Momentus Inc. (NASDAQ:MNTS), a space infrastructure company, has entered into a secured convertible promissory note with Space Infrastructures Ventures, LLC (SIV), as disclosed in a recent SEC filing. This agreement, dated October 24, 2024, allows Momentus to borrow up to $3 million in two tranches to fund working capital and general business needs.
The first tranche of the loan is $2 million, with an option to borrow an additional $1 million between December 22, 2024, and February 14, 2025. The note carries a 15% annual interest rate and matures on October 24, 2025, when all principal and accrued interest become due. Momentus' assets substantially secure the loan.
SIV has the option to convert outstanding obligations under the note into Momentus Class A common stock at $0.5292 per share, starting six months after the issuance date. The number of shares and conversion price are adjustable for certain corporate actions like stock splits or dividends.
Additionally, Momentus agreed to issue SIV warrants to purchase up to 5,668,934 shares of common stock at the same price of $0.5292 per share. These warrants become exercisable on April 24, 2025, and expire on April 24, 2029. However, SIV's beneficial ownership is capped at 9.99% of Momentus' outstanding common stock, a limit that can be adjusted upon mutual agreement.
The company also issued warrants to an unrelated investor for purchasing up to 5,000,000 shares at $0.575 per share. These investor warrants are exercisable from March 17, 2025, until March 17, 2029, with similar ownership restrictions as the SIV warrants.
Momentus must obtain consent from SIV for certain actions, such as asset purchases outside the ordinary course of business or debt repayments. The note can be prepaid with a 10% fee and may accelerate upon default or a change of control of the company.
In other recent news, Momentus Inc. faces potential Nasdaq delisting due to non-compliance with listing rules. The company has received a notice indicating insufficient stockholders' equity and plans to present a compliance plan to a Nasdaq Hearing Panel. Additionally, Momentus has secured a contract from NASA for future satellite launch services under the VADR program. This opportunity positions the company to deliver a variety of payloads to multiple orbits.
Momentus has also secured approximately $2.75 million through a private placement of securities arranged by A.G.P./Alliance Global Partners (NYSE:GLP). The company has reached a preliminary court-approved settlement over derivative lawsuits, which includes corporate governance reforms.
The company's financial forecast for the first half of 2024 projects revenues between $1.0 to $2.0 million and an anticipated net loss between $14.0 and $16.0 million. Momentus has joined the Defense Advanced Research Projects Agency's BRIDGES consortium and collaborated with London-based Lodestar Space to equip its Vigoride Orbital Service Vehicle with a new robotic arm.
InvestingPro Insights
Momentus Inc.'s recent financial maneuver reflects the company's urgent need for capital, as highlighted by several InvestingPro metrics and tips. The company's market capitalization stands at a modest $12.82 million, indicating its small-cap status. This aligns with the InvestingPro Tip that Momentus is "quickly burning through cash," which explains the necessity for the $3 million convertible note agreement.
The company's financial health appears precarious, with InvestingPro data showing a negative P/E ratio of -0.29 and a concerning return on assets of -139.95% for the last twelve months as of Q2 2024. These figures support another InvestingPro Tip that Momentus "may have trouble making interest payments on debt," which is particularly relevant given the new 15% interest rate on the convertible note.
Despite these challenges, Momentus boasts impressive gross profit margins of 84.86%, as reflected in both the InvestingPro data and tips. This suggests that while the company struggles with overall profitability, its core operations have potential for efficiency.
Investors should note that Momentus's stock has experienced significant volatility, with a 16.72% return over the last month but a -84.6% return over the past year. This volatility is consistent with the InvestingPro Tip that the "stock generally trades with high price volatility."
For a more comprehensive analysis, InvestingPro offers 16 additional tips for Momentus, providing deeper insights into the company's financial position and market performance.
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