Momentus Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; balance-sheet comparisons are with December 31, 2022. Amounts below are in U.S. dollars. The company develops in-space transportation and infrastructure services; it has not yet established material recurring revenue.
Financial performance
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Revenue | $22,000 | $0 |
| Gross profit | $22,000 | $0 |
| Research and development | $10.1 million | $10.0 million |
| Selling, general and administrative | $10.3 million | $14.9 million |
| Operating loss | $(20.4) million | $(24.8) million |
| Net loss | $(20.8) million | $(26.8) million |
| Net loss per share | $(0.24) | $(0.34) |
| Cash used in operating activities | $(18.7) million | $(23.1) million |
The $22,000 of revenue was from forfeited customer deposits, not completed delivery services. The reported gross profit therefore does not indicate an established service margin. SG&A fell 31%, primarily reflecting lower SEC-related compliance and professional fees, lower payroll and stock compensation, and reduced insurance and corporate costs. R&D was nearly flat, with higher subcontracting and Vigoride 5 launch costs offset by lower materials and component spending.
Financial position and liquidity
- Cash and cash equivalents were $38.6 million at March 31, down from $61.1 million at year-end; cash, cash equivalents and restricted cash totaled $39.9 million.
- Total current assets were $53.0 million and current liabilities $31.7 million. Total assets were $68.8 million, total liabilities $39.9 million, and stockholders’ equity $28.9 million.
- Loan payable had a $11.5 million carrying value, including $11.3 million current and $0.2 million non-current. The filing reports $12.2 million of gross loan principal and accrued interest before unamortized discount and issuance costs. The loan bears a fixed rate; principal maturities are $9.9 million in 2023 and $2.3 million in 2024.
- Financing cash flows included $3.1 million of loan principal payments, a $10.0 million securities offering and a $10.0 million payment to former co-founders under stock repurchase agreements. Net financing cash used was $3.8 million.
- Operating lease liabilities totaled $7.0 million; future lease payments were $8.1 million before imputed interest. Unconditional purchase obligations were $16.2 million, mainly due in the remainder of 2023.
Material developments and outlook
- Going concern: Management concluded conditions raised substantial doubt about the company’s ability to continue as a going concern within twelve months after issuance of the financial statements. Management believes plans to grow bookings and revenue, reduce operating expenses and resolve legal matters mitigate the doubt, but says there is no assurance they will succeed. The company may need additional capital.
- Capital raise and dilution: A February registered offering raised approximately $10.0 million gross through 9.396 million common shares, pre-funded warrants for 2.170 million shares, and warrants for 11.566 million shares exercisable at $1.15. Net proceeds funded the $10.0 million co-founder repurchase payment. Common shares outstanding increased from 84.4 million at year-end to 95.0 million at March 31.
- Operations: Vigoride 5, launched in January 2023, remained on orbit; the company reported initial on-orbit tests of its water-propelled microwave electrothermal thruster and use of the thruster to change altitude. Vigoride 6 launched April 15, after quarter-end, with six customer payloads. The company anticipated one additional Vigoride mission in 2023, subject to licensing, approvals and spacecraft readiness.
- Commercial outlook: The company reported approximately $33 million of backlog, described as potential revenue, including firm orders and options. Customers may cancel, and backlog conversion and timing are uncertain. Three launch-service providers/aggregators and affiliates accounted for about 86% of backlog; the top ten customers accounted for about 98%.
- Technology and execution risks: Momentus said it had not yet confirmed that its propulsion technology could provide sufficient thrust for customer deliveries or operate reliably enough for commercialization. Development, demonstration missions, launch access, government approvals and successful operations remain uncertain; future vehicles and services may be delayed or fail to perform as intended.
- Legal and regulatory matters: The company recorded an $8.5 million contingency for a proposed securities class-action settlement, with a $4.0 million insurance receivable recorded separately. The settlement remained subject to documentation and court approval. Other disclosed matters include shareholder and derivative actions, founder indemnification disputes, and a customer’s SAFE-related claim seeking damages in excess of $7.6 million. The NSA imposes operating and compliance restrictions and provides for liquidated damages of up to $1 million per breach.
Most important facts for investors to verify
- Whether the company can obtain additional financing and sustain operations given the going-concern substantial doubt, cash burn and limited revenue.
- Whether Vigoride 5 and 6 complete their missions successfully, and whether the MET can support reliable customer deliveries.
- How much of the $33 million backlog is firm, remains cancellable, and can be converted into recognized revenue; assess the stated customer concentration.
- Final court approval, insurance recovery and cash impact of the proposed $8.5 million settlement, along with exposure from other litigation and NSA compliance.
- Potential dilution from outstanding warrants, pre-funded warrants, equity awards and future capital raises.