SPAC Stable Road amends its merger agreement with Momentus to cut the space company's enterprise valuation in half, from $1.1 billion down to $567 million. https://sec.gov/Archives/edgar/data/1781162/000121390021034706/ea143483-8k_stableroad.htm $SRAC
On June 29, 2021, Stable Road Acquisition Corp., a Delaware corporation (“Parent”), entered into Amendment No. 3 (the “Amendment”) to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of October 7, 2020, by and among Parent, Project Marvel First Merger Sub, Inc., a Delaware corporation (“First Merger Sub”), Project Marvel Second Merger Sub, LLC, a Delaware limited liability company (“Second Merger Sub”), and Momentus Inc., a Delaware corporation (“Momentus”). The Amendment, among other things, (i) reduced the enterprise valuation of Momentus from $1.131 billion to $566.6 million, (ii) extended the outside date under the Merger Agreement from June 7, 2021 to August 13, 2021, (iii) amended the list of individuals who will serve on the combined company’s board of directors as of Closing (as defined in the Merger Agreement) or the manner in which they will be selected, (iv) terminated the previously contemplated repurchase agreement pursuant to which Parent had agreed to repurchase shares from Prime Movers Lab Fund I, L.P. immediately following the Closing, (v) provides that Momentus will reimburse certain third party expenses of Parent and (vi) provides that, in the event the Closing does not occur for any reason, Momentus will indemnify Parent, Sponsor (as defined in the Merger Agreement) and their respective directors and officers with respect to any untrue statement of a material fact contained in (or material omission from) the registration statement or other Securities and Exchange Commission filings, which statement was provided by or based upon information provided by Momentus or its representatives, subject to certain exceptions.The Amendment was unanimously approved by Parent’s board of directors.The Amendment is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the Amendment is qualified in its entirety by reference thereto.
https://www.sec.gov/news/press-release/2021-124According to the SEC’s settled order, Kokorich and Momentus, an early-stage space transportation company, repeatedly told investors that it had “successfully tested” its propulsion technology in space when, in fact, the company’s only in-space test had failed to achieve its primary mission objectives or demonstrate the technology’s commercial viability.
JOHN C. ROOD TO JOIN MOMENTUS AS CHIEF EXECUTIVE OFFICERFormer Under Secretary of Defense for Policy and aerospace executive brings national security expertise and organizational best practices as company aims to go publicSANTA CLARA, Calif. — July 14, 2021— Momentus Inc. ("Momentus" or the "Company"), a U.S. commercial space company offering in-space infrastructure services, today announced that John C. Rood, former U.S. Under Secretary of Defense for Policy, will join the Company as Chief Executive Officer effective August 1.Rood brings more than three decades of public and private sector experience to Momentus, including over 20 years of service to the U.S. Government at the Department of Defense, Department of State, White House National Security Council, Central Intelligence Agency, and as a U.S. Senate staff member.Under Rood’s guidance, Momentus will aim to complete a successful merger with Stable Road Acquisition Corp. in August. The Company’s recent settlement with the Securities and Exchange Commission (SEC) clears the path for the deal and a Stable Road Acquisition Corp. stockholder meeting date is set for August 11 with a record date of July 7, subject to the SEC declaring the registration statement on Form S-4 effective."John's leadership signals a new chapter for Momentus as we focus on the future," said Momentus interim Chief Executive Officer Dawn Harms. "His deep national security experience, proven expertise in business growth, and steadfastness in government service are invaluable assets. We’re looking forward to welcoming John and seeking to transition to becoming a publicly traded company with him at the helm."Prior to his public service, Rood was Senior Vice President of Lockheed Martin International where he led international business growth. He also served as Vice President for Corporate Domestic Business Development at Lockheed Martin. Before joining Lockheed Martin, he was a Vice President at the Raytheon Company.“I’m excited and honored to be joining Momentus at this critical time,” said Rood. “This team is building a unique value proposition, services and solutions that will help customers to use space in new ways. I look forward to working with the team at Momentus to mature the technology to make this vision a reality.” Rood added, “I also look forward to leading the company in a new chapter in which we take the actions necessary to address the concerns previously expressed by the Defense Department through robust implementation of the recent National Security Agreement with the U.S. Government.”Dawn Harms, who has served as Momentus' interim CEO since January of this year, will step down from the board and return to her prior role as Chief Revenue Officer (CRO)."Dawn's leadership as the interim CEO has been an unwavering source of confidence for the entire team," said Stable Road Acquisition Corp. Chairman and Chief Executive Officer Brian Kabot. "Her continued guidance as CRO will be invaluable as Momentus strategizes its offerings in support of the rapidly growing space economy."
So legal issues aside, do they or do they not have a working engine right now?It's great they settled and "are looking toward the future" but I'm not sure how bright that future is going to be if their core technology doesn't work...
Momentus’ Russian founder and former CEO, Mikhail Kokorich, whose actions are at the heart of the government’s allegations, didn’t join in the settlement, and is instead fighting the SEC’s charges.Quartz reached out to Kokorich to get his side of the story. In the first interview granted since the charges were announced, he says he did not hide key facts about his work at Momentus from investors. He also says he’s owed a payout from Momentus, which purchased his share of the company, and that he has started a new space vehicle start-up in Switzerland.
Kokorich says what failed were onboard computers built by another company. “Momentus created a failure review board to investigate a failure of the avionics (including an onboard computer) on the satellite bus,” he continued. “As a result of the review board, the technical team decided to build robust and fault-tolerant avionics in-house. So by the time we filed S4, we didn’t have in our technology roadmap the avionics that failed during the first test mission.”
I'm curious how the SEC determined this omission to begin with. Do they rely on whistleblowers for this and otherwise assume companies aren't outright lying, or is there actually a verification process with relevant experts? And how's that work with something like Momentus, where the core issues are with technology that is both proprietary and ITAR sensitive?
42. In its third amendment to the registration statement on Form S-4 filed on June 29, 2021, Momentus and SRAC disclosed that the El Camino Real mission “did not demonstrate the MET’s ability to generate thrust in space, which is crucial to our ability to maneuver objects in space.” The June 2021 registration statement on Form S-4 also states, “Moreover, even if the unit generates thrust, there can be no assurance that it can be operated in a manner that is sufficiently reliable and efficient to permit commercialization of the technology.”
In a July 16 filing with the SEC, Stable Road Acquisition Corporation, the SPAC that is merging with Momentus, said that it complied with the terms of a settlement with the SEC announced July 13, offering investors who participated in a private investment in public equity (PIPE) funding round the ability to drop out without penalty.When Stable Road announced the merger with Momentus in October 2020, the deal included a concurrent PIPE round, which is common in SPAC mergers to increase the amount of capital raised beyond the proceeds of the SPAC itself. In the case of the Momentus deal, $172.5 million was coming from the proceeds of Stable Road, while $175 million would come from the PIPE round.In its July 16 SEC filing, Stable Road said investors who accounted for $118 million of the $175 million raised in the PIPE round terminated their agreements. The filing did not state which investors decided to drop out of the deal.
Item 1.01 Entry into a Material Definitive Agreement.On July 16, 2021, Stable Road Acquisition Corp. (“Stable Road” or “Parent”) announced that it has entered into amended or new subscription agreements (the “Subscription Agreements”) with certain investors (the “PIPE Investors”), pursuant to which the PIPE Investors agreed to purchase an aggregate of 11,000,000 shares (the “PIPE Investment”) of Stable Road Class A common stock, par value $0.0001 per share (the “Combined Company’s Class A common stock”), following the consummation of the proposed business combination with Momentus Inc. (“Momentus” or the “Company”, and such business combination, the “Proposed Business Combination”) at a price of $10.00 per share, representing aggregate gross proceeds of $110.0 million.In addition, Stable Road agreed to issue to each PIPE Investor, at the closing of the PIPE Investment, warrants to purchase one share of Combined Company Class A common stock at a price of $11.50 per share (subject to adjustment as described in the warrant agreement, dated as of November 7, 2019, between Continental Stock Transfer & Trust Company, as warrant agent, and Stable Road (the “Warrant Agreement”)) for each share of Combined Company Class A common stock purchased pursuant to such PIPE Investor’s Subscription Agreement. The PIPE Warrants will be issued pursuant to the Warrant Agreement and will have substantially the same provisions as the public warrants issued in connection with Stable Road’s initial public offering.Prior to July 15, 2021, Stable Road had entered into Subscription Agreements with PIPE Investors pursuant to which such PIPE Investors agreed to purchase an aggregate of 17,500,000 shares of Combined Company’s Class A common stock following the consummation of the Proposed Business Combination, representing aggregate gross proceeds of $175.0 million.On July 13, 2021, the Securities and Exchange Commission (the “SEC”) announced charges against Stable Road, Brian Kabot, Momentus, and Momentus’ founder and former CEO, Mikhail Kokorich, for misleading claims about Momentus’ technology and about national security risks associated with Mr. Kokorich (the “SEC’s settled order”). Pursuant to the SEC’s settled order, Momentus and Stable Road agreed to provide the original PIPE Investors with the right to terminate their Subscription Agreements prior to the stockholder vote to approve the Proposed Business Combination. Accordingly, Momentus and Stable Road provided all PIPE Investors with the option to terminate their Subscription Agreements without any liability or obligation. In total, PIPE Investors representing $118.0 million of the original PIPE Investment terminated their Subscription Agreements. The remaining PIPE Investors elected to continue with their Subscription Agreements, with certain PIPE Investors increasing or decreasing their commitment amounts pursuant to amendments to the Subscription Agreements, with such changes representing a net $5.3 million increase in commitments by such remaining PIPE Investors. In addition, 6 new PIPE Investors entered into Subscription Agreements, representing approximately $47.75 million of new commitments. Affiliates of SRC-NI Holdings, LLC, the sponsor of Stable Road, which had committed $15.0 million in the aggregate to the PIPE Investment, reaffirmed their commitment.After giving effect to the foregoing, the PIPE Investors have agreed to purchase an aggregate of 11,000,000 shares of Combined Company Class A common stock in the PIPE Investment for $10.00 per share, for aggregate gross proceeds of $110.0 million. In addition, Stable Road has agreed to issue to PIPE Investors warrants to purchase 11,000,000 shares of Combined Company Class A common stock at a price of $11.50 per share.The PIPE Investment is contingent upon, among other things, the substantially concurrent closing of the Proposed Business Combination.
NOTICE IS HEREBY GIVEN that a Special Meeting of Stable Road Acquisition Corp., a Delaware corporation (“SRAC,” the “Company,” “we,” “us” or “our”), will be held on August 11, 2021 at 10:00 a.m., Eastern Time (the “Special Meeting”).
