Momentus Inc.

Ladies and gentlemen, thank you for standing by and welcome to Memento's third quarter 2021 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the conference, please press star zero on your touchtone telephone. I would like to turn the conference over to your host, Mr. Daryl Giannivosi. Please go ahead, sir.

Thank you, Grace. Good afternoon, everyone. Welcome to Momentus' third quarter of 2021 earnings conference call and our first ever earnings conference call. With me here today at 3901 North 1st Street in San Jose, our corporate headquarters and one of the two sites that Momentus occupies are John Rood, Chief Executive Officer of the company and Chairman of its Board of Directors, as well as Jikon Kim, Chief Financial Officer. Each will provide prepared remarks. Following these prepared remarks, we will take questions from analysts. In the interest of time, we would ask that you limit yourself to one question and one brief follow-up. 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 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 predicted theoretical and ground-based results will translate into operational space vehicles that operate within the parameters we expect or at all with that i'd like to turn the call over to our chairman and chief executive officer john ruse

Thank you, Daryl. 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 toward 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 D-SPAC process. The drive and determination of this team kept us moving forward and ultimately allowed us to complete the business combination with StableRoad leaving us well capitalized to execute the next phase of our business plan. Turning to slide three, 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, Jikon 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 have 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 two 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've 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 FCC's Enforcement Division, which cleared the way for us to complete our business combination with StableRoad 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 four weeks ago. Fifth, we completed the merger with StableRoad with a low level of redemptions compared to other recent D-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 III 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 and 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. I incorporate several design innovations to the nozzle to extend the thruster's total lifetime. Seven, although outside the Q3 window, I'm pleased to report on October 20th, 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 four, 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 five 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 VigRide 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 schedule. If we're unable to fly VigRide in June, then we'll do so as early as we are able. 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 demands 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 five, we have an exceptional team leading the business. In particular, I'd like to introduce three 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. Al Nye is our new Chief Legal Officer and Corporate Secretary. He has nearly four 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 plays a 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 four-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 two-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 three people, I joined Momentous 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 six 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 since 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 the slide are four 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, Don Harms, Chief Technology Officer, Rob Schwartz, and Chief Financial Officer, Jikon Kim. Turning to slide six, 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 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 rideshare partnership with SpaceX, a long list of customers and a healthy backlog. As of September 30th, 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 forego their deposits and other payments. Turning to slide seven, 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 a payload operator's launch costs while also expanding its deployment options. Turning to slide eight. This slide shows how Vigorag can provide tremendous advantages over small, dedicated rockets or onboard propulsion systems, which are bespoke, oversized, and constrain 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 low Earth 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 nine. 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 three years. We're developing our VigRide 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 two initial operational capabilities 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. Daryl is going to narrate the video.