Item 1A. Risk Factors 19
Item 1B. Unresolved Staff Comments 47
Item 2. Properties 47
Item 3. Legal Proceedings 47
Item 4. Mine Safety Disclosures 47
Item 6. Selected Financial Data 48
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 53
Item 8. Financial Statements and Supplementary Data 53
Item 9A. Controls and Procedures 53
Item 9B. Other Information 54
PART III 55
Item 10. Directors, Executive Officers and Corporate Governance 55
Item 11. Executive Compensation 61
Item 14. Principal Accounting Fees and Services 65
Item 15. Exhibits and Financial Statement Schedules 66
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This report, including,
without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results
of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. These forward-looking statements can be identified by the use of forward-looking terminology,
including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,”
“plans,” “may,” “will,” “potential,” “projects,” “predicts,”
“continue,” or “should,” or, in each case, their negative or other variations or comparable terminology.
There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not
limited to, any statements relating to our ability to consummate any acquisition or other business combination and any other statements
that are not statements of current or historical facts. These statements are based on management’s current expectations,
but actual results may differ materially due to various factors, including, but not limited to:
● our pool of prospective target businesses;
● our public securities’ potential liquidity and trading;
● the lack of a market for our securities;
● our financial performance.
The forward-looking
statements contained in this report are based on our current expectations and beliefs concerning future developments and their
potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements
involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results
or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to, those factors summarized under the heading “Summary Risk Factors” and
described more fully under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize,
or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking
statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under applicable securities laws. These risks and others described under
“Risk Factors” may not be exhaustive.
By their nature, forward-looking
statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur
in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results
of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from
those made in or suggested by the forward-looking statements contained in this report. In addition, even if our results or operations,
financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking
statements contained in this report, those results or developments may not be indicative of results or developments in subsequent
periods.
ii
Unless otherwise stated
in this report, or the context otherwise requires, references to:
● “management” or our “management team” are to our officers and directors;
● “SEC” are to the Securities and Exchange Commission;
● “sponsor” are to SRC-NI Holdings, LLC, a Delaware limited liability company;
iii
PART I
Item
1. Business.
Our Company
We are a blank check
company formed as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more businesses. Throughout this Report we will refer to this
as our initial business combination. In November 2019, we closed our initial public offering for the sale of an aggregate
of 17,250,000 units at a price of $10.00 per unit, yielding gross proceeds of $172,500,000. Simultaneous with the closing of such
offering, SRAC consummated the sale of 545,000 private placement units at a price of $10.00 per unit ($5,450,000 in the aggregate)
in a private placement. Such proceeds have been deposited in our trust account.
Proposed Business Combination with
Momentus
On October 7, 2020,
we entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among SRAC, Project Marvel First Merger
Sub, Inc., a Delaware corporation and wholly-owned subsidiary of SRAC (“First Merger Sub”), Project Marvel Second Merger
Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of SRAC (“Second Merger Sub”), and Momentus
Inc., a Delaware corporation (“Momentus”), pursuant to which, among other things: (a) First Merger Sub will merge
with and into Momentus (“First Merger”), with Momentus being the surviving corporation of the First Merger and (b) immediately
following the First Merger and as part of the same overall transaction as the First Merger, Momentus will merge with and into Second
Merger Sub (the “Second Merger” and, together with the First Merger, the “Mergers”), with Second Merger
Sub being the surviving company of the Second Merger. The Merger Agreement, the Mergers and the other transactions contemplated
by the Merger Agreement are referred to herein as the “Proposed Transaction.”
Pursuant to the Merger
Agreement, the aggregate merger consideration payable to the equityholders of Momentus will be paid in equity consideration equal
to $1,131,000,000, minus Momentus’ indebtedness for borrowed money as of the closing of the Mergers (the “Closing”),
plus the amount of Momentus’ cash and cash equivalents (excluding restricted cash as determined in accordance with GAAP,
any cash being held on behalf of Momentus’ customers and any security deposits for leases) as of the Closing, plus the aggregate
exercise price of all outstanding options and warrants (the “Merger Consideration”). The Merger Consideration payable
to the stockholders of Momentus will be paid in shares of newly issued Class A common stock of SRAC, with a deemed value of $10
per share. In addition, SRAC will pay off, or cause to be paid off, on behalf of Momentus and in connection with the Closing, Momentus’
outstanding indebtedness for borrowed money.
In connection with
the Proposed Transaction, each share of Momentus’ capital stock (subject to limited exceptions) will be cancelled and automatically
deemed for all purposes to represent the right to receive a portion of the Merger Consideration in accordance with Momentus’
organizational documents. In addition, the Merger Consideration that is paid with respect to any shares of Momentus’ capital
stock that is subject to any vesting restrictions or other conditions shall continue to be subject to such vesting restrictions
and conditions after the Closing.
Each option of Momentus
that is outstanding and unexercised immediately prior to the Closing (whether vested or unvested) will be automatically assumed
by SRAC and converted into an option to acquire an adjusted number of shares of Class A common stock at an adjusted exercise price
per share and will continue to be governed by substantially the same terms and conditions (including vesting and exercisability
terms) as were applicable to the corresponding former option.
Each warrant to purchase
shares of capital stock of Momentus that is outstanding and unexercised immediately prior to the Closing will be automatically
converted into a warrant to acquire an adjusted number of shares of Class A common stock at an adjusted exercise price per share
and will continue to be governed by substantially the same terms and conditions (including applicable vesting conditions) as were
applicable to the corresponding former warrant.
1
Consummation of the
Proposed Transaction is subject to customary closing conditions for special purpose acquisition companies, including the following
conditions to each party’s obligations, among others: (a) approval by SRAC’s stockholders and Momentus’ stockholders,
(b) SRAC having at least $5,000,001 of net tangible assets as of the effective time of the consummation of the Mergers, and (c)
the approval of the listing of the shares of Class A common stock to be issued in connection with the Closing on The Nasdaq Stock
Market LLC and the effectiveness of a Registration Statement on Form S-4. The Merger Agreement may be terminated under certain
customary and limited circumstances prior to the consummation of the Mergers.
On October 7, 2020,
we entered into Subscription Agreements with certain investors pursuant to which the investors have agreed to purchase an aggregate
of 17,500,000 shares of Class A common stock in a private placement for $10.00 per share (the “Private Placement”).
The proceeds from the Private Placement will be partially used to fund the Repurchase (as defined below) and for general working
capital purposes following the closing. The closing of the transactions contemplated by the Subscription Agreements is contingent
upon, among other customary closing conditions, the substantially concurrent consummation of the Proposed Transaction.
Concurrently with the
execution of the Merger Agreement, Prime Movers Lab (“PML”),
SRAC and Momentus entered into a repurchase agreement (the “Repurchase Agreement”) pursuant to which, amongst other
things, SRAC has agreed to repurchase a certain number of shares of Class A common stock from PML, at a purchase price of $10.00
per share, immediately following the Closing (the “Repurchase”). The Repurchase is contingent on the amount of available
cash SRAC has at the Closing from (a) the Private Placement (and any alternative financing arranged by SRAC and Momentus in the
event the Private Placement becomes unavailable) and (b) the funds in SRAC’s trust account (after taking into account payments
required to satisfy SRAC’s stockholder redemptions), after further deducting the amount of SRAC’s transaction expenses
and Momentus’ transaction expenses (“Net Proceeds”) being in excess of $265 million. If Net Proceeds exceed $265,000,000
but are less than $280,000,000, the number of shares of Class A common stock subject to the Repurchase will be equal to the amount
by which Net Proceeds exceed $250 million, divided by $10.00. In the event Net Proceeds are in excess of $280,000,000,
the number of shares of Class A common stock subject to the Repurchase will be equal to $30,000,000, divided by $10.00.
At the closing of the Repurchase, SRAC will be entitled to deduct from such cash payment an amount equal to 3.3% of such cash payment
(representing PML’s obligation to pay Momentus a portion of its transaction expenses).
For additional information
regarding the Proposed Transaction, Momentus, the Merger Agreement, the Subscription Agreements, the Repurchase Agreement and the
other agreements entered into in connection with the Proposed Transaction, including risk and uncertainties with respect to Momentus
and the parties’ ability to consummate the Proposed Transaction, see the Registration Statement on Form S-4, including a
proxy statement/consent solicitation statement/prospectus included therein, initially filed by SRAC with the SEC on November 2,
2020, as subsequently amended.
Other than as specifically
discussed, this Report does not assume the Closing of the Proposed Transaction.
Our Management Team
Our management team
has broad experience in identifying targets and acquiring businesses through different economic cycles and under diverse market
conditions. We believe our management team is well positioned to identify and evaluate businesses that would benefit from their
skills and access to the public markets. We believe our management team offers extensive experience in growing and operating companies,
as well as a deep network of contacts.
Our management team
has over 60 years of combined professional experience and is led by Brian Kabot, the chief investment officer of Stable Road Capital,
and Juan Manuel Quiroga, the chief investment officer of NALA Investments. Stable Road Capital is a single-family office managing
a portfolio of investments across public securities, private credit, private equity, real estate and venture capital. NALA Investments
is a single-family office with investment interests across various industries including communications, transportation, consumer
products, real estate, technology and media. Stable Road Capital and NALA Investments manage, in the aggregate, over $1.0 billion
of investment capital.
2
Brian Kabot
Mr. Kabot, our Chairman
and Chief Executive Officer, has over 19 years of principal investing experience and has served as Chief Investment Officer
of Stable Road Capital, a single-family office investment vehicle based in Los Angeles, California, since July 2017. In July 2019,
Mr. Kabot was named a Strategic Advisor to The Cannabis ETF (NYSE: THCX), a newly-launched cannabis-oriented exchange-traded fund
managed by Innovation Shares LLC. Since December 2018, Mr. Kabot has been a director of the Treehouse Real Estate Investment
Trust, a private real estate investment trust, where he currently serves as the Chairman of the Investment Committee. Mr. Kabot
has also served on the board of directors of Old Pal, LLC, a private cannabis brand company, since June 2018, and on the board
of directors of Grenco Science LLC, a private developer of vape pens and portable vaporizers, since July 2019. From May 2016
to July 2017, Mr. Kabot was the Director of Research at Eschaton Opportunities Fund Management LP, a management company for
two global value hedge funds. From January 2011 to April 2016, Mr. Kabot served as a partner and Deputy Portfolio Manager
of Riverloft Capital Management L.P., or Riverloft Capital, a management company for an event-driven hedge fund. From March 2009
to December 2010, he served as a managing director at Gulf Coast Capital, a single-family office investment vehicle. From
August 2006 to January 2009, Mr. Kabot ran the industrials, materials, and energy vertical for Sun Capital Partners’
cross cap structure/activist hedge fund. From February 2005 to July 2006, he served as a senior analyst at Reservoir
Capital Group. Mr. Kabot also worked as an associate at Questor Management Company from May 2003 to February 2005, where
he focused on acquiring distressed and bankrupt companies in the industrials, materials and energy sectors. From June 2000
to April 2003, Mr. Kabot served as an analyst in the merchant banking partners group at Donaldson, Lufkin & Jenrette.
James Norris
Mr. Norris, our Chief
Financial Officer, has more than 18 years of experience in the investment management industry. Since November 2018, Mr. Norris
has served as the Chief Financial Officer of Stable Road Capital. Mr. Norris previously served as the Chief Financial Officer of
Cycad Management LLC, a single family investment office, Chief Financial Officer and Chief Compliance Officer of Blue Jay Capital
Management LLC, a SEC-registered investment management firm focused on equity investments in the healthcare sector, the Controller
and Chief Compliance Officer of Expo Capital Management LLC, a SEC-registered investment management firm, and a Manager at PriceWaterhouseCoopers.
Juan Manuel Quiroga
Mr. Quiroga, our Chief
Investment Officer, has over 20 years of experience in the financial sector, including 14 years of principal investing experience.
Since August 2015, Mr. Quiroga has served as Chief Investment Officer of Nala Investments. From September 2007 to August 2015,
Mr. Quiroga served as Senior Vice President of Darby Private Equity. From August 2005 to August 2007, Mr. Quiroga served as a Vice
President of Market Intelligence at General Electric Capital Solutions. Prior to that, from 1996 to 1998 and from 2000 to 2003,
Mr. Quiroga worked for Grupo Financiero Banorte in Mexico City and New York City, where he collaborated on the creation of an asset
management and financial derivatives division. Mr. Quiroga currently serves on the board of directors of Acrecent Financial Corporation,
Cobiscopr and Good Media Company.
Past performance of
our management team, Stable Road Capital or NALA Investments is not a guarantee either (i) of success with respect to any business
combination we may consummate, including the Mergers, or (ii) that we will be able to identify a suitable candidate for our initial
business combination. You should not rely on the historical performance record of our management team, Stable Road Capital or NALA
Investments as indicative of our future performance. Additionally, in the course of their respective careers, members of our management
team have been involved in businesses and deals that were unsuccessful. Our officers and directors have no other experience with
blank check companies or special purpose acquisition companies. In addition, our executive officers and directors may have conflicts
of interest with other entities to which they owe fiduciary or contractual obligations with respect to initial business combination
opportunities.
3
Business Strategy
Our strategy is to
pursue one or more business combinations with companies that have an aggregate enterprise value in excess of $300 million, although
target entities with a smaller enterprise value may be considered. We are seeking potential targets which we believe can materially
grow revenue and earnings both organically and inorganically through the efforts of our management team. These may include targets
that can benefit from access to capital in order to: (i) increase spending on strategic initiatives that are expected to generate
favorable returns and which can accelerate revenue and earnings growth; (ii) invest in infrastructure or technology; or (iii) fundamentally
restructure their business operations.
Acquisition Criteria
We have identified
the following general criteria and guidelines that we believe are consistent with our acquisition philosophy and our management’s
experience, and that we believe are important in evaluating prospective target businesses. We use these criteria and guidelines
to evaluate acquisition opportunities, but we may decide to enter into our initial business combination with a target business
that does not meet these criteria and guidelines.
We are seeking a business
combination with one or more companies that we believe possess some or all of the following characteristics:
● Is highly scalable;
● Has an institutional mindset/infrastructure;
● Has potential to achieve significant growth in revenue and earnings;
● Will be well received by financial markets as a public company; and
These criteria are
not intended to be exhaustive. We initially intended to focus our search for target businesses within the cannabis industry as
described in the prospectus for our initial public offering, however, our efforts were not limited to that industry and spanned
companies in various industries that had the potential to meet the other criteria and guidelines set forth in the prospectus. After
initially evaluating several companies operating in the cannabis industry, we expanded our search to include companies operating
in other high growth industries. In considering the Proposed Transaction with Momentus, our board of directors determined that
the business combination was an attractive business opportunity that met the vast majority of the criteria and guidelines above,
although not weighted or in any order of significance.
4
Competitive Strengths
We have leveraged and
will continue to leverage the following competitive strengths in seeking to achieve our business strategy:
Experienced management team with
proven expertise in deploying capital within numerous industries
We believe that our
management team’s long and diverse transaction experience provides us with a competitive advantage. Our Chairman and Chief
Executive Officer has over 19 years of principal investing experience across a number of industries as an owner or financier and
our Chief Investment Officer has over 14 years of principal investing experience. Stable Road Capital and NALA Investments manage,
in the aggregate, over $1.0 billion of investment capital. Our management team also has extensive experience acquiring companies
for private equity investors. Their transaction history includes control private equity investments, distressed debt for control
transactions, and a hostile takeover of a public company.
Leveraging management’s
extensive experience in capital markets
Our management team
has substantial cross capital structure experience in both the private and public markets. Their transaction experience includes
private and public companies as well as debt and equity investments across various stages of a company’s lifecycle. In addition,
our management team has also overseen portfolios that invested in a wide variety of transactions, including private equity, public
equities, private and public credit, real estate, and venture capital. We view this broad experience in capital markets to be a
competitive advantage in sourcing a prospective business combination.
Implementing operational best
practices and financial structuring opportunities post-closing
We have leveraged and
will continue to leverage our management team’s principal investing experience to develop and implement strategies to improve
the operational and financial performance of the business combination target to create a platform for growth. Specifically, our
management team intends to evaluate opportunities for industry consolidation in the target’s core lines of business as well
as opportunities to vertically or horizontally integrate with other industry participants. We also intend to structure and execute
a business combination that will provide the target business with a capital structure that provides flexibility to grow organically
and through strategic acquisitions or divestitures to drive shareholder value.
Our Business Combination Process
We believe our management
team’s operational and investment track record provides us with a deep understanding of challenges faced by operators and
owners of high growth businesses. Our diligence includes an assessment of the company’s competitive advantage through meetings
with management and key employees, key customers, interactions with consultants and experts within our network, visits of key operating
facilities and a review of financial, legal and operational documents. We also have the ability to bring creative solutions from
a capital structure, growth, vision and operational standpoint to unlock shareholder value. In addition, we have retained and worked
with financial advisors and legal counsel as well as industry consultants to conduct due diligence, develop strategic plans, and
implement operational strategies.
We are not prohibited
from pursuing an initial business combination with a company that is affiliated with Stable Road Capital, NALA Investments, or
our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated
with Stable Road Capital, NALA Investments or our sponsor, officers or directors, we, or a committee of independent directors,
will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation
opinions that our initial business combination is fair to our company from a financial point of view.
5
Members of our management
team directly or indirectly own our founders shares, common stock and/or private placement units, and, accordingly, may have a
conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our
initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating
a particular business combination if the retention or resignation of any such officers and directors were to be included by a target
business as a condition to any agreement with respect to our initial business combination.
Certain of our officers
and directors presently have fiduciary or contractual obligations to other entities, including Stable Road Capital and NALA Investments,
pursuant to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if
any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he
or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations
to present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual obligations of our officers
or directors will not materially affect our ability to complete our initial business combination. Our amended and restated certificate
of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless
such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and
such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue,
and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
We may need to obtain
additional financing either to complete our initial business combination or because we become obligated to redeem a significant
number of our public shares upon completion of our initial business combination. We intend to acquire a company with an enterprise
value significantly above the net proceeds of our initial public offering and the sale of the placement units. Depending on the
size of the transaction or the number of public shares we become obligated to redeem, we may potentially utilize several additional
financing sources, including but not limited to the issuance of additional securities to the sellers of a target business, debt
issued by banks or other lenders or the owners of the target, a private placement to raise additional funds, or a combination of
the foregoing. If we are unable to complete our initial business combination because we do not have sufficient funds available
to us, we will be forced to cease operations and liquidate the trust account. In addition, following our initial business combination,
if cash on hand is insufficient to meet our obligations or our working capital needs, we may need to obtain additional financing.
After the initial business
combination, our management team intends to apply a rigorous approach to enhancing shareholder value, including evaluating the
experience and expertise of incumbent management and making changes when appropriate, examining growth, cost savings and acquisition
opportunities, and accessing the financial markets to optimize the company’s capital structure. Subsequent to the closing
of the initial business combination we expect to pursue initiatives through participation on the board of directors, through direct
involvement with company operations or contacting former managers and advisors when necessary.
Status as a Public Company
We believe our structure
makes us an attractive business combination partner to target businesses. As a public company, we offer a target business an alternative
to the traditional initial public offering through a merger or other business combination with us. Following an initial business
combination, we believe the target business would have greater access to capital and additional means of creating management incentives
that are better aligned with stockholders’ interests than it would as a private company. A target business can further benefit
by augmenting its profile among potential new customers and vendors and aid in attracting talented employees. In a business combination
transaction with us, the owners of the target business may, for example, exchange their shares of stock in the target business
for our shares of Class A common stock (or shares of a new holding company) or for a combination of our shares of Class A common
stock and cash, allowing us to tailor the consideration to the specific needs of the sellers.
Although there are
various costs and obligations associated with being a public company, we believe target businesses will find this method a more
expeditious and cost effective method to becoming a public company than the typical initial public offering. The typical initial
public offering process takes a significantly longer period of time than the typical business combination transaction process,
and there are significant expenses in the initial public offering process, including underwriting discounts and commissions, marketing
and road show efforts that may not be present to the same extent in connection with an initial business combination with us.
6
Furthermore, once a
proposed initial business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriter’s ability to complete the offering, as well as general market conditions,
which could delay or prevent the offering from occurring or could have negative valuation consequences. Following an initial business
combination, we believe the target business would then have greater access to capital and an additional means of providing management
incentives consistent with stockholders’ interests and the ability to use its shares as currency for acquisitions. Being
a public company can offer further benefits by augmenting a company’s profile among potential new customers and vendors and
aid in attracting talented employees.
While we believe that
our structure and our management team’s backgrounds will make us an attractive business partner, some potential target businesses
may view our status as a blank check company, such as our lack of an operating history and our ability to seek stockholder approval
of any proposed initial business combination, negatively.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible
to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not “emerging growth companies” including, but not limited to, not being required to comply with the independent
registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding
a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our
securities and the prices of our securities may be more volatile.
In addition, Section
107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an
“emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following November 13, 2024, (b) in which we have total
annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the
market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th,
and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year
period.
Financial Position
With funds available
in the trust account for an initial business combination in the amount of $166,207,749 (as of December 31, 2020), after payment
of $6,900,000 of deferred underwriting fees, before fees and expenses associated with our initial business combination, we offer
a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth
and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able
to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have
the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business
to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance
it will be available to us.
Effecting Our Initial Business Combination
We are not presently
engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our initial business
combination using cash from the proceeds of our initial public offering and the private placement of the placement units, the proceeds
of the sale of our shares in connection with our initial business combination (pursuant to backstop agreements we may enter into),
shares issued to the owners of the target, debt issued by banks or other lenders or the owners of the target, or a combination
of the foregoing. We may seek to complete our initial business combination with a company or business that may be financially unstable
or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
7
If our initial business
combination is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment
of the consideration in connection with our initial business combination or used for redemptions of our Class A common stock, we
may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance
or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in
completing our initial business combination, to fund the purchase of other companies or for working capital.
We may seek to raise
additional funds through a private offering of debt or equity securities in connection with the completion of our initial business
combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts
held in the trust account. In addition, we intend to target businesses larger than we could acquire with the net proceeds of our
initial public offering and the sale of the placement units, and may as a result be required to seek additional financing to complete
such proposed initial business combination. Subject to compliance with applicable securities laws, we would expect to complete
such financing only simultaneously with the completion of our initial business combination. In the case of an initial business
combination funded with assets other than the trust account assets, our proxy materials or tender offer documents disclosing the
initial business combination would disclose the terms of the financing and, only if required by law, we would seek stockholder
approval of such financing. There are no prohibitions on our ability to raise additional funds privately, or through loans in connection
with our initial business combination. At this time, we are not a party to any arrangement or understanding with any third party
with respect to raising any additional funds through the sale of securities or otherwise.
Selection of a Target Business and
Structuring of our Initial Business Combination
Nasdaq rules require
that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the
assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the
trust account) at the time of our signing a definitive agreement in connection with our initial business combination. The fair
market value of our initial business combination will be determined by our board of directors based upon one or more standards
generally accepted by the financial community, such as discounted cash flow valuation, a valuation based on trading multiples of
comparable public businesses or a valuation based on the financial metrics of M&A transactions of comparable businesses. If
our board of directors is not able to independently determine the fair market value of our initial business combination, we will
obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions
with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to
make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it
is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as
to the value of a target’s assets or prospects. We intend to satisfy the 80% requirement even if our securities are not listed
on Nasdaq at the time of our initial business combination. We do not intend to purchase multiple businesses in unrelated industries
in conjunction with our initial business combination. Subject to this requirement, our management has virtually unrestricted flexibility
in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial
business combination with another blank check company or a similar company with nominal operations.
In any case, we will
only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities of the
target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business
or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will
be taken into account for purposes of Nasdaq’s 80% fair market value test. There is no basis for investors to evaluate the
possible merits or risks of any target business with which we may ultimately complete our initial business combination.
To the extent we effect
our initial business combination with a company or business that may be financially unstable or in its early stages of development
or growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate
the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
8
In evaluating a prospective
business target, we conduct a thorough due diligence review, which encompasses, among other things, meetings with incumbent management
and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial
and other information that will be made available to us.
The time required to
select and evaluate a target business and to structure and complete our initial business combination, and the costs associated
with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of a prospective target business with which our initial business combination is not ultimately completed will result
in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack of Business Diversification
For an indefinite period
of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future
performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple
entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate
the risks of being in a single line of business. In addition, we intend to focus our search for an initial business combination
in a single industry. By completing our initial business combination with only a single entity, our lack of diversification may:
Limited Ability to Evaluate the Target’s
Management Team
Although we closely
scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination
with that business, our assessment of the target business’ management may not prove to be correct. In addition, the future
management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role
of members of our management team, if any, in the target business cannot presently be stated with any certainty. The determination
as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial
business combination. While it is possible that one or more of our directors will remain associated in some capacity with us following
our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our
initial business combination. Moreover, there is no assurance that members of our management team will have significant experience
or knowledge relating to the operations of the particular target business.
There is no assurance
you that any of our key personnel will remain in senior management or advisory positions with the combined company. The determination
as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following an initial
business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
There is no assurance that we will have the ability to recruit additional managers, or that additional managers will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
9
Stockholders May Not Have the Ability
to Approve Our Initial Business Combination
We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required
by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons.
Under Nasdaq’s
listing rules, stockholder approval would be required for our initial business combination if, for example:
The Proposed Transaction
with Momentus will require the approval of our stockholders.
Permitted Purchases of our Securities
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their affiliates may purchase
shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion
of our initial business combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors
or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they
have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions
for any such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession
of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the
Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender
offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however,
if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will
comply with such rules. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent
such purchasers are subject to such reporting requirements. None of the funds held in the trust account will be used to purchase
shares or public warrants in such transactions prior to completion of our initial business combination.
The purpose of any
such purchases of shares could be to vote such shares in favor of the initial business combination and thereby increase the likelihood
of obtaining stockholder approval of the initial business combination or to satisfy a closing condition in an agreement with a
target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be
to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for
approval in connection with our initial business combination. Any such purchases of our securities may result in the completion
of our initial business combination that may not otherwise have been possible. In addition, if such purchases are made, the public
“float” of our shares of Class A common stock or warrants may be reduced and the number of beneficial holders of our
securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities
on a national securities exchange.
10
Our sponsor, officers,
directors and/or their affiliates may identify the stockholders with whom our sponsor, officers, directors or their affiliates
may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests
submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the
extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify and
contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the
trust account or vote against our initial business combination, whether or not such stockholder has already submitted a proxy with
respect to our initial business combination. Our sponsor, officers, directors, advisors or their affiliates will only purchase
shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our
sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will
only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability
for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that
must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their
affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange
Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases
are subject to such reporting requirements.
Redemption Rights for Public Stockholders
upon Completion of our Initial Business Combination
We will provide our
public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion
of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account as of two business days prior to the consummation of the initial business combination including interest earned on
the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding
public shares, subject to the limitations described herein. The amount in the trust account is, as of December 31, 2020, approximately
$10.04 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced
by the deferred underwriting commissions we will pay to the underwriter. Our sponsor, officers and directors have entered into
a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares
and (along with Cantor Fitzgerald & Co. (“Cantor”)) placement shares and any public shares held by them in connection
with the completion of our initial business combination.
Manner of Conducting Redemptions
We will provide our
public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion
of our initial business combination either (i) in connection with a stockholder meeting called to approve the initial business
combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial
business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of
factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval
under the law or stock exchange listing requirement. Under Nasdaq rules, asset acquisitions and stock purchases would not typically
require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue
more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require
stockholder approval. If we structure an initial business combination with a target company in a manner that requires stockholder
approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed initial business combination.
We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval
is required by law or stock exchange listing requirements or we choose to seek stockholder approval for business or other legal
reasons. So long as we maintain a listing for our securities on Nasdaq, we are required to comply with such rules.
If a stockholder vote
is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended
and restated certificate of incorporation:
11
Upon the public announcement
of our initial business combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase
shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply
with Rule 14e-5 under the Exchange Act.
In the event we conduct
redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance
with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the
expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more
than a specified number of public shares which are not purchased by our sponsor, which number will be based on the requirement
that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001
either immediately prior to or upon consummation of our initial business combination and after payment of underwriter’s fees
and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset
or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders
tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If, however, stockholder
approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval
for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
● file proxy materials with the SEC.
In the event that we
seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith,
provide our public stockholders with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder
approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted
are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders present in person
or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding
shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count toward this quorum
and pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote their founder shares and placement
shares and any public shares purchased (including in open market and privately negotiated transactions) in favor of our initial
business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes
will have no effect on the approval of our initial business combination once a quorum is obtained. As a result, in addition to
our initial stockholders’ founder shares and placement shares, we would need only 6,196,251, or approximately 35.9%, of the
17,250,000 public shares sold in our initial public offering to be voted in favor of an initial business combination (assuming
all outstanding shares are voted) in order to have our initial business combination approved. We intend to give approximately 30
days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall
be taken to approve our initial business combination. These quorum and voting thresholds, and the voting agreements of our initial
stockholders, may make it more likely that we will consummate our initial business combination. Each public stockholder may elect
to redeem its public shares irrespective of whether they vote for or against the proposed transaction.
12
Our amended and restated
certificate of incorporation provides that we will only redeem our public shares so long as (after such redemption) our net tangible
assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after
payment of underwriter’s fees and commissions (so that we are not subject to the SEC’s “penny stock” rules)
or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. For example, the proposed initial business combination may require: (i) cash consideration to be paid to the target
or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention
of cash to satisfy other conditions in accordance with the terms of the proposed initial business combination. In the event the
aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for
redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination
exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares,
and all shares of Class A common stock submitted for redemption will be returned to the holders thereof.
Limitation on Redemption upon
Completion of our Initial Business Combination if we Seek Stockholder Approval