Momentus Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023; filed August 14, 2023. Momentus develops in-space transportation and infrastructure services, including satellite delivery, hosted payloads and in-orbit services. Its Vigoride 5 and Vigoride 6 spacecraft were operating in orbit during the period.
Financial performance and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Service revenue | $1.705 million | $0.050 million | $1.727 million | $0.050 million |
| Gross profit | $1.317 million | $0.038 million | $1.339 million | $0.038 million |
| Operating expenses | $20.211 million | $23.757 million | $40.600 million | $48.581 million |
| Operating loss | $(18.894) million | $(23.719) million | $(39.261) million | $(48.543) million |
| Net loss | $(18.835) million | $(22.872) million | $(39.660) million | $(49.706) million |
| Basic and diluted loss per share | $(0.20) | $(0.28) | $(0.43) | $(0.62) |
- Q2 gross margin was approximately 77%; gross profit remains small relative to operating costs.
- Revenue growth reflected customer services on Vigoride 5 and 6, a third-party payload launch and forfeited customer deposits. Q2 revenue included $1.305 million transportation services, $0.142 million in-orbit services and $0.258 million from forfeited deposits.
- Cash and cash equivalents were $21.3 million at June 30, down from $61.1 million at December 31, 2022. Total assets were $48.7 million and total liabilities $36.0 million; stockholders’ equity was $12.8 million.
- Six-month operating cash use was $33.2 million, versus $45.9 million a year earlier. Investing cash use was $0.015 million; financing cash use was $7.0 million. Cash, cash equivalents and restricted cash ended at $22.2 million.
- Loan payable was $8.7 million current on the balance sheet, reflecting approximately $9.0 million gross term-loan principal plus accrued interest, less unamortized discount and issuance costs. The loan bears fixed interest and is scheduled to mature by February 2024.
- Current assets of $33.0 million compared with current liabilities of $29.0 million. Current liabilities include an $8.5 million litigation settlement contingency; a $4.0 million insurance receivable is recorded separately.
Changes versus the prior comparable period
- Q2 revenue increased by $1.655 million from a very low comparison base. Six-month revenue rose by $1.677 million.
- Q2 net loss narrowed by $4.0 million; the six-month net loss narrowed by $10.0 million. Lower selling, general and administrative costs and lower interest expense contributed, while year-over-year changes in warrant fair value also affected reported results.
- Six-month research and development expense decreased 3% to $20.3 million; selling, general and administrative expense decreased 27% to $20.3 million.
- Cash declined substantially during the first half, including $6.3 million of term-loan principal payments and the $10.0 million stock repurchase-agreement payment. The February securities offering raised $10.0 million gross, but its proceeds were used to fund that repurchase obligation.
- Common shares outstanding increased from 84.4 million at December 31, 2022, to 97.9 million at June 30, 2023. The filing reports 97,866,756 shares outstanding as of August 9, 2023.
Outlook, risks and notable items
- Going concern: Management concluded substantial doubt exists about the Company’s ability to continue as a going concern for at least one year after issuance of the financial statements. The Company says it needs substantial additional capital; absent funding, it may have to scale back or halt operations. A term sheet to raise capital with Deutsche Bank had been executed, but the filing does not establish that financing was completed.
- Operational plans: Management described a planned Transporter-9 customer mission for November 2023 and a further Vigoride mission in early 2024. Future launches depend on vehicle readiness, licenses and government approvals. Commercial viability and the reliability and performance of the propulsion technology remain unproven.
- Backlog: Approximately $32 million as of July 31, 2023, including firm orders and options. Customers can cancel; about 89% was attributable to three launch-service providers or aggregators and affiliates, and the top ten customers represented about 99%. Backlog may not convert into revenue.
- Funding and workforce: The Company reported no ATM sales in the first half. On July 3, 2023, it reduced its workforce by 18 employees to extend cash runway; further reductions may be needed if it cannot raise capital.
- Contingencies: The $8.5 million securities-class-action settlement remained subject to final documentation and court approval; $4.0 million of insurance proceeds were expected. Other shareholder and founder-related litigation continued, including a SAFE-note dispute seeking damages in excess of $7.6 million. The filing states outcomes are uncertain.
- National security agreement: NSA compliance carries operating restrictions and costs; the agreement provides for liquidated damages of up to $1 million per breach.
- Other notable items: The Vigoride 3 inaugural mission experienced communication and power anomalies and did not complete all planned deployments or demonstrations. The filing also reports successful initial on-orbit MET tests on Vigoride 5 and orbital maneuvering on Vigoride 6. An August 2023 change-in-control letter agreement provides for accelerated vesting of outstanding employee equity awards upon a qualifying change in control.
Important facts for investors to verify
- Whether the Company secures sufficient new capital, on what terms and when; confirm the status and terms of the Deutsche Bank financing effort.
- Actual cash burn and available liquidity after June 30, 2023, including whether management’s plans provide adequate runway.
- Whether planned missions launch on schedule and obtain required approvals, and whether the spacecraft reliably complete customer deliveries and technology demonstrations.
- How much of the reported backlog is firm, remains uncancelled and converts into revenue, given its concentration and customer cancellation rights.
- The status and potential cash impact of the settlement and other litigation, insurance recovery, NSA compliance costs and any indemnification obligations.
- Potential dilution from equity financing, outstanding warrants, stock awards and other share-based compensation.