Business context and reporting period
Entity mismatch: Although the request identifies Momentus Inc., this filing is for Stable Road Acquisition Corp., a SPAC and shell company—not an operating-company 10-Q for Momentus. For the period ended June 30, 2020, Stable Road said it had not commenced operations and was searching for a business combination, with a stated focus on the cannabis industry. The filing does not identify a completed combination or provide Momentus operating results.
Financial results and position
- Revenue: No operating revenue; the company expected none before completing a business combination.
- Profit: Net income was $36,372 for the quarter and $295,843 for the six months, primarily reflecting interest earned on trust investments. The six-month 2019 comparison is only from the company’s May 28, 2019 inception through June 30, 2019, when it reported an $865 loss; a comparable prior-year quarter is not clearly presented.
- Cash flow: Six-month cash used in operating activities was $984,160. Cash outside the trust account declined to $933,897 from $1,093,184 at December 31, 2019. The company withdrew $824,873 of trust interest to pay franchise taxes.
- Assets and liquidity: Trust assets were $173,046,751; total assets were $174,446,821. Trust funds were principally reserved for a business combination or public-share redemptions, not ordinary working capital. Current liabilities were $138,476.
- Debt and obligations: No long-term debt or working-capital loans were outstanding. Total liabilities were $7,038,476, including a $6.9 million deferred underwriting fee payable only if a business combination is completed. The company also incurred a $10,000 monthly administrative-support fee payable to a sponsor affiliate.
- Margins: Not meaningful because the company had no operating revenue.
Changes, outlook and risks
- Compared with December 31, 2019, outside-trust cash fell by about $159,000; trust assets increased by about $201,000. The company recorded six-month interest income of $1,025,613, partly offset by operating costs and taxes.
- Stable Road had until May 13, 2021 to complete a business combination. Management said completion by then was uncertain and that the required liquidation if no transaction closed raised substantial doubt about the company’s ability to continue as a going concern.
- Management did not believe additional funds were currently needed for planned expenditures, but warned that higher-than-estimated search or transaction costs, significant redemptions, or insufficient funds could require financing or prevent a transaction.
- COVID-19 could hinder the search and transaction process; management said the specific financial impact was not determinable. The filing also added a risk that negative interest rates could reduce trust-account redemption value.
- Potential transaction financing through new shares or debt could dilute investors, increase leverage, or constrain the post-combination company. No market or interest-rate exposure was considered material at quarter-end, given the short-term U.S. Treasury investments.
- The filing reported effective disclosure controls, no material change in internal control, and no legal proceedings.
Most important facts to verify
- Confirm the intended filing and issuer: this document is Stable Road Acquisition Corp.’s 10-Q, not a Momentus Inc. operating-company filing.
- Verify any later business-combination announcements and whether the stated cannabis-industry search focus or May 13, 2021 deadline subsequently changed.
- Distinguish trust-account assets from cash available for operating expenses, and review redemption terms and potential effects of redemptions.
- Review the going-concern disclosure, COVID-19 uncertainties, and the deferred $6.9 million underwriting fee payable upon a completed combination.