Momentus Inc.

Previous wording

The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our results of operations and financial condition. This discussion and analysis should be read together with our audited and unaudited financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”) and our Annual Report on Form 10-K filed with the SEC on June 6, 2024. This discussion and analysis should also be read together with our financial information for the period ended as of September 30, 2024. In addition to historical financial information, this discussion and analysis contains forward-looking statements that reflect our plans, estimates, and beliefs that involve risks, uncertainties and assumptions. As a result of many factors, such as those set forth under the “Risk Factors” under Part II, Item 1A: "Risk Factors," in this Form 10-Q and under Part I, Item 1A in our Annual Report on Form 10-K filed with the SEC on June 6, 2024, and “Cautionary Statement Regarding Forward-Looking Statements” elsewhere in this Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements.

Current wording

The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our results of operations and financial condition. This discussion and analysis should be read together with our audited and unaudited financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”) and our Annual Report on Form 10-K filed with the SEC on April 1, 2025, as amended on April 9, 2025. This discussion and analysis should also be read together with our financial information for the period ended as of March 31, 2025. In addition to historical financial information, this discussion and analysis contains forward-looking statements that reflect our plans, estimates, and beliefs that involve risks, uncertainties and assumptions. As a result of many factors, such as those set forth under the “Risk Factors” under Part II, Item 1A: “Risk Factors,” in this Form 10-Q and under Part I, Item 1A in our Annual Report on Form 10-K filed with the SEC on April 1, 2025, as amended on April 9, 2025, and “Cautionary Statement Regarding Forward-Looking Statements” elsewhere in this Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements.

Previous wording

During the quarter ended September 30, 2024, the Company recognized $0.1 million of revenue, primarily from the completion of performance obligations on engineering services performed for U.S. government and engineering project services.

Current wording

During the three months ended March 31, 2025, the Company recognized $0.3 million of revenue, primarily from the completion of performance obligations on engineering services performed for U.S. government and engineering project services.

Previous wording

As of September 30, 2024 we have signed contracts with customers and have collected approximately $1.6 million in customer deposits, $1.1 million of which are recorded as non-current contract liabilities in our condensed consolidated balance sheets.

Current wording

As of March 31, 2025 we have signed contracts with customers and have collected approximately $3.0 million in customer deposits, $0.2 million of which are recorded as non-current contract liabilities in our condensed consolidated balance sheets.

Previous wording

Cost of revenue consists primarily of expenses associated with third-party launch costs and direct headcount cost related to the engineering project. Development of the orbital service vehicles is part of the Company’s technology roadmap. Therefore, to date, the cost of these orbital service vehicles has been expensed as research and development costs as materials and services are received. The current design and technology allow for a single use of the orbital service vehicle.

Current wording

Cost of revenue consists primarily of expenses associated with third-party launch costs and direct headcount cost related to the engineering project. The costs associated with orbital service vehicles are deferred to prepaid cost of revenues and amortized to cost of revenues upon release of payload. The current design and technology allow for a single use of the orbital service vehicle.

Previous wording

Research and development expenditures consist primarily of the cost of the following activities for developing existing and future technologies for our satellites, satellite technologies, and our Orbital Service Vehicles. Research and development activities include basic research, applied research, design, development, and related test program activities. Costs incurred for developing our technologies primarily include equipment, material, and labor hours

Current wording

Research and development expenditures consist primarily of the cost of the following activities for developing existing and future technologies for our satellites, satellite technologies, and our Orbital Service Vehicles. Research and development activities include basic research, applied research, design, development, and related test program activities. Costs incurred for developing our technologies primarily include equipment and labor hours (both internal and subcontractors). The Company also records launch costs related to the testing of its Vigoride vehicles as research and development costs.

Previous wording

Revenue recognized during the nine months ended September 30, 2024 was primarily driven by engineering services performed for the Space Development Agency agreement, resulting in $1.8 million of revenue recognition.

Current wording

Revenue recognized during the three months ended March 31, 2025, was primarily driven by engineering services performed for the Space Development Agency agreement, resulting in$0.2 million of revenue recognition. The remaining$0.1 million of revenue recognized was due to customer deposit forfeiture upon contract expiration.

Previous wording

Research and development expenses decreased from $6.0 million in the three months ended September 30, 2023 to $2.2 million in the three months ended September 30, 2024. The decrease was mostly headcount driven whereas payroll related cost went down by a $2.5 million including a decrease of $0.2 million in non-cash stock based compensation. Subcontractor costs decreased by $1.0 million. Additionally, there was a $0.1 million decrease in spending on materials and a $0.1 million decrease in information technology and facilities expense.

Current wording

Research and development expenses decreased from $2.7 million in the three months ended March 31, 2024 to $1.9 million in the three months ended March 31, 2025. The decrease was mostly headcount driven whereas cash payroll related cost went down by a $0.8 million, partially offset by an increase of $0.3 million in non-cash stock based compensation. Subcontractor costs decreased by $0.2 million.

Previous wording

Selling, general and administrative expenses decreased from $9.3 million in the three months ended September 30, 2023 to $5.4 million in the three months ended September 30, 2024. Payroll costs decreased by $1.2 million inclusive of a decrease of $0.3 million in non-cash stock based compensation. NSA compliance spending decreased by $0.2 million and SEC and legal services expenses decreased by $1.7 million. Consulting and other professional services and other general corporate expenses decreased by $0.7 million and $0.1 million, respectively.

Current wording

Selling, general and administrative expenses decreased from $6.2 million in the three months ended March 31, 2024 to $4.6 million in the three months ended March 31, 2025. Payroll costs decreased by $1.1 million inclusive of a decrease of $0.7 million in non-cash stock based compensation. Legal services expenses decreased by $0.9 million and other miscellaneous fees, such as insurance and overhead, decreased by $0.6 million. These decreases were offset by an increase in consulting and professional services of $1.1 million.

Previous wording

Interest income decreased from $0.2 million for three months ended September 30, 2023 to $2 thousand for the three months ended September 30, 2024 as the Company invested less money market funds given liquidity constrains.

Current wording

Interest income decreased from $0.02 million for the three months ended March 31, 2024 to $4 thousand for the three months ended March 31, 2025 as the Company invested in less money market funds given liquidity constrains.

Previous wording

Interest expense decreased from $2.2 million of cash and amortization interest for the nine months ended September 30, 2023 to $0.1 million of cash and amortization interest for the nine months ended September 30, 2024 due to the application of the effective interest method which results in less cash and amortization interest as the Term Loan approaches maturity. See Note 8 for additional information.

Current wording

Interest expense decreased from $0.1 million of cash and debt discount amortization interest for the three months ended March 31, 2024 to $0.2 million interest reduction for the three months ended March 31, 2025 primarily due to amortization of the debt premium on the July Convertible Note and the October Convertible Note, partially offset by cash interest accrual. See Note 8 for additional information.

Previous wording

Other income during the three months ended September 30, 2024 and 2023, was immaterial.

Current wording

Other income (expense) decreased from $0.1 million of other income during the three months ended March 31, 2024 to $0.2 million of other expense during the three months ended March 31, 2025, primarily due to resolution of a prior obligation of the Company during the three months ended March 31, 2025.

Previous wording

The Company’s ability to continue as a going concern is dependent on the Company’s ability to successfully raise capital to fund its business operations and execute on its business plan. To date, the Company 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. This is reflected by the Company’s incurred net losses of $23.1 million for the nine months ended September 30, 2024 and had an accumulated deficit of $396.1 million as of September 30, 2024. Additionally, the Company used net cash of $10.9 million to fund its operating activities for the nine months ended September 30, 2024, and had cash and cash equivalents of $0.8 million as of September 30, 2024.

Current wording

The Company’s ability to continue as a going concern is dependent on the Company’s ability to successfully raise capital to fund its business operations and execute on its business plan. To date, the Company 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. This is reflected by the Company’s incurred net losses of $6.2 million for the three months ended March 31, 2025 and an accumulated deficit of $414.2 million as of March 31, 2025. Additionally, the Company used net cash of $4.2 million to fund its operating activities for the three months ended March 31, 2025, and had cash and cash equivalents of $3.4 million as of March 31, 2025.

Previous wording

In connection with the preparation of the consolidated interim financial statements for the nine months ended September 30, 2024, management conducted an evaluation and concluded that 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 believes that its current level of cash and cash equivalents are not sufficient to fund commercial scale production and sale of its services and products. These conditions raise substantial doubt regarding its ability to continue as a going concern for a period of at least one year from the date of issuance of these consolidated interim financial statements. In order to proceed with the Company’s business plan and operating strategy, the Company will need to raise substantial additional capital to fund its operations. Until such time, if ever, the Company can generate revenues sufficient to achieve profitability, the Company expects to finance its operations through equity or debt financings, which may not be available to the Company on the timing needed or on terms that the Company deems to be favorable. In an effort to alleviate these conditions, the Company continues to seek and evaluate opportunities to access additional capital through all available means.

Current wording

In connection with the preparation of the condensed consolidated interim financial statements for the three months ended March 31, 2025, management conducted an evaluation and concluded that 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 believes that its current level of cash and cash equivalents are not sufficient to fund commercial scale production and sale of its services and products. These conditions raise substantial doubt regarding its ability to continue as a going concern for a period of at least one year from the date of issuance of these condensed consolidated interim financial statements. In order to proceed with the Company’s business plan and operating strategy, the Company will need to raise substantial additional capital to fund its operations. Until such time, if ever, the Company can generate revenues sufficient to achieve profitability, the Company expects to finance its operations through equity or debt financings, which may not be available to the Company on the timing needed or on terms that the Company deems to be favorable. In an effort to alleviate these conditions, the Company continues to seek and evaluate opportunities to access additional capital through all available means.

Previous wording

The accompanying consolidated interim financial statements have been prepared on a going concern basis of accounting. The accompanying consolidated interim financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern.

Current wording

The accompanying condensed consolidated interim financial statements have been prepared on a going concern basis of accounting. The accompanying condensed consolidated interim financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern.

Previous wording

Net cash used in operating activities for the nine months ended September 30, 2024 was $10.9 million, driven primarily by headcount costs, research and development activities, legal expenses, and professional fees, as well as net cash changes in operating assets and liabilities.

Current wording

Net cash used in operating activities for the three months ended March 31, 2025 was $4.2 million, driven primarily by headcount costs, research and development activities, legal expenses, and professional fees, as well as net cash changes in operating assets and liabilities.

Previous wording

Headcount related payroll costs, excluding stock-based compensation of $4.9 million, were $7.3 million. Professional fees of $5.1 million included $2.6 million in legal fees discussed in Note 12. Office overheads and other general corporate expenses were $4.4 million, which includes insurance costs of $1.3 million. Research and Development activity expenses, including materials, components, and subcontractor costs were $1.5 million. These cash outflows were partially offset by gross profit of $1.8 million primarily related to the fulfillment of performance obligations for Vigoride 5 and Vigoride 6 customers during the nine months ended September 30, 2024. Additionally, the Company had a change in operating assets and liabilities of $5.6 million during the nine months ended September 30, 2024.

Current wording

Headcount related payroll costs, excluding stock-based compensation of $1.1 million, were $1.6 million. Professional fees of $2.1 million included $0.4 million in legal fees discussed in Note 12. Office overheads and other general corporate expenses were $1.2 million, which includes insurance costs of $0.3 million. Research and Development activity expenses, including materials, components, and subcontractor costs were $0.3 million. These cash outflows were partially offset by gross profit of $0.3 million primarily related to the fulfillment of performance obligations during the three months ended March 31, 2025. Additionally, the Company had a change in operating assets and liabilities of $0.9 million during the three months ended March 31, 2025.

Previous wording

Net cash used in operating activities for the nine months ended September 30, 2023 was $46.0 million, driven primarily by headcount costs, research and development activities, legal expenses, and professional fees, as well as net cash changes in operating assets and liabilities. Headcount related payroll costs, excluding accrued bonus of $2.6 million and stock-based compensation of $6.5 million, were $5.5 million. Research and development activity expenses, including materials, components, and subcontractor costs were $3.6 million. Professional fees of $4.9 million included $0.6 million of costs related to the SEC and NSA topics discussed in Note 12 and legal fees of $2.4 million. Office overheads, other general corporate expenses, and cash interest were $1.5 million, which includes insurance costs of $0.8 million. The Company also incurred launch costs of $0.5 million during the nine months ended September 30, 2023, that were amortized in connection with its first launch. The Company additionally had change in cash from changes in operating assets and liabilities of $0.9 million.

Current wording

Net cash used in operating activities for the three months ended March 31, 2024 was $5.3 million, driven primarily by headcount costs, research and development activities, legal expenses, and professional fees, as well as net cash changes in operating assets and liabilities. Headcount related payroll costs, excluding stock-based compensation of $1.4 million, were $2.9 million. Professional fees of $1.9 million included $1.4 million in legal fees. Office overheads and other general corporate expenses were $1.7 million, which includes insurance costs of $0.5 million. Research and Development activity expenses, including materials, components, and subcontractor costs were $0.5 million. These cash outflows were partially offset by gross profit of $0.5 million primarily related to the fulfillment of performance obligations for Vigoride 5 and Vigoride 6 customers during the three months ended March 31, 2024. Additionally, the Company had a change in operating assets and liabilities of $1.1 million during the three months ended March 31, 2024.

Previous wording

Net cash used in investing activities was $94 thousand and $7 thousand for the nine months ended September 30, 2024 and 2023, respectively, which consisted of purchases of machinery and equipment and intangible assets and proceeds received on the sale of machinery and equipment.

Current wording

Net cash used in investing activities was zero and $0.04 million for the three months ended March 31, 2025 and 2024, respectively. which consisted of purchases of machinery and equipment and intangible assets and proceeds received on the sale of machinery and equipment.

Previous wording

Net cash provided by financing activities was $9.6 million for the nine months ended September 30, 2024, primarily due to gross proceeds of approximately $10.8 million received from the January Offering and March Offering, and $$2.3 million received from SIV partially offset by principal repayments of $2.3 million under the Term Loan and $1.1 million in issuance costs related to common stock and related warrants.

Current wording

Net cash provided by financing activities was $4.8 million for the three months ended March 31, 2024, primarily due to gross proceeds of approximately $8.0 million received from the January Offering and March Offering, partially offset by principal repayments of $2.3 million under the Term Loan and $0.8 million in issuance costs related to common stock and related warrants.

Previous wording

•pursue further research and development related to developing our satellites, satellite technology, and Orbital Service Vehicles;

Current wording

•pursue further research and development related to developing our satellites and satellite technology

Previous wording

Some of these risks and uncertainties are described in more detail under Part II, Item 1A: "Risk Factors," in this Form 10-Q under the heading “Risk Factors — We may not be able to continue as a going concern.”

Current wording

Some of these risks and uncertainties are described in more detail under Part I, Item 1A: “Risk Factors,” in our December 31, 2024 Form 10-K under the heading “Risk Factors — We may not currently or in the future be able to continue as a going concern.”

Previous wording

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated interim financial statements, which have been prepared in accordance with GAAP. The preparation of our consolidated interim financial statements and related disclosures requires us to make estimates, assumptions and judgments as of the balance sheet date that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. Our actual results may differ from these estimates under different assumptions and conditions. In addition to our critical accounting policies below, see Note 2 in the notes to our consolidated interim financial statements included elsewhere in this Form 10-Q.

Current wording

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated interim financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed consolidated interim financial statements and related disclosures requires us to make estimates, assumptions and judgments as of the balance sheet date that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. Our actual results may differ from these estimates under different assumptions and conditions. In addition to our critical accounting policies below, see Note 2 in the notes to our condensed consolidated interim financial statements included elsewhere in this Form 10-Q.

Previous wording

We prepay for certain launch costs to third-party providers that will carry the orbital service vehicle to orbit. Prepaid costs allocated to the delivery of a customer’s payload are classified as deferred fulfillment costs and recognized as cost of revenue upon delivery of the customer’s payload. Prepaid costs allocated to our payload are classified as prepaid launch costs and are amortized to research and development expense upon the release of our payload. The allocation is determined based on the distribution between customer and our payload weight on each launch.

Current wording

We prepay for certain launch costs to third-party providers that will carry the orbital service vehicle to orbit. Prepaid costs allocated to the delivery of a customer’s payload are classified as deferred fulfillment costs. Prepaid costs allocated to our payload are classified as prepaid launch costs. These costs are then recognized as cost of revenues upon release of the customer’s payload and our payload, respectively.

Previous wording

Customer deposits collected prior to the release of the customer’s payload into its specified orbit are recorded as current and non-current contract liabilities in our condensed consolidated balance sheets as the amounts received represent a prepayment for the satisfaction of a future performance obligation that has not yet commenced. Each non-refundable deposit is determined to be a contract liability upon cash collection. Prior to making this determination, we ensure that a valid contract is in place that meets the definition of the existence of a contract in accordance with ASC 606-10-25-1 and 2.

Current wording

Customer deposits collected prior to the release of the customer’s payload into its specified orbit are recorded as current and non-current contract liabilities in our condensed consolidated balance sheets as the amounts received represent a prepayment for the satisfaction of a future performance obligation that has not yet commenced. Some customer deposits are non-refundable. Each non-refundable deposit is determined to be a contract liability upon cash collection. Prior to making this determination, we ensure that a valid contract is in place that meets the definition of the existence of a contract in accordance with ASC 606-10-25-1 and 2.

Previous wording

We have various stock incentive plans under which incentive and non-qualified stock options and restricted stock awards are granted to employees, directors, and consultants. All stock-based payments to employees, including grants of employee stock options are recognized in the consolidated interim financial statements based on their respective grant date fair values.

Current wording

We have various stock incentive plans under which incentive and non-qualified stock options and restricted stock awards are granted to employees, directors, and consultants. All stock-based payments to employees, including grants of employee stock options are recognized in the condensed consolidated interim financial statements based on their respective grant date fair values.

Previous wording

We recognize stock-based compensation expense using a fair value-based method for costs related to all stock-based payments. We estimate the fair value of stock-based payments on the date of grant using the Black-Scholes-Merton option pricing model. The model requires management to make a number of assumptions, including expected volatility of our stock, expected life of the option, risk-free interest rate, and expected dividends. The fair value of the stock is expensed over the related service period which is typically the vesting period. The stock-based compensation expense that is reported in our consolidated interim financial statements is based on awards that are expected to vest. We account for forfeitures as they occur.

Current wording

We recognize stock-based compensation expense using a fair value-based method for costs related to all stock-based payments. We estimate the fair value of stock-based payments on the date of grant using the Black-Scholes-Merton option pricing model. The model requires management to make a number of assumptions, including expected volatility of our stock, expected life of the option, risk-free interest rate, and expected dividends. The fair value of the stock is expensed over the related service period which is typically the vesting period. The stock-based compensation expense that is reported in our condensed consolidated interim financial statements is based on awards that are expected to vest. We account for forfeitures as they occur.

Previous wording

ASC Topic 740-10 requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any tax benefit can be recorded in the consolidated financial statements. It also provides guidance on the recognition, measurement, classification and interest and penalties related to uncertain tax positions. The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount that is initially recognized.

Current wording

ASC Topic 740-10 requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any tax benefit can be recorded in the condensed consolidated interim financial statements. It also provides guidance on the recognition, measurement, classification and interest and penalties related to uncertain tax positions. The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount that is initially recognized.

Previous wording

Please refer to Note 2 in the notes to our consolidated interim financial statements included elsewhere in this Form 10-Q for a description of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted, the timing of their adoptions and our assessment, to the extent we have made one, of their potential impact on our consolidated financial condition and results of operations.

Current wording

Please refer to Note 2 in the notes to our condensed consolidated interim financial statements included elsewhere in this Form 10-Q for a description of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted, the timing of their adoptions and our assessment, to the extent we have made one, of their potential impact on our consolidated financial condition and results of operations.

Previous wording

The market risk inherent in our financial instruments and our financial position represents the potential loss arising from adverse changes in interest rates. As of September 30, 2024, we had cash and cash equivalents of $0.8 million, which were primarily invested in highly liquid investments purchased with a remaining maturity of three months or less. However, due to the short-term maturities and the low-risk profile of our investments, an immediate 10% change in interest rates would not have a material effect on the fair market value of our cash and cash equivalents.

Current wording

The market risk inherent in our financial instruments and our financial position represents the potential loss arising from adverse changes in interest rates. As of March 31, 2025, we had cash and cash equivalents of $3.4 million, which were primarily invested in highly liquid investments purchased with a remaining maturity of three months or less. However, due to the short-term maturities and the low-risk profile of our investments, an immediate 10% change in interest rates would not have a material effect on the fair value of our cash and cash equivalents.

Previous wording

There were no material foreign currency transactions for the three and nine months ended September 30, 2024. Currently, a significant portion of our cash receipts and expenses are generated in U.S. dollars.

Current wording

There were no material foreign currency transactions for the three months ended March 31, 2025 and 2024. Currently, a significant portion of our cash receipts and expenses are generated in U.S. dollars.