Business context and reporting period
This is Stable Road Acquisition Corp.’s unaudited Form 10-Q for the quarter ended March 31, 2020—not a Momentus Inc. filing. Stable Road was a blank-check company seeking a business combination, with a stated focus on the cannabis industry. It had not begun operating activities or generated operating revenue.
Financial results and liquidity
| Metric | Q1 2020 / March 31, 2020 |
|---|---|
| Operating revenue | None |
| General and administrative expense | $236,879 |
| Trust-account interest income | $669,789 |
| Income tax provision | $173,439 |
| Net income | $259,471 |
| Cash outside the trust | $984,919 |
| Trust cash and marketable securities | $173,396,298 |
| Total liabilities | $7,240,139, including $6,900,000 deferred underwriting fee payable |
| Cash used in operating activities | $227,767 |
There was no long-term debt reported and no off-balance-sheet financing arrangement. The trust held primarily U.S. Treasury securities. Cash outside the trust fell from $1,093,184 at December 31, 2019 to $984,919 at March 31, 2020. Total assets rose from $174,207,811 to $174,612,112; the filing does not provide a comparable prior-quarter income statement or cash-flow statement.
Material changes and unusual items
Trust-account assets increased by about $550,000 from year-end, principally reflecting investment earnings; the company withdrew $119,502 of trust interest to pay franchise taxes. The change in value of shares subject to possible redemption was recorded as a $259,470 reduction to additional paid-in capital. The $6.9 million deferred underwriting fee is payable only if a business combination is completed.
Outlook, risks and contingencies
- The company had until May 13, 2021 to complete a business combination; otherwise it faced mandatory liquidation and redemption of public shares. Management said this uncertainty raised substantial doubt about the company’s ability to continue as a going concern.
- Management said COVID-19 could adversely affect the company’s financial position, results, or target search, but the specific impact was not determinable. No related adjustments were made to the financial statements.
- Management did not expect to need additional funds for current operations, but warned that higher-than-estimated search or transaction costs, or substantial shareholder redemptions, could require financing. No working-capital loans were outstanding at March 31, 2020.
- Public shareholders could redeem shares in connection with a business combination. If no combination occurred by the deadline, warrants could expire worthless. A successful transaction could involve dilution or debt, among other risks.
- No legal proceedings or material changes to the previously disclosed risk factors were reported. Management assessed disclosure controls as effective and reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Confirm the issuer: the supplied filing is for Stable Road Acquisition Corp., despite the request identifying Momentus Inc.
- Review subsequent filings for whether and when Stable Road completed a business combination, and whether the May 13, 2021 deadline or other terms changed.
- Assess the availability of the $173.4 million trust balance after redemptions, taxes, and transaction costs, including the conditional $6.9 million underwriting fee.
- Review the 2019 Form 10-K and later disclosures for target-search developments, COVID-19 effects, financing needs, and redemption or liquidation outcomes.