Momentus Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2022. Amounts are in U.S. dollars; financial statement amounts are in thousands unless stated otherwise.
Business context and operating progress
Momentus is developing in-space transportation and infrastructure services, including satellite delivery, hosted payloads and planned in-orbit services. Its vehicles depend on water-plasma propulsion technology that remains under development and has not yet demonstrated measured orbit change in space.
The company’s first Vigoride demonstration flight launched in May 2022. A mechanical problem with third-party deployable solar arrays caused low power and interrupted two-way communications. By quarter-end, eight customer satellites had been deployed—seven from Vigoride 3 and one using a partner’s deployer—while three Vigoride payloads remained undeployed. The anomalies also prevented planned vehicle maneuvers and technology demonstrations.
Financial performance and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Service revenue | $129,000 | $200,000 | $179,000 | $330,000 |
| Gross margin | $115,000 | $384,000 | $153,000 | $465,000 |
| Research and development | $10.6 million | $9.0 million | $31.4 million | $39.7 million |
| Selling, general and administrative | $11.2 million | $12.1 million | $38.9 million | $35.8 million |
| Net income (loss) | $(21.3) million | $(5.6) million | $(71.0) million | $123.4 million |
Q3 operating loss was $21.6 million, compared with $20.7 million a year earlier. Nine-month operating loss improved to $70.2 million from $75.1 million. The prior-year nine-month net income included a $209.3 million gain from the change in fair value of SAFE notes, which converted in the 2021 business combination; it is not a comparable recurring operating result. The 2021 nine-month results also included a $7.0 million SEC settlement expense.
Cash and cash equivalents were $81.6 million at September 30, 2022; cash, cash equivalents and restricted cash totaled $82.2 million. Cash declined by $78.4 million in the first nine months. Operating activities used $71.5 million, investing activities used $0.6 million, and financing activities used $6.2 million. Current assets were $92.8 million and current liabilities $32.8 million, implying approximately $60.0 million of working capital.
The term loan had a carrying amount of $16.4 million, including $10.8 million current and $5.6 million non-current; the filing reports $18.3 million of gross principal outstanding. The fixed-rate loan is scheduled to be repaid through February 2024. Total liabilities were $48.8 million and stockholders’ equity was $59.9 million. A further $10.0 million stock-repurchase liability related to the former co-founders is recorded; the company says a future qualifying financing could trigger payment.
Material changes and financing
- Revenue remains minimal and reflects the inaugural mission, resolution of customer concessions and forfeited deposits from cancellations.
- Compared with the prior-year nine-month period, R&D expense fell primarily because 2021 included $9.5 million of prepaid launch-cost impairments. SG&A rose, reflecting public-company, insurance and professional-service costs, partly offset by lower legal and stock-compensation expense.
- The company paid the remaining $5.0 million SEC settlement liability on July 8, 2022.
- On September 28, 2022, Momentus established an at-the-market program allowing up to $50 million of common-stock sales, subject to commissions of up to 3%. No shares had been sold under the program through September 30.
- Common shares outstanding were 84.0 million at quarter-end and 84.15 million as of November 4, 2022. Outstanding public and private warrants and equity awards may add potential dilution.
Outlook, risks and contingencies
Management expected to fly a second Vigoride vehicle to low-earth orbit with a third-party launch provider as early as December 2022. This was an anticipated timing, not a guarantee; future missions depend on vehicle readiness and required government licenses and approvals. Management stated that available cash, projected gross profit and potential additional financing were expected to fund operations beyond the next 12 months, while cautioning that spending could exceed estimates and additional financing may not be available on acceptable terms.
Backlog was approximately $43 million as of October 31, 2022, down from $67 million at January 31, 2022 and $86 million at March 4, 2021. It includes options, is cancellable by customers and is not assured revenue. Approximately 90% related to three launch-service providers or aggregators and their affiliates; the top ten customers represented approximately 98%.
Key risks include the Vigoride 3 anomalies, unproven propulsion and vehicle capabilities, possible further launch delays, reliance on government approvals, customer concentration and backlog cancellations, and compliance costs or restrictions under the National Security Agreement. The filing also describes securities class-action litigation, a SAFE-investment dispute seeking damages exceeding $7.6 million, and other proceedings. The company said potential losses from litigation were not reasonably estimable; no litigation reserve was recorded. The securities class action had a November 2023 trial date set.
Important facts for investors to verify
- Progress and reliability of the second Vigoride mission, including whether the solar-array issue and other anomalies have been resolved.
- Whether remaining Vigoride 3 customer satellites were deployed and whether the spacecraft can complete meaningful demonstrations.
- Timing and status of required FAA, FCC, NOAA and other approvals, including the FCC’s temporary authority for Vigoride 3 communications.
- Cash burn, actual runway and any ATM or other financing activity; also assess the resulting dilution and the potential $10 million co-founder payment.
- Conversion of the concentrated, cancellable backlog into performed services and cash receipts, and developments in the disclosed litigation.