Business Context and Reporting Period
This Form 8-K is filed by Stellar Acquisition III Inc., a special purpose acquisition company (SPAC) incorporated in the Republic of Marshall Islands. The report covers events occurring between February 22, 2018, and February 28, 2018. The filing details the issuance of promissory notes to extend the deadline for consummating an initial business combination and the execution of a merger agreement with Phunware, Inc.
Key Financial Metrics
- Sponsor Promissory Notes: $167,100 issued to affiliates of the Company's Chairman and co-CEOs.
- Phunware Promissory Note: $201,268 issued to Phunware, Inc.
- Total Trust Account Deposit: $368,368 (comprising proceeds from the Notes).
- Interest Applied to Trust: $34,168.
- Total Funds in Trust: $402,536 (equivalent to $0.058 per public share).
- Interest Rate: 0% (Notes bear no interest).
Material Changes
The Company extended its deadline to consummate an initial business combination by three months, moving the date from February 24, 2018, to May 24, 2018. This extension was achieved through the deposit of funds into the Trust Account. Additionally, the Company executed a definitive Merger Agreement with Phunware, Inc. on February 27, 2018, which triggers specific repayment terms for the Phunware Note.
Outlook, Risks, and Unusual Items
Merger Transaction: The Company is in the process of merging with Phunware, Inc. The Phunware Note is repayable upon the consummation of this transaction, at which point the principal will be paid by increasing the consideration payable to Phunware security holders.
Repayment Terms: The Sponsor Notes are repayable in full upon the consummation of the initial business combination. Sponsors have the option to convert unpaid balances into warrants exercisable for common stock at $0.50 per warrant.
Regulatory Status: The issuance of notes was made pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act of 1933.
Investor Verification Checklist
- Verify the terms of the Merger Agreement with Phunware, Inc. filed on February 27, 2018.
- Confirm the exact repayment mechanics for the Phunware Note upon transaction consummation.
- Review the warrant conversion terms ($0.50 per warrant) available to Sponsors.
- Monitor the May 24, 2018, deadline for the completion of the business combination.