Filing Summary
Important identity discrepancy: The supplied filing is for GP Investments Acquisition Corp., not Rimini Street, Inc. It is a Form 10-K for the fiscal year ended December 31, 2016, filed March 16, 2017. The filing describes a Cayman Islands blank-check company and does not contain Rimini Street operating results.
Business Context and Reporting Period
GP Investments Acquisition Corp. was formed to identify and complete a merger, acquisition, share exchange, or similar business combination, with an intended focus on asset-management opportunities but broad authority to pursue other industries. It had not commenced operating activities as of December 31, 2016.
The company completed its initial public offering in May 2015, raising gross proceeds of $172.5 million through 17.25 million units, and raised an additional $6.1 million through a private placement of warrants. A proposed acquisition of WKI Holding Company, the parent of World Kitchen, was terminated on November 11, 2016.
Financial Results and Key Metrics
| Metric | FY 2016 | Prior comparable period |
|---|---|---|
| Operating revenue | None | None |
| Operating costs | $3.335 million | $0.209 million |
| Loss from operations | $(3.335) million | $(0.209) million |
| Interest income | $0.485 million | $0.078 million |
| Unrealized gain/(loss) on trust securities | $(0.012) million | None reported |
| Net loss | $(2.861) million | $(0.131) million |
| Basic and diluted loss per share | $(0.52) | $(0.03) |
| Net cash used in operating activities | $(3.502) million | $(0.197) million |
| Cash outside trust account | $1,551 | $0.967 million |
| Trust account cash and securities | $173.052 million | $172.578 million |
| Total assets | $173.271 million | $173.554 million |
| Total liabilities | $8.636 million | $6.057 million |
| Shares subject to possible redemption | $159.635 million | $162.496 million |
| Shareholders’ equity | $5.000 million | $5.000 million |
The fourth quarter of 2016 generated operating costs of $1.043 million, a loss from operations of $1.043 million, interest income of $91,783, an unrealized loss of $12,275, and a net loss of $963,971. The filing does not provide conventional revenue or operating margin metrics because the company had no operating business.
There was no long-term debt or capital lease obligation. The company had $1.9 million outstanding under a non-interest-bearing sponsor promissory note and $635,681 of sponsor advances at year-end. It also reported approximately $3.993 million of contingent transaction fees payable only if a business combination occurs.
Material Changes Versus the Prior Comparable Period
- Operating costs increased from $208,978 to $3.335 million, primarily due to target-identification expenses, transaction expenses related to the terminated WKI transaction, and other public-company costs.
- Net loss increased from $130,726 to $2.861 million.
- Operating cash usage increased from $196,961 to $3.502 million.
- Cash outside the trust account declined from $967,449 to $1,551, while trust-account assets increased modestly to $173.052 million.
- Trust-account shares subject to possible redemption declined from 16.242 million to 15.913 million, and the associated redemption value declined from $162.496 million to $159.635 million.
- The company incurred $1.9 million of sponsor promissory-note borrowings and $635,681 of sponsor advances during 2016.
Guidance, Outlook, Risks and Unusual Items
- The company had to complete an initial business combination by May 26, 2017, or cease operations, redeem public shares from the trust account, and liquidate.
- If no business combination occurred, public shareholders were expected to receive approximately $10 per share, subject to trust-account claims, taxes, dissolution expenses, and applicable law; warrants would expire worthless.
- Management stated that available funds, trust-account interest available for taxes, and sponsor financing commitments were expected to fund operations through the earlier of a business combination or May 26, 2017, but acknowledged that additional financing might be required.
- Public shareholders could redeem shares in connection with a business combination, subject to a minimum net tangible asset requirement of $5.000 million and other transaction-specific conditions.
- Key risks included failure to identify or complete a suitable transaction, intense competition for targets, redemption pressure, potential dilution from additional equity or warrants, sponsor and management conflicts of interest, creditor claims against the trust account, and possible liquidation.
- The sponsor had committed up to $3.4 million of financing after a February 2017 amendment; as of December 31, 2016, $1.9 million was outstanding under the promissory note.
- Management reported effective disclosure controls and effective internal control over financial reporting at December 31, 2016. The independent auditor issued an unqualified opinion on the financial statements and did not audit internal controls.
Investor Verification Checklist
- Verify the issuer name and CIK before relying on this filing; the document is for GP Investments Acquisition Corp., not Rimini Street, Inc.
- Confirm whether the requested period should be fiscal year 2016 or fourth-quarter 2016; this filing is an annual report with unaudited quarterly data.
- Review the status and final disposition of the terminated WKI merger agreement.
- Reconcile trust-account assets, redemption liabilities, deferred underwriting fees, sponsor financing, and contingent transaction fees.
- Confirm whether an initial business combination was completed by the May 26, 2017 deadline and whether liquidation or redemption procedures were subsequently triggered.
- For Rimini Street-specific analysis, obtain the correct Rimini Street Form 10-K or quarterly filing because this document provides no Rimini Street revenue, profitability, cash flow, debt, or outlook data.