Momentus Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Financial statements are unaudited. Momentus is a pre-commercial space-services company developing orbital transfer vehicles and related in-space services; it had not completed a commercial customer launch by quarter-end.
Financial performance and position
- Revenue: $0, versus $130,000 in Q1 2021. The prior-year revenue resulted from a customer contract cancellation. No gross margin was reported in Q1 2022.
- Operating expenses: $24.8 million, up 4% from $23.9 million. Research and development was $10.0 million (up 1%); selling, general and administrative expense was $14.9 million (up 6%).
- Operating loss: $24.8 million, compared with $23.8 million. Net loss: $26.8 million, or $0.34 per diluted share, versus net income of $64.7 million in Q1 2021. The prior-year result included an $81.6 million gain from the decrease in fair value of SAFE notes; the periods are not directly comparable.
- Cash flow: Cash used in operating activities was $23.1 million, versus $21.2 million. Investing activities used $0.5 million and financing activities used $0.9 million. Cash, cash equivalents and restricted cash declined $24.5 million to $136.0 million.
- Liquidity: Cash and cash equivalents were $135.6 million at March 31, down from $160.0 million at December 31, 2021. Management stated that current cash, projected gross profit and additional equity or debt financing were expected to fund operations and capital expenditures beyond the next 12 months, while warning actual spending could be higher and further financing might be needed.
- Debt and obligations: Term-loan principal was $24.1 million; its balance-sheet carrying amount, net of unamortized discount and issuance costs, was approximately $20.7 million. The company extended repayment over 24 months beginning March 2022. It also had a $5.0 million SEC penalty outstanding, due within one year of the 2021 settlement; $6.0 million recorded for potential additional co-founder payments; $21.6 million in purchase obligations; and $8.1 million in operating lease liabilities.
- Equity: Stockholders’ equity was $101.3 million, down from $131.9 million at year-end 2021. Shares outstanding were 81.8 million at March 31.
Material changes and developments
- Revenue fell to zero from $130,000. Operating expenses rose modestly, while the year-over-year swing to a net loss largely reflects the absence of the prior-year SAFE-note fair-value gain.
- Operating cash use increased by $1.9 million year over year. Management cited payroll, R&D, professional and legal costs among the principal cash uses.
- In January 2022, Momentus elected to repay its term loan over two years rather than repay principal in March 2022 under the original schedule. Q1 financing cash outflow included $0.9 million of note payments.
- In February, the company adopted a 2022 Inducement Equity Plan with 4.0 million shares initially reserved. Q1 stock-based compensation was $2.2 million.
Outlook, risks and contingencies
- Management targeted the inaugural Vigoride flight for as early as May 2022 and planned another flight in the second half of 2022, subject to readiness and other conditions. After quarter-end, the company reported receiving a favorable FAA payload-review determination on May 4, an FCC license on April 28 and NOAA license updates, stating that required government approvals for the inaugural flight had been obtained. These were subsequent events, not conditions established at March 31.
- Management reported approximately $69 million of backlog as of April 30, 2022, across 25 companies. Backlog is potential revenue, includes options, may be cancelled, and is not assurance of future revenue. About 70% related to four launch-service providers or aggregators and affiliates; the top ten customers represented about 95%.
- Technology remains unproven for commercial operations. The company said its water-plasma propulsion system had not yet been experimentally confirmed to generate thrust in space; the inaugural mission was intended partly as a demonstration, and failures or delays could affect future launches and the business.
- Key risks include launch execution, government approvals and regulation, converting backlog into revenue, customer concentration, access to funding, and compliance with the National Security Agreement (NSA). The NSA allows liquidated damages of up to $1 million per breach and imposes operational restrictions and compliance costs.
- Momentus faced consolidated securities class actions alleging misstatements or omissions concerning the proposed business combination; it moved to dismiss and said it intended to defend the claims. The company also described possible indemnification disputes with former founders, with cumulative potential exposure presently unknown and stated to exceed $1 million.
Important facts for investors to verify
- Whether the inaugural and subsequent Vigoride missions occurred as planned, and what they demonstrated about vehicle and propulsion performance.
- Whether reported backlog converts into signed, funded launches and recognized revenue, including the effect of cancellation rights and customer concentration.
- Actual cash burn, remaining liquidity and financing needs compared with management’s beyond-12-month funding expectation.
- Term-loan repayment progress and settlement of the $5.0 million SEC penalty and potential co-founder payment obligations.
- Developments in the securities litigation, founder-related disputes and NSA compliance, including any resulting costs, penalties or operating restrictions.