0001635282-21-000103.txt : 20210804 0001635282-21-000103.hdr.sgml : 20210804 20210804161330 ACCESSION NUMBER: 0001635282-21-000103 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 69 CONFORMED PERIOD OF REPORT: 20210630 FILED AS OF DATE: 20210804 DATE AS OF CHANGE: 20210804 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Rimini Street, Inc. CENTRAL INDEX KEY: 0001635282 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 364880301 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37397 FILM NUMBER: 211144164 BUSINESS ADDRESS: STREET 1: 3993 HOWARD HUGHES PARKWAY STREET 2: SUITE 500 CITY: LAS VEGAS STATE: NV ZIP: 89169 BUSINESS PHONE: (702) 839-9671 MAIL ADDRESS: STREET 1: 3993 HOWARD HUGHES PARKWAY STREET 2: SUITE 500 CITY: LAS VEGAS STATE: NV ZIP: 89169 FORMER COMPANY: FORMER CONFORMED NAME: GP Investments Acquisition Corp. DATE OF NAME CHANGE: 20150227 10-Q 1 rmni-20210630.htm 10-Q rmni-20210630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended June 30, 2021
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from                               to                             
Commission File Number: 001-37397
Rimini Street, Inc.
(Exact name of registrant as specified in its charter)

Delaware36-4880301
(State or other jurisdiction of incorporation or
organization)
(I.R.S. Employer Identification No.)
3993 Howard Hughes Parkway, Suite 500,
Las Vegas, NV
89169
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code:
(702) 839-9671
Not Applicable
(Former name, former address and formal fiscal year, if changed since last report) 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:Trading Symbol(s)Name of each exchange on which registered:
  
Common Stock, par value $0.0001 per shareRMNIThe Nasdaq Global Market
  
Public Units, each consisting of one share of Common
Stock, $0.0001 par value, and one-half of one Warrant
RMNIU
 OTC Pink Current Information Marketplace
  
Warrants, exercisable for one share of Common Stock, $0.0001 par valueRMNIWOTC Pink Current Information Marketplace

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.         Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes þ No ¨





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
Accelerated filer þ
Non-accelerated filer ¨
Smaller reporting company
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).        
Yes No þ
The registrant had approximately 85,764,000 shares of its $0.0001 par value common stock outstanding as of August 2, 2021. 






RIMINI STREET, INC.
TABLE OF CONTENTS
Page
Unaudited Condensed Consolidated Balance Sheets
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
Unaudited Condensed Consolidated Statements of Stockholders' Deficit
Unaudited Condensed Consolidated Statements of Cash Flows

1



PART I - FINANCIAL INFORMATION
 
ITEM 1. Financial Statements.
 
RIMINI STREET, INC. 
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except per share amounts) 
June 30,December 31,
 20212020
ASSETS
Current assets:
Cash and cash equivalents$110,387 $87,575 
Restricted cash334 334 
Accounts receivable, net of allowance of $960 and $723, respectively
85,665 117,937 
Deferred contract costs, current14,722 13,918 
Prepaid expenses and other15,593 13,456 
Total current assets226,701 233,220 
Long-term assets:
Property and equipment, net of accumulated depreciation and amortization of $12,123 and $10,985, respectively
4,465 4,820 
Operating lease right-of-use assets15,772 17,521 
Deferred contract costs, noncurrent21,839 21,027 
Deposits and other1,717 1,476 
Deferred income taxes, net1,630 1,871 
Total assets$272,124 $279,935 
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable$4,427 $3,241 
Accrued compensation, benefits and commissions38,650 38,026 
Other accrued liabilities15,926 21,154 
Operating lease liabilities, current4,055 3,940 
Deferred revenue, current229,768 228,967 
Total current liabilities292,826 295,328 
Long-term liabilities:
Deferred revenue, noncurrent35,870 27,966 
Operating lease liabilities, noncurrent14,495 15,993 
Accrued PIK dividends payable647 1,193 
Liability for redeemable warrants3,092 2,122 
Other long-term liabilities2,288 2,539 
Total liabilities349,218 345,141 
Commitments and contingencies (Note 8)
Redeemable Series A Preferred Stock:
Authorized 180 shares; issued and outstanding 87 shares and 155 shares as of June 30, 2021 and December 31, 2020, respectively. Liquidation preference of $87,155, net of discount of $8,020 and $154,911, net of discount of $17,057, as of June 30, 2021 and December 31, 2020, respectively.
79,135 137,854 
Stockholders’ deficit:
Preferred stock; $0.0001 par value. Authorized 99,820 shares (excluding 180 shares of Series A Preferred Stock); no other series has been designated
  
Common stock; $0.0001 par value. Authorized 1,000,000 shares; issued and outstanding 85,704 and 76,406 shares as of June 30, 2021 and December 31, 2020, respectively
9 8 
Additional paid-in capital143,801 98,258 
Accumulated other comprehensive loss(2,262)(318)
Accumulated deficit(297,777)(301,008)
Total stockholders' deficit(156,229)(203,060)
Total liabilities, redeemable preferred stock and stockholders' deficit$272,124 $279,935 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2



RIMINI STREET, INC. 
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share amounts) 
Three Months Ended
June 30,
Six Months Ended June 30,
 2021202020212020
Revenue$91,614 $78,402 $179,509 $156,434 
Cost of revenue34,595 30,437 68,431 60,636 
Gross profit57,019 47,965 111,078 95,798 
Operating expenses:
Sales and marketing33,157 26,836 63,540 55,248 
General and administrative16,494 13,133 33,097 25,134 
Impairment charge related to operating right of use assets  393  
Litigation costs and related recoveries:
Professional fees and other costs of litigation2,786 2,722 7,549 5,474 
Insurance costs and recoveries, net 141  1,062 
 Litigation costs and related recoveries, net
2,786 2,863 7,549 6,536 
Total operating expenses52,437 42,832 104,579 86,918 
Operating income4,582 5,133 6,499 8,880 
Non-operating income and (expenses):  
Interest expense(38)(12)(85)(25)
Gain (loss) on change in fair value of redeemable warrants3,698 (546)(970)(546)
Other income (expenses), net(496)(567)276 (785)
Income before income taxes7,746 4,008 5,720 7,524 
Income tax expense(939)(1,084)(2,489)(2,055)
Net income 6,807 2,924 3,231 5,469 
Other comprehensive income:
Foreign currency translation gain (loss)420 402 (1,944)(411)
Comprehensive income$7,227 $3,326 $1,287 $5,058 
Net loss attributable to common stockholders$(4,846)$(3,763)$(14,691)$(7,848)
Net loss per share attributable to common stockholders:
Basic and diluted$(0.06)$(0.06)$(0.18)$(0.12)
Weighted average number of shares of Common Stock outstanding:
Basic and diluted85,343 68,290 82,056 68,076 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3



RIMINI STREET, INC.
Unaudited Condensed Consolidated Statements of Stockholders' Deficit
(In thousands) 
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Common Stock, Shares
  Beginning of period85,140 68,032 76,406 67,503 
    Exercise of stock options for cash84 260 800 564 
    Restricted stock units vested480 238 748 463 
    Issuance of Common Stock in March 2021 Offering  7,750  
  End of period85,704 68,530 85,704 68,530 
Total Stockholders' Deficit, beginning of period$(154,495)$(226,405)$(203,060)$(223,321)
Common Stock, Amount
  Beginning of period9 7 8 7 
    Exercise of stock options for cash    
    Restricted stock units vested    
    Issuance of Common Stock in March 2021 Offering, net  1  
  End of period9 7 9 7 
Additional Paid-in Capital
  Beginning of period152,762 85,879 98,258 90,695 
    Stock based compensation expense2,478 1,726 4,711 3,236 
    Exercise of stock options for cash201 252 3,113 556 
    Restricted stock units vested    
    Issuance of Common Stock in March 2021 Offering, net13  55,641  
    Redemption of 60,000 shares of Series A Preferred Stock in April 2021:
      Accretion related to redemption of Series A Preferred Stock(5,673) (5,673) 
      Make-whole dividends related to redemption of Series A Preferred Stock(2,343) (2,343) 
   Return on repurchase of Series A Preferred Stock shares in January 2021  (38) 
    Accretion of discount on Series A Preferred Stock(804)(1,567)(2,277)(3,114)
    Accrued dividends on Series A Preferred Stock:
      Payable in cash(2,179)(3,939)(5,839)(7,849)
      Payable in kind(654)(1,181)(1,752)(2,354)
  End of period143,801 81,170 143,801 81,170 
Accumulated Other Comprehensive Loss
  Beginning of period(2,682)(2,242)(318)(1,429)
    Foreign currency translation gain (loss)420 402 (1,944)(411)
  End of period(2,262)(1,840)(2,262)(1,840)
Accumulated Deficit
  Beginning of period(304,584)(310,049)(301,008)(312,594)
    Net income6,807 2,924 3,231 5,469 
  End of period(297,777)(307,125)(297,777)(307,125)
Total Stockholders' Deficit, end of period$(156,229)$(227,788)$(156,229)$(227,788)


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.



4





RIMINI STREET, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
Six Months Ended June 30,
20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$3,231 $5,469 
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on change in fair value of redeemable warrants970 546 
Stock-based compensation expense4,711 3,236 
Depreciation and amortization1,174 886 
Deferred income taxes165 33 
Impairment charge related to operating right of use assets393  
Amortization and accretion related to operating right of use assets3,100 3,047 
Other 8 
Changes in operating assets and liabilities:
Accounts receivable31,971 46,457 
Prepaid expenses, deposits and other(2,380)3,777 
Deferred contract costs(1,616)(1,335)
Accounts payable1,180 2,361 
Accrued compensation, benefits, commissions and other liabilities(5,541)(5,583)
Deferred revenue9,804 (14,658)
Net cash provided by operating activities47,162 44,244 
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital expenditures(832)(725)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds related to issuance of Common Stock from March 2021 Offering56,965  
Payments for professional fees related to issuance of Common Stock from March 2021 Offering(1,243) 
Payments to repurchase shares of Series A Preferred Stock(68,951) 
Payments of cash dividends on Series A Preferred Stock(9,891)(7,805)
Principal payments on capital leases(218)(100)
Proceeds from exercise of employee stock options3,112 557 
Net cash used in financing activities(20,226)(7,348)
Effect of foreign currency translation changes(3,292)(1,554)
Net change in cash, cash equivalents and restricted cash22,812 34,617 
Cash, cash equivalents and restricted cash at beginning of period87,909 38,388 
Cash, cash equivalents and restricted cash at end of period$110,721 $73,005 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 

5



RIMINI STREET, INC. 
Unaudited Condensed Consolidated Statements of Cash Flows, Continued
(In thousands)

Six Months Ended June 30,
20212020
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest$83 $24 
Cash paid for income taxes2,038 1,464 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Discount on shares of Common Stock issued in March 2021 Public Offering:
  Underwriter discounts and commissions$2,948 $ 
  Underwriter expenses 1,050  
  Accrued professional fees related to the issuance of Common Stock79  
Discount on shares issued in Private Placements:
Redeemable Series A Preferred Stock Dividends and Accretion:
  Accrued cash dividends$2,186 $3,939 
  Accrued PIK dividends647 1,182 
  Accretion of discount on Series A Preferred Stock2,277 3,114 
  Issuance of Series A Preferred Stock for PIK dividends2,244 2,323 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


6


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 — NATURE OF BUSINESS AND BASIS OF PRESENTATION
 
Nature of Business
 
Rimini Street, Inc. (the “Company”) is a global provider of enterprise software support services. The Company’s subscription-based software support products and services offer enterprise software licensees a choice of solutions that replace or supplement the support products and services offered by enterprise software vendors. 

Basis of Presentation and Consolidation
 
The unaudited condensed consolidated financial statements, which include the accounts of the Company and its wholly owned subsidiaries, are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by U.S. GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2020, included in the Company’s 2020 Annual Report on Form 10-K as filed with the SEC on March 3, 2021 and as subsequently amended on May 10, 2021 (as amended, the “2020 Form 10-K/A”).
 
The accompanying condensed consolidated balance sheet and related disclosures as of December 31, 2020 have been derived from the Company’s audited financial statements. The Company’s financial condition as of June 30, 2021, and operating results for the three months ended June 30, 2021, are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the year ending December 31, 2021.
 
NOTE 2 — LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES
 
Liquidity
 
As of June 30, 2021, the Company’s current liabilities exceeded its current assets by $66.1 million, and the Company recorded net income of $6.8 million for the three months ended June 30, 2021. As of June 30, 2021, the Company had available cash, cash equivalents and restricted cash of $110.7 million. As of June 30, 2021, the Company’s current liabilities included $229.8 million of deferred revenue whereby the historical costs of fulfilling the Company's commitments to provide services to its clients was approximately 38% of the related deferred revenue for the three months ended June 30, 2021.

As discussed in Note 6, the Company completed a firm commitment underwritten public offering on March 11, 2021 (the “March 2021 Offering”) of 7.8 million shares of its common stock, par value $0.0001 per share (“Common Stock”), at a price of $7.75 per share for total gross proceeds of $57.0 million. Underwriter discounts and commissions were $2.9 million and the underwriter expenses were $0.2 million. The Company also incurred additional professional fees and expenses of $1.3 million as part of the transaction, resulting in net proceeds from the March 2021 Offering of approximately $55.7 million. The Company had previously completed a firm commitment underwritten public offering on August 18, 2020 (the “August 2020 Offering”) of 6.1 million shares of its Common Stock at a price of $4.50 per share for total gross proceeds of $27.5 million. Underwriter discounts and commissions were $1.7 million and the underwriter expenses were $0.1 million. The Company also incurred additional professional fees of $0.6 million as part of the transaction, resulting in net proceeds from the August 2020 Offering of approximately $25.1 million.

On April 16, 2021, the Company redeemed 60,000 shares of its 13.00% Series A Preferred Stock at an aggregate redemption price of $62.3 million. The Company funded the partial redemption with the proceeds from the March 2021 Offering and the August 2020 Offering, which raised aggregate net proceeds of approximately $80.8 million.

Additionally, the Company is obligated to make operating and financing lease payments that are due within the next 12 months in the aggregate amount of $6.4 million. In March 2020, the World Health Organization declared the outbreak of a novel strain of the coronavirus (“COVID-19”) to be a pandemic. Assuming that, after the issuance date of these financial statements, the
7


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Company’s ability to operate continues not to be significantly adversely impacted by the COVID-19 pandemic, the Company believes that current cash, cash equivalents, restricted cash, and future cash flow from operating activities will be sufficient to meet the Company’s anticipated cash needs, including cash dividend requirements, working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of these financial statements.
 
Revision of Previously Issued Financial Statements

The Company has revised certain prior period amounts on the unaudited condensed consolidated financial statements to correct a misstatement with respect to improperly classifying certain warrants to purchase approximately 6.1 million shares of the Company’s Common Stock, at $11.50 per share (the “GP Sponsor Private Placement Warrants”) as equity instead of as a warrant liability that is adjusted through charges or credits to the income statement each quarter to reflect changes in the fair value of the warrants, under the guidance of Accounting Standards Codification (“ASC”) 815-40, Contracts in Entity’s Own Equity. The Company recorded a liability for the warrants of $2.1 million as of December 31, 2020 and adjusted its additional paid-in capital and accumulated deficit accordingly. The impact to the statement of operations and statement of cash flows for both the three and six months ended June 30, 2020 was $0.5 million. There was no income tax impact associated with this revision. Total stockholders’ deficit increased by $1.3 million and $0.7 million as of June 30, 2020 and December 31, 2019, respectively.

The Company has assessed the impact of improperly classifying the GP Sponsor Private Placement Warrants as equity rather than as a warranty liability that is adjusted through charges or credits to the income statement each quarter to reflect changes in the fair value of the warrants and determined the impact is not material, quantitatively or qualitatively, to the periods presented. Accordingly, the Company will adjust prior periods as those financial statements are presented for comparative purposes in future filings.

See Note 11 for additional information regarding the assumptions made to determine the fair value of the GP Sponsor Private Placement Warrants as of June 30, 2021 and December 31, 2020.

Use of Estimates
 
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes are reasonable under the circumstances to determine the carrying values of assets and liabilities that are not readily apparent from other sources. The Company’s significant accounting estimates include, but are not necessarily limited to, accounts receivable, valuation assumptions for stock options and leases, deferred income taxes and the related valuation allowances, and the evaluation and measurement of contingencies. To the extent there are material differences between the Company’s estimates and actual results, the Company’s future consolidated results of operation may be affected.
 
Recent Accounting Pronouncements

Recently Adopted Standards. The following accounting standards were adopted during the fiscal year 2021:

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The guidance removes certain exceptions to the general income tax accounting principles, and clarifies and amends existing guidance to facilitate consistent application of the accounting principles. The new guidance was effective for the Company as of January 1, 2021. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.

In January 2020, the FASB issued ASU 2020-1, Investments—Equity Securities (Topic 321), Investments - Equity and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). The guidance clarifies interactions between current accounting standards on equity securities, equity method and joint ventures, and derivatives and hedging. The new guidance addresses accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. The new guidance was effective for the Company as of January 1, 2021. The adoption of this guidance did not have a material impact on the Company’s Consolidated Financial Statements.

8


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - DEFERRED CONTRACT COSTS AND DEFERRED REVENUE

Activity for deferred contract costs for the three and six months ended June 30, 2021 and 2020 is shown below (in thousands):
Three Months Ended
June 30,
Six Months Ended June 30,
2021202020212020
Deferred contract costs, current and noncurrent, as of the beginning of period$34,500 $28,472 $34,945 $28,049 
Capitalized commissions during the period5,868 4,289 9,142 8,042 
Amortized deferred contract costs during the period(3,807)(3,377)(7,526)(6,707)
Deferred contract costs, current and noncurrent, as of the end of period$36,561 $29,384 $36,561 $29,384 

Deferred revenue activity for the three and six months ended June 30, 2021 and 2020 is shown below (in thousands):
Three Months Ended
June 30,
Six Months Ended June 30,
2021202020212020
Deferred revenue, current and noncurrent, as of the beginning of period$249,997 $222,654 $256,933 $235,498 
Billings, net107,255 74,254 188,214 139,442 
Revenue recognized(91,614)(78,402)(179,509)(156,434)
Deferred revenue, current and noncurrent, as of the end of period$265,638 $218,506 $265,638 $218,506 

The transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized. As of June 30, 2021, the remaining transaction price included in deferred revenue was $229.8 million in current and $35.9 million in noncurrent.

NOTE 4 — OTHER FINANCIAL INFORMATION
  
Other Accrued Liabilities
 
As of June 30, 2021 and December 31, 2020, other accrued liabilities consist of the following (in thousands): 
 20212020
Accrued sales and other taxes$4,288 $5,213 
Accrued professional fees4,908 5,912 
Accrued dividends on Redeemable Series A Preferred Stock2,186 3,842 
Current maturities of capital lease obligations369 429 
Income taxes payable1,038 2,245 
Other accrued expenses3,137 3,513 
Total other accrued liabilities$15,926 $21,154 

Interest Expense
 
Interest expense of $38 thousand and $12 thousand for the three months ended June 30, 2021 and 2020, respectively, was comprised primarily from finance leases. Interest expense of $85 thousand and $25 thousand for the six months ended June 30, 2021 and 2020, respectively, was comprised primarily from finance leases.

NOTE 5 — REDEEMABLE SERIES A PREFERRED STOCK

2018 Securities Purchase Agreement

On July 19, 2018, the Company closed a Securities Purchase Agreement (the “2018 SPA”) with several accredited investors (the “Purchasers”) for a private placement (the “Initial Private Placement”) of (i) 140,000 shares of Series A Preferred Stock,
9


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(ii) approximately 2.9 million shares of Common Stock, and (iii) convertible secured promissory notes (the “Convertible Notes”), with no principal amount outstanding at issuance that solely collateralize amounts, if any, that may become payable by the Company pursuant to certain redemption provisions of the Series A Preferred Stock.

Pursuant to the 2018 SPA, the Purchasers acquired an aggregate of 140,000 shares of Series A Preferred Stock, 2.9 million shares of Common Stock, and Convertible Notes with no principal amount outstanding as of the issuance date, for an aggregate purchase price equal to $133.0 million in cash (after taking into account a discount of $7.0 million, but before the incremental and direct transaction costs associated with the Private Placement of $4.6 million). The allocation of the net proceeds as of the closing date, along with changes in the net carrying value of the Series A Preferred Stock through June 30, 2021, are set forth below (dollars in thousands):
Series A Preferred StockCommonConvertible
SharesAmountStockNotesTotal
Fair value on July 19, 2018:
  Series A Preferred Stock140,000 $126,763 
(1)
$— $— $126,763 
  Common Stock— — 20,131 
(2)
— 20,131 
  Convertible Notes— — — — — 
    Total140,000 $126,763 $20,131 $— $146,894 
Relative fair value allocation on July 19, 2018
  Aggregate cash proceeds on July 19, 2018140,000 $114,773 
(3)
$18,227 
(3)
$— $133,000 
  Incremental and direct costs— (3,994)
(4)
(634)
(4)
— (4,628)
Net carrying value on July 19, 2018140,000 $110,779 
 
$17,593 $— $128,372 

_________________
(1)The liquidation preference for each share of Series A Preferred Stock on the closing date for the Initial Private Placement was $1,000 per share for an aggregate liquidation preference of $140.0 million. The estimated fair value of the Series A Preferred Stock was approximately $126.8 million on July 19, 2018, which is the basis for allocation of the net proceeds. Please refer to Note 11 for further discussion of the valuation methodology employed.
(2)The fair value of the issuance of approximately 2.9 million shares of Common Stock was based on the last closing price of $6.95 per share on the date prior to closing the transaction.
(3)The aggregate cash proceeds of $133.0 million on July 19, 2018 were allocated pro rata based on the fair value of all consideration issued.
(4)Incremental and direct costs of the Initial Private Placement were allocated pro rata based on the fair value of all consideration issued. Such costs include financial advisory and professional fees of $2.7 million that were incurred by the Company, and due diligence and professional fees incurred by the investors of $1.9 million.

At the closing, the Company used the $133.0 million of proceeds from the Initial Private Placement plus cash and cash equivalents of $2.7 million to (i) repay all outstanding indebtedness and various operating and financing fees and expenses under its former credit facility in the aggregate amount of $132.8 million, (ii) pay incremental and direct transaction costs of $2.7 million, and (iii) pay a professional services retainer of $0.2 million.

In connection with the completion of the Initial Private Placement, the Company, among other customary closing actions, (i) filed a Certificate of Designations with the State of Delaware setting forth the rights, preferences, privileges, qualifications, restrictions and limitations on the Series A Preferred Stock (the “CoD”), (ii) entered into a Registration Rights Agreement with the Purchasers setting forth certain registration rights of capital stock held by the Purchasers (the “Registration Rights Agreement”), (iii) delivered a Convertible Note to each Purchaser, and (iv) entered into a Security Agreement (the “Security Agreement”) in respect of the Company’s assets collateralizing the amounts that may become payable pursuant to the Convertible Notes if certain redemption provisions of the Series A Preferred Stock are triggered in the future.

March 2019 Securities Purchase Agreement
On March 7, 2019, the Company entered into a securities purchase agreement (the “March 2019 SPA”) with an accredited investor for a private placement (the “March 2019 Private Placement”) of (i) 6,500 shares of Series A Preferred Stock, (ii) 134,483 shares of Common Stock, and (iii) a Convertible Note with no principal balance outstanding. The shares of Series A Preferred Stock were authorized pursuant to the CoD and are subject to the provisions set forth in an amended Security Agreement, a Convertible Note and a registration rights agreement that is substantially similar in all material respects to the Registration Rights Agreement entered into in connection with the 2018 SPA discussed above. The accredited investor in the March 2019 Private Placement is affiliated with one of the accredited investors in the Initial Private Placement.
10


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The aggregate cash proceeds from the March 2019 Private Placement were $5.8 million in cash (after an 11.0% discount or $0.7 million). The net proceeds were approximately $5.0 million after estimated transaction costs payable by the Company of $0.8 million. The transaction costs consisted of 85,000 shares of Common Stock issued to the existing holders of the Series A Preferred Stock for their consent at a cost of approximately $0.5 million and direct transaction costs of approximately $0.3 million related to due diligence and professional fees. The net proceeds were allocated based on their relative fair values at issuance of the Series A Preferred Stock and the Common Stock. The allocation of the net proceeds from the March 2019 Private Placement are set forth below (dollars in thousands):
Series A Preferred StockCommonConvertible
SharesAmountStockNotesTotal
Fair value on March 7, 2019:
  Series A Preferred Stock6,500 $5,313 
(1)
$— $— $5,313 
  Common Stock— — 722 
(2)
— 722 
  Convertible Notes— — — — — 
    Total6,500 $5,313 $722 $— $6,035 
Relative fair value allocation on March 7, 2019:
  Aggregate cash proceeds on March 7, 20196,500 $5,093 
(3)
$692 
(3)
$— $5,785 
  Incremental and direct costs— (661)
(4)
(90)
(4)
— (751)
Net carrying value on March 7, 20196,500 $4,432 $602 $— $5,034 


(1)The liquidation preference for each share of Series A Preferred Stock on the closing date for the March 2019 Private Placement was $1,000 per share for an aggregate liquidation preference of $6.5 million. The estimated fair value of the Series A Preferred Stock was approximately $5.3 million on March 7, 2019, which is the basis for allocation of the net proceeds. Please refer to Note 11 for further discussion of the valuation methodology employed.
(2)The fair value of the issuance of approximately 134,483 shares of Common Stock was based on the closing price of $5.37 per share on the date prior to closing of the transaction.
(3)The aggregate cash proceeds of $5.8 million on March 7, 2019 were allocated pro rata based on the fair value of all consideration issued.
(4)Incremental and direct costs related to the March 2019 Private Placement were allocated pro rata based on the fair value of all consideration issued. Such costs included the issuance of 85,000 shares of Common Stock to the Initial Private Placement investors in the Series A Preferred Stock for their consent of approximately $0.5 million and financial advisory and professional fees that were incurred of approximately $0.3 million that were either paid or accrued directly by the Company as of March 31, 2019.

June 2019 Securities Purchase Agreement
On June 20, 2019, the Company entered into a securities purchase agreement (the “June 2019 SPA”) with accredited investors for a private placement (the “June 2019 Private Placement”) of (i) 3,500 shares of Series A Preferred Stock, (ii) 72,414 shares of Common Stock, and (iii) a Convertible Note with no principal balance outstanding. The shares of the Series A Preferred Stock were authorized pursuant to the CoD and are subject to the provisions set forth in an amended Security Agreement, a Convertible Note and a registration rights agreement that is substantially similar in all material respects to the Registration Rights Agreement entered into connection with the 2018 SPA discussed above. The accredited investors in the June 2019 Private Placement are not affiliated with the accredited investors in the March 2019 Private Placement or the Initial Private Placement.
The aggregate cash proceeds from the June 2019 Private Placement were $3.3 million in cash (after a 5.0% discount or $0.2 million). The net proceeds were approximately $3.0 million after estimated transaction costs payable by the Company of $0.3 million. The transaction costs consisted of 35,000 shares of Common Stock issued to the existing holders of the Series A Preferred Stock for their consent at a cost of approximately $0.2 million and direct transaction costs of approximately $0.2 million related to professional fees of the investors, existing holders of Series A Preferred Stock and the Company. The net proceeds were allocated based on their relative fair values at issuance of the Series A Preferred Stock and the Common Stock.
11


RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The allocation of the net proceeds from the June 2019 Private Placement are set forth below (dollars in thousands):
Series A Preferred StockCommonConvertible
SharesAmountStockNotesTotal
Fair value on June 20, 2019:
  Series A Preferred Stock3,500 $2,997 
(1)
$— $— $2,997 
  Common Stock— — 376 
(2)
— 376 
  Convertible Notes— — — — — 
    Total3,500 $2,997 $376 $— $3,373 
Relative fair value allocation on June 20, 2019:
  Aggregate cash proceeds on June 20, 20193,500 $2,954 
(3)
$371 
(3)
$— $3,325 
  Incremental and direct costs— (301)
(4)
(38)
(4)
— (339)
Net carrying value on June 20, 20193,500 $2,653 $333 $— $2,986 

(1)The liquidation preference for each share of Series A Preferred Stock on the closing date for the June 2019 Private Placement was $1,000 per share for an aggregate liquidation preference of $3.5 million. The estimated fair value of the Series A Preferred Stock was approximately $3.0 million on June 20, 2019, which is the basis for allocation of the net proceeds. Please refer to Note 11 for further discussion of the valuation methodology employed.
(2)The fair value of the issuance of approximately 72,414 shares of Common Stock was based on the closing price of $5.19 per share on the date prior to closing of the transaction.
(3)The aggregate cash proceeds of $3.3 million on June 20, 2019 were allocated pro rata based on the fair value of all consideration issued.
(4)Incremental and direct costs related to the June 2019 Private Placement were allocated pro rata based on the fair value of all consideration issued. Such costs included the issuance of 35,000 shares of Common Stock to the Initial Private Placement investors in the Series A Preferred Stock for their consent of approximately $0.2 million and financial advisory and professional fees that were incurred of approximately $0.2 million that were either paid or accrued directly by the Company as of June 30, 2019.


On April 16, 2021, the Company redeemed 60,000 shares of its 13.00% Series A Preferred Stock at an aggregate total redemption price of $62.3 million. The total price consisted of $60.0 million related to the face value of $1,000 per share of Series A Preferred Stock and $2.3 million or $39.05 per share of Series A Preferred Stock related to the dividends to be earned for the period from April 1, 2021 through July 18, 2021. The redeemed shares of Series A Preferred Stock, along with the dividends were recorded when the redemption offer became mandatorily redeemable on April 16, 2021.

The Company funded the redemption with a portion of the proceeds from the March 2021 Offering and the August 2020 Offering, which raised aggregate net proceeds of approximately $80.7 million.

On January 5, 2021, the Company entered into an agreement with certain of the holders of its Series A Preferred Stock (the “January 2021 Stock Repurchase Agreement”) to repurchase 10,000 shares of Series A Preferred Stock and the associated obligations pursuant to the Company’s Convertible Secured Promissory Notes outstanding in respect thereof (the “Note Obligations”) for an aggregate purchase price of approximately $8.95 million representing a discount to the face value of such shares of Series A Preferred Stock and no make-whole payments were required. The January 2021 Stock Repurchase Agreement contains customary representations, warranties and covenants of the parties and waivers relating to the purchased shares of Series A Preferred Stock.

Upon the closing of the transactions contemplated by the January 2021 Stock Repurchase Agreement, the shares of Series A Preferred Stock purchased by the Company were retired (and the underlying Note Obligations cancelled) and are not eligible for re-issuance by the Company in accordance with the terms of the CoD.

On October 30, 2020, the Company entered into an agreement (the “October 2020 Stock Repurchase Agreement”) with certain of the holders of its Series A Preferred Stock to repurchase 5,000 shares of Series A Preferred Stock and the associated Note Obligations for an aggregate purchase price of approximately $4.5 million representing a discount to the face value of such shares of Series A Preferred Stock and no make-whole payments were required. The October 2020 Stock Repurchase Agreement contains customary representations, warranties and covenants of the parties and waivers relating to the purchased shares of Series A Preferred Stock.

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RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Subsequent Event

On June 18, 2021, the Company issued a notice (the “June 2021 Notice of Redemption”) to redeem the remaining shares of its 13.00% Series A Preferred Stock on July 20, 2021 at an aggregate total redemption price of $88.4 million. The total price consists of $87.8 million related to the face value of $1,000 per share of Series A Preferred Stock and $0.6 million or $6.86 per share of Series A Preferred Stock related to the dividends to be earned for the period from July 1, 2021 through July 19, 2021. The redeemed shares of the Series A Preferred Stock, along with the dividends, will be recorded on the redemption date of July 20, 2021.
The Company funded the redemption with a five year term loan of $90 million, which was entered into on July 20, 2021 (the “Credit Facility”). The Credit Facility will bear interest at the London Interbank Offered Rate (“LIBOR”) plus a margin ranging from 1.75% to 2.50% and contains certain financial covenants, including a minimum fixed charge coverage ratio, a total leverage ratio, and a minimum liquidity of $20 million in U.S. cash. Annual minimum principal payments over the five year term for the Credit Facility will be 5%, 5%, 7.5%, 7.5%,and 10%, respectively, with the remaining balance due at the end of the term.
The changes in the net carrying value of Series A Preferred Stock from December 31, 2020 to June 30, 2021 are set forth below (dollars in thousands):
Series A Preferred Stock
SharesAmount
Net carrying value as of December 31, 2020154,911 $137,854 
Issuance of shares to settle PIK Dividends on January 4, 20211,193 1,193 
Repurchase of 10,000 shares on January 5, 2021
(10,000)(8,913)
Accretion of discount for the three months ended March 31, 2021 1,473 
Net carrying value as of March 31, 2021146,104 131,607 
Issuance of shares to settled PIK Dividends on April 1, 20211,051 1,051 
Redemption of 60,000 shares on April 16, 2021
(60,000)(54,327)
Accretion of discount for the three months ended June 30, 2021 804 
Net carrying value as of June 30, 202187,155 $79,135 

For future calculations of earnings applicable to common stockholders, the aggregate discount applicable to the Series A Preferred Stock will be accreted using the effective interest method from the respective issuance dates through July 19, 2023 when the holders of all outstanding shares of Series A Preferred Stock were able to first elect to redeem their shares for cash.

Agreements Related to Private Placement Transactions
 
In connection with the completion of the Initial Private Placement, the Company, among other customary closing actions, (i) filed the CoD, (ii) entered into the Registration Rights Agreement, (iii) delivered a Convertible Note to each Purchaser, and (iv) entered into the Security Agreement in respect of the Company’s assets collateralizing the amounts that may become payable pursuant to the Promissory Notes if certain redemption provisions of the Series A Preferred Stock are triggered in the future. In connection with both the March 2019 Private Placement and June 2019 Private Placement, the Company entered into a securities purchase agreement, a Registration Rights Agreement, a First (March 2019) and Second (June 2019) Amendment to the Security Agreement, and issued Convertible Notes to each investor, in each case substantially in the same form as entered into by the Company in the Initial Private Placement.

Certificate of Designations of the Series A Preferred Stock and Dividends

The CoD authorizes the issuance of up to 180,000 shares of Series A Preferred Stock. The holders of Series A Preferred Stock are entitled to, from the respective issuance date, a cash dividend of 10.0% per annum (the “Cash Dividends”) and a payment-in-kind dividend of 3.0% per annum (the “PIK Dividends” and, together with the Cash Dividends, the “Dividends”) for the first five years following the initial June 2018 closing and thereafter all dividends accruing on such Series A Preferred Stock will be payable in cash at a rate of 13.0% per annum. The Series A Preferred Stock is classified as mezzanine equity in the Company’s consolidated balance sheet as of June 30, 2021 and December 31, 2020 since the holders have redemption rights beginning on July 19, 2023 (and earlier under certain circumstances).
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RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



As required under the CoD, the Cash Dividends and PIK Dividends for the period in which the Series A Preferred Stock was outstanding during the second quarter of 2021 were settled on July 1, 2021 to holders of record on June 16, 2021. Accordingly, the Company accrued a current liability for accrued Cash Dividends through June 30, 2021 for $2.2 million. A long-term liability was recorded for $0.6 million of PIK Dividends that accrued through June 30, 2021, which were settled through the issuance of 647 shares of Series A Preferred Stock on July 1, 2021. Presented below is a summary of total and per share dividends declared through June 30, 2021 (dollars in thousands, except per share amounts):
Dividends Payable in:TotalDividends
CashPIKDividendsPer Share
Dividends payable as of December 31, 2020$3,842 $1,193 $5,035 $32.50 
  Cash Dividends @ 10% per annum
3,660 — 3,660 23.40 
  PIK Dividends @ 3% per annum
— 1,098 1,098 7.02 
Fractional PIK shares settled for cash47 (47)  
Less dividends settled January 4, 2021(4,009)(1,193)(5,202)(33.26)
Dividends payable as of March 31, 20213,540 1,051 4,591 32.14 
  Cash Dividends @ 10% per annum
2,179 — 2,179 25.00 
  PIK Dividends @ 3% per annum
— 654 654 7.50 
Fractional PIK shares settled for cash7 (7)  
Less dividends settled April 1, 2021(3,540)(1,051)(4,591)(52.68)
Dividends payable as of June 30, 2021$2,186 $647 $2,833 $32.51 

The liquidation value of the Series A Preferred Stock is convertible into shares of Common Stock at an initial conversion rate of $10.00 per share for a total of 8.7 million shares of Common Stock based on 87,155 shares of Series A Preferred Stock outstanding as of June 30, 2021. Each share of Series A Preferred Stock is convertible at the holder’s option into one share of Common Stock at a conversion price equal to the quotient of (i) the Liquidation Preference (as defined below), and (ii) $10.00 (subject to appropriate adjustment in the event of a stock split, stock dividend, combination or other similar recapitalization) (the “Per Share Amount”). The Company has the right to convert outstanding shares of Series A Preferred Stock into Common Stock for the Per Share Amount after July 19, 2021, if the Company’s volume weighted average stock price for at least 30 trading days of the 45 consecutive trading days immediately preceding such conversion is greater than $11.50 per share. The Company can exercise this right to convert twice per calendar year for a maximum number of shares of Common Stock equal to the amount that has publicly traded over the 60 consecutive trading days prior to the conversion date (less any shares of Common Stock that have been issued pursuant to any such conversion during such 60-day period).

The Series A Preferred Stock will become mandatorily redeemable, upon the election by the holders of a majority of the then outstanding shares, on or after July 19, 2023. Any and all of the then outstanding liquidation value of the Series A Preferred Stock plus any capitalized PIK Dividends and any unpaid accrued Cash Dividends not previously included in the Liquidation Preference (the “Redemption Amount”) is required to be repaid in full in cash on such redemption date or satisfied in the form of obligations under the Convertible Notes. Additionally, in certain circumstances the Company may require the holders of shares of the Series A Preferred Stock to convert into shares of Common Stock in lieu of cash payable upon redemption.

The Series A Preferred Stock will also become mandatorily redeemable at any time upon the reasonable determination of the holders of a majority of the Series A Preferred Stock then outstanding of the occurrence of a Material Adverse Effect or the occurrence of a Material Litigation Effect (as such terms are defined in the CoD), with the Redemption Amounts payable automatically becoming payment obligations pursuant to the Convertible Notes with a concurrent cancellation of the shares of the Series A Preferred Stock, unless under certain circumstances, the Company redeems the Series A Preferred Stock for cash at such time.

Prior to July 19, 2021, the Company has the right to redeem up to $80.0 million of shares of the Series A Preferred Stock for cash amounts equal to the Redemption Amount which would include a make-whole premium that provides the holders thereof with full yield maintenance as if the Series A Preferred Stock was held until July 19, 2021, provided that such redemptions are subject to certain conditions and limitations. After July 19, 2021, the Company will have the right to redeem shares of Series A Preferred Stock for a cash per share amount equal to the Redemption Amount.

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RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The holders of Series A Preferred Stock may exercise their conversion rights prior to any optional redemption. In the event of a liquidation, dissolution or winding up of the Company, the Series A Preferred Stock is entitled to a liquidation preference in the amount of the greater of (i) $1,000 plus accrued but unpaid Dividends (the “Liquidation Preference”), and (ii) the per share amount of all cash, securities and other property to be distributed in respect of the Common Stock such holder would have been entitled to receive for its Series A Preferred Stock on an as-converted basis. In the event of a liquidation, dissolution or winding up of the Company prior to July 19, 2021, the holders are entitled to a make-whole premium that provides the holders thereof with full yield maintenance as if the shares of Series A Preferred Stock were held until July 19, 2021.

Until approximately 95% of the Series A Preferred Stock or Convertible Notes are no longer outstanding, the Company is restricted from incurring Indebtedness (as defined in the June 2019 SPA, March 2019 SPA and 2018 SPA), subject to certain exceptions.

Registration Rights Agreement

The original Registration Rights Agreement required the Company to register the resale of the shares of Common Stock and Series A Preferred Stock issued pursuant to the 2018 SPA. The Company satisfied such registration requirements in November 2018. The Registration Rights Agreements, entered into in connection with both the March 2019 and June 2019 Private Placements, required the Company to register the resale of the shares of Common Stock and Series A Preferred Stock pursuant to the March 2019 SPA and the June 2019 SPA within 120 days of the respective March 7, 2019 and June 20, 2019 closing dates. The Company satisfied all such registration requirements in July 2019. Each such Registration Rights Agreement also includes customary “piggyback” registration rights, suspension rights, indemnification, contribution, and assignment provisions.

NOTE 6—COMMON STOCK OFFERING, RESTRICTED STOCK UNITS, STOCK OPTIONS AND WARRANTS
 
Common Stock Offerings

On March 11, 2021, the Company completed the March 2021 Offering of 7.8 million shares of its Common Stock at a price of $7.75 per share for total gross proceeds of $56.9 million. Underwriter discounts and commissions were $2.9 million and the underwriter expenses were $0.2 million. The Company also incurred additional professional fees and expenses of $1.3 million as part of the transaction, resulting in net proceeds from the March 2021 Offering of approximately $55.6 million. The Company used the net proceeds from the March 2021 Offering to redeem 60,000 shares of Series A Preferred Stock.

On August 18, 2020, the Company completed the August 2020 Offering of 6.1 million shares of its Common Stock at a price of $4.50 per share for total gross proceeds of $27.5 million. Underwriter discounts and commissions were $1.7 million and the underwriter expenses were $0.1 million. The Company also incurred additional professional fees of $0.6 million as part of the transaction, resulting in net proceeds from the August 2020 Offering of approximately $25.1 million. The Company used the net proceeds from the August 2020 Offering to redeem 60,000 shares of Series A Preferred Stock and for working capital and other general corporate purposes.

Stock Option Plans

The Company’s stock option plans consist of the 2007 Stock Plan (the “2007 Plan”) and the 2013 Equity Incentive Plan, as amended and restated in July 2017 (the “2013 Plan”). The 2007 Plan and the 2013 Plan are collectively referred to as the “Stock Plans”. On February 23, 2021, the Board of Directors authorized an increase of approximately 3.1 million shares available for grant under the 2013 Plan. For additional information about the Stock Plans, please refer to Note 8 to the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Form 10-K/A. The information presented below provides an update for activity under the Stock Plans for both the three and six months ended June 30, 2021.
 
Restricted Stock Units
 
For the six months ended June 30, 2021, the Board of Directors granted restricted stock units (“RSUs”) under the 2013 Plan for an aggregate of approximately 1.1 million shares of Common Stock to employees and to non-employee directors of the Company. RSU grants vest over periods generally ranging from 12 to 36 months from the respective grant dates and the awards are subject to forfeiture upon termination of employment or service on the Board of Directors, as applicable. Based on the weighted average fair market value of the Common Stock on the date of grant of $7.35 per share, the aggregate fair value for the shares underlying the RSUs amounted to $8.0 million as of the grant date that will be recognized as compensation cost over
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RIMINI STREET, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


the vesting period. Accordingly, compensation expense related to RSUs of approximately $2.2 million and $1.3 million was recognized for the three months ended June 30, 2021 and 2020, respectively. Compensation expense related to RSUs of approximately $4.1 million and $2.5 million was recognized for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, the unrecognized expense of $13.2 million net of forfeitures is expected to be charged to expense on a straight-line basis as the RSUs vest over a weighted-average period of approximately 1.8 years.
 
Stock Options
 
For the six months ended June 30, 2021, the Board of Directors granted stock options for the purchase of an aggregate of approximately 0.7 million shares of Common Stock at exercise prices that were equal to the fair market value of the Common Stock on the date of grant. These stock options generally vest annually for one-third of the awards and expire ten years after the grant date.
 
The following table sets forth a summary of stock option activity under the Stock Plans for the six months ended June 30, 2021 (shares in thousands): 
 Shares
Price (1)
Term (2)
Outstanding, December 31, 20207,007 $5.24 5.0
Granted665 7.61 
Forfeited(65)4.74 
Expired(95)