Momentus Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Amounts are in U.S. dollars; financial statement amounts are generally in thousands unless noted.
Business context and reporting period
Momentus is developing in-space transportation and infrastructure services, including satellite delivery, hosted payloads and planned in-orbit services. Its Vigoride vehicles and water-plasma propulsion technology remain under development. The May 2022 Vigoride 3 flight was the company’s first demonstration mission and generated its first reported service revenue.
Financial performance and position
| Metric | Q2 2022 | Six months ended June 30, 2022 | Comparable 2021 period |
|---|---|---|---|
| Service revenue | $50,000 | $50,000 | $0 in Q2; $130,000 for six months |
| Gross margin | $38,000 | $38,000 | $0 in Q2; $82,000 for six months |
| Research and development | $10.9 million | $20.9 million | $20.8 million Q2; $30.7 million six months |
| Selling, general and administrative | $12.9 million | $27.7 million | $9.7 million Q2; $23.7 million six months |
| Operating loss | $23.7 million | $48.5 million | $30.5 million Q2; $54.4 million six months |
| Net loss (income) | $22.9 million loss | $49.7 million loss | $64.3 million income Q2; $129.0 million income six months |
| Operating cash used | Not separately stated | $45.9 million | $44.1 million |
- Gross margin was approximately 76% of Q2 revenue, but revenue was very small and the margin is not indicative of an established operating business.
- Prior-year net income was substantially driven by non-cash decreases in the fair value of SAFE-note liabilities: $100.8 million in Q2 2021 and $182.4 million for the first half of 2021. These notes converted in the 2021 business combination. The 2021 comparison also included a $7 million SEC settlement expense.
- At June 30, cash and cash equivalents were $109.1 million, down from $160.0 million at December 31, 2021. Cash, cash equivalents and restricted cash totaled $110.4 million. First-half cash declined by $50.2 million.
- Current assets were $117.6 million and current liabilities $30.7 million. Total assets were $133.8 million, total liabilities $51.6 million, and stockholders’ equity $82.2 million, compared with $131.9 million at year-end.
- Term-loan principal was $21.2 million; its balance-sheet carrying amount, net of unamortized discount and issuance costs, was $18.7 million. The loan bears 12% stated interest and is scheduled to be repaid through February 2024. Lease liabilities were $7.8 million.
Material changes and operating developments
- Vigoride 3 reached low Earth orbit in May, but its deployable solar arrays did not operate as intended, causing low power and communications problems. Momentus deployed two of nine customer satellites before quarter-end. Four more were deployed in July; the filing reports six of nine deployed as of its filing date, in addition to one satellite placed in orbit using a partner’s deployer.
- Momentus had not re-established two-way communication with Vigoride 3 and said the anomalies prevented some planned vehicle operations and technology demonstrations. Management said its confidence in completing some planned operations on this mission had substantially declined.
- Operating loss improved year over year, while R&D expense fell partly because 2021 included launch-deposit impairments. SG&A rose year over year, reflecting public-company costs, insurance, professional fees and payroll.
- Backlog was approximately $55 million as of July 31, 2022, versus $67 million in January 2022 and $86 million in March 2021. Approximately 70% was associated with three launch providers or aggregators and affiliates; the top ten customers represented about 98%. Contracts include options and are generally cancellable.
Outlook, liquidity, risks and contingencies
- Management said current cash, projected gross profit and potential additional financing were expected to fund operating and capital needs beyond the next 12 months, but cautioned that estimates could prove wrong and capital could be used faster than expected. The company may need additional debt or equity financing, which may not be available on acceptable terms or at all.
- Management anticipated a second Vigoride flight as early as November 2022, subject to vehicle readiness and required government licenses and approvals. The filing gives no revenue or earnings guidance.
- Key execution risks include spacecraft reliability, unresolved Vigoride mission issues, development and validation of propulsion technology, regulatory approvals, launch scheduling, customer cancellations and backlog concentration. The company had not experimentally confirmed that its water-plasma propulsion system could generate thrust in space.
- First-half purchase obligations totaled $22.9 million, in addition to lease and loan commitments. A $5 million SEC settlement payment was made July 8, 2022.
- The company reported securities class-action litigation, a shareholder books-and-records action, a derivative action and a July 2022 SAFE-note lawsuit seeking damages in excess of $7.6 million. The company disputes the claims. The filing does not provide a clear aggregate estimate of potential losses for these matters.
- A further $10 million payment to former owners may be triggered by a qualifying financing; the company recorded a $5.8 million liability at June 30, 2022. The National Security Agreement also imposes compliance requirements and potential liquidated damages of up to $1 million per breach.
Most important facts for investors to verify
- Whether Vigoride 3 deployed its remaining three customer satellites and whether communications, power and planned on-orbit operations were restored.
- Whether the second Vigoride mission launched on schedule, received all required approvals and demonstrated reliable spacecraft and propulsion performance.
- Whether the $55 million backlog converts into firm, collected revenue given cancellation rights, concentration and prior erosion.
- Cash burn, debt repayment and financing needs against management’s stated expectation that resources would fund needs beyond 12 months.
- Developments and potential financial exposure from the disclosed litigation, the contingent $10 million former-owner payment and National Security Agreement compliance.