NewSpace

Momentus Space – Success in Space Not Reflected on Balance Sheet

By Doug Messier

Parabolic Arc

May 18, 2023

Filed under Momentus, space tugs, Vigoride, Vigoride 5, Vigoride 6

Momentus Space – Success in Space Not Reflected on Balance Sheet — Vigoride 3 space tug prepared for launch.

In-space transporter provider Momentus (Nasdaq: MNTS) has been having increasing success in orbit, but the progress was not reflected in first-quarter revenue as the company reported low revenue and dwindling cash reserves amid “substantial doubt” about the company’s survival.

Momentus reported revenue last week of only $22,000 in the first three months of the year. It did represent an improvement over the zero revenue the company reported for the first quarter of 2022. Momentus reported a net quarterly loss of $20.8 million, down from $26.8 million during the same period last year.

Momentus First Quarter 2023 Key Statistics
(In thousands of dollars except net loss per share)

	First Quarter 2023	First Quarter 2022
Revenue	$22	$0
Gross Profit	$22	$0
Net Loss	$20,825	$26,834
Net Loss Per Share	$0.24	$0.34
Adjusted EBITDA Loss	$20,231	$25,048

The company had $38.6 million in cash and cash equivalents as of March 31, a decrease from $61.1 million on Dec. 31, 2022.

“In connection with the preparation of the condensed consolidated financial statements for the quarterly period ended March 31, 2023, management conducted such an evaluation and concluded there were conditions and events, considered in the aggregate, which raised substantial doubt as to the Company’s ability to continue as a going concern within twelve months after the date of the issuance of such financial statements,” the company said in its quarterly report.

“However, through management’s evaluation of our strategic business plan, management identified conditions and events that it believes mitigate and alleviate the substantial doubt about the Company’s ability to continue as a going concern,” the report continues. “Going forward, management expects to continue driving bookings and revenue growth, implement a plan management has developed to further reduce our operating expenses, and resolve certain outstanding legal matters.”

While Momentus has struggled on the ground, the company is reporting increasing success in Earth orbit. The company’s Vigoride 5 and Vigoride 6 space tugs were launched into orbit on SpaceX Falcon 9 rockets in January and April, respectively.

The company successfully tested its Microwave Electrothermal Thruster system on Vigoride 5, with firings lasting from 30 seconds to six minutes. As board member Chris Hadfield explained to SpaceRef, its thrusters are powered by distilled water.

“Momentus is showing its competitive advantages with flight heritage, early success with our pioneering water-based propellant engine, and a vehicle that can respond to customer needs with flexibility, speed, and a lower cost,” said Momentus CEO John Rood.

“We are now operating Vigoride-5 and Vigoride-6 concurrently, and both missions mark key milestones in demonstrating the value proposition of our technology. In less than a year we have launched three of our Vigoride Orbital Service Vehicles into space, deployed nine customer payloads, provided hosted payload services, demonstrated a new, differentiated breed of spacecraft engine, and continue to garner interest with commercial and government customers,” Rood added.

Momentus also said it had recently signed services agreements with:

Repeat customer FOSSA Systems, to place the company’s latest generation of spacecraft into low Earth orbit and to fly a picosat deployer capable of eight pocketqube satellites.
Hello Space, to provide hosted payload service for a deployer carrying four pocketqubes as part of the company’s planned 80-satellite constellation.
Lunasonde and SatRev, for the deployment of CubeSats on the Vigoride-7 mission scheduled for launch in October on SpaceX’s Transporter-9 rideshare flight.
An undisclosed company, for the first tranche of picosats for a 100-satellite planned constellation.

The Space Development Agency also selected Momentus for a Small Business Innovation Research Phase 2 award to develop new satellite transportation technology.

Momentus also said it signed launch agreements with SpaceX to fly aboard Transporter rideshare missions through the end of 2024.

Momentus Space further revealed it teamed with Astroscale to a NASA request for information concerning how to reboost the Hubble Space Telescope into a higher orbit.

Momentus’ Financials

Momentus Space’s first-quarter financials, as well as excerpted disclaimers from the company’s press release, are below.

MOMENTUS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share data)

		Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Service revenue	$	22	$	—
Gross profit		22		—
Operating expenses:
Research and development expenses		10,119		9,971
Selling, general and administrative expenses		10,270		14,853
Total operating expenses		20,389		24,824
Loss from operations		(20,367)		(24,824)

Other income (expense):
Change in fair value of warrant liability		(112)		(451)
Realized loss on disposal of asset		—		(70)
Interest income		555		—
Interest expense		(920)		(1,492)
Litigation settlement, net		—		3
Other income		19		—
Total other expense		(458)		(2,010)
Net loss	$	(20,825)	$	(26,834)
Net loss per share, basic	$	(0.24)	$	(0.34)
Net loss per share, fully diluted	$	(0.24)	$	(0.34)
Weighted average shares outstanding, basic		87,559,611		79,958,383
Weighted average shares outstanding, fully diluted		87,559,611		79,958,383

MOMENTUS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

		March 31, 2023		December 31, 2022
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	38,630	$	61,094
Restricted cash, current		879		1,007
Insurance receivable		4,000		4,000
Prepaids and other current assets		9,524		10,173
Total current assets		53,033		76,274
Property, machinery and equipment, net		3,844		4,016
Intangible assets, net		340		337
Operating right-of-use asset		6,174		6,441
Deferred offering costs		418		331
Restricted cash, non-current		363		312
Other non-current assets		4,670		4,712
Total assets	$	68,842	$	92,423

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	2,092	$	2,239
Accrued expenses		6,496		8,026
Loan payable, current		11,290		11,627
Contract liabilities, current		2,136		1,654
Operating lease liability, current		1,181		1,153
Stock repurchase liability		—		10,000
Litigation settlement contingency		8,500		8,500
Other current liabilities		36		27
Total current liabilities		31,731		43,226
Contract liabilities, non-current		1,026		1,026
Loan Payable, non-current		171		2,404
Warrant liability		676		564
Operating lease liability, non-current		5,821		6,131
Other non-current liabilities		471		465
Total non-current liabilities		8,165		10,590
Total liabilities		39,896		53,816
Commitment and Contingencies (Note 12)
Stockholders’ equity:
Common stock, $0.00001 par value; 250,000,000 shares authorized and 94,984,332 issued and outstanding as of March 31, 2023; 250,000,000 shares authorized and 84,441,153 issued and outstanding as of December 31, 2022		1		1
Additional paid-in capital		353,897		342,733
Accumulated deficit		(324,952)		(304,127)
Total stockholders’ equity		28,946		38,607
Total liabilities and stockholders’ equity	$	68,842	$	92,423

MOMENTUS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)

		Three Months Ended March 2023		Three Months Ended March 2022
Cash flows from operating activities:
Net loss	$	(20,825)	$	(26,834)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		229		294
Amortization of debt discount and issuance costs		492		742
Amortization of right-of-use asset		267		322
Change in fair value of warrant liability		112		451
Loss on disposal of property, machinery, equipment and intangible assets		—		70
Stock-based compensation expense		1,720		2,212
Issuance of common stock to non-employees		57		—
Changes in operating assets and liabilities:
Prepaids and other current assets		704		1,447
Other non-current assets		41		(2,685)
Accounts payable		(211)		1,387
Accrued expenses		(1,538)		(273)
Accrued interest		39		13
Other current liabilities		12		14
Contract liabilities		481		100
Lease liability		(282)		(328
Other non-current liabilities		6		6
Net cash used in operating activities		(18,696)		(23,062)

Cash flows from investing activities:
Purchases of property, machinery and equipment		(43)		(290)
Purchases of intangible assets		(9)		(231)
Net cash used in investing activities		(52)		(521)

Cash flows from financing activities:
Proceeds from exercise of stock options		92		48
Repurchase of Section 16 Officer shares for tax coverage exchange		(60)		(59)
Principal payments on loan payable		(3,102)		(927)
Payment of deferred offering costs		(23)		—
Payment for repurchase of common shares		(10,000)		—
Proceeds from issuance of common stock and related warrants		10,000		—
Payments for issuance costs related to common stock and related warrants		(700)		—
Net cash used in financing activities		(3,793)		(938)

Decrease in cash, cash equivalents and restricted cash		(22,541)		(24,521)
Cash, cash equivalents and restricted cash, beginning of period		62,413		160,547
Cash, cash equivalents and restricted cash, end of period	$	39,872	$	136,026

Supplemental disclosure of non-cash investing and financing activities
Purchases of intangibles assets in accounts payable and accrued expenses at period end	$	7	$	—
Deferred offering costs in accounts payable and accrued expenses at period end	$	64	$	—
Stock repurchase liability fair value	$	—	$	6,000

Supplemental disclosure of cash flow information
Cash paid for income taxes	$	—	$	—
Cash paid for interest	$	389	$	750

Reclassifications

Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation. None of the reclassifications have changed the total assets, liabilities, shareholders’ deficit, income, expenses or net losses previously reported.

Use of Non-GAAP Financial Measures (unaudited)

This press release references certain non-GAAP financial measures, including adjusted EBITDA, non-GAAP selling, general, and administrative expense and non-GAAP research and development expense. The Company defines adjusted EBITDA as earnings before interest expense, taxes, depreciation and amortization, stock-based compensation, and certain other items the Company believes are not indicative of its core operating performance. The Company defines non-GAAP selling, general, and administrative expenses and research and development expenses as those respective GAAP amounts, excluding stock-based compensation and non-recurring items not indicative of core operating performance None of these non-GAAP financial measures is a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles in the United States (GAAP) and should not be considered as an alternative to any other performance measures derived in accordance with GAAP.

The Company believes that presenting these non-GAAP financial measures provides useful supplemental information to investors about the Company that is helpful in understanding and evaluating its operating results, enhancing the overall understanding of its past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by its management in financial and operational-decision making. However, there are a number of limitations related to the use of non-GAAP measures and their nearest GAAP equivalents. For example, other companies may calculate non-GAAP measures differently, or may use other measures to calculate their financial performance, and therefore any non-GAAP measures the Company uses may not be directly comparable to similarly titled measures of other companies.

Quarterly adjusted EBITDA

A reconciliation of adjusted EBITDA to net loss for the three months ended March 31, 2023, March 31, 2022, and December 31, 2022, is set forth below:

(in thousands)		Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		Three Months Ended December 31, 2022
Net loss	$	(20,825)	$	(26,834)	$	(24,440)
Income tax expense		—		—		—
Interest income		(555)		—		(489)
Interest expense		920		1,492		1,096
Depreciation & amortization		229		294		259
EBITDA		(20,231)		(25,048)		(23,574)
Increase (decrease) in fair value of warrants		112		451		(1,803)
Realized loss on disposal of assets		—		70		54
Litigation settlement, net		—		(3)		4,500
Prepaid launch deposit impairment		514		—		—
SEC and CFIUS legal expenses		85		795		161
Class action litigation legal expenses		110		795		755
Other non-recurring litigation legal expense		1,219		114		1,004
SEC compliance costs		22		2,135		76
NSA compliance costs		232		978		233
Severance and other non-recurring expenses¹		122		350		—
Stock-based compensation		1,720		2,212		3,044
Adjusted EBITDA	$	(16,095)	$	(17,151)	$	(15,550)

1 – Loss contingencies for certain severance agreements were reversed when the Company determined they would not be signed and paid

A reconciliation of selling, general, and administrative expenses to non-GAAP selling, general, and administrative expenses for the three months ended March 31, 2023, March 31, 2022, and December 31, 2022, is set forth below:

(in thousands)		Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		Three Months Ended December 31, 2022
Selling, general, and administrative expenses	$	10,270	$	14,853	$	10,929
Stock-based compensation		1,244		1,839		2,534
SEC and CFIUS legal expenses		85		795		161
Class action litigation legal expenses		110		795		755
Other non-recurring litigation legal expense		1,219		114		1,004
SEC compliance costs		22		2,135		76
NSA compliance costs		232		978		233
Severance and other non-recurring expenses¹		—		—		—
Non-GAAP selling, general, administration expenses	$	7,358	$	8,197	$	6,166

1 – Loss contingencies for certain severance agreements were reversed when the Company determined they would not be signed and paid

A reconciliation of research and development expenses to non-GAAP research and development expenses for the three months ended March 31, 2023, March 31, 2022, and December 31, 2022, is set forth below:

(in thousands)		Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		Three Months Ended December 31, 2022
Research and development expenses	$	10,119	$	9,971	$	10,283
Prepaid launch deposit impairment		514		—		—
Stock-based compensation		476		373		510
Severance and non-recurring expenses¹		122		350		—
Non-GAAP Research and development expenses	$	9,007	$	9,248	$	9,773