The accompanying notes are an integral part of
the unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of
the unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of
the unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of
the unaudited condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Stable Road Acquisition Corp. (the “Company”
or “SRAC”) was incorporated in Delaware on May 28, 2019. The Company was formed for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business
Combination”).
The Company is an early stage and emerging growth
company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
The Company has two subsidiaries, Project Marvel
First Merger Sub, Inc., a wholly-owned subsidiary of the Company incorporated in Delaware on September 29, 2020 (“First Merger Sub”)
and Project Marvel Second Merger Sub, LLC, a wholly-owned subsidiary of the Company incorporated in Delaware on September 29, 2020 (“Second
Merger Sub”). First Merger Sub and Second Merger Sub were formed in connection with the proposed business combination with Momentus
Inc., a Delaware corporation (“Momentus”), as more fully discussed below.
As of December 31, 2020, the Company had not commenced
any operations. All activity through December 31, 2020 relates to the Company’s formation, the initial public offering (“Initial
Public Offering”), which is described below, identifying a target company for a Business Combination, and the proposed business
combination with Momentus, as more fully discussed below. The Company will not generate any operating revenues until after the completion
of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the
proceeds derived from the Initial Public Offering.
The registration statement for the Company’s
Initial Public Offering was declared effective on November 7, 2019. On November 13, 2019, the Company consummated the Initial Public Offering
of 17,250,000 units (the “Units” and, with respect to the shares of common stock included in the Units sold, the “Public
Shares”), which includes the full exercise by the underwriter of the over-allotment option to purchase an additional 2,250,000 Units,
at $10.00 per Unit, generating gross proceeds of $172,500,000, which is described in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 545,000 units (the “Placement Units”) at a price of $10.00 per Placement
Unit in a private placement to SRC-NI Holdings, LLC, a Delaware limited liability company (the “Sponsor”), and Cantor Fitzgerald& Co. (“Cantor”), the underwriter of the Initial Public Offering, generating gross proceeds of $5,450,000, which is described
in Note 4.
Transaction costs amounted to $10,924,857, consisting
of $3,450,000 of underwriting fees, $6,900,000 of deferred underwriting fees and $574,857 of other offering costs.
Following the closing of the Initial Public Offering
on November 13, 2019, an amount of $172,500,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public
Offering and the sale of the Placement Units was placed in a trust account (“Trust Account”) and invested only in U.S. government
securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less or in
any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule
2a-7 of the Investment Company Act of 1940, as amended (the “Investment Company Act”), as determined by the Company, until
the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account, as described below.
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Placement Units, although
substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance
that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business
Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting
commissions and taxes payable on interest earned on the Trust Account) at the time of the agreement to enter into the initial Business
Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the
outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required
to register as an investment company under the Investment Company Act.
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The Company will provide holders of the outstanding
Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the
completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or
(ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct
a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public
Shares for a pro rata portion of the amount then in the Trust Account ($10.00 per Public Share, plus any pro rata interest earned on the
funds held in the Trust Account and not previously released to the Company to pay its tax obligations, less up to $100,000 of interest
to pay dissolution expenses). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be
reduced by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 6). There will be no redemption
rights upon the completion of a Business Combination with respect to the Company’s warrants.
The Company will proceed with a Business Combination
if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation of a Business Combination
and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder
vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company
will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”),
conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file
tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is
required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem
shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company
seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor has agreed to vote its Founder Shares
(as defined in Note 5), Placement Shares (as defined in Note 4) and any Public Shares purchased during or after the Initial Public Offering
in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares irrespective
of whether they vote for or against the proposed transaction.
If the Company seeks stockholder approval of a
Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation
provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is
acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares,
without the prior consent of the Company.
The Sponsor has agreed (a) to waive its redemption
rights with respect to its Founder Shares, Placement Shares and Public Shares held by it in connection with the completion of a Business
Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) that would affect the substance
or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination
or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination activity, unless the Company
provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
The Company will have until August 13, 2021 to
complete a Business Combination (the “Combination Period”), including the proposed business combination with Momentus. However,
if the Company is unable to complete a Business Combination within the Combination Period, it will (i) cease all operations except for
the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on
the funds held in the Trust Account and not previously released to the Company to pay its tax obligations (less up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public
Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable
law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining
stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights
or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete
a Business Combination within the Combination Period.
The Sponsor has agreed to waive its liquidation
rights with respect to the Founder Shares and (along with Cantor) Placement Shares if the Company fails to complete a Business Combination
within the Combination Period. However, if the Sponsor acquires Public Shares after the Initial Public Offering, such Public Shares will
be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination
Period. The underwriter has agreed to waive its rights to its deferred underwriting commission (see Note 6) held in the Trust Account
in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will
be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the
event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than
the Initial Public Offering price per Unit ($10.00).
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or
products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality
or similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00
per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust
Account, if less than $10.00 per share due to reductions in the value of the trust assets less taxes payable. This liability will not
apply with respect to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies
held in the Trust Account (whether or not such waiver is enforceable) or to any claims under the Company’s indemnity of the underwriter
of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of
creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company
does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the
Trust Account. The Company’s independent registered public accounting firm and the underwriter of the Initial Public Offering will
not execute agreements with the Company waiving such claims to the monies held in the Trust Account.
Proposed Business Combination with Momentus Inc.
On October 7, 2020, SRAC 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”), and 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.
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
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, the Company 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 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, an investor of Momentus, the Company and Momentus entered into a repurchase agreement (the “Repurchase Agreement”)
pursuant to which, amongst other things, the Company has agreed to repurchase a certain number of shares of Class A common stock from
an investor of Momentus, 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 the Company has at the Closing from (a) the Private Placement (and any alternative
financing arranged by the Company and Momentus in the event the Private Placement becomes unavailable) and (b) the funds in the Company’s
trust account (after taking into account payments required to satisfy SRAC’s stockholder redemptions), after further deducting the
amount of the Company’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, the Company 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).
Going Concern
In connection with the Company’s assessment
of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”)
2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until
August 13, 2021 or the extension date, as applicable, to consummate a Business Combination. It is uncertain that the Company will be able
to consummate a Business Combination by this time. If a Business Combination is not consummated by this date or the extension date, there
will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the mandatory liquidation, should
a Business Combination not occur, and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue
as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate
after the prescribed date. Management plans to continue its efforts in consummating a business combination by the prescribed date.
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain
information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or
omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information
and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management,
the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature,
which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed consolidated
financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K/A for the year ended December 31,
2020 as filed with the SEC on June 10, 2021, which contains the consolidated financial statements and notes thereto. The financial information
as of December 31, 2020 is derived from the consolidated financial statements presented in the Company’s Annual Report on Form 10-K/A
for the year ended December 31, 2020. The interim results for the three months ended March 31, 2021 are not necessarily indicative of
the results to be expected for the year ending December 31, 2021 or for any future interim periods.
Emerging Growth Company
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”),
and it may 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 its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s consolidated financial statements with another public company which is neither an emerging growth company nor an
emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences
in accounting standards used.
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Use of Estimates
The preparation of condensed consolidated financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change
in the near term due to one or more future events. One of the more significant accounting estimates included in these financial statements
is the determination of the fair value of the warrant liability. Such estimates may be subject to change as more current information becomes
available and accordingly the actual results could differ significantly from those estimates.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject
to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control
of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified
as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s Class A common
stock held by Public Stockholders features certain redemption rights that are considered to be outside of the Company’s control
and subject to occurrence of uncertain future events. Accordingly, at March 31, 2021 and December 31, 2020, there were 11,703,564 and
11,126,916 shares of Class A common stock subject to possible redemption, respectively, presented as temporary equity, outside of the
stockholders’ equity section of the Company’s condensed balance sheets.
Offering Costs
Offering costs consist of legal, accounting, underwriting
fees and other costs incurred through the closing date of the Initial Public Offering that are directly related to the Initial Public
Offering. Offering costs amounted to $10,924,857, of which $10,067,168 was charged to stockholders’ equity and $857,689 related
to the warrants was expensed through the statement of operations, upon the completion of the Initial Public Offering in 2019.
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Warrant Liability
The Company accounts for warrants as either equity-classified or liability-classified
instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity
(“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are
freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants
meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s
own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside
of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional
judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of additional paid-in-capital at the time of issuance. For issued
or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial
fair value on the date of issuance, and each balance sheet date thereafter. The Company accounts for the warrants issued in connection
with its Initial Public Offering in accordance with the guidance contained in ASC 815-40-15-7D, under which the warrants do not meet the
criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the warrants as liabilities at
their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each
balance sheet date until exercised, and any change in fair value is recognized in the Company’s statement of operations. The fair
value of the public warrants initially was estimated using a Post-Acquisition Simulation, with subsequent measurements utilizing the public
trading price. The fair value of the private warrants was initially and subsequently measured using the Black-Scholes Model (see Note
8).
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under ASC Topic 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and
a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax
return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and penalties as of March 31, 2021 and March 31, 2020. The Company is currently not aware
of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is
subject to income tax examinations by major taxing authorities since inception.
Net Income (Loss) per Common Share
Net income (loss) per common share is computed
by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period. The Company has considered
the effect of warrants sold in the Initial Public Offering and as part of the Placement Units to purchase 8,897,500 shares of Class A
common stock in the calculation of diluted income (loss) per share for non-redeemable Class A and B common stock, since the exercise of
such warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The Company’s consolidated statements of
operations include a presentation of income (loss) per share for common shares subject to possible redemption in a manner similar to the
two-class method of income (loss) per share. Net income per share, basic and diluted, for Class A redeemable common stock is calculated
by dividing the interest income earned on the Trust Account net of applicable franchise and income taxes, by the weighted average number
of Class A redeemable common stock outstanding since original issuance. Net loss per share, basic and diluted, for Class A and B non-redeemable
common stock is calculated by dividing the net loss, adjusted for the net income attributable to Class A redeemable common stock, by the
weighted average number of Class A and B non-redeemable common stock outstanding for the period. Class A and B non-redeemable common stock
includes the Founder Shares as these shares do not have any redemption features and do not participate in the income earned on the Trust
Account.
The following table reflects
the calculation of basic and diluted net income per common share (in dollars, except per share amounts):
|
|
For the three
months ended
March 31,
|
|
|
For the three
months ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Redeemable Class A Common Stock
|
|
|
|
|
|
|
Numerator: Net Income allocable to Redeemable Class A Common Stock
|
|
|
|
|
|
|
Interest Income
|
|
$
|
19,046
|
|
|
$
|
669,789
|
|
Income and Franchise Tax
|
|
|
(19,046
|
)
|
|
|
(223,439
|
)
|
Net Income
|
|
$
|
—
|
|
|
$
|
446,450
|
|
Denominator: Weighted Average Redeemable Class A Common Stock
|
|
|
|
|
|
|
|
|
Redeemable Class A Common Stock, Basic and Diluted
|
|
|
17,250,000
|
|
|
|
17,250,000
|
|
Net Income/Basic and Diluted Redeemable Class A Common Stock
|
|
$
|
0.00
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
Non-Redeemable Class A and B Common Stock
|
|
|
|
|
|
|
|
|
Numerator: Net Income minus Net Earnings - Basic
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
5,766,386
|
|
|
$
|
1,209,171
|
|
Redeemable Net Income - Basic
|
|
|
—
|
|
|
|
(446,350
|
)
|
Non-Redeemable Net Loss
|
|
$
|
5,766,386
|
|
|
$
|
762,821
|
|
Denominator: Weighted Average Non-Redeemable Class A and B Common Stock
|
|
|
|
|
|
|
|
|
Non-Redeemable Class A and B Common Stock, Basic
|
|
|
4,857,500
|
|
|
|
4,875,500
|
|
Net income, Basic Non-Redeemable Class A and B Common Stock
|
|
$
|
1.19
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
Non-Redeemable Class A and B Common Stock
|
|
|
|
|
|
|
|
|
Numerator: Net Income minus Net Earnings - Diluted
|
|
|
|
|
|
|
|
|
Non-Redeemable Net Income - Basic
|
|
$
|
5,766,386
|
|
|
$
|
—
|
|
Less: Change in Fair Value of Derivative Liability
|
|
|
8,719,763
|
|
|
|
—
|
|
Non-Redeemable Net Loss - Diluted
|
|
$
|
(2,953,277
|
)
|
|
$
|
—
|
|
Denominator: Weighted Average Non-Redeemable Class A and B Common Stock
|
|
|
|
|
|
|
—
|
|
Non-Redeemable Class A and B Common Stock, Diluted
|
|
|
8,425,836
|
|
|
|
—
|
|
Net loss, Diluted Non-Redeemable Class A and B Common Stock
|
|
$
|
(0.35
|
)
|
|
$
|
—
|
|
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company
is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying
amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards
Update (“ASU”) No. 2020-06, Debt --debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging --Contracts
in Entity’ Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’ Own Equity (“ASU 2020-06”),
which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also
removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and
it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU 2020-06 on January 1, 2021. Adoption
of the ASU did not impact the Company’s financial position, results of operations or cash flows.
The Company’s management does not believe that
any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying
financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 17,250,000 Units, which includes the full exercise by the underwriter of its option to purchase an additional 2,250,000 Units at
$10.00 per Unit. Each Unit consists of one share of Class A common stock and one-half of one redeemable warrant (“Public Warrant”).
Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to
adjustment (see Note 7).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Sponsor and Cantor purchased an aggregate of 545,000 Placement Units at a price of $10.00 per Placement Unit, for
an aggregate purchase price of $5,450,000. Each Placement Unit consists of one share of Class A common stock (“Placement Share”)
and one-half of one redeemable warrant (“Placement Warrant”). Each whole Placement Warrant is exercisable to purchase one
share of Class A common stock at a price of $11.50 per share. The proceeds from the Placement Units were added to the proceeds from the
Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period,
the proceeds from the sale of the Placement Units will be used to fund the redemption of the Public Shares (subject to the requirements
of applicable law), and the Placement Units and all underlying securities will be worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In June 2019, the Sponsor purchased 4,312,500
shares (the “Founder Shares”) of the Company’s Class B common stock for an aggregate price of $25,000. The Founder
Shares will automatically convert into shares of Class A common stock at the time of a Business Combination, or earlier at the option
of the holders, on a one-for-one basis, subject to certain adjustments, as described in Note 7.
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The Founder Shares included up to 562,500 shares
subject to forfeiture to the extent that the underwriter’s over-allotment option was not exercised in full or in part, so that the
Sponsor would own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering
(assuming the Sponsor did not purchase any Public Shares in the Initial Public Offering and excluding Placement Shares included in the
Placement Units). As a result of the underwriter’s election to fully exercise its over-allotment option, the 562,500 Founder Shares
are no longer subject to forfeiture.
The Sponsor has agreed, subject to limited exceptions,
not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of a Business
Combination or (B) subsequent to a Business Combination, (x) if the last sale price of the Class A common stock equals or exceeds $12.00
per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within
any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a
liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having
the right to exchange their shares of common stock for cash, securities or other property.
Related Party Loans
On June 28, 2019, the Sponsor agreed to loan the
Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Promissory
Note”). The Promissory Note was non-interest bearing and payable on the earlier of December 31, 2019 or the completion of the Initial
Public Offering. Borrowings outstanding under the Promissory Note of $222,725 were repaid upon the consummation of the Initial Public
Offering on November 13, 2019.
Promissory Notes
On February 12, 2021, the Sponsor and an unrelated
party each provided $300,000 in non-interest-bearing promissory notes for an aggregate balance of $600,000. As of March 31, 2021, the
full balance of the notes remains unpaid.
In addition, in order to finance transaction costs
in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and
directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company
completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released
to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that
a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital
Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms
of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working
Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion,
up to $1,500,000 of such Working Capital Loans may be convertible into units upon consummation of the Business Combination at a price
of $10.00 per unit. The units would be identical to the Placement Units. There were no outstanding borrowings under the Working Capital
Loans as of March 31, 2021.
Administrative Support Agreement
The Company entered into an agreement whereby,
commencing on November 8, 2019 through the earlier of the Company’s consummation of a Business Combination or its liquidation, the
Company will pay an affiliate of the Sponsor a total of $10,000 per month for office space, utilities and administrative support. In January
2021, the Sponsor forgave the accrued administrative fees accrued at December 31, 2020 of $30,000 and agreed to not collect any fees for
the first quarter of 2021. As such, no administrative fees were incurred in 2021.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect
on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily
determinable as of the date of these consolidated financial statements. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
Registration Rights
Pursuant to a registration rights agreement entered
into on November 7, 2019, the holders of the Founder Shares, Placement Units (including securities contained therein) and units (including
securities contained therein) that may be issued upon conversion of Working Capital Loans, and any shares of Class A common stock issuable
upon the exercise of the Placement Warrants and any shares of Class A common stock and warrants (and underlying Class A common stock)
that may be issued upon conversion of the units issued as part of the Working Capital Loans and Class A common stock issuable upon conversion
of the Founder Shares, are entitled to registration rights, requiring the Company to register such securities for resale (in the case
of the Founder Shares, only after conversion to Class A common stock). The holders of the majority of these securities are entitled to
make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain
“piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business
Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. Notwithstanding
the foregoing, Cantor may not exercise its demand and “piggyback” registration rights after five (5) and seven (7) years after
the effective date of the registration statement and may not exercise its demand rights on more than one occasion. The Company will bear
the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriter was paid a cash underwriting discount
of $3,450,000, or $0.20 per Unit of the gross proceeds from the Units sold in the Initial Public Offering. In addition, the underwriter
is entitled to a deferred fee of $0.40 per Unit of the gross proceeds from the Units sold in the Initial Public Offering, or $6,900,000
in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event
that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
NOTE 7. STOCKHOLDERS' EQUITY
Preferred Stock — The Company
is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other
rights and preferences as may be determined from time to time by the Company’s board of directors. At March 31, 2021 and December
31, 2020, there were no shares of preferred stock issued or outstanding.
Common Stock
Class A Common Stock — The
Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common
stock are entitled to one vote for each share. At March 31, 2021 and December 31, 2020, there were 6,091,436 and 6,668,084 shares of Class
A common stock issued or outstanding, excluding 11,703,564 and 11,126,916 shares of common stock subject to possible redemption, respectively.
Class B Common Stock — The
Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common
stock are entitled to one vote for each share. At March 31, 2021 and December 31, 2020, there were 4,312,500 shares of Class B common
stock issued and outstanding.
Holders of Class A common stock and Class B common
stock will vote together as a single class on all matters submitted to a vote of stockholders except as required by law.
The shares of Class B common stock will automatically
convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject to adjustment. In the
case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts
offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B common
stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of
Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares
of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted
basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering
(not including the shares of Class A common stock underlying the Placement Units) plus all shares of Class A common stock and equity-linked
securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked securities issued,
or to be issued, to any seller in a Business Combination, any private placement-equivalent warrants issued, or to be issued, to any seller
in a Business Combination, any private placement equivalent securities issued to the Sponsor or its affiliates upon conversion of loans
made to the Company).
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
NOTE 8. WARRANT LIABILITIES
Warrants — Public Warrants
may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole
warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination
or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a
Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any
shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless
a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective
and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant
will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class
A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of
the state of residence of the registered holder of the warrants.
The Company has agreed that as soon as practicable,
but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file
with the SEC a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants, to cause such
registration statement to become effective and to maintain a current prospectus relating to those shares of Class A common stock until
the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the shares of Class A
common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of a Business
Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company
will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with
Section 3(a)(9) of the Securities Act or another exemption.
Notwithstanding the foregoing, if a registration
statement covering the Class A common stock issuable upon exercise of the warrants is not effective within a specified period following
the consummation of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during
any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant
to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another
exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.
Once the warrants become exercisable, the Company
may redeem the Public Warrants:
|
●
|
in whole and not in part;
|
|
●
|
at a price of $0.01 per warrant;
|
|
●
|
upon not less than 30 days’ prior written notice of redemption; and
|
|
●
|
if, and only if, the reported last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders.
|
If and when the warrants become redeemable by
the Company, the Company may not exercise its redemption right if the issuance of shares of common stock upon exercise of the warrants
is not exempt from registration or qualification under applicable state blue sky laws or the Company is unable to effect such registration
or qualification.
If the Company calls the Public Warrants for redemption,
management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,”
as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants
may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation.
However, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in
no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within
the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such
funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust
Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
In addition, if (x) the Company issues additional
shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination
at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue
price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or
its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance)
(the “Newly Issued Price”), and (y) the aggregate gross proceeds from such issuances represent more than 60% of the total
equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business
Combination (net of redemptions), and (z) the volume weighted average trading price of the shares of Class A common stock during the 20
trading day period starting on the trading day prior to the day on which the Company consummates a Business Combination (such price, the
“Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be
equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be
adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Placement Warrants are identical to the Public
Warrants underlying the Units sold in the Initial Public Offering, except that the Placement Warrants and the Class A common stock issuable
upon the exercise of the Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business
Combination, subject to certain limited exceptions. Additionally, the Placement Warrants will be exercisable on a cashless basis and be
non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Placement Warrants are held by
someone other than the initial purchasers or their permitted transferees, the Placement Warrants will be redeemable by the Company and
exercisable by such holders on the same basis as the Public Warrants.
NOTE 9. FAIR VALUE MEASUREMENTS
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale
of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the
measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of
observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions
about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities
based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
Level 3:
|
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The Company classifies its U.S. Treasury and equivalent
securities as held-to-maturity in accordance with ASC Topic 320 “Investments - Debt and Equity Securities.” Held-to-maturity
securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities
are recorded at amortized cost on the accompanying consolidated balance sheets and adjusted for the amortization or accretion of premiums
or discounts.
At March 31, 2021, assets held in the Trust Account
were comprised of $884 in cash and $173,021,422 in Treasury Preferred Fund that invests in U.S. Treasury securities. During the three
months ended March 31, 2021, the Company withdrew $104,489 of interest income from the Trust Account to pay for franchise taxes.
At December 31, 2020, assets held in the Trust
Account were comprised of $636 in cash and $173,107,113 in U.S. Treasury securities. During the three months ended March 31, 2020, the
Company withdrew $119,502 of interest income from the Trust Account to pay for franchise taxes.
The gross holding gains and fair value of held-to-maturity
securities at March 31, 2021 and December 31, 2020 are as follows:
|
|
|
Held-To-Maturity
|
|
Amortized
Cost
|
|
|
Gross
Holding
Gains
|
|
|
Fair Value
|
|
March 31, 2021
|
|
|
Marketable securities held in Trust Account – U.S. Treasury Securities Money Market Fund
|
|
$
|
173,021,422
|
|
|
$
|
—
|
|
|
$
|
173,021,422
|
|
December 31, 2020
|
|
|
U.S. Treasury Securities (Reinvested into Money Market Fund on March 2, 2021)
|
|
$
|
173,107,113
|
|
|
$
|
1,887
|
|
|
$
|
173,109,000
|
|
STABLE ROAD ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
(Unaudited)
The following tables present information about
the Company’s liabilities that are measured at fair value on a recurring basis at March 31, 2021 and December 31, 2020 and indicates
the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
|
|
Quoted Prices in Active Markets
|
|
Description
|
|
Level
|
|
|
March 31,
2021
|
|
Assets:
|
|
|
|
|
|
|
Marketable securities held in Trust Account – U.S. Treasury Securities Money Market Fund
|
|
1
|
|
|
$
|
173,021,422
|
|
|
|
Level
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Warrant Liability – Public Warrants
|
|
1
|
|
|
37,518,750
|
|
|
|
45,625,388
|
|
Warrant Liability – Private Placement Warrants
|
|
3
|
|
|
1,839,375
|
|
|
|
2,452,500
|
|
The Company established the initial fair value
for the Warrants on November 13, 2019, the date of the Company’s Initial Public Offering, using a Black-Scholes Model for private
warrants and a Post-Acquisition Simulation for public warrants. The Company allocated the proceeds received from (i) the sale of Units
(which is inclusive of one share of common stock and one-third of one Public Warrant), (ii) the sale of Private Placement Warrants, and
(iii) the issuance of common shares, first to the Warrants based on their fair values as determined at initial measurement, with the remaining
proceeds allocated to common shares subject to possible redemption, and common shares based on their relative fair values at the initial
measurement date.
The key inputs into the Black-Scholes model for
the Private Placement Warrants were as follows at March 31, 2021:
Input
|
|
March 31,
2021
|
|
Risk-free interest rate
|
|
|
0.94
|
%
|
Holding period (years)
|
|
|
5.08
|
|
Volatility
|
|
|
54.31
|
%
|
Exercise price
|
|
$
|
11.50
|
|
Underlying value
|
|
$
|
13.23
|
|
On March 31, 2021, the Private Placement Warrants
and Public Warrants were determined to be $6.75 and $4.35 per warrant for aggregate values of $1.8 million and $37.5 million, respectively.
|
|
Private
Placement
|
|
|
Public
|
|
|
Warrant
Liabilities
|
|
Fair value as of December 31, 2020
|
|
$
|
2,452,500
|
|
|
$
|
45,625,388
|
|
|
$
|
48,077,888
|
|
Change in valuation inputs or other assumptions
|
|
|
(613,125
|
)
|
|
|
(8,106,638
|
)
|
|
|
(8,719,763
|
)
|
Fair value as of March 31, 2021
|
|
$
|
1,839,375
|
|
|
$
|
37,518,750
|
|
|
$
|
39,358,125
|
|
Level 3 financial liabilities consist of the Private
Placement Warrant liability for which there is no current market for these securities such that the determination of fair value requires
significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed
each period based on changes in estimates or assumptions and recorded as appropriate.
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions
that occurred after the balance sheet date up to the date that the condensed consolidated financial statements were issued. Based upon
this review, other than described below, the Company did not identify subsequent events that would have required adjustment or disclosure
in the condensed consolidated financial statements.
The Company filed a Form 8-K on May 13, 2021 notifying
shareholders of the approval to extend the date to consummate a business combination from May 13, 2021 to August 13, 2021. Shareholders
redeemed 19,662 shares of common stock purchased in the Company’s initial public offering as part of the extension.