New Bankruptcy Document Documents Masten Space Systems’ Failed Efforts to Sell Company, Inability to Raise Cash – Parabolic Arc – Parabolic Arc | Vette Leader

A spacecraft creates its own landing pad using the In-Flight Alumina Spray Technique system. (Image credit: Masten Space Systems)

MOJAVE, Calif. — A new court document reveals that an unidentified company nearly bought now-bankrupt Masten Space Systems earlier this year but ultimately backed out over financial concerns about Masten Mission 1 (MM1), the company’s program to deliver a small, would have withdrawn rover and a set of instruments to the south pole of the moon under a NASA contract.

“On April 29, Company A Masten advised that it had no intention of proceeding with a transaction due to the significant liabilities recognized to date and additional future losses related to MM1,” according to a filing with the Delaware Bankruptcy Court from August 10th.

The statement, signed by founder and CTO Dave Masten, says the company subsequently held discussions with two other potential suitors, identified as Company B and Company C, but the effort yielded nothing. The company’s efforts to raise $60 million from investors needed to run MM1 for NASA also failed.

In late July, the company filed for protection from its creditors by filing for Chapter 11 bankruptcy. The move came after the company, which plans to reorganize and restart operations, laid off 22 employees and furloughed all but six employees.

In April 2020, NASA awarded the company a $75.9 million contract to deliver the MoonRanger and a suite of scientific instruments to the South Pole of the moon and operate them for at least 12 days. The space agency made the award as part of its Commercial Lunar Payload Service (CLPS) initiative, under which it paid companies to deliver payloads to the moon.

At the time, the award seemed like a massive boost for the small company, which built and tested a range of vertical take-off and landing vehicles and conducted research and development (R&D) projects at California’s windswept Mojave Air and Space Port. Instead, it helped bankrupt the company.

NASA’s contract did not cover the full amount of the mission. Masten also had to pay to launch the mission aboard a SpaceX Falcon 9. This was announced by a source who asked for anonymity parabolic arch that Masten had grossly undercut the project, which an internal estimate placed at $105 million. The company would have to fill the gap by raising money from investors or finding other parties to fly MM1 payloads.

The statement filed this week said the company has suffered delays and cost overruns attributed to supply chain delays caused by the COVID-19 pandemic, design changes required for its XL-1 lander and inexperience in managing a such a large project.

“In the past, Masten has also avoided a formal leadership hierarchy. In 2020, instead of an organizational chart, Masten implemented a “function chart” that identifies different subject areas and the person(s) within the organization who had primary and secondary responsibility for those subject areas. Masten only hired its first experienced project manager in May 2021,” the document reads.

“MM1 was far more expensive than any previous mast mission. Masten has struggled to manage this spend, at least in part because it lacked experienced project managers, had a sophisticated approach to managing spend or programming, and struggled to quickly scale its workforce and facilities amid an historic pandemic.” added the explanation.

As a result, Masten determined that it would not be possible to land MM1 at the moon’s south pole in December 2022 as planned. In February, NASA adjusted the contract to postpone the landing to no later than January 2024. Contract awards also increased by $5.4 million to $81.3 million.

Masten’s statement says the company’s efforts to raise $60 million by the end of 2021 turned out to be a bit late.

Masten’s timing was particularly bad because it began its efforts between Thanksgiving and the Christmas holidays,” the document reads. “Masten’s fundraising efforts also followed the trend of a Special Purpose Acquisition Company (‘SPAC’) in the space industry. Between April and December 2021, nine space companies went public through SPAC mergers. Private investment in space companies broke records in 2021, but many investors interested in making significant investments in space companies were already doing so when Masten launched at the end of the year.”

A SPAC is a “blank check” company that is already traded on an exchange. The sole purpose of a SPAC is to find a company to merge with and go public under their name. Both of Richard Branson’s space companies, Virgin Galactic and Virgin Orbit, went public through SPACs.

Masten also has trouble defining himself.

“Masten’s fundraising efforts have also been hampered by news issues,” the statement said. “Masten was difficult to categorize: it wasn’t a startup in the traditional sense, having existed for over seventeen years and living on the revenues it generated, but it wasn’t yet an established company. Additionally, Masten’s business had no clear or strategic focus; It generated most of its revenue (but also most of its costs) from MM1, but also performed suborbital VTVL and test operations and was involved in numerous R&D projects.”

Masten attracted interest from a number of potential investors, but the effort came to nothing. Attempts to be acquired by the three unidentified companies would prove similarly unsuccessful.

In January 2022, Masten’s board of directors directed CEO Sean Mahoney to step down from day-to-day operations of the company. Executive Chairman Joel Scotkin, who owns 51.67% of the company, assumed leadership of the company and directed fundraising. Mahoney would leave the company in April.

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