Momentus Reduces Staff by 30 Percent, Plans Reverse Stock Split as Cash Dwindles
In-space transportation provider Momentus said this week it laid off 30 percent of its workforce amid “substantial doubt” about its ability to continue to operate over the next 12 months as the company’s accumulated deficit approached $350 million.
“To date the Company remains heavily focused on growth and continued development of its proprietary technology, as a result of this it has not generated sufficient revenues to provide cash flows that enable the Company to finance its operations internally and the Company’s financial position and operating results raise substantial doubt about the Company’s ability to continue as a going concern,” Momentus said in a regulatory filing with the Securities and Exchange Commission (SEC).
On August 14, Momentus reported $1.7 million in revenue and a net loss of $39.3 million for the second quarter.
“The second quarter marks our first million-dollar quarter with the successful deployment of commercial customers from our Vigoride-6 mission contributing to the recognition of $1.7 million in revenue,” CEO John Rood said in a press release. “We continue to build interest with customers, particularly in the Department of Defense, and we recently signed a contract with the Space Development Agency to tailor our space vehicles for their future use.”
Momentus had only $21.3 million in cash and cash equivalents when the second quarter ended on June 30.
“The Company has been working to raise additional capital while pursuing and evaluating strategic alternatives. To that end, the Company engaged Deutsche Bank as its financial advisor,” Momentus said in its earnings release.
Momentus Second Quarter Results at a Glance
(in thousands of dollars)
| 2023 | 2022 | |
|---|---|---|
| Second Quarter Revenue | $1,705 | $50 |
| Six Months Revenue | $1,727 | $50 |
| Second Quarter Net Loss | $(18,835) | $(22,872) |
| Six Months Net Loss | $(39,660) | $(49,706) |
| Cash and Cash Equivalents (June 30) | $21,298 | $61,094 |
| Accumulated Deficit (June 30) | $(343,787) | $(304,127) |
CFO Eric Williams said the company had laid off 30 percent of its staff in order to reduce expenses. Neither he nor Rood commented on how many employees were let go or how many remain. In its regulatory filing, the company said it laid off 18 employees on July 3.
“The Company may have to implement additional reductions in workforce if the Company is unable to raise additional capital or otherwise fund the operations of the Company,” Momentus said.
The company plans to conduct a reverse stock split in order to raise its share price, Williams said. The split would involve exchanging a number of existing shares for a smaller number of new shares that would have a higher value.
In March, Nasdaq gave Momentus until September 18 to raise its stock price to $1.00 or face being delisted. The company can appeal for an additional 180 days if it is unable to do so by that date. The stock was trading at $0.28 on Friday (August 18).
Momentus said it had an order backlog of $32 million at the end of the second quarter. The company’s primary revenue is from deploying satellites and hosting payloads on its Vigoride Orbital Service Vehicles (OSV). Vigorides have been deployed during SpaceX Transporter rideshare missions.
“Backlog includes signed contracts spanning across 19 companies in 13 countries. Backlog contains firm orders as well as options, which allow customers to opt-in to launches on shorter notice without requiring a separate agreement,” the company said in its SEC filing. “In general, our customers have the right to cancel their contracts with the understanding that they will forfeit their deposits. If a customer cancels a contract before it is required to pay non-refundable deposits, we may not receive revenue from these orders, except for an initial deposit which is paid at the time the contract is signed.”
Momentus said it signed a contract to host payloads for returning customer FOSSA Space Systems beginning in 2024. The company also announced it had received a contract from the Space Development Agency to tailor its Vigoride OSV to support a full range of Department of Defense payloads and missions. The contract’s initial value is $746,073 with an option for an additional $1.2 million to cover additional work.
“The flexibility, payload capacity, and power available on the Vigoride Orbital Service Vehicle (OSV) make it well-positioned to support a range of national security missions like space situational awareness, surveillance, reconnaissance, and other priorities,” Rood said in the earnings release.
Earlier this month, Momentus unveiled its first commercial satellite bus, the M-1000, during the Small Satellite Conference in Utah.
“We’re also proud to continue to build on our flight heritage with our M-1000 satellite bus which is based on the Vigoride OSV and draws on its flight heritage,” Rood added. “The M-1000 bus offers significant advantages to commercial and government customers such as its high power – up to 3 kW of peak power – large payload capacity, flexible configuration, speed from requirements to delivery on-orbit, and low cost. Momentus possesses the capability to manufacture satellite buses like the M-1000 at a rapid and scalable pace.”
Momentus said it submitted a bid to the Space Development Agency to build 50 satellites for the Tranche 2 Transporter Layer Alpha program. The company also submitted a proposal to the Defense Innovation Unit for funding to develop “novel approaches to operationally responsive space.”
MOMENTUS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Service revenue | $ | 1,705 | $ | 50 | $ | 1,727 | $ | 50 | |||||||
| Cost of revenue | 388 | 12 | 388 | 12 | |||||||||||
| Gross profit | 1,317 | 38 | 1,339 | 38 | |||||||||||
| Operating expenses: | |||||||||||||||
| Research and development expenses | 10,204 | 10,896 | 20,323 | 20,867 | |||||||||||
| Selling, general and administrative expenses | 10,007 | 12,861 | 20,277 | 27,714 | |||||||||||
| Total operating expenses | 20,211 | 23,757 | 40,600 | 48,581 | |||||||||||
| Loss from operations | (18,894) | (23,719) | (39,261) | (48,543) | |||||||||||
| Other income (expense): | |||||||||||||||
| Change in fair value of warrant liability | 451 | 2,254 | 338 | 1,803 | |||||||||||
| Realized loss on disposal of asset | (17) | 1 | (17) | (69) | |||||||||||
| Interest income | 357 | 5 | 912 | 5 | |||||||||||
| Interest expense | (732) | (1,413) | (1,652) | (2,905) | |||||||||||
| Litigation settlement, net | — | — | — | 3 | |||||||||||
| Other income | — | — | 20 | — | |||||||||||
| Total other income (expense) | 59 | 847 | (399) | (1,163) | |||||||||||
| Net loss | $ | (18,835) | $ | (22,872) | $ | (39,660) | $ | (49,706) | |||||||
| Net loss per share, basic | $ | (0.20) | $ | (0.28) | $ | (0.43) | $ | (0.62) | |||||||
| Net loss per share, fully diluted | $ | (0.20) | $ | (0.28) | $ | (0.43) | $ | (0.62) | |||||||
| Weighted average shares outstanding, basic | 95,978,588 | 81,319,533 | 91,791,957 | 80,642,670 | |||||||||||
| Weighted average shares outstanding, fully diluted | 95,978,588 | 81,319,533 | 91,791,957 | 80,642,670 | |||||||||||
| June 30, 2023 | December 31, 2022 | ||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 21,298 | $ | 61,094 | |||
| Restricted cash, current | 488 | 1,007 | |||||
| Accounts receivable | 434 | — | |||||
| Insurance receivable | 4,000 | 4,000 | |||||
| Prepaids and other current assets | 6,771 | 10,173 | |||||
| Total current assets | 32,991 | 76,274 | |||||
| Property, machinery and equipment, net | 3,605 | 4,016 | |||||
| Intangible assets, net | 335 | 337 | |||||
| Operating right-of-use asset | 5,903 | 6,441 | |||||
| Deferred offering costs | 468 | 331 | |||||
| Restricted cash, non-current | 366 | 312 | |||||
| Other non-current assets | 5,048 | 4,712 | |||||
| Total assets | $ | 48,716 | $ | 92,423 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Accounts payable | $ | 2,498 | $ | 2,239 | |||
| Accrued liabilities | 6,785 | 8,026 | |||||
| Loan payable, current | 8,702 | 11,627 | |||||
| Contract liabilities, current | 1,237 | 1,654 | |||||
| Operating lease liability, current | 1,210 | 1,153 | |||||
| Stock repurchase liability | — | 10,000 | |||||
| Litigation settlement contingency | 8,500 | 8,500 | |||||
| Other current liabilities | 24 | 27 | |||||
| Total current liabilities | 28,956 | 43,226 | |||||
| Contract liabilities, non-current | 794 | 1,026 | |||||
| Loan Payable, non-current | — | 2,404 | |||||
| Warrant liability | 226 | 564 | |||||
| Operating lease liability, non-current | 5,506 | 6,131 | |||||
| Other non-current liabilities | 477 | 465 | |||||
| Total non-current liabilities | 7,003 | 10,590 | |||||
| Total liabilities | 35,959 | 53,816 | |||||
| Commitments and Contingencies (Note 12) | |||||||
| Stockholders’ equity: | |||||||
| Common stock, $0.00001 par value; 250,000,000 shares authorized and 97,865,351 issued and outstanding as of June 30, 2023; 250,000,000 shares authorized and 84,441,153 issued and outstanding as of December 31, 2022 | 1 | 1 | |||||
| Additional paid-in capital | 356,543 | 342,733 | |||||
| Accumulated deficit | (343,787) | (304,127) | |||||
| Total stockholders’ equity | 12,757 | 38,607 | |||||
| Total liabilities and stockholders’ equity | $ | 48,716 | $ | 92,423 | |||
MOMENTUS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
MOMENTUS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
| Six Months Ended June 30, | |||||||
| 2023 | 2022 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (39,660) | $ | (49,706) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
| Depreciation and amortization | 452 | 578 | |||||
| Amortization of debt discount and issuance costs | 890 | 1,462 | |||||
| Amortization of right-of-use asset | 537 | 613 | |||||
| Change in fair value of warrant liability | (338) | (1,803) | |||||
| Loss on disposal of property, machinery, equipment and intangible assets | 17 | 69 | |||||
| Stock-based compensation expense | 4,297 | 5,247 | |||||
| Non-cash consulting expense | 112 | — | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivables | (434) | — | |||||
| Prepaids and other current assets | 3,401 | 1,914 | |||||
| Other non-current assets | (337) | (585) | |||||
| Accounts payable | 258 | (742) | |||||
| Accrued liabilities | (1,298) | (2,555) | |||||
| Accrued interest | 79 | 53 | |||||
| Other current liabilities | 1 | (6) | |||||
| Contract liabilities | (648) | 133 | |||||
| Lease liability | (569 | (626) | |||||
| Other non-current liabilities | 12 | 11 | |||||
| Net cash used in operating activities | (33,228) | (45,943) | |||||
| Cash flows from investing activities: | |||||||
| Purchases of property, machinery and equipment | (53) | (488) | |||||
| Proceeds from sale of property, machinery and equipment | 63 | 7 | |||||
| Purchases of intangible assets | (25) | (464) | |||||
| Net cash used in investing activities | (15) | (945) | |||||
| Cash flows from financing activities: | |||||||
| Proceeds from exercise of stock options | 130 | 393 | |||||
| Proceeds from employee stock purchase plan | 31 | 190 | |||||
| Repurchase of Section 16 Officer shares for tax coverage exchange | (60) | (97) | |||||
| Principal payments on loan payable | (6,298) | (3,763) | |||||
| Payment of deferred offering costs | (121) | — | |||||
| 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 | (7,018) | (3,277) | |||||
| Decrease in cash, cash equivalents and restricted cash | (40,261) | (50,165) | |||||
| Cash, cash equivalents and restricted cash, beginning of period | 62,413 | 160,547 | |||||
| Cash, cash equivalents and restricted cash, end of period | $ | 22,152 | $ | 110,382 | |||
| Supplemental disclosure of non-cash investing and financing activities | |||||||
| Purchases of property, machinery and equipment in accounts payable and | $ | 41 | $ | — | |||
| Deferred offering costs in accounts payable and accrued expenses at period | $ | 16 | $ | — | |||
| Stock repurchase liability fair value | $ | — | $ | 5,780 | |||
| Supplemental disclosure of cash flow information | |||||||
| Cash paid for interest | $ | 684 | $ | 1,392 | |||
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