Filing Identity and Reporting Period
The provided Form 10-Q is for GP Investments Acquisition Corp., not Rimini Street, Inc. It covers the quarter ended June 30, 2015 and the period from January 28, 2015, the company’s inception, through June 30, 2015. The financial statements are unaudited.
Business Context
GP Investments Acquisition Corp. was a newly formed Cayman Islands blank check company established to pursue a merger, share exchange, asset acquisition, stock purchase, reorganization, or similar business combination. It had not commenced operating activities or identified a target business as of June 30, 2015.
The company completed its initial public offering on May 26, 2015, selling 17.25 million units at $10.00 per unit, including the full exercise of the underwriters’ over-allotment option. It also sold 6.0625 million private placement warrants to its sponsor.
Financial Metrics
| Metric | Three Months Ended June 30, 2015 | Inception Through June 30, 2015 |
|---|---|---|
| Operating revenue | None | None |
| Operating costs | $33,251 | $42,602 |
| Interest income | $35,231 | $35,231 |
| Net income (loss) | $1,980 | $(7,371) |
| Basic and diluted earnings per share | $0.00 | $(0.00) |
| Cash and cash equivalents outside trust | $1,110,063 at June 30, 2015 | |
| Trust account assets | $172,535,231 at June 30, 2015 | |
| Total assets | $173,667,039 at June 30, 2015 | |
| Total liabilities | $6,047,500 at June 30, 2015 | |
| Deferred underwriting fees | $6,037,500 | |
| Ordinary shares subject to possible redemption | $162,619,530, representing 16,258,632 shares |
Cash used in operating activities was $54,347 for the inception-to-date period. Cash used in investing activities was $172.5 million, reflecting funding of the trust account. Cash provided by financing activities was $173.664 million. The company had no long-term debt, capital leases, or operating leases reported.
Profit margins are not meaningful because the company had no operating revenue and its results primarily reflected formation, public-company, offering, and administrative costs offset by trust-account interest.
Material Changes Versus the Prior Comparable Period
No meaningful prior-period comparison is available because the company was incorporated on January 28, 2015 and had no prior comparable reporting period. During the quarter, it completed its initial public offering, exercised the full over-allotment option, funded the trust account, and began operating as a publicly traded blank check company.
Guidance, Outlook, Risks, and Unusual Items
- Management expected no operating revenue until a business combination is completed and expected increased legal, accounting, reporting, auditing, and due diligence expenses.
- The company was required to complete a business combination within 24 months of the IPO closing or cease operations and redeem the public shares using the trust account, subject to applicable requirements.
- There was no assurance that a business combination would be completed. A qualifying transaction generally had to involve a target or targets with aggregate fair market value of at least 80% of the trust account balance at the time of the definitive agreement.
- Public shareholders could redeem shares in connection with a business combination, subject to restrictions including a minimum net tangible asset requirement of $5,000,001.
- If no business combination occurred within the combination period, the public warrants could expire worthless and the sponsor’s founder shares would not receive liquidating distributions.
- The trust account consisted of cash and short-term U.S. Treasury securities and held $172.535 million at period end. Management reported no material interest-rate exposure because of the investments’ short-term nature.
- The company paid or incurred $10,960,590 of offering-related transaction costs, including $6,037,500 of deferred underwriting fees payable only if a business combination is completed.
- An affiliate of the sponsor was entitled to a $10,000 monthly administrative services fee beginning May 19, 2015; $20,000 was incurred through June 30, 2015, with $10,000 payable at period end.
- Management stated that disclosure controls and procedures were effective and that there were no material changes in internal control over financial reporting.
- No legal proceedings, defaults, unregistered equity sales, or material changes to previously disclosed risk factors were reported.
Investor Verification Items
- Verify the filing issuer: the source document identifies GP Investments Acquisition Corp., not Rimini Street, Inc.
- Confirm the status, timing, and terms of any subsequent business combination, since none had been completed or identified as of June 30, 2015.
- Reconcile the $172.535 million trust account, the $162.620 million of redeemable shares, and the $6.038 million deferred underwriting fee.
- Review the 24-month liquidation deadline, shareholder redemption provisions, sponsor indemnification obligations, and potential dilution from public and private warrants.
- Assess whether the $1.110 million held outside the trust account was sufficient to fund operating and transaction costs before a business combination.