Momentus (MNTS) - 2023 Q3 - Quarterly Report

Part I - Financial Information This section presents Momentus Inc.'s unaudited financial statements and management's analysis of financial condition and results Item 1. Unaudited Condensed Consolidated Financial Statements Momentus Inc.'s unaudited financial statements reveal decreased cash, net losses, and going concern doubts, alongside capital raises and a reverse stock split Condensed Consolidated Balance Sheets The condensed consolidated balance sheets reflect significant decreases in cash, total assets, and liabilities, with stockholders' equity also declining Condensed Consolidated Balance Sheets (in thousands) | ASSETS (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Cash and cash equivalents | $9,750 | $61,094 | | Total current assets | $21,157 | $76,274 | | Total assets | $33,489 | $92,423 | | LIABILITIES (in thousands) | | | | Total current liabilities | $23,102 | $43,226 | | Total liabilities | $29,197 | $53,816 | | STOCKHOLDERS' EQUITY (in thousands) | | | | Total stockholders' equity | $4,292 | $38,607 | - Cash and cash equivalents decreased significantly from $61.1 million at December 31, 2022, to $9.8 million at September 30, 2023[14] - Total assets declined from $92.4 million to $33.5 million, while total liabilities decreased from $53.8 million to $29.2 million over the same period[14] Condensed Consolidated Statements of Operations The condensed consolidated statements of operations show increased service revenue and gross profit, reduced expenses, and a decreased net loss Condensed Consolidated Statements of Operations (in thousands, except per share data) | (in thousands, except per share data) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Service revenue | $339 | $129 | $2,066 | $179 | | Gross profit | $220 | $115 | $1,559 | $153 | | Research and development expenses | $5,992 | $10,571 | $26,315 | $31,438 | | Selling, general and administrative expenses | $9,294 | $11,184 | $29,571 | $38,898 | | Loss from operations | $(15,066) | $(21,640) | $(54,327) | $(70,183) | | Net loss | $(15,159) | $(21,298) | $(54,819) | $(71,004) | | Net loss per share, basic and diluted | $(7.20) | $(12.98) | $(28.45) | $(43.77) | - Service revenue increased significantly for both the three-month period (163% YoY) and nine-month period (1054% YoY) ending September 30, 2023[16] - Net loss decreased by 29% for the three months ended September 30, 2023, and by 23% for the nine months ended September 30, 2023, compared to the same periods in the prior year[16] Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased significantly due to net losses, partially offset by capital raised through common stock and warrant issuances Changes in Stockholders' Equity (in thousands) | Item | Balance, Dec 31, 2022 | Balance, Sep 30, 2023 | | :-------------------------------------------- | :-------------------- | :-------------------- | | Total stockholders' equity | $38,607 | $4,292 | | Additional paid-in capital | $342,734 | $363,238 | | Accumulated deficit | $(304,127) | $(358,946) | | Net loss (Nine Months Ended Sep 30, 2023) | N/A | $(54,819) | | Issuance of common stock and related warrants | N/A | $13,865 | - Total stockholders' equity decreased from $38.6 million at December 31, 2022, to $4.3 million at September 30, 2023, primarily due to net losses[18] - The company issued common stock and related warrants in registered offerings, contributing $9.3 million (March 31, 2023) and $4.6 million (September 30, 2023) to additional paid-in capital[18] Condensed Consolidated Statements of Cash Flows The condensed consolidated statements of cash flows reflect decreased net cash used in operating activities, but an overall substantial decrease in total cash and equivalents Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(45,987) | $(71,495) | | Net cash used in investing activities | $(7) | $(641) | | Net cash used in financing activities | $(5,905) | $(6,244) | | Decrease in cash, cash equivalents and restricted cash | $(51,899) | $(78,380) | | Cash, cash equivalents and restricted cash, end of period | $10,514 | $82,167 | - Net cash used in operating activities decreased by 35.7% from $71.5 million in 2022 to $46.0 million in 2023 for the nine months ended September 30[21] - The company's total cash, cash equivalents, and restricted cash significantly decreased from $82.2 million at September 30, 2022, to $10.5 million at September 30, 2023[21] Notes to the Condensed Consolidated Financial Statements Detailed notes to the condensed consolidated financial statements cover operations, accounting policies, and specific financial items including assets, liabilities, equity, and subsequent events Note 1. Nature of Operations Momentus Inc. provides satellite buses and in-space services, but faces significant financial challenges and going concern doubts due to net losses and insufficient cash - Momentus offers satellite buses and in-space infrastructure services, including in-space transportation, hosted payloads, and in-orbit services, powered by its water plasma-based propulsion system[22] - The company has successfully launched Vigoride 3, 5, and 6 OSVs, deploying a total of 20 customer satellites and testing its Microwave Electrothermal Thruster (MET) and Tape Spring Solar Array (TASSA) technologies[23][24][25][26][27][28][29][30][31] - Momentus is developing the M-1000 satellite bus, which shares commonality with Vigoride, and is pursuing U.S. Department of Defense contracts, including a bid for the Tranche 2 Tracking Layer[32][33][34] - The company's financial position, marked by net losses of $15.2 million (Q3 2023) and $54.8 million (YTD Q3 2023), an accumulated deficit of $358.9 million, and $9.7 million in cash, raises substantial doubt about its ability to continue as a going concern, requiring significant additional capital[39][40][42] - Effective August 22, 2023, the company completed a 1-for-50 reverse stock split of its Class A common stock[45] Note 2. Summary of Significant Accounting Policies This note outlines Momentus Inc.'s significant accounting policies, including GAAP, consolidation, estimates, revenue recognition, warrants, stock-based compensation, and segment reporting - The company prepares its unaudited interim condensed consolidated financial statements in accordance with GAAP and SEC rules, with certain information condensed or omitted[48] - Revenue for transportation services is recognized at a point in time upon payload delivery, while in-orbit services revenue is recognized ratably over time[65][66] - Warrants are classified as derivative liabilities (Level 3 fair value hierarchy) or equity, with changes in fair value recognized in the statements of operations for liabilities[71][75][79][80][82] - Stock-based compensation is recognized based on grant date fair values using the Black-Scholes Merton Option Pricing model for options and ESPP, and closing stock price for RSUs[86][87] - The company operates as one operating and reportable segment, providing in-space transportation services[101][102] Note 3. Prepaids and Other Current Assets Prepaids and other current assets, primarily prepaid launch costs, R&D, and insurance, totaled $10.5 million as of September 30, 2023, a slight increase from $10.2 million at December 31, 2022 Prepaids and Other Current Assets (in thousands) | (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :------------------------ | :----------- | :----------- | | Prepaid launch costs, current | $4,493 | $3,000 | | Prepaid research and development | $2,377 | $2,841 | | Prepaid insurance and other assets | $3,599 | $4,332 | | Total | $10,469 | $10,173 | - Non-current prepaid launch costs decreased from $4.4 million at December 31, 2022, to $1.9 million at September 30, 2023[104] Note 4. Property, Machinery and Equipment, net Net property, machinery, and equipment decreased to $3.4 million as of September 30, 2023, from $4.0 million at December 31, 2022, primarily due to accumulated depreciation Property, Machinery and Equipment, net (in thousands) | (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :------------------------------ | :----------- | :----------- | | Property, machinery and equipment, gross | $5,702 | $5,808 | | Less: accumulated depreciation | $(2,349) | $(1,792) | | Property, machinery and equipment, net | $3,353 | $4,016 | - Depreciation expense for property, machinery, and equipment was $0.6 million for the nine months ended September 30, 2023, down from $0.7 million in the prior year period[105] Note 5. Intangible Assets, net Net intangible assets, primarily patents, were $0.329 million as of September 30, 2023, slightly down from $0.337 million at December 31, 2022, with a weighted-average remaining amortization period of 6.4 years Intangible Assets, net (in thousands) | (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :------------------------ | :----------- | :----------- | | Patents/Intellectual Property, Gross Value | $492 | $461 | | Accumulated Amortization | $(163) | $(124) | | Net Value | $329 | $337 | | Weighted Average Remaining Amortization Period (In Years) | 6.4 | 7.0 | - Amortization expense for intangible assets was $0.04 million for the nine months ended September 30, 2023, a decrease from $0.10 million in the prior year period[106] Note 6. Leases The company leases office space under non-cancellable operating leases, with total lease expense of $1.5 million for the nine months ended September 30, 2023, and a weighted-average remaining lease term of 4.4 years Operating Lease Expense (in thousands) | (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Operating lease cost | $368 | $385 | $1,103 | $1,229 | | Variable lease expense | $136 | $138 | $394 | $429 | | Total lease expense | $504 | $544 | $1,497 | $1,680 | Maturities of Operating Lease Liabilities (in thousands) | (in thousands) | Amount | | :------------------ | :----- | | Remainder of 2023 | $383 | | 2024 | $1,580 | | 2025 | $1,627 | | 2026 | $1,674 | | 2027 | $1,729 | | Thereafter | $298 | | Total lease payments | $7,291 | | Less: Imputed interest | $(865) | | Present value of lease liabilities | $6,426 | Note 7. Accrued Liabilities Accrued liabilities totaled $7.4 million as of September 30, 2023, a decrease from $8.0 million at December 31, 2022, primarily comprising legal, professional services, and compensation expense Accrued Liabilities (in thousands) | (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :------------------------------ | :----------- | :----------- | | Legal and other professional services | $3,882 | $3,128 | | Compensation expense | $2,947 | $3,584 | | Research and development projects | $451 | $981 | | Other accrued liabilities | $142 | $333 | | Total | $7,422 | $8,026 | Note 8. Loan Payable The Term Loan had $5.7 million gross payable as of September 30, 2023, maturing by February 28, 2024, with an effective interest rate of 28.2% after an extended repayment schedule - The Term Loan provides up to $40.0 million in borrowing capacity at an annual interest rate of 12%, with $25.0 million borrowed at inception[113] - The principal repayment schedule was extended to two years, ending February 28, 2024, resulting in a recalculated effective interest rate of 28.2%[114][116] - As of September 30, 2023, the total loan payable was $5.7 million, with future scheduled maturities of $3.4 million for the remainder of 2023 and $2.3 million for 2024[117] Note 9. Stockholders' Equity This note details changes in stockholders' equity, including a 1-for-50 reverse stock split and September ($5.0 million) and February ($10.0 million) 2023 securities offerings, with proceeds from the latter used for a co-founder stock repurchase liability - A 1-for-50 reverse stock split of Class A common stock was approved and became effective on August 22, 2023[118][119] - In September 2023, the company raised approximately $5.0 million gross proceeds from a registered offering of 210,000 shares of Class A common stock, pre-funded warrants, and Series A and B warrants[121][123] - In February 2023, the company raised approximately $10.0 million gross proceeds from a registered offering of 187,920 shares of Class A common stock, pre-funded warrants, and Class A warrants, with proceeds used to satisfy a $10.0 million co-founder stock repurchase liability[128][130][135] - As of September 30, 2023, the company had public and private warrants outstanding to purchase 172,500 and 225,450 shares, respectively, from the Business Combination, and additional warrants from the February and September 2023 offerings[136][138] - The fair value of private warrants assumed from the Business Combination decreased by $0.2 million and $0.6 million for the three and nine months ended September 30, 2023, respectively[139] Note 10. Stock-based Compensation Momentus Inc. maintains several stock incentive plans, with total stock-based compensation expense of $6.5 million for the nine months ended September 30, 2023, primarily from RSUs and RSAs - The 2021 Equity Incentive Plan and 2021 Employee Stock Purchase Plan include evergreen provisions for increasing available shares[146][147] Stock-based Compensation Expense by Type (in thousands) | (in thousands) | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :---------------------------------- | :------------------------------ | :----------------------------- | | Research and development expenses | $472 | $1,629 | | Selling, general and administrative expenses | $1,684 | $4,824 | | Total | $2,156 | $6,453 | Stock-based Compensation Expense by Award Type (in thousands) | (in thousands) | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :------------- | :------------------------------ | :----------------------------- | | Options | $81 | $269 | | RSUs & RSAs | $2,068 | $6,167 | | ESPP | $7 | $17 | | Performance Awards | $0 | $0 | | Total | $2,156 | $6,453 | - As of September 30, 2023, unrecognized compensation cost for unvested options was $0.4 million (expected over 1.2 years) and for unvested RSUs was $17.6 million (expected over 1.6 years)[151][154] Note 11. Diluted Earnings Per Share Due to net losses, all potential common shares (options, unvested stock units, warrants, and contingent Sponsor Earnout Shares) were excluded from diluted EPS calculations as their effect would be anti-dilutive Potential Common Shares Excluded from Diluted EPS (Anti-Dilutive) | (in thousands) | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2023 | | :---------------------------------- | :------------------------------ | :----------------------------- | | Options and unvested stock units outstanding | 296,861 | 235,736 | | Warrants outstanding | 629,271 | 629,271 | | Contingent Sponsor Earnout Shares | 28,750 | 28,750 | | Total | 954,882 | 893,757 | - The company incurred a net loss for both periods, rendering all potential common shares anti-dilutive and thus excluded from diluted EPS calculations[160] Note 12. Commitments and Contingencies Momentus Inc. faces various legal proceedings, including an $8.5 million securities class action settlement, an NSA requiring co-founder divestment and a $10.0 million payment, and ongoing shareholder, SAFE note, and founder litigation Future Unconditional Purchase Obligations (in thousands) | (in thousands) | Amount | | :---------------- | :----- | | Remainder of 2023 | $15,226 | | 2024 | $600 | | Total | $15,826 | - The company reached an agreement in principle to settle Securities Class Actions for $8.5 million, with $5.0 million deposited in escrow as of September 30, 2023, and $4.0 million expected from insurance proceeds[165][166][169] - The National Security Agreement (NSA) required co-founders to divest their equity interests, leading to a $10.0 million payment in Q1 2023[171][172] - Momentus is actively defending against multiple shareholder derivative actions, SAFE Note litigation, and founder litigation, incurring significant legal expenses[176][177][178][180][182][185][187][192] - Legal expenses related to CFIUS and SEC matters were $0.3 million for the nine months ended September 30, 2023, a decrease from $1.6 million in the prior year[174] Note 13. Income Taxes The company's effective tax rate was zero percent for the three and nine months ended September 30, 2023 and 2022, primarily due to non-deductible items and a full valuation allowance against deferred tax assets - The effective tax rate was zero percent for the three and nine months ended September 30, 2023 and 2022[198] - The difference from the federal statutory rate of 21% is mainly due to non-deductible items, state/local taxes, and a full valuation allowance for deferred tax assets[198] Note 14. Subsequent Events Subsequent to September 30, 2023, Momentus Inc. completed an October 2023 offering raising $4.0 million and a November 2023 warrant inducement generating $6.5 million, while also amending existing warrants and making settlement payments - On October 2, 2023, the company entered an agreement to sell 290,000 shares of Class A common stock at $2.00 per share, raising approximately $4.0 million gross proceeds, and issued pre-funded and new warrants[199][200] - Existing Series A, Series B, and February Class A Warrants were amended to reduce their exercise price to $2.00 per share and extend their termination date to October 4, 2028[201] - On November 7, 2023, a warrant inducement agreement led to the issuance of new warrants for 5,808,538 shares and the exercise of existing warrants, generating approximately $6.5 million in gross proceeds[205][206] - Post-period, the company paid $1.0 million into the Securities Class Action escrow account, and an insurance carrier paid an additional $0.5 million, reducing the contingency to $3.5 million[203] - On October 18, 2023, Momentus paid Lev Khasis $0.1 million related to Founder Litigation legal expenses[204] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Momentus Inc.'s financial condition and operations, highlighting commercial space services and technology, while acknowledging substantial net losses, cash burn, going concern doubts, and recent capital raises and a reverse stock split Overview This overview describes Momentus Inc.'s business model, focusing on satellite buses, transportation, and infrastructure services for commercial and government space missions, driven by decreasing launch costs and smaller satellites, while acknowledging the dependence on successful technology commercialization - Momentus offers satellite buses, transportation, and infrastructure services for commercial and U.S. government space missions, focusing on 'last mile' satellite transportation using Orbital Service Vehicles (OSVs)[212][214] - The company's services are enabled by decreasing launch costs and smaller, lower-cost satellites, driving growth in the commercial space market[216][217] - Momentus has launched Vigoride 5 and 6 OSVs, successfully testing the Microwave Electrothermal Thruster (MET) and Tape Spring Solar Array (TASSA) technologies[221][222][223][224][225][226] - The company's ability to execute its business plan depends on the continued development and successful commercialization of its technologies, with no assurance of full commercial viability[227] Services Overview Momentus plans to provide space transportation using a hub-and-spoke model, hosted payload services, and in-orbit servicing with future reusable vehicles, also offering the M-1000 satellite bus - Momentus plans to provide space transportation using a hub-and-spoke model, hosted payload services for modular satellite systems, and in-orbit servicing (inspection, refueling, maintenance) with future reusable vehicles[228][229][230][231][232] - The company also offers the M-1000 satellite bus, a modified version of the Vigoride OSV, to commercial and government customers[233] Factors Affecting Our Performance Key factors affecting performance include R&D objectives for in-space transfer and propulsion, future Vigoride missions subject to approvals, the pursuit of reusable vehicles, cancellable customer contracts, and backlog variations not indicative of future revenues - Primary R&D objectives focus on developing in-space transfer and service vehicles and water plasma propulsion technology, with Vigoride intended for low-earth orbit transportation of small satellites[235][236] - Future Vigoride missions are planned through the end of 2024, but are subject to licenses, government approvals, and successful spacecraft preparation[237][238][241] - The company aims for reusable vehicles by 2025, leveraging water as a propellant for cost-effectiveness and environmental benefits, but this requires significant R&D[239] - Customer contracts are cancellable, and revenue realization depends on timely regulatory approvals and successful mission execution, with early missions being demonstration-focused and offered at discounts[244][246][247] - Backlog is subject to large variations and may not be indicative of future revenues due to factors like mission scheduling and customer economic viability[248] Recent Developments Recent developments include September and February 2023 securities offerings raising $5.0 million and $10.0 million respectively, a 1-for-50 reverse stock split, the appointment of a new CFO, and legal expenses related to CFIUS and SEC matters - In September 2023, Momentus sold 210,000 shares of Class A common stock and warrants for approximately $5.0 million gross proceeds, and amended February Class A Warrants[249][250] - A 1-for-50 reverse stock split of Class A common stock became effective on August 22, 2023[252] - In February 2023, the company sold 187,920 shares of Class A common stock and warrants for approximately $10.0 million gross proceeds, used to satisfy stock repurchase obligations[253] - Eric Williams was appointed permanent Chief Financial Officer and principal accounting officer on April 5, 2023[255] - The company incurred legal expenses of $0.3 million for the nine months ended September 30, 2023, related to CFIUS and SEC matters[258] Components of Results of Operations This section outlines the components of Momentus Inc.'s results of operations, including service revenue recognition, cost of revenue, R&D, SG&A expenses, and other income/expense items like warrant liability changes and interest - Service revenue is recognized upon satisfaction of performance obligations (payload delivery) or contract cancellation, or ratably over time for in-orbit services[262][265] - Cost of revenue includes orbital service vehicle and third-party launch costs; currently, OSV costs are expensed as R&D until design is completed for production[266] - Research and development expenses cover activities for developing existing and future vehicle technologies, including equipment, materials, labor, and launch costs for Vigoride testing[267][268] - Selling, general and administrative expenses include human capital, facilities, professional fees, and public company operating costs, including NSA compliance[269][270] - Other income/expense items include changes in fair value of warrant liability, interest income/expense, and non-recurring fees[271][272][273][274] Results of Operations This section compares Momentus Inc.'s financial results, highlighting significant increases in service revenue and gross profit, alongside decreases in R&D and SG&A expenses, leading to a reduced net loss Comparison of Financial Results (in thousands) | (in thousands) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | $ Change | % Change | | :------------- | :------------------------------ | :------------------------------ | :------- | :------- | | Service revenue | $339 | $129 | $210 | 163% | | Gross profit | $220 | $115 | $105 | 91% | | R&D expenses | $5,992 | $10,571 | $(4,579) | (43%) | | SG&A expenses | $9,294 | $11,184 | $(1,890) | (17%) | | Net loss | $(15,159) | $(21,298) | $6,139 | (29%) | | (in thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | $ Change | % Change | | :------------- | :----------------------------- | :----------------------------- | :------- | :------- | | Service revenue | $2,066 | $179 | $1,887 | 1054% | | Gross profit | $1,559 | $153 | $1,406 | 919% | | R&D expenses | $26,315 | $31,438 | $(5,123) | (16%) | | SG&A expenses | $29,571 | $38,898 | $(9,327) | (24%) | | Net loss | $(54,819) | $(71,004) | $16,185 | (23%) | - Service revenue for the three months ended September 30, 2023, was $0.3 million, primarily from Vigoride 5 hosted payload mission fulfillment[280] - Research and development expenses decreased by $4.6 million (43%) for the three months and $5.1 million (16%) for the nine months ended September 30, 2023, driven by reduced payroll, materials, and allocated IT/facilities costs[283][295] - Selling, general and administrative expenses decreased by $1.9 million (17%) for the three months and $9.3 million (24%) for the nine months ended September 30, 2023, due to lower payroll, NSA/legal services, and professional fees[284][285][296] - Interest income significantly increased to $0.2 million (Q3 2023) and $1.1 million (YTD Q3 2023) due to investments in money market funds amid rising interest rates[288][299] Liquidity and Capital Resources This section addresses Momentus Inc.'s liquidity and capital resources, emphasizing substantial doubt about its ability to continue as a going concern due to net losses, accumulated deficit, and low cash, necessitating significant additional capital raises - The company's ability to continue as a going concern is in substantial doubt due to net losses ($54.8 million YTD Q3 2023), accumulated deficit ($358.9 million), and low cash and cash equivalents ($9.7 million)[304][305] - Net cash used in operating activities for the nine months ended September 30, 2023, was $46.0 million, primarily for headcount, R&D, and legal/professional fees[309] - Net cash used in financing activities was $5.9 million for the nine months ended September 30, 2023, driven by loan repayments and stock repurchase liability payments, partially offset by proceeds from securities offerings[313] - The company expects continued cash consumption and will need to raise substantial additional capital through equity or debt financings, which may not be available on favorable terms or at all[305][306][315] Critical Accounting Policies and Estimates Key critical accounting policies include revenue recognition, loss contingencies, deferred fulfillment and prepaid launch costs, contract liabilities, stock-based compensation, and income taxes, requiring significant judgment in estimates like fair value and valuation allowances - Key critical accounting policies include revenue recognition (point-in-time for transportation, ratably over time for in-orbit services), loss contingencies, deferred fulfillment and prepaid launch costs, contract liabilities, stock-based compensation, and income taxes[322][323][325][326][328][329][330][331][335] - Significant judgment is required in estimating loss contingencies, fair value of stock-based payments (using Black-Scholes-Merton model), and determining valuation allowances against deferred tax assets[328][333][336] Item 3. Quantitative and Qualitative Disclosures About Market Risk Momentus Inc. faces market risks, primarily interest rate and foreign currency, but these are mitigated by short-term, low-risk investments, a fixed-rate Term Loan, and predominantly U.S. dollar transactions - The company's cash and cash equivalents ($9.7 million as of September 30, 2023) are primarily invested in highly liquid, short-term instruments, limiting exposure to interest rate fluctuations[342] - The Term Loan bears a fixed interest rate, making it unaffected by changes in market interest rates[343] - Foreign currency risk is not material, as a significant portion of cash receipts and expenses are in U.S. dollars[344] Item 4. Controls and Procedures Management evaluated Momentus Inc.'s disclosure controls and procedures as effective at a reasonable assurance level as of September 30, 2023, with no material changes in internal control over financial reporting during the quarter - As of September 30, 2023, the company's disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level[347] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended September 30, 2023[348] Part II - Other Information This section provides other information, including legal proceedings, risk factors, equity sales, defaults, mine safety disclosures, and exhibits, supplementing the financial statements Item 1. Legal Proceedings This section incorporates by reference detailed disclosures from Note 12 regarding Momentus Inc.'s legal proceedings, including securities class actions, shareholder derivative, SAFE note, and founder litigation - Legal proceedings information is incorporated by reference from Note 12 of the financial statements[350] Item 1A. Risk Factors Momentus Inc. faces critical risks including limited mission success, uncertain revenue conversion from cancellable contracts, significant going concern doubts due to insufficient capital, and potential negative impacts from workforce reductions and capital pursuit - Setbacks in initial or future missions, like the Vigoride 3 anomalies, could materially harm the business, financial condition, and reputation[352][353][354] - Customer contracts are cancellable, and the company may not realize all potential revenue, especially if regulatory approvals are delayed or future missions experience significant anomalies[355][356][357] - There is substantial doubt about the company's ability to continue as a going concern due to insufficient revenues and capital, which could adversely affect its share price, ability to raise capital, and commercial relationships[358][359] - Workforce reductions, such as the 18-employee reduction on July 3, 2023, may not achieve expected cost savings and could negatively impact business operations and employee morale[360] - Pursuing additional capital and strategic alternatives will divert management's attention and incur expenses, potentially disrupting business and impacting financial condition[361] - In the event of bankruptcy, the company faces risks including high costs, difficulty obtaining financing, maintaining relationships, and potential liquidation under Chapter 7, which could result in no recovery for Class A common stock holders[362][363] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds were reported[364] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report for the period - No defaults upon senior securities were reported[365] Item 4. Mine Safety Disclosures There were no mine safety disclosures to report for the period - No mine safety disclosures were reported[366] Item 5. Other Information This section reports no Rule 10b5-1 trading plan adoptions or terminations by Section 16 officers and directors, and reiterates the 1-for-50 reverse stock split of Class A common stock effective August 22, 2023 - No Rule 10b5-1 trading plans were adopted or terminated by Section 16 officers and directors for the three months ended September 30, 2023[367] - A 1-for-50 reverse stock split of Class A common stock was approved by stockholders and became effective on August 22, 2023[368] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including merger agreements, certificates of amendment, forms of warrants, securities purchase agreements, and Sarbanes-Oxley Act certifications - The exhibits include various agreements and forms related to the Business Combination, securities offerings, and corporate governance[370][371] - Certifications pursuant to Rules 13a-14(a) and 15d-14(a) and 18 U.S.C. Section 1350 are filed/furnished[370][371] Signatures This section contains the signatures of the principal executive and financial officers, certifying the accuracy of the report - The report was signed on November 14, 2023, by John Rood, Chief Executive Officer (Principal Executive Officer), and Eric Williams, Chief Financial Officer (Principal Financial and Accounting Officer)[376]