Business Context and Reporting Period
Stable Road Acquisition Corp. filed this Form 8-K on August 5, 2021 under Item 8.01 in connection with its proposed business combination with Momentus Inc. The filing supplements the definitive proxy statement, consent solicitation statement, and prospectus related to the transaction. The SEC declared the related Form S-4 effective on July 22, 2021, and the definitive proxy materials were filed on July 23, 2021.
This is a transaction-related disclosure filing, not a quarterly or annual financial report. The filing does not provide current-period revenue, earnings, cash flow, balance sheet, or liquidity results for Momentus or Stable Road.
Key Financial and Transaction Metrics
- Evercore and Cantor were engaged as co-placement agents for the proposed PIPE investment. Each is entitled to a fee equal to 2.0% of the PIPE’s aggregate gross proceeds, subject to consummation of the PIPE and the business combination, plus customary expense reimbursement.
- Evercore is also entitled to a financial advisory fee from Momentus of $14.6 million, subject to reduction to $12.3 million based on the level of redemptions by Stable Road’s public stockholders.
- The filing does not state the final PIPE proceeds, redemption amount, transaction funding, debt, cash balance, operating margins, or other financial results.
Material Changes Versus Prior Disclosure
- Stable Road supplemented the proxy statement after receiving stockholder litigation and demand letters alleging inadequate transaction disclosures. The companies deny that additional disclosure was legally required and state that the claims are without merit.
- The amended disclosure states that Stable Road evaluated more than 50 potential business combination targets, signed confidentiality agreements with approximately 26 other targets, submitted three non-binding indications of interest and one non-binding letter of intent involving other targets, and negotiated more extensively with two other targets.
- The disclosure clarifies that none of the approximately 26 confidentiality agreements included standstill or “don’t ask, don’t waive” provisions.
- The filing describes Evercore’s dual roles as Momentus’s financial adviser and a co-placement agent for Stable Road, with consent from both parties.
- Brian Kabot is expected to continue as a director of the combined company and may receive cash fees or equity awards determined by the combined board. No other employment arrangements with Stable Road officers, directors, or employees had been discussed or agreed.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Completion of the business combination remained subject to required stockholder approvals, regulatory approvals, closing conditions, and the level of redemption requests by Stable Road’s public stockholders.
- Litigation included two earlier complaints alleging deficient disclosures, three related stockholder letters, and three additional putative class action complaints filed in July and August 2021. The filing states that additional similar suits may follow.
- A stockholder also demanded a separate Class A stockholder vote on the Class A Share Increase Amendment; Stable Road stated that the demand was without merit.
- Material risks identified include failure or delay in closing the transaction, inability to realize anticipated benefits, uncertainty in Momentus’s projected financial information, development risks involving its microwave electrothermal thruster and other technology, customer contract cancellations, National Security Agreement compliance, launch or product failures, competition, increased space-industry regulation, legal or regulatory proceedings, redemptions, and difficulty issuing equity or equity-linked securities.
- The filing contains forward-looking statements but provides no updated quantitative financial guidance.
Facts an Investor Should Verify
- Whether the business combination ultimately closed and the required stockholder and regulatory approvals were obtained.
- The final amount of PIPE financing, public-stockholder redemptions, available cash, and post-closing capitalization.
- The final Evercore advisory fee and placement-agent fees, including the impact of redemptions.
- The status, settlement, dismissal, or financial exposure associated with the disclosed lawsuits and stockholder demands.
- Momentus’s actual operating results, liquidity, technology-development milestones, customer contracts, and compliance with the National Security Agreement.