# Virgin Galactic Holdings, Inc: Form 10-Q for the period ended Jun 30, 2024

- Company: [Virgin Galactic Holdings, Inc](/companies/spce.md) (CIK 1706946)
- Form: 10-Q
- Filed: 2024-08-07
- Accepted by EDGAR: Aug 7, 2024, 17:01 ET
- Period: 2024-06-30
- Accession: 0001706946-24-000176
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1706946/000170694624000176/spce-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1706946/000170694624000176/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $4.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-01-01 to 2024-06-30 | $6.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-04-01 to 2024-06-30 | $27.3m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2024-01-01 to 2024-06-30 | $49.9m | us-gaap:CostOfRevenue |
| Research and development | 3 months, 2024-04-01 to 2024-06-30 | $41.5m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2024-01-01 to 2024-06-30 | $100.5m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-04-01 to 2024-06-30 | $33.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-01-01 to 2024-06-30 | $61.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | −$101.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | −$212.9m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-04-01 to 2024-06-30 | $3.2m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 6 months, 2024-01-01 to 2024-06-30 | $6.5m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | $34.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | $114.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | −$93.8m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | −$195.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | −$4.36 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-01-01 to 2024-06-30 | −$9.43 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | −$4.36 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | −$9.43 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 21,484,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 20,752,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | −$192.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-01-01 to 2024-06-30 | $47.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-06-30 | $182.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $843.9m | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $1.06bn | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $179.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-06-30 | $667.6m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-06-30 | $394.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 26,827 characters.

*Unless the context otherwise requires, all references in this section to the “Company,” "Virgin Galactic," “we,” “us,” or “our” refer to Virgin Galactic Holdings, Inc. and its subsidiaries.*

*You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited financial statements and the related notes thereto, and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "Annual Report on Form 10-K"). This discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve risks and uncertainties. As a result of many factors, such as those set forth under the “Risk Factors” sections of our Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and under the "Cautionary Note Regarding Forward-Looking Statements" section and elsewhere in this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements.*

### Overview

We are an aerospace and space travel company offering access to space for private individuals, researchers and government agencies. Our missions include flying passengers to space, as well as flying scientific payloads and researchers to space in order to conduct experiments for scientific and educational purposes. Our operations include the design and development, manufacturing, ground and flight testing, spaceflight operation, and post-flight maintenance of our spaceflight system. Our current spaceflight system was developed using our proprietary technology and processes and is focused on providing space experiences for private astronauts, researcher flights and professional astronaut training. We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services for third parties.

### Recent Developments

In June 2024, we completed our second spaceflight of 2024 and seventh commercial spaceflight to date, *'Galactic 07,'* carrying one researcher and three private astronauts. Following the '*Galactic 07' flight,* we paused Unity spaceflights and expect to re-commence flying with test flights of our new Delta Class spaceships in advance of restarting commercial service, which is expected to begin in 2026.

On June 12, 2024, at the Company’s 2024 annual meeting of stockholders, our stockholders approved, and on June 14, 2024, we effected, a 1-for-20 reverse stock split (the “Reverse Stock Split”), and our common stock began trading on a split-adjusted basis on June 17, 2024. Prior to the Reverse Stock Split, on May 29, 2024, we received a notice from the New York Stock Exchange (the “NYSE”) that we were no longer in compliance with Section 802.01C of the NYSE Listed Company Manual (“Section 802.01C”), which requires listed companies to maintain an average closing price per share of at least $1.00 over a 30 consecutive trading-day period. Following the Reverse Stock Split, on July 1, 2024, we received a letter from the NYSE stating that we regained compliance with Section 802.01C.

All shares of our common stock, per-share data and related information included in this Quarterly Report on Form 10-Q have been retroactively adjusted as though the Reverse Stock Split had been effected prior to all periods presented.

In July 2024, we completed our new manufacturing facility in Mesa, Arizona, where final assembly of our next-generation Delta Class spaceships is scheduled to begin in 2025. After the initial development of our first Delta Class spaceship, we estimate the recurring cost to make each additional spaceship to be between $50 and $60 million.

### Factors Affecting Our Performance

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below, as well as in Part 1, Item 1A. of our Annual Report on Form 10-K titled “*Risk Factors”* and in Part II, Item 1A. in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

### Customer Demand

We have already received significant interest from potential astronauts. Going forward, we expect the size of our backlog and the number of astronauts that have flown to space on our spaceflight system to be an important indicator of our future performance. As of June 30, 2024, we have reservations for spaceflights for approximately 700 future astronauts, which represent approximately $193 million in expected future spaceflight revenue upon completion of the spaceflights.

### Available Capacity and Annual Flight Rate

We commenced our commercial operations with VSS Unity and VMS Eve, which together comprised our initial commercial spaceflight system. Our annual flight rate is constrained by the availability and capacity of this commercial spaceflight system. To expand capacity, we are currently developing our next-generation spaceflight vehicles. These next-generation spaceflight vehicles, which include our Delta Class spaceships and additional motherships, are expected to dramatically increase our annual flight rate.

We expect to reach a significant milestone for the design phase of our Delta Class spaceships at the end of summer 2024, completing the majority of manufacturing designs. This will enable us to deploy some of our engineers from the Delta program to the design of our new motherships, which we project to be ready for service in 2028.

### Safety Performance of Our Spaceflight Systems

Our spaceflight systems are highly specialized with sophisticated and complex technology. We have built operational processes to ensure that the design, manufacture, performance and servicing of our spaceflight systems meet rigorous quality standards. However, our spaceflight systems are still subject to operational and process risks, such as manufacturing and design issues, human errors, or cyber-attacks. Any actual or perceived safety issues may result in significant reputational harm to our business and our ability to generate spaceflight revenue.

### Results of Operations

The following tables set forth our results of operations for the periods presented. The period-to-period comparisons of financial results are not necessarily indicative of future results.

*(In thousands)*

|  | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $4,220 | $1,871 | $6,205 | $2,263 |
| Operating expenses: |  |  |  |  |
| Spaceline operations | 27,288 | 234 | 49,879 | 552 |
| Research and development | 41,535 | 86,574 | 100,504 | 196,444 |
| Selling, general and administrative | 33,931 | 51,437 | 61,815 | 101,802 |
| Depreciation and amortization | 3,256 | 3,192 | 6,955 | 6,437 |
| Total operating expenses | 106,010 | 141,437 | 219,153 | 305,235 |
| Operating loss | (101,790) | (139,566) | (212,948) | (302,972) |
| Interest income | 11,108 | 8,404 | 23,416 | 15,734 |
| Interest expense | (3,230) | (3,216) | (6,457) | (6,427) |
| Other income, net | 171 | 48 | 316 | 78 |
| Loss before income taxes | (93,741) | (134,330) | (195,673) | (293,587) |
| Income tax expense | 34 | 34 | 114 | 162 |
| Net loss | $(93,775) | $(134,364) | $(195,787) | $(293,749) |

23

### For the Three and Six Months Ended June 30, 2024 Compared to the Three and Six Months Ended June 30, 2023

### Revenue

*(In thousands, except %)*

|  | Three Months Ended June 30, 2024 | 2023 | $ Change | % Change 2024 | Six Months Ended June 30, 2023 |  | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | $4,220 | $1,871 | $2,349 | 126% | $6,205 | $2,263 | $3,942 | 174% |

Revenue for the three and six months ended June 30, 2024 and 2023 were primarily attributable to revenue generated from our commercial spaceflights and membership fees related to our Future Astronaut community.

### Spaceline Operations

*(In thousands, except %)*

|  | Three Months Ended June 30, 2024 | 2023 | $ Change | % Change 2024 | Six Months Ended June 30, 2023 |  | $ Change | % Change |
| --- | ---: | ---: | ---: | --- | ---: | ---: | ---: | --- |
| Spaceline operations | $27,288 | $234 | $27,054 | n.m. | $49,879 | $552 | $49,327 | n.m. |

Spaceline operations expense includes costs to maintain and operate our spaceflight system; non-capitalizable costs to build our new vehicles and manufacture items required to support the making of our vehicles, such as rocket motors and spare parts; the consumption of rocket motors, fuel and other consumables; costs to maintain and support our Future Astronaut community; and costs to provide payload cargo and engineering services.

Following the launch of commercial service and achievement of technological feasibility in July 2023, we began presenting the operating expenses supporting our commercial spaceline activities as spaceline operations expense in the accompanying condensed consolidated statements of operations and comprehensive loss. Prior to achievement of technological feasibility, spaceline operations expense included costs to support our Future Astronaut community and costs related to payload cargo and engineering services, which were previously presented as customer experience expense.

Spaceline operations expense for the three and six months ended June 30, 2024 was primarily attributable to costs to maintain and operate our spaceflight system; non-capitalizable costs to build our new vehicles and manufacture items required to support the making of our vehicles; and costs to maintain and support our Future Astronaut community. Spaceline operations expense for the three and six months ended June 30, 2023 was primarily attributable to incremental costs related to our commercial spaceflight and costs related to our Future Astronaut community.

### Research and Development

*(In thousands, except %)*

|  | Three Months Ended June 30, 2024 | 2023 | $ Change | % Change 2024 | Six Months Ended June 30, 2023 |  | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Research and development | $41,535 | $86,574 | $(45,039) | (52)% | $100,504 | $196,444 | $(95,940) | (49)% |

Research and development expenses represent costs incurred to support activities that advance our future fleet towards commercialization, including basic research, applied research, concept formulation studies, design, development, and related testing activities. Research and development costs will consist primarily of equipment, material, and labor costs (including from third-party contractors) for designing the spaceflight system’s structure, spaceflight propulsion system, and flight profiles for our next-generation spaceships and motherships, as well as allocated facilities and other supporting overhead costs.

Research and development expenses decreased from $86.6 million for the three months ended June 30, 2023 to $41.5 million for the three months ended June 30, 2024. The decrease was primarily driven by a $22.8 million decrease in materials, consulting, and other costs primarily due to the completion of modifications in 2023 of VSS Unity and VMS Eve, a $20.3 million decrease in cash compensation and other employee benefit costs primarily due to the completion of the modifications in 2023 of VSS Unity and VMS Eve and a reduction in headcount, and a $1.9 million decrease in stock-based compensation.

Research and development expenses decreased from $196.4 million for the six months ended June 30, 2023 to $100.5 million for the six months ended June 30, 2024. The decrease was primarily driven by a $48.9 million decrease in materials, consulting, and other costs primarily due to the completion of modifications in 2023 of VSS Unity and VMS Eve, a $42.4 million decrease in cash compensation and other employee benefit costs primarily due to the completion of the modifications in 2023 of VSS Unity and VMS Eve and a reduction in headcount, an $8.3 million decrease in other operational costs primarily due to a technology license fee expensed in 2023, and a $3.8 million decrease in stock-based compensation. These decreases were partially offset by a $10.4 million increase in sub-contractor and contract labor costs associated with the development of our next-generation spaceflight vehicles.

### Selling, General and Administrative

*(In thousands, except %)*

|  | Three Months Ended June 30, 2024 | 2023 | $ Change | % Change 2024 | Six Months Ended June 30, 2023 |  | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Selling, general and administrative | $33,931 | $51,437 | $(17,506) | (34)% | $61,815 | $101,802 | $(39,987) | (39)% |

Selling, general and administrative expenses consist primarily of compensation and other employee benefit costs for employees involved in general corporate functions, including executive management and administration, accounting, finance, legal, information technology, sales and marketing, and human resources. Non-compensation components of selling, general and administrative expenses include accounting, legal and other professional fees, facilities expenses, and other corporate expenses.

Selling, general and administrative expenses decreased from $51.4 million for the three months ended June 30, 2023 to $33.9 million for the three months ended June 30, 2024. The decrease was primarily driven by a $9.1 million decrease in cash compensation and other employee benefit costs primarily due to a reduction in headcount, a $4.3 million decrease in consulting and other professional fees, and a $2.9 million decrease in stock-based compensation.

Selling, general and administrative expenses decreased from $101.8 million for the six months ended June 30, 2023 to $61.8 million for the six months ended June 30, 2024. The decrease was primarily driven by a $20.1 million decrease in cash compensation and other employee benefit costs primarily due to a reduction in headcount, a $9.1 million decrease in consulting and other professional fees, and a $6.9 million decrease in stock-based compensation.

### Depreciation and Amortization

*(In thousands, except %)*

|  | Three Months Ended June 30, 2024 | 2023 | $ Change | % Change 2024 | Six Months Ended June 30, 2023 |  | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Depreciation and amortization | $3,256 | $3,192 | $64 | 2% | $6,955 | $6,437 | $518 | 8% |

Depreciation and amortization expense increased from $3.2 million for the three months ended June 30, 2023 to $3.3 million for the three months ended June 30, 2024.

Depreciation and amortization expense increased from $6.4 million for the six months ended June 30, 2023 to $7.0 million for the six months ended June 30, 2024. The increase was primarily due to the acquisition of property, plant and equipment.

### Interest Income

*(In thousands, except %)*

|  | Three Months Ended June 30, 2024 | 2023 | $ Change | % Change 2024 | Six Months Ended June 30, 2023 |  | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest income | $11,108 | $8,404 | $2,704 | 32% | $23,416 | $15,734 | $7,682 | 49% |

Interest income increased from $8.4 million for the three months ended June 30, 2023 to $11.1 million for the three months ended June 30, 2024. This increase was primarily driven by higher investment returns on marketable securities and higher interest rates on deposits in interest-bearing accounts.

Interest income increased from $15.7 million for the six months ended June 30, 2023 to $23.4 million for the six months ended June 30, 2024. This increase was primarily driven by higher investment returns on marketable securities and higher interest rates on deposits in interest-bearing accounts.

### Interest Expense

*(In thousands, except %)*

|  | Three Months Ended June 30, 2024 | 2023 | $ Change | % Change 2024 | Six Months Ended June 30, 2023 |  | $ Change | % Change |
| --- | ---: | ---: | ---: | --- | ---: | ---: | ---: | --- |
| Interest expense | $3,230 | $3,216 | $14 | n.m. | $6,457 | $6,427 | $30 | n.m. |

Interest expense was $3.2 million for each of the three months ended June 30, 2024 and 2023. Interest expense increased from $6.4 million for the six months ended June 30, 2023 to $6.5 million for the six months ended June 30, 2024. Interest expense primarily consists of interest expense and amortization of debt issuance costs related to our convertible senior notes.

### Income Tax Expense

Income tax expense was immaterial for the three and six months ended June 30, 2024 and 2023. We have accumulated net operating losses at the U.S. federal and state levels. We maintain a full valuation allowance against our net U.S. federal and state deferred tax assets. The income tax expense is primarily related to corporate income taxes for our operations in the United Kingdom, which operates on a cost-plus arrangement.

### Liquidity and Capital Resources

As of June 30, 2024, we had cash, cash equivalents and restricted cash of $214.8 million and marketable securities of $605.9 million. Our principal sources of liquidity have come from sales of our common stock and offering of convertible senior notes ("2027 Notes").

### Historical Cash Flows

*(In thousands)*

| Net cash provided by (used in): | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| Operating activities | $(192,361) | $(261,387) |
| Investing activities | 83,676 | 48,751 |
| Financing activities | 69,921 | 268,044 |
| Net increase (decrease) in cash, cash equivalents and restricted cash | $(38,764) | $55,408 |

### Operating Activities

Net cash used in operating activities was $192.4 million for the six months ended June 30, 2024, and consisted primarily of $195.8 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $16.5 million and depreciation and amortization expense of $7.0 million, partially offset by $9.3 million of other non-cash items and $11.8 million of cash used from changes in operating assets and liabilities.

Net cash used in operating activities was $261.4 million for the six months ended June 30, 2023, and consisted primarily of $293.7 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $24.8 million and depreciation and amortization expense of $6.4 million.

### Investing Activities

Net cash provided by investing activities was $83.7 million for the six months ended June 30, 2024, and consisted primarily of $479.4 million in proceeds from maturities and calls of marketable securities, partially offset by $348.8 million in purchases of marketable securities and $47.5 million in capital expenditures.

Net cash provided by investing activities was $48.8 million for the six months ended June 30, 2023, and consisted of $471.3 million in proceeds from maturities and calls of marketable securities, partially offset by $409.9 million in purchases of marketable securities and $12.6 million in capital expenditures.

### Financing Activities

Net cash provided by financing activities was $69.9 million for the six months ended June 30, 2024, and consisted primarily of net cash proceeds from the sale and issuance of common stock of $70.9 million, partially offset by tax withholdings paid for net settled stock-based awards of $0.9 million.

Net cash provided by financing activities was $268.0 million for the six months ended June 30, 2023, and consisted primarily of net cash proceeds from the sale and issuance of common stock of $270.5 million, partially offset by tax withholdings paid for net settled stock-based awards of $2.3 million.

### Funding Requirements

We expect our expenditures to fluctuate in connection with our ongoing activities, particularly as we continue to advance the development of our next-generation spaceflight system and leverage investments in capital expenditures.

As our fleet of spaceships expands, we expect our expenditures to increase as we scale our commercial operations. Specifically, our long-term expenditures will increase as we:

- scale up our manufacturing processes and capabilities to support expanding our fleet with additional spaceships, carrier aircraft and rocket motors in connection with commercialization;
- hire additional personnel in manufacturing operations, testing programs, maintenance operations and guest services as we increase the volume of our spaceflights;
- scale up required operational facilities, such as hangars and warehouses; and
- establish our astronaut campus in New Mexico.

We expect our arrangements with third-party providers to manufacture key subassemblies for our next-generation spaceships and for the design and manufacture of our next-generation carrier aircraft will require significant capital expenditures. Certain estimated amounts in connection with third-party arrangements are subject to future negotiations and cannot be estimated with reasonable certainty.

We believe that our current capital is adequate to sustain our operations for at least the next twelve months. Changing circumstances may cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. While we have completed our initial commercial launch with a single spaceship, we are currently developing our next-generation spaceflight vehicles. We anticipate the costs to manufacture additional vehicles will begin to decrease as we continue to scale up our manufacturing processes and capabilities.

### Issuances of Common Stock

In August 2022, we entered into a distribution agency agreement with Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC (each, an “Agent” and collectively, the “Agents”) providing for the offer and sale of up to $300 million of shares of our common stock from time to time through the Agents, acting as sales agents, or directly to one or more of the Agents, acting as principal(s), through an "at-the-market offering" program (the "2022 ATM Program").

We completed the 2022 ATM Program in June 2023, selling a total of 3.0 million shares of common stock and generating $300 million in gross proceeds, before deducting $3.0 million in underwriting discounts, commissions and other expenses.

In June 2023, we entered into a distribution agency agreement with the Agents providing for the offer and sale of up to $400 million of shares of our common stock from time to time through the Agents, acting as sales agents, or directly to one or more of the Agents, acting as principal(s), through an "at-the-market offering" program (the "2023 ATM Program").

During the six months ended June 30, 2024, we sold 3.9 million shares of common stock under the 2023 ATM Program and generated $71.6 million in gross proceeds, before deducting $0.7 million in underwriting discounts, commissions and other expenses.

As of June 30, 2024, we sold a total of 7.9 million shares of common stock under the 2023 ATM Program, generating $359.1 million in gross proceeds, before deducting $3.6 million in underwriting discounts, commissions and other expenses.

### Liquidity Outlook

For at least the next twelve months, we expect our principal demand for funds will be for our ongoing activities described above. We expect to meet our short-term liquidity requirements primarily through our cash, cash equivalents and marketable securities on hand. We believe we will have sufficient liquidity available to fund our business needs, commitments and contractual obligations for the next twelve months.

Beyond the next twelve months, our principal demand for funds will be to sustain our operations, operate our spaceline at Spaceport America in New Mexico, and expand our fleet of spaceships, motherships, and supporting facilities. We expect to generate revenue from our spaceflight program, which is expected to restart in 2026. To the extent this source of capital as well as sources of capital described above are insufficient to meet our needs, we may need to seek additional debt or equity financing.

The commercial launch of our spaceflight program and the anticipated expansion of our fleet have unpredictable costs and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control, that may affect the timing and magnitude of these anticipated expenditures. Some of these risk and uncertainties are described in more detail in our Annual Report on Form 10-K under the heading Item 1A. “*Risk Factors—Risks Related to Our Business.”*

### Contractual Obligations and Commitments

Except as set forth in the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there have been no material changes outside the ordinary course of business to our contractual obligations and commitments as described in Part II, Item 7. “*Management’s Discussion and Analysis of Financial Condition and Results of Operations”* in our Annual Report on Form 10-K.

### Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We believe that the estimates, assumptions and judgments involved in the accounting policies referred to below have the greatest potential impact on our financial statements and, therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions.

During the fiscal quarter ended June 30, 2024, there were no significant changes to our critical accounting policies and estimates compared to those previously disclosed in *"Critical Accounting Policies and Estimates"* included in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 2023 Annual Report on Form 10-K.

## Market risk

As filed, 272 characters.

During the fiscal quarter ended June 30, 2024, there were no significant changes to our market risks compared to those previously disclosed in Part II, Item 7A. *"Quantitative and Qualitative Disclosures About Market Risk"* included in our 2023 Annual Report on Form 10-K.

## Controls and procedures

As filed, 1,440 characters.

### Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of June 30, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.

### Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 2,721 characters.

Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described as risk factors, any one or more of which could, directly or indirectly, cause our actual operating results and financial condition to vary materially from past, or anticipated future, operating results and financial condition. For a discussion of our potential risks and uncertainties, see the risk factors previously disclosed in Part I, Item 1. “*Business,”* Part I, Item 1A. “*Risk Factors,”* and Part II, Item 7. “*Management's Discussion and Analysis of Financial Condition and Results of Operations"* in our Annual Report on Form 10-K, in Part II, Item 1A. “*Risk Factors”* in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and in Part I, Item 2. “*Management's Discussion and Analysis of Financial Condition and Results of Operations"* in this Quarterly Report on Form 10-Q. There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, other than the addition of the Risk Factor below.

***We completed a 1-for-20 reverse stock split of our shares of common stock, which may have adverse effects on the trading of our common stock.***

On May 29, 2024, we received a notice from the New York Stock Exchange (the “NYSE”) that we were no longer in compliance with Section 802.01C of the NYSE Listed Company Manual (“Section 802.01C”), which requires listed companies to maintain an average closing price per share of at least $1.00 over a 30 consecutive trading-day period. On June 12, 2024, at the Company’s 2024 annual meeting of stockholders, our stockholders approved, and on June 14, 2024 we effected, a 1-for-20 reverse stock split (the “Reverse Stock Split”), and our common stock began trading on a split-adjusted basis on June 17, 2024. On July 1, 2024, we received a letter from the NYSE stating that we regained compliance with Section 802.01C. However, the effect that the Reverse Stock Split will have on the market price of our common stock cannot be predicted with certainty, and if our common stock again does not maintain an average closing price per share of at least $1.00 over a 30 consecutive trading-day period, we would receive another notice of non-compliance from the NYSE and would be provided a period of six months from the date of such notice to regain compliance with Section 802.01C. There can be no assurance that the per share price of our common stock will continue to meet the price criteria or other requirements for continued listing of our common stock on the NYSE.

Filed Aug 7, 2024.
Source: SEC EDGAR, the filing index for accession 0001706946-24-000176. Last ingested by Listed: Oct 27, 2026, 17:29 ET. No prices; not investment advice.