Filing identity and business context
Important mismatch: The supplied filing is a Form 10-Q for Global Partner Acquisition Corp., not Purple Innovation, Inc. It covers the quarter ended September 30, 2016. Global Partner was a blank-check company seeking a business combination; it had not begun operating or generated revenue by quarter-end. This summary therefore describes Global Partner, not Purple Innovation.
Financial results and position
| Metric | Three months ended September 30, 2016 | Nine months ended September 30, 2016 |
|---|---|---|
| Revenue | $0 | $0 |
| General and administrative expenses | $227,000 | $486,000 |
| Interest income | $93,000 | $258,000 |
| Net loss | $134,000 | $228,000 |
| Loss per share, basic and diluted | $0.03 | $0.05 |
| Operating cash used | Not separately stated | $403,000 |
At September 30, 2016, cash outside the Trust Account was $645,000; prepaid expenses were $72,000. Trust Account assets were $155.48 million, primarily U.S. Treasury bills, and were generally unavailable for operating expenses. Total assets were $156.20 million, liabilities were $4.81 million, and stockholders’ equity was $5.00 million. The company reported no long-term debt or other long-term liabilities. The $4.66 million deferred underwriting compensation is payable only if a business combination is completed.
Changes versus prior comparable periods
- Third-quarter general and administrative expense increased to $227,000 from $149,000 in the 2015 quarter. Net loss improved to $134,000 from $149,000, principally because 2016 included $93,000 of Trust Account interest income.
- For the nine months of 2016, the company reported $486,000 of expenses and a $228,000 net loss. The filing’s 2015 comparison is from inception on May 19 through September 30, not a full comparable nine-month period, so it is not directly comparable.
- Cash outside the Trust Account declined from $1.048 million at December 31, 2015 to $645,000 at September 30, 2016. Trust Account assets increased from $155.293 million to $155.480 million.
Outlook, risks, and unusual items
- Management expected available operating cash to fund the search through the company’s liquidation deadline, but noted significant expected acquisition-search costs. It had discussed possible sponsor financing, but no financing agreement was in place.
- The company had until August 4, 2017—24 months after its offering—to complete a business combination. If it did not, it was required to cease operations, redeem public shares from the Trust Account subject to stated terms, and liquidate. The filing says this mandatory liquidation raises substantial doubt about the company’s ability to continue as a going concern.
- Management reported no material interest-rate risk given the Trust Account’s investment in short-term U.S. government securities. Disclosure controls were assessed as effective, with no material change in internal control reported. No legal proceedings were reported, and the filing stated there were no material changes to previously disclosed risk factors.
- Public-share redemptions are subject to a minimum net tangible asset requirement of $5,000,001. A business combination could also involve new equity or debt, with potential dilution and other risks described in the filing.
Important facts for investors to verify
- Confirm the issuer: this source identifies Global Partner Acquisition Corp., not Purple Innovation, Inc.
- Check the status and terms of any proposed business combination, and whether it was completed before the August 4, 2017 deadline.
- Verify the availability of cash outside the Trust Account and any subsequent sponsor financing; no committed sponsor financing was disclosed here.
- Review the redemption provisions, deferred underwriting fee, and potential dilution from warrants or transaction financing.