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United States securities and exchange commission logo
July 9, 2021
Brian Kabot
Chief Executive Officer
Stable Road Acquisition Corp.
1345 Abbot Kinney Blvd.
Venice, CA 90291
Re: Stable Road
Acquisition Corp.
Amendment No. 3 to
Registration Statement on Form S-4
Filed June 29, 2021
File No. 333-249787
Dear Mr. Kabot:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Amendment No. 3 to Form S-4
Q: How will SRAC s Sponsor, directors and officers vote?
Q: What interests do the current officers and directors have in the
Business Combination?, page
14
1. Please expand to
highlight the risk that the Sponsor and its affiliates, including certain of
SRAC s officers and
directors, will benefit from the completion of a business combination
and may be incentivized
to complete an acquisition of a less favorable target company or
on terms less favorable
to shareholders rather than liquidate. In this regard, we note the
recent approval of
Amendment No. 3 to the Merger Agreement which includes a reduced
the enterprise
valuation of Momentus from $1.131 billion to $566.6 million.
Brian Kabot
FirstName
Stable RoadLastNameBrian Kabot
Acquisition Corp.
Comapany
July 9, 2021NameStable Road Acquisition Corp.
July 9,2 2021 Page 2
Page
FirstName LastName
Momentus Inc., page 25
2. We note your statement that Momentus plans to offer in-space
infrastructure services by
building transfer and service vehicles that will carry satellites and
hosted payloads
between orbits in space using an innovative water-based propulsion
system (microwave
electrothermal). Please expand this section to disclose the current
status or stage of
development of the water-based propulsion system, and the steps needed
in order for
Momentus to realize its business model of offering in-space
infrastructure services to
customers.
National Security Agreement, page 26
3. In regards to the National Security Agreement, we note the following:
The Security Director will not be able to be removed without the
approval of the
CFIUS Monitoring Agencies.
The Security Director will be endowed with unilateral authority to
remove and
replace Momentus directors and officers, approve new Momentus
directors, and
review, approve and terminate certain contracts and relationships
related to access to
technology and protected technical information.
The charter and bylaws will not be able to be amended in regards
to these
arrangements without approval of the CFIUS Monitoring Agencies.
The Security Director will have a fiduciary duty to each of the
U.S. government and
the combined company and its shareholders.
Please provide us with your legal analysis as to how these
arrangements are permissible
under Delaware law, in particular Section 141 of the Delaware General
Corporation Law.
To the extent that there is uncertainty regarding their
permissibility, please add risk factor
disclosure addressing the relevant risks. In addition, provide the
form of the charter and
bylaws reflecting these provisions.
Co-Founder Divestment, page 26
4. Disclose, if true, that you expect to pay an aggregate of $50 million
to Mr. Kokorich,
Nortrone Finance S.A. and Brainyspace LLC upon the completion of the
Business
Combination. Please also disclose here that the $50 million payment
will come from
proceeds of the PIPE Investment and the SRAC Trust Account that will
be released to you
upon the closing of the Business Combination, and therefore will
reduce the proceeds that
will available to you to fund your operations and capital
expenditures.
Risks Related to the Business Combination and SRAC, page 40
5. Disclose here, and in the Risk Factors section, the material risks to
unaffiliated investors
presented by taking the company public through a merger rather than an
underwritten
offering. These risks could include the absence of due diligence
conducted by an
underwriter that would be subject to liability for any material
misstatements or omissions
in a registration statement.
Brian Kabot
FirstName
Stable RoadLastNameBrian Kabot
Acquisition Corp.
Comapany
July 9, 2021NameStable Road Acquisition Corp.
July 9,3 2021 Page 3
Page
FirstName LastName
We have not yet delivered customer satellites into orbit using any of our
transfer and service
vehicles..., page 42
6. We note your statement that the objective of the inaugural mission
involving the
Vigoride system is to successfully deploy satellites and perform
certain maneuvers.
Please expand to disclose whether you intend to demonstrate or test
the commercial
viability of your products or services during the inaugural mission.
Discuss the role this
inaugural mission will play in your business model of offering
commercial launch
services.
We are dependent on third-party launch vehicles to launch our vehicles..., page
46
7. We note your disclosure that SpaceX delayed the December 2020 launch
of Transporter-1,
a Falcon 9 launch, on which your inaugural vehicle was intended to
fly. Revise to discuss
your current relationship and the current nature of your joint efforts
with SpaceX.
We may be unable to manage our future growth effectively..., page 46
8. Please discuss the delays in building out Momentus second
manufacturing building due
to a lack of funds. Expand to disclose the status of this second
manufacturing building,
and the extent to which your future operations and financial results
are dependent on this
second manufacturing building or other initiatives that require
additional funding.
We are subject to various requirements and restrictions under the NSA..., page
50
9. We note the reference to a full time Security Officer who will be
responsible for
overseeing compliance with the NSA. Please expand to disclose the
difference between
the Security Officer and the Security Director.
The Security Director required by the NSA..., page 51
10. Please revise to address the risks associated with the Security
Director s fiduciary duty to
both the U.S. government and the combined company and its
shareholders, including the
potential for conflicts in the exercise of these duties. In addition,
the description of the
Security Director s authority is not consistent with the disclosure
elsewhere in the filing.
In this regard, we note that the description does not indicate that
the Security Director has
the power to unilaterally remove other directors and that the
description indicates that the
Security Director has the authority to remove employees other than
officers. Please revise
to ensure that the description of the Security Director s authority
is consistent throughout
the document.
We have a minimum cash requirement. This requirement may..., page 70
11. We note that Momentus' obligation to consummate the business
combination is
conditioned in part on SRAC having at least $250 million in available
cash to effectuate
the merger. Given the pro forma combined financial information
assuming maximum
Brian Kabot
FirstName
Stable RoadLastNameBrian Kabot
Acquisition Corp.
Comapany
July 9, 2021NameStable Road Acquisition Corp.
July 9,4 2021 Page 4
Page
FirstName LastName
redemption as of March 31, 2021 reflects a balance in cash and cash
equivalents below
this threshold, please discuss how this condition is assumed to have
been met herein and
throughout the filing where the maximum redemption is given pro forma
effect.
Comparative Share Information, page 92
12. Revise your disclosure to show the potential impact of redemptions on
the per share value
of the shares owned by non-redeeming shareholders by including a
sensitivity analysis
showing a range of redemption scenarios, including minimum, maximum
and interim
redemption levels. In response to this comment and the following two
comments, provide
similar information in the risk factors titled There is no
guarantee that a stockholder s
decision whether to redeem its shares for a pro rata portion of the
Trust Account will put
the stockholder in a better future economic position and Our
public stockholders will
experience dilution
13. Disclose all possible sources and extent of dilution that shareholders
who elect not to
redeem their shares may experience in connection with the business
combination. Provide
disclosure of the impact of each significant source of dilution,
including the amount of
equity held by founders, convertible securities, including the SAFE
notes, at each of the
redemption levels detailed in your sensitivity analysis, including any
needed assumptions.
14. It appears that underwriting fees remain constant and are not adjusted
based on
redemptions up to certain thresholds. Disclose the effective
underwriting fee on a
percentage basis for shares at each redemption level presented in your
sensitivity analysis
related to dilution.
Background to the Business Combination, page 119
15. We note the disclosure that During the period between the execution
of the
Confidentiality Agreement and the execution of the Merger Agreement on
October 7,
2020, SRAC and its advisors conducted extensive due diligence with
respect to
Momentus financial model, customer base and customer contracts,
total addressable
market, industry in which Momentus operates, companies comparable to
Momentus
Please expand to disclose the extent to which this due diligence also
encompassed a
review of Momentus technology, including its water plasma
propulsion technology, upon
which your business model and future financial results appear to be
reliant.
SRAC's Board of Directors' Reasons for the Approval of the Third Amendment,
page 131
16. We note that in approving the Third Amendment, one of the material
factors the board
considered was the reduced valuation of Momentus which will result in
SRAC s
stockholders owning a significantly greater percentage of the
Combined Company.
Please provide disclosure comparing SRAC s stockholders
percentage of ownership of
the Combined Company before and after the reduced valuation of
Momentus pursuant to
the Third Amendment.
Brian Kabot
FirstName
Stable RoadLastNameBrian Kabot
Acquisition Corp.
Comapany
July 9, 2021NameStable Road Acquisition Corp.
July 9,5 2021 Page 5
Page
FirstName LastName
17. Please disclose the extent to which the SRAC board, in approving the
Third Amendment,
considered Mr. Kokorich s resignation and the technical knowledge
and abilities of the
remaining members of Momentus. In this regard, we note the statements
in prior filings
of this Form S-4 that Momentus is highly dependent on Mikhail
Kokorich, its co-founder
and chief executive officer. Mr. Kokorich invented the majority of
Momentus
inventions The loss of Mr. Kokorich would adversely affect Momentus
business
because his loss could make it more difficult to, among other things,
compete with other
market participants and retain existing customers or cultivate new
ones.
Revised Forecasted Financial Information for Momentus, page 140
18. We note that the management of Momentus provided internally prepared
forecasted
financial projections to SRAC, and the SRAC board of directors
considered these
projections for each calendar year through 2027. Given that Momentus
has earned limited
revenues to date, please expand to provide a basis for the
projections. For example,
discuss the current state of development of Momentus critical
technologies and the
additional steps and funding needed to fully develop, test and
validate [Momentus ]
technology in space, including its water plasma propulsion technology.
As another
example, discuss if true that these projections assume that your
Ardoride and Fervoride
vehicles will enter commercial service by 2024 and 2026, that you will
achieve reusability
in the 2025-2026 timeframe, and/or that you expect to begin providing
Satellite as a
Service starting in 2023 on Vigoride vehicles and in 2025 on Ardoride
vehicles. Discuss
the contingencies and obstacles to achieving these underlying
assumptions and their
impact on your forecasted financial projections.
19. In light of recent challenges, provide disclosure describing the risk
that the expectations of
future growth may be unrealistic or uncertain, given the assumptions
as to future events,
and may have resulted in inflated valuation conclusions.
Proposal No. 2 - The Charter Amendment Proposal, page 153
20. We note the summary of the differences between the existing charter
and the proposed
charter. Please expand to disclose how the NSA and the Security
Director will affect the
provisions summarized herein. For example, with respect to the
Required Vote to
Remove Directors, we note that removal of the Security Director
would also require the
approval of the CFIUS Monitoring Agencies. We also note that Security
Director has the
authority to remove and replace Momentus officers and directors, and
to approve all new
Momentus directors. As another example, with respect to the
Required Vote to Amend
the Charter and the Required Vote to Amend the Bylaws, we
note that so long as there
shall be a Security Director on the Combined Company board, the
provisions of the
proposed charter that shall be in effect as long as there shall be a
Security Director on the
Combined Company board, and Section 2.2 (Election; Resignation;
Removal; Vacancies)
of the proposed bylaws and the proposed charter shall not be amended
except with the
approval of the CFIUS Monitoring Agencies.
Brian Kabot
Stable Road Acquisition Corp.
July 9, 2021
Page 6
21. For any matters subject to the provisions of the NSA, please disclose how
you will inform
shareholders at the time of the shareholder vote of the conditions
imposed by the NSA and
revise to discuss how such conditions may affect the results of any
shareholder approval.
Legal Proceedings, page 205
22. Please provide the information required by Item 103 of Regulation S-K
with respect to the
potential enforcement action by the Division of Enforcement of the SEC.
Provide similar
disclosure with respect to Stable Road s legal proceedings on page 227.
Management After the Business Combination, page 236
23. We note your disclosure that Dawn Harms, Momentus Interim Chief
Executive Officer
will become the Chief Revenue Officer of the Combined Company upon
consummation
of the merger. Please revise to provide disclosure about the Chief
Executive Officer of
the Combined Company.
Exhibits
24. Please file the National Security Agreement as an exhibit, or tell us why
it is not required.
25. We note your response to comment 13 of our November 25, 2020 letter
regarding your
agreement with SpaceX. To better understand why you are not substantially
dependent on
SpaceX, please provide additional information regarding the other
partners referenced in
your response and in your amended S-4. If any of these are non-US
entities, discuss how
the restrictions under the NSA or any other applicable import and export
control laws and
regulations will allow you to partner with these entities. Tell us which
of these entities
have made launches to date, and discuss their ability to provide launch
services to meet
your current business goals and the timeframes discussed in this filing.
To the extent
these entities are not able to meet your current business goals and
timeframes, provide
further analysis as to why you are not substantially dependent on SpaceX.
You may contact Melissa Gilmore at 202-551-3777 or Mark Rakip at
202-551-3573 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Jay Ingram at 202-551-3397 with any other questions.
Sincerely,
FirstName LastNameBrian Kabot
Division of
Corporation Finance
Comapany NameStable Road Acquisition Corp.
Office of
Manufacturing
July 9, 2021 Page 6
cc: Douglas Gessner
FirstName LastName