Momentus Inc. (NASDAQ:MNTS), a company specializing in guided missiles and space vehicles, has entered into a loan agreement with J.J. Astor & Co. for $2 million, according to a recent SEC filing. The agreement, dated December 13, 2024, is set to mature on September 19, 2025, and includes provisions for weekly installment payments and potential conversion into shares of Momentus Class A Common Stock.
The San Jose-based company, formerly known as Stable Road Acquisition Corp., will use the loan for general working capital purposes. According to InvestingPro analysis, this funding comes at a critical time as the company is quickly burning through cash, with a concerning current ratio of 0.38, indicating potential liquidity challenges.
The loan, secured by a lien on substantially all of the company's assets, carries a prepayment option with varying amounts depending on the date of payment.
Under the terms of the agreement, the loan will become immediately due if Momentus encounters default events, which include failure to meet payment obligations or significant changes in business operations, such as bankruptcy or a change of control.
In case of default, the outstanding loan amount can be converted into Momentus stock at a price of $5.92 per share before May 5, 2025, with the price adjusting to 80% of the stock's average closing prices in the 20 trading days prior to conversion after that date.
Moreover, Momentus has agreed to issue warrants to J.J. Astor & Co., allowing the lender to purchase up to 28,572 shares of common stock at the same price of $5.92 per share. These "Lender Warrants," along with a second set of "Default Warrants" that become exercisable upon default, are subject to adjustments in case of stock splits or similar events.
As part of the agreement, Momentus is obligated to file a registration statement for the resale of the shares underlying the loan agreement and the warrants within 31 days following the closing date. The company has also committed to convening a special shareholder meeting by March 13, 2025, to seek approval for the transaction.
The issuance of the securities involved in this loan agreement was conducted in reliance on exemptions from registration under the Securities Act of 1933, as the sale did not involve a public offering and was made to an accredited investor.
This financial maneuver comes as Momentus seeks to bolster its working capital amid its endeavors in the aerospace sector. The filing indicates a strategic move by Momentus to secure necessary funds while providing J.J. Astor & Co. with an equity stake option, reflecting a calculated approach to financing in the competitive space industry.
In other recent news, Momentus Inc. has made significant strides in its financial and strategic operations. The company has secured a $3 million convertible note with Space Infrastructures Ventures, LLC, adjusting the borrowing date to access the full principal under the October 2024 Convertible Note.
This financial restructuring comes amidst challenges in debt management and liquidity. The company's Board of Directors also approved a reverse stock split ratio of 1-for-14, intended to meet Nasdaq's minimum bid price requirement for continued listing.
Momentus Inc. has also been chosen by the U.S. Defense Department's Space Development Agency to participate in the Hybrid Acquisition for Proliferated Low Earth Orbit program, positioning it to compete for demonstration prototype orders. However, the company faces potential Nasdaq delisting due to non-compliance with listing rules, with plans to present a compliance plan to a Nasdaq Hearing Panel.
In terms of financial performance, Momentus projects revenues between $1.0 to $2.0 million and an anticipated net loss between $14.0 and $16.0 million for the first half of 2024. The company has also postponed a Special Meeting of Stockholders to ensure comprehensive stockholder participation. These are the recent developments at Momentus Inc.
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