Business Context and Reporting Period
This Form 8-K is a Current Report filed by SportsMap Tech Acquisition Corp. (SMAP) on December 1, 2023. The filing details a material definitive agreement entered into to secure financing necessary for the proposed business combination with Infrared Cameras Holdings, Inc. (ICI). The transaction involves the issuance of convertible promissory notes and warrants to financing investors, contingent upon the closing of the merger.
Key Financial Metrics and Capital Structure
- Financing Amount: $6.805 million in aggregate convertible promissory notes ("Financing Notes").
- Cash Proceeds: $4.3 million in new cash proceeds to the Company.
- Note Roll-overs: $1.48 million issued in exchange for cancellation of existing SportsMap promissory notes; $1.0 million rolled over from an existing ICI Convertible Note.
- Interest Rate: 9% per annum payable in cash, or 11% per annum payable in shares of common stock at the holder's option.
- Default Penalty: Interest rate increases automatically to 15% per annum upon failure to pay interest.
- Conversion Terms: Notes are convertible at $10.00 per share, subject to adjustments.
- Warrants Issued: 340,250 Financing Warrants to purchase common stock at an exercise price of $11.50 per share.
- Inducement Shares: Up to 680,500 shares transferred from founders and ICI stockholders to Financing Investors.
- Liquidity: The filing does not provide current cash balance, total debt, or liquidity ratios; it focuses solely on the new financing instrument.
Material Changes and Transaction Details
The primary material change is the execution of a Subscription Agreement on December 1, 2023, to fund the pending merger with ICI. This financing replaces or rolls over existing debt obligations rather than solely providing new capital. The closing of this financing is strictly contingent upon the substantially concurrent consummation of the Business Combination. The financing includes related-party transactions involving the Company's CEO (David Gow), a director (Steven Webster), and the spouse of the expected post-merger CEO (Gary Strahan).
Guidance, Risks, and Contingencies
- Contingencies: The financing and the business combination are subject to stockholder approval, regulatory approvals, and the satisfaction of closing conditions.
- Registration Obligations: The Company must file a registration statement within 30 days of closing. Failure to do so triggers liquidated damages of 1.0% per month (first 180 days) or 2.0% per month (after 180 days) of the principal amount.
- Market Cap Limitation: Issuance of conversion shares, interest shares, and warrant shares is capped to comply with Nasdaq listing rules (Exchange Cap) unless stockholder approval is obtained.
- Lock-up Period: Securities issued in this transaction cannot be transferred for six months following the closing.
- Risks: Risks include failure to close the merger, inability to meet Nasdaq listing standards post-transaction, disruption of management, and the uncertainty of projected financial performance for the combined entity.
- Operational Update: ICI announced its SmartIR platform is now available in AWS Marketplace.
Investor Verification Checklist
- Verify the status of the definitive Proxy Statement (Schedule 14A) filed on November 13, 2023, for details on the merger terms and voting requirements.
- Confirm the extent of related-party participation in the $6.805 million financing and the specific amounts held by directors and officers.
- Assess the Company's ability to meet the 30-day filing deadline for the Financing Registration Statement to avoid liquidated damages.
- Review the "Exchange Cap" provisions to understand potential dilution limits and the likelihood of needing additional stockholder approval for share issuances.
- Monitor the progress of the Business Combination closing, as the Financing Notes are contingent upon this event.