Loan Payable |
6 Months Ended |
|---|---|
Jun. 30, 2025 | |
| Debt Disclosure [Abstract] | |
| Loan Payable | Note 8. Loan Payable May 2025 Loan On May 30, 2025, the Company and J.J. Astor & Co. entered into a loan agreement (the “May 2025 Loan”) pursuant to which the Company may borrow up to $1.5 million in two tranches of $0.75 million each (the first tranche referred to as the “Initial Tranche” and the second as the “Second Tranche”) and paid debt issuance costs of $0.2 million. The May 2025 Loan has a maturity date of March 6, 2026, and is payable in 40 weekly installments of $25 thousand, with at least 10% in cash and the remainder in shares at a conversion price of $1.70 per share. The May 2025 Loan can be prepaid in full at any time, subject to a prepayment fee of 120% of the outstanding principal plus costs. Amounts borrowed under the May 2025 Loan are secured by a lien on substantially all of the assets of the Company. Upon event of default, amounts owing under the May 2025 Loan increase by 120% and are convertible into shares of Class A common stock at a conversion price equal to 80% of the average of the four lowest volume weighted average closing prices of the Class A common stock during the 20 trading days immediately prior to conversion, with a floor of $0.50 per share. The Company elected the FVO for recognition of the May 2025 Loan as permitted under ASC Topic 825. In addition, in connection with the May 2025 Loan, the Company agreed to issue J.J. Astor & Co. warrants to purchase up to 952,940 shares of Class A common stock with an exercise price of $1.70 per share, subject to adjustment (the “May 2025 J.J. Astor Warrants”), comprising 476,470 warrants for each tranche. The May 2025 J.J. Astor Warrants had a residual value of $0.6 million, which was recognized as expense immediately due to the election of the FVO for the May 2025 Loan. The warrants are fully vested and expire five years from the date of issuance. On June 17, 2025, the Company and J.J. Astor & Co. entered into an amendment to the May 2025 Loan (the “June 2025 Amendment”). The June 2025 Amendment, among other things, revised the conditions for funding the Second Tranche to occur within three business days after the effectiveness of a resale registration statement, subject to Nasdaq listing maintenance, a stock price of not less than $1.25, a market capitalization of not less than $6.7 million, and trading volume conditions. It also reduced the conversion price on both tranches to the lesser of $1.70 or the closing price prior to the Second Tranche issuance. Additionally, the June 2025 Amendment introduced a cash make-whole payment upon conversion equal to the difference between the conversion price and the lower of the closing price on conversion or the lowest volume weighted average closing price over 20 prior trading days. If not paid in cash, the Company will issue shares equal to the make-whole amount divided by the make-whole price. If the Company completes an equity offering sufficient to repay the Initial Tranche before the Second Tranche funding date, the obligation to issue the Second Tranche is suspended, with a $100,000 termination fee and issuance of warrants for 476,470 shares (the “Second Tranche Warrant”). On July 1, 2025, the 476,470 warrants were issued with an exercise price of $1.13 per share. As of June 30, 2025, the Company had drawn $0.75 million under the May 2025 Loan. The Company extinguished the May 2025 Loan on July 1, 2025. The May 2025 Loan contains customary events of default, upon which the outstanding obligations may be accelerated. The loan ranks senior to unsecured indebtedness. The Company was in compliance with all covenants as of June 30, 2025. AGP Convertible Promissory Note On May 13, 2025, the Company entered into an unsecured convertible promissory note (the “May 2025 Convertible Note”) with A.G.P./Alliance Global Partners (“AGP”) for a principal amount of $1.2 million, issued in exchange for AGP’s services in facilitating the issuance of equity securities under the Master Services Agreement with Velo3D, Inc. (see Note 9). The May 2025 Convertible Note bears interest at 4.5% per annum and matures on November 13, 2026, unless earlier converted or prepaid. AGP may elect to convert all or any portion of the outstanding principal and accrued interest into shares of the Company’s Class A common stock at a conversion price of $1.67 per share, based on the closing price on May 9, 2025, subject to adjustment for stock splits, dividends, or similar events. At maturity, all outstanding principal and accrued interest are payable in cash or, at AGP’s option, in shares of Class A common stock at the conversion price. The Company may prepay the May 2025 Convertible Note in whole or in part at any time without penalty. The May 2025 Convertible Note is classified as a liability under ASC Topic 718, as it was issued to a non-employee for services, and is remeasured at fair value at each reporting period until settlement, with changes in fair value recognized in earnings as part of operating expenses. The note represents payment for legal services incurred in relation to the Velo3D MSA. Upon issuance, the Company recognized $0.4 million of legal expense related to the May 2025 Convertible Note in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations. The May 2025 Convertible Note contains customary events of default, upon which the outstanding obligations may be accelerated. The note is unsecured and ranks pari passu with the Company’s other unsecured indebtedness. The Company was in compliance with all covenants as of June 30, 2025. On June 17, 2025, the Company and AGP executed a letter agreement (the “June 2025 Amendment”) modifying the terms of the May 2025 Convertible Note. The June 2025 Amendment provided that a new convertible promissory note with a reduced principal amount of $0.5 million (the “Amended Note”) will replace the May 2025 Convertible Note. AGP agreed to waive any claim or recourse with respect to the $0.7 differential between the May 2025 Convertible Note and the Amended Note. The Amended Note would retain substantially similar terms to the May 2025 Convertible Note, including the interest rate, maturity, conversion price, and conversion mechanics, with the only change being the reduction of the principal from $1.2 million to $0.5 million. The June 2025 Amendment was accounted for as a modification, with no change to the accounting treatment, as the note remains liability-classified and continues to be remeasured at fair value at each reporting period. No additional costs or premiums were recognized. December 2024 Loan On December 13, 2024, the Company and J.J. Astor & Co. entered into a loan agreement (the “December 2024 Loan”) pursuant to which the Company borrowed $2.0 million and paid debt issuance costs of $0.3 million. The December 2024 Loan had a maturity date of September 19, 2025, and was payable in 40 weekly installments of $68 thousand. The December 2024 Loan could be prepaid at any time on or before January 13, 2025, for $2.4 million and at any time thereafter through the maturity date for $2.7 million. Amounts borrowed under the December 2024 Loan are secured by a lien on substantially all of the assets of the Company. Upon event of default, amounts owing under the December 2024 Loan are convertible into shares of Class A common stock at a conversion price of $5.92 per share prior to May 5, 2025, and thereafter the conversion price will be reduced to 80% of the average of the four lowest volume weighted average closing prices of the Class A common stock during the 20 trading days immediately prior to conversion. In addition, in connection with the December 2024 Loan, the Company agreed to issue J.J. Astor & Co. warrants to purchase up to 28,572 shares of Class A common stock with an exercise price of $5.92 per share (the “J.J. Astor Warrants”). The J.J. Astor Warrants had a relative value of $0.1 million which was as accounted for as an additional debt issuance cost for the December 2024 Loan. The warrants are fully vested, and expire five years from the date of issuance. The Company determined the fair value of the warrants by using a Black-Scholes option pricing model, with the following assumptions: expected term of 5.01 years, stock price of $5.92, exercise price of $5.92, volatility of 100.00%, risk-free rate of 4.25%, and no forfeiture rate. On December 18, 2024, the Company prepaid $2.4 million in order to extinguish the December 2024 Loan. The Company recognized a $0.8 million loss on extinguishment in the condensed consolidated statements of operations related to the December 2024 Loan. In connection with the December 2024 Loan, the Company agreed to issue J.J. Astor & Co. a second warrant that is exercisable and issuable upon certain customary events of default to purchase up to 285,715 shares of Class A common stock with an exercise price per share equal to the closing price of the Class A common stock as traded in the applicable trading market on the date of the event of default, subject to adjustment (the “Default Warrants”). The Default Warrants were an embedded derivative that required bifurcation and recognition as a derivative liability (the “Default Warrant Derivative”). The Default Warrant Derivative instrument is recorded at fair value and marked‑to‑market each reporting period with changes in fair value being reflected in earnings. As of the issuance date, and immediately prior to extinguishment of the December 2024 Loan on December 18, 2024, the Default Warrant Derivative was valued at zero. SIV Convertible Promissory Notes On July 12, 2024, the Company and Space Infrastructure Ventures (“SIV”) entered into a secured convertible promissory note (the “July Convertible Note”) pursuant to which the Company borrowed $2.3 million as of September 26, 2024. The July Convertible Note bears an annual interest rate of 15%. Principal on the July Convertible Note is to be re-paid in four equal payments on a quarterly basis, commencing on December 1, 2024, and maturing on September 1, 2025, at which time all accrued interest is due. Amounts borrowed under the July Convertible Note are secured by a lien on substantially all of the assets of the Company. In lieu of cash payments of accrued interest, SIV, in its sole discretion, may elect to receive shares of Class A common stock at a conversion price of $7.41 per share. On the maturity date, subject to the satisfaction of applicable legal and regulatory conditions, all outstanding obligations under the July Convertible Note automatically convert into Class A common stock at the conversion price. The July Convertible Note requires SIV’s consent to take certain actions, such as increasing compensation, purchasing assets, extending financing, making capital expenditures, repaying debts outside the ordinary course of business or investing in any entity or enterprise. The July Convertible Note can be prepaid in full at any time, subject to a prepayment penalty fee of 10%. The July Convertible Note will accelerate and become immediately due upon the occurrence of certain customary events of default, including failure to pay amounts owing when due and/or certain events involving a discontinuation of our business or certain types of proceedings involving insolvency, bankruptcy, receivership and the like, or a change of control of Momentus. Contingent interest related to these events of default was an embedded derivative that required bifurcation and recognition as a derivative liability (“Default Interest Derivative”). The Default Interest Derivative instrument is recorded at fair value and marked-to-market each reporting period with changes in fair value being reflected in earnings. As of the issuance date, December 31, 2024, March 31, 2025, and June 30, 2025, the Default Interest Derivative was valued at zero. On October 24, 2024, the Company and SIV entered into a secured convertible promissory note (the “October Convertible Note”) pursuant to which the Company borrowed $3.0 million in two tranches, consisting of (i) an initial loan in the principal amount of $2.0 million, and (ii) up to an additional $1.0 million in principal amount which could be borrowed from December 2, 2024 through February 14, 2025. Borrowings under the October Convertible Note bear interest at 15% per annum. The October Convertible Note has a maturity date of October 24, 2025, at which time all principal and accrued interest is due. The Company paid debt issuance costs of $0.1 million in relation to borrowing $2.0 million under the first tranche of the October Convertible Note. As a third-party debt issuance cost related to the October Convertible Note, the Company agreed to issue an investor warrants to purchase up to 357,143 shares of Class A common stock with an exercise price of $8.05 per share (the “Investor Warrants”). The Investor Warrants had a fair value of $2.0 million which was as accounted for as debt issuance costs allocated between two tranches of the October Convertible Note; $1.3 million was allocated to the first tranche and $0.7 million was allocated to the second tranche. The investor may not exercise the Investor Warrants prior to April 24, 2025, and the Investor Warrants will expire April 24, 2030. The Company determined the fair value of the warrants by using a Black-Scholes option pricing model, with the following assumptions: expected term of 5.50 years, stock price of $7.41, exercise price of $8.05, volatility of 97.50%, risk-free rate of 4.05%, and no forfeiture rate. Amounts borrowed under the October Convertible Note are secured by a lien on substantially all of the assets of the Company. At any time after the date that is six months after the original issuance date of the October Convertible Note, SIV, in its sole discretion, may convert some or all of the outstanding obligations under the October Convertible Note into shares of Class A common stock at a conversion price of $7.41 per share. In addition, in connection with the first tranche of the October Convertible Note, the Company agreed to issue SIV warrants to purchase up to 269,950 shares of Class A common stock with an exercise price of $7.41 per share (the “October SIV Warrants”). The October SIV Warrants had a relative value of $0.8 million which was as accounted for as an additional debt issuance cost for the October Convertible Note. SIV may not exercise the October SIV Warrants prior to April 24, 2025, and the October SIV Warrants will expire April 24, 2030. The Company determined the fair value of the warrants by using a Black-Scholes option pricing model, with the following assumptions: expected term of 5.44 years, stock price of $8.82, exercise price of $7.41, volatility of 97.50%, risk‑free rate of 4.33%, and no forfeiture rate. Neither the October Convertible Note nor the October SIV Warrants can be converted or exercised if it would cause the aggregate number of shares of Class A common stock beneficially owned by SIV to exceed 9.99% of the number of shares of Class A common stock outstanding immediately after giving effect to the conversion or exercise, as applicable. Conversion of the October Convertible Note and exercise of the October SIV Warrants is also subject to compliance with applicable Nasdaq rules, and if shareholder approval is required the Company will use commercially reasonable efforts to obtain such approval. The October Convertible Note requires SIV’s consent to take certain actions, such as purchasing assets outside the ordinary course of business, extending financing, making capital expenditures in excess of $0.1 million, repaying debts outside the ordinary course of business or investing in any entity or enterprise. The October Convertible Note can be prepaid in full at any time, subject to a prepayment fee of 10%. The October Convertible Note will accelerate and become immediately due upon the occurrence of certain customary events of default, including failure to pay amounts owing when due and/or certain events involving a discontinuation of our business or certain types of proceedings involving insolvency, bankruptcy, receivership and the like, or a change of control of the Company. Contingent interest related to these events of default was an embedded derivative that required bifurcation and recognition as a derivative liability (“Default Interest Derivative”). The Default Interest Derivative instrument is recorded at fair value and marked-to-market each reporting period with changes in fair value being reflected in earnings. As of the issuance date, December 31, 2024, March 31, 2025, and June 30, 2025, the Default Interest Derivative was valued at zero. In November 2024, the Company amended the July Convertible Note and the October Convertible Note (the “November Amendment”). The November Amendment, among other things, accelerated the borrowing date for the second tranche of the October Convertible Note, for which the Company immediately borrowed the $1.0 million available under the second tranche, and provided that owed under both the July Convertible Note and the October Convertible Note may be converted to Class A common stock at any time. The November Amendment was accounted for as an extinguishment of both the July Convertible Note and the October Convertible Note. The Company recognized a $3.2 million loss on extinguishment in the condensed consolidated statements of operations related to the November Amendment, resulting from the difference between the carrying value and reacquisition price of the July Convertible Note and the first tranche of the October Convertible Note. The Company recognized an aggregate debt premium of $1.2 million related to the July Convertible Note and the first tranche of the October Convertible Note as a result. Furthermore, the Company recognized an additional $0.3 million loss on extinguishment in the condensed consolidated statements of operations for a debt premium resulting from the difference between the proceeds received and fair value of the second tranche of the October Convertible Note. In addition, in connection with the November Amendment, the Company agreed to issue SIV warrants to purchase up to 193,273 shares of Class A common stock with an exercise price of $7.41 per share (the “December SIV Warrants”). The December SIV Warrants had a relative value of $0.5 million which was as accounted for as an additional debt issuance cost for the second tranche of the October Convertible Note. SIV may not exercise the December SIV Warrants prior to April 24, 2025, and the December SIV Warrants will expire April 24, 2030. The Company determined the fair value of the warrants by using a Black-Scholes option pricing model, with the following assumptions: expected term of 5.38 years, stock price of $7.84, exercise price of $7.41, volatility of 97.50%, risk-free rate of 4.08%, and no forfeiture rate. The Company capitalized cash debt issuance costs of $0.1 million in relation to the November Amendment. The debt issuance costs, including $0.7 million allocated from the Investor Warrants and $0.5 million related to the December SIV Warrants, and $0.3 million debt premium for the second tranche of the October Convertible Note are being amortized over the term of the October Convertible Note using an effective interest rate of 348%. The debt premium of $0.7 million related to the first tranche of the October Convertible Note is being amortized over the term of the October Convertible Note using an effective interest rate of (18)%. On February 7, 2025, in Company converted $0.2 million of principal and $0.1 million of accrued interest, including unamortized premium of $0.05 million, of the October Convertible Note into 40,000 shares of Class A common stock at a conversion price of $7.41 per share. The conversion was accounted for under ASC Sub-Topic 470-20, with no gain or loss recognized. On March 3, 2025, the Board of Directors of the Company approved a reduction in the conversion price for the July Convertible Note from $7.41 per share to $2.12 per share during the period beginning on March 3, 2025 and continuing until there are no further obligations outstanding under the July Convertible Note. The reduction in the conversion price for the July Convertible Note was accounted for as an extinguishment. The Company recognized a $0.1 million gain on extinguishment in the condensed consolidated statements of operations related to this extinguishment, resulting from the difference between the carrying value and reacquisition price of the July Convertible Note. The Company recognized a debt premium of $0.2 million related to the July Convertible Note, which is being amortized over the term of the July Convertible Note using an effective interest rate of (25)%. Furthermore, on March 3, 2025, in Company converted $0.3 million of principal and $0.03 million of accrued interest of the July Convertible Note into 150,000 shares of Class A common stock at a conversion price of $2.12 per share. The conversion was accounted for under ASC Sub-Topic 470-20, with no gain or loss recognized. On May 16, 2025, the Company offered SIV the opportunity to convert amounts outstanding under the July Convertible Note, at a reduced conversion price of $1.77 per share, into up to 112,576 shares of Class A common stock and, thereafter, to convert amount outstanding under the October Convertible Note, at a reduced conversion price of $1.77 per share, into up to 275,000 shares of Class A common stock during the period from May 19, 2025, through June 1, 2025. Pursuant to this offer and as part of the Company’s May 2025 contractual repayment, on May 20, 2025, SIV converted $0.2 million of principal of the July Convertible Note into 112,576 shares of Class A common stock at a conversion price of $1.77 per share. The conversion was accounted for as a partial extinguishment of the July Convertible Note, resulting in a $0.01 million gain on extinguishment in the condensed consolidated statements of operations. In addition to the $0.2 million of principal converted into equity, the Company repaid $0.3 million of principal in cash, and postponed $0.1 million of payments, including $0.06 million of principal and $0.04 million of interest, to the following quarter. The postponement was accounted for as a modification of the July Convertible Note. SIV did not convert any amounts outstanding under the October Convertible Note pursuant to this offer. As of June 30, 2025, the July Convertible Note has a carrying amount of $0.7 million, consisting of principal of $0.6 million and unamortized premium of $0.04 million, and the October Convertible Note has a carrying value of $2.4 million, consisting of principal of $2.8 million and net unamortized discount of $0.4 million. The total loan payable consisted of convertible promissory note principal of $3.5 million and accrued interest of $0.2 million. The convertible notes have future scheduled maturities of $3.5 million for 2025. Term Loan On February 22, 2021, the Company entered into a Term Loan and Security Agreement (the “Term Loan”) with Western Technology Investment which provided the Company with up to $40.0 million in borrowing capacity at an annual interest rate of 12.0%. The Company borrowed $25.0 million of the Term Loan at inception of the agreement on March 1, 2021. The remaining $15.0 million of borrowing capacity is no longer available as the Company did not achieve certain milestones by the June 30, 2021 deadline. The repayment terms of the Term Loan provide for interest-only payments from March 1, 2021 through February 28, 2022. Under the original terms, the principal amount was due and payable on March 1, 2022. However, during January 2022 the Company exercised its option to pay back the principal amount of the Term Loan over two years beginning on March 1, 2022 and ending on February 28, 2024. The Company allocated the proceeds from the Term Loan agreement to the note and warrants issued in conjunction with the Term Loan comprising the financing agreement based on the relative fair value of the individual securities on the February 22, 2021 closing date of the agreements. The discount attributable to the note, an aggregate of $15.8 million, primarily related to the value of the warrant liability with immaterial issuance costs, is amortized using the effective interest method over the term of the note, originally maturing on March 1, 2022, but now being repaid over two years, recorded as interest expense. Because the discount on the note exceeds 62.6% of its initial face value, and because the discount is amortized over the period from issuance to maturity, the calculated effective interest rate up until January 2022 was 126.0%. As a result of the exercised extended repayment schedule, the unamortized discount and issuance costs were recast over the updated term of the loan and resulted in a recalculated effective interest rate of 28.2%. Interest expense amortization related to the Term Loan was zero and $0.05 million for the three and six months ended June 30, 2025 and 2024, respectively. In January 2024, the Company repaid the remaining principal balance of the Term Loan.
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