Filing identity and reporting period
Important identity mismatch: The supplied filing is for Global Partner Acquisition Corp., not Purple Innovation, Inc. It is a blank-check company formed to pursue a business combination. This summary reflects the filing provided and contains no Purple Innovation operating results.
The unaudited Form 10-Q covers the period from inception on May 19, 2015 through June 30, 2015. The company had not begun operations; no prior comparable period is presented.
Financial results and liquidity
- Revenue and expenses: Revenue, general and administrative expense, operating loss, net loss, and interest income were each reported as zero. Basic and diluted loss per share was $0.00.
- Balance sheet at June 30, 2015: Cash was $27,000; deferred offering costs were $146,000; total assets were $173,000. Liabilities were $148,000, including $145,000 due to the sponsor. Stockholders’ equity was $25,000.
- Cash flow: Operating and investing cash flows were zero. Financing provided $27,000, including $25,000 from founder shares and $145,000 in sponsor advances, offset by $143,000 of deferred offering-cost payments. Ending cash was $27,000.
- Debt and liquidity: The company reported no long-term debt or off-balance-sheet financing arrangements. Sponsor advances were non-interest-bearing and were repaid upon the subsequent offering closing. Management expected post-offering resources to fund operations for at least 12 months.
- Margins: Not meaningful because the company had no revenue or operating activity.
Material developments and subsequent events
After quarter-end, on August 4, 2015, the company closed a public offering of 15,525,000 units at $10 each, generating $155.25 million gross, and a sponsor private placement of warrants for approximately $6.408 million gross. It reported approximately $156.525 million in combined net proceeds after specified non-deferred underwriting commissions and offering expenses; $155.25 million was placed in trust and approximately $1.3 million remained outside the trust for operating expenses. A further approximately $4.658 million of underwriting commissions is deferred and payable only if a business combination is completed.
The trust funds are restricted to specified U.S. government securities or qualifying money market funds. At June 30, no offering proceeds were in trust. The filing reports that 14,689,249 public shares were classified outside permanent equity at a $10 per-share redemption value after the offering.
Outlook, risks, and contingencies
- The company had 24 months from the offering closing to complete a business combination; otherwise it generally must redeem public shares and liquidate. There is no assurance it will complete a transaction.
- A target business must have fair market value of at least 80% of the trust balance, subject to the filing’s stated adjustments. Redemptions cannot reduce net tangible assets below $5,000,001.
- Management had broad discretion over transaction proceeds. Issuing equity or debt for a combination could dilute shareholders, create senior claims, constrain financing and operations, or increase debt-service and default risks.
- The company expected significant acquisition-search and public-company costs, including a $10,000 monthly sponsor administrative-services fee beginning after quarter-end.
- Public warrants and sponsor warrants have exercise, redemption, transfer, and expiration conditions; if no business combination is completed within the permitted period, the warrants expire worthless.
- Management stated disclosure controls were effective as of June 30, 2015 and reported no material changes in internal control. No legal proceedings were reported; the filing said there were no material changes to previously disclosed risk factors.
Key facts for investors to verify
- Confirm whether this filing is intended: the registrant named throughout is Global Partner Acquisition Corp., not Purple Innovation, Inc.
- Check the subsequent offering and trust-account amounts against the cited August 2015 Form 8-K and prospectus.
- Verify the business-combination deadline, redemption terms, deferred underwriting fee, and warrant terms in the governing documents.
- Review later filings for whether a business combination occurred and how the SPAC’s securities and financial statements changed.