The accompanying notes are an integral part
of the condensed financial statements.
The accompanying notes are an integral part
of the condensed financial statements.
The accompanying notes are an integral part
of the condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2016
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
GP Investments Acquisition Corp. (the “Company”)
is a blank check company incorporated in the Cayman Islands on January 28, 2015. The Company was formed for the purpose of effecting
a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses
(“Business Combination”).
At March 31, 2016, the Company had not
yet commenced operations. All activity through March 31, 2016 related to the Company’s formation, its Initial Public Offering
(as defined below), which is described below, and identifying a target company for a Business Combination.
The registration statement for the Company’s
initial public offering (the “Initial Public Offering”) was declared effective on May 19, 2015. On May 26, 2015, the
Company consummated the Initial Public Offering of 17,250,000 units (“Units”), which included the exercise by the underwriters
of their entire overallotment option in the amount of 2,250,000 Units, at $10.00 per Unit, generating gross proceeds of $172,500,000.
The Initial Public Offering is further described in Note 3.
Simultaneously with the closing of the
Initial Public Offering, the Company consummated the sale of 6,062,500 warrants (the “Private Placement Warrants”)
at a price of $1.00 per warrant in a private placement to the Company’s sponsor, GPIC Ltd, a Bermuda company (“Sponsor”),
generating gross proceeds of $6,062,500. The sale of Private Placement Warrants is further described in Note 4.
Transaction costs amounted to $10,960,590,
consisting of $4,312,500 of underwriting fees, $6,037,500 of deferred underwriting fees (which are held in the Trust Account (defined
below)) and $610,590 of Initial Public Offering costs. In addition, at March 31, 2016, $871,920 of cash was held outside of the
Trust Account and was available for working capital purposes.
Following the closing of the Initial Public
Offering, an amount of $172,500,000 ($10.00 per share) from the net proceeds of the sale of the Units in the Initial Public Offering
and the Private Placement Warrants was placed in a trust account (“Trust Account”) and invested in U.S. government
securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “1940
Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market
fund selected by the Company meeting the conditions of paragraphs (c)(2), (c)(3) and (c)(4) of Rule 2a-7 of the 1940 Act, as determined
by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account
as described below.
The Company’s management has broad
discretion with respect to the specific application of the net proceeds of its Initial Public Offering and Private Placement Warrants,
although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
The Company’s Units are listed on the Nasdaq Capital Market (“NASDAQ”). Pursuant to the NASDAQ listing rules,
the Company’s Business Combination must be with a target business or businesses whose collective fair market value is equal
to at least 80% of the balance in the Trust Account at the time of the execution of a definitive agreement for such Business Combination.
There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide its shareholders
with the opportunity to redeem all or a portion of their shares included in the Units sold in the Initial Public Offering (the
“Public Shares”) upon the completion of a Business Combination either (i) in connection with a shareholder meeting
called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek
shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion.
The per-share price of the Public Shares to be redeemed (initially $10.00 per share), payable in cash, will be equal to the aggregate
amount then on deposit in the Trust Account as of two business days prior to the consummation of a Business Combination, including
interest earned on the funds held in the Trust Account and not previously released to the Company to pay its income and franchise
tax obligations, divided by the number of then outstanding Public Shares. The per-share amount to be distributed to shareholders
who redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriter (as
discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s
warrants. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets
to be less than $5,000,001. The Company’s initial shareholders have agreed to waive their redemption rights with respect
to the founder shares (as defined in Note 5) and Public Shares in connection with the completion of a Business Combination. If
a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other legal
reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association, conduct the redemptions
pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents
with the SEC prior to completing a Business Combination.
GP INVESTMENTS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2016
(Unaudited)
If, however, a shareholder approval of
the transaction is required by law, or the Company decides to obtain shareholder approval for business or other legal reasons,
the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to
the tender offer rules. If the Company seeks shareholder approval, it will complete a Business Combination only if a majority of
the outstanding ordinary shares voted are voted in favor of the Business Combination. If the Company seeks shareholder approval
in connection with a Business Combination, the initial shareholders have agreed to vote their founder shares and any Public Shares
purchased during or after the Initial Public Offering in favor of a Business Combination. Additionally, each shareholder may elect
to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
If the Company seeks shareholder approval
of a Business Combination and it does not conduct redemptions in connection with a Business Combination pursuant to the tender
offer rules, the Company’s Amended and Restated Memorandum and Articles of Association provides that a public shareholder,
together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted
from redeeming its shares with respect to more than an aggregate of 20% of the shares sold in the Initial Public Offering (“Excess
Shares”). However, the Company would not be restricting the shareholders’ ability to vote all of their shares (including
Excess Shares) for or against a Business Combination.
If the Company is unable to complete a
Business Combination within 24 months from the closing of the Initial Public Offering (the “Combination Period”), the
Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more
than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released
to the Company to pay its income and franchise tax obligations (less up to $100,000 of interest to pay dissolution expenses), divided
by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights
as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the Company’s
board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each
case to its obligations to provide for claims of creditors and the requirements of the laws of the Cayman Islands and other applicable
law. There will be no redemption rights or liquidating distributions with respect to the Company’s Warrants, which will expire
worthless if the Company fails to complete a Business Combination within the Combination Period.
The initial shareholders have agreed to
waive their rights to liquidating distributions from the Trust Account with respect to the founder shares if the Company fails
to complete a Business Combination during the Combination Period. However, if the initial shareholders acquire Public Shares in
or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to
such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriter has agreed
to waive its rights to the deferred underwriting commission held in the Trust Account in the event the Company does not complete
a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the
Trust Account that will be available to fund the redemption of the Company’s Public Shares. In the event of such distribution,
it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets)
will be less than the $10.00 per share initially held in the Trust Account. In order to protect the amounts held in the Trust Account,
the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products
sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who
executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims
under the Company’s indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities
under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver
is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such
third party claims.
The Company has principally financed its
operations from inception using proceeds from the sale of its equity securities to its initial shareholders and proceeds from the
Initial Public Offering. As of March 31, 2016, the Company had $871,920 in its operating account. Interest earned on the Trust
Account balance through March 31, 2016 available to be released to the Company amounted to approximately $239,000. In May 2016,
the Sponsor committed to provide loans to the Company up to an aggregate of $500,000, of which no amounts were outstanding as of
March 31, 2016 (see Note 5). Based on the foregoing, the Company believes it will have sufficient cash to meet its needs through
the earlier of consummation of a Business Combination or May 26, 2017, the date the Company’s liquidation will be triggered
if a Business Combination is not consummated.
GP INVESTMENTS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2016
(Unaudited)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of presentation
The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the
SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have
been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting.
Accordingly, they do not include all the
information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows.
In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of
a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows
for the periods presented.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2015 as
filed with the SEC, which contains the audited financial statements and notes thereto. The financial information as of December
31, 2015 is derived from the audited financial statements presented in the Company's Annual Report on Form 10-K for the year ended
December 31, 2015. The interim results for the three months ended March 31, 2016 are not necessarily indicative of the results
to be expected for the year ending December 31, 2016 or for any future interim periods.
Emerging growth company
The Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012,
(the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with
the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private
companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of
securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The
JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such
extended transition period which means that when a standard is issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company
which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition
period difficult or impossible because of the potential differences in accounting standards used.
Use of estimates
The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period.
Making estimates requires management to
exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or
set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate,
could change in the near term due to one or more future events. Accordingly, the actual results could differ significantly from
those estimates.
Cash and cash equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of March 31, 2016.
GP INVESTMENTS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2016
(Unaudited)
Cash and marketable securities held in Trust Account
The amounts held in the Trust Account represent
substantially all of the proceeds of the Initial Public Offering and are classified as restricted assets since such amounts can
only be used by the Company in connection with the consummation of a Business Combination. As of March 31, 2016, cash and marketable
securities held in the Trust Account consisted of $172,842,770 in United States Treasury Bills with a maturity date of 180 days
or less.
Ordinary shares subject to possible
redemption
The Company accounts for its ordinary shares
subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480
“Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as
a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that
feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain
events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are
classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights that are considered
to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at March 31, 2016,
the ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity
section of the Company’s balance sheet.
Income taxes
The Company complies with the accounting
and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial
accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the
financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on
enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes a recognition
threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon
examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s only
major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax
expense. As of December 31, 2015, there were no amounts accrued for interest and penalties. There were no unrecognized tax benefits
as of December 31, 2015. The Company is currently not aware of any issues under review that could result in significant payments,
accruals or material deviation from its position over the next twelve months.
The Company may be subject to potential
examination by U.S. federal, U.S. states or foreign taxing authorities in the areas of income taxes. These potential examinations
may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance
with U.S. federal, U.S. state and foreign tax laws.
Net loss per share
The Company complies with accounting and
disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss
by the weighted average number of ordinary shares outstanding during the period. Ordinary shares subject to possible redemption
at March 31, 2016 have been excluded from the calculation of basic loss per share since such shares, if redeemed, only participate
in their pro rata share of the Trust Account earnings. Weighted average shares as of March 31, 2015 were reduced for the effect
of an aggregate of 562,500 ordinary shares that were subject to forfeiture if the over-allotment option was not exercised by the
underwriters. The Company has not considered the effect of warrants to purchase ordinary shares in the calculation of diluted loss
per share, since the exercise of the warrants is contingent upon the occurrence of future events. As a result, diluted loss per
share is the same as basic loss per share for the periods presented.
Concentration of credit risk
Financial instruments that potentially
subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times may exceed
the Federal depository insurance coverage of $250,000. At March 31, 2016, the Company had not experienced losses on these accounts
and management believes the Company is not exposed to significant risks on such accounts.
GP INVESTMENTS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2016
(Unaudited)
Fair value of financial instruments
The fair value of the Company’s assets
and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,”
approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature.
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s
financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
On May 26, 2015, the Company sold 15,000,000
Units at a purchase price of $10.00 per Unit. In addition, as a result of the underwriters election to exercise their entire over-allotment
option, the Company sold an additional 2,250,000 Units to the underwriters at a purchase price of $10.00 per Unit. Each Unit consists
of one ordinary share and one-half of one warrant (“Public Warrant”). Each whole Public Warrant entitles the holder
to purchase one ordinary share at a price of $11.50 per share (see Note 7).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the Initial Public
Offering, the Sponsor purchased an aggregate of 6,062,500 Private Placement Warrants at a purchase price of $1.00 per warrant in
a private placement. Each Private Placement Warrant is exercisable to purchase one ordinary share at $11.50 per share. The proceeds
from the Private Placement Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account.
If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private
Placement Warrants will be used to fund the redemption of the Company’s Public Shares (subject to the requirements of applicable
law) and the Private Placement Warrants will expire worthless. There will be no redemption rights or liquidating distributions
with respect to the Private Placement Warrants.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On March 2, 2015, the Company issued 4,312,500
ordinary shares to GPIAC, LLC, a company whose sole member is the Sponsor
(the “founder shares”), for
an aggregate purchase price of $25,000. The 4,312,500 founder shares included an aggregate of up to 562,500 shares subject to forfeiture
by the initial shareholders (or their permitted transferees) on a pro rata basis depending on the extent to which the underwriter’s
over-allotment was exercised. As a result of the underwriter’s election to exercise its full over-allotment option to purchase
2,250,000 Units on May 26, 2015 (see Note 6), 562,500 founder shares were no longer subject to forfeiture. The founder shares are
identical to the Public Shares included in the Units sold in the Initial Public Offering, except that (1) the founder shares are
subject to certain transfer restrictions and (2) the initial shareholders have agreed (i) to waive their redemption rights with
respect to the founder shares and Public Shares purchased during or after the Initial Public Offering in connection with the completion
of a Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to the
founder shares if the Company fails to complete a Business Combination within the Combination Period.
Administrative Services Agreement
Commencing on May 19, 2015, the Company
has agreed to pay an affiliate of the Sponsor a monthly fee of $10,000 for general and administrative services. For the three months
ended March 31, 2016, the Company incurred $30,000 of administrative service fees, of which $10,000 is payable and included in
accounts payable and accrued expenses in the accompanying balance sheet as of March 31, 2016.
Related Party Loans
In May 2016, the Sponsor committed to provide
loans to the Company up to an aggregate of $500,000 in order to finance transaction costs in connection with a Business Combination.
The loans will be non-interest bearing, unsecured and will only be repaid upon the completion of a Business Combination. As
of March 31, 2016, no amounts were outstanding under the loans.
GP INVESTMENTS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2016
(Unaudited)
Other than as described above, the Sponsor
or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the
Company additional funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination,
the Company would repay the Working Capital Loans out of the proceeds held in the Trust Account released to the Company. Otherwise,
the Working Capital Loans would be repaid only out of funds held outside the Trust Account.
In the event that a Business Combination
does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital
Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Up to $1,000,000 of Working
Capital Loans may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option
of the lender. Such warrants would be identical to the Private Placement Warrants. The terms of such Working Capital Loans, if
any, have not been determined and no written agreements exist with respect to the Working Capital Loans.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Contingent Transaction Fee Arrangements
The Company has entered into fee arrangements
with certain service providers and advisors pursuant to which certain fees incurred by the Company in connection with a potential
Business Combination will be deferred and become payable only if the Company consummates such potential Business Combination. If
the potential Business Combination does not occur, the Company will not be required to pay these contingent fees. As of March 31,
2016, the amount of these contingent fees was approximately $1,881,000. To the extent the potential Business Combination is consummated,
the Company anticipates incurring a significant amount of additional costs. There can be no assurances that the Company will complete
this or any other Business Combination.
Committed Transaction Fee Arrangements
In connection with the Merger discussed in Note 9, the Company has entered into commitments to pay certain
creditors and advisors fees to be incurred by the Company in connection with the Merger. As of March 31, 2016, such fees have not
been incurred and will become due and payable only if the Company consummates the Merger. If the Merger does not occur, the Company
will not be required to pay these fees. As of March 31, 2016, the amount of the fees committed to be paid by the Company was approximately
$16,894,000.
Registration Rights
Pursuant to a registration rights agreement
entered into on May 19, 2015 with the holders of the founder shares, Private Placement Warrants and Warrants, the holders of the
majority of these securities are entitled to make up to three demands, excluding short form demands, that the Company register
such securities and shares that may be issued upon conversion of the Private Placement Warrants, Warrants and Working Capital Loans,
if any. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements
filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities
pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit
any registration statement filed under the Securities Act to become effective until termination of the applicable Lock-Up Period
(as defined in the registration rights agreement). The Company will bear the expenses incurred in connection with the filing of
any such registration statements.
Underwriting Agreement
The underwriters are entitled to an underwriting
discount of 6.0%, of which two and one-half percent (2.5%), or $4,312,500, was paid in cash at the closing of the Initial Public
Offering on May 26, 2015, and up to three and one-half percent (3.5%), or $6,037,500, has been deferred. The deferred fee is payable
to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination,
subject to the terms of the underwriting agreement.
GP INVESTMENTS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2016
(Unaudited)
NOTE 7. SHAREHOLDERS’EQUITY
Preferred
Shares
-
The Company is authorized to issue 20,000,000 preferred shares
with a par value of $0.0001 per share in one or more series. The Company’s board of directors will be authorized to fix
the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and
any qualifications, limitations and restrictions thereof, applicable to the shares of each series. At March 31, 2016, there are
no preferred shares designated, issued or outstanding.
Ordinary
Shares
-
The Company is authorized to issue up to 400,000,000 ordinary
shares. The Company's ordinary shares have a par value of $0.0001 per share. Holders of the Company’s ordinary shares are
entitled to one vote for each share. At March 31, 2016, there were 5,342,742 ordinary shares issued and outstanding (excluding
16,137,312 ordinary shares subject to possible redemption).
Warrants -
Public Warrants
may only be exercised for a whole number of ordinary shares. No fractional shares will be issued upon exercise of the Public Warrants.
The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12
months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement
under the Securities Act covering the ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating
to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise
is exempt from registration under the Securities Act). The Public Warrants will expire five years after the completion of a Business
Combination or earlier upon redemption or liquidation.
The Private Placement Warrants are identical
to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and
the ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until
30 days after the completion of a Business Combination, subject to certain limited exceptions.
Additionally, the Private Placement Warrants
will be non-redeemable so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the
Private Placement Warrants are held by someone other than the initial purchasers or such purchasers’ permitted transferees,
the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public
Warrants.
The exercise price and number of ordinary
shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend,
or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of ordinary
shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants.
Accordingly, the warrants may expire worthless.
NOTE 8. FAIR VALUE MEASUREMENTS
The Company follows the
guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting
period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s
financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection
with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market
participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks
to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy
is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets
and liabilities:
Level 1:
|
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
Level 2:
|
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
Level 3:
|
|
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
GP INVESTMENTS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2016
(Unaudited)
The following table presents information
about the Company’s assets that are measured at fair value on a recurring basis at March 31, 2016 and December 31, 2015,
and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
|
March 31,
2016
|
|
|
December 31,
2015
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Cash and marketable securities held in Trust Account
|
|
|
1
|
|
|
$
|
172,842,770
|
|
|
$
|
172,578,252
|
|
NOTE 9. SUBSEQUENT EVENTS
The Company evaluates subsequent events
and transactions that occur after the balance sheet date up to the date that the financial statements were issued for potential
recognition or disclosure. Other than as described below and in Note 5, the Company did not identify any subsequent events that
would have required adjustment or disclosure in the financial statements.
Merger Agreement
On April 19, 2016, the Company entered
into an Agreement and Plan of Merger (the “
Merger Agreement
”) with Let’s Go Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of the Company (“
Merger Sub
”), WKI Holding Company, Inc., a Delaware
corporation (“
WKI
”), and, solely in its capacity as the initial Holder Representative thereunder, WKI Group,
LLC, a Delaware limited liability company (“
Holder Representative
”). WKI is the parent company of World Kitchen,
LLC, a leading multinational manufacturer and marketer of houseware products whose portfolio of brands includes Corelle, Pyrex,
CorningWare and Snapware, among others.
The Merger Agreement provides that, among
other things and in accordance with the terms and subject to the conditions thereof, Merger Sub will merge with and into WKI (the
“
Merger
”) with WKI continuing as the surviving corporation and a wholly-owned subsidiary of the Company. Prior
to the Merger, the Company shall domesticate as a Delaware corporation. On April 19, 2016, following execution and delivery of
the Merger Agreement, WKI delivered irrevocable written consents executed by WKI stockholders holding sufficient shares of WKI
common stock to approve the Merger Agreement and the Merger.
The aggregate purchase price is $500,000,000,
as adjusted in accordance with the terms of the Merger Agreement (the “
Merger Consideration
”). The Company will
pay the Merger Consideration seventy-five percent (75%) in cash and twenty-five percent (25%) in newly issued shares of the Company’s
common stock based on a per share issue price of $10.00 per share.
At the effective time of the Merger (the
“
Effective Time
”), (i) each outstanding share of WKI common stock that is issued and outstanding immediately
prior to the Effective Time and (ii) whether vested or unvested, each (A) Time-Based Option, (B) Performance-Based Option (assuming
attainment of full performance targets) and (C) SAR (in each case, as defined in the Merger Agreement), granted for compensatory
purposes to a WKI employee or outside WKI director or other service provider under a WKI Incentive Plan (as defined in the Merger
Agreement) will automatically be cancelled and converted into the right to receive the applicable portion of the Merger Consideration
as more particularly set forth in the Merger Agreement. The Merger Consideration for SARs is payable entirely in cash.
The cash portion of the Merger Consideration
is also subject to (i) a purchase price escrow of $5,000,000 for any post-closing adjustments to the purchase price and (ii) an
indemnity escrow for eighteen months from the closing date of $5,000,000 for any indemnification claims by the Company under the
Merger Agreement. Any proceeds remaining (i) in the purchase price escrow after completion of the post-closing purchase price adjustment
and (ii) in the indemnification escrow after eighteen months, will be distributed to the pre-closing holders of WKI common stock,
Time-Based Options, Performance-Based Options and SARs.
The Company intends to finance the cash
portion required for the Merger and related transactions primarily through a combination of cash held in the Trust Account after
redemptions (as described herein), proceeds from the Credit Facilities and proceeds from the Equity Financing (in each case, as
defined and as described below). However, the Merger Agreement is not conditioned on obtaining the debt financing under the
Credit Facilities, the Equity Financing or any other third-party financing.
GP INVESTMENTS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2016
(Unaudited)
In connection with the Merger Agreement,
the Company has entered into a debt commitment letter, dated as of April 19, 2016, with Citigroup Global Markets Inc., Bank of
Montreal and BMO Capital Markets Corp. (collectively, the “
Commitment Parties
”), pursuant to which, among other
things, the Commitment Parties have committed to provide, in accordance with the terms and subject to the conditions thereof, (i)
a $100 million senior secured asset-based revolving credit facility (the “
ABL Facility
”) and (ii) a $250
million senior secured first lien term facility (the “
Term Facility
” and, together with the ABL Facility, the
“
Credit Facilities
”) to Merger Sub. Proceeds of the Term Facility will be used at Closing, together with
up to $25 million of proceeds of the ABL Facility, to finance a portion of the Merger Consideration and fees, commissions and expenses
in connection therewith. Upon the consummation of the Merger, the post-combination company will assume all of the obligations
of the Merger Sub under the Credit Facilities. The Credit Facilities will be guaranteed by the Company, the parent entity
of the Merger Sub, and certain of the Company’s direct or indirect wholly-owned restricted subsidiaries. The Credit
Facilities will be secured by substantially all of the assets of the Merger Sub and such guarantors. The funding of the Credit
Facilities is subject to customary conditions, including the negotiation of definitive documentation and other customary closing
conditions.
In connection with the Merger Agreement,
the Company has entered into an equity commitment letter, dated April 19, 2016, with the Sponsor, which will provide equity financing
by means of purchasing newly issued shares of the Company’s common stock based on a per share issue price of $10.00 per share
in an aggregate amount of up to $58 million (the “
Equity Financing
”), of which (i) $50 million is solely for
the purpose of providing a portion of the financing for the Merger and (ii) up to an additional $8 million is for use only in certain
circumstances, as further described in the Merger Agreement.
The Company's Board of Directors has unanimously
(1) determined that the Merger Agreement and the Merger are fair to and in the best interests of the Company and its shareholders,
(2) approved the execution, delivery and performance of the Merger Agreement and (3) resolved to recommend adoption of the Merger
Agreement and other related matters by the Company's shareholders.
Pursuant to the Company's Amended and Restated
Memorandum and Articles of Association and in accordance with the terms and subject to the conditions of the Merger Agreement,
the Company will provide certain of its shareholders with the opportunity to redeem, contemporaneously with a vote on the Merger,
their common shares of the Company for cash equal to their pro rata share of the Trust Account.
The closing of the Merger is subject to
customary closing conditions, including, among others, (1) adoption by the Company’s shareholders of the Merger Agreement
and approval of certain related matters, including the change in the jurisdiction of incorporation to Delaware and adoption of
new governing documents and certain governance and other matters in connection therewith, issuance of shares of the Company’s
common stock in connection with the Merger, certain approvals required by the rules of NASDAQ, and an incentive equity plan, (2)
effectiveness of a registration statement on Form S-4 registering the shares of the Company’s common stock to be issued to
WKI’s stockholders pursuant to the Merger, (3) approval for the listing of such shares on NASDAQ, (4) expiration or termination
of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“
HSR
”),
(5) net redemptions of the Company’s common shares by its shareholders shall not exceed thirty percent (30%) of the outstanding
common shares and the cash available in the Trust Account shall not be less than $122,000,000 (in each case, after giving effect
to payments in respect of redemptions) and (6) appointment of the Nominee Director (as defined in the Merger Agreement) to the
Company’s Board of Directors in accordance with the terms and subject to the conditions of the Merger Agreement and the Stockholder
Letter (as defined below).
The Company has made customary representations,
warranties and covenants in the Merger Agreement, including, among others, covenants to (1) make required HSR filings and
to use its reasonable best efforts to obtain expiration or termination of the waiting period under the HSR, (2) prepare and submit
a listing application to NASDAQ and take other related actions required to list the common shares of the Company to be issued in
connection with the Merger, (3) use its reasonable best efforts to arrange and obtain the debt financing described above and (4)
subject to certain conditions, appoint the Nominee Director to the Company’s board of directors, with such appointment to
take effect on the first business day after the Closing Date (as defined in the Merger Agreement).
WKI has made customary representations,
warranties and covenants in the Merger Agreement, including, among others, covenants to conduct its business in the ordinary course
during the period between the execution of the Merger Agreement and the Effective Time.
The Merger Agreement contains customary
non-solicitation restrictions prohibiting (1) WKI and its subsidiaries from initiating, soliciting or otherwise encouraging an
Acquisition Proposal (as defined in the Merger Agreement) or conducting discussions or negotiations or entering into a definitive
agreement in connection therewith and (2) GPIAC from making any proposal or offer that constitutes a Business Combination Proposal
(as defined in the Merger Agreement) or initiating discussions or negotiations or entering into a definitive agreement in connection
therewith, provided, that, subject to certain conditions, the Company may take certain actions related to an Acquiror Acquisition
Proposal (as defined in the Merger Agreement).
GP INVESTMENTS ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2016
(Unaudited)
The Merger Agreement may be terminated
at any time prior to the consummation of the Merger (whether before or after the required Company stockholder votes have been obtained)
by mutual written consent of the Company and WKI and, in certain other limited circumstances, including if the Merger has not been
consummated by September 20, 2016, subject to extension until November 19, 2016 in certain circumstances.
In connection with the Merger Agreement,
and the receipt by certain of WKI's stockholders of shares of the Company's common stock in connection with the Merger, the Company,
the Principal Stockholders of WKI and the Lock-up Stockholders of WKI (in each case, as defined in the Merger Agreement) have
executed a letter agreement (the “Stockholder Letter”), dated as of April 19, 2016, pursuant to which, among other
things, (i) the Principal Stockholders and the Lock-up Stockholders have agreed to certain restrictions regarding the transfer
of the shares of the Company’s common stock to be received by such persons in connection with the Merger and (ii) the Company
has agreed to provide certain registration rights to the Principal Stockholders and the Lock-up Stockholders.
The Merger will be accounted for as a purchase in accordance
with GAAP. Under this method of accounting, the assets (including identifiable intangible assets) and liabilities of WKI as of
the effective time of the Merger will be recorded at their respective fair values and added to those of the Company. Any excess
of the purchase price over the fair value will be recorded as goodwill.