Momentus Inc (MNTS) 2021 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Momentus' Third Quarter 2021 Earnings Call. (Operator Instructions) I would now like to turn the conference over to your host, Mr. Darryl Genovesi. Please go ahead, sir.

Thank you, Grace, and good afternoon, everyone. Welcome to Momentus' Third Quarter 2021 Earnings Conference Call and our first ever earnings conference call.

With me here today at 3901 N First Street in San Jose, our corporate headquarters and one of the 2 sites that Momentus occupies, are John Rood, Chief Executive Officer of this company and Chairman of its Board of Directors; as well as Jikun Kim, Chief Financial Officer. Each will provide prepared remarks. Following these prepared remarks, we will take questions from analysts. (Operator Instructions)

Earlier today, we issued a press release and made a slide presentation available on our Investor Relations website which provides an overview of our business and financial highlights for the third quarter. You can download a copy of the release and presentation slides at investors.momentus.space.

During today's call, we will make certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from forward-looking statements in this communication. For more information about factors that may cause actual results to materially differ from forward-looking statements, please refer to the earnings press release we issued today as well as the company's filings with the Securities and Exchange Commission. Readers are cautioned not to put undue reliance on forward-looking statements, and the company specifically disclaims any obligation to update the forward-looking statements that may be discussed during this call.

Please also note that we will refer to certain non-GAAP financial information on today's call. You can find reconciliations of the non-GAAP financial measures to the most comparable GAAP measures in our earnings press release.

The technology underlying our anticipated service offering is still in the process of being developed and has not yet been fully tested or validated in the space. Our ability to execute on our business plan is dependent on the successful development and commercialization of our technologies. Development of space technologies is extremely complex, time-consuming and expensive, and there can be no assurance that our predictive, theoretical and ground-based results will translate into operational space vehicles that operate within the parameters we expect for at all.

With that, I'd like to turn the call over to our Chairman and Chief Executive Officer, John Rood.

Thank you, Darryl. Good afternoon. I'm delighted to talk to you on our first earnings call now that we've completed our business combination with Stable Road Acquisition Corporation and are listed on the Nasdaq. This event was an important step towards growing our business and achieving our objective of providing the backbone infrastructure services to support the emerging space economy that continues to experience impressive growth.

I want to thank you for getting together here on Tuesday. We originally thought about doing this call on Thursday, which is Veterans Day. Of course, on the 11th hour of the 11th day of the 11th month, we'll pause to honor our veterans, and Momentus is pleased to have veterans serving on our team.

I'd like to start this call by thanking the team at Momentus. As many of you know, we faced some unique challenges during our de-SPAC process. The drive and determination of this team kept us moving forward and ultimately allowed us to complete the business combination with Stable Road, leaving us well capitalized to execute the next phase of our business plan.

Turning to Slide 3. Since this is our first earnings call and some of you are unfamiliar with our story, I'll provide an overview of the business, our achievements to date, an overview of our adjusted and refocused strategy and how we'll drive growth going forward. I'll also talk about our current areas of focus for the remainder of the year and preliminary plans for 2022. Once I give my overview, our CFO, Jikun Kim, will take you through the Q3 financial highlights.

However, before I talk about Momentus and our business model, since some of you have followed the company for a while, I want to highlight a few new things that happened over the past few months.

First, Momentus signed a National Security Agreement with the U.S. government in June of this year and repurchased the 2 Russian co-founders' equity in the company. The co-founders, including the company's former CEO, have had no involvement with the company since that time. The Defense Department and Treasury Department oversee this agreement, and we continue to work closely with them to implement it.

Second, we populated our executive leadership team and Board of Directors with high-caliber individuals that bring the type of experience and skill sets that we need to grow our business and implement the National Security Agreement, or NSA.

Third, under the direction of our new leaders, Momentus has already made significant progress on NSA implementation. Of the 62 discrete compliance tasks required under the NSA, we have fully implemented the majority and have partially implemented the remaining items. The team is working hard to put in place many processes to promote consistent compliance with the NSA such that it becomes routine. While this involves a heavy upfront lift in many legacy IT systems and internal processes are being replaced by new ones, we believe diligent implementation will create a stable regulatory environment around the company and our activities.

Fourth, we settled all outstanding claims with the SEC's Enforcement Division, which cleared the way for us to complete our business combination with Stable Road and publicly list our stock. As part of our settlement, we agreed to hire an independent compliance consultant to provide oversight of our disclosures and ethics programs and engaged this consultant about 4 weeks ago.

Fifth, we completed the merger with Stable Road with a low level of redemptions compared to other recent de-SPACs, providing us the necessary capital to fuel the continued development of our technology.

Sixth, we've made significant progress advancing our technology. We've completed the initial assembly and initial system-level functional testing of Vigoride 3 and drafted a plan to address anomalies uncovered by these tests. Remediation and planned rework of some components is ongoing. The vehicle will soon enter system-level thermal vacuum testing, which is late-stage testing that simulates the environment in space. Our initial vehicles that we plan to launch will have our current generation thruster design. However, our propulsion engineers have been hard at work testing and qualifying our next-generation thruster design with significant progress made during Q3. This next-generation thruster is being developed to improve efficiency as measured by specific impulse over our current thruster. This next-generation thruster improves on earlier versions by incorporating several design innovations to the nozzle to extend the thruster's total lifetime.

Seventh, although outside the Q3 window, I'm pleased to report on October 20, 2021, we signed a Launch Services Agreement with SpaceX that reserves space for Vigoride on SpaceX's Transporter 5 mission, which is targeted for June 2022. While securing space on the manifest is an important step, our plan to launch in June remains subject to the receipt of licenses and other government approvals, which we believe we are on pace to achieve, and successful completion of our current efforts to get the system ready for flight.

Turning to Slide 4. Our objective is to become an industry leader providing the transportation and in-space infrastructure services for the burgeoning new space economy. This is our bold vision and achieving it requires methodical and near-term progress points on our journey. I've adjusted and refocused our strategy into actionable steps that will help build a foundation for the future.

Our strategy, which will drive the decisions and actions we take every day, has 5 elements. First, we'll focus our resources on bringing our initial orbital transfer vehicle, Vigoride, to market as early as possible with the features and reliability we know our customers need. We currently plan to fly our Vigoride vehicle as early as June 2022, subject to receipt of licenses and government approvals, successful completion of our current efforts to get the system ready for flight and the SpaceX mission staying on its current sketch. If we're unable to fly Vigoride in June, then we'll do so as early as we are able.

Second, we plan to pursue a focused expansion of our service offerings and bring online a reusable version of Vigoride that we expect will be able to effectively and economically support customer advance for payload hosting and in-orbit servicing.

Third, we'll scale up from Vigoride and broaden our service offerings and capabilities. We plan to complete development of new vehicles, such as Ardoride, to support missions beyond Low-Earth Orbit like lunar missions with much larger payloads.

Fourth, we're a technology company, and the technology we bring forward will be critical to making the best use of space possible. Our technology developments and continued innovation are at the heart of what we intend to do.

Finally, the last element of our strategy is to attract, develop and retain a highly skilled and motivated workforce to give us a competitive advantage in the industry. This last element could easily have been the first element of our strategy as it's foundational to our success and we need great people to accomplish great things. Throughout the execution of this strategy, we'll never lose sight of the relationship between customer demand and the technology we're bringing to market. Throughout everything we do, we'll ensure our capabilities are aligned with critical customer needs. We'll strive to maintain a strong understanding of our customers' needs. And I would add that we continue to hear from customers about how our future capabilities will enable them to be part of the vibrant and growing space economy.

Turning to Slide 5. We have an exceptional team leading the business. In particular, I'd like to introduce 3 new additions who bring extensive experience at the Defense Department as well as experience implementing mitigation agreements with CFIUS, like the one we're currently implementing.

Paul Ney is our new Chief Legal Officer and Corporate Secretary. He has nearly 4 decades of public and private sector experience. Most recently, he served as the General Counsel of the Defense Department, where he led a team of over 12,000 lawyers. He's also served as Principal Deputy and Acting General Counsel of the United States Navy and Chief Deputy Attorney General for the State of Tennessee.

Vic Mercado is our Security Director. He sits on our Board of Directors and play the daily role in overseeing implementation of our National Security Agreement. Vic most recently served as Assistant Secretary of Defense for Strategy, Plans and Capabilities, which is a 4-star civilian equivalent position that is confirmed by the United States Senate. Before that, he served for 35 years in the U.S. Navy and retired as a 2-star Admiral.

Karen Plonty is our new Chief Security Officer and reports to Vic Mercado. She has implemented domestic and international security and compliance programs for companies operating under mitigation agreements with CFIUS, similar to ours, and has 35 years of experience in the tech industry.

In addition to these 3 people, I joined Momentus in early August. I bring over 20 years of U.S. government service, including at the Department of Defense, where I was most recently Undersecretary for Policy, as well as at the Department of State where I served as one of 6 undersecretaries. I also served at the White House National Security Council at the Central Intelligence Agency and as a U.S. Senate staff member. I've also spent about 10 years in the private sector, including stints at Lockheed Martin, where I served as Senior Vice President for Lockheed Martin International, leading the growth of the company's international business; and Raytheon, where I was Vice President of U.S. Business Development.

With this team, the company now has the right skill sets and experiences to overcome security-related hurdles that it currently faces.

Also on Slide 4 are other names that you'll no doubt recognize if you followed our story, including the President of the company, Dr. Fred Kennedy; Chief Revenue Officer, Dawn Harms; Chief Technology Officer, Rob Schwarz; and Chief Financial Officer, Jikun Kim.

Turning to Slide 6. Let's look at our business model and plan. Momentus is a publicly traded, pure-play space infrastructure company. Based on our examination of other players in the market, we might be the only publicly traded, pure-play space infrastructure company. The commercialization of space is one of the most exciting opportunities of our time, with growth likely to far outpace that of the broader economy for the foreseeable future. Our model is vertically integrated, so we are both a manufacturer and an operator of our spacecraft, which are orbital transfer vehicles, or OTVs. We expect to use these OTVs to provide in-space services for our customers. We ultimately envision having a family of increasingly larger and more capable OTVs.

That said, our adjusted strategy refocuses our efforts on our initial OTV offering, Vigoride. Our service offerings with Vigoride will initially include in-space transportation and last-mile delivery of satellites to custom orbits, which we are planning to begin providing in 2022. To accomplish this, we'll have to secure all the necessary government approvals to permit our launches in 2022, which we believe we are on pace to achieve.

We also plan to provide payload hosting services with more capabilities to come over time, such as satellite refueling, inspection, on-orbit maintenance and removal of debris and satellites at the end of their useful life.

The combination of larger launch vehicles and smaller satellites means that the cost of delivering a given capability to orbit is significantly decreasing. As access to space becomes more affordable, we expect demand will increase for in-space transportation, payload hosting and other in-space services that we plan to offer.

While other companies hope to offer similar services, we believe our proprietary water plasma propulsion technology will make our approach the lowest-cost option for many customers as well as the safest and most environmentally friendly.

We have some notable commercial arrangements, including our ride share partnership with SpaceX, a long list of customers and a healthy backlog. As of September 30, 2021, we've signed contracts for approximately $65 million in backlog or potential revenue. These include firm as well as optionable contracts. In general, customers have the right to cancel their contracts with the understanding that they will forgo their deposits and other payments.

Turning to Slide 7. Our first service to market will be focused on space transportation by combining rideshare launch with last mile delivery. This approach allows us to provide an affordable, flexible hub and spokes logistics model to transport satellites and cargo to precise destinations in Low Earth Orbit. We believe our approach has the potential to greatly reduce the payload operator's launch costs while also expanding its deployment options.

Turning to Slide 8. This slide shows how Vigoride can provide tremendous advantages over small dedicated rockets or onboard propulsion systems, which are bespoke, oversized and constraining the amount of payload that can be delivered to orbit. In fact, for payloads below 100 kilograms, we anticipate that our transportation service model can reduce our customers' launch costs by as much as 80% relative to traditional approaches.

Our Vigoride vehicle is designed to deploy nano, cube and microsatellites anywhere in lower orbit. We're starting with a single-use, expendable version of Vigoride, but we expect to eventually transition to a reusable Vigoride vehicle around the middle of the decade. This will allow a single vehicle to deliver cargo multiple times to multiple orbits, reducing manufacturing costs.

Turning to Slide 9. I want to speak for just a minute about the underlying market dynamics for in-space transportation. This slide focuses on small satellites, which is where much of the growth is taking place. Before 2018, only a few dozen small satellites were launched per year. Now, several hundred are being launched per year. Most of these small satellites are going to Low Earth Orbit. For example, Northern Sky, a firm that provides market forecasts, estimates the market for taking small satellites to Low-Earth Orbit will double over the next 3 years. We're developing our Vigoride vehicle and service offerings to take advantage of these market conditions, including the expected debut of larger rockets that cost less on a per kilogram basis.

Looking further out, on the right, you see more distant orbits growing to a larger part of the pie. We plan to scale the same technologies that we're using for Vigoride to our next-generation OTVs, which will be developed to travel further from Earth. This suggests that our total addressable market, or TAM, could expand by another 5 to 10x through the end of the decade as our capabilities grow from services in Low-Earth Orbit. However, in the near term, as I said, we're focused on getting our -- to initial operational capability with Vigoride. Our mantra is that we earn the right to expand from Vigoride by successfully demonstrating its capabilities.

Next, we're going to play a quick video that demonstrates how our Vigoride vehicle will deliver transportation services to our customers, and Darryl is going to narrate the video.

(presentation)

So that's the transportation mission, which is our first service that we will provide. Beyond that, we'll bring online our hosted payload service offering, which is described here on Slide 11.

Turning to Slide 12. We plan for our future vehicles to provide a range of in-orbit services, which are shown on this chart.

Turning to Slide 13. This slide provides an overview of where we stand in production of our first vehicles. And so far, we've produced 2 complete Vigors with 2 more in production.

Vigoride-1, our first vehicle, which has a 30-watt thruster, is fully built and ground tested. Vigoride-2 beyond are much larger than Vigoride-1. Vigoride-2 is designed to be capable of carrying larger payloads with much more powerful -- with a much more powerful 550-watt thruster. Vigoride-2 is now fully built and has completed most of its ground testing program.

We've learned a significant amount from production of these initial vehicles that we plan to retain the storage and potentially use for testing as we apply the lessons learned to future Vigoride vehicles that we plan to fly.

As I mentioned, initial assembly of Vigoride-3 was completed, and the vehicle is undergoing some rework following initial system-level testing, and it will soon undergo thermal vacuum testing. This will be followed by final vibration testing and other ground tests. We expect Vigoride-3 to be fully qualified in the first half of the year before our planned inaugural launch. This inaugural launch is intended to be a demonstration mission. We also plan to take some customer payloads to orbit and to generate a small amount of revenue. However, the primary goals of the mission are to test Vigoride on orbit, learn from any issues that we encounter and take important steps towards establishing the viability of our initial market offering.

I can't overstate the importance of testing at all stages in the process, from ground testing to testing in space. You test not only to validate your design but also to find areas for improvement. While we obviously love for our first test in space to go flawlessly, in the history of space, it's common to experience issues that you learn from and improve upon. So we're looking at this first opportunity with realistic expectations borne from experience and eager anticipation to find and address any problems that arise.

Beyond our planned June launch, we're planning to fly Vigoride again in the second half of 2022, although this is subject to the same caveats mentioned earlier and our ability to secure space on a launch provider's manifest.

Consistent with our refocused strategy that emphasizes first steps first, we will, to some degree, deemphasize our longer-term product plan, and specifically our larger follow-on vehicles, Ardoride and Fervoride. To be clear, we still plan to develop these larger vehicles, although development will take place over a longer period than previously anticipated.

So that's our plan as it currently stands. Although I would note, I'm still working through refinements to the 2022 plan with the team, and I expect to be able to offer you more details during our fourth quarter earnings call.

With that, I'll now turn to our CFO, Jikun Kim, for comments on the Q3 financials. And then we'll take questions.

Thank you, John. Before I discuss the third quarter financial results, I would like to thank the teams at Momentus and Stable Road for getting us to a successful close.

Next slide, please. On August 12, 2021, Momentus completed the reverse merger with Stable Road Acquisition Corporation, which culminated in Momentus being listed on the Nasdaq. This transaction provided us with $247 million in gross proceeds $137 million was provided by Stable Road's trust fund, and we raised an additional $110 million from various pipe investors. We were pleased with the limited amount of redemptions on the trust fund and took this as a positive indicator of investor confidence in Momentus.

We incurred onetime transaction-related costs of $33 million and used another $40 million to repurchase the cofounder shares. The share repurchase was necessary to comply with the national Security Agreement that we signed with the U.S. government and was also highly accretive to existing shareholders.

Net proceeds from the business combination totaled $175 million which capitalizes Momentus to execute the initial phases of our long-term plan.

At the close of our transaction, our ownership structure consisted of the following: 67% is owned by pre-closed Momentus equity holders; 16% is owned by Stable Road's public stockholders; 11% by pipe investors, this excludes the SPAC sponsors; and 6% ownership by the SPAC sponsors.

Next slide, please. Our third quarter financial results reflect ongoing progress in investments toward our inaugural launch and successful transition to becoming a public company. We ended the quarter with nonrestricted cash and cash equivalents of $178 million and approximately $26.5 million in outstanding gross debt.

Revenue for the quarter totaled $200,000. Revenue was recognized when a customer terminated their contract for convenience and forfeited their deposits.

Our cost of goods sold during the third quarter was a credit of $184,000. This credit is a reversal of a forward loss reserve that we had previously booked for a loss-generating launch service agreement. Customer received a full refund.

Gross profit in the third quarter was $384,000. Net loss for the quarter was $5.6 million, which included a net $24.2 million in liability mark-to-market gains and $4.8 million in transaction-related expenses.

On a non-GAAP basis, adjusted EBITDA was a negative $15.1 million in the third quarter, which was consistent with the second quarter performance, but $7.2 million worse than the third quarter last year. Please refer to the earnings press release issued today and the reconciliations of adjusted EBITDA to GAAP net income.

Our SG&A and R&D investments have steadily increased over the prior year. Our non-GAAP SG&A expenses for the third quarter totaled $6.8 million, $4.1 million higher than the prior year. Non-GAAP R&D expenses for the third quarter totaled $9 million, $3.7 million higher than the prior year. We ended the quarter with approximately 80.6 million shares outstanding.

With that, operator, we are ready for the Q&A portion of this call.

(Operator Instructions) Your first question comes from the line of Mike Maugeri from Wolfe Research.

John, you have a strong pedigree and probably had a lot of different options. Why did you end up choosing to go with Momentus?

Well, thank you for the question, Mike. I came here because it's a really exciting time in the space industry. I'm excited about the dawn of a new space economy in the new in-space transportation and infrastructure services, but I saw Momentus developing something I wanted to be a part of bringing to the market.

I will say, since coming to Momentus, I continue to see market forecasts that show the space economy is expected to expand significantly faster than the overall economy. When I was evaluating what to do next in my career, I looked at some key mega trends that were shaping the industry. In the space industry, you see larger rockets being brought to market that are leading to lower launch costs per kilogram. And satellites are getting smaller and increasingly capable. But the smaller satellites then need to be placed in custom orbits or, if they're part of a constellation, taken to the right locations.

And so infrastructure services are really needed to fuel this new space economy. And for this new space economy to flourish, these new infrastructure services need to be closely aligned with customer needs. And that's what I saw occurring at Momentus and that's where we're placing our efforts at Momentus.

So I will say, I really wanted to be a part of the new space economy. I wanted to be a part of this young, tech company with the potential to play a very key role in enabling that new space economy. And so I was just attracted to the vision of Momentus and the chance to bring that vision to be a reality.

Got it. And then, John, again, you laid out some of the risks but still seem pretty confident that you're going to be able to fly in June. Am I reading that right? And if so, what gives you so much confidence in that?

Well, thanks for the question, Mike. We feel good about our chances to fly in June. And we're happy to have a strong partner in SpaceX. We recently signed a launch services agreement with them that reserve space on the Transporter 5 mission, as I mentioned, and that mission is targeted to go in June.

We do need to do some additional work between now and then. But overall, we believe we're on pace. We're really focused our efforts so far, on firstly, improving our relationship with the government, and in particular, the Defense Department.

As I mentioned in my statement, we've made significant progress implementing the NSA, including completion of the majority of the 62 discrete tasks that we needed to accomplish. And in so doing, we communicate with the Defense Department on a near daily basis.

Work on our Vigoride vehicles is also moving along. I mentioned some of the progress in my statement on the particular vehicles and the additional production and testing.

The only thing I'd say is anybody that's been in the space industry for a while knows that nothing's ever 100% certain. But based on where we sit today, we feel good about where we're at and that we're on a pace to be able to achieve our first mission next June, that is the June of 2022. But between now and then, we'll be burning a lot of calories to make sure we get to our planned first launch.

Next up, we have James Ratcliffe from Evercore ISI.

Two, if I could. First of all, John, could you give us some more color on the sales pipeline? Like what sort of applications customers are looking for and also some sense of how much of the pipeline is for like, call it, Momentus services, like transport to customer orbits versus more resale of launch capacity?

And secondly, on the DoD process, clearly, you're making progress there. Can you talk about what the long poles in the tent are when it comes to completing all of those 62 items on the NSA?

Sure. Why don't I address the second question first. With respect to the NSA, as you mentioned, we're taking that, our obligations under the National Security Agreement, very seriously.

As I mentioned in the statement, of the 62 discrete tasks that are required under the NSA, we fully implemented the majority and partially implemented the remaining items. The remaining work that is a heavy lift and is among the more significant things that we're doing is the insertion of a new IT systems and new processes to improve our security in that regard. While this does involve a pretty heavy upfront lift in many legacy IT systems and internal processes are being replaced by new ones, we think by diligent implementation we'll create a stable regulatory environment around the company and our activities.

And I will say while in the near term this is required to implement the NSA, improved cybersecurity, improved information security is something that's going to make our company more competitive over the long run. You're probably seeing, like I am, all of the instances of cyber incidents and ransomware and other things affecting companies. And so while we need to carry this heavy load initially and there is a significant upfront series of tasks required to get that new IT security system in place, we're committed to doing so. And there's a series of other provisions in the NSA that we're going to need to continue diligently implementing.

Now on your first question, which was about sort of customer interest and what the trends are in that area. As you've seen, our backlog has held fairly steady since we filed our S-4. We feel good about the continued customer interest in our company and the type of services we plan to offer. We really do see solid demand from our customers. And I think that's why our backlog continues to hold fairly steady.

There are customer opportunities we continue to see on a regular basis that we're continuing to bid on. Once we have the opportunity to fly Vigoride on orbit and demonstrate our capabilities, we would expect to convert more of this customer interest to firm orders and backlog. As I mentioned, there's a number of third-party market forecasts that indicate the total addressable market for space transportation is growing. That's likely to continue to be the case.

So overall, I think we feel pretty good about where we stand with our customers and the match between their needs and the products we're providing and the match between what our company plans are and our new strategy and these megatrends I mentioned in the industry, with lower launch costs and smaller, more capable satellites but therefore driving a need for space infrastructure services.

Next, we have Edison Yu from Deutsche Bank.

Congrats on the first quarter out of the gate. First question is a bit more near term. Driving kind of a little bit deeper into the regulatory and development program, I guess, sequence and events. Could you maybe provide some sort of list or sequence of how you think the security arrangement and kind of the operational progress will progress going forward kind of into the launch -- into the launch in June? So that's the first question.

And then second question, more longer term, could you maybe compare your MET technology versus some of the competitors out there, in particular, in electric and chemical space tugs. From our understanding, it's quite a superior solution. And kind of what gives you confidence that you can commercialize this, which has been kind of an obstacle in the past?

Well, thank you, Edison, for those questions. I'll take the second one first, and you asked about the technology that we're developing. And we really think we have a differentiated technology approach. At the heart of our vehicle designs is the Microwave Electrothermal Propulsion technology or MET technology. It uses water as a propellant. This is not a new technology in the sense that MET technology has been the subject of studies in university labs since the '80s. But we're pioneers in commercializing it.

The technology is particularly well suited for our use case, which is in-space, last-mile transportation because there's a balance that the MET can provide between thrust and propellent efficiency, if you will, the power and thrust that's generated by the thruster and its efficiency using the propellant, something with a car or something you talk about fuel efficiency.

Essentially, all of our competitors are using either a chemical propulsion system or a pure electric system like a hall thruster. And those technologies were developed for other purposes and can be used for in-space transportation, but not as optimally as can be done with our MET. A pure electrical thruster like, say, a hall thruster, will require more power to generate the same amount of thrust. A chemical thruster will have lower specific impulse than our MET as its efficiency rating, which means the amount of propellent that will be needed to generate the same amount of thrust. We believe our MET thruster can be tuned to balance the cost of launch mass with the opportunity cost of the transit time for our customers also. And the choice of water as a propellant also leads to simple, reliable, low-cost designs for our propulsion tank feed system and eventually the whole vehicle itself. And the other advantage we see is there's an inherent safety in using water with low pressure in the tanks that reduces the risks and hazards very substantially versus chemical propellents and also helps, therefore, reduce operating costs.

Now your first question related to what should investors and others look for in terms of things like key milestones or regulatory implementation. What I would say there, Edison, is we have more work to do on NSA implementation. As I mentioned, mainly related to replacement of legacy IT systems and some other internal processes.

We're going to be applying for necessary government approvals from the FAA and FCC in advance of our June launch. I mentioned the Vigoride-3, the third vehicle, will soon have the thermal vacuum testing, which is meant to simulate the environment in space and how the vehicle will encounter that environment in -- the space environment that we plan to launch to next year.

After that, we're going to put Vigoride-3 through ground vibration testing, which is meant to simulate the environment the vehicle encounter in the launch.

We're going to assemble some of our later model vehicles. We're going to start next after Vigoride-3 with Vigoride-5, which is the first Vigoride of our next-generation or next block configuration called Block 2.2. That's our latest configuration of the vehicle.

We currently plan to conduct the inaugural mission, as I mentioned, as early as June of 2022. Of course, that's subject to receipt of the necessary licenses and other government approvals and successful completion of our efforts to get the system ready for flight.

We're planning then, I would say, to look ahead for a follow-on mission in the fall of 2022. And that's subject, of course, to the same caveats that I just mentioned as well as our ability to secure space on a launch provider's manifest.

So fair to say in the regulatory area as well as in the technology development production area, in our new launch services agreement with SpaceX, there's an awful lot going on, but those are just some things to look for in the coming months when you follow Momentus.

Next, we have David Strauss from Barclays.

It's (inaudible) on for David Strauss. First question, if you could discuss the cash trajectory of the business and to the extent that you're funded for Vigoride production and also kind of the extent in which you'll need more cash or can generate more cash for your Ardoride solutions?

Sure, David. So year-to-date, we've spent about $8 million per month in operating cash, and you can see that in our cash flow statement. We do have a series of one-off items that we are looking at into the future. We do have a loan repayment, too. We do have the balance of the SEC settlement. As we increase our launch activities, you'll see some milestones going out to our favored launch vehicle provider. As well as we do anticipate increased investments that John talked about on the NSA front as well as legal bills on the CFIUS, the independent compliance consultant tied to our SEC order and the class action lawsuit. This should be additive to our run rate. Now some of those investments on the NSA side, they're kind of nonrecurring in nature, so you'll see a higher spike and then should ramp down, right, over time.

We have about $178 million in cash at the end of the third quarter, and we do see this cash sufficient to carry us to the early part of 2023.

Got it. Just as a follow-up, can you refresh us on the price per kilogram to Low Earth Orbit that's implied by the Vigoride vehicle? And maybe discuss a little bit about your comments on mid-decade reusability. And to the extent that, that compares to pricing on kind of the larger end of the market as well as some of the aspirational pricing of your small sat competitors or your small sat launch competitors?

Okay. Let me try to unpack that question a little bit here. So we are seeing roughly $15,000 per kilogram to Low Earth Orbit. And we've seen that historically in the past, and that's been what I would classify as our standard pricing model.

Now the market dynamics is getting a little more competitive and we do see challenges. But we are still entertaining many of our customers and our backlog remains relatively stable. So that's -- I think that was part of your question.

Now can you reiterate the second part of your question?

Sure. So just thinking about how that $15,000 per kilogram per Lower Earth Orbit, how does that compare to maybe the current market as well as some of the aspirational pricing of these small sat launch providers?

Yes. John, are you familiar with the small sat launch provider and their pricing?

I don't know the specific numbers.

Yes. We'll have to get back to you on the small -- you're talking about the small launch vehicle providers, right?

Sure, sure. So Astra, Rocket Lab, Relativity.

Yes. I think from a -- I mean, again, from a mission standpoint and a dedicated launch to LEO, you're going to find a larger launch vehicle provider much more economical. But I don't have the specifics on the small provider. Darryl, do you have any?

Yes, this is Darryl. So I think I mean a Rocket Lab Electron Rocket, I think, costs about $7 million. If you fill it, you can get the price down to sort of $25,000, $30,000 per kilogram. But by and large, you don't fill it, right? So if you're taking -- the example that we often cite is 100-kilogram payload, which is likely bigger than most of what we see. But if you have 100-kilogram payload going orbit, you're only going to fill about 40-or-so percent of that Rocket Lab rocket, and you're going to end up paying $70,000 $80,000 per kilogram for that. So I think that's one data point that I'd sort of throw out there. And as John said, the cost to do this with a midsized or large rocket is much lower on a per kilogram basis.

And I guess I would just add on to that, that there's the -- the cost that it's going to require us to provide an expendable Vigoride-based service, but of course, our key aspect of our strategy, as I mentioned, is the continued improvement of that technology. And once we get to the point that we have a reusable version, which we expect to introduce around the middle of the decade, we'll be able to transition to reusability which should lower our costs substantially and provide not only this cost reduction opportunity but a margin expansion opportunity.

Next up, we have Austin Moeller from Canaccord.

So my first question here, recently, I did a satellite manufacturing panel where several key manufacturers indicated that they are requiring that all of their new small sat customers have a dedicated propulsion system on their satellite because of the risk of space debris. So how do you factor that sort of recent development into what's demonstrated in your presentation about the possibility of excluding propulsion to reduce the cost per kilogram?

Well, our Vigoride vehicle and the other vehicles we're going to provide, of course, as I mentioned, it's a very personal vehicle that will handle not only in-space transportation, that is to say taking small satellites, cube satellites, nano satellites to the right locations. Think of it like a bus or the UPS trucking space dropping cargo off at the right locations. And there are other services that we described for hosted payloads, satellite servicing and the like.

Debris removal, which is what you're talking about, is a substantial opportunity because of the large numbers of small satellites and cube sats and nano sats going up.

Now some of the larger satellites, it's more practical to introduce built-in propulsion systems for those satellites to be commanded to therefore deorbit or things of that nature to remove the debris.

But we think we're more cost-effective because if you stop and think about it, you could outfit hundreds or thousands or tens of thousands of satellites to each have their own propulsion system or you can have the equivalent of a truck coming by and picking up and deorbiting large numbers of satellites. And when you get down to smaller and smaller satellites like cube sats, nano sats, the per pound, per kilogram cost of outfitting those things with their own dedicated propulsion systems is substantial.

And so I'm not saying there's going to be a single solution for this burgeoning need for debris removal. I think you're going to see a variety of things brought to market and commercialized. But we do think the concept that we're pursuing has a lot of potential and that there's going to be a significant addressable market for it.

Okay. That makes sense. And just a follow-up, what key test objectives are you looking to demonstrate on that Vigoride launch in June? And as I understand it from previous conversations we've had, there's not going to be any customer payloads riding along for deployment on that June launch, right?

For the planned launch next June, there will be customer payloads that we will take with us to orbit. We're planning to have paying customers that come along with us. And what we'll do is we'll be integrated, assuming all goes well, and we meet the caveats. I mentioned in my statement. We will take the SpaceX Transporter 5 mission in June, go to orbit, Lower Earth Orbit. And there, our primary goals for the mission will be to test Vigoride on orbit, to put it through its spaces, the things that it would ordinarily do to drop customers off and to operate normally in space. And we're just going to put it through its flight envelope. And if there are any issues that are experienced, we'll work to address those both on orbit and then later.

I just can't overstate though the importance of this kind of step-by-step testing. And while we will have paying customers that we will take to orbit in this initial mission, once we've dropped them off, we will then go through our testing regimen. And obviously, we would love for our first test of Vigoride in space to go flawlessly, I mean not a single thing wrong. But in the history of space, it is common to experience issues that you learn from and improve upon. So we really are approaching this first opportunity with realistic expectations borne from the experience we all have and the desire to be poised to address any issues that we see occur. And I just can't overstate the importance of this kind of philosophy from testing on the ground, testing in space, build a little, test a little, build a little test a little, and that's how you innovate and develop new technology that does new things that haven't been done before in the space. And that's how we're going to validate our design and also look for areas for improvement.

Thank you. Presenters, I'm showing no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may all disconnect.