied up in retainage. Indemnification Agreements Effective March 5, 2014, we entered into indemnification agreements with each of our executive officers and members of our board of directors. Theindemnification agreements supplement our Third Amended and Restated Memorandum and Articles of Association and Cayman Islands law in providingcertain indemnification rights to these individuals. The indemnification agreements provide, among other things that we will indemnify these individuals tothe fullest extent permitted by Cayman Islands law and to any greater extent that Cayman Islands law may in the future permit, including the advancement ofattorneys’ fees and other expenses incurred by such individuals in connection with any threatened, pending or completed action, suit or other proceeding,whether of a civil, criminal, administrative, regulatory, legislative or investigative nature, relating to any occurrence or event before or after the date of theindemnification agreements, by reason of the fact that such individuals is or were our directors or executive officers, subject to certain exclusions andprocedures set forth in the indemnification agreements, including the absence of fraud or willful default on the part of the indemnitee and, with respect to anycriminal proceeding, that the indemnitee had no reasonable cause to believe his conduct was unlawful. 60  Related Person Policy Our Code of Ethics requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests,except under guidelines approved by the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) theaggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries are a participant, and (3) any(a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our ordinary shares, or (c) immediate familymember, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director ora less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make itdifficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receivesimproper personal benefits as a result of his or her position. Our audit committee, pursuant to its written charter, is responsible for reviewing and approving related-party transactions to the extent we enter intosuch transactions. The audit committee will consider all relevant factors when determining whether to approve a related party transaction, including whetherthe related party transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstancesand the extent of the related party’s interest in the transaction. No director may participate in the approval of any transaction in which he is a related party,but that director is required to provide the audit committee with all material information concerning the transaction. Additionally, we require each of ourdirectors and executive officers to complete directors’ and officers’ questionnaires that elicit information about related party transactions. These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflictof interest on the part of a director, employee or officer. Director Independence We adhere to the NASDAQ Capital Market listing standards in determining whether a director is independent. Our board of directors consults withits counsel to ensure that the board’s determinations are consistent with those rules and all relevant securities and other laws and regulations regarding theindependence of directors. The NASDAQ Capital Market listing standards define an “independent director” as a person, other than an executive officer of a company or anyother individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment incarrying out the responsibilities of a director. Consistent with these considerations, we have affirmatively determined that Messrs. Weil, Azout, CastroVergara, Torres and Ms. Byorum qualify as independent directors. Our independent directors have regularly scheduled meetings at which only independentdirectors are present. Item 14. Principal Accounting Fees and Services. Effective December 30, 2014, the firm of PricewaterhouseCoopers Ltda. acts as our independent registered public accounting firm. The Companypaid $0.7 million, $0.6 million, and $0.9 million to PricewaterhouseCoopers Ltda for audit and audit related fees during 2018, 2017 and 2016, respectively. Audit Committee Approval Our audit committee pre-approved all the services performed by PricewaterhouseCoopers Ltda. In accordance with Section 10A(i) of the SecuritiesExchange Act of 1934, before we engage our independent accountant to render audit or non-audit services on a going-forward basis, the engagement will beapproved by our audit committee. 61  PART IV Item 15. Exhibits, Financial Statement Schedules. (a)The following documents are filed as part of this Form 10-K: (1)Consolidated Financial Statements: PageReport of Independent Registered Public Accounting FirmF-2Balance SheetsF-3Statements of Operations and Comprehensive IncomeF-4Statements of Shareholders’ EquityF-5Statements of Cash FlowsF-6Notes to Financial StatementsF-7 (2)Financial Statement Schedules: None. (3)The following exhibits are filed as part of this Form 10-K ExhibitNo. Description Included Form Filing Date2.1 Agreement and Plan of Reorganization dated as of August 17, 2013 andas amended November 6, 2013, by and among the Company, AndinaMerger Sub, Inc., Tecnoglass S.A., C.I. Energia Solar S.A. E.S. Windowsand Tecno Corporation By Reference Schedule 14A December 4, 20133.1 Third Amended and Restated Memorandum and Articles of Association. By Reference Schedule 14A December 4, 20134.1 Specimen Ordinary Share Certificate. By Reference S-1/A January 23, 20124.2 Specimen Warrant Certificate. By Reference S-1/A December 28, 20114.3 Warrant Agreement between Continental Stock Transfer & TrustCompany and the Company. By Reference 8-K March 22, 20124.4 Form of First Unit Purchase Option issued to EarlyBirdCapital, Inc. By Reference S-1/A March 12, 20124.5 Form of Second Unit Purchase Option issued to EarlyBirdCapital, Inc. By Reference S-1/A March 7, 201210.1 Amended and Restated Registration Rights Agreement among theCompany, the Initial Shareholders and Energy Holding Corporation. By Reference 8-K December 27, 201310.2 Indemnity Escrow Agreement dated as of December 20, 2013, by andamong the Company, Representative, Committee and Continental StockTransfer and Trust Company. By Reference 8-K December 27, 201310.3 Additional Shares Escrow Agreement dated as of December 20, 2013, byand among the Company, Representative, Committee and ContinentalStock Transfer and Trust Company. By Reference 8-K December 27, 201310.4 Form of Lock-Up Agreement between the Company and EnergyHolding Corporation By Reference 8-K August 22, 201310.5 2013 Long-Term Incentive Equity Plan By Reference Schedule 14A December 4, 201310.6 Form of Subscription Agreement By Reference 8-K December 19, 201310.7 Form of Indemnification Agreement By Reference 8-K March 6, 201410.8 Share Purchase Agreement, dated as of March 1, 2017, between theCompany and Giovanni Monti By Reference 10-Q May 12, 201710.9 Settlement Agreement, dated June 30, 2018, between the Company andGiovanni Monti Herewith 10.10 Investment Agreement dated January 11, 2019, by and amongTecnoglass Inc., Holding Concorde S.A.S., Saint-Gobain ColombiaS.A.S., Saint-Gobain Cristaleria S.L., and Pilkington InternationalHoldings B.V. By Reference 8-K January 11, 201921 List of subsidiaries. Herewith 24 Power of Attorney (included on signature page of this Form 10-K). Herewith 62  ExhibitNo. Description Included Form Filing Date23.1 Consent of PricewaterhouseCoopers Ltda. Herewith 31.1 Certification of Principal Executive Officer pursuant to Section 302 ofthe Sarbanes-Oxley Act of 2002. Herewith 31.2 Certification of Principal Financial and Accounting Officer pursuant toSection 302 of the Sarbanes-Oxley Act of 2002. Herewith 32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuantto Section 906 of the Sarbanes-Oxley Act of 2002 Herewith 101.INS XBRL Instance Document Herewith 101.SCH XBRL Taxonomy Extension Schema Herewith 101.CAL XBRL Taxonomy Extension Calculation Linkbase Herewith 101.DEF XBRL Taxonomy Extension Definition Linkbase Herewith 101.LAB XBRL Taxonomy Extension Label Linkbase Herewith 101.PRE XBRL Taxonomy Extension Presentation Linkbase Herewith Item 16. Form 10-K Summary. None. 63  SIGNATURES Pursuant to the requirements of the Section 13 or 15 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to besigned on its behalf by the undersigned, thereunto duly authorized on the 8th day of March, 2019. TECNOGLASS INC. By:/s/ Santiago Giraldo Name: Santiago Giraldo Title:Chief Financial Officer (Principal Financial and Accounting Officer) POWER OF ATTORNEY The undersigned directors and officers of Tecnoglass Inc. hereby constitute and appoint Jose Daes and Santiago Giraldo with full power to act as our true andlawful attorney-in-fact with full power to execute in our name and behalf in the capacities indicated below, this annual report on Form 10-K and any and allamendments thereto and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and ExchangeCommission, and hereby ratify and confirm all that such attorneys-in-fact, or any of them, or their substitutes shall lawfully do or cause to be done by virtuehereof. In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in thecapacities and on the dates indicated. Name Title Date /s/ Jose M. Daes Chief Executive Officer March 8, 2019Jose M. Daes (Principal Executive Officer) /s/ Christian T. Daes Chief Operating Officer March 8, 2019Christian T. Daes /s/ Santiago Giraldo Chief Financial Officer March 8, 2019Santiago Giraldo (Principal Financial and Accounting Officer) /s/ A. Lorne Weil Director (Non-Executive Chairman) March 8, 2019A. Lorne Weil /s/ Samuel R. Azout Director March 8, 2019Samuel R. Azout /s/ Luis Fernando Castro Director March 8, 2019Juan Carlos Vilariño /s/ Martha Byorum Director March 8, 2019Martha Byorum /s/ Julio A. Torres Director March 8, 2019Julio A. Torres 64  Tecnoglass Inc. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageAudited Financial Statements: Report of Independent Registered Public Accounting FirmF-2 Consolidated Balance Sheets at December 31, 2018 and 2017F-3 Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2018, 2017 and 2016F-4 Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2018, 2017 and 2016F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2017 and 2016F-6 Notes to Consolidated Financial StatementsF-7 F-1 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders ofTecnoglass Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Tecnoglass Inc. and its subsidiaries (the “Company”) as of December 31, 2018 and 2017,and the related consolidated statements of operations and comprehensive income, shareholders’ equity and cash flows for each of the three years in the periodended December 31, 2018, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited theCompany's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all materialrespects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework(2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to ineffective design andmaintenance of controls over income tax accounts. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibilitythat a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness referredto above is described in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. We considered this material weaknessin determining the nature, timing, and extent of audit tests applied in our audit of the 2018 consolidated financial statements, and our opinion regarding theeffectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, andfor its assessment of the effectiveness of internal control over financial reporting included in management's report referred to above. Our responsibility is toexpress opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. Weare a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independentwith respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internalcontrol over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financialstatements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internalcontrol over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. /s/ PricewaterhouseCoopers Ltda.Bogota, ColombiaMarch 8, 2019 We have served as the Company’s auditor since 2014. F-2 Tecnoglass Inc. and SubsidiariesConsolidated Balance Sheets(In thousands, except share and per share data) December 31, 2018 December 31, 2017 ASSETS Current assets: Cash and cash equivalents $33,040 $40,923 Investments 1,163 1,680 Trade accounts receivable 92,791 110,464 Unbilled receivables on uncompleted contracts - 9,996 Due from related parties 8,239 8,500 Inventories 91,849 71,656 Contract assets – current portion 46,018 - Prepaid expenses 1,367 1,165 Other current assets 18,932 17,514 Total current assets 293,399 261,898 Long term assets: Property, plant and equipment, net 149,199 168,701 Contract assets – non-current 6,986 - Intangible assets 9,006 11,517 Goodwill 23,561 23,130 Deferred income tax 4,770 103 Other long term assets 2,853 2,651 Total long term assets 196,375 206,102 Total assets $489,774 $468,000 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term debt and current portion of long-term debt $21,606 $3,260 Trade accounts payable 65,510 55,182 Accrued interest expense 7,567 7,392 Dividend Payable 736 585 Due to related parties 1,500 975 Payable associated to GM&P acuiqisition - 29,000 Taxes payable 7,154 12,076 Labor liabilities 1,733 1,550 Contract liabilities – current portion 16,789 - Current portion of customer advances on uncompleted contracts - 11,429 Total current liabilities 122,595 121,449 Deferred income taxes 2,706 2,317 Long Term Payable associated to GM&P acquisition 8,500 - Long term note payable to related party 600 - Customer advances on uncompleted contracts - 1,571 Contract liabilities – non-current 1,436 - Long-term debt 220,709 220,998 Total long term liabilities 233,951 224,886 Total liabilities $356,546 $346,335 Commitments and contingencies Shareholders’ equity Preferred shares, $0.0001 par value, 1,000,000 shares authorized, 0 shares issued andoutstanding at December 31, 2018 and 2017 $- $- Ordinary shares, $0.0001 par value, 100,000,000 shares authorized, 38,092,996 and34,836,575 shares issued and outstanding at December 31, 2018 and 2017, respectively 4 3 Legal reserves 1,367 1,367 Additional paid-in capital 157,604 125,317 Retained earnings 10,439 22,212 Accumulated other comprehensive income (loss) (37,058) (28,651)Shareholders’ equity attributable to controlling interest 132,356 120,248 Shareholders’ equity attributable to non-controlling interest 872 1,417 Total shareholders’ equity 133,228 121,665 Total liabilities and shareholders’ equity $489,774 $468,000 The accompanying notes are an integral part of these consolidated financial statements. F-3 Tecnoglass Inc. and SubsidiariesConsolidated Statements of Operations and Comprehensive Income(In thousands, except share and per share data) Years ended December 31, 2018 2017 2016 Operating revenue: Customers $365,646 $309,375 $295,274 Related Parties 5,338 5,081 9,742 Total Operating Revenue 370,984 314,456 305,016 Cost of sales 250,767 215,274 192,369 Gross profit 120,217 99,182 112,647 Operating expenses: Selling 39,390 33,784 36,953 General and administration 33,632 31,034 27,846 Operating expenses 73,022 64,818 64,799 Operating income 47,195 34,364 47,848 Change in fair value of warrant liability - - 776 Change in fair value of earnout shares liability - - 4,674 Non-operating income, net 2,915 3,190 4,155 Foreign currency transaction gains (losses) (14,461) (3,028) (1,387)Loss on extinguishment of debt - (3,136) - Interest expense (21,187) (19,872) (16,814) Income before taxes 14,462 11,518 39,252 Income tax provision 5,976 5,793 16,072 Net income (loss) $8,486 $5,725 $23,180 Less: Loss (income) attributable to non-controlling interest 545 (276) - Net income (loss) attributable to parent 9,031 5,449 23,180 Comprehensive income: Net income (loss) $8,486 $5,725 $23,180 Foreign currency translation adjustments (8,407) 549 1,969 Total comprehensive income (loss) $79 $6,274 $25,149 Less: Loss (income) attributable to non-controlling interest 545 (276) - Total comprehensive income attributable to parent $624 $5,998 $25,149 Basic income (loss) per share $0.23 $0.16 $0.71 Diluted income (loss) per share $0.22 $0.15 $0.69 Basic weighted average common shares outstanding 37,511,851 36,836,075 32,864,628 Diluted weighted average common shares outstanding 38,062,635 37,386,858 33,415,412 The accompanying notes are an integral part of these consolidated financial statements. F-4 Tecnoglass, Inc. and SubsidiariesConsolidated Statements of Shareholders’ EquityFor the Years Ended December 31, 2018, 2017 and 2016(In thousands, except share data) Ordinary Shares, $0.0001Par Value AdditionalPaid in Legal RetainedEarnings(Accumulated AccumulatedOtherComprehensive TotalShareholders’EquityArreibutable Non-Controlling TotalShareholders’ Shares Amount Capital Reserve Deficit) Loss to Parent Interest Equity Balance at December 31, 2015 26,895,636 $3 $45,584 $1,367 $22,028 $(31,169) $37,813 $- $37,813 Issuance of common stock 2,500,000 - 30,279 - - - 30,279 - 30,279 Cash Dividend - - - - (4,226) - (4,226) - (4,226) Stock dividend 272,505 - 12,171 - (12,171) - - - (0) Exercise of warrants 2,690,261 - 30,437 - - - 30,437 - 30,437 Exercise of Unit Purchase Options 58,297 - 404 - - - 404 - 404 Share based compensation 21,045 - 292 - - - 292 - 292 ESWindows Distribution prior toacquisiiton 734,400 - (4,320) - (2,263) - (6,583) - (6,583) Foreign currency translation - - - - - 1,969 1,969 - 1,969 Net income - - - - 23,180 - 23,180 - 23,180 Balance at December 31, 2016 33,172,144 $3 $114,847 $1,367 $26,548 $(29,200) $113,565 $- $113,565 Dividend 1,619,812 - 10,212 - (9,785) - 427 - 427 Exercise of Unit Purchase Options 8,559 - - - - - - - - Share based compensation 36,060 - 258 - - - 258 - 258 Non Controlling Interest GM&P - - - - - - - 1,141 1,141 Foreign currency translation - - - - - 549 549 - 549 Net income - - - - 5,449 - 5,449 276 5,725 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 1,242,659 1 14,534 - - - 14,535 - 14,535 Adoption of ASC 606 - - - - (187) - (187) - (187) Stock dividend 2,013,762 - 17,753 - (20,617) - (2,864) - (2,864) Foreign currency translation - - - - - (8,407) (8,407) - (8,407) Net income - - - - 9,031 - 9,031 (545) 8,486 Balance at December 31, 2018 38,092,996 $4 $157,604 $1,367 $10,439 $(37,058) $132,356 $872 $133,228 The accompanying notes are an integral part of these consolidated financial statements. F-5 Tecnoglass Inc. and SubsidiariesConsolidated Statements of Cash Flows(In thousands) Years Ended December 31, 2018 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $8,486 $5,725 $23,180 Adjustments to reconcile net income (loss) to net cash (used in) provided byoperating activities: Depreciation and amortization 23,157 20,969 15,522 Provision for bad debts 369 3,128 4,686 Provision for obsolete inventory (20) 80 238 Other fair value adjustments, net (155) (72) (54)(Gain) Loss on disposition of assets 33 17 (477)Change in fair value of earnout share liability - - (4,674)Change in fair value of warrant liability - - (776)Director Stock compensation - 284 300 Deferred income taxes (3,289) (6,137) (247)Extinguishment of Debt - 2,558 - Amortization of deferred financing costs 1,468 1,204 - Changes in operating assets and liabilities, net of effects from acquisitions: Trade accounts receivable (23,700) 2,497 (25,979)Inventories (28,064) (16,447) (4,305)Prepaid expenses (1,161) 22 799 Other assets (4,645) (2,004) 1,343 Unbilled receivables - (10,653) (7,768)Trade accounts payable 34,588 13,055 (985)Accrued interest expense 466 3,769 2,559 Taxes payable (4,315) (8,542) (2,299)Labor liabilities 340 134 439 Related parties (23) 1,815 2,259 Contract assets and liabilities (8,566) - - Advances from customers - 2,807 (6,846)CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES $(5,031) $14,209 $(3,085) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment (13,117) (7,027) (22,906)Proceeds from sale of property and equipment - - 686 Acquisition of businesses and intangible assets (6,000) (7,873) - Proceeds from sale of investments 1,575 571 24,486 Purchase of investments (1,184) (600) (26,975)CASH USED IN INVESTING ACTIVITIES $(18,726) $(14,929) $(24,709) CASH FLOWS FROM FINANCING ACTIVITIES Proceed from bond issuance - 201,801 - Repayments of debt and capital leases (8,860) (205,330) (163,126)Proceeds from debt 28,600 20,761 196,468 Proceeds from the exercise of unit purchase options - - 404 Dividends paid (2,714) (2,471) (741)Subsidiary distributions prior to acquisition - - (2,263)Proceeds from the exercise of warrants - - 800 CASH PROVIDED BY FINANCING ACTIVITIES $17,026 $14,761 $31,542 Effect of exchange rate changes on cash and cash equivalents (1,152) (36) 499 NET (DECREASE) INCREASE IN CASH (7,883) 14,005 4,247 CASH - Beginning of year 40,923 26,918 22,671 CASH - End of year $33,040 $40,923 $26,918 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the year for: Interest $18,223 $15,774 $8,696 Taxes $8,399 $17,834 $25,825 NON-CASH INVESTING AND FINANCING ACTIVITES: Assets acquired under capital lease, financial obligations or credit $447 $1,751 $19,641 Gain in extinguishment of GM&P payment settlement $3,606 $- $- The accompanying notes are an integral part of these consolidated financial statements. F-6 Tecnoglass Inc. and SubsidiariesNotes to Consolidated Financial Statements(Amounts in thousands, except share and per share data) Note 1.General Business Description The Company manufactures hi-specification, architectural glass and windows for the global residential and commercial construction industries.Currently the Company offers design, production, marketing, and installation of architectural systems for buildings of high, medium and low elevation size.Products include windows and doors in glass and aluminum, office partitions and interior divisions, floating facades and commercial window showcases. TheCompany sells to customers in North, Central and South America, and exports about half of its production to foreign countries. 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 androds, tubes, bars and plates. Alutions’ operations include extrusion, smelting, painting and anodizing processes, and exporting, importing and marketingaluminum products. The Company also designs, manufactures, markets and installs architectural systems for high, medium and low rise construction, glass and aluminumwindows and doors, office dividers and interiors, floating facades and commercial display windows. On March 1, 2017, the Company entered into and consummated a purchase agreement with Giovanni Monti, the owner of 100% of the outstandingshares of GM&P. GM&P is a consulting and glazing contracting company located in Miami, Florida with over 15 years of experience in the design andinstallation of various building enclosure systems such as curtain window walls and a long-standing commercial relationship with the Company, workingalongside it in different projects within the U.S, by providing engineering and installation services to those projects. Note 2.Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Management’s Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the UnitedStates of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”). F-7 Prior year financial information has been retroactively adjusted for an acquisition under common control. As the acquisition of ESW LLC wasdeemed to be a transaction between entities under common control, the assets and liabilities were transferred at the historical cost of ESW LLC, with priorperiods retroactively adjusted to include the historical financial results of the acquired company for the period they were controlled by ESW LLC in theCompany’s financial statements. The accompanying financial statements and related notes have been retroactively adjusted to include the historical resultsand financial position of the acquired company prior to the acquisition date during the periods the assets were under common control. All financialinformation presented for the periods after the ESW LLC acquisition represent the consolidated results of operations, financial position and cash flows of theCompany with retroactive adjustments of the results of operations, financial position and cash flows of the acquired company during the periods the assetswere under common control. The preparation of the accompanying consolidated financial statements requires the Company to make estimates and judgments that affect thereported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of the Company’sfinancial statements. Actual results may differ from these estimates under different assumptions and conditions. Estimates inherent in the preparation of theseconsolidated financial statements relate to the collectability of account receivables, the valuation of inventories, estimated earnings on uncompletedcontracts, useful lives and potential impairment of long-lived assets, and valuation of warrants and other derivative financial instruments. Principles of Consolidation These financial statements consolidate Tecnoglass, its indirect wholly-owned subsidiaries TG, ES and ESW LLC, its direct wholly ownedsubsidiaries GM&P, Tecno LLC and Tecno RE, and majority owned subsidiary Componenti, which are entities in which we have a controlling financialinterest 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 toapply the variable interest entity (“VIE”) model to the entity, otherwise the entity is evaluated under the voting interest model. All significant intercompanyaccounts and transactions are eliminated in consolidation. Non-controlling interest When the Company owns a majority of a subsidiary’s stock, the Company includes in its consolidated financial statements the non-controllinginterest in the subsidiary. The non-controlling interest in the Consolidated Statements of Operations and Other Comprehensive Income is equal to the non-controlling proportionate share of the subsidiary’s net income and, as included in Shareholders’ Equity on the Consolidated Balance Sheet, is equal to thenon-controlling proportionate share of the subsidiary’s net assets. Foreign Currency Translation and Transactions The consolidated financial statements are presented in U.S. Dollars, the reporting currency. Our foreign subsidiaries’ local currency is the ColombianPeso, which is also their functional currency as determined by the market analysis, costs and expenses, assets, liabilities, financing and cash flow indicators.As such, our subsidiaries’ assets and liabilities are translated at the exchange rate in effect at the balance sheet date, with equity being translated at thehistorical rates. Revenues and expenses of our foreign subsidiaries are translated at the average exchange rates for the period. The resulting cumulativeforeign currency translation adjustments from this process are included as a component of accumulated other comprehensive income (loss). Therefore, theU.S. Dollar value of these items in our financial statements fluctuates from period to period. Cash and Cash Equivalents Cash and cash equivalents include investments with original maturities of three months or less. As of December 31, 2018, 2017 and 2016, cash andcash equivalents were primarily comprised of deposits held in operating accounts in Colombia, Panama and United States. As of December 31, 2018, 2017and 2016 the Company had no restricted cash. F-8 Investments The Company’s investments are comprised of marketable securities, short term deposits and income producing real estate. Investments which are held for trading are recorded at fair value and fluctuations in value are recorded as a non-operating income or expense. Inaddition, we have investments in long-term marketable equity securities which are classified as available-for-sale securities and are recorded at fair value. Short- term deposits and other financial instruments with maturities greater than 90 days and shares in other companies that do not meet therequirements for equity method treatment are recorded for at cost. We also have investments in income-producing real estate. This real estate is recorded at cost and is depreciated using the straight-line method overits estimated useful life. The depreciation and rental income associated with this real estate are recognized in the consolidated statement of operations. Theseinvestments are recorded within long term assets on the Company’s balance sheet. Trade Accounts Receivable Trade accounts receivable are recorded net of allowances for cash discounts for prompt payment, doubtful accounts and sales returns. TheCompany’s policy is to reserve for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accountsreceivable. The Company periodically reviews its accounts receivable to determine whether an allowance for doubtful accounts is necessary based on ananalysis of past due accounts and other factors that may indicate that the collectability of an account may be in doubt. Other factors that the Companyconsiders include its existing contractual obligations, historical payment patterns of its customers and individual customer circumstances, and a review of thelocal economic environment and its potential impact on the collectability of accounts receivable. Account balances deemed to be uncollectible are writtenoff after all means of collection have been exhausted and the potential for recovery is considered remote. On certain fixed price contracts, a portion of the amounts billed are withheld by the customer as a retainage which typically amount to 10% of theinvoiced amount and can remain outstanding for several months until a final good receipt of the complete project to the customers satisfaction. Concentration of Risks and Uncertainties Financial instruments which potentially subject the Company to credit risk consist primarily of cash and trade accounts receivable. The Companymitigates its cash risk by maintaining its cash deposits with major financial institutions in the United States and Colombia. As discussed above, the Companymitigates its risk to trade accounts receivable by performing on-going credit evaluations of its customers. Related party transactions The Company has related party transactions such as sales, purchases, leases, guarantees, and other payments. We periodically performed a relatedparty analysis to identify transactions to disclose. Depending on the transactions, we aggregate some related party information by type. F-9 Inventories Inventories of raw materials, which consist primarily of purchased and processed glass, aluminum, parts and supplies held for use in the ordinarycourse of business, are valued at the lower of cost or market. Cost is determined using a weighted-average method. Inventory consisting of certain job specificmaterials not yet installed (work in process) are valued using the specific identification method. Cost for finished product inventory are recorded andmaintained at the lower of cost or market. Cost includes raw materials and direct and applicable indirect manufacturing overheads. Also, inventories relatedto contracts in progress are included within work in process and finished goods, and are stated at using the specific identification method and lower of cost ormarket, respectively, and are expected to turn over in less than one year. Reserves for excess or slow-moving raw materials inventories are updated based on historical experience of a variety of factors including salesvolume and levels of inventories at the end of the period. The Company does not maintain allowances for the lower of cost or market for inventories offinished products as its products are manufactured based on firm orders rather than built-to-stock. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Significant improvements and renewals that extend the useful life of the asset are capitalized.Interest caused while acquired property is under construction and installation are capitalized. Repairs and maintenance are charged to expense as incurred.When property is retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any related gains orlosses are included in income as a reduction to or increase in selling, general and administrative expenses. Depreciation is computed on a straight-line basis,based on the following estimated useful lives: Buildings 20 yearsMachinery and equipment 10 yearsFurniture and fixtures 10 yearsOffice equipment and software 5 yearsVehicles 5 years The Company also records within fixed assets all the underlying assets of a capital lease. Initial recognition of these assets are done at the presentvalue of all future lease payments. A capital lease is a lease in which the lessor transferred substantially all of the benefits and risks associated with theownership of the property. Long Lived Assets The Company periodically reviews the carrying values of its long lived assets when events or changes in circumstances would indicate that it ismore likely than not that their carrying values may exceed their realizable values, and record impairment charges when considered necessary. When circumstances indicate that an impairment may have occurred, the Company tests such assets for recoverability by comparing the estimatedundiscounted future cash flows expected to result from the use of such assets and their eventual disposition to their carrying amounts. If the undiscountedfuture cash flows are less than the carrying amount of the asset, an impairment loss, measured as the excess of the carrying value of the asset over its estimatedfair value, is recognized. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values andthird-party independent appraisals, as considered necessary. Goodwill We review goodwill for impairment each year on December 31st or more frequently when events or significant changes in circumstances indicatethat the carrying value may not be recoverable. Under ASC 350-20-35-4 through 35-8A, the goodwill impairment test requires a comparison of the fair valueof the reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit is greater than zero and its fair value exceedsits carrying amount, goodwill of the reporting unit is considered not impaired. The Company has only one reporting unit and as such the impairment analysiswas done by comparing the Company’s market capitalization with its book value of equity. As of December 31, 2018, the Company’s market capitalizationsubstantially exceeded its book value of equity and as such no impairment of goodwill was indicated. See Note 9- Goodwill and Intangible Assets foradditional information. F-10 Intangible Assets Intangible assets with definite lives subject to amortization are amortized on a straight-line basis. We also review these intangibles for impairmentwhen events or significant changes in circumstance indicate that the carrying value may not be recoverable. Events or circumstances that indicate thatimpairment testing may be required include changes in building codes and regulation, loss of key personnel or a significant adverse change in businessclimate or regulations. There were no triggering events or circumstances noted and as such no impairment was needed for the intangible assets subject toamortization. See Note 9 - Goodwill and Intangible Assets for additional information. Common Stock Purchase Warrants The Company classifies as equity any warrants contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company achoice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities anycontracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside theCompany’s control) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assesses classification of its common stock purchase warrants and other freestanding derivatives, if any, at each reporting date todetermine whether a change in classification between assets and liabilities is required. As of December 20, 2016, the Company no longer has warrantsoutstanding. Financial Liabilities Financial liabilities correspond to the financing obtained by the Company through bank credit facilities and accounts payable to suppliers andcreditors. Financial liabilities are initially recognized based on their fair value, which is usually equal to the transaction value less directly attributable costs.Subsequently, such financial liabilities are carried at their amortized cost according to the effective interest rate method determined at initial recognition, andrecognized in the results of the period during the time of amortization of the financial obligation. Stock-Based Compensation We account for stock-based compensation in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires compensation costsrelated to share-based transactions, including employee stock options, to be recognized based on fair value. The Company accounts for share-based awardsexchanged for employee services at the estimated grant date fair value of the award. In October 2015, the Company authorized to grant each non-employeedirector $50 worth of ordinary shares of the Company payable annually and first payment was made in October 2016. In November 2016 the Companyauthorized additional payment of $8 on an annual basis to members of the Company´s Audit Committee members and $18 on an annual basis to the Chair ofthe Audit Committee, all of whom are members of the board of directors. The Company recorded director stock compensation of $284 and $247 during theyears ended December 31, 2017 and 2016. In 2018 the Company began paying non employee directors in cash. Fair Value of Financial Instruments ASC 820, Fair Value Measurements, establishes a fair value hierarchy which requires us to maximize the use of observable inputs and minimize theuse of unobservable inputs when measuring fair value. We primarily apply the market approach for financial assets and liabilities measured at fair value on arecurring basis. Fair value is the price we would receive to sell and asset or pay to transfer a liability in an orderly transaction with a market participant at themeasurement date. In the absence of active markets for identical assets or liabilities, such measurements involve developing assumptions based on marketobservable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transactionthat occurs at the measurement date. F-11 The standard describes three level of inputs that may be used to measure fair value: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are notactive; or other inputs that are observable by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. See Note 13 - Fair Value Measurements. Revenue Recognition Our principal sources of revenue are derived from product sales, sometimes referred to as standard form sales, and supply and installation contracts,sometimes referred to as revenues from fixed price contracts. We identified one single performance obligation for both forms of sales. Revenue is recognizedwhen control is transferred to our customers. For product sales, the performance obligations are satisfied at a point in time and control is deemed to betransferred upon delivery. Approximately 43.3% of the Company’s consolidated net sales is generated supply and installation contracts with customers that require to design,develop, test, manufacture, and install windows according to the customers’ specifications. These contracts are primarily multi-year contracts with real estategeneral contractors and are generally priced on a fixed-price basis and are invoiced based on contract progress. To determine the proper revenue recognition method, the Company first evaluates each of its contractual arrangements to identify its performanceobligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. All the Company’s contracts have asingle performance obligation because the promise to transfer the individual good or service is not separately identifiable from other promises within thecontract and is, therefore, not distinct. These contractual arrangements either require the use of a highly specialized manufacturing process to provide goodsaccording to customer specifications or represent a bundle of contracted goods and services that are integrated and together represent a combined output,which may include the delivery of multiple units. These performance obligations are satisfied over time. Sales are recognized over time when control is continuously transferred to the customerduring the contract. The continuous transfer of control to the customer is supported by contract clauses that provide for progress or performance-basedpayments. Generally, if a customer unilaterally terminates a contract, the Company has the right to receive payment for costs incurred plus a reasonable profitfor products and services that do not have alternative use to the Company. Sales are recorded using the cost-to-cost method on supply and installation contracts that include performance obligations satisfied over time. Thesesales are generally recorded at amounts equal to the ratio of actual cumulative costs incurred divided by total estimated costs at completion, multiplied by (i)the transaction price, less (ii) the cumulative sales recognized in prior periods. F-12 Accounting for the sales and profits on performance obligations for which progress is measured using the cost-to-cost method involves thepreparation of estimates of: (1) transaction price and (2) total costs at completion, which is equal to the sum of the actual incurred costs to date on the contractand the estimated costs to complete the contract’s statement of work. Incurred costs include labor, material, and overhead and represent work performed,which corresponds with and thereby represents the transfer of ownership to the customer. Performance obligations are satisfied over time when the risk ofownership has been passed to the customer and/or services are performed. The estimated profit or loss at completion on a contract is equal to the differencebetween the transaction price and the total estimated cost at completion. Contract modifications routinely occur to account for changes in contract specifications or requirements. In most cases, contract modifications arefor goods or services that are not distinct and, therefore, are accounted for as part of the existing contract. Transaction price estimates include additionalconsideration for submitted contract modifications or claims when the Company believes it has an enforceable right to the modification or claim, the amountcan be reliably estimated and its realization is reasonably assured. Amounts representing modifications accounted for as part of the existing contract areincluded in the transaction price and recognized as an adjustment to sales on a cumulative catch-up basis. The Company’s supply and installation contracts allow for progress payments to bill the customer as contract costs are incurred and the customeroften retains a small portion of the contract price until satisfactory completion of the contractual statement of work, which is a retainage of approximately10%. The Company records an asset for unbilled receivables due to completing more work than the progress payment schedule allows to collect at a point intime. For certain supply and installation contracts, the Company receives advance payments. Advanced payments are not considered a significant financingcomponent because they are a negotiated contract term to ensure the customer meets its financial obligation, particularly when there are significant upfrontworking capital requirements. The Company records a liability for advance payments received in excess of sales recognized, which is presented as a contractliability on the balance sheet. Revisions or adjustments to estimates of the transaction price, estimated costs at completion and estimated profit or loss of a performance obligationare often required as work progresses under a contract, as experience is gained, as facts and circumstances change and as new information is obtained, eventhough the scope of work required under the contract may not change. Revisions or adjustments may also be required if contract modifications occur. Theimpact of revisions in profit or loss estimates are recognized on a cumulative catch-up basis in the period in which the revisions are made. The revisions incontract estimates, if significant, can materially affect the Company’s results of operations and cash flows, as well as reduce the valuations of contract assetsand inventories, and in some cases result in liabilities to complete contracts in a loss position. The Company recognizes a liability for non-recurringobligations as situations considering that projects actual costs are usually adjusted to estimated costs. The Company did not recognize sales for performanceobligations satisfied in prior periods during year ended December 31, 2018. Shipping and Handling Costs The Company classifies amounts billed to customers related to shipping and handling as product revenues. The Company records and presents shipping andhandling costs in selling expenses. Sales Tax and Value Added Taxes The Company accounts for sales taxes and value added taxes imposed on its goods and services on a net basis - value added taxes paid for goodsand services purchased is netted against value added tax collected from customers and the net amount is paid to the government. The current value added taxrate in Colombia for all of the Company’s products is 19%. A municipal industry and commerce tax (ICA) sales tax of 0.7% is payable on all of theCompany’s products sold in the Colombian market. Product Warranties The Company offers product warranties in connection with the sale and installation of its products that are competitive in the markets in which theproducts are sold. Standard warranties depend upon the product and service, and are generally from five to ten years for architectural glass, curtain wall,laminated and tempered glass, window and door products. Warranties are not priced or sold separately and do not provide the customer with services orcoverages in addition to the assurance that the product complies with original agreed-upon specifications. Claims are settled by replacement of thewarrantied products. F-13 The Company evaluated historical information regarding claims for replacements under warranties and concluded that the costs that the Companyhas incurred in relation to these warranties have not been material. Advertising Costs Advertising costs are expensed as they are incurred and are included in general and administrative expenses. Advertising costs for the years endedDecember 31, 2018, 2017 and 2016 amounted to approximately $1,526, $1,385 and $1,293, respectively. Employee Benefits The Company provides benefits to its employees in accordance with Colombian labor laws. Employee benefits do not give rise to any long termliability. Income Taxes The Company’s operations in Colombia are subject to the taxing jurisdiction of the Republic of Colombia. Tecnoglass LLC and Tecnoglass RELLC are subject to the taxing jurisdiction of the United States. Tecnoglass is subject to the taxing jurisdiction of the Cayman Islands. Annual tax periodsprior to December 2014 are no longer subject to examination by taxing authorities in Colombia. GM&P, Componenti and ESW LLC are U.S. entities based inFlorida subject to U.S. federal and state income taxes. The Company accounts for income taxes using the asset and liability approach of accounting for income taxes (ASC 740 “Income Taxes”). Underthis approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered orpaid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferredtaxes result from differences between the financial and tax basis of the Company’s assets and liabilities and are adjusted for changes in tax rates and tax lawswhen changes are enacted. For each tax jurisdiction in which the Company operates, deferred tax assets and liabilities are offset against one another and arepresented as a single noncurrent amount within the consolidated balance sheets. The Company presents deferred tax assets and liabilities net as either a non-current asset or liability, depending on the net deferred tax position. TheCompany recognizes the financial statement effects of uncertain income tax positions when it is more likely than not, based on the technical merits, that theposition will be sustained upon examination. The Company accrues for other tax contingencies when it is probable that a liability to a taxing authority hasbeen incurred and the amount of the contingency can be reasonably estimated. Interest accrued related to unrecognized tax and income tax related penaltiesare included in the provision for income taxes. The uncertain income taxes positions are recorded in “Taxes payable” in the consolidated balance sheets. Earnings per Share The Company computes basic earnings per share by dividing net income by the weighted-average number of ordinary shares outstanding during theperiod. Income per share assuming dilution (diluted earnings per share) would give effect to dilutive options, warrants, and other potential ordinary sharesoutstanding during the period. See Note 16 - Shareholders’ Equity for further detail on the calculation of earnings per share. F-14 Recently Issued Accounting Pronouncements In November 2019, the FASB issued ASU 2018-19 – Codification Improvements to Topic 326, Financial Instruments – Credit Losses (“ASU 2018-19”). In June 2016, FASB issued Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326). This ASU represents asignificant change in the allowance for credit losses accounting model by requiring immediate recognition of management’s estimates of current expectedcredit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses thatmight 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 valuethrough net income, thereby bringing consistency in accounting treatment across different types of financial instruments and requiring consideration of abroader range of variables when forming loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, (with early applicationpermitted). The Company is currently evaluating the potential effect of this ASU on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)” (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparencyand comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasingarrangements. Under ASU 2016-02, a lessee will recognize in the statement of financial position a liability to make lease payments (the lease liability) and aright-to-use asset representing its right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cashflows arising from a lease by a lessee have not significantly changed from current GAAP. ASU 2016-02 retains a distinction between finance leases (i.e.capital leases under current GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will besubstantially similar to the classification criteria for distinguishing between capital leases and operating leases under current GAAP. The amendments of thisASU are effective for reporting periods beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB provided entities theoption to instead apply the provisions of the new leases guidance at the effective date, without adjusting the comparative periods presented. The Companyexpects to apply the provisions of the new leases guidance at the effective date, without adjusting the comparative periods presented. The Company iscurrently evaluating the potential effect of this ASU on its consolidated financial statements and expects no material impact to Consolidated Balance Sheetand Consolidated Statement of Operations. Note 3.New Accounting Standards Implemented In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, as amended (commonly referred to as ASC 606), which replacesnumerous requirements in U.S. GAAP, including industry-specific requirements, and provides companies with a single revenue recognition model forrecognizing revenue from contracts with customers and significantly expanded the disclosure requirements for revenue arrangements. The new standard, asamended, was effective for the Company for interim and annual reporting periods beginning on January 1, 2018. As discussed in Note 2, the Company adopted ASC 606 using the modified retrospective transition method. Results for reporting periods beginning afterDecember 31, 2017 are presented under ASC 606, while prior period comparative information has not been restated and continues to be reported inaccordance with ASC 605, Revenue Recognition, the accounting standard in effect for periods ending prior to January 1, 2018. With the adoption of ASC606, the Company recognizes sales over time by using the cost-to-cost method on all of its supply and installation contracts and measures the extent ofprogress toward completion using the cost-to-cost method after adjusting inventory for uninstalled materials and that control has not been passed to thecustomer. Previously, under ASC 605, the Company recognized sales over time by using the percentage of completion method on all of its fixed-typecontracts and measured the extent of progress toward completion using the cost-to-cost method but adjusted inventory for uninstalled materials only forthose projects were this method was not appropriately reflecting the progress on the contracts. Accordingly, the adoption of ASC 606 impacted all contractsthat had uninstalled materials were control has not been passed to the customer regardless of the extent of progress toward completion. Based on the analysis performed of the uninstalled materials at January 1, 2018, the Company recorded, upon adoption of ASC 606, a net decrease to retainedearnings of $187, as shown on the table below. The adjustment to retained earnings primarily relates to contracts that had uninstalled material that were notpreviously included in inventory since the cost-to-cost method was appropriately reflecting the progress of these contracts. The Company made certain presentation changes to its consolidated balance sheet on January 1, 2018 to comply with ASC 606. The components of contractsin process as reported under ASC 605, which included unbilled contract receivables and inventoried contract costs, have been reclassified as contract assetsand inventories, respectively, after certain adjustments described below under ASC 606. The remainder of inventoried contract costs, primarily related toinventories not controlled by the Company’s customers, were reclassified to inventories. The Company expenses costs to obtain a contract and costs to fulfilla contract as incurred. Other revenues not related to fixed-type contracts did not result in any changes under ASC 606 and the revenues are still beenrecognized when control is transferred to the customer based on the sales terms. F-15 The table below presents the cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet due to the adoption of ASC 606. December 31, 2017 As Reported Under ASC 605 Adjustments Due to ASC 606 January 1, 2018 As Adjusted Under ASC 606 ASSETS Trade accounts receivable, net $110,464 $(30,223) $80,241 Inventories 71,656 1,975 73,631 Unbilled receivables on uncompleted contracts 9,996 (9,996) - Contract assets - 45,468 45,468 Other Assets 275,884 - 275,884 Total Assets $468,000 $7,224 $475,224 LIABILITIES Contract liabilities - current - 18,945 18,945 Current portion of customer advances on uncompleted contracts 11,429 (11,429) - Other current liabilities 13,626 (105) 13,521 Customer advances on uncompleted contracts - non-current 1,571 (1,571) - Contract liabilities - current - 1,571 1,571 Other Liabilities 319,709 - 319,709 Total liabilities $346,335 $7,411 $353,746 SHAREHOLDERS’ EQUITY Retained earnings 22,212 (187) 22,025 Total shareholders’ equity $121,665 $(187) $121,478 The adjustment of trade accounts receivable upon adoption of ASC 606 is related to the reclassification of retainage receivables to contract assets. Seebreakdown of contract assets further below. The table below presents the impact of the adoption of ASC 606 on the Company’s balance sheet. December 31, 2018 Under ASC 605 Effect of ASC 606 As Reported Under ASC 606 ASSETS Trade accounts receivable $117,106 $(24,315) $92,791 Inventories 90,716 1,133 91,849 Unbilled receivables on uncompleted contracts 18,556 (18,556) - Contract assets - current portion - 46,018 46,018 Other Assets 252,130 - 252,130 Contract assets - Non-current 6,986 - 6,986 Total Assets $485,494 $4,280 $489,774 LIABILITIES Contract liabilities - current - 16,789 16,789 Current portion of customer advances on uncompletedcontracts 12,396 (12,396) - Other current liabilities 105,806 - 105,806 Customer advances on uncompleted contracts - non-current 1,436 (1,436) - Contract liabilities - non-current - 1,436 1,436 Other Liabilities 232,590 (75) 232,515 Total liabilities $352,228 $4,318 $356,546 SHAREHOLDERS’ EQUITY Retained earnings 10,477 (38) 10,439 Total shareholders’ equity $133,266 $(38) $133,228 F-16 The table below presents the impact of the adoption of ASC 606 on the Company’s statement of operations. Year ended December 31, 2018 Under ASC 605 Effect of ASC 606 As Reported Under ASC 606 Operating Revenues $372,230 $(1,246) $370,984 Cost of Sales 251,900 (1,133) 250,767 Gross Profit 120,330 (113) 120,217 Operating Expenses (73,022) -73,022 Other Income and Expenses 47,308 (113) 47,195 Income Before Tax 14,575 (113) 14,462 Income Tax Provision 6,051 (75) 5,976 Net Income 8,524 (38) 8,486 Net Income Attributable to Parent $9,069 $(38) $9,031 Basic earnings per share $0.23 $- $0.23 Diluted earnings per share $0.22 $- $0.22 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 thenature, amount, timing, and uncertainty of the Company’s revenue and cash flows. Year ended December 31, 2018 2017 2016 Supply and installation contracts $160,503 $148,317 $48,725 Product sales 210,481 166,139 256,291 Total Revenues $370,984 $314,456 $305,016 F-17 Remaining Performance Obligations As of December 31, 2018, the Company had $251.7 million of remaining performance obligations, which represents the transaction price of firm orders minussales recognized from inception to date. Remaining performance obligations exclude unexercised contract options, verbal commitments and potential ordersunder basic ordering agreements. The Company expects to recognize 100% of sales relating to existing performance obligations within three years, of which$217.4 million are expected to be recognized during the year ended December 31, 2019, and $34.4 million during the year ended December 31, 2020. Contract Assets and Contract Liabilities Contract assets represent accumulated incurred costs and earned profits on contracts with customers that have been recorded as sales but have not been billedto customers and are classified as current. Contract liabilities consist of advance payments and billings in excess of costs incurred and deferred revenue, andrepresent amounts received in excess of sales recognized on contracts. The Company classifies advance payments and billings in excess of costs incurred ascurrent, and deferred revenue as current or non-current based on the expected timing of sales recognition. Contract assets and contract liabilities aredetermined 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 inthe Company’s consolidated balance sheets. The table below presents the components of net contract assets (liabilities). December 31, 2018 January 1, 2018 Contract assets — current $46,018 $45,468 Contract assets — non-current 6,986 - Contract liabilities — current (16,789) (18,945)Contract liabilities — non-current (1,436) (1,571)Net contract assets $34,779 $24,952 The components of contract assets are presented in the table below. December 31, 2018 January 1, 2018 Unbilled contract receivables, gross $21,703 $15,245 Retainage 31,301 30,223 Total contract assets 53,004 45,468 Less: current portion 46,018 45,468 Contract Assets – non-current $6,986 $- F-18 The components of contract liabilities are presented in the table below. December 31, 2018 January 1, 2018 Billings in excess of costs $4,393 $7,516 Advances from customers on uncompleted contracts 13,832 13,000 Total contract liabilties 18,225 20,516 Less: current portion 16,789 18,945 Contract liabilities – non-current $1,436 $1,571 During the year ended December 31, 2018, the Company recognized $6,381 of sales related to its contract liabilities at January 1, 2018. Note 4.GM&P Acquisition On March 1, 2017, the Company entered into and consummated a purchase agreement, as amended, with Giovanni Monti, the owner of 100% of theoutstanding shares of GM&P. GM&P is a consulting and glazing contracting company located in Miami, Florida with over 15 years of experience in thedesign and installation of various building enclosure systems such as curtain window walls and a long-standing commercial relationship with the Company,working alongside it in the past in different projects within the U.S, by providing engineering and installation services to those projects. The Company acquired all of the shares of GM&P for a purchase price of $35 million, of which the Company paid $6 million in May 2017 with theremaining $29 million of the purchase price to be paid by May 15, 2018. The Company paid an additional $6 million in cash on April 2018 and entered intoa Debt Settlement Agreement to pay the remaining consideration price through a combination of stock, by issuing 1,238,095 ordinary shares valued at$10.50 per share and a $10 million Subordinated Seller´s Note. The Seller´s Note was subsequently reduced to $8.5 million to atone the Buyer foradjustments and process inefficiencies caused by changes in GM&P´s supply chain and other business optimization costs seen during the second quarter of2018. Following our process optimization and changes in the supply chain process, we believe the associated cost impacts to be non-recurring. The Companyoriginally intended to complete the payment for the acquisition in the short term but opted to classify the liability as long term in line with its contractualmaturity as the Company prioritizes its short-term working capital needs to fund ongoing growth. The Seller’s Note bears semi-annual interest payments atapproximately 6% per annum and matures in 2022. Based on the implicit price at which the shares were issued, which at the time of the issuance in June 2018 was higher than the market price of those shares,the Company recorded a gain of $2,106. Additionally, including the reduction of the nominal amount of the Seller´s Note by $1,500, the Company recordeda gain on extinguishment of debt of $3,606. The gain on extinguishment of debt was recorded into Additional Paid-In Capital per guidance of ASC 470-50-40 because it is considered a related party transaction as the former owner of GM&P holds a management position within the Company. With the acquisition of GM&P, the Company also acquired a 60% equity interest in Componenti, a subsidiary of GM&P that provides architecturalspecialties in the US, specializing in design-build systems for individual projects and with experience in value engineering to create products that complywith the architects’ original design intent, while maintaining focus on affordable construction methods and materials. The following table summarizes the consideration transferred to acquire GM&P and the amounts of identified assets acquired and liabilities assumed at theacquisition date, as well as the fair value of the non-controlling interest in Componenti as of the acquisition date. Under ASC 805, a company can applymeasurement period adjustments during the twelve-month period after the date of acquisition. During this period, the acquirer may adjust preliminaryamounts recognized at the acquisition date to their subsequently determined final fair values. The allocation of the consideration transferred was based onmanagement’s judgment after evaluation of several factors, including a preliminary valuation assessment. The analysis was completed on March 2018 andresults in measurement period adjustments are included in the final purchase price allocation as shown on the table below. The goodwill from the GM&Pacquisition represents the expected synergies from combining operations with Tecnoglass Inc., and is not deductible for tax purposes F-19 The following table summarizes the purchase price allocation of the total consideration transferred: Consideration Transferred: Notes payable (Cash or Stock) $35,000 Fair value of the non-controlling interest in Componenti 1,141 Recognized amounts of identifiable assetsacquired and liabilities assumed: Preliminary PurchasePrice Allocation Measurement PeriodAdjustments Final Purchase PriceAllocation Cash and equivalents $509 509 Accounts receivable 42,314 42,314 Other current assets 5,287 242 5,529 Property, plant, and equipment 684 684 Other non-current tangible assets 59 59 Trade name 980 980 Non-compete agreement 165 165 Contract backlog 3,090 3,090 Customer relationships 4,140 4,140 Accounts payable (22,330) 275 (22,055)Other current liabilities assumed (13,967) (673) (14,640 Non-current liabilities assumed (3,634) (3,231) (6,865)Total identifiable net assets 17,297 (3,387) 13,910 Goodwill (including Workforce) $18,844 3,387 $22,231 The adjustment made to the preliminary purchase price allocation to Non-current liabilities assumed is related to an adjustment in deferred tax liability andbillings in excess of cost incurred. The excess of the consideration transferred over the estimated fair values of assets acquired and liabilities assumed wasrecorded as goodwill. The identifiable intangible asset subject to amortization was the tradename, customer relationships, non-compete agreement, andbacklog, which have a remaining useful life of two to five years. See Note 9 – Goodwill and Intangible Assets for additional information. The following unaudited pro forma financial information assumes the acquisition had occurred as of January 1, 2017 which does not include GM&P actualresults for the entire period. Pro forma results have been prepared by adjusting our historical results to include the results of GM&P adjusted for theamortization expense related to the intangible assets arising from the acquisition. The unaudited pro forma results below do not necessarily reflect the resultsof operations that would have resulted had the acquisition been completed at the beginning of the earliest periods presented, nor does it indicate the resultsof operations in future periods. The unaudited pro forma results do not include the impact of synergies, nor any potential impacts on current or future marketconditions which could alter the following unaudited pro forma results. Pro-Forma Pro-Forma Twelve months Twelve months Ended Ended (in thousands, except per share amounts) December 31, 2017 December 31, 2016 Pro Forma Results Net sales $324,523 $365,047 Net (loss) income attributable to parent $4,719 $27,600 Net income per common share: Basic $0.14 $0.89 Diluted $0.13 $0.85 F-20 Non-controlling interest With the acquisition of GM&P, the Company also acquired a 60% equity interest in Componenti USA LLC, a subsidiary of GM&P that providesarchitectural specialties in the US, specializing in design-build systems for individual projects and with experience in value engineering to create productsthat comply with the architects’ original design intent, while maintaining focus on affordable construction methods and materials. The 40% non-controllinginterest in Componenti is included in the opening balance sheet as of the acquisition date and its fair value amounted to $1,141. When the company owns amajority (but less than 100%) of a subsidiary’s stock, the Company includes in its Consolidated Financial Statements the non-controlling interest in thesubsidiary. The non-controlling interest in the Consolidated Statements of Operations and Other Comprehensive Income is equal to the non-controllinginterests’ proportionate share of the subsidiary’s net income and, as included in Shareholders’ Equity on the Consolidated Balance Sheet, is equal to the non-controlling interests’ proportionate share of the subsidiary’s net assets. In determining the fair value we used the income approach amd the market approachwhich was performed by third party valuation specialists under management. Note 5.Trade Accounts Receivable Trade accounts receivable consists of the following: December 31, 2018 2017 Current accounts receivable $95,474 $82,970 Retainage (1) - 30,223 Trade accounts receivable 95,474 113,193 Less: Allowance for doubtful accounts (2,683) (2,729) $92,791 $110,464 (1)Retainage as of December 31, 2018 amount to $31,301 and is presented as contract assets as a result of the adoption of the new accounting standardfor revenue recognition, ASC 606, further described in Note 3. New Accounting Standards Implemented. The changes in the allowance for doubtful accounts for the years ended December 31, 2018 and 2017 are as follows: December 31, 2018 2017 Balance at beginning of year $2,729 $2,083 Provision for bad debts 369 3,128 Deductions and write-offs, net of foreign currency adjustment (415) (2,482)Balance at end of year $2,683 $2,729 F-21 Note 6.Inventories Inventories are comprised of the following December 31, 2018 December 31, 2017 Raw materials $43,744 $40,509 Work in process 25,957 11,468 Finished goods 14,251 13,236 Stores and spares 7,437 6,134 Packing material 540 438 91,929 71,785 Less: inventory allowances (80) (129) $91,849 $71,656 There are no third party liens or pledges on our inventories as of December 31, 2018. Note 7.Other Current Assets Other assets consists of the following: December 31, 2018 2017 Advances to Suppliers and Loans $1,100 $795 Prepaid Income Taxes 16,000 15,573 Employee Receivables 418 455 Other Creditors 1,414 691 $18,932 $17,514 F-22 Note 8.Property, Plant and Equipment Property, plant and equipment is comprised of the following: December 31, 2018 December 31, 2017 Building $53,784 $59,237 Machinery and equipment 133,663 134,536 Office equipment and software 6,238 5,936 Vehicles 1,887 1,834 Furniture and fixtures 2,339 2,274 Total property, plant and equipment 197,911 203,817 Accumulated depreciation (77,884) (66,083)Net book value of property and equipment 120,027 137,734 Land 29,172 30,967 Total property, plant and equipment, net $149,199 $168,701 Depreciation expense was $18,807, $17,472 and $14,508 for the years ended December 31, 2018, 2017 and 2016, respectively. The roll forward of Property, plant and equipment for the years ended December 31, 2018 and 2017 is as follows: December 31, 2018 2017 Property, Plant and Equipment Beginning balance $234,784 $220,074 Beginning balance Acquisitions GM&P, Componenti - 961 Acquisitions 13,563 8,782 Tax incentive on installation of solar panels (1,531) Disposals (72) (17)Reclassification to investment property - 5,459 Effect of Foreign currency translation (19,662) (475)Ending Balance $227,083 $234,784 Accumulated Depreciation Beginning Balance $(66,083) $(49,277)Beginning balance Acquisitions GM&P, Componenti - (277)Depreciation Expense (18,807) (17,472)Disposals 39 - Reclassification to investment property - (585)Effect of Foreign Currency Translation 6,967 1,528 Ending balance $(77,884) $(66,083)Property, plant and Equipment, Net $149,199 $168,701 F-23 The effect of foreign currency translation is the adjustment resulting from translating the amounts from Colombian Pesos, functional currency ofsome of the Company’s subsidiaries, into U.S. Dollars, the reporting currency. Note 9.Goodwill and Intangible Assets Goodwill The table below provides a reconciliation of the beginning and ending balances of the Goodwill recorded on the Company’s balance sheet: Beginning balance - December 31, 2016 $1,330 GM&P Acquisition 21,800 Ending balance – December 31, 2017 $23,130 GM&P measurement period adjustment 431 Ending balance – December 31, 2018 $23,561 Intangible Assets, Net Intangible assets include Miami-Dade County Notices of Acceptances (NOA’s), which are certificates in the required to market hurricane- resistantglass in Florida. Also, it includes the intangibles related to the acquisition of GM&P. December 31, 2018 Gross Acc. Amort. Net Trade Names $980 $(359) $621 Notice of Acceptances (NOAs), product designs and other intellectual property 10,881 (5,425) 5,456 Non-compete Agreement 165 (60) 105 Contract Backlog 3,090 (2,832) 258 Customer Relationships 4,140 (1,626) 2,514 Total $19,256 $(10,302) $8,954 F-24 December 31, 2017 Gross Acc. Amort. Net Trade Names $980 $(163) $817 Notice of Acceptances (NOAs), product designs and other intellectual property 10,826 (5,467) 5,359 Non-compete Agreement 165 (28) 137 Contract Backlog 3,090 (1,287) 1,803 Customer Relationships 4,140 (739) 3,401 Total $19,201 $(7,684) $11,517 December 31, 2016 Gross Acc. Amort. Net Notice of Acceptances (NOAs) and product designs 8,524 (3,969) 4,555 The weighted average amortization period is 5.2 years. During the twelve months ended December 31, 2018, 2017 and 2016, the amortization expense amounted to $4,350, $3,497 and $825, respectively,and was included within the general and administration expenses in our consolidated statement of operations. The estimated aggregate amortization expense for each of the five succeeding years as of December 31, 2018 is as follows: Year ending (in thousands) 2019 $2,545 2020 2,133 2021 2,103 2022 1,225 2023 760 Thereafter 188 $8,954 Note 10.Other Long Term Assets Other long term assets are comprised of the following: December 31, 2018 2017 Real estate investments $2,271 $2,069 Cost method investment 500 500 Other long term assets 82 82 $2,853 $2,651 F-25 Note 11.Debt The Company’s debt is comprised of the following: December 31, 2018 December 31, 2017 Revolving lines of credit $19,146 $638 Capital lease 380 245 Unsecured senior note 210,000 210,000 Other loans 17,804 20,293 Less: Deferred cost of financing (5,015) (6,918)Total obligations under borrowing arrangements 242,315 224,258 Less: Current portion of long-term debt and other current borrowings 21,606 3,260 Long-term debt $220,709 $220,998 As December 31, 2018 and December 31, 2017, the Company had $242,106 and $224,041 of debt denominated in US Dollars with the remainingamounts denominated in Colombian Pesos. The Company’s Other loans amounting to $17,804 have maturities ranging from sixty days to 11 years on a realestate mortgage. Our credit facilities bear interest at rates ranging from 3.9% to 8.2% and weighted average of 7.65%. Short term borrowings outstanding beara weighted average interest rate of 4.7%. As December 31, 2018 and December 31, 2017, the Company had $208 and $216 of debt denominated inColombian Pesos with the remaining amounts denominated in U.S. Dollars. On January 23, 2017, the Company issued a U.S. dollar denominated, $210 million offering of 5-year senior unsecured notes at a coupon rate of8.2% in the international debt capital markets under Rule 144A of the Securities Act to Qualified Institutional Buyers. The Company used approximately$179 million of the proceeds to repay outstanding indebtedness, including Capital leases, and as a result will achieve a lower cost of debt and strengthen itscapital structure given the non-amortizing structure of the new bond. Of these repayments, $59,444 were used to refinance short term debt into long termdebt. The senior note does not have negative covenants with an acceleration clause, however requires the Company to meet certain performance indicators inorder to take on more debt. The Company had $5,037 and $4,758 of property, plant and equipment pledged as collateral for various lines of credit as of December 31, 2018 andDecember 31, 2017, respectively. Maturities of long term debt and other current borrowings are as follows as of December 31, 2018: Year Ending December 31, 2019 $21,606 2020 2,447 2021 2,411 2022 212,412 2023 2,380 Thereafter 6,074 Total $247,330 F-26 The Company had $18,257 and $19,146 available and outstanding in several lines of credit under a revolving note arrangement as of December 31,2018. The floating interest rates on the revolving notes range between 3.9% and 7.9% and a weighted average interest rate of 4.7%. The Company had$4,250 and $638 available and outstanding in several lines of credit under a revolving note arrangement as of December 31, 2017. As of December 31, 2018, the Company was obligated under various capital leases under which the aggregate present value of the minimum leasepayments amounted to $380. Differences between capital lease obligations and the value of property, plant and equipment under capital lease arises fromdifferences between the maturities of capital lease obligations and the useful lives of the underlying assets. Interest expense for the year ended December 31, 2018, 2017 and 2016 was $21,187, $19,872 and $16,814, respectively. During the years endedDecember 31, 2018, 2017 and 2016, the Company capitalized interests in the amounts of $0, $10 and $377, respectively. Note 12.Income Taxes The Company files income tax returns for TG and ES in the Republic of Colombia. On December 28, 2016, the Colombian congress enacted astructural tax reform that took effect on January 1, 2017 which reduces corporate income tax from 42% to 40% for fiscal year 2017, 37% in 2018 and 33% in2019 and thereafter. As a result of the Colombian tax reform from December 28, 2016, the Company’s net deferred tax liability decreased $586 as ofDecember 31, 2016. 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 federalincome tax rate ranges between 34% and 39.5%. Tecnoglass Inc. as well as all the other subsidiaries in the Cayman Islands and Panama do not currently haveany tax obligations. On December 20, 2017, the Tax Cuts and Jobs Act (the “2017 Act”) was signed into law. We analyzed the impact of the 2017 Act on ouraccounting for income taxes, including the remeasurement of our deferred tax assets and liabilities, and expect to see a reduction in U.S. tax expense as thenew reform reduces the federal corporate tax rate from 35% to 21%. The components of income tax expense (benefit) are as follows: December 31, 2018 2017 2016 Current income tax United States $639 $4,558 $- Colombia 8,626 7,372 16,318 9,265 11,930 16,318 Deferred income Tax United States 391 (2,328) - Colombia (3,680) (3,809) (247) (3,289) (6,137) (247)Total Provision for Income Tax $5,976 $5,793 $16,071 F-27 A reconciliation of the statutory tax rate in Colombia to the Company’s effective tax rate is as follows: December 31, 2018 2017 2016 Income tax expense at statutory rates 31.3 % 37.0% 40.00%Non-deductible expenses 13.0 % 18.6% 1.20%Non-taxable income -3.0 % -20.4% -0.30%Effective tax rate 41.3% 35.3% 40.9% The Company’s effective tax rate of 35.3% for the year ended December 2017 reflects $4,628 of non-taxable income, including 7.7% related tocertain intercompany gains of foreign exempt subsidiaries of $1,740 and 5.5% an unrecognized tax benefit related to GM&P’s uncertain tax position of$1,255, further described below, as well as $4,230 of non-deductible expenses including withholding taxes on debt payments, and other non-deductibleexpenses. Comparably, the Company had nontaxable gains of $776 and $4,674 related to the change in the fair value of warrant liability and earnout shareliability during the year ended December 31, 2016. There were no other individual items that contributed 5 percentage points or more in the reconciliation of the Company’s effective tax rate and thestatutory rate during the years ended December 31, 2016 and 2015. The Company has the following deferred tax assets and liabilities: December 31, 2018 2017 Deferred tax assets: Accounts Receivable Clients - not delivered FOB $(1,119) $- Property, plant and equipment adjustments 427 483 Tax benefit on installation of renewable energy project 448 - Operating loss carryforward 1,581 - Financial Liabilities 30 - Deferred profit on other assets 99 108 Foreign currency transactions 6,560 1,552 Provision Inventory obsolescence 24 35 Total deferred tax assets $8,050 $2,178 Deferred tax liabilities: Inventory - not delivered FOB $- $(1,134)Investments (118) - Property, plant and equipment adjustment (130) - Unbilled receivables uncompleted contracts (3,293) (726)Depreciation and Amortization (2,445) (2,532)Total deferred tax liabilities $(5,986) $(2,124) Net deferred tax $2,064 $(2,214) Net deferred tax is presented on the balance sheet as follows: December 31, 2018 2017 Long term deferred income tax asset $4,770 $103 Less: long term deferred income tax liability $2,706 $2,317 F-28 Note 13.Fair Value Measurements The Company accounts for financial assets and liabilities in accordance with accounting standards that define fair value and establish a frameworkfor measuring fair value. The hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets foridentical 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 orliability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservableinputs based on the Company’s assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification within thehierarchy 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 andadvances from customers approximate their fair value due to their relatively short-term maturities. The Company bases its fair value estimate for long termdebt obligations on its internal valuation. As of December 31, 2018, financial instruments carried at amortized cost that do not approximate fair value consist of long-term debt. See Note 11 -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 onmarket rates, which are level 2 inputs. The following table summarizes the fair value and carrying amounts of our long-term debt: December 31 2018 2017 Fair Value 234,163 240,057 Carrying Value 220,709 220,998 Note 14.Related Parties The following is a summary of assets, liabilities, and income and expense transactions with all related parties, shareholders, directors and managers: December 31, 2018 December 31, 2017 Assets Current Assets Due from VS $6,229 $6,240 Due from other related parties 2,010 2,260 $8,239 $8,500 Liabilities Due to related parties - Current $1,500 $975 Due to related parties – Long Term 600 - F-29 December 31, 2018 December 31, 2017 December 31, 2016 Revenues $5,338 $5,081 $9,742 Interest Income - - 235 Expenses Paid to other related parties 6,925 4,254 2,395 Ventanas Solar S.A. (“VS”), a Panama sociedad anonima, is an importer and installer of the Company’s products in Panama. Family members of theCompany’s CEO and COO and other related parties own 100% of the equity in VS. The Company’s sales to VS for the year ended December 31, 2018, 2017and 2016 were, $2,938, $3,670 and $8,269, respectively. Payments to other related parties during the periods indicated are comprised of the following: Year ended December 31, 2018 2017 2016 Charitable contributions 1,263 2,787 1,340 Sales commissions 1,419 691 392 Note 15.Commitments and Contingencies Commitments As of December 31, 2018, the Company has an outstanding obligation to purchase an aggregate of at least $31,264 of certain raw materials from aspecific supplier before May 2026. Additionally, in connection with the joint venture agreement the Company entered into with Saint-Gobain on January 11, 2019, further described inNote 21. Subsequent Events, the Company acquired a contingent obligation to purchase minimum volumes of float glass once the new plant located close tothe Company’s actual manufacturing facilities commences operations, which are expected to initiate in 2022. Guarantees As of December 31, 2018, the Company does not have guarantees on behalf of other parties. F-30 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 ourconstruction projects, related to supply and installation, and even though deemed ordinary, they may involve significant monetary damages. We are alsosubject to other type of litigations arising from employment practices, worker’s compensation, automobile claims and general liability. It is very difficult topredict precisely what the outcome of these litigations might be. However, with the information at out disposition as this time, there are no indications thatsuch claims will result in a material adverse effect on the business, financial condition or results of operations of the Company. Note 16.Shareholders’ Equity Preferred Shares Tecnoglass is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 per share with such designation, rights and preferences asmay be determined from time to time by the Company’s board of directors. As of December 31, 2018, there are no preferred shares issued or outstanding. Ordinary Shares The Company is authorized to issue 100,000,000 ordinary shares with a par value of $0.0001 per share. As of December 31, 2018, a total of38,092,996 Ordinary shares were issued and outstanding. Legal Reserve Colombian regulation requires that companies retain 10% of net income until it accumulates at least 50% of subscribed and paid in capital. Theamount recorded meets this standard. Earnings per Share The following table sets forth the computation of the basic and diluted earnings per share for the years ended December 31, 2018, 2017 and 2016: December 31, 2018 2017 2016 Numerator for basic and diluted earnings per shares Net Income (Loss) $8,486 $5,725 $23,180 Denominator Denominator for basic earnings per ordinary share - weighted averageshares outstanding 37,511,851 36,836,075 32,864,628 Effect of dilutive securities and stock dividend 550,784 550,784 550,784 Denominator for diluted earnings per ordinary share - weightedaverage shares outstanding 38,062,635 37,386,858 33,415,412 Basic earnings per ordinary share $0.23 $0.16 $0.71 Diluted earnings per ordinary share $0.22 $0.15 $0.69 F-31 As per ASC 260 – Earnings Per Share, 2,626,727 and 3,125,807 ordinary shares issued in connection with the share dividend paid since December31, 2017 and 2016 are considered in the denominator for basic and diluted earnings per ordinary share, respectively. The effect of dilutive securities includes 550,784 shares as of December 31, 2018, for shares potentially issued in relation to the dividend declared. Long Term Incentive Compensation Plan On December 20, 2013, our shareholders approved our 2013 Long-Term Equity Incentive Plan (“2013 Plan”). Under the 2013 Plan, 1,593,917ordinary shares are reserved for issuance in accordance with the plan’s terms to eligible employees, officers, directors and consultants. As of December 31,2018, no awards had been made under the 2013 Plan. Dividend Prior to April 2015, we had not paid any cash dividends on our ordinary shares. On April 14, 2015, our Board of Directors authorized the payment ofregular quarterly dividends to holders of our ordinary shares at a quarterly rate of $0.125 per share (or $0.50 per share on an annual basis). Our Board ofDirectors subsequently authorized an increase in the dividends to $0.14 per share (or $0.56 per share on an annual basis) beginning on the third quarter of2017 going forward. The dividends are paid in cash or ordinary shares, at the option of holders of ordinary shares during an election period. The value of theordinary shares used to calculate the number of shares issued with respect to that portion of the dividend payable in ordinary shares was the average of theclosing price of our ordinary shares on the NASDAQ Capital Market during a set period. If no choice was made during the election periods, the dividend waspaid in ordinary shares. We intend to continue to pay dividends on our ordinary shares, subject to our compliance with applicable law, and depending on, among otherthings, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreementsand in any preferred stock, business prospects and other factors that our Board of Directors may deem relevant. Our bond indenture currently restricts the typeof dividend we can make while the bonds are outstanding. See “Description of Indebtedness” below for further information. The payment of any dividends isultimately within the discretion of our Board of Directors. The payment of dividends in the future, if any, will be contingent upon our revenues and earnings,if any, capital requirements and our general financial condition and limitations imposed by our outstanding indebtedness. Dividend declarations and the establishment of future record and payment dates are subject to the Board of Directors’ continuing determination thatthe 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 theBoard of Directors at any time. Note 17.Segment and Geographic Information 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 windows products sold to the construction industry. F-32 In reviewing the Company’s segmentation, the Company followed guidance under ASC 280-10-50-1 which states that “an operating segment is acomponent of a public entity that has all of the following characteristics: (i) it engages in business activities from which it may earn revenues and incurexpenses (including revenues and expenses relating to transactions with other components of the same public entity), (ii) its operating results are regularlyreviewed by the public entity’s chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess itsperformance, and (iii) its discrete financial information is available. Based on the Company’s review discussed below, the Company believes that itsidentification of a single operating and reportable segment - Architectural Glass and Windows - is consistent with the objectives and basic principles ofSegment Reporting, which are to “help financial statement readers better understand the public entity’s performance, better assess its prospects for future netcash flows and make more informed judgments about the public entity as a whole.” The Company analyzed the Company’s segmentation after the acquisition of GM&P and concluded that the operations of GM&P fall within our singleoperating segment, Architectural Glass and Windows. The CODM reviews financial information of the Company on a consolidated basis including GM&P ona comparative basis including an analysis with the consolidated budget and forecast. This acquisition has not changed the products and services offered inprior years and as such the company believes that there is no need of an additional segment due to the aforementioned above. Furthermore, a large part of thestrategy behind the acquisition of GM&P was to use this entity as a platform to sell the Company´s products into the U.S, serving our clients by providing afull “end to end” portfolio of products and services integrated into one. The following tables present geographical information about external customers. Geographical information is based on the location where there thecustomer is located. Year ended December 31, 2018 2017 2016 Colombia $62,445 $63,539 $98,758 United States 296,534 238,529 189,985 Panama 4,248 4,259 9,444 Other 7,757 8,129 6,829 Total Revenues $370,984 $314,456 $305,016 The following table presents revenues from external customer by product groups. December 31, 2018 2017 2016 Glass and framing components $104,032 $67,311 $89,850 Windows and architectural systems 266,952 247,144 215,166 Total Revenues $370,984 $314,456 $305,016 During the year ended December 31, 2018 and 2017, no single customer accounted for more than 10% of our revenues. Only GM&P before beingacquired by the Company in 2017 accounted for more than 10% or more of our net sales, amounting to $80.0 million, or 26% of total sales during the yearsended December 31, 2016. F-33 The Company’s long-lived assets are distributed geographically as follows: December 31, 2018 2017 2016 Colombia $146,544 $166,380 $172,478 United States 38,075 39,037 5,631 Total long lived assets $184,619 $205,417 $178,109 Note 18.Operating Expenses Selling expenses for the years ended December 31, 2018, 2017 and 2016 were comprised of the following: December 31, 2018 2017 2016 Shipping and Handling $18,583 $13,068 $15,568 Personnel 6,707 6,219 5,679 Sales commissions 5,382 4,527 4,346 Services 2,502 2,024 1,723 Packaging 1,283 1,306 950 Accounts Receivable provision 369 3,128 4686 Other Selling Expenses 4,564 3,512 4,001 Total Selling Expense $39,390 $33,784 $36,953 General and administrative expenses for the years ended December 31, 2018, 2017 and 2016 were comprised of the following: December 31, 2018 2017 2016 Personnel $12,281 $10,631 $7,938 Professional fees 4,705 4,207 5,395 Taxes 845 895 1,302 Services 2,918 2,850 2,302 Depreciation and Amortization 4,887 4,404 1,788 Bank charges and tax on financial transactions 1,075 1,647 2,881 Insurance 1,601 1,487 893 Rent expense 854 552 209 Charitable contributions 1,385 1,537 1,504 Other expenses 3,081 2,824 4,736 Total General and administrative expenses $33,632 $31,034 $27,846 F-34 Note 19.Non-Operating Income and Expenses Non-operating income and expenses, net on our consolidated statement of operations amounted to $2,915, $3,190 and $4,155 for the years endedDecember 31, 2018, 2017 and 2016, respectively. These amounts are primarily comprised of income from interests on receivables and short-term investments,rent income and recoveries on scrap materials. Note 20.Selected Quarterly Financial Data (unaudited) The following tables contain (unaudited) quarterly financial statement information for the years ended December 31, 2018 and 2017. 2018 Quarters Ended March 31, June 30, September 30, December 31, Operating revenue $87,160 $88,969 $96,992 $97,863 Gross profit 26,748 24,642 34,693 34,134 Net income (loss) 10,619 (3,870) 5,152 (4,415)Net income (loss) attributable to parent 10,691 (3,658) 6,297 (22,361)Basic income (loss) per share* 0.29 (0.10) 0.13 (0.12)Diluted income (loss) per share* $0.28 $(0.10) $0.13 $(0.12) 2017 Quarters Ended March 31, June 30, September 30, December 31, Operating revenue $65,817 $80,976 $83,384 $84,279 Gross profit 22,252 22,544 27,184 27,202 Net income (loss) 1,031 (3,500) 7,025 1,169 Net income (loss) attributable to parent 1,019 (3,560) 6,924 1,066 Basic income (loss) per share* 0.03 (0.10) 0.19 0.03 Diluted income (loss) per share* $0.03 $(0.10) $0.19 $0.03 *Per share amounts have been retroactively adjusted to include the dilutive effect of shares issued in relation to a share dividend payment. F-35 Note 21.Subsequent Events On January 9, 2019, we declared a regular quarterly dividend of $0.14 per share for the fourth quarter of 2018. The dividend will be payable onFebruary 28, 2019 to shareholders of record as of the close of business on January 31, 2019. The dividend will be paid in cash or ordinary shares, to be chosenat the option of holders of ordinary shares during an election period beginning February 1, 2019 and lasting until 5:00 P.M. Eastern Time on February 15,2019. 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 inordinary shares shall be the average of the closing price of the Company’s ordinary shares on NASDAQ during the period from February 1, 2019 throughFebruary 15, 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. 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 componentof our manufacturing process, whereby we will acquire an approximate 25% minority ownership interest in Vidrio Andino Holdings S.A.S, a Colombia-basedsubsidiary of Saint-Gobain. The purchase price for our interest in this entity is $34.1 million in cash and land worth $10.9 million near our facility inBarranquilla, which will be contributed on our behalf by our Chief Executive Officer and Chief Operating Officer, José M. Daes and Christian T. Daes with athird party valuation to be conducted. Vidrio Andino’s float glass plant located in the outskirts of Bogota, Colombia, had been one of our main suppliers ofraw glass. We beleive this transaction will solidify our vertical integration strategy by acquiring an interest in the first stage of our production chain, whilesecuring ample glass supply for our expected production needs. Additionally, the joint venture agreement includes plans to build a new plant in Galapa, Colombia that will be located approximately 20 miles fromour primary manufacturing facility, in which we will also have a 25% interest. The new plant will be funded with proceeds the original cash contributionmade by the Company, operating cashflows from the Bogota plant, debt incurred at the joint venture level that will not consolidate into the Company and anadditional contribution by us of approximately $12.5 million to be paid between 2020 and 2021. Under the joint venture agreement, Saint Gobain will retaina majority ownership position and will have control over the operations of both plants and as such, the transaction will be accounted for under the equitymethod. The acquisition will be consummated on or before May 2019, once the original cash and land contributions have been completed and the shares ofVidrio Andino have been contributed. F-36  FIRST AMENDMENT TO THE DEBT SETTLEMENT AGREEMENT THIS FIRST AMENDMENT TO THE DEBT SETTLEMENT AGREEMENT, effective as of June 30, 3018 (“Effective Date”), is made by and among(i) TECNOGLASS INC., a Cayman Islands exempted company (“Tecnoglass” or the “Buyer”), and (ii) GIOVANNI MONTI, an individual (“Seller”). RECITALS WHEREAS, Giovanni Monti and Partners Consulting and Glazing Contractors, Inc (“GM&P”) is a consulting and glazing contracting companylocated in Miami, Florida. WHEREAS, GM&P has over 15 years of experience in the design and installation of various building enclosure systems such as curtain and windowwalls. WHEREAS, on March 1st, 2017 Tecnoglass acquired all shares of GM&P for a total purchase price equal to thirty-five million dollars(US$35,000,000) by means of a Share Purchase Agreement. WHEREAS, the Seller and the Buyer entered into a First Amendment to the Share Purchase agreement dated March 1, 2017 and Second Amendmentto the Share Purchase Agreement on August 29, 2017 where the Parties agreed on the different options and timing of the payment. WHEREAS, the Parties entered into a Debt Settlement Agreement on May 4, 2018 to agree upon the payment of the outstanding balance of theShare Purchase Agreement, where a portion would be payable via a Seller’s Note. WHEREAS, the Parties verbally agreed to adjust the Seller’s Note amount under the Debt Settlement Agreement in order to atone the Buyer for alower than originally forecasted financial performance, mainly identified during the second quarter of 2018 and within the period of completion of projectsundertaken by the Seller prior to the acquisition date. As such, the Effective Date shall also signify the completion of the period to carry out suchadjustments. NOW, Seller and Buyer in virtue of section 4.5. of the Debt Settlement Agreement and previous considerations wish to enter into this FirstAmendment as of the Effective Date agreeing as follows: ARTICLE 1. Settled amounts. As of the Effective Date, Buyer has paid thirteen million dollars (US$13,000,000) in Tecnoglass Ordinary Shares andtwelve million dollars (US$12,000,000) in cash which Seller declares to have received in full. Shares are subject to the lock-up agreement contained inAnnex 1 of the Debt Settlement Agreement. ARTICLE 2. Seller’s Note. As verbally agreed by the Parties, the amount of the Seller’s Note is being reduced to eight million five hundredthousand dollars (US$8,500,000) through a Sellers’ Promissory Note in the terms contained in the Annex of this Agreement, which in all cases will besubordinated to the outstanding senior unsecured notes due by Tecnoglass on 2022. ARTICLE 3. General Provisions. 3.1. Notices. Any notice, demand, claim, notice of claim, request or communication required or permitted to be given under the provisions of thisAgreement shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered in person, (ii) on the date of mailing if mailed byregistered or certified mail, postage prepaid and return receipt requested, (iii) on the date of delivery to a national overnight courier service, or (iv) upontransmission by facsimile (if such transmission is confirmed by the addressee) or email if delivered to the following addresses, or to such other address as anyparty may request by notifying in writing all of the other parties to this Agreement in accordance with this Section.  If to Buyer: Santiago Giraldo CFO sgiraldo@tecnoglass.com Av. Circunvalar a 100 mts de la Via 40 Las Flores, Barranquilla, Colombia Facsimile: 575 3734090 If to Seller:Giovanni Monti gm@gmpglazing.com 800 Caughton Island Drive, Apt 1203 Miami, Florida 33131 3.2. Benefit and Assignment. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors andpermitted assigns. No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of theother party. 3.3. Waiver. Any party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of any other party, (b)waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered by any other party pursuanthereto or (c) waive compliance with any of the agreements or conditions of any other party contained herein. Any such extension or waiver shall be validonly if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver ofany subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition, of this Agreement. The failure of anyparty to assert any of its rights hereunder shall not constitute a waiver of any such rights. 3.4. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, allother terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactionscontemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid,illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to affect the original intent of the partiesas closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatestextent possible. 3.5. Amendment. This Agreement may not be amended or modified except by an instrument in writing signed by, or on behalf of, all parties. 3.6. Effect and Construction of this Agreement. This Agreement embodies the entire agreement and understanding of the parties with respect to thesubject matter hereof and supersedes any and all prior agreements, arrangements and understandings, whether written or oral, relating to matters provided forherein. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual agreement, and thisAgreement shall not be deemed to have been prepared by any single party hereto.  3.7. Headings. The headings of the sections and subsections of this Agreement are inserted as a matter of convenience and for reference purposesonly and in no respect, define, limit or describe the scope of this Agreement or the intent of any section or subsection. 3.8. Counterparts. This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each ofwhich when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. 3.9. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida, which shall govern allmatters arising out of or relating to this Agreement and all of the transactions it contemplates, including, without limitation, its validity, interpretation,construction, performance and enforcement. 3.10. Entire Agreement. This Agreement, along with the Disclosure Schedules, Exhibits and all other agreements, instruments or documents to bedelivered in connection with this Agreement, constitutes the entire agreement between the parties hereto and supersedes all prior agreements, understandings,negotiations and discussions, both written and oral, between the parties hereto with respect to the subject matter hereof. 3.11. Remedies Cumulative. No remedy made available by any of the provisions of this Agreement is intended to be exclusive of any other remedy,and each and every remedy is cumulative and is in addition to every other remedy given hereunder or now or hereafter existing at law or in equity. 3.12. Waiver of Jury Trial. THE PARTIES, BY THEIR EXECUTION OF THIS AGREEMENT, WAIVE TRIAL BY JURY IN ANY SUIT, ACTION, ORPROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADEBY THE PARTIES, AND THE PARTIES HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANYPERSON TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.  IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Debt Settlement Agreement as of Effective Date above written andthat it supersedes any other forms of payment to the Seller. BUYER: TECNOGLASS INC. By: Name:Jose Manuel Daes Title:Chief Executive Officer SELLER: GIOVANNI MONTI By:  ANNEXPROMISORY NOTE Borrower Tecnoglass IncAv. Circunvalar a 100 mts de la Via 40, Barranquilla, Colombia Lender Giovanni Montigm@gmpglazing.com800 Caughton Island Drive, Apt 1203Miami, Florida 33131 Loan Type UnsecuredSubordinated to the NotesBullet Principal Eight million five-hundred thousand dollars (US$8.500.000) Interest Rate 6% Interest Day Count 30/360 Interest Payment Dates March 1st and September 1st First Interest Payment Date March 1, 2019 Effective Date June 30, 2018 Maturity Date March 1st, 2022 Voluntary Prepayments Yes ARTICLE 1. Borrower’s promise to pay. On the Effective Date the Borrower promises to payback the Lender, the principal sum of EIGHTMILLION FIVE-HUNDRED THOUSAND US Dollars ($8.500.000) with interest accruing on the unpaid balance. This Note is subordinated to the priorpayment in full in cash of all obligations then due with respect to the Senior Notes due 2022 by the Borrower (“Senior Notes”) and subordinated in the rightof collateral assignment. ARTICLE 2. Payments. The Principal Amount is due and payable in one payment on the Maturity Date and is subordinated in right of payment tothe Senior Notes. 2.1. The Borrower will pay to the Lender semi-annually the interests accrued on the outstanding debt on the Interest Payment Date. 2.2. Payments shall be first credited any late fees due, then to interest due and any remainder will be credited to principal.  ARTICLE 3. Interests: Interest shall accrue from the Effective Date and shall continue to accrue until this Note is paid in full in accordance to thefollowing provisions: 3.1. Interest will accrue on a 30/360 basis and shall be paid semi-annually as established above, with the First Interest Payment Date due on March 1,2019. 3.2. The interest rate is 6% per annum, fixed and shall not increase or decrease without mutual consent among the Parties. 3.3. In the event the Borrower fails to pay the note in-full on the Maturity Date, unpaid principal shall accrue interest at the maximum rate allowedby law, until the Borrower is no longer in default. 3.4. Borrower may pre-pay this Note without penalty at any time. ARTICLE 4. Collateral: This is an unsecured facility and therefore the Lender agrees that there will be no lien nor collateral to be maintained bythe Borrower in its favor. ARTICLE 5. Acceleration: Unless agreed otherwise amongst the parties, if the Borrower is in default under this Note or is in default under anotherprovision of this Note, and such default is not cured within the minimum allotted time by law after written notice of such default, then Lender may, at itsoption, declare all outstanding sums owed on this Note to be immediately due and payable. ARTICLE 6. Attorneys’ Fees and Costs: Borrower shall pay all costs incurred by Lender in collecting sums due under this Note after a default,including reasonable attorneys’ fees. If Lender or Borrower sues to enforce this Note or obtain a declaration of its rights hereunder, the prevailing party in anysuch proceeding shall be entitled to recover its reasonable attorneys’ fees and costs incurred in the proceeding (including those incurred in any bankruptcyproceeding or appeal) from the non-prevailing party. ARTICLE 7. Non-Waiver No failure or delay by Lender in exercising Lender’s rights under this Note shall be considered a waiver of such rights. ARTICLE 8. Severability: In the event that any provision herein is determined to be void or unenforceable for any reason, such determination shallnot affect the validity or enforceability of any other provision, all of which shall remain in full force and effect. ARTICLE 9. Integration: There are no verbal or other agreements which modify or affect the terms of this Note. This Note may not be modified oramended except by written agreement signed by Borrower and Lender. ARTICLE 10. Conflicting Terms: The terms of this Note shall control over any conflicting terms in any referenced agreement or document. ARTICLE 11. Notice: Any notices required or permitted to be given hereunder shall be given in writing and shall be delivered (a) in person, (b) bycertified mail, postage prepaid, return receipt requested, (c) by facsimile, or (d) by a commercial overnight courier that guarantees next day delivery andprovides a receipt, and such notices shall be made to the parties at the addresses listed above. ARTICLE 12. Governing Law and forum selection: This Note shall be governed by and construed in accordance with the laws of Florida,irrespective of its conflict of laws principles. Borrower hereby irrevocably consents to the non-exclusive jurisdiction of the state and federal courts located inMiami-Dade County, Florida for the enforcement of this Note, and further irrevocably agrees that venue shall be proper in Miami-Dade County, Florida.  ARTICLE 13. Entire Agreement. This Note dated June 30, 2018 supersedes any and all other agreements in the same form or purpose issued by theBorrower in favor of the Lender, leaving prior agreements on the same matter without effect. IN WITNESS WHEREOF, the parties hereto have executed this Promissory Note as of the day and year first above written. Tecnoglass Inc. By: Name:Jose Manuel Daes Title:Chief Executive Officer Seller By:Giovanni Monti   Exhibit 21 Name of Subsidiary Description C.I. Energía Solar S.A.E.S. Windows A corporation, organized under the laws of Colombia, which is owned directly by Tecnoglass. Energia Solar – ESWINDOWS Paraguay SA A corporation, organized under the laws of Paraguay, which is owned solely by ES. ESWindows LLC A Florida limited liability company organized under the laws of the State of Florida in which Tecnoglassand ES are members. ESWindows Europe SRL A limited liability company, organized under the laws of Italy, which is owned solely by ES. Tecno Corporation An exempted company organized under the laws of the Cayman Islands, which is a wholly ownedsubsidiary of Tecnoglass. Tecnoglass LLC A Florida limited liability company organized under the laws of the State of Florida in which Tecnoglassis the sole member. Tecno RE LLC A Florida limited liability company organized under the laws of the State of Florida in which Tecnoglassis the sole member. Tecnoglass S.A.S A sociedad anómina, organized under the laws of Colombia, which is owned directly Tecnoglass. Componenti USA LLC A Florida limited liability company organized under the laws of the State of Florida in which GM&P has60% equity interest. GM&P Consulting and Glazing Contractors, Inc. A corporation organized under the laws of the State of Florida in which Tecnoglass Inc. is the solemember.   CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-227898) of Tecnoglass Inc. of our report datedMarch 8, 2019 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers Ltda.Bogota, ColombiaMarch 8, 2019   Exhibit 31.1 CERTIFICATION PURSUANT TORULE 13a-14 AND 15d-14UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Jose Daes, certify that: 1. I have reviewed this annual report on Form 10-K of Tecnoglass Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; 4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, toensure that material information relating to the issuer is made known to me by others within those entities, particularly during the period in which thisreport is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness ofthe disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscalquarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theissuer’s internal control over financial reporting; and 5. The issuer’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the issuer’sauditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control overfinancial reporting. Date: March 8, 2019 By:/s/ Jose Daes Name:Jose Daes Title:Chief Executive Officer (Principal Executive Officer)   Exhibit 31.2 CERTIFICATION PURSUANT TORULE 13a-14 AND 15d-14UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Santiago Giraldo, certify that: 1. I have reviewed this annual report on Form 10-K of Tecnoglass Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries is made known to us by others within those entities,particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectivenessof the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscalquarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theissuer’s internal control over financial reporting; and 5. The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’sauditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control overfinancial reporting. Date: March 8, 2019 By:/s/ Santiago Giraldo Name:Santiago Giraldo Title:Chief Financial Officer (Principal Financial and Accounting Officer)   Exhibit 32 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Tecnoglass Inc. (the “Company”) on Form 10-K for the year ended December 31, 2018 as filed with the Securitiesand Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifiespursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company. Date: March 8, 2019 By:/s/ Jose Daes Name:Jose Daes Title:Chief Executive Officer (Principal Executive Officer) By:/s/ Santiago Giraldo Name:Santiago Giraldo Title:Chief Financial Officer (Principal Financial and Accounting Officer)  

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