Q4 2022 Momentus Inc Earnings Call

March 7, 2023

Okay.

Ladies and gentlemen, thank you for sandy by and welcome to the Momentous Inc. Fourth quarter 2022 earnings Conference call I would now like to turn the call over to Darryl Genovese <unk> Vice President of Investor Relations. Please go ahead.

Yes.

Fourth quarter 2022, and fiscal year 2022 earnings Conference call with me here today are John Rooney, Chief Executive Officer of the company and chairman of its board of directors as well as Denis Mahoney interim Chief Financial officer, each will 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 quarter and the year you can download a copy of the release and presentation slides at investors that momentous that space.

During today's call, we will make certain forward looking statements within the meaning of section 27, a of the Securities Act of $19 33, and section 20 <unk> of the Exchange Act of 1034.

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 the forward looking statements. In this communication you should listen to today's call with the understanding that our actual results may be materially different from the plans intentions and expectations disclosed in our forward looking statements we make.

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 Companys 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.

None of these non-GAAP financial measures as a substitute for or superior to measures of financial performance prepared in accordance with GAAP.

With that I'd like to turn the call over to our chairman and Chief Executive Officer John Route.

Well. Thank you Daryl I'm delighted to give you an overview of the company's progress in 2022, and so far in 2023 as well as our plans for the future.

I'm also pleased to have Denis Mahoney here for his first earnings call as our interim CFO . After I make my comments Dennis will take you through the financial highlights.

Turning to slide four momentous took great strides in 2022, and so far in 2023 toward our goal of being one of the market leaders in in space transportation and infrastructure services.

We are one of a small number of companies that have launched orbital service vehicles in this space to serve this market.

We have made significant progress on our technology development conducting the first launch of our vigorous orbital service vehicle called vigorous three in May of 2022.

<unk> three was launched from Cape Canaveral, Florida into low Earth orbit on the Spacex transporter five mission.

In addition to launching <unk> three on the transporter five mission momentous used the second court on the launch vehicle for a deploy are made by a third party.

Using vigorous three in this deploy air momentous placed eight satellites into orbit. These eight satellites were from foster systems orbit, NT and U and California State Polytechnic University at Pomona. We also carried a payload from a fourth customer who prefers not to be publicly date.

Our inaugural launch of vigorous III was followed by a second invigorate launch in early January of this year with our vigorous five vehicle, which is the lead ship in our new block two two configuration that incorporated lessons learned and improvements from the vigorous three mission.

<unk> five is now in low Earth orbit, where it is in good health and is undergoing a deliberate commissioning process as we prepare to fire its microwave electrothermal thruster in the coming weeks maneuver the spacecraft in orbit place a customer satellite in orbit and continue to support our cutting edge hosted payload from Caltech.

That aims to demonstrate the ability to collect solar energy in space and transmit electricity wirelessly in space and back to Earth.

During the first two months of 2023, we conducted the assembly ground testing and flight readiness review of the next space craft, we intend to launch the <unk> six.

We then ship vigorous six to its launch site at Vandenberg Space Force base in California, where it has been integrated onto a Spacex launch vehicle I am pleased to report that we are on track to launch <unk> six on the Spacex transporter seven mission targeted for next month.

We have really strengthened our engineering and operations capabilities over the past year, we assembled an impressive group of leaders for our technology development Engineering program management manufacturing and operations and supply chain functions composed of industry veterans with decades of experience at leading companies in space.

And defense industries.

We have also recruited the outstanding talent below the level of the organization chart below the top of the organization chart down to the individual contributor.

Momentous combines the strength of our highly experienced team with the agility of people trained in early stage enterprises.

Interplay between these backgrounds has produced a stronger engineering and innovation culture.

We believe our highly experienced team gives us a competitive advantage over our peers.

We.

Lined our engineering and development organizational structure to support more rapid development of our spacecraft and enable more mature documented engineering processes to develop assemble and test our spacecraft and its components.

The results are evident.

We encountered far fewer issues during the assembly and testing a vigorous six than we did during the production of vigorous five which already represented a big improvement relative to what we experienced on the earlier vehicle the grade three.

To be specific our engineers and technicians reported 45% fewer nonconformance is on vigorous six relative to <unk> <unk> five.

And not only are we seeing progressively fewer issues as our assembly and test processes mature. We're also resolving the issues that we do encounter more rapidly.

All of this gives us increased confidence in the reliability of our vigorous orbital service vehicle.

Productivity has similarly improved.

The assembly and test and invigorated six faster with substantially fewer labor hours to invigorate five and we expect to see continued productivity gains during the production of our next vehicle <unk> seven that is already underway.

We're pleased with how customer interest has been trending we recently secured follow on orders from two of our vigorous three customers as well as contracts with several additional customers, including NASA luck space quasi in context.

Momentum has also signed a memorandum of understanding with scientists space during 2022 to explore launching its lindsay set satellites onboard vigor.

Generally foster collaboration between our two companies.

As I mentioned on our last earnings call Momentous has started to focus on growing our business with U S government departments and agencies like the defense Department and NASA.

Think these customers can ultimately grow to represent a major part of our business.

To lead this effort, we have hired Chris Kinman as our new Chief Commercial officer, Chris comes to Us from North procurement space system, where he led the business development team and their capture of satellite payload opportunities for the defense Department and intelligence community.

Chris brings more than three decades of experience driving growth in the defense and civil government and commercial space sectors.

He is already making a big difference for us.

During 2022, we improved our it systems tools and processes for better cyber security and a better user experience that showed improved workforce productivity.

We've also improved our finance and accounting tools and processes and hired a new interim CFO Denis Mahoney, who is here with us today.

Dennis has been the CFO of our senior financial executive of six publicly traded companies is negotiated and closed four acquisitions in one company sale. He comes to momentous with deep experience in defining financial strategy scaling operations and driving profitable growth at technology companies.

We're really happy to have Dennis onboard youll hear from him in just a minute about our Q4 financials.

Over just the last few weeks, we've made progress in retiring some legacy obligations from before the company was public including settling a class action lawsuit.

We also successfully raised roughly $10 million in gross proceeds from an institutional investor.

Momentous as the share repurchase agreement or SRA for a final payment of $10 million to the two founders of the company.

The former founders were divested from the company in January 2021.

Due to the U S government foreign ownership concerns and the company previously paid $40 million for this purpose.

The $10 million investment, which is equivalent to a total of specified in the SRA provided capital to the company to meet the obligations in the SMA.

Retirement these issues here's the way for momentum to move forward with its vision to provide backbone infrastructure services for the growing space economy.

Okay.

Turning to slide five.

In early January of this year, we launched our second big Red mission with our vigorous five spacecraft recall that <unk> five is a next generation vehicle from our block two two configuration, which is much more capable compared to our previous vehicles improvements include modular payload day that allows us to swap customer <unk>.

Loads for additional propellant, our next generation microwave electrothermal thruster or MVP, which is designed to be more capable than its predecessor, and enhanced payload hosting capabilities that allow us to host multiple experiments from Caltech onboard figure out five.

Turning to slide six.

Launching separation of vigorous five from the launch vehicle has been completed vigorous five is now in low earth orbit undergoing commissioning.

Commissioning operations advance vigorous five remains in good health and the vehicles power and thermal systems continued to be with nominal ranges.

The solar arrays are fully deployed and generating power.

Generating power nominally I might add both uplink and downlink communications with the vehicle are healthy.

Recent activities have included commissioning the attitude determination system and completing the pressurization of the vehicles propulsion system.

As part of the commissioning campaign a spacecraft camera has now been activated it has been returning images of the spacecraft, which momentous uses for engineering evaluation one of the images we've collected as displayed now.

In the coming weeks momentous will prioritize testing the vehicles innovative microwave electrothermal thruster or MBT.

Momentous as a pioneer in commercializing this technology.

<unk> is designed to use water as a propellant and produce thrust by expelling extremely hot gases through a rocket nozzle.

Unlike a conventional rocket engine, which creates thrust through a chemical reaction <unk> is designed to create a plasma and thrusts using microwave energy.

Using the MDT momentous aims to offer cost effective efficient safe and environmentally friendly propulsion to meet the demands for in space transportation and infrastructure services.

We plan to operate big arriving space through powered flight and test its ability to maneuver to different orbits using MCT.

While we plan to deploy cosmos as satellite and its desired orbit vigorous five will host kalle text payload for the entirety of its mission.

As was the case for our inaugural mission. Our intention is to perform the planned flight mission test, our technology and space meet our obligations to our customers and apply the lessons learned during the mission to improve our technology.

This is hard earned knowledge that can only be gained through flight.

Turning to slide seven.

Beyond <unk> five we plan to launch Big ride six on Spacex as transporter seven mission targeted for next month.

The <unk> six manifest includes two satellites turn ASUR payloads for several commercial customers as well as the prototype of the momentous tape spring solar array or Tessa.

We are delighted that NASA contracted with us to fly two satellites for their lighted.

<unk> or low latitude ionosphere therma sphere enhancements and density mission.

We recently completed vigorous six assembly and a rigorous ground testing campaign, including vibration and thermal testing.

Those things simulate those tests stimulate the environment that vigorously six will encounter in the launch vehicle and in space.

This slide that we're showing now illustrates the progress we've made in preparing <unk> six.

The picture at the top left shows the spacecraft in our clean room.

When we were just beginning to assemble it and the other photos trace its journey through various stages of testing and launch preparation.

Customer satellites have been integrated onto the <unk> six and we conducted our flight readiness review about a week ago.

Then on February 28, we shipped vigorous six to its launch site with Vandenberg Space Force base in California, where it has been integrated with the launch vehicle.

We're on track to launch <unk> six on the Spacex transporter seven mission targeted for next month.

Turning to slide eight.

One of the key objectives of the <unk> six.

Yes, the tasting solar array our task on orbit.

Our team led by our CTO, Rob Schwartz has been working on the task that concept for several years as a potential means of reducing bigger I'd unit manufacturing costs and lead times.

We've applied the patented technology behind cassette.

You can see the tests are fully unfurled on the left it's about 11 meters or roughly 36 feet long to build pasta the team bonded large sheets of flexible solar cells to take springs.

The four inch mandrel is much smaller than those used in competing rollout solar rays, which provides weight savings.

Once development is complete we estimate that replacing vigor.

Third party solar array with Tessa could reduce the overall recurring production cost a vigorous by as much as about 10%, while potentially reducing lead time by several months.

These are important improvements as we continue to transition from vigorous development to production at lower unit costs.

We're also seeing interest from commercial and government customers and Tessa.

<unk> six will be equipped with its standard foldup solar arrays, so tasks and will not be its main power source, rather Tessa will fly is a hosted payload on the upper deck, a bigger I'd six.

On the bottom right corner of the chart you can see task stowed position on the <unk> six upper deck.

Turning to slide nine.

We have another technology demonstration plan for our next mission with vigorous seven scheduled to be launched on the Spacex transporter nine mission targeted for October 2023.

Invigorating seven we intend to test and demonstrate <unk> ability to rendezvous with other objects in space and maintain close proximity.

Vigorous seven will deploy a satellite and then attempt to maneuver closer and farther away as well as maintain relative distance to it in space using a sensor suite designed for rendezvous and proximity operations or our PEO.

Recall that the current version of vigor I've locked two two is expandable.

After completing its mission and moves to a decaying orbit and burns up during reentry.

A reusable big ride after completing its mission would rendezvous with and provide services to additional customer satellites.

To be clear, what we mean by reusable Big ride is one that would stay in space and be refueled and therefore reused on later emissions.

This would allow momentum to serve customers at lower cost and it can by building and launching an additional vigor.

We think transitioning from an expandable to a reusable Greg vehicle offers the potential to deeply reduce our manufacturing and launch costs and part of that process is the need to upgrade vigor with a few key technologies, including our Po.

Our capability is also key to our ability to expand the menu of services that vigorously can provide to include in orbit maintenance and refueling with customer satellites life extension and de orbiting satellites at the end of their useful life.

Turning to slide 10.

This slide shows a few commercial highlights from the fourth quarter and early part of 2023.

<unk> is a Korean company that is a new customer momentum.

Momentous <unk> plans to provide transportation services for the <unk>, one cube set in 2023 in support of our Korean National space.

We have also sites.

Correct.

<unk> Research Council training center for cube sets and crude aerial vehicles and their applications or qualify.

Our contracts are for the transportation of two quob acute SaaS to lower orbit.

While there is a new customer.

We also signed contracts with fastest systems in Spain for the transportation of two satellites and one pocket pod deploy carrying eight satellites.

As I mentioned foster as a previous momentous customer who participated in our vigorous tree mission. We deployed six satellites on that mission from a fast to deploy there.

And then finally, we signed a contract with another repeat customer who would prefer not to be named publicly.

Turning to slide 11.

We're excited about the potential growth of the markets we serve.

This chart estimates market segment sizes for last mile Transportation and de orbiting services, where we expect growth to accelerate given recent regulatory changes from the Federal Communications Commission or FCC that we covered in detail on our last earnings call that will require operators to de orbit there.

<unk> for the five years after mission conclusion.

As well as the potential for harmonization from other global regulatory bodies to closely resemble the new FCC rules.

Defense and civil government space budgets are growing as you can see they're measured in billions of dollars.

We believe momentum has the right team and experience to appealed lease customers with decades of experience in the aerospace and defense industry and as the department of defense and <unk>.

And that's where we're focusing our business development efforts.

Turning to slide 12.

I would like to conclude my prepared remarks with a summary of the key reasons why momentous is well positioned in this space market.

First the markets that we serve a rapidly developing <unk>.

As a result of progressively lower cost the number of satellite deployments is growing and these satellites need additional services once they get the space.

The private sector and the public sector recognized this need and the regulatory environment is trending favorably with new FCC the orbiting rules being an important example.

The space Foundation estimates the size of the space economy at about $469 billion today, and Morgan Stanley space team expects the market to more than doubled to over one trillion by 2040.

Bank of America, and other groups forecast even faster growth.

Second momentous is well positioned to capture a portion of this growing market momentum.

Momentum is now launched two bigger I've vehicles space and is well on its way to launching a third.

While others have aspirations.

We are one of just a select group of companies already flying in space and we've deployed eight customer satellites.

Beyond our inks based transportation service, we offer payload hosting services and are currently flying a substantial hosted payload for Caltech.

We believe our power generation capabilities and the size and flexibility of our configuration gives us a competitive advantage in this segment.

We continue to build on our service offering and plan to introduce in orbit services, such satellite weakness fueling and orbital debris removal.

Our planned 2023.

<unk> demonstration should aid us in this effort.

Yes.

Our relationships with launch companies such as Spacex are strong. Moreover, vigorous launch vehicle agnostic. So we should benefit from increasing launch capacity and associated price competition amongst launch providers over time.

Third we are encouraged by our improvements in reliability and efficiency.

We're confident that we're on a path to be a profitable business once we get to scale.

Our costs exceed revenue today as we're still early on the learning curve and are producing in flying vigorous at a low frequency.

As we increase vehicle reliability, we expect capacity utilization and revenue generation per vigorous mission to increase.

At the same time, we expect to be able to produce vigorous more efficiently and as a result of learning economies of scale design for manufacturing and targeted cost reduction efforts like our Tessa.

As a result as revenue grows.

We plan to achieve profitability and expand margins in the future. Additionally.

Additionally, we expect a discrete margin boost once we introduce reusable big right and start to save on manufacturing costs.

And finally driving all of this is our highly experienced and capable leadership team that I believe to be the most credible among new space companies as evidenced by all the progress. The company has made in these last 18 months.

Overall, I believe the combination of a growing space economy favorable demand outlook as we <unk>.

Provide competitive advantages relative to other in space transportation.

Writers and potential for margin improvement position moments as well for the future.

I am pleased with what we were able to accomplish in 2022, and so far in 2023, including the launch of two orbital service vehicles. The deployment of eight customer satellites, our progress towards conducting individualized six launch next month recent customer contracts further progress on our cost reduction plan.

The retirement of legacy matters through the settlement of the class action lawsuit and raising capital to cover expenses of the share repurchase agreement with our former founders.

As I look back over the last 18 months since we've gone public.

Proud of how many consequential strides momentous has taken from being a startup to a disciplined public company we are today.

This is not an easy not by any means but seeing what we've done successfully over these 18 months is what gives me great optimism for our future success.

Perhaps most of all adding new talent at all levels of the company as a resulted in a culture that is focused relentless and refuses to quit.

I'd like to thank our dedicated team for getting US here and would also like to thank our customers and investors for their continued support.

Now I'll hand, the mic off to our interim CFO Denis Mahoney and then we'll take your questions.

Thank you John .

I am pleased to present highlights of the financial results achieved by the momentous team during our fourth quarter and fiscal year 2022 with comparisons to prior corresponding periods.

Turning to slide 14.

Our fourth quarter and fiscal year 2022 results reflect our ongoing progress and investments toward our future launches.

We currently have contracts for approximately $33 million in backlog representing potential revenue as of December 31, 2022, compared to $43 million at the end of Q3, 2022 and 67 million.

At 2021 fiscal year end.

The $33 million and contracts have been entered into with 18 companies in 12 countries similar totals to the prior periods the.

The decline in total backlog at fiscal year end 2022, compared to Q3 2022 and fiscal 2021 is due to the combination of fulfillment of prior contracts.

Installations, and the exploration of option agreements entered into for a fee to participate and momentous slides at future dates.

Typically our customers have the right to cancel a flight reservation and when doing so forego their deposits and milestone payments.

Should a customer cancel a contract further rescheduling needs or other reasons before all of its payments are made the resulting revenue will be less than the full value of the backlog.

Momentous has historically included in backlog both firm orders as well as options.

These options give our customers the flexibility to opt into an available launch slot without requiring a separate agreements.

The decline in backlog from prior periods to $33 million at Q4 2022 was due to a combination of these factors, including the exploration of options.

Of particular note our firm contracted order backlog is consistent with levels reported at the end of Q3 2022.

We ended Q4, 2022, with Nonrestricted cash and cash equivalents of $61 million, which compares to ending cash balances of $160 million at Q4, 2021 and to $82 million at Q3 2002.

92.

We believe the company has sufficient liquidity to meet its needs for the next 12 months.

We ended the year in fourth quarter of 2022 with approximately $15 million in outstanding gross debt consisting of a term loan that we began that we began to repay in march versus $25 million at the year ended 2021.

We invested approximately $88 million in operations in 2022.

Compared to $87 million in 2021.

2022 investments of $88 million includes $17 million in Q4, 2022, a like amount compared to Q4 2021 and in line with our plan.

We recognized $299000 in revenue in 2022.

Compared to $330000 in 2021.

During Q4 2022, we recognized $120000 in revenue, which included customer deposits forfeited upon the exploration of options.

Other 2022 revenue related to bigger ride three as it continued to deploy customer satellites fulfilling performance obligations to our customers. The majority of our figure vigor ride manufacturing costs and launch costs are accounted for as research and development expense.

Because the bigger ride platform is still under development.

We expect gross margins to decline once vigorous development is completed and we enter the production phase when costs will be accounted for as cost of revenue and not research and development expenses.

In the fourth quarter of 2022, we generated approximately $21 million in losses from operations.

On a non-GAAP basis, our adjusted EBITDA was negative $15 $5 million, which.

Presents an improvement of approximately $500000 versus Q3 2022.

Please refer to the earnings press release issued today for the reconciliation of EBITDA to GAAP net income.

non-GAAP SG&A expenses for the fourth quarter of 2022 totaled approximately $6 million approximately $1 million lower than Q3 2022.

non-GAAP R&D expenses for the fourth quarter 2022 totaled approximately $10 million in line with Q3 2022.

We ended Q4 2022 with approximately 84 million shares outstanding I will now hand, the call back to Daryl.

Thank you Dennis.

Moment, we will move on to the question and answer portion of our call I would like to remind participants that all disclaimers outlined at the outset of this call extends to the question and answer session.

This includes our disclaimers relating to non-GAAP financial measures and forward looking statements.

<unk> would you please remind participants how to enter the queue.

Yes.

The floor is now open for your questions to ask a question at this time. Please press star one on your telephone keypad, if at any point you'd like to withdraw from the queue. Please press star one again youll be provided the opportunity to ask one question and one for sort of a follow up question, we will take a moment to render our roster.

Okay.

Yeah.

Our first question comes from Eric <unk>.

Amazon from Stifel. Please proceed.

Yes, thanks for taking the questions.

Maybe just starting with the vehicle right five given the success you've seen so far.

And the achievement of certain milestones around.

The solar rays deployment.

Vehicles power and communications.

Has this changed or improved your timeframe, maybe for being able to do.

Nice Orbitz and transportation services.

Well thanks for the question Eric.

The vigor five mission of course is the second mission that we've conducted.

The first one being last year in May of 2022, the spacecraft the vigorous five spacecraft right now is in lower orbit.

Again this spacecraft is in good health it is.

As solar arrays are fully deployed and generating power nominally we're able to charge and discharge the batteries normally.

Telemetry, we're getting back to a regular communications and the uplink.

Good health.

The.

Key performance requirements that we're going to aim to meet coming up soon is that we as I mentioned attitude determination has been enable than we are.

Our pressurization of the fuel system essentially allows you to move the water propellant around on the spacecraft. So we've tested our ability to do that the things that are coming soon will be completion of commissioning of the reaction control system first and the reaction control system uses the same water and the same for pellet tank.

As the microwave electrothermal thruster.

And so with that Rcs will not only reorienting adjust our attitude is necessary, but it's one of the redundancy features that we have in vigor that if for some reason the microwave electrothermal thruster should not perform we can maneuver the vehicle using the water based reaction control system to different al.

<unk> and adjust our position in space that way now.

Now we do plan to test the microwave electrothermal thruster soon in just the coming weeks, we expect to be.

Plan too.

Test that system, we've tested it of course, dozens and dozens of times on the Earth and conditions that stimulate space, but now we're looking forward to this latest the next generation I should say of our microwave electrothermal trustor operating space and those are the keys to space transportation.

And as you mentioned, having the ability to maneuver and deliver customers too precise customer orbits either through space transportation services or through the kinds of hosted payload service that we're providing to a customer like Cal Tech and.

And we do think that our technology provides a competitive advantage in our ability to service those needs, particularly hosted payloads and theres more opportunity in hosted payloads for differentiation and margin expansion.

Great.

So it seems like.

This is just it's an ongoing process and we'll find out more.

The coming weeks and then obviously with the V go right.

<unk> coming up in April may.

And then maybe just my follow up question.

<unk> settled the class action lawsuit that was a material drag on the business.

As you continue to scale the business and drive efficiencies, how should we be thinking about the quarterly cash burn rate and your timeframe for achieving breakeven. Thank you.

Sure maybe I'll mention a couple of things ill turn it over to our CFO Dennis on that matter.

Certainly, it's something that we're paying close attention to as we begin to scale. The business you mentioned the settlement of the class action lawsuit, we're very pleased to have that behind us.

Been pending for a while and while the settlement provides a near term cash outflow. It does allow us to reduce our ongoing legal spending now that that issue is behind us.

So why don't I turn to Dennis to cover some of the things on the cash outlook.

Great well, thank you John and Eric.

Nice to meet you on this call.

While of course, we do not give forward looking guidance, Eric perhaps I can clarify for you more about our results that we've achieved and progress we've made in this in this year just ended.

Also.

We are absolutely focused on resource utilization and putting our wood behind all of the right arrows in managing our cash appropriately. We also of course watch our watch markets and watch opportunities and we will continue to act opportunistically and.

We believe we can say with good judgment going forward.

We look at our cash burn this last year, we also see a trend.

And while we can't predict what that trend might be in the future.

We're certainly well focused on the goal and our monthly cash burn for the fourth quarter of this year was $6 8 million that compares to cash burns in the first half of the year that were between $8 million to $9 million. So we had a very good trend as we completed this.

Full year 2022.

Cash is king will continue to watch it and manage our business tightly.

Of course, those were monthly figures that Dennis provided.

Understood great. Thanks for the update good luck.

Thank you Eric.

Our next question comes from the line of David Strauss from Barclays. Please proceed.

Okay.

Hi, Good afternoon. This is Josh <unk> on for David.

Wanted to ask how does the forward sales pipeline look.

Sure.

One of the things that we're very pleased about is as we.

Generally more flight heritage and as we.

Get further in our development cycle, we're seeing growing interest from commercial customers as well as government customers on the pipeline.

<unk>, we continue to see customer opportunities, we're bidding about we feel good about the way our service offering aligns with our customers' plans to go to market.

As we mentioned earlier, we recently announced in customer orders from repeat customers like foster systems, as well as new customers like content and quasi.

Where we're seeing significant opportunities to grow our business and that we're actively pursuing is with the defense Department and NASA. The feedback we're receiving is very encouraging about the capabilities of our Big Road orbital service vehicle and its ability to support a range of military intelligence scientific needs and things of that nature.

At the Defense Department and NASA.

Some of the discriminator, so the things that we think set us apart in that market is that the vigorous orbital service vehicle has lot of power relative to our competitors in power is one of the coins overwhelm that allow you to support instruments payloads the operations.

All of the systems onboard a spacecraft.

As a hosted payload.

To do different missions with them secondly, our configuration is very flexible compared to our competitors right. Now we are flying the Caltech payload on invigorate five I would say a number of our other competitors are not able to fly a payload of that tight because of the size and configuration of it.

So thats the second advantage that vigor out provides a third would be the payload hosting capacity.

Fourth would be our speed to market one of the feedback pieces, we're getting particularly from government customers is the speed at which we can produce vehicles. We just produced our third one in under a year and it was a real joy for us all to be outside of our headquarters here cheering the truck as it pulled away and it goes to the launch site.

Those are some special moments in the space industry, and then I'll ask discriminator or differentiator that I'll mention is we intend to be very competitive on cost and to compete aggressively.

So for all those reasons I think we're very optimistic about the future and then lastly, I'd say there is an external change that government regulators have brought this new FCC rule, requiring the de orbit satellites. After five years at the end of their useful life at the end of their useful life.

As a real change in the environment.

Just to give you a sense of the scale of that according to the government accountability office or G. E O at today about 5500 satellites on orbit.

The <unk> estimates by 2030 over 55000 will be in orbit, that's a roughly 10 fold expansion over the next seven years and so as we begin to think about the need to de orbit those satellites consistent with the new FCC rule and rules that the government.

Counterparts in places like Europe are going to implement that's going to provide another significant opportunity for our flexible orbital service vehicle light vehicle right.

Yeah.

Okay.

Sure.

Our next question comes from the line of Edison Chu from Deutsche Bank. Please proceed.

Hey, Thanks for taking our questions first I.

I understand that you're going to test it properly in the next few weeks do you have some parameters in mind and how you would define success or various all the success curious how you're thinking about that.

Well thanks for the question of Edison.

The microwave electrothermal thruster onboard vigorous five is something that we intend to test here in the coming weeks as you mentioned.

Some of the things that we'll evaluate.

The water onboard vigorous five once it has moved to the thrust chamber. If you will first explain for EIS and then there is a startup sequence that we will monitor and evaluate carefully because once that startup sequence begins we can control the burn and the duration.

Of it and modify the position of vigorous path using the NDA.

And so we'll evaluate its performance will look very carefully and deliberately at the telemetry we're receiving.

And we will.

Look at any refinements that we want to offer in the performance of it and assess its performance that's the plan.

Now once the MDT begins operation, we do intend to change the altitude and inclination of vigor out that's one of the benefits of an orbital service vehicle is your ability to take our satellites to different altitudes from the drop off locations. So your customers receive a custom orbit and not just <unk>.

<unk> to the general location of being about 500 kilometers up in space, but theyre going specifically to where they want to go and it's a lot like a container ship it being the equivalents of the launch vehicle on Earth.

It takes a series of cargo payloads to the port, but that cargo needs to be redistributed elsewhere and that's that's the role we intend to play in our play.

And then secondly on the inclination changed that allows you to modify the orbitz. So that you can go to a more precise location that it's optimized for our customers' needs depending on whether it's a communications mission or a remote sensing this sooner.

Are there particular customer requirements are so we will do those things using the that's our plan anyway to do those things with the <unk> in the coming weeks.

Understood.

Separately on the bigger seven reusable one how comfortable are you with the tech upgrades that are needed to do this and also you mentioned significant savings do you have a sense of of how much.

We're talking about here in terms of the cost.

Okay.

Well <unk> seven is currently being assembled in our cleaner in here, where we're doing this call from San Jose, California.

Vigorous seven will be assembled over the coming weeks and we'll complete the testing of it bigger.

Just to clarify Edison bigger eight seven is a walk to two vehicle, which is the same configuration, which is expandable as vigorous five in orbit now and figure out six that is integrated for launch next month.

Now a reusable vigor IDE is part of our future product roadmap and the first demonstration of some of those key technologies needed for a reasonable version will be on <unk> seven with the remote proximity operations or <unk>.

Projects we.

We do think it's very important to eventually develop a reusable great vehicle as this has the potential to reduce our two largest cost items, which our manufacturing costs and launch costs, while also allowing us to add new revenue streams, such as in orbit refueling maintenance and D. Orphaning.

In terms of.

Rule of thumb to assess the magnitude of the cost reduction the intensive for the reusable or you might call. It an refuel bigger I've sustained space. So it would go to spaced on launch vehicle deliberate customers are superb support hosted payloads or do in space servicing.

And then stay there.

Subsequent launch vehicle replenishment fuel or additional payloads would be delivered and vigor vigor. The reusable version in the future could then we feel itself take the payloads and continue onward and the plan is to do this a few times and so if you think about the cost to produce one vigor and one law.

<unk> being useful to support one set of missions. If you can do that for 2345 missions you can see the extent the commensurate reduction in launch costs, it's not exactly a 100% reduction because after all you have to set up new fuel and payloads, but you are being <unk>.

Much more efficient by not launching the mass of the vehicle itself, but rather just the fuel and the additional payloads.

Thanks, if I could just sneak one more and I think on the last earnings call. You had mentioned you're bidding or going after some some government contracts defense contracts.

We have any updates on the prospects of dose.

Yes, thanks for the good question.

We are.

Focusing on government business, particularly with the defense Department that we are pursuing.

Interest that we're receiving is has been very rewarding.

So government organizations are actively engaging with us.

Commenting about a number of the ways that they see our platform our capabilities being differentiated and there are.

They like the flexibility of the platform that we have the power of its available the speed at which we can produce the vehicles and the cost. So we're in active dialogue with defense Department organizations like the space Force SDA.

ARPA and we're also talking to NASA and to pursue additional business and so we're optimistic about those as you know these are long cycle business with the government.

So we don't have any contracts to announced today. However, we are optimistic about the future in that area.

Okay.

Thank you.

Okay.

Our next question comes from the line of James Ratcliffe from Evercore ISI. Please proceed.

Alright, thanks for taking the question.

Noticed that Spacex recently raised the rideshare prices and what does that mean for you directly particularly in regards to <unk>.

The aggregation business.

And how how protected if at all are you against those increases and in regards to the bigger picture, what's your view on.

Overall trends in cost to orbit.

Now versus where things were looking for a year ago.

Well thanks for the question James.

We currently have launched service agreements signed with Spacex fit will that cover our launches in planned in 2023 and the first one plans in 2024, which is currently targeted for January of 2024, and so on those those emissions.

Where we already have assigned launch services agreement contract our prices there will not be affected by the increase in prices that Spacex recently announced after those contracts that we would like others in the market.

Be subject to the increased pricing that Spacex has has introduced.

Those.

That new pricing structure, which is really meant to also come with a new interface for ride sharing missions.

Is designed to provide increased flexibility to spacex customers.

We maintain a very close dialogue with Spacex.

And I will say once those new cost come into play.

Our cost permission will be higher under that new framework.

However that won't be unique to us. It will also affect our competitors who are also fly on Spacex.

And certainly.

Once starship is introduced to the market by Spacex and of course, they are saying that they are planning to launch star ship. This year, that's a much larger market.

British understatement theyre substantially larger of course that will significantly reduce the per pound or per kilogram cost place things that orbit.

The other thing I'd say is we're seeing other competitors to Spacex begin to mature their rockets.

Relativity for instances talking about conducting there is planning to conduct their their first launch here shortly and we have seen other.

New systems to be tested.

It reminds us all of the difficulty in doing that you probably saw the news about Japan, the Japanese space Agency.

And the unfortunate failure of the H three launch here in the last 24 hours from tonic Shima.

We've seen other examples of that with <unk> and their recent Vega failure, ABL and Virgin orbit. So there are just reminds us how difficult space can be but as those new systems come online and we see more competition and more capacity, including from Star ship.

We think we're going to see launch costs begin to.

Half price positively affected to come down.

So.

This is one of the things that there is a lot of demand for existing launch vehicle capacity in the industry.

And so I think is there more opportunity to go space.

Customers will also benefit.

Thank you and thanks for the question.

Our final question comes from the line of Michael Matheson from singular research. Please proceed.

Good evening, gentlemen, just coming back to some of the financial figures that we work with you mentioned that your order backlog stands at $33 million so at quarter end.

The committed portion of that is consistent with prior periods, but I didn't hear a stickier.

Do you disclose the figure for the committed amount.

Okay.

We have not been disclosing that breakdown.

Okay.

Michael.

Backlog at the year.

Year end December 31 was $33 million.

The key takeaway would be that our fixed component of that because.

Right.

Oh.

Firm, a firm orders as well as options and the firm component of that has remained steady from previous quarters, when we've announced that.

The decline in recent backlog was due to the expiration of some options the way, we signed contracts with our customers as we allow them to sign options in some cases, if they wish to for future contracts and obviously, that's an advantage for us to potentially gain future new business and so a number of those options had expired.

This last quarter.

Very good thanks for clarifying so just for modeling revenue going through this year anyway.

Do we have committed payloads for the October launch.

Okay.

We have some committed payloads for the October 2023 launch that are presently in backlog and obviously, our salespeople are out trying to to get more and I for one am hoping to get more.

So are we all will well. Thank you very much for taking the questions and thank you for a good quarter.

Thank you Michael.

Thank you ladies and gentlemen, this does conclude today's call. Thank you for your participation you may now disconnect.

Okay.

[music].

Yes.

[music].

Ladies and gentlemen, thank you for sandy by and welcome to the Momentous Inc. Fourth quarter 2022 earnings Conference call I would now like to turn the call over to Darryl Genovesi, Vice President of Investor Relations. Please go ahead.

Yeah.

Fourth quarter 2022, and fiscal year 2022 earnings conference call with me here today are John <unk>, Chief Executive Officer of the company and chairman of its board of directors as well as Denis Mahoney interim Chief Financial officer, each will 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.

During today's call, we will make certain forward looking statements within the meaning of section 27, a of the Securities Act of 1933 and section 20 <unk> of the Exchange Act of 1934.

None of these non-GAAP financial measures as a substitute for or superior to measures of financial performance prepared in accordance with GAAP.

Okay.

With that I'd like to turn the call over to our chairman and Chief Executive Officer John Route.

Well. Thank you Daryl I'm delighted to give you an overview of the company's progress in 2022, and so far in 2023 as well as our plans for the future.

I'm also pleased to have Denis Mahoney here for his first earnings call as our interim CFO . After I make my comments Dennis will take you through the financial highlights.

Turning to slide four momentous took great strides in 2022, and so far in 2023 toward our goal of being one of the market leaders and in space transportation and infrastructure services.

We are one of a small number of companies that have launched orbital service vehicles in this space to serve this market.

We have made significant progress on our technology development conducting the first launch of our vigorous orbital service vehicle called vigorous three in May of 2022.

<unk> was launched from Cape Canaveral, Florida into low Earth orbit on the Spacex transporter five mission in.

In addition to launching <unk> three on the transporter five mission momentous used a second port on the launch vehicle for a deploy are made by a third party.

Using vigorous three in this deploy air momentous placed eight satellites into orbit. These eight satellites were from foster systems orbit, NT and U and California State Polytechnic University at Pomona. We also carry the payload from a fourth customer prefers not to be publicly gained.

Our inaugural launch of vigorous III was followed by a second vigor I'd launch in early January of this year with our vigorous five vehicle, which is the lead ship in our new block two two configuration that incorporated lessons learned and improvements from the vigorous three mission.

That aims to demonstrate the ability to collect solar energy in space and transmit electricity wirelessly in space and back to Earth.

During the first two months of 2023, we conducted the assembly ground testing and flight readiness review of the next space craft, we intend to launch <unk> six.

We then ship vigorous six to its launch site at Vandenberg space for space in California, where it has been integrated onto a Spacex launch vehicle.

He used to report that we are on track to launch <unk> six on the Spacex transporter seven mission targeted for next month.

And defense industries.

We have also recruited the outstanding talent below the level of the organization chart below the top of the organization chart down to the individual contributor.

Momentous combines the strength of our highly experienced team with the agility of people trained in early stage enterprises.

Interplay between these backgrounds has produced a stronger engineering and innovation culture.

We believe our highly experienced team gives us a competitive advantage over our peers.

We streamlined our engineering and development organizational structure to support more rapid development of our spacecraft and enable more matured documented engineering processes to develop assemble and test our spacecraft and its components.

The results are evident as we encountered far fewer issues during the assembly and testing a vigorous six than we did during the production of invigorate five which already represented a big improvement relative to what we experienced on the earlier vehicles the grade three.

To be specific our engineers and technicians reported 45% fewer nonconformance is on bigger I'd six relative to <unk> five.

And not only are we seeing progressively fewer issues as our assembly and test processes mature.

We're also resolving the issues that we do encounter more rapidly.

All of this gives us increased confidence in the reliability of our vigorous orbital service vehicle.

Productivity has similarly improved.

Assembly and testing a vigorous six faster with substantially fewer labor hours to invigorate five and we expect to see continued productivity gains during the production of our next vehicle <unk> seven that is already underway.

Momentum has also signed a memorandum of understanding with scientists space during 2022 to explore launching its lindsay set satellites onboard vigor and to generally foster collaboration between our two companies.

As I mentioned on our last earnings call momentous and started to focus on growing our business with U S government departments and agencies like the defense Department and NASA.

We think these customers can ultimately grow to represent a major part of our business.

To lead this effort, we have hired Chris Kinman as our new Chief Commercial officer, Chris comes to Us from Northrop Grumman space systems, where he led the business development team and their capture of satellite payload opportunities for the defense Department and intelligence community.

Chris brings more than three decades of experience driving growth in the defense and civil government and commercial space sectors and he is already making a big difference for us.

During 2022, we improved our it systems tools and processes for better cyber security.

And a better user experience that showed improved workforce productivity.

We've also improved our finance and accounting tools and processes and hired a new interim CFO Denis Mahoney, who is here with us today.

We're really happy to have Dennis onboard youll hear from him in just a minute about our Q4 financials.

Over just the last few weeks, we've made progress in retiring some legacy obligations from before the company was public including settling a class action lawsuit.

We also successfully raised roughly $10 million in gross proceeds from an institutional investor.

Momentous as a share repurchase agreement or SRA for a final payment of $10 million to the two founders of the company.

The former founders were divested from the company in January 2021.

Due to the U S government foreign ownership concerns and the company previously paid $40 million for this purpose.

The $10 million investment, which is equivalent to a total of specified in the SRA provided capital to the company to meet the obligations in the SRA.

Retirement of these issues and clears the way for momentum to move forward with its vision to provide backbone infrastructure services for the growing space economy.

Okay.

Turning to slide five.

In early January of this year, we launched our second ziggurat mission with our vigorous five spacecraft recall that vigorous five is a next generation vehicle from our block two two configuration, which is much more capable compared to our previous vehicles improvements include modular payload day that allows us to swap customer payloads.

For additional propellant, our next generation microwave electrothermal thruster or MVP, which is designed to be more capable than its predecessor, and enhanced payload hosting capabilities that allow us to host multiple experiments from Caltech onboard figure out five.

Turning to slide six.

Launching separation of vigorous five from the launch vehicle has been completed vigorous five is now in low earth orbit undergoing commissioning.

As commissioning operations advance vigorous five remains in good health and the vehicles power and thermal systems continue to be with a nominal ranges.

The solar arrays are fully deployed and generating power.

Generating power nominally I might add both uplink and downlink communications with the vehicle are healthy.

The recent activities have included commissioning the attitude determination system and completing the pressurization of the vehicles propulsion system.

In the coming weeks momentous will prioritize testing the vehicles innovative microwave electrothermal thruster or MBT.

Momentous as a pioneer in commercializing this technology.

<unk> is designed to use water as a propellant and produce thrust by expelling extremely hot gases through a rocket nozzle.

Unlike a conventional rocket engine, which creates thrust through a chemical reaction.

<unk> is designed to create a plasma and thrusts using microwave energy.

Using the MBT momentous aims to offer cost effective efficient safe and environmentally friendly propulsion to meet the demands for in space transportation and infrastructure services.

Yes.

We plan to operate big riding space through powered flight and test its ability to maneuver to different orbits using the MBT.

While we plan to deploy cosmos as satellite and its desired orbit vigorous five will host Kalle <unk> payload for the entirety of its mission.

This is hard earned knowledge that can only be gained through flight.

Turning to slide seven.

Beyond <unk> five we plan to launch Big rides six on Spacex as transporter seven mission targeted for next month.

The <unk> six manifest includes two satellites for NASA payloads for several commercial customers as well as the prototype of the momentous tape spring solar array or Tessa.

We are delighted that NASA contracted with us to fly two satellites for their lighted <unk>.

Or low latitude ionosphere therma sphere enhancements and density mission.

We recently completed vigorous six assembly and a rigorous ground testing campaign, including vibration and thermal testing.

Things stimulate those tests stimulate the environment that vigorously six will encounter in the launch vehicle and in space.

This slide that we're showing now illustrates the progress we've made in preparing <unk> six.

The picture at the top left shows the spacecraft in our clean room.

When we were just beginning to assemble it and the other photos trace its journey through various stages of testing and launch preparation.

Customer satellites have been integrated onto the <unk> six and we conducted our flight readiness review about a week ago.

Then on February 28, we shipped vigorous six to its launch site with Vandenberg Space Force base in California, where it has been integrated with the launch vehicle.

We're on track to launch <unk> six on the Spacex transporter seven mission targeted for next month.

Turning to slide eight.

One of the key objectives of the <unk> six.

We test the tasting solar array or task on orbit.

Our team led by our CTO, Rob Schwartz has been working on the task that concept for several years as a potential means of reducing vigor I'd unit manufacturing costs and lead times.

We've applied the patented technology behind Cassa.

You can see the tests are fully unfurled on the left it's about 11 meters or roughly 36 feet long to build pasta the team bond with large sheets of flexible solar cells to take springs.

The four inch mandrel is much smaller than those used in competing rollout solar rays, which provides weight savings.

Once development is complete we estimate that replacing vigor.

Third party solar array with Tessa could reduce the overall recurring production cost of vigor by as much as about 10%, while potentially reducing lead time by several months.

These are important improvements as we continue to transition from vigorous development to production at lower unit costs.

We're also seeing interest from commercial and government customers and Tessa.

<unk> six will be equipped with its standard foldup solar arrays, so tax will not be its main power source, rather Tessa will fly is a hosted payload on the upper deck, a bigger I'd six.

On the bottom right corner of the chart you can see test stope position on the <unk> six upper deck.

Turning to slide nine.

We have another technology demonstration plan for our next mission with vigorous seven scheduled to be launched on the Spacex transport nine mission targeted for October 2023.

Invigorating seven we intend to test and demonstrate vigorous ability to rendezvous with other objects in space and maintain close proximity.

Recall that the current version of vigor I've blocked two two is expandable.

After completing its mission and moves to a decaying orbit and burns up during reentry.

A reusable big ride after completing its mission would rendezvous with and provide services to additional customer satellites.

To be clear, what we mean by reusable Big ride is one that would stay in space and be refueled and therefore reused on later emissions.

This would allow momentum to serve customers at lower cost and it can by building and launching an additional vigor.

We think transitioning from an expandable to a reusable Greg vehicle offers the potential to deeply reduce our manufacturing and launch costs and part of that process is the need to upgrade the garage with a few key technologies, including our Po.

Our capability is also key to our ability to expand the menu of services that vigorous can provide to include in orbit maintenance and refueling with customer satellites life extension and the orbiting satellites at the end of their useful life.

Turning to slide 10.

This slide shows a few commercial highlights from the fourth quarter and early part of 2023.

<unk> is a Korean company that is a new customer momentum.

Momentous <unk> plans to provide transportation services for the <unk>, one cube set in 2023 in support of our Korean National space.

We have also sites.

Correct.

We have 6 million Research Council training center for the future sets and crude aerial vehicles and their applications or qualify.

Our contracts are for the transportation of to qualify acute sets to lower orbit.

<unk> is a new customer.

We also signed contracts with fastest systems in Spain for the transportation of two satellites and one pocket pod deploy carrying eight satellites.

As I mentioned at foster as a previous momentous customer who participated in our vigorous tree mission. We deployed six satellites on that mission from a fast to deploy there.

And then finally, we signed a contract with another repeat customer who would prefer not to be named publicly.

Turning to slide 11.

We're excited about the potential growth of the markets we serve.

<unk> for the five years after mission conclusion.

As well as the potential for harmonization from other global regulatory bodies to closely resemble the new FCC rules.

Defense and civil government space budgets are growing as you can see they're measured in billions of dollars.

We believe momentum has the right team and experience to appeal to these customers with decades of experience in the aerospace and defense industry and as the department of defense in senior positions.

And that's where we're focusing our business development efforts.

Turning to slide 12.

I would like to conclude my prepared remarks with a summary of the key reasons why momentous is well positioned in this space market.

First the markets that we serve a rapidly developing <unk>.

As a result of progressively lower cost the number of satellite deployments is growing and these satellites need additional services once they get space.

The private sector and the public sector recognized this need and the regulatory environment is trending favorably with new FCC the orbiting rules being an important example.

The space Foundation estimates the size of the space economy at about $469 billion today, and Morgan Stanley 's space team expects the market to more than doubled to over one trillion by 2040.

Bank of America, and other groups forecast even faster growth.

Second momentous is well positioned to capture a portion of this growing market.

Momentum is now launched two bigger I've vehicle space and is well on its way to launching a third.

While others have aspirations.

We are one of just a select group of companies already flying in space and we've deployed eight customer satellites.

Beyond our inks based transportation service, we offer payload hosting services and are currently flying a substantial hosted payload for Caltech.

We believe our power generation capabilities and the size and flexibility of our configuration gives us a competitive advantage in this segment.

We continue to build on our service offering and plan to introduce in orbit services, such satellite weakness fueling and orbital debris removal.

Our planned 2023.

<unk> demonstration should aid us in this effort.

Yeah.

Third we are encouraged by our improvements in reliability and efficiency.

We're confident that we're on a path to be a profitable business once we get to scale.

Our costs exceed revenue today as we're still early on the learning curve and are producing in flying vigorous at a low frequency.

As we increase vehicle reliability, we expect capacity utilization and revenue generation per viguerie admission to increase.

At the same time, we expect to be able to produce vigorous more efficiently and as a result of learning economies of scale design for manufacturing and targeted cost reduction efforts like our Tessa.

As a result as revenue grows.

We plan to achieve profitability and expand margins in the future.

Additionally, we expect the discrete margin boost once we introduce reusable big right and start to save on manufacturing costs.

Overall, I believe the combination of a growing space economy favorable demand locally services, we provide competitive advantages relative to other in space transportation service providers.

Potential for margin improvement.

<unk> moments as well for the future.

The retirement of legacy matters through the settlements of the class action lawsuit and raising capital to cover expenses of the share repurchase agreement with our former founders.

As I look back over the last 18 months since we've gone public.

Route of how many consequential strides momentous has taken from being a startup to a disciplined public company we are today.

This has not been easy not by any means but seeing what we've done successfully over these 18 months is what gives me great optimism for our future success.

Perhaps most of all adding new talent at all levels of the company as a resulted in a culture that is focused relentless and refuses to quit.

I'd like to thank our dedicated team for getting US here and would also like to thank our customers and investors for their continued support.

I'll now hand, the mic off to our interim CFO Denis Mahoney and then we'll take your questions.

John .

I am pleased to present highlights of the financial results achieved by the momentous team during our fourth quarter and fiscal year 2022 with comparisons to prior corresponding periods.

Turning to slide 14, our fourth quarter and fiscal year 2022 results reflect our ongoing progress and investments toward our future launches.

We currently have contracts for approximately $33 million in backlog representing potential revenue as of December 31, 2022, compared to $43 million at the end of Q3, 2022 and 67 million.

At 2021 fiscal year end.

The $33 million and contracts have been entered into with 18 companies in 12 countries.

Similar totals to the prior periods.

The decline in total backlog at fiscal year end 2022, compared to Q3 2022 and fiscal 2021 is due to the combination of fulfillment of prior contracts.

Installations, and the exploration of option agreements entered into for a fee to participate and momentous flights at future dates.

Typically our customers have the right to cancel a flight reservation and when doing so forego their deposits and milestone payments should.

Should a customer cancel a contract further rescheduling needs or other reasons before all of its payments are made the resulting revenue will be less than the full value of the backlog.

Momentous has historically included in backlog both firm orders as well as options.

These options give our customers the flexibility to opt into an available launch slot without requiring a separate agreements.

The decline in backlog from prior periods to $33 million at Q4 2022 was due to a combination.

Combination of these factors, including the exploration of options.

Of particular note our firm contracted order backlog is consistent with levels reported at the end of Q3 2022.

We ended Q4, 2022, with Nonrestricted cash and cash equivalents of $61 million.

Which compares to ending cash balances of $160 million at Q4, 2021 and to $82 million at Q3 2022.

We believe the company has sufficient liquidity to meet its needs for the next 12 months.

We ended the year in fourth quarter of 2022, with approximately $15 million and outstanding gross debt consisting of a term loan that we began that we began to repay in march versus $25 million at the year ended 2021.