Momentus (US:MNTS)2022-08-11 20:57Part I - Financial Information Unaudited Financial Statements Unaudited financial statements for the period ending June 30, 2022, reflect the inaugural mission and business combination Condensed Consolidated Balance Sheets Total assets decreased to $133.8 million due to cash reduction, with stockholders' equity falling to $82.2 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 (unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $109,052 | $160,036 | | Total current assets | $117,574 | $169,664 | | Total assets | $133,774 | $185,825 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $30,704 | $38,867 | | Total liabilities | $51,569 | $53,937 | | Total stockholders' equity | $82,205 | $131,888 | Condensed Consolidated Statements of Operations The company recognized its first revenue of $50 thousand and reported a net loss of $22.9 million for Q2 2022 Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Service revenue | $50 | $— | $50 | $130 | | Gross margin | $38 | $— | $38 | $82 | | Loss from operations | $(23,719) | $(30,534) | $(48,543) | $(54,363) | | Net (loss) income | $(22,872) | $64,327 | $(49,706) | $128,998 | | Net (loss) income per share, basic | $(0.28) | $1.25 | $(0.62) | $2.36 | Condensed Consolidated Statements of Stockholders' Equity (Deficit) Stockholders' equity declined to $82.2 million, primarily driven by a net loss of $49.7 million for the period Changes in Stockholders' Equity (in thousands) | Description | Six Months Ended June 30, 2022 | | :--- | :--- | | Balance, December 31, 2021 | $131,888 | | Net loss | $(49,706) | | Stock-based compensation | $5,317 | | Other (stock issuance/repurchase) | $466 | | Balance, June 30, 2022 | $82,205 | Condensed Consolidated Statements of Cash Flows Net cash used in operations was $45.9 million, contributing to a total cash decrease of $50.2 million Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(45,943) | $(44,077) | | Net cash used in investing activities | $(945) | $(2,187) | | Net cash (used in) provided by financing activities | $(3,277) | $55,713 | | (Decrease) Increase in cash | $(50,165) | $9,449 | Notes to the Condensed Consolidated Financial Statements Notes detail the Vigoride 3 mission anomalies, legal proceedings, and the National Security Agreement - The inaugural Vigoride 3 mission launched on May 25, 2022, but experienced anomalies with its deployable solar arrays, resulting in low power and communication issues; as of July 29, 2022, 7 of 10 customer satellites had been deployed242530 - The company recognized its first service revenue of $50,000 in Q2 2022 from a completed performance obligation on the May mission; due to mission anomalies, related deposits of $133,000 were recorded as deferred revenue73 - The company is subject to several legal proceedings, including a consolidated securities class action lawsuit, a shareholder derivative action, and litigation from a SAFE note investor; it also settled with the SEC for a $7.0 million penalty187191201 - A National Security Agreement (NSA) with CFIUS led to the divestment of the co-founders' equity for up to $50 million; $40 million was paid following the Business Combination, with a potential $10 million contingent payment remaining, for which a $5.8 million liability is recorded150151153 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the inaugural mission's results, financial performance, and liquidity challenges Overview The inaugural Vigoride 3 mission experienced anomalies but deployed several satellites; backlog stands at $55 million - Launched its first demonstration flight of the Vigoride spacecraft (Vigoride 3) on May 25, 2022212 - The Vigoride spacecraft experienced anomalies with its deployable solar arrays, causing low power and communication problems, which has substantially declined confidence in performing all planned operations for this mission213214219 - As of July 29, 2022, Momentus has deployed a total of seven customer satellites: six from Vigoride 3 and one from a third-party deployer system218 - The company has signed contracts for approximately $55 million in backlog as of July 31, 2022, spanning 22 companies in 16 countries211 Results of Operations The company generated its first revenue in Q2 2022 but recorded a net loss of $22.9 million amid rising SG&A costs Comparison of Q2 2022 vs. Q2 2021 (in thousands) | Metric | Q2 2022 | Q2 2021 | $ Change | | :--- | :--- | :--- | :--- | | Service revenue | $50 | $— | $50 | | Research and development expenses | $10,896 | $20,794 | $(9,898) | | Selling, general and administrative expenses | $12,861 | $9,740 | $3,121 | | Operating loss | $(23,719) | $(30,534) | $6,815 | | Net (loss) income | $(22,872) | $64,327 | $(87,199) | - The decrease in Q2 2022 R&D expenses was primarily due to a one-time $8.7 million impairment of prepaid launch deposits in Q2 2021303 - The increase in Q2 2022 SG&A expenses was driven by higher payroll ($0.9M), insurance ($0.7M), and other corporate costs ($0.8M) associated with being a public company304 Liquidity and Capital Resources The company holds $109.1 million in cash, which management believes is sufficient for the next 12 months - The company's principal source of liquidity is its cash and cash equivalents, which amounted to $109.1 million as of June 30, 2022325 Historical Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in Operating activities | $(45,943) | $(44,077) | | Net cash used in Investing activities | $(945) | $(2,187) | | Net cash (used in) provided by Financing activities | $(3,277) | $55,713 | - Management expects current cash and projected gross profit will fund operations for more than 12 months, but notes that changing circumstances could require additional equity or debt financing332333 Quantitative and Qualitative Disclosures About Market Risk Primary market risks from interest rates and foreign currency are considered minimal - Interest rate risk is low, as cash is held in short-term, highly liquid investments and the company's Term Loan has a fixed interest rate370371 - Foreign currency risk is not material because a significant portion of cash receipts and expenses are generated in U.S. dollars372 Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes identified - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2022375 - There were no material changes to the company's internal control over financial reporting during the fiscal quarter ended June 30, 2022376 Part II - Other Information Legal Proceedings The company faces multiple legal proceedings, including a class action and a lawsuit from a SAFE note investor - The company is defending against a consolidated putative class action lawsuit alleging violations of securities laws related to disclosures for the Business Combination186187 - A shareholder derivative action was filed in June 2022, and a shareholder Section 220 litigation was filed to inspect books and records, both related to the de-SPAC merger200201 - In July 2022, a SAFE note investor filed a lawsuit claiming fraudulent inducement and breach of contract, seeking damages exceeding $7.6 million202 Risk Factors Key risks include mission failures, dependency on government licenses, ongoing losses, and an eroding backlog - The inaugural Vigoride mission experienced anomalies with its communication and power systems, preventing it from completing all objectives and fully validating its technology, which could harm the company's reputation379384 - The business is dependent on receiving required governmental licenses and approvals (e.g., from FAA, FCC), and there is no assurance these will be granted in a timely manner or at all385387 - The company has a history of significant losses, including an operating loss of $99.8 million in 2021, and expects to incur future losses; the backlog has eroded from $86 million to $55 million and may not convert to revenue388393 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported during the period - None reported for the period400 Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None reported401 Mine Safety Disclosures This section is not applicable to the company's operations - None reported402 Other Information No other information was required to be disclosed for the period - None reported403 Exhibits This section lists all exhibits filed with the Form 10-Q, including merger agreements and certifications - Key exhibits filed include the Merger Agreement and certifications required under Sections 302 and 906 of the Sarbanes-Oxley Act404