Momentus (US:MNTS)2020-03-26 20:31Business Strategy and Focus - The company is focusing on acquiring businesses within the cannabis industry that do not directly involve the production, distribution, or sale of cannabis, targeting companies with an aggregate enterprise value exceeding $300 million[27]. - The management team has over 60 years of combined experience and has executed over 20 transactions within or ancillary to the cannabis sector, investing over $150 million since July 2017[21]. - The cannabis industry is currently undercapitalized, with many companies struggling to access traditional capital sources, presenting an opportunity for the company to facilitate public offerings for target businesses[19]. - The company aims to leverage its management team's extensive network to identify potential acquisition targets and conduct thorough evaluations of their growth potential[29]. - The strategy includes pursuing opportunities in sectors such as hardware, software, labs, distribution, real estate, brands, and packaging that support the cannabis industry[29]. - The company intends to implement operational best practices and financial structuring opportunities post-acquisition to enhance the performance of the target business[39]. - The management team has substantial experience in both private and public capital markets, which is viewed as a competitive advantage in sourcing business combinations[38]. - The company intends to acquire a target business with an enterprise value significantly above the net proceeds from its initial public offering and placement units[46]. - The company plans to conduct robust due diligence to assess potential target businesses, focusing on competitive advantages and operational capabilities[42]. - The company aims to enhance shareholder value post-business combination by evaluating management expertise and exploring growth opportunities[47]. Financial Considerations - The company has $165,946,011 available in the trust account for an initial business combination after paying $6,900,000 in deferred underwriting fees[57]. - The company may need to obtain additional financing to complete its initial business combination or to redeem a significant number of public shares[46]. - The company may seek to raise additional funds through private offerings of debt or equity securities in connection with its initial business combination[61]. - The company must maintain net tangible assets of at least $5,000,001 after redemptions to avoid being subject to SEC's "penny stock" rules[88]. - The company has approximately $1,093,200 in proceeds held outside the trust account as of December 31, 2019, to cover potential claims[107]. - The company may incur substantial debt to complete its initial business combination, which could adversely affect its leverage and financial condition[202]. - The company has $172,500,000 available from its initial public offering and placement units to complete its initial business combination and cover related fees and expenses, including $6,900,000 for deferred underwriting commissions[204]. Redemption and Stockholder Rights - The company will provide public stockholders the opportunity to redeem shares of Class A common stock upon completion of the initial business combination, either through a stockholder meeting or a tender offer[83]. - If stockholder approval is required, a majority of the outstanding shares must vote in favor of the initial business combination for it to be completed, requiring approximately 35.9% of the 17,250,000 public shares to be voted in favor[87]. - Public stockholders are restricted from seeking redemption rights for more than 15% of the shares sold in the initial public offering without prior consent[89]. - The company has agreed to waive redemption rights for its sponsor, officers, and directors concerning any founder shares and public shares in connection with the initial business combination[82]. - If the initial business combination is not completed by May 13, 2021, the company will redeem public shares at a per-share price based on the trust account balance[98]. - The per-share redemption amount for stockholders upon dissolution is approximately $10.00, but actual amounts may be less due to creditor claims[103]. - If public stockholders tender more shares than the company has offered to purchase, the tender offer will be withdrawn[85]. - The redemption process will remain open for at least 20 business days, and the company cannot complete the initial business combination until the expiration of this period[85]. Regulatory and Compliance Issues - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from reporting requirements[54]. - The company must complete one or more business combinations with an aggregate fair market value of at least 80% of the assets held in the trust account at the time of signing a definitive agreement[65]. - The fair market value of the initial business combination will be determined by the board of directors based on generally accepted financial standards, such as discounted cash flow valuation[65]. - The company is required to evaluate its internal control procedures for the fiscal year ending December 31, 2020, as mandated by the Sarbanes-Oxley Act[118]. - The company is exempt from certain SEC rules protecting investors in blank check companies due to having net tangible assets exceeding $5,000,000[140]. Management and Operational Risks - The company does not have operating history and no revenues, making it challenging to evaluate its ability to achieve its business objectives[122]. - Key personnel's ability to remain with the company post-combination is uncertain, and their departure could negatively impact operations and profitability[189]. - The company does not intend to have full-time employees prior to completing the initial business combination, with only three officers currently involved[115]. - Conflicts of interest may arise as officers and directors are involved with other entities engaged in similar business activities, potentially affecting the allocation of business opportunities[195]. - The company may face challenges in assessing the management capabilities of target businesses, which could negatively impact post-combination operations[193]. Competition and Market Conditions - Competition for target businesses includes other blank check companies and private equity groups, which may limit the company's acquisition capabilities[114]. - The ongoing COVID-19 pandemic may materially adversely affect the company's search for a business combination[146]. - The company may face significant competition from other entities with similar business objectives, which could hinder its ability to complete an initial business combination[145]. - The company may face challenges in completing simultaneous business combinations, which could increase costs and risks that negatively impact operations and profitability[206]. Stockholder Influence and Governance - The initial stockholders own approximately 21.8% of the outstanding shares, and only 35.9% of public shares need to be voted in favor for the initial business combination to be approved[124]. - Initial stockholders may exert substantial influence on stockholder votes and major corporate transactions[217]. - The board of directors is divided into three classes, with each class serving a term of three years[217]. - Control by initial stockholders will continue at least until the completion of the initial business combination[217].