Q1 2023 Momentus Inc Earnings Call

Speaker 2: Hello, and thank you for standing by. My name is Emma and I will be your conference operator today.

Speaker 2: At this time, I would like to welcome everyone to the Momentous Inc. first quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise.

Speaker 2: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star and the number one on your telephone keypad. If you would like to withdraw your question, press star one again.

Speaker 2: As a reminder, today's call is being recorded. I would now like to turn the conference over to Mary Horm. Please go ahead.

Speaker 3: Thank you and hello everyone. Welcome to momenta's first quarter 2023 earnings content call.

Speaker 3: With me here today are John Roode, Chief Executive Officer of the company, and Chairman of the Board of Directors, as well as Eric Williams, Chief Financial Officer. Each will provide prepared remarks. Following these prepared remarks, we will take questions from analysts.

Speaker 3: Earlier today, we issued a press release and made a slide presentation available on our investor relations website, which provides an overview of the business and financial highlights for the quarter. You can download a copy of the release and presentation slide. At investors dot momentous dot space.

Speaker 3: and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements and miscommunication.

Speaker 3: our actual results may be materially different from the plans, intentions, and expectations disclosed in the forward-looking statements we make.

Speaker 3: 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.

Speaker 3: 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.

Speaker 3: Please also note that we will refer to certain non-GAAP financial information on today's call.

Speaker 3: comparable GAAP measures in our earnings press release.

Speaker 3: Menifee's non-GAAP financial measures is a substitute for or superior to measures of financial performance prepared in accordance with GAAP.

Speaker 4: With that, I'd like to turn the call over to our Chairman and Chief Executive Officer, John Rood. Well, thank you, Mary. It's a pleasure to be here today to provide an update on the progress that we've made at Momentus over the past quarter and our Q1 financial results.

Speaker 4: I'm also pleased to have Eric Williams here for his first earnings call as our CFO . Before I make my comments, Eric will take you through the financial highlights and the outlook.

Speaker 4: Turning to slide four, in the first quarter, Momentus demonstrated solid progress toward our goal of being one of the market leaders in in-space transportation and infrastructure services for US government and commercial customers.

Speaker 4: We are at the forefront of this rapidly expanding market, possess key competitive advantages, and have confidence in our long-term strategy. In my remarks today, I'll focus on four things that fuel my excitement about the future of millions.

Speaker 4: First, our core technology is functional and operational in space. We've come a long way in maturing our technology and we're delighted to be seeing our spacecraft and its key technologies performing in space. With every passing day and orbit of our spacecraft around the Earth, we gain more flight heritage than ever before.

Speaker 4: and increase this important advantage over competitors that have yet to fly their vehicles in space, or surely can do so successfully.

Speaker 4: Second, we continue to see growing interest from customers.

Speaker 4: both commercial and government customers responsible for US national security missions that we plan to translate into contracts over the coming months. Third, we're driving new innovation to maximize our competitive edge and are excited about new capabilities and technology.

Speaker 4: that we will be demonstrating the space in the next few months.

Speaker 4: And fourth, one of the key reasons why we're confident about our future is the cumulative decades of experience within our veteran leadership team.

Speaker 4: We've taken great strides in our engineering and technology development, whether measured in metrics for productivity, quality, speed of production, testing, and improved capabilities.

Speaker 4: We've been able to do this by leveraging over 150 years of experience leading technology development efforts at space companies by our top six leaders in engineering and supply chain to engage our massive 5G and Short......... Now it's time toHis ecatentry technology arsenal is the next step in the future.

Speaker 4: Defliters have learned the hard lessons and nuances that can only be learned through experience.

Speaker 4: of what it takes to be successful in developing new technology for the harsh and unforgiving environment in space.

Speaker 4: When combined with a young, talented crop of engineers eager to change the way we operate in space, and to be more agile and innovative, we have a very strong talent mix that is a competitive advantage over our peers.

Speaker 4: Specifically, I'd like to mention Tom Malco. He was our VP of Operations, but we recently expanded his role to oversee engineering in operations.

Speaker 4: Tom has more than 40 years of experience overseeing the design, production, launch, and operation of satellites and space systems at Lockheed Martin.

Speaker 4: Under his leadership, Lomentus has been implementing improvements and best practice processes that have increased productivity, reduced defect rates, and allowed us to produce spacecraft faster, at lower cost, and better quality.

Speaker 4: I'd also like to highlight Charles Chase, who recently transitioned from being our VP of Engineering to be our VP of Special Programs, where he is focused on winning new business and national security business. This is part of our greater focus on growing our business supporting national security missions.

Speaker 4: Charles has a 30-year track record and notably was the founder and leader of Revolutionary Technology Programs, the organization at the technological front end of the story of Lockheed Martin Skunk Works. Turning to slide five, let me begin by providing an update on our technology and missions.

Speaker 4: In less than a year, Momentus has launched three Vigoride orbital service vehicles, or OSVs.

Speaker 4: All three Vigoride vehicles are currently in orbit and we're on track to launch our fourth orbital service vehicle called Vigoride 7 later this year of SpaceX Transporter 9 mission targeted for October .

Speaker 4: Turning to slide six.

Speaker 4: As a reminder, Vigoride 3 was launched in May 2022 and we deployed eight customer satellites from the Vigoride 3 vehicle and a third-party deployer.

Speaker 4: We've since completed operation of this spacecraft which remains in orbit.

Speaker 4: Viggring 5 was launched in January 2023, carrying a large hosted payload for Caltech, and a satellite for a customer called Cosmosis.

Speaker 4: are more profitable than transportation missions.

Speaker 4: was launched in April and carries two satellites from NASA that we plan to deliver in the next few weeks to a unique custom orbit.

Speaker 4: This is the NASA Lighted Mission, or LLITD, that will measure and study two features of the nighttime-uproad atmosphere, making an important contribution toward understanding weather and space that impacts our lives on Earth and the reentry rates of satellites.

Speaker 4: On this mission, we're also flying payloads for four other commercial customers.

Speaker 4: We are operating Vigorite 5 and Vigorite 6 concurrently from our mission operations headquarters in San Jose, California, just a few steps away from where we're calling you for this conference call. We've now successfully commissioned and operated in space all of the subsystems of our Vigorite orbital service vehicle during the Vigorite 5 mission. We've also commissioned most of the subsystems of Vigorite 6 with the remainder scheduled to be completed in the next few weeks.

Speaker 4: On that flight, we plan to carry six satellites that we plan to deploy for commercial customers, as well as two hosted payloads for commercial customers. We also plan to carry a momentous hosted payload that we will use to conduct a rendezvous proximity operations demonstration, and I'll talk more about that later. As you recall, our contracts are structured, such that we typically recognize revenue from these customers once we deliver their satellite to orbit, we're complete their payloads mission.

Speaker 4: We are also pleased to see our technology performing in space, which has increased our confidence in our technology and its capabilities. During the three Vigoride missions that we've conducted in space, we've learned a lot and are continuously improving our spacecraft and its technologies. To be sure, we've had challenges that we've worked to overcome on our initial missions. This is common on early missions in space and what we said to expect. It's part of the learning process and process of developing and demonstrating space technology.

Speaker 4: For example, much like the updates we commonly make to the software in our personal computers and cell phone operating systems, we've uploaded improvements and bug fixes to the software used on our spacecraft to address things observed on orbit or to automate processes and operations. We plan to continue to do so as our missions go forward.

Speaker 4: to continuously improve the operation of our spacecraft.

Speaker 4: We've also designed our orbital service vehicle with redundancy and resiliency features like a fully redundant A and B sign of the spacecraft with two sets of avionics radios and other features that we have used and demonstrated on orbit.

Speaker 4: Turning to slide seven. Since our last earnings call, we've successfully operated our pioneering microwave Electrofirmal thruster or MET on the Vigoride spacecraft on orbit showing it can perform our near-term use cases in space.

Speaker 4: The MET is the Vigoride Orbital Service Vehicle's primary propulsion method that produces thrust by expelling extremely hot gases through a rocket nozzle.

Speaker 4: Unlike a conventional chemical rocket engine which creates thrust through a chemical reaction, the ME2 is designed to create a plasma and thrust using solar power to drive a microwave electric microwave energy source that heats the water propeller.

Speaker 4: Momentus has two patents in support of this proprietary propulsion technology.

Speaker 4: The MET is an innovative pioneering technology that offers key efficiency, safety, and sustainability advantages.

Speaker 4: We have now performed more than 35 firings of the MET, ranging from 30 seconds to 6 minutes. And these burns have shown that we can execute our near-term potential use cases.

Speaker 4: In total, we've achieved more than 140 minutes of firing time of the MET and have raised the orbit of the vehicle by more than 3 kilometers. In fact, we've actually exceeded the duration range for the full power or the full duration of the planned firing by 20%, which we consider to be a very significant accomplishment. To be clear, Momentus has now operated the MET successfully in space at full power across the range of durations for firing that we plan to operationally use to deliver satellites to precise custom orbits.

Speaker 4: and to provide in-space infrastructure services like hosted payloads. For those of you familiar with Defense Department programs, this means that our MET has achieved Technology Readiness Level 9, which is DoD's highest TRL level.

Speaker 4: Simply put, we have now shown that water heated by the sun is a viable fuel in space, and then our water-based solar heated MET thruster can provide capabilities across to broad range of national security and commercial needs.

Speaker 4: Turn slide 8. As a result, we are seeing growing customer interest engagement about our services.

Speaker 4: Some of our existing commercial customers are planning to launch hundreds of satellites in low-earth orbit and some in geostationary orbit over the next few years.

Speaker 4: Since the last earnings call, we're pleased to have signed some new contracts with customers. First in Q1, we signed two contracts with one of our Vigoride 3 customers, Fosso Systems, which is a Spanish company that offers global, low-power, Internet of Things, or IoT connectivity, and in-space services. With a business focused on IoT, it requires a wide distribution of satellites.

Speaker 4: FASA chose Momentus for two contracts. The first contract is for the delivery of their next generation of satellites planned for launch on the SpaceX Transporter 8 mission targeted for June of 2023. Not only will this showcase the new design features of FASA satellites, but it will also showcase the new design features of FASA satellites.

Speaker 4: It will also serve as a demonstration for a second batch of satellites, momentous, expect to launch for FOSA, onboard a follow-on SpaceX Transport Emission in June of 2024. Combined, these two missions will kick off the deployment of a new constellation of FOSA satellites.

Speaker 4: and mark progress as momentous workstores our first stage constellation deployment. a Diet All You Know What This Just Difficult Way. You Know What This Just Difficult Way.

Speaker 4: progress as Momentus works towards our first stage constellation deployment.

Speaker 4: The second contract is to support FASA's Pocket Pod, which is a PICO satellite deployer with a capacity for eight PocketCube satellites. This deployer is targeted to fly with Momentus on our October mission.

Speaker 4: It will house several small satellites serving different IOT, Earth observation, and demonstration platforms for yet to be announced customers. We have also signed service agreements with three other customers. Follow space.

Speaker 4: LunaSand, and SatRef, and a fourth customer that will be announcing in the near future. For HelloSpace, we will be providing a hosted payload service for a deployer that will carry four pocketcube satellites. HelloSpace is a Turkish Internet of Things company.

Speaker 4: that is part of an alliance working toward creating a global standard for low-power, long-range, very wide area Internet of Things networks. The company's deployer that it plans to demonstrate on a momentous orbital service vehicle is a test product before full-scale manufacturing operations begin. The launch of this payload is targeted for the Vigoride 7 mission plan.

Speaker 4: targeted for launch in October on the SpaceX Transporter 9 mission.

Speaker 4: We're also happy to announce that we've signed a contract with SatRev, a Polish internet of things company, to deliver a CubeSat to low-earth orbit also on our Vigoride 7 mission.

Speaker 4: For the soon-to-be-announce customer, we'll be delivering the first charge of PICO satellites for a 100-satellite planned constellation. As I mentioned on our last earnings call, Momentus has started to focus on growing our business with the U.S. Government Department's agencies like the Defense Department in NASA.

Speaker 4: Just a few weeks ago, the Momentus team was at Space Symposium, one of the premier space industry conferences, and we received very positive feedback from Defense Prime contractors and government customers that Momentus has strong capabilities to support their missions for the Department of Defense, and that our capabilities offer key advantages over others in the industry.

Speaker 4: To that end, in Q1, we teamed with AstraScale US, a commercial space company, and responded to an RFI, or request for information from NASA, with a unique and competitive offering to reboost the Hubble Space Telescope to keep this asset in space for years to come.

Speaker 4: The mission's objectives include safely relocating the Hubble telescope and removing nearby threatening debris from the celebrated space telescope's new orbit.

Speaker 4: We were able to leverage Momentus's flight heritage with three orbital service vehicles on orbit today and Astra scales expertise in R-Pod or rendezvous proximity operations and docking to offer a commercial solution to extend the life of this important US national asset without risk to humans. The concept included launching a momentous vigorite orbital service vehicle to launch

Speaker 4: would perform a series of maneuvers to raise the Hubble by 50 kilometers.

Speaker 4: We're also very pleased about the growth in our interest in our capabilities from U.S. government customers responsible for national security missions.

Speaker 4: The flexibility, payload capacity, and power available on the Vigoride orbital service vehicle make it well positioned to support a range of national security missions like space situational awareness, surveillance, reconnaissance, and other missions. The Vigoride orbital service vehicle can also deliver national security payloads to custom orbits.

Speaker 4: support their unique mission requirements.

Speaker 4: The speed with which we can move from initial customer requirements to operation space is a major discriminator that sets us apart from traditional companies that support Defense Department missions.

Having large amounts of power available to supporting intensive, high-end national security payments like sensors, communications equipment, and other electronics also distinguishes which is momentous from our competitors.

Coupled with the ability to change your orbital altitude and inclination, our capabilities are well suited to support the kind of maneuver in space that senior US officials like Space Force Chief of Staff, General Salisman, have discussed as a key need in the highly contested space environment.

Our technology offers key capabilities and attributes that give us a competitive advantage.

In addition, Momentus is highly experienced team of professionals and engineers with decades of national security experience gives us an edge over other US companies and also over international competitors who are unable to meet the needs of these large customers.

The combination of our leadership and our discriminating technical and mission capabilities have garnered significant interest from major defense firm customers like the Space Development Agency, Space Force, National Reconnaissance Office, and the Naval Information Warfare Center they cells who create those AMERICA-aviCartridge C

capability and working with us will help them with their government customer activities. We think these government customers can ultimately grow to represent a major portion of our business and as we increase in scale we anticipate this will help unlock additional operating leverage and stability in our revenue.

To support our focus on the defense department market, we're pleased to share that we have been selected for funding from the Space Development Agency, or SDA, for a Small Business Innovation Research Phase II award, which the SDA is working to complete in collaboration with the Air Force Research Lab.

Technology Director at AFWORKS, AFWERX. We'll have more to say about that work in the near future. We've also signed a Memorandum of Understanding with Accident, a well-established company with a strong track record in defense and classified work for the defense department.

including the Air Force research labs as well as NASA. Momentous in accessing the advantages in our collaboration to address a variety of industry needs, including but not limited to launch services.

space communication, space domain awareness, precision navigation and timing, and other related technologies and capabilities to serve customers in a variety of orbits.

from low-earth orbit to geostationary orbit and out to cislunar. We're looking forward to collaborating with Accient, which has a strong track record of bringing solutions to these government customers responsible for important national security missions. We also recently provided a letter of support to Catalina...

vehicle as a very capable high-power low-cost satellite bus.

We're very competitive as a commercial satellite bus and have begun bidding jobs with commercial and government customers who have given us great feedback about our capabilities and competitive pricing. We're also pursuing launch aggregation, which gives us the ability to earn revenue from customers who don't need delta-v, meaning changes in velocity once in orbit.

2024.

We've also signed a new launch service agreement with SpaceX for Transporter 12 in October 2024.

We therefore have launch service agreements or contracts to reserve ports for Momentus to launch customers to space on SpaceX transport missions through the end of 2024.

Turning to slide 10, according to a recent report by Euroconsult, the global space market grew by 8% last year and is expected to reach over 737 billion dollars within a decade. There are over 5,500 active satellites in orbit now.

a number that's projected to grow to 58,000 by 2030, according to the Government Accountability Office, or GAO. Joichi Bank research estimates the in-space transportation market will double from about $2 billion currently to about $4 billion by 2025, just two years from now. The Federal Communications Commission, or FCC, will

recently implemented a new regulation that requires all satellites after September 29, 2024.

below 2,000 kilometers in altitude to be deorbited within five years of mission conclusion.

This will create a new market with the potential for over 2,000 satellite deorbiting operations annually by the end of this decade.

which is a large market opportunity. U.S. Space Force and Defense Department space budgets average about 15 to 20 billion dollars per year over the coming five years, providing a significant market opportunity for momentous.

So in sum, there are many market drivers for the growing space industry and we are confident our solution will continue to see strengthening demand. Turning to slide 11, Momentus remains well positioned to grow in the burgeoning space industry.

Key attributes of our Vigoride design are first, the flexibility of its configuration, allowing us to accommodate many different payloads with different sizes.

and configurations. Secondly, our large payload capacity. Third, we have more onboard power to provide the host of payloads to operate sensors, communications equipment, and other systems for the full range of military and commercial missions.

We've also proven ourselves to be able to rapidly produce spacecraft and deliver payloads to space at low cost. We've seen many new entrants into this market but our early mover advantage has put momentous ahead of some relatively inexperienced competition.

Our track record at Flight Heritage helps build trust with target customers, and we've proven our team's ability to execute.

Speed and reliability are not the only factors that matter to customers. Our highly differentiated technology

also enables us to win the areas of payload capacity and power at low cost.

First, the flexibility of our spacecraft's large, completely open, and flexible upper deck can accommodate a broad diversity of payloads, even at larger payload volumes, or those with unusual shapes.

This customization ability was the key reason we were chosen by Caltech to carry their hosted payload.

These unique payloads often have increased power requirements that our competition is not capable of supplying.

Momentus can provide best in class power and this makes us extremely attractive to customers whose electronics, satellites and instruments are limited by the power available for missions like communications, data processing, sensing, surveillance and mobility.

Importantly, Momentus provides these benefits at a low cost with a short timeframe from requirements to operation in orbit, enabling a very attractive value proposition. To further capitalize on this, we plan to offer additional capabilities that others either cannot provide or can only offer at a substantially higher price point.

for missions like satellite refueling. Innovating to meet future needs of the space industry remains a focus for us.

We are planning to develop additional features and capabilities to further enhance Vigorite's performance for hosted payloads, which allows us to serve an even broader base of customers.

These features include a high-speed mission data link and adding expansion tanks to extend to the algorithms range.

We're also incorporating security features and adding a precision pointing option that will allow Vigoride to host sensitive and classified U.S. government payloads. We expect to begin introducing some of these features in 2024.

In addition, we will be testing our tape spring solar array or TASSA, T-A-S-S-A, TASSA, TASSA,

and lead times. We've applied the patented technology behind TASA.

You can see the TASA fully unfurled on the right side of this slide. It's about 11 meters or 36 feet long. To build TASA, the team bonded large sheets of flexible solar cells to take spring.

very similar to the roll out tape measures you can buy from places like Home Depot. They keep their stiffness and strength due to their shape only on a much larger scale.

tape measures you can buy from places like Home Depot to keep their stiffness and strength due to their shape only on a much larger scale.

The four-inch mandrel is much smaller than those used in competing roll-out solar arrays, providing weight savings. Once development is complete, we estimate that replacing vigorite's third-party solar array with TASA could reduce the overall recurring production cost of a vigorite by as much as about 10%, while potentially reducing lead time by several months.

These are important improvements as we continue to transition from Vigoride development to production at lower unit costs. We're also seeing interest from commercial and government customers in TASA, given the efficiency we expect to demonstrate for low cost power in space. Vigoride 6 is equipped with its standard fold up.

solar arrays so TASA will not be its main power source.

Rather, TASA is a hosted payload on the upper deck of Vigrite 6. On the bottom right corner of the chart, you can see the TASA in its stowed position on the Vigrite 6 upper deck.

With this mission, we expect to demonstrate that Momentus can generate power at 50% of the cost per watt of the leading solar array in the market. With a patent pending, this is an important potential means of reducing Vig-Rite manufacturing costs by about 10% and lead time of about 10% of the cost per watt of the solar array.

by months as well as supporting other commercial and government customers. We're excited about TASA along with other significant improvements in cost and lead time as we move from development to production. It's no surprise that we're seeing commercial government interest in TASA.

We've started to discuss potential business partnerships with solar array companies as a potential way to bring this innovative technology to a broader market.

Additionally, we have another technology demonstration planned for our VIGORiVE 7 mission scheduled to be launched on the SpaceX Transporter 9 mission targeted for October 2023.

On Vigorite 7, we plan to deploy a satellite and then maneuver closer and farther away, as well as maintain relative distance to it in space using a sensor suite designed for remote proximity operations, or RPO. For more information about the RPO capability, visit our website at www.vigorite7.com

is key to our ability to expand the menu of services that Vigoride can provide to include in-orbit maintenance and refueling of customer satellites, life extension, and de-orbiting of satellites at the end of their useful life. The RPO mission also supports another innovation focus of ours, which is to evolve toward a reusable version of Vigoride.

or refuelable that would stay in space and be refueled and therefore reused on later missions. Currently after completing its mission, the Vigoride moves to a decaying orbit and burns up during reentry.

A reusable Vigoride, after completing its mission, will rendezvous with and provide services to additional customer satellites, thereby providing greater return on investment for each Vigoride launched.

Turning to slide 12, overall, I believe the combination of a growing space economy, favorable demand outlook for the services we provide, already demonstrated competitive advantages relative to other in-space transportation and infrastructure providers, our attractiveness for defense-driven programs.

and potential for margin improvement position momentous well for the future. I'd like to close by thanking our dedicated team for getting us here and would also like to thank our customers and investors for their continued support.

Now I'd like to turn to our new CFO , Eric Williams, to cover the financial highlights from the quarter. But before Eric comments, I'd like to thank Dennis Mahoney, who recently completed his tenure as our interim CFO , for his support, leadership, and expertise that he brought to Momentus. At the time of his presentation we had Shaun

Let me now welcome our new CFO , Eric Williams, to the team here at Momentus on his first earnings call in this role. Eric brings more than 25 years of experience at tech companies in Silicon Valley, a proven track record, and a growth mindset. He has experience raising capital for early-stage tech companies and in any way, he has a career

and having the opportunity to contribute towards scaling the business and being a key participant and leader in the space infrastructure market. I am pleased to present highlights of the financial results achieved by the momentous team during our first quarter of 2023.

Our first quarter results reflect our ongoing progress and investments towards our future launches.

These contracts include firm orders as well as options.

These options give our customers the flexibility to quickly opt into an available launch slot on short notice without requiring a separate agreement.

The breadth of these signed contracts spans across 19 companies in 13 countries.

Typically, our customers have the right to cancel a flight, reservation, and when doing so will forgo their deposits in milestone payments. Should a customer cancel a contract for their rescheduling needs or other reason before all payments are made, wanting to shoe up in count thus far. Your customer can either go off of Guide and Che teachers in one pass or within two to separate your payments from your CDs. If you want to note benefits for your customer at your expense conference, please visit NomInce.org

The resulting revenue will be less than the full value of the backlog. Lamentis has historically included in backlog both firm mortars as well as options.

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

We ended Q1 2023 with non-restricted cash and cash equivalents of $39 million and approximately $12 million in outstanding gross debt, consisting of a term loan that we began to repay in March of 2022.

Next, I would like to address a topic that will be mentioned in our 10Q to be filed with the SEC. I would like to address a topic that will be mentioned in our 10Q to be filed with the

R10Q will include language regarding our ability to continue as a going concern.

This going concern qualification was determined as we prepared our financial statements for the first quarter after conducting an evaluation of the status of our current liquidity in projected cash flows for the next 12 months.

When taking into account certain external factors, this analysis concluded that given our current cash balance, there is a risk that the company will not meet its obligations.

certain external factors, this analysis concluded that given our current cash balance, there is a risk that the company will not meet its obligations for the next 12 months.

Momentus has already taken proactive steps to extend our cash one way and in addition have evaluated our strategic business plan to identify the best course of action in clearing this going concern analysis.

Going forward, we expect to continue driving bookings and revenue growth, implement the plan management has developed to further reduce our operating expenses.

and drive to closure a variety of legal matters. We expect this plan will improve our liquidity and strengthen our balance sheet to allow the company to operate well into 2024.

In addition, we continue to explore and evaluate opportunities to raise additional funds and further strengthen our balance sheet.

We invested approximately $19 million in operations during Q1 compared to $17 million in Q4 2022 and $23 million in Q1 2022. We recognized $22,000 in revenue in Q1 comprised of customer deposits forfeited upon contract termination for late pay.

On gap basis, our adjusted EBITDA was negative $16.1 million or approximately $1 million better than Q1 of 2022.

non-GAAP SG&A expenses for the first quarter of 2023 totaled $7.4 million, down $0.8 million when compared to Q1 of 2022.

non-GAAP R&D expenses for the first quarter of 2023 totaled approximately $9 million, down $0.3 million when compared to Q1 of 2022.

We ended Q1 2023 with approximately 95 million shares outstanding.

Please refer to the press release issued today for the reconciliation of non-GAAP numbers to GAP.

I will now hand the call back to Mary. Thank you Eric. In a moment, we will move on to the question and answer portion of our call. I'd like to remind participants that all disclaimers outlined at the outset of this call extend to the question and answer session.

This includes our disclaimers relating to non-GAAP financial information, forward-looking statements, and the technology underlying our planned service offerings. Operator, would you please remind participants how to enter the queue?

Thank you. As a reminder, if you would like to ask a question, press star followed by the number 1 on your telephone keypad.

Your first question comes from the line of James Ratcliffe with Evercore.

Your line is open. Good afternoon, thanks for taking the question. A couple if I could. On the operational side, if you just give us a little more update on the status of the VIGRIDE 6 mission including the timeline for moving those NASA satellites to the custom orbit and testing of the TASA array. How long will it be until we know?

whether both of those worked or not. And second, you know, getting into the financing questions and the like, can you talk about the potential sources of capital and what the process looks like for finding incremental capital in addition to the efforts to reduce burn and develop revenue? Thanks.

Well thanks for the question James. As you know, as you asked in your question, a Vigoride 6 is the third spacecraft that we launched and put into orbit. We launched it, of course, just under a month ago.

And prior to that, we launched Vigorite 5 in January . So right now we're operating both of those two spacecraft concurrently from our Mission Operations Center here, which is just a few steps away from me in San Jose, California.

We've now successfully commissioned and operated in space all of the subsystems of the Vigoride 5 orbital service vehicle. And we've also commissioned most of the subsystems of Vigoride 6 with the remainder scheduled to be completed in the next few weeks. The reason being that that was launched three months later than Vigoride.

which you asked about. It's carrying payloads as you mentioned for four commercial customers and two NASA satellites. We'll first deploy the four satellites for the commercial customers and then we'll proceed to the NASA mission. In the NASA mission there is a very unique

deployment roughly late July . And then after we finish the deployment of those NASA payloads, next on the docket for the Vigran 6 mission, we'll be transitioning to demonstrate our tape spring solar array. That's expected again to occur, begin roughly the end of July . And there's some variables that we'll assess as we go towards that date. But we'll be running the task through a series of both mechanical and electrical tests on orbit that will be conducted over the remainder of the summer. Some of that we're going to want to monitor over time, the effects of things like…

power per watt at 50% of the cost of the leading solar array in the market. So thanks again for the question. I'll turn now to Eric for the response to your question on the financials. Thanks, James. And again, I think two parts to your question.

With respect to sources of capital, we have been in market and will continue to be in market in terms of looking at alternatives to raise additional funds and to support our balance sheet. As you would expect, we'll evaluate the timing and the structure of those raises within the context of execution of our business plan.

the other part of your question, we have developed a plan and we are currently implementing such a plan to reduce our operating costs in order to provide us

With runway, can conduct our demonstration missions and place additional customer satellites in orbit with cash on hand in utilization or existing balance sheet. And as John noticed, noted in his portion of the call, we continue to see a significant amount of excitement from new business, government, commercial, and so we expect the fact that we've demonstrated flight heritage and performance.

in developing key technologies and resolving certain legal issues that we have in front of ourselves.

Yes, James, just to mention one other thing. Anecdotally, I attended the space symposium in Colorado Springs in mid-April. And if you haven't been, that might be the largest gathering of space industry and customer folks annually that occurs. And one of the things that was really gratifying about that experience is when you sit down to talk to industry veterans or we talk...

We're really favorably impressed by the rate at which we've done that and the results that we've shown. And then the positive feedback from customers that's translating to a growth in interest. And so our business development sales teams are quite busy right now keeping up with that. But thanks again for the questions. Thank you. Your next question comes on the line of Michael Matheson with Singular Radio.

in Q2 and an estimated 6 in Q3.

for your attendance.

Just in the past few days, completed deployment of the Cosmosis satellite from Vigorite 5. Our plan is to deploy the four commercial satellites onboard Vigorite 6 here in the coming days.

ahead. And so those would occur in this quarter in terms of as we go forward that's how our contracts are typically structured for revenue recognition. In assuming the NASA payloads are deployed in late January , early July .

whether it's the six months we're under contract or if they exercise contract adoption for up to two years. I mean that would that would define how we approach revenue recognition on that as well. And then there's some other things that we plan to have begin to be orders and

hosting is different. Am I still correct to work with a figure of about $15,000 per deployment?

For deployment? No. It would vary, it depends upon the value of the contract in which we have concluded with that customer. And the value of the contract is heavily dependent on the mass.

of the items of the satellite in this case. And so the larger satellites have a higher price, hence because they have a larger mass, and the smaller ones would be different. So I would not assume the same amount of revenue per satellite as a result.

Got it, okay. Very good, so that's very helpful. Thank you for taking the questions. As a reminder, if you would like to ask a question press star followed by the number one on your telephone keypad. We'll pause for a moment to compile any final questions.

There are no further questions, and this concludes today's conference call. Thank you for attending. You may now disconnect.