Filing Scope and Business Context
This Form 10-Q covers the three months ended March 31, 2017, and was filed May 10, 2017. The source filing identifies the registrant as GP Investments Acquisition Corp., not Rimini Street, Inc. The registrant was a Cayman Islands blank check company formed to pursue a business combination and had not commenced operating activities.
The company’s proposed acquisition of WKI Holding Company, Inc. was terminated on November 11, 2016. The company was seeking shareholder approval to extend its business-combination deadline from May 26, 2017 to November 27, 2017.
Key Financial Metrics
| Metric | March 31, 2017 / Q1 2017 | Comparable period or prior year-end |
|---|---|---|
| Operating revenue | $0 | $0 in Q1 2016 |
| Operating costs | $179,386 | $1,066,912 in Q1 2016 |
| Net loss | $4,271 | $802,394 loss in Q1 2016 |
| Interest income | $200,175 | $161,227 in Q1 2016 |
| Trust account | $173.2 million | $173.1 million at December 31, 2016 |
| Cash outside trust account | $1,551 | $1,551 at December 31, 2016 |
| Cash used in operating activities | $147,212 | $95,529 used in Q1 2016 |
| Related-party promissory note | $2,682,893 | $1.9 million at December 31, 2016 |
| Shares subject to possible redemption | 15,896,071 shares, recorded at $159.6 million | 15,912,582 shares at December 31, 2016 |
The trust account consisted of U.S. Treasury bills with maturities of 180 days or less. No operating margin or business-level profitability metrics were applicable because the company had no operating revenue.
Material Changes Versus Prior Comparable Period
- Net loss declined to $4,271 from $802,394, primarily because operating costs fell to $179,386 from $1.1 million.
- Interest income increased to $200,175 from $161,227, while the trust account recorded an unrealized loss of $25,060 compared with an unrealized gain of $103,291 in Q1 2016.
- Cash used in operations increased to $147,212 from $95,529, and was fully funded by $147,212 of proceeds from related-party promissory notes.
- Related-party advances of $635,681 were reclassified into the promissory note balance. Total related-party promissory notes increased to $2.7 million.
- The WKI transaction was no longer pending; it had been terminated before the current reporting period.
Liquidity, Debt, Outlook, and Risks
- Only $1,551 was available outside the restricted trust account at March 31, 2017. Management expected liquidity to be sufficient through the business-combination deadline based on trust-account interest available for taxes, sponsor funding commitments, and existing resources.
- The sponsor had committed to provide up to $3.4 million of non-interest-bearing, unsecured loans; $2.7 million was outstanding at quarter-end. Repayment generally depended on completion of a business combination.
- Approximately $4.0 million of contingent transaction fees related to service providers and advisors were payable only if a business combination occurred. Deferred underwriting fees totaled $6.0 million and were payable upon a completed business combination.
- The company had until May 26, 2017 to complete a transaction, subject to the proposed extension to November 27, 2017. If no transaction occurred within the applicable period, the company would cease operations, redeem public shares from the trust account, and liquidate. Public and private warrants could expire worthless.
- Management stated that there was no assurance a business combination would be completed and that additional financing might be required to complete a transaction or fund redemptions.
- The filing reported no legal proceedings, no material changes to previously disclosed risk factors, and no off-balance-sheet financing arrangements.
- Disclosure controls and procedures were evaluated as effective. The filing did not include management’s internal-control attestation because of the applicable transition rules for newly public companies.
Investor Verification Items
- Verify the issuer identity: the provided filing is for GP Investments Acquisition Corp., not Rimini Street, Inc.
- Confirm whether shareholders approved the proposed extension of the business-combination deadline to November 27, 2017.
- Confirm whether the company completed a business combination or entered liquidation after the filing date.
- Review the trust-account balance, redemption terms, deferred underwriting fees, and the treatment of approximately $4.0 million in contingent transaction fees.
- Assess sponsor-related financing, including the $3.4 million commitment and $2.7 million outstanding balance, and its repayment priority if no transaction closes.