Business context and reporting period
This is Stable Road Acquisition Corp.’s (SRAC) Form 10-K for the fiscal year ended December 31, 2020, filed March 8, 2021—not a standalone Momentus Inc. 10-K. SRAC was a blank-check company with no operating business or revenue. Its proposed business combination with Momentus was pending at year-end and was not completed as of the filing.
The proposed merger provided for equity consideration based on $1.131 billion, less Momentus debt, plus specified cash and option/warrant exercise-price amounts. SRAC also agreed to a contingent private placement of 17.5 million shares at $10 per share. Closing depended on approvals and other conditions, including at least $5,000,001 in net tangible assets.
Financial results and condition
| Metric | FY 2020 | 2019 comparison |
|---|---|---|
| Revenue | None | None |
| Operating costs / loss from operations | $3.721 million | $236,085 |
| Trust-account interest income | $1.134 million | $346,011 |
| Income tax provision | $178,866 | $47,567 |
| Net income (loss) | $(2.765) million | $62,359 |
| Cash used in operating activities | $1.751 million | $356,959 |
The comparison period is May 28, 2019 (inception) through December 31, 2019, not a full prior-year period. The company reported no operating margins because it had no revenue-generating operations.
At December 31, 2020, total assets were $173.733 million, including $173.108 million in the trust account and $214,811 in cash outside it. Current liabilities were $2.486 million; total liabilities were $9.386 million, including $6.9 million of deferred underwriting fees payable only if a business combination closes. Stockholders’ equity was $5.000 million. SRAC reported no long-term debt or off-balance-sheet financing arrangements. In February 2021, two related parties loaned SRAC $300,000 each, interest-free, for transaction and working-capital costs.
Changes, outlook, risks and unusual items
- Operating costs rose to $3.721 million from $236,085, and SRAC moved from $62,359 net income in the 2019 inception period to a $2.765 million net loss in 2020. Trust interest was the principal source of income; the company had not begun operations.
- SRAC had until May 13, 2021, unless extended, to complete a business combination. Management and the auditor said failure to complete one by the deadline would require liquidation and raised substantial doubt about SRAC’s ability to continue as a going concern.
- Trust funds were approximately $10.04 per public share at December 31, 2020, before transaction-related costs and subject to redemption terms. Public shares could be redeemed in connection with a transaction; warrants would expire worthless if no transaction closed by the deadline.
- The merger included a conditional repurchase of shares from Prime Movers Lab, dependent on net proceeds after redemptions and expenses. The filing describes thresholds above $265 million and a maximum repurchase of $30 million when net proceeds exceed $280 million.
- Two purported stockholder lawsuits filed in December 2020 alleged omissions in the merger registration statement and sought, among other relief, to block a vote or closing absent further disclosures. In January 2021, the SEC Division of Enforcement informed SRAC it was investigating certain SEC filing disclosures, including those relating to the proposed transaction; SRAC said it was cooperating. The outcomes were indeterminable.
- Management identified COVID-19 as a potential risk but said its specific effect was not readily determinable. Other material risks include redemptions reducing transaction cash, financing availability, the short transaction deadline, conflicts of interest, creditor claims against trust assets, and possible Nasdaq listing requirements.
- Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2020. The auditor did not attest to internal controls.
Important facts for investors to verify
- Whether the merger closed, was amended, or terminated, and the final redemption level, net proceeds, financing, and consideration terms.
- The status and outcome of the SEC investigation and the two disclosure-related lawsuits; review subsequent filings for any updated disclosures.
- SRAC’s extension or liquidation status and the applicable deadline and redemption amount.
- The source and use of transaction funds, including the PIPE, related-party loans, deferred underwriting fee, and contingent share repurchase.
- Momentus’s operating results, liquidity, debt, risks, and transaction disclosures in its merger registration materials; this SRAC filing does not provide a standalone financial summary of Momentus.