Note 6. Balance Sheet Components

Accounts Receivable, Net

Inventories

The Company recorded $24.1 million and $25.2 million in inventory reserves related to the valuation of inventory as of March 31, 2026 and December 31, 2025, respectively.

Prepaid Expenses and Other Current Assets

The Company entered into a sales-type lease on July 11, 2024 with a customer for a Sapphire XC system. The contract term is over 21 months with an effective interest rate of 0.78%. An amendment to the original agreement was executed to amend the monthly payments and included a purchase option of $1.2 million at the end of completion of the initial term.

For a full description of the customer deposit — noncash consideration, see Note 15, Momentus Master Service Agreement.

Property and Equipment, Net

Depreciation expense for the three months ended March 31, 2026 and 2025 was $0.7 million and $0.9 million, respectively.

Other Assets

Accrued Expenses and Other Current Liabilities

For a full description of the customer liabilities - prepaid reserve, and customer liabilities - noncash consideration, see Note 15, Momentus Master Service Agreement. On August 14, 2025, an amendment to the Momentus Master Service Agreement triggered changes to the accounting treatment, which required an independent valuation appraisal. The customer deposit - prepaid reserve are net cash proceeds after fees from the sale of the customer noncash consideration, and the customer deposit - noncash consideration was based on an independent valuation appraisal as of December 31, 2025, and was based solely on the Momentus, Inc. (Nasdaq: MNTS) price of $3.68 per share as of March 31, 2026, respectively. The December 31, 2025 valuation was based on a Black-Scholes model including inputs from the current stock price, volatility, remaining term and risk-free rate. A discount for lack of marketability was applied and certain restrictions on trading activity limitations were considered in the model.

Other Noncurrent Liabilities