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What changed in Virgin Galactic Holdings, Inc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Virgin Galactic Holdings, Inc's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+351 added−367 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-27)

Top changes in Virgin Galactic Holdings, Inc's 2024 10-K

351 paragraphs added · 367 removed · 287 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

107 edited+23 added−35 removed111 unchanged
Biggest changeDuring this period, the FAA is still able to issue regulations governing the design or operation of a vehicle to protect the health and safety of crew, government astronauts and spaceflight participants under certain conditions. The learning period has been extended until March 9, 2024; however, legislation has been introduced to extend the learning period to October 1, 2031.
Biggest changeCongress has enacted a "learning period" limiting the FAA until January 1, 2028 from regulating human occupants on launch vehicles such as our spaceships. During this period, the FAA retains limited authority to regulate the design or operation of a vehicle to protect the health and safety of crew, government astronauts and spaceflight participants under certain conditions.
This reusable launch platform design provides a flight experience and economics similar to commercial airplanes and offers an economic advantage over other potential launch alternatives. Additionally, our carrier aircraft is designed to have a rapid turnaround time to enable it to provide frequent spaceflight launch services for multiple spaceships. • Our spaceships .
This reusable launch platform design provides a flight experience and economics similar to commercial airplanes and offers an economic advantage over other potential launch alternatives. Additionally, our carrier aircraft is designed to have a rapid turnaround time to enable it to provide frequent spaceflight launch services for multiple spaceships.
Each customer is welcomed and on-boarded into the Future Astronaut community via a call with our ‘Astronaut Office.’ Future astronauts are kept apprised of community activity and company news through an app-accessed customer portal, which has undergone an extensive upgrade and is now the principal tool by which we provide and receive necessary information from our future astronauts in preparation for their spaceflights.
Each customer is welcomed and on-boarded into the astronaut community via a call with our ‘Astronaut Office.’ Future astronauts are kept apprised of community activity and company news through an app-accessed customer portal, which has undergone an extensive upgrade and is now the principal tool by which we provide and receive necessary information from our future astronauts in preparation for their spaceflights.
We operate our flights at Spaceport America, which was designed to be both functional and beautiful and sets the stage for our astronaut experiences. Spaceport America is located in New Mexico on more than 25 square miles of desert landscape, with access to 6,000 square miles of restricted airspace running from the ground to space.
We operate our flights at Gateway to Space at Spaceport America, which was designed to be both functional and beautiful and sets the stage for our astronaut experiences. Spaceport America is located in New Mexico on more than 25 square miles of desert landscape, with access to 6,000 square miles of restricted airspace running from the ground to space.
The term “hybrid” rocket refers to the fact that the rocket uses a solid fuel grain cartridge and a liquid oxidizer. The fuel cartridge is consumed over the course of a flight and replaced in between flights. Our rocket motor has been designed to provide performance capabilities necessary for spaceflight with a focus on safety, reliability and economy.
The term “hybrid” rocket refers to the fact that the rocket uses a solid fuel grain cartridge and a liquid oxidizer. The fuel cartridge is consumed over the course of a flight and replaced in between flights. Our rocket motor has been designed to provide performance capabilities necessary for suborbital spaceflight with a focus on safety, reliability and economy.
Upon any termination or expiration of the Amended TMLA, unless otherwise agreed with Virgin, we will have 90 days to exhaust, return or destroy any products or other materials bearing the licensed trademarks, and to change our corporate name to a name that does not include any of the licensed trademarks, including the Virgin name.
Upon any termination or expiration of the Amended TMLA, unless otherwise agreed with VEL, we will have 90 days to exhaust, return or destroy any products or other materials bearing the licensed trademarks, and to change our corporate name to a name that does not include any of the licensed trademarks, including the Virgin name.
Spacecraft Technology License Agreement We are party to a Spacecraft Technology License Agreement, as amended, with Mojave Aerospace Ventures, LLC (“MAV”) pursuant to which we possess a non-exclusive, worldwide license under certain patents and patent applications, including improvements that have been reduced to practice within a specified period.
Spacecraft Technology License Agreement We are party to a Spacecraft Technology License Agreement, as amended (STLA"), with Mojave Aerospace Ventures, LLC (“MAV”) pursuant to which we possess a non-exclusive, worldwide license under certain patents and patent applications, including improvements that have been reduced to practice within a specified period.
Pursuant to the terms of the Amended TMLA, we are obligated to pay Virgin quarterly royalties equal to the greater of (a) a low single-digit percentage of our gross sales and (b) (i) prior to the first spaceflight for paying future astronauts, a mid-five figure amount in dollars and (ii) from our first spaceflight for paying future astronauts, a low-six figure amount in dollars, which increases to a low-seven figure amount in dollars over a four-year ramp up and thereafter increases in correlation with the consumer price index.
Pursuant to the terms of the Amended TMLA, we are obligated to pay VEL quarterly royalties equal to the greater of: (a) a low single-digit percentage of our gross sales; and, (b) (i) prior to the first spaceflight for paying future astronauts, a mid-five figure amount in dollars; and, (ii) from our first spaceflight for paying future astronauts, a low-six figure amount in dollars, which increases to a low-seven figure amount in dollars over a four-year ramp up and thereafter increases in correlation with the consumer price index.
Furthermore, Virgin is generally responsible for the protection, maintenance, enforcement and protection of the licensed intellectual property, including the Virgin brand, subject to our step-in rights in certain circumstances.
Furthermore, VEL is generally responsible for the protection, maintenance, enforcement and protection of the licensed intellectual property, including the Virgin brand, subject to our step-in rights in certain circumstances.
The Amended TMLA may be terminated by Virgin upon the occurrence of several specified events, including if: • we commit a material breach of our obligations under the Amended TMLA (subject to a cure period, if applicable); • we materially damage the Virgin brand; • we use the brand name “Virgin Galactic” outside of the scope of the activities licensed under the Amended TMLA (subject to a cure period); • we become insolvent; • we undergo a change of control to an unsuitable buyer, including to a competitor of Virgin; 17 Table of Contents • we fail to make use of the “Virgin Galactic” brand to conduct our business; • we challenge the validity or entitlement of Virgin to own the “Virgin” brand; or • the commercial launch of our services does not occur by a fixed date or thereafter if we are unable to undertake any commercial flights for paying passengers for a specified period (other than in connection with addressing a significant safety issue).
The Amended TMLA may be terminated by VEL upon the occurrence of several specified events, including if: • we commit a material breach of our obligations under the Amended TMLA (subject to a cure period, if applicable); • we materially damage the Virgin brand; • we use the brand name “Virgin Galactic” outside of the scope of the activities licensed under the Amended TMLA (subject to a cure period); • we become insolvent; • we undergo a change of control to an unsuitable buyer, including to a competitor of VEL; • we fail to make use of the “Virgin Galactic” brand to conduct our business; • we challenge the validity or entitlement of VEL to own the “Virgin” brand; or • the commercial launch of our services does not occur by a fixed date or thereafter if we are unable to undertake any commercial flights for paying passengers for a specified period (other than in connection with addressing a significant safety issue).
Our astronauts will be able to exit their seats and experience weightlessness, floating about the cabin and positioning themselves at one of the dozen windows around the cabin sides and top. The vehicle’s two pilots will maneuver the spaceship to give the astronauts spectacular views of the Earth and an opportunity to look out into the blackness of space.
Our astronauts will be able to exit their seats and experience weightlessness, floating about the cabin and positioning themselves at one of the twelve windows around the cabin sides and top. The vehicle’s two pilots will maneuver the spaceship to give the astronauts spectacular views of the Earth and an opportunity to look out into the blackness of space.
Since the Company was formed in 2004, we have developed our current spaceflight system consisting of reusable vehicles and capabilities that allow us to conduct efficient and frequent operations for spaceflight and which were the basis for the FAA granting us our commercial space launch license in 2016.
Since the Company was formed in 2004, we have developed our initial spaceflight system consisting of reusable vehicles and capabilities that allow us to conduct efficient and frequent operations for spaceflight and which were the basis for the FAA granting us our commercial space launch license in 2016.
The Amended TMLA also contains, among other things, customary mutual indemnification provisions, representations and warranties, information rights of Virgin and restrictions on our and our affiliates’ ability to apply for or obtain registration for any confusingly similar intellectual property to that licensed to us pursuant to the Amended TMLA.
The Amended TMLA also contains, among other things, customary mutual indemnification provisions, representations and warranties, information rights of VEL and restrictions on our and our affiliates’ ability to apply for or obtain registration for any confusingly similar intellectual property to that licensed to us pursuant to the Amended TMLA.
Upon landing, astronauts will disembark and join family and friends to celebrate their achievements and receive their Virgin Galactic astronaut wings. Sales and Marketing In August 2021, following Sir Richard Branson's successful test flight, we reopened ticket sales to a select group and increased the pricing of our consumer offerings to a base price of $450,000 per seat.
Upon landing, astronauts will disembark and join family and friends to celebrate their achievements and receive their Virgin Galactic astronaut wings. 14 Table of Contents Sales and Marketing In August 2021, following Sir Richard Branson's successful test flight, we reopened ticket sales to a select group and increased the pricing of our consumer offerings to a base price of $450,000 per seat.
We have developed extensive vertically integrated aerospace development capabilities for developing, manufacturing and testing aircraft, spacecraft and related propulsion systems. These capabilities encompass preliminary systems and vehicle design and analysis, detail design, manufacturing, ground testing, flight testing and post-delivery support and maintenance.
We have developed extensive aerospace development capabilities for developing, manufacturing and testing aircraft, spacecraft and related propulsion systems. These capabilities encompass preliminary systems and vehicle design and analysis, detail design, manufacturing, ground testing, flight testing and post-delivery support and maintenance.
This provides our pilots with a safe, cost-effective and repeatable way to train for the spaceship’s final approach and landing. Our carrier aircraft is designed to launch hundreds of spaceship flights over its lifetime. As such, our spaceflight launch platform system offers a considerable economic advantage over other potential launch architectures.
This provides our pilots with a safe, cost-effective and repeatable way to train for the spaceship’s final approach and landing. 10 Table of Contents Our carrier aircraft is designed to launch hundreds of spaceship flights over its lifetime. As such, our spaceflight launch platform system offers a considerable economic advantage over other potential launch architectures.
Furthermore, if potential concerns emerge after release from the mothership, spaceship can simply glide back to the runway. 12 Table of Contents • The mothership's engine reliability. Highly reliable and rigorously tested jet engines made by Pratt and Whitney Canada power the first 45,000 feet of the journey to space. • Two pilots per vehicle.
Furthermore, if potential concerns emerge after release from the mothership, spaceship can simply glide back to the runway. • The mothership's engine reliability. Highly reliable and rigorously tested jet engines made by Pratt and Whitney Canada power the first 45,000 feet of the journey to space. • Two pilots per vehicle.
On ‘ Galactic 05,’ two private researchers, one sponsored by the Southwest Research Institute (SwRI), and another sponsored by the International Institute for Astronautical Sciences (IIAS), conducted a total of five human-tended research experiments .
On 'Galactic 05,' two private researchers, one sponsored by the Southwest Research Institute (SwRI), and another sponsored by the International Institute for Astronautical Sciences (IIAS), conducted a total of five human-tended research experiments .
The spaceship is a rocket-powered winged vehicle designed to achieve a maximum speed of over Mach 3 and has a flight duration, measured from passenger boarding to the disembarkation, of approximately 90 minutes. 11 Table of Contents The spaceship begins each mission by being carried to an altitude of approximately 45,000 feet by the mothership before being released.
The spaceship is a rocket-powered winged vehicle designed to achieve a maximum speed of over Mach 3 and has a flight duration, measured from passenger boarding to the disembarkation, of approximately 90 minutes. The spaceship begins each mission by being carried to an altitude of approximately 45,000 feet by the mothership before being released.
The commonality of cabin construction provides cost savings 10 Table of Contents in production, as well as operational, maintenance and crew training advantages. The mothership’s all-composite material construction substantially reduces weight as compared to an all-metal design. The mothership is powered by four Pratt and Whitney Canada commercial turbo-fan engines.
The commonality of cabin construction provides cost savings in production, as well as operational, maintenance and crew training advantages. The mothership’s all-composite material construction substantially reduces weight as compared to an all-metal design. The mothership is powered by four Pratt and Whitney Canada commercial turbo-fan engines.
Our elegant and distinctive spaceflight system – which takes off and lands on a runway – has been designed for optimal safety and comfort. As part of our commercial operations, we have exclusive access to the Gateway to Space facility at Spaceport America located in New Mexico.
Our elegant and distinctive spaceflight system – which takes off and lands on a runway – has been designed for a superior astronaut experience, optimal safety and comfort. As part of our commercial operations, we have exclusive access to the Gateway to Space facility at Spaceport America located in New Mexico.
Our astronauts are also granted membership to a unique and long-established global community of Virgin Galactic Future Astronauts and alumni. • Limited competition with natural barriers to entry. Entry into the commercial spaceflight market requires a significant financial investment as well as many years of high-risk development.
Our astronauts are also granted access to a unique and long-established global community of Virgin Galactic astronauts and alumni astronauts. • Limited competition with natural barriers to entry. Entry into the commercial spaceflight market requires a significant financial investment as well as many years of high-risk development.
Virgin Trademark License Agreement We possess certain exclusive and non-exclusive rights to use the name and brand “Virgin Galactic” and the Virgin signature logo pursuant to an amended and restated trademark license agreement (the “Amended TMLA”). Our rights under the Amended TMLA are subject to certain reserved rights and pre-existing licenses granted by Virgin to third parties.
Virgin Trademark License Agreement We possess certain exclusive and non-exclusive rights to use the name and brand “Virgin Galactic” and the Virgin signature logo pursuant to an amended and restated trademark license agreement (the “Amended TMLA”). Our rights under the Amended TMLA are subject to certain reserved rights and pre-existing licenses granted by Virgin Enterprises Limited (“VEL”) to third parties.
Our spaceflight system and our hybrid rocket motor together enable the following key differentiators: ◦ Horizontal take-off and landing using winged vehicles and traditional airplane runway infrastructure that enable a familiar airplane-like experience; ◦ Use of our carrier aircraft for the first stage of flight and then to air launch our spaceship, which is intended to maximize the safety and efficiency of our spaceflight system; ◦ Pilot-designed and pilot-flown missions to aid safety and customer confidence; ◦ Carbon composite construction that is light, strong and durable; ◦ Robust, controllable spaceship hybrid rocket motor propulsion system that can be safely shut down at any time during the flight; ◦ Large cabin with multiple windows, allowing for an experience of weightlessness and easy access to views of Earth for all of our astronauts; ◦ Unique “wing-feathering” system, designed to enable a safe, aerodynamically controlled re-entry into the Earth’s atmosphere on a repeated basis; and 8 Table of Contents ◦ Versatile cabin provides the adaptability to operate research-focused flights with payload racks and researchers onboard as well as private astronaut flights with a full cabin of commercial passengers. • Significant backlog and pent-up customer demand.
Our spaceflight system and our hybrid rocket motor together enable the following key differentiators: ◦ Horizontal take-off and landing using winged vehicles and traditional airplane runway infrastructure that enable a familiar airplane-like experience; ◦ Use of our carrier aircraft for the first stage of flight and then to air launch our spaceship, which is intended to maximize the safety and efficiency of our spaceflight system; ◦ Pilot-designed and pilot-flown missions to aid safety and customer confidence; ◦ Carbon composite construction that is light, strong and durable; ◦ Robust, controllable spaceship hybrid rocket motor propulsion system that can be safely shut down at any time during the flight; ◦ Large cabin with multiple windows, allowing for an experience of weightlessness and easy access to views of Earth for all of our astronauts; ◦ Unique “wing-feathering” system, designed to enable a safe, aerodynamically controlled re-entry into the Earth’s atmosphere on a repeated basis; ◦ Versatile cabin provides the adaptability to operate research-focused flights with payload racks and researchers onboard as well as private astronaut flights with a full cabin of commercial passengers; and ◦ Highly re-useable spaceflight system, with the exception of the rocket motor, which must be replaced after each flight. • Significant backlog and pent-up customer demand.
While these highly capable government astronauts have inspired millions, individuals in the private sector have had extremely limited opportunity to fly into space, regardless of their wealth or ambitions. 6 Table of Contents Over the past decade, several trends have converged to invigorate the commercial space industry.
While these highly capable government astronauts have inspired millions, individuals in the private sector have had extremely limited opportunity to fly into space, regardless of their wealth or ambitions. Over the past decade, several trends have converged to invigorate the commercial space industry.
Although leased, the facilities were built with our operational requirements and our astronauts in mind, with comprehensive consideration of its practical function, while also providing the basis for the Virgin Galactic experience. 9 Table of Contents • Experienced management team and an industry-leading flight team.
Although leased, the facilities were built with our operational requirements and our astronauts in mind, with comprehensive consideration of its practical function, while also providing the basis for the Virgin Galactic experience. • Experienced management team and an industry-leading flight team.
Despite the importance of these missions and their cultural, scientific, economic and geopolitical influence, as of December 31, 2023, only approximately 675 humans have ever traveled above the Earth’s atmosphere into space. Overwhelmingly, these men and women have been government employees handpicked by government space agencies such as NASA, and trained over many years at significant expense.
Despite the importance of these missions and their cultural, scientific, economic and geopolitical influence, as of December 31, 2024, only approximately 700 humans have ever traveled above the Earth’s atmosphere into space. Overwhelmingly, these men and women have been government employees handpicked by government space agencies such as NASA, and trained over many years at significant expense.
Our commercial team is managed and supported by individuals with significant experience and success in building and growing a commercial spaceflight brand, selling spaceflight reservations and managing the Future Astronaut community. Our Assets We have developed an extensive portfolio of proprietary technologies that are embodied in the highly specialized vehicles that we have created to enable commercial spaceflight.
Our commercial team is managed and supported by individuals with significant experience and success in building and growing a commercial spaceflight brand, selling spaceflight reservations and managing the astronaut community. 9 Table of Contents Our Assets We have developed an extensive portfolio of proprietary technologies that are embodied in the highly specialized vehicles that we have created to enable commercial spaceflight.
We have flown 30 experiments for research-related missions and we expect research missions to form an important part of our launch manifest in the future.
We have flown dozens of experiments for research-related missions and we expect research missions to form an important part of our launch manifest in the future.
This rocket offers simple shut-off control at any point in the trajectory, unlike a traditional solid rocket motor. • Feathering system. Our unique wing feathering technology provides self-correcting capability that requires limited pilot input for our spaceship to align properly for re-entry. • Astronaut preparation.
This rocket offers simple shut-off control at any point in the trajectory, unlike a traditional solid rocket motor. • Feathering system. Our unique wing feathering technology provides self-correcting capability that requires limited pilot input for our spaceship to align properly for re-entry. 12 Table of Contents • Astronaut preparation.
While our primary focus for the foreseeable future is on managing our commercial human spaceflight operations, we intend to expand our commitment to exploring and evaluating the application of our technologies and expertise into these and other ancillary applications. 16 Table of Contents Competition The commercial spaceflight industry is still developing and evolving, but we expect it to be highly competitive.
While our primary focus for the foreseeable future is on managing our commercial human spaceflight operations, we intend to expand our commitment to exploring and evaluating the application of our technologies and expertise into these and other ancillary applications. Competition The commercial spaceflight industry is still developing and evolving, but we expect it to be competitive.
Further, we believe we are at the center of these industry trends and well-positioned to capitalize on them by bringing human spaceflight to a broader global population that dreams of traveling to space.
Further, we believe we are at the center of these industry trends and well-positioned to capitalize on them by bringing human spaceflight to a broader global population that dreams of 6 Table of Contents traveling to space.
Its design incorporates comprehensive critical safety features, including the ability to be safely shut down at any time, and its limited number of moving parts increases reliability and robustness for human spaceflight. Furthermore, the fuel is made from a benign substance that needs no special or hazardous storage. 5 Table of Contents • Spaceport America .
Its design incorporates comprehensive critical safety features, including the ability to be safely shut down at any time, and its limited number of moving parts increases reliability and robustness for human spaceflight. Furthermore, the fuel is made from a benign substance that needs no special or hazardous storage. • Gateway to Space at Spaceport America .
Beyond that, we plan to identify opportunities to expand to additional spaceports. We expect our Delta Class spaceship test flights to begin in 2025, in advance of commercial service expected to begin in 2026. • Lower operating costs.
Beyond that, we plan to identify opportunities to expand to additional spaceports. We expect our Delta Class spaceship test flights to begin in advance of commercial service, which is expected to begin in 2026. • Lower operating costs.
The authorization requirements include the need to get permission to release controlled technology to foreign persons, including foreign person employees under the License Exception Strategic Trade Authorization for certain exports, re-exports and transfers in-country.
The authorization requirements include the need to obtain permission to release controlled technology to foreign persons, including foreign person employees under the EAR's License Exception Strategic Trade Authorization for certain exports, re-exports and transfers in-country.
The spaceship is a rocket-powered winged vehicle designed to achieve a maximum speed of over Mach 3 and has a flight duration, measured from passenger boarding to the disembarkation, of approximately 90 minutes. The spaceship cabin has been designed to maximize astronaut safety, experience and comfort.
The spaceship is a rocket-powered winged vehicle designed to achieve a maximum speed of over Mach 3 and has a flight duration, measured from passenger boarding to the disembarkation, of approximately 90 minutes. The spaceship cabin has been designed to deliver a superior astronaut experience, maximizing astronaut safety and comfort.
The astronauts will then meet up with their fellow astronauts and board our spaceship, which will already be mated to the mothership. 14 Table of Contents The spaceship cabin has been designed, like the spaceport interior, to deliver an aesthetic consistent with our brand values and optimize the flight experience.
The astronauts will then meet up with their fellow astronauts and board our spaceship, which will already be mated to the mothership. The spaceship cabin has been designed, like the spaceport interior, to deliver an aesthetic consistent with our brand values and optimize the flight experience.
Our engineering, design and corporate headquarters in Tustin, California, serves as our primary hub for research, design and engineering of our new Delta Class spaceships. • Rocket systems and support facilities.
Our engineering, design and corporate headquarters in Tustin, California, serves as our primary hub for research, design and engineering of our new Delta Class spaceships and next-generation motherships. • Rocket systems and support facilities.
We believe our existing spaceflight system addresses many of these issues by providing: 15 Table of Contents • Researchers the ability to accompany and tend to their experiments in space; • The ability to fly payloads repeatedly, which can enable lower cost and iterative campaigns; • Prompt access to experiments following landing; • Access to a large payload capacity; and • In the case of sounding rockets, gentler G-loading.
We believe our spaceflight systems addresses many of these issues by providing: • Researchers the ability to accompany and tend to their experiments in space; • The ability to fly payloads repeatedly, which can enable lower cost and iterative campaigns; • Prompt access to experiments following landing; • Access to a large payload capacity; and • In the case of sounding rockets, gentler G-loading.
The end-to-end customer journey starts at the point of sale and extends far beyond the spaceflight experience – with membership in our Future Astronaut community and access to experiences, events, trips and activities around the world, all curated and delivered by our uniquely experienced team.
The end-to-end customer journey starts at the point of sale and extends far beyond the spaceflight experience – with access to our astronaut community and opportunities to attend experiences, events, trips and activities around the world, all curated and delivered by our uniquely experienced team.
All Virgin and Virgin-related trademarks are owned by Virgin Investments Limited and our use of such trademarks is subject to the terms of the Amended TMLA, including our adherence to Virgin’s quality control guidelines and granting Virgin customary audit rights over our use of the licensed intellectual property.
All Virgin and Virgin-related trademarks are owned by VEL and our use of such trademarks is subject to the terms of the Amended TMLA, including our adherence to VEL’s quality control guidelines and granting VEL customary audit rights over our use of the licensed intellectual property.
To accomplish this, we intend to: 7 Table of Contents • Expand our spaceflight operations with more vehicles and significantly higher flight frequency per vehicle. In 2023, we commenced commercial operations with our spaceship, VSS Unity, and our mothership carrier aircraft, VMS Eve, which together comprise our current spaceflight system.
To accomplish this, we intend to: • Expand our spaceflight operations with more vehicles and significantly higher flight frequency per vehicle. In 2023, we commenced commercial operations with our spaceship, VSS Unity, and our mothership carrier aircraft, VMS Eve, which together comprise our initial spaceflight system.
Additionally, as of December 31, 2023, we have flown 30 payloads for space research missions and intend to pursue similar arrangements for additional research missions. • Iconic brand associated with unique customer experiences. The Virgin brand carries an exceptional reputation worldwide for innovation, customer experience, adventure and luxury.
Additionally, as of December 31, 2024, we have flown dozens of payloads for space research missions and intend to pursue similar arrangements for additional research missions. 8 Table of Contents • Iconic brand associated with unique customer experiences. The Virgin brand carries an exceptional reputation worldwide for innovation, customer experience, adventure and luxury.
Our team of pilots is similarly experienced, with decades of flight and flight test experience, and includes former test pilots for NASA, the Royal Air Force, the Royal Canadian Air Force, the U.S. Air Force, the Italian Air Force, and the U.S. Marine Corps.
Our team of pilots is similarly experienced, with decades of flight and flight test experience, and includes former test pilots for the Royal Air Force, the Royal Canadian Air Force, the U.S. Air Force, and the Italian Air Force, as well as a former NASA astronaut and test pilot for the U.S. Marine Corps.
We have partnered with third parties to manufacture key subassemblies for our next generation Delta Class spaceships, which will be assembled in our manufacturing and operations facilities in Mesa, Arizona. Our 200,000+ square-foot campus in Mojave, California, houses hangar and office space and is the site where we perform ground and test operations and production of our rocket motors.
We have partnered with third parties to manufacture key subassemblies for our next-generation Delta Class spaceships, which will be assembled in Arizona at our new facility. Our campus in Mojave, California, houses hangar and office space and is the site where we perform ground and test operations and production of our rocket motors.
We are exploring strategic relationships to develop new applications for our technologies and to develop new aerospace technologies for commercial and transportation applications that we believe will accelerate progress within relevant industries and enhance our growth. The Company plans to assemble our next generation spaceships in Mesa, Arizona, which consists of approximately 151,000 square feet of manufacturing and operating facilities.
We are exploring strategic relationships to develop new applications for our technologies and to develop new aerospace technologies for commercial and transportation applications that we believe will accelerate progress within relevant industries and enhance our growth. We plan to assemble our next-generation spaceships in Arizona at our new manufacturing and operating facility, which consists of approximately 150,000 square feet.
Design, Development and Manufacturing Our development and manufacturing team consists of talented and dedicated engineers, technicians and professionals with years of combined design, engineering, manufacturing and flight test experience from a wide variety of the world’s leading research, commercial and military aerospace organizations.
This demonstrates the broad implications and desirability of our offering. Design, Development and Manufacturing Our development and manufacturing team consists of talented and dedicated engineers, technicians and professionals with decades of combined design, engineering, manufacturing and flight test experience from a wide variety of the world’s leading research, commercial and military aerospace organizations.
By leveraging our technology and operations, we believe we will also have an opportunity in the future to pursue growth opportunities abroad, including by potentially opening additional spaceports or entering into other arrangements with different international government agencies. We also expect to continue and expand our government and research payload business, in addition to developing additional commercial partnerships.
By leveraging our technology and operations, we believe we will also have an opportunity in the future to pursue growth opportunities abroad, including by potentially opening additional spaceports or entering into other arrangements with different international government agencies.
Under the terms of the license agreement, we are obligated to pay MAV license fees and royalties through the later of a fixed date and the expiration date of the last to expire of the patent rights granted under the agreement of (a) a low-single-digit percentage of our commercial spaceflight operating revenue, subject to an annual cap that is adjusted annually for changes in the consumer price index, (b) a low-single-digit percentage of our gross operating revenue on the operation of spacecraft, and (c) a mid-single-digit percentage of our gross sales revenue of spacecraft sold to third parties.
Under the terms of the STLA, we were obligated to pay MAV royalties through a fixed date (the “Royalty Period”) of (a) a low-single-digit percentage of our commercial spaceflight operating revenue, subject to an annual cap that is adjusted annually for changes in the consumer price index, (b) a low-single-digit percentage of our gross operating revenue on the operation of spacecraft, and (c) a mid-single-digit percentage of our gross sales of spacecraft sold to third parties.
The EAR similarly regulates the export of hardware, software, and technology that has commercial or “dual-use” applications (i.e., for both military and commercial applications) or that have less sensitive military or space-related applications that are not subject to the ITAR.
The EAR similarly regulates the export of hardware, software, and technology that has commercial or “dual-use” applications (i.e., for both military and commercial applications) or that have less sensitive military or space-related applications that are not subject to the ITAR. The regulations exist to advance the national security and foreign policy interests of the United States.
Once the spaceship has descended back to an altitude of approximately 55,000 feet above sea level, the wings de-feather back to their normal position, and the spaceship glides back to the base for a runway landing, similar to NASA’s Space Shuttle or any other glider. The spaceship’s feathering system was originally developed and tested on SpaceShipTwo’s smaller predecessor, SpaceShipOne.
Once the spaceship has descended back to an altitude of approximately 55,000 feet above sea level, the wings de-feather back to their normal position, and the spaceship glides back to the base for a runway landing, similar to NASA’s Space Shuttle or any other glider.
Additionally, we expect that our staff will become more efficient in various aspects of operations and maintenance to reduce associated operating costs over time. • Leverage our proprietary technology and deep manufacturing experience to augment our product and service offerings and expand into adjacent and international markets. We have developed an extensive set of integrated aerospace development capabilities and technologies.
Additionally, we expect that our staff will become more efficient in various aspects of operations and maintenance to reduce associated operating costs over time. 7 Table of Contents • Leverage our proprietary technology and deep manufacturing experience to augment our product and service offerings and expand into adjacent and international markets.
Prior to traveling to Spaceport America to begin their journey, each astronaut will be required to complete a medical history questionnaire. In addition to completing this questionnaire, each astronaut will also undergo a medical assessment with an aerospace medical specialist, typically within six months of flight. Some astronauts may be asked for additional testing as indicated by their health status.
Prior to traveling to Spaceport America to begin their journey, each astronaut will be required to complete a medical history questionnaire. In addition to completing this questionnaire, each astronaut will also undergo a medical assessment with an aerospace medical specialist, typically within six months of flight.
This law generally provides coverage to operators, manufacturers and suppliers, and requires operators to maintain at least $1.0 million in insurance for all spaceflight activities. At this time, no such claim regarding third-party liability or informed consent provisions have been brought in New Mexico or in federal courts.
This law generally provides coverage to operators, manufacturers and suppliers, and requires operators to maintain at least $1.0 million in insurance for all spaceflight activities. 18 Table of Contents At this time, we are not aware that any claim regarding liability to third parties or informed consent provisions have been brought in New Mexico or in federal courts.
Under the first tier, all operators with an FAA license for launch activities are required to demonstrate financial responsibility with either an insurance policy or dedicated funds set aside in amounts up to the maximum probable loss (“MPL”) level likely to occur in the event of an accident. The MPL is determined by the FAA for each licensed launch activity.
Under the first tier, all operators with an FAA license for launch activities are required to demonstrate financial responsibility with either an insurance policy or other demonstration of financial responsibility in amounts up to the maximum probable loss (“MPL”) level likely to occur in the event of an accident.
A dozen windows line the sides and ceiling of the spaceship, offering customers the ability to view the blackness of space as well as stunning views of the Earth below. Pilot-designed and pilot-flown missions aid safety and customer confidence, enhancing the spaceflight experience.
Twelve windows line the sides and ceiling of the spaceship, offering customers the ability to observe the stunning views of Earth from space as well as the vast blackness of space. Pilot-designed and pilot-flown missions aid safety and customer confidence, enhancing the unique Virgin Galactic spaceflight experience.
In 2018, our rocket motor set a Guinness world record as the most powerful hybrid rocket to be used in crewed flight. In February 2019, it was accepted into the permanent collection of the National Air and Space Museum. Our rocket motor has been designed to provide the required mission performance capability with a focus on safety, reliability and economy.
In February 2019, it was accepted into the permanent collection of the National Air and Space Museum. Our rocket motor has been designed to provide the required mission performance capability with a focus on safety, reliability and economy.
In January 2024, we completed our sixth commercial spaceflight. 4 Table of Contents We are currently developing our next generation spaceflight vehicles, which include our Delta Class spaceships and our next generation motherships, which we expect will allow us to increase our annual flight rate.
We are currently developing our next-generation spaceflight vehicles, which include our Delta Class spaceships and our next-generation motherships, both of which we expect will allow us to increase our annual flight rate.
The third tier stipulates that any amount exceeding the $3.0 billion indemnity would revert to the operator. Additionally, the SFICA offers spaceflight companies protection in New Mexico, where we conduct our commercial operations, from lawsuits from passengers on space vehicles where spaceflight participants provide informed consent and a waiver of claims.
Under the third tier, any excess liability beyond the first and second tiers would revert to the operator. Additionally, the SFICA offers spaceflight companies protection in New Mexico, where we conduct our commercial operations, from lawsuits from passengers on space vehicles where spaceflight participants provide informed consent and a waiver of claims.
The regulations exist to advance the national security and foreign policy interests of the United States. 19 Table of Contents The U.S. government agencies responsible for administering the ITAR and the EAR have significant discretion in the interpretation and enforcement of these regulations. The agencies also have significant discretion in approving, denying, or conditioning authorizations to engage in controlled activities.
The U.S. government agencies responsible for administering the ITAR and the EAR have significant discretion in the interpretation and enforcement of these regulations. The agencies also have significant discretion in approving, denying, or conditioning authorizations to engage in controlled activities.
The license agreement and the associated licenses granted thereunder may be terminated if we commit a material breach of our obligations under the agreement that is uncured for more than 30 days or if we become insolvent.
Unless terminated earlier, the term of the STLA will expire when the last patent right granted under the STLA expires. The STLA and the associated licenses granted thereunder may be terminated if we commit a material breach of our obligations under the STLA that is uncured for more than 30 days or if we become insolvent.
Our Competitive Strengths We are a pioneer in commercial human spaceflight with a mission to transform access to space for the benefit of humankind; to reveal the wonder of space to more people than ever before.
We also expect to continue and expand our government and research payload business, in addition to developing additional commercial partnerships. Our Competitive Strengths We are a pioneer in commercial human spaceflight with a mission to transform access to space for the benefit of humankind; to reveal the wonder of space to more people than ever before.
With upgrades incorporated into the mothership over the last two years, our spaceflight system commenced commercial services in June 2023. Our Spaceships Virgin Galactic spaceships are reusable with the capacity to carry pilots and private astronauts, research experiments and researchers that travel with their experiments for human-tended research flights, into space and return them safely to Earth.
Our Spaceships Virgin Galactic spaceships are reusable with the capacity to carry pilots and private astronauts, research experiments and researchers that travel with their experiments for human-tended research flights, into space and return them safely to Earth.
Our rocket motor plant and hot-fire test facility are located in Mojave, California, where we also perform ground and test operations. This location provides us with year-round access to airspace for various flight test programs. Our Design and Engineering center is located in Tustin, California and encompasses approximately 61,000 square feet of office space and functions as our corporate headquarters.
Our rocket motor plant and hot-fire test facility are located in Mojave, California, where we also perform ground and test operations. This location provides us with year-round access to airspace for various flight test programs.
In 2021, Blue Origin sold its first commercial ticket for a suborbital flight at a price of $28 million. Current prices for NASA spaceflights to the ISS and SpaceX orbital missions are estimated to be in excess of $50 million per seat. Historically, the privatization of human spaceflight has been limited primarily by cost and availability to private individuals.
Current prices for NASA spaceflights to the ISS are estimated to be in excess of $50 million per seat. Orbital missions offered by other private companies are estimated to be in excess of $30 million. Historically, the privatization of human spaceflight has been limited primarily by cost and availability to private individuals.
These opportunities are high cost, infrequent and may impose highly limiting operational constraints. Our spaceflight system is intended to provide the scientific research community low cost, repeatable access to space and the microgravity environment.
Our spaceflight system is intended to provide the scientific research community low cost, repeatable access to space and the microgravity environment.
Our first four spaceflights carried payloads into space for research purposes through NASA's Flight Opportunities Program, and two of our commercial spaceflights, ‘Galactic 01’ and ‘Galactic 05,’ carried researchers conducting human-tended experiments onboard. ‘Galactic 01’ – our first commercial spaceflight – was a government-funded flight which carried 13 human-tended and autonomous research payloads with three crew members from the Italian Air Force and the National Research Council of Italy.
Our first four spaceflights during the flight test program carried payloads into space for research purposes through NASA's Flight Opportunities Program. 'Galactic 01' – our first commercial spaceflight – was a government-funded flight that supported over a dozen research experiments and carried three mission specialists from the Italian Air Force and the National Research Council of Italy, who conducted human-tended research experiments.
Once the reservation transaction is completed, the customer receives immediate membership of the Future Astronaut community and access to an annual calendar of money-can’t-buy events and experiences, visits to Virgin Galactic’s facilities in New Mexico and California, as well as space readiness activities such as zero-gravity aircraft flights and high-g centrifuge training.
It is designed to deliver a high-touch but efficient and scalable user experience. Once the reservation transaction is completed, the customer receives immediate access to our astronaut community and opportunities to attend events and experiences, visits to Virgin Galactic’s facilities in New Mexico and California, as well as space readiness activities such as zero-gravity aircraft flights and high-g centrifuge training.
Total Workforce Demographics: 20 Table of Contents • Compensation and Benefits: ◦ Virgin Galactic strives to offer competitive compensation, benefits and services that meet the needs of its employees, including short-term and long-term incentive programs, defined contribution plans, healthcare benefits, and wellness and employee assistance programs.
Virgin Galactic strives to offer competitive compensation, benefits and services that meet the needs of its employees, including short-term and long-term incentive programs, defined contribution plans, healthcare benefits, and wellness and employee assistance programs. Management monitors market compensation and benefits to attract, retain and promote high-performing employees and reduce turnover and associated costs.
The mothership has completed an extensive, multi-year test program that included a combination of ground and flight tests. As of December 31, 2023, it had completed more than 330 flights, with more than 50 of those being dual tests with our spaceship, VSS Unity.
The mothership has completed an extensive, multi-year test program that included a combination of ground and flight tests. As of December 31, 2024, it had completed approximately 350 flights, with more than 50 of those being dual tests with our spaceships. Following the completion of upgrades incorporated into the mothership, our initial spaceflight system commenced commercial services in June 2023.
We believe our unique approach and rapid prototyping capabilities enable innovative ideas to be designed quickly and built and tested with process rigor. In addition, we have expertise in configuration management and developing documentation needed to transition our technologies and systems to commercial applications.
We believe our unique approach that blends the speed of prototyping with the design stability required for production enables innovative ideas to be quickly designed, built, tested with process rigor, and transitioned into service. In addition, we have expertise in configuration 15 Table of Contents management and developing documentation needed to transition our technologies and systems to commercial applications.
Further, even investigations of suspected or alleged violations can be expensive and disruptive. Thus, violations (or allegations of violations) of applicable export control laws and regulations could materially adversely affect our reputation, business, financial condition and results of operations. Human Capital At Virgin Galactic, our employees are critical to our mission of opening access to space for all.
Further, even investigations of suspected or alleged violations can be expensive and disruptive. Thus, violations (or allegations of violations) of applicable export control laws and regulations could materially adversely affect our reputation, business, financial condition and results of operations. Human Capital As of December 31, 2024, we had 744 employees across the globe.
Spaceport America is the world’s first purpose-built commercial spaceport and is the base of our commercial spaceline operations. We believe the site provides us with a competitive advantage as it has a desert climate with relatively predictable weather conditions preferable to support our spaceflights, and it also has airspace that is restricted for surrounding general commercial air traffic.
We believe the site provides us with a competitive advantage as it has a desert climate with relatively predictable weather conditions preferable to support our spaceflights, and it also has airspace that is restricted for surrounding general commercial air traffic. In December 2018, we made history by flying our spaceship, VSS Unity, to space from Mojave, California.
This was the third time Virgin Galactic had flown technology experiments in the cabin on a spaceflight. This flight also completed the data submission to the Federal Aviation Administration ("FAA"), resulting in the approval for the expansion of our commercial space transportation operator license to allow for the carriage of spaceflight participants.
This flight also completed the data submission to the Federal Aviation Administration ("FAA"), resulting in the approval for the expansion of our commercial space transportation operator license to allow for the carriage of spaceflight participants. This marked the first time the FAA licensed a spaceline to fly customers and was further validation of the inherent safety of our system.
At no time did the detached alignment pin pose a safety impact to the vehicles or the crew on board. We have a current FAA Reusable Launch Vehicle Operator License that allows test and payload revenue flights from both Mojave, California and Spaceport America, New Mexico.
We have a current FAA Reusable Launch Vehicle Operator License that allows test and payload revenue flights from both Mojave, California and Spaceport America, New Mexico.
In addition, for the term of the Amended TMLA, to the extent the Virgin Group does not otherwise have a right to place a director on our board of directors, we have agreed to provide Virgin with the right to appoint one director to our board of directors, provided the designee is qualified to serve on the board under all applicable corporate governance policies and applicable regulatory and listing requirements.
In addition, for the term of the Amended TMLA, to the extent Virgin Investments Limited (“VIL”) does not otherwise have a right to place a director on our board of directors, we agreed to provide VEL with the right to appoint one director to our board of directors, provided the designee is qualified to serve on the board under all applicable corporate governance policies and applicable regulatory and listing requirements. 16 Table of Contents Unless terminated earlier, the Amended TMLA will have an initial term of 25 years expiring October 2044, subject to up to two additional 10-year renewals by mutual agreement of the parties.
Our goal is to offer our customers an unmatched and safe journey to space without the need for any previous experience or significant prior training and preparation.
The Astronaut Journey Our goal is to offer our astronauts an unmatched but affordable opportunity to experience spaceflight safely and without the need for any prior experience or training.
This flight completed the final assessment of the full spaceflight and astronaut experience before commercial service. In June 2023, ' Galactic 01,' marked the start of commercial service. This flight was a dedicated research mission sponsored by the Italian government, which tested 13 experiments and demonstrated our ability to use suborbital spaceflights to train astronauts for future orbital missions.
This flight was a dedicated research mission sponsored by the Italian government, which tested 13 experiments and demonstrated our ability to use suborbital spaceflights to train astronauts for future orbital missions. 'Galactic 05' and 'Galactic 07' were also commercial research missions.
Researchers have historically utilized parabolic aircraft and drop towers to create moments of microgravity and conduct significant research activities utilizing the space-like environment. In most cases, these solutions offer only seconds of continuous microgravity time and do not offer access to the upper atmosphere or space itself. Researchers can also conduct experiments on sounding rockets, satellites or orbital platforms.
In most cases, these solutions offer only seconds of continuous microgravity time and do not offer access to the upper atmosphere or space itself. Researchers can also conduct experiments on sounding rockets, satellites or orbital platforms. These opportunities are high cost, infrequent and may impose highly limiting operational constraints.
Our SEC filings are also available free of charge on the Investor Information page of our website at virgingalactic.com as soon as reasonably practicable after they are filed with or furnished to the SEC. Our website and the information contained on or through that site are not incorporated into this Annual Report on Form 10-K. 21 Table of Contents
Our SEC filings are available to the public over the internet at the SEC’s website at www.sec.gov . Our SEC filings are also available free of charge on the Investor Information page of our website at virgingalactic.com as soon as reasonably practicable after they are filed with or furnished to the SEC.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf delays like this arise or recur, in particular in connection with the development of our Delta Class spaceships and next generation motherships, if our remediation measures and process changes do not continue to be successful or if we experience issues with planned manufacturing improvements or design and safety, we could experience issues in sustaining the ramp of our spaceflight system, delays in increasing production further or commencing revenue service on our expected timeframes or at all.
Biggest changeIf delays like this arise or recur, in particular in connection with the development of our Delta Class spaceships and next-generation motherships, if our remediation measures and process changes do not continue to be successful or if we experience issues with planned manufacturing improvements or design and safety, we could experience issues in sustaining the ramp of our spaceflight system, delays in increasing production further or commencing commercial service on our expected timeframes or at all. 22 Table of Contents If we encounter difficulties in scaling our delivery or servicing capabilities, if we fail to develop and successfully commercialize spaceflight technologies, if we fail to develop such technologies before our competitors, or if such technologies fail to perform as expected, are inferior to those of our competitors or are perceived as less safe than those of our competitors, our business, financial condition and results of operations could be materially and adversely impacted.
For example, unfavorable economic conditions, whether related to the COVID-19 pandemic, inflation, interest rates or otherwise have resulted in, and may continue to result in, significant disruption and volatility of global financial markets that could adversely impact our ability to access capital.
For example, unfavorable economic conditions, whether related to inflation, interest rates, the COVID-19 pandemic or otherwise have resulted in, and may continue to result in, significant disruption and volatility of global financial markets that could adversely impact our ability to access capital.
The Virgin brand is also licensed to and used by a number of other companies unrelated to us and in a variety of industries, and the integrity and strength of the Virgin brand will depend in large part on the efforts and the licensor and any other licensees of the Virgin brand and how the brand is used, promoted and protected by them, which will be outside of our control.
The Virgin brand is also licensed to and used by a number of other companies unrelated to us and in a variety of industries, and the integrity and strength of the Virgin brand will depend in large part on the efforts of the licensor and any other licensees of the Virgin brand and how the brand is used, promoted and protected by them, which will be outside of our control.
Our indebtedness could have significant negative consequences for our security holders, business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • in the event interest accrues on the 2027 Notes or additional indebtedness, requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; • diluting the interests of our existing stockholders if we issue shares of our common stock upon conversion of the Notes or additional indebtedness; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
Our indebtedness could have significant negative consequences for our security holders, business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • in the event interest accrues on the 2027 Notes or additional indebtedness, requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; • diluting the interests of our existing stockholders if we issue shares of our common stock upon conversion of the 2027 Notes or additional indebtedness; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
In addition, breaches of our or our third-party service providers’ security measures, the unapproved use or disclosure of proprietary information or sensitive or confidential data about us or our suppliers, customers or other third parties and any other adverse impact to the availability, integrity or confidentiality of our information systems and information could expose us or any such affected third party to a risk of loss or misuse of this information, result in litigation (including class actions), regulatory investigations, potential liability, damage our brand and reputation, cause significant incident response, system restoration or remediation and future compliance costs, or other harm to our business, even if we were not responsible for the breach.
In addition, breaches of our or our third-party service providers’ security measures, the unapproved use or disclosure of proprietary information or sensitive or confidential information about us or our suppliers, customers or other third parties and any other adverse impact to the availability, integrity or confidentiality of our information systems and information could expose us or any such affected third party to a risk of loss or misuse of this information, result in litigation (including class actions), regulatory investigations, potential liability, damage our brand and reputation, cause significant incident response, system restoration or remediation and future compliance costs, or other harm to our business, even if we were not responsible for the breach.
A class action complaint alleging violations of federal securities laws has also been filed against us in the Eastern District of New York alleging, among other things, that we and certain of our current and former officers and directors made false and misleading statements and failed to disclose certain information regarding the safety of its ships and success of its commercial flight program.
A class action complaint alleging violations of federal securities laws has also been filed against us in the Eastern District of New York alleging, among other things, that we and certain of our current and former officers and directors made false and misleading statements and failed to disclose certain information regarding the safety of our ships and success of our commercial flight program.
Similar rules may apply under state tax laws. The Company may have or may in the future, experience one or more Section 382 “ownership changes.” As a result, we may be unable to use a material portion of our net operating loss carryforwards and other tax attributes, which could adversely affect our future cash flows.
Similar rules may apply under state tax laws. The Company may in the future experience one or more Section 382 “ownership changes.” As a result, we may be unable to use a material portion of our net operating loss carryforwards and other tax attributes, which could adversely affect our future cash flows.
Threat actors also may be able to develop and deploy viruses, worms, malware (including ransomware) and other malicious software programs that attack our systems or otherwise exploit any security vulnerabilities of our systems or products. We face additional cybersecurity risks from social engineering/phishing, malfeasance from insiders, human or technological error.
Threat actors also may be able to deploy viruses, worms, malware (including ransomware) and other malicious software programs that attack our systems or otherwise exploit any security vulnerabilities of our systems or products. We face additional cybersecurity risks from social engineering/phishing, malfeasance from insiders, human or technological error.
Among other things, our certificate of incorporation and bylaws include provisions regarding: • the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • subject to the terms of the Stockholders’ Agreement, our board of directors has the exclusive right to expand the size of the board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which will prevent stockholders from being able to fill vacancies on the board of directors; • the prohibition of cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the limitation of the liability of, and the indemnification of, our directors and officers; • the ability of our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
Among other things, our certificate of incorporation and bylaws include provisions regarding: • the ability of our board of directors to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; 38 Table of Contents • subject to the terms of the Stockholders’ Agreement, our board of directors has the exclusive right to expand the size of the board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which will prevent stockholders from being able to fill vacancies on the board of directors; • the prohibition of cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the limitation of the liability of, and the indemnification of, our directors and officers; • the ability of our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our board of directors and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
We collect, store, use, disclose and otherwise process personal information and other customer data, including sensitive information (such as health and biometric information), of customers, employees and other individuals, and we rely in part on third parties that are not directly under our control to manage certain of our operations and to collect, store, use, disclose and otherwise process payment information.
We collect, store, use, disclose and otherwise process personal information and other customer information, including sensitive information (such as health and biometric information), of customers, employees and other individuals, and we rely in part on third parties that are not directly under our control to manage certain of our operations and to collect, store, use, disclose and otherwise process payment information.
Failure of third-party contractors could adversely affect our business. We are dependent on various third-party contractors to develop and provide critical technology, systems and components required for our spaceflight system. For example, each spaceflight currently requires replenishment of certain components of our rocket motor propulsion system that we obtain from third-party contractors.
Failure of third-party contractors and suppliers could adversely affect our business. We are dependent on various third-party contractors and suppliers to develop and provide critical technology, systems and components required for our spaceflight system. For example, each spaceflight currently requires replenishment of certain components of our rocket motor propulsion system that we obtain from third-party contractors and suppliers.
These requirements include comprehensive data privacy compliance obligations in relation to our collection, sharing, disclosure, transfer, use and other processing of personal data, including having a lawful basis for our processing, providing certain rights to individuals and demonstrating compliance through policies, procedures, training and audit.
These requirements include comprehensive data privacy compliance obligations in relation to our collection, sharing, disclosure, transfer, use and other processing of personal information, including having a lawful basis for our processing, providing certain rights to individuals and demonstrating compliance through policies, procedures, training and audit.
Any failure, or perceived failure, by us to comply with any U.S. federal, state or foreign privacy, processing of personal information, consumer protection or e-marketing related laws, regulations, standards or other requirements to which we may be subject or other legal obligations relating to these matters, or any significant data breach, could adversely affect our reputation, brand and business, result in claims, investigations, proceedings or actions against us by individuals, consumer rights groups, governmental entities or others or other penalties or liabilities, or require us to change our operations and/or cease using certain data sets.
Any failure, or perceived failure, by us to comply with any U.S. federal, state or foreign privacy, processing of personal information, consumer protection or e-marketing related laws, regulations, standards or other requirements to which we may be subject or other legal obligations relating to these matters, or any significant data breach or security incident, could adversely affect our reputation, brand and business, result in claims, investigations, proceedings or actions against us by individuals, consumer rights groups, governmental entities or others or other penalties or liabilities, or require us to change our operations and/or cease using certain data sets.
Under Section 382 of the Internal Revenue Code of 1986, the Company’s ability to utilize net operating loss carryforwards or other tax attributes such as research tax credits, in any taxable year, may be limited if the Company experiences, or has experienced, an “ownership change.” A Section 382 “ownership change" generally occurs if one or more stockholders or groups of stockholders, who own at least 5% of the Company’s stock, increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.
Under Section 382 of the Internal Revenue Code of 1986, the Company’s ability to utilize net operating loss carryforwards or other tax attributes such as research tax credits, in any taxable year, may be limited if the Company experiences an “ownership change.” A Section 382 “ownership change" generally occurs if one or more stockholders or groups of stockholders, who own at least 5% of the Company’s stock, increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.
The obligations associated with being a public company involve significant expenses and require significant resources and management attention, which divert from our business operations. As a public company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act.
The obligations associated with being a public company involve significant expenses, resources and management attention, which divert from our business operations. As a public company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act.
Our certificate of incorporation provides that, to the fullest extent permitted by law, and other than corporate opportunities that are expressly presented to one of our directors in his or her capacity as such, VIL and its respective affiliates (but in each case, other than us and our officers and employees): • will not have any fiduciary duty to refrain from engaging in the same or similar business activities or lines of business as us, even if the opportunity is one that we might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so; • will have no duty to communicate or offer such business opportunity to us; and • will not be liable to us for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such exempted person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to us.
Our certificate of incorporation provides that, to the fullest extent permitted by law, and other than corporate opportunities that are expressly presented to one of our directors in his or her capacity as such, VIL and its respective affiliates (but in each case, other than us and our officers and employees): • will not have any fiduciary duty to refrain from engaging in the same or similar business activities or lines of business as us, even if the opportunity is one that we might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so; • will have no duty to communicate or offer such business opportunity to us; and 39 Table of Contents • will not be liable to us for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such exempted person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to us.
In addition to our planned pause of Unity spaceflights in mid-2024, many other events may cause a delay in our ability to fulfill reservations or cause planned spaceflights to not be completed at all, some of which may be out of our control, including unexpected weather patterns, maintenance issues, natural disasters, epidemics or pandemics (including COVID-19), changes in governmental regulations or in the status of our regulatory approvals or applications or other events that may force us to cancel or reschedule flights.
In addition to our pause of Unity spaceflights in mid-2024, many other events may cause a delay in our ability to fulfill reservations or cause planned spaceflights to not be completed at all, some of which may be out of our control, including unexpected weather patterns, maintenance issues, natural disasters, epidemics or pandemics, changes in governmental regulations or in the status of our regulatory approvals or applications or other events that may force us to cancel or reschedule flights.
Any significant interruption due to any of the above hazards and operational to the manufacturing or operation of our spaceflight systems at one of our primary facilities, including from weather conditions, growth constraints, performance by third-party providers (such as electric, utility or telecommunications providers), failure to properly handle and use hazardous materials, failure of computer systems, power supplies, fuel supplies, infrastructure damage, disagreements with the owners of the land on which our facilities are located, or damage sustained to our runway could result in manufacturing delays or the delay or cancellation of our spaceflights and, as a result, could have a material adverse effect on our business, financial condition and results of operations.
Any significant interruption due to any of the above hazards and operational to the manufacturing or operation of our spaceflight systems at one of our primary facilities, including from weather conditions, growth constraints, performance by 34 Table of Contents third-party providers (such as electric, utility or telecommunications providers), failure to properly handle and use hazardous materials, failure of computer systems, power supplies, fuel supplies, infrastructure damage, disagreements with the owners of the land on which our facilities are located, or damage sustained to our runway could result in manufacturing delays or the delay or cancellation of our spaceflights and, as a result, could have a material adverse effect on our business, financial condition and results of operations.
The failure of any contractors to perform to our expectations could result in shortages of certain manufacturing or operational components for our spacecraft or delays in spaceflights and harm our business.
The failure of any contractors and suppliers to perform to our expectations could result in shortages of certain manufacturing or operational components for our spacecraft or delays in spaceflights and harm our business.
In that event, we expect that we would be subject to additional risks related to entering into international business relationships, including: • restructuring our operations to comply with local regulatory regimes; • identifying, hiring and training highly skilled personnel; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • the need for U.S. government approval to operate our spaceflight systems outside the United States; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenue; • government appropriation of assets; • workforce uncertainty in countries where labor unrest is more common than in the United States; and • disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including anti-corruption laws and anti-money laundering regulations, as well as exposure of our foreign operations to liability under these regulatory regimes.
In the event that we expand internationally, we expect that we would be subject to additional risks related to entering into international business relationships, including: • restructuring our operations to comply with local regulatory regimes; • identifying, hiring and training highly skilled personnel; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • the need for U.S. government approval to operate our spaceflight systems outside the United States; • the need for local government approval to operate our spaceflight systems; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenue; 29 Table of Contents • government appropriation of assets; • workforce uncertainty in countries where labor unrest is more common than in the United States; and • disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including anti-corruption laws and anti-money laundering regulations, as well as exposure of our foreign operations to liability under these regulatory regimes.
Any decrease from our assumptions in the number of passengers per flight could adversely impact our ability to generate revenue at the rate we anticipate. Any delays in the development and manufacture of additional spaceflight systems and related technology, including our Delta Class spaceships and next generation motherships, may adversely impact our business, financial condition and results of operations.
Any decrease from our assumptions in the number of passengers per flight could adversely impact our ability to generate revenue at the rate we anticipate. Any delays in the development and manufacture of additional spaceflight systems, including our Delta Class spaceships and next-generation motherships, may adversely impact our business, financial condition and results of operations.
Our reliance on contractors and inability to fully control any operational difficulties with our third-party contractors could have a material adverse effect on our business, financial condition and results of operations. We expect to face intense competition in the commercial spaceflight industry and other industries in which we may develop products.
Our reliance on contractors and suppliers and inability to fully control any operational difficulties with our third-party contractors and suppliers could have a material adverse effect on our business, financial condition and results of operations. We expect to face competition in the commercial spaceflight industry and other industries in which we may develop products.
Our disclosure controls and procedures address cybersecurity and include elements intended to ensure that there is an analysis of potential disclosure obligations arising from cybersecurity breaches. Our business is subject to a wide variety of extensive and evolving government laws and regulations. Failure to comply with such laws and regulations could have a material adverse effect on our business.
Our disclosure controls and procedures address cybersecurity and include elements intended to ensure that there is an analysis of potential disclosure obligations arising from cybersecurity breaches. Failure to comply with a wide variety of extensive and evolving government laws and regulations could have a material adverse effect on our business.
Furthermore, no such claim has resulted in the FAA preparing a compensation plan for congressional review, and we are unable to determine whether the protections provided by applicable laws or regulations would be upheld by U.S. or foreign courts.
Furthermore, to our awareness, no such claim has resulted in the FAA preparing a compensation plan for congressional review, and we are unable to determine whether the protections provided by applicable laws or regulations would be upheld by U.S. or foreign courts.
We and our third-party providers are also subject to evolving U.S., EU and UK online services and digital privacy and data laws as well as laws on cookies, pixels, tracking technologies and e-marketing. Recent European court and regulator decisions are driving increased attention to cookies and tracking technologies.
We and our third-party providers are also subject to evolving U.S., EEA and UK online services and digital privacy and data laws as well as laws on cookies, pixels, tracking technologies and e-marketing. Recent European court and regulator decisions are driving increased attention to cookies and tracking technologies.
Prolonged disruptions in the supply of any of our key raw materials or components, difficulty qualifying new sources of supply, implementing use of replacement materials or new sources of supply or any volatility in prices could have a material adverse effect on our ability to operate in a cost-efficient, timely manner and could cause us to experience cancellations or delays of scheduled spaceflights, customer 27 Table of Contents cancellations or reductions in our prices and margins, any of which could harm our business, financial condition and results of operations.
Prolonged disruptions in the supply of any of our key raw materials or components, difficulty qualifying new sources of supply, implementing use of replacement materials or new sources of supply or any volatility in prices could have a material adverse effect on our ability to operate in a cost-efficient, timely manner and could cause us to experience cancellations or delays of scheduled spaceflights, customer cancellations or reductions in our prices and margins, any of which could harm our business, financial condition and results of operations.
In addition, we are continually learning, and as our engineering and manufacturing expertise and efficiency increases, we aim to leverage this learning to be able to manufacture our spaceflight systems and related equipment using less of our currently installed equipment, which could render our existing inventory obsolete.
In addition, we are continually learning, and as our engineering and manufacturing expertise and efficiency increases, we aim to leverage this learning to be able to manufacture our spaceflight systems and related equipment using less of our currently installed equipment, which could render our existing material obsolete.
The trading price of our common stock may fluctuate due to a variety of factors, including: • changes in the industries in which we operate; • the number of flights we schedule for a period, the number of seats we are able to sell in any given spaceflight and the price at which we sell them; • delays in development of additional spaceships and motherships, including our Delta Class spaceships, or in the completion of our ground and flight testing programs; • developments involving our competitors; • unexpected weather patterns, maintenance issues, natural disasters or other events that force us to cancel or reschedule flights; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual operating results; • publication of research reports by securities analysts about us, our competitors or our industry; • the public’s reaction to our press releases, public announcements and filings with the SEC; • additions and departures of key employees and personnel; • competition for talent and skill-sets required; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of debt; • investors mistaking developments involving other companies, including Virgin-branded companies, as involving us and our business; • the volume of shares of our common stock available for public sale; • sales of common stock by our directors, officers or significant stockholders, or the perception that such sales may occur; • short sales of our common stock; and • general economic and political conditions such as the COVID-19 global health crisis or other pandemics or epidemics, recessions, inflation, interest rates, fuel prices, international currency fluctuations, corruption, political instability and acts of war or terrorism.
The trading price of our common stock may fluctuate due to a variety of factors, including: • changes in the industries in which we operate; • the number of flights we schedule for a period, the number of seats we are able to sell in any given spaceflight and the price at which we sell them; • delays in development of additional spaceships and motherships, including our Delta Class spaceships, or in the completion of our ground and flight testing programs; • delays in future commercial flights of our Delta Class spaceships; 41 Table of Contents • developments involving our competitors; • unexpected weather patterns, maintenance issues, natural disasters or other events that force us to cancel or reschedule flights; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual operating results; • publication of research reports by securities analysts about us, our competitors or our industry; • the public’s reaction to our press releases, public announcements and filings with the SEC; • additions and departures of key employees and personnel; • competition for talent and skill-sets required; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of debt; • investors mistaking developments involving other companies, including Virgin-branded companies, as involving us and our business; • the volume of shares of our common stock available for public sale; • sales of common stock by our directors, officers or significant stockholders, or the perception that such sales may occur; • short sales of our common stock; and • general economic and political conditions such as pandemics or epidemics, recessions, inflation, interest rates, fuel prices, international currency fluctuations, corruption, political instability and acts of war or terrorism.
We believe the steps we have taken are sufficient to address the issues noted in the NTSB’s report; however, it is 26 Table of Contents impossible to completely eliminate the potential for human error, and there is a possibility that other accidents may occur in the future as a result of human error or for a variety of other reasons, some of which may be out of our control.
We believe the steps we have taken are sufficient to address the issues noted in the NTSB’s report; however, it is impossible to completely eliminate the potential for human error, and there is a possibility that other accidents may occur in the future as a result of human error or for a variety of other reasons, some of which may be out of our control.
If the inflation rate continues to increase, it will likely affect our expenses, including, but not limited to, employee compensation expenses and increased costs for supplies. Moreover, to the extent inflation results in rising interest rates, reduces discretionary spending, and has other adverse effects on the market, it may adversely affect our business, financial condition and results of operations.
If the inflation rate increases, it will likely affect our expenses, including, but not limited to, employee compensation expenses and increased costs for supplies. Moreover, to the extent inflation results in rising interest rates, reduces discretionary spending, and has other adverse effects on the market, it may adversely affect our business, financial condition and results of operations.
In the event we need to replace any components or hardware of our spaceflight system, there are limited numbers of replacement parts available, some of which have significant lead time associated with procurement or manufacture, so any failure of our systems or their components or hardware could result in reduced numbers of flights and significant delays to our planned growth.
In the event we need to replace any components or hardware of our spaceflight system, there are limited numbers of replacement parts available, some of which have significant lead time 21 Table of Contents associated with procurement or manufacture, so any failure of our systems or their components or hardware could result in reduced numbers of flights and significant delays to our planned growth.
We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. Further, these proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust.
We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. Further, these proceedings and any 33 Table of Contents subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust.
After the accident, we assumed responsibility for the completion of the flight test program and submitted a report to the NTSB that listed the actions we were taking for reducing the likelihood and effect of human error.
After the accident, we assumed responsibility for the completion of the flight test program and submitted a report to the NTSB that listed the actions we were taking to reduce the likelihood and effect of human error.
If we further delay spaceflights or if future astronauts reconsider their astronaut experience, those individuals may seek to cancel their planned spaceflight, and may obtain a full or partial refund. 24 Table of Contents We have not yet tested flights at our anticipated full passenger capacity of our Delta Class spaceships.
If we further delay spaceflights or if future astronauts reconsider their astronaut experience, those individuals may seek to cancel their planned spaceflight, and may obtain a full or partial refund. We have not yet tested flights at our anticipated full passenger capacity of our Delta Class spaceships.
If we do not complete the development of our next generation spaceflight vehicles in our anticipated timeframes or at all, our ability to grow our business will be adversely affected.
If we do not complete the development of our next-generation spaceflight system in our anticipated timeframes or at all, our ability to grow our business will be adversely affected.
We cannot ensure that any acquisition, partnership or joint venture we make will not have a material adverse effect on our business, financial condition and results of operations. Changes in tax laws or regulations may increase tax uncertainty and adversely affect results of our operations and our effective tax rate.
We cannot ensure that any acquisition, partnership or joint venture we make will not have a material adverse effect on our business, financial condition and results of operations. 42 Table of Contents Changes in tax laws or regulations may increase tax uncertainty and adversely affect results of our operations and our effective tax rate.
For example, commercial space launches, reentry of our spacecraft and the operation of our spaceflight system in the United States require licenses and permits from certain agencies of the Department of Transportation, including the FAA, and review by other agencies of the U.S. Government, including the Department of Defense, Department of State, and Federal Communications 33 Table of Contents Commission.
For example, commercial space launches, reentry of our spacecraft and the operation of our spaceflight system in the United States require licenses and permits from certain agencies of the Department of Transportation, including the FAA, and review by other agencies of the U.S. Government, including the Department of Defense, Department of State, and Federal Communications Commission.
If one or more of these analysts cease coverage of 45 Table of Contents us or fail to publish reports covering us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline. Item 1B. Unresolved Staff Comments None.
If one or more of these analysts cease coverage of us or fail to publish reports covering us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline. Item 1B. Unresolved Staff Comments None.
While Spaceport America was funded by the State of New Mexico and we intend to pursue similar arrangements in the future, we cannot assure that such arrangements will be available to us on terms similar to those we have with the State of New Mexico or at all.
While Spaceport America was funded by the State of New Mexico and we intend to pursue similar arrangements in the future, we cannot assure that such arrangements will be available to us on terms similar to those we have with the State of New Mexico 24 Table of Contents or at all.
The adoption of a multi-layered regulatory approach to any one of the laws or regulations to which we are or may become subject, particularly where the layers are in conflict, could require alteration of our manufacturing processes or operational parameters which may adversely impact our business.
The adoption of a multi-layered regulatory approach to any one of the laws or regulations to which we are or may become subject, particularly where the layers are in conflict, could require alteration of our manufacturing processes or 31 Table of Contents operational parameters which may adversely impact our business.
To the extent these events also impact one or more of our suppliers or contractors or result in the closure of any of their facilities or our facilities, we may be unable to maintain spaceflight schedules, provide other support functions to our astronaut experience or fulfill our other contracts.
To the extent these events 35 Table of Contents also impact one or more of our suppliers or contractors or result in the closure of any of their facilities or our facilities, we may be unable to maintain spaceflight schedules, provide other support functions to our astronaut experience or fulfill our other contracts.
The enactment of the CCPA prompted a wave of similar legislative developments in other states in the U.S., which creates the potential for a patchwork of overlapping but different state laws.
The enactment of the CCPA prompted a wave of similar legislative developments in other states in the U.S., which creates a patchwork of overlapping but different state laws.
We may not be able to obtain sufficient raw materials or supplied components to meet our manufacturing and operating needs, or obtain such materials on favorable terms, which could impair our ability to fulfill our orders in a timely manner or increase our costs of production.
We may not be able to obtain sufficient raw materials or supplied components to meet our needs, or obtain such materials on favorable terms, which could impair our ability to fulfill our orders in a timely manner or increase our costs of production.
We may not be successful in identifying acquisition, partnership and joint venture candidates. In addition, we may 44 Table of Contents not be able to continue the operational success of such businesses or successfully finance or integrate any businesses that we acquire or with which we form a partnership or joint venture.
We may not be successful in identifying acquisition, partnership and joint venture candidates. In addition, we may not be able to continue the operational success of such businesses or successfully finance or integrate any businesses that we acquire or with which we form a partnership or joint venture.
If we are unable to attract new astronauts, our business, financial condition and results of operations will be harmed. 22 Table of Contents The market for commercial spaceflight has not been established with precision. It is still emerging and may not achieve the growth potential we expect or may grow more slowly than expected.
If we are unable to attract new astronauts, our business, financial condition and results of operations will be harmed. The market for commercial spaceflight is still emerging and may not achieve the growth potential we expect or may grow more slowly than expected. The market for commercial spaceflight has not been established with precision and is still emerging.
For example, certain U.S. states have adopted new or modified privacy and security laws and regulations that may apply to our business. The California Consumer Privacy Act as amended by the California Privacy Rights Act ("CCPA") went into effect in 2020 and imposes a range of obligations on covered businesses that process personal information of California residents.
For example, certain U.S. states have adopted new or modified privacy and security laws and regulations that may apply to our business. The California Consumer Privacy Act ("CCPA") went into effect in 2020 and imposes a range of obligations on covered businesses that process personal information of California residents.
The 2027 Note Hedge transactions are expected generally to reduce the potential dilution upon any conversion of the 2027 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2027 Notes, subject to a cap.
The 2027 Note Hedge 40 Table of Contents transactions are expected generally to reduce the potential dilution upon any conversion of the 2027 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 2027 Notes, subject to a cap.
While we had a backlog of approximately 750 future astronauts as of December 31, 2023, we are making, and we expect that we will need to continue to make, significant investments in order to attract new astronauts. Our sales growth depends on our ability to implement strategic initiatives and these initiatives may not be effective in generating sales growth.
While we had a backlog of approximately 700 future astronauts as of December 31, 2024, we are making, and we expect that we will need to continue to make, significant investments in order to attract new astronauts. Our sales growth depends on our ability to implement strategic initiatives and these initiatives may not be effective in generating sales growth.
Should we experience complications with any of these components, which are critical to the operation of our spacecraft, we may need to delay or cancel scheduled spaceflights. We face the risk that any of our contractors may not fulfill their contracts and deliver their products or services on a timely basis, or at all.
Should we 25 Table of Contents experience complications with any of these components, which are critical to the operation of our spacecraft, we may need to delay or cancel scheduled spaceflights. We face the risk that any of our contractors and suppliers may not fulfill their contracts and deliver their products or services on a timely basis, or at all.
We do not control these analysts, and the analysts who publish information about our common stock may have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates.
We do not control these analysts, and the analysts who publish information about 43 Table of Contents our common stock may have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates.
Pursuant to the terms of the stockholders' agreement (the "Stockholders' Agreement") entered in connection with the consummation of the Virgin Galactic business combination in October 2019 (the "Virgin Galactic Business Combination"), Virgin Investments Limited (“VIL”) has a contractual right to be able to influence the outcome of corporate actions so long as it owns a significant portion of our total outstanding shares of common stock.
Pursuant to the terms of the stockholders' agreement (the "Stockholders' Agreement") entered in connection with the consummation of the Virgin Galactic business combination in October 2019 (the "Virgin Galactic Business Combination"), VIL has a contractual right to be able to influence the outcome of corporate actions so long as it owns a significant portion of our total outstanding shares of common stock.
To date, we have relied primarily on trade secrets and other intellectual property laws, non-disclosure agreements with our employees, consultants and other relevant persons and other measures to protect our intellectual property, and intend to continue to rely on these and other 29 Table of Contents means, including patent protection, in the future.
To date, we have relied primarily on trade secrets and other intellectual property laws, non-disclosure agreements with our employees, consultants and other relevant persons and other measures to protect our intellectual property, and intend to continue to rely on these and other means, including patent protection, in the future.
We are likely to face attempted cybersecurity incidents in the future. Accordingly, we may be vulnerable to losses and costs associated with the improper functioning, breach or unavailability of our information systems as well as any systems used in acquired operations.
We and our third-party service providers are likely to face attempted cybersecurity incidents in the future. Accordingly, we may be vulnerable to losses and costs associated with the improper functioning, breach or unavailability of our information systems as well as any systems used in acquired operations.
We may not be able to convert our orders in backlog or inbound inquiries about flight reservations into revenue. As of December 31, 2023, our backlog represents orders from approximately 750 future astronauts for which we have not yet recognized spaceflight revenue.
We may not be able to convert our orders in backlog or inbound inquiries about flight reservations into revenue. As of December 31, 2024, our backlog represents orders from approximately 700 future astronauts for which we have not yet recognized spaceflight revenue.
Further, it is possible that domestic or foreign companies or governments, some with greater experience in the aerospace industry or greater financial resources than we possess, will seek to provide products or services that compete directly 28 Table of Contents or indirectly with ours in the future.
Further, it is possible that domestic or foreign companies or governments, some with greater experience in the aerospace industry or greater financial resources than we possess, will seek to provide products or services that compete directly or indirectly with ours in the future.
The DPF, and the UK Extension to the DPF, became effective as transfer mechanisms to U.S. entities self-certified on July 2023 and October 2023, respectively. 35 Table of Contents We expect the existing legal complexity and uncertainty regarding international personal data transfers to continue.
The DPF, and the UK Extension to the DPF, became effective as transfer mechanisms to U.S. entities self-certified on July 2023 and October 2023, respectively. We expect the existing legal complexity and uncertainty regarding international personal data transfers to continue.
The GDPR imposes stringent requirements on companies that process personal data and are subject to its provisions.
The GDPR imposes stringent requirements on companies that process personal information and are subject to its provisions.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including: • the number of flights we schedule for a period, the number of seats we are able to sell in any given spaceflight and the price at which we sell them; • unexpected weather patterns, maintenance issues, natural disasters or other events that force us to cancel or reschedule flights; • the cost of raw materials or supplied components critical for the manufacture and operation of our spaceflight system; • any delays that we may experience in connection with the manufacture of our Delta Class spaceships and next generation motherships; • the timing and cost of, and level of investment in, research and development relating to our technologies and our current or future facilities; • developments involving our competitors; • changes in governmental regulations or in the status of our regulatory approvals or applications; 38 Table of Contents • future accounting pronouncements or changes in our accounting policies; • the impact of epidemics or pandemics, including the business disruption and related financial impact resulting from the global COVID-19 pandemic; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including: • the number of flights we schedule for a period, the number of seats we are able to sell in any given spaceflight and the price at which we sell them; • unexpected weather patterns, maintenance issues, natural disasters or other events that force us to cancel or reschedule flights; • the cost of raw materials or supplied components critical for the manufacture and operation of our spaceflight system; • any delays that we may experience in connection with the manufacture of our Delta Class spaceships and next-generation motherships; • the timing and cost of, and level of investment in, research and development relating to our technologies and our current or future facilities; • developments involving our competitors; • changes in governmental regulations or in the status of our regulatory approvals or applications; • future accounting pronouncements or changes in our accounting policies; • the impact of epidemics or pandemics; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
The GDPR and other laws regulate cross-border transfers of personal data. For transfers of personal data outside of the EEA and the UK, entities may rely on standard contractual clauses (a standard form of contractual terms approved by the European Commission or the UK authorities, as applicable) as an adequate personal data transfer mechanism.
The GDPR and other laws regulate cross-border transfers of personal information. For transfers of personal information outside of the European Economic Area (the “EEA”) and the UK, entities may rely on standard contractual clauses (a standard form of contractual terms approved by the European Commission or the UK authorities, as applicable) as an adequate personal data transfer mechanism.
We have experienced, and may in the future experience, operational complications with our contractors. The ability of our contractors to effectively satisfy our requirements could also be impacted by such contractors’ financial difficulty or damage to their operations caused by fire, terrorist attack, military conflict, natural disaster, pandemic, such as the COVID-19 pandemic, or other events.
We have experienced, and may in the future experience, operational complications with our contractors and suppliers. The ability of our contractors and suppliers to effectively satisfy our requirements could also be impacted by their financial difficulty or damage to their operations caused by fire, terrorist attack, military conflict, natural disaster, pandemic, or other events.
In addition to the expected pause on Unity spaceflights while we continue to develop our Delta Class spaceships, we may be unable to operate our spaceflight systems at our anticipated flight rate for a number of other reasons outside of our control, including, but not limited to, unexpected weather patterns, maintenance issues, pilot error, design and engineering flaws, natural disasters, epidemics or pandemics (including COVID-19), changes in governmental regulations or in the status of our regulatory approvals or applications or other events that force us to cancel or reschedule flights.
In addition to the pause on Unity spaceflights, we may be unable to operate our spaceflight systems at our anticipated flight rate for a number of other reasons outside of our control, including, but not limited to, unexpected weather patterns, maintenance issues, pilot error, design and engineering flaws, natural disasters, epidemics or pandemics, changes in governmental regulations or in the status of our regulatory approvals or applications or other events that force us to cancel or reschedule flights.
In addition, sophisticated hardware and operating system software and applications that we produce or procure from third parties and integrate into our or our third-party service providers’ systems, products or services may contain defects in design or manufacture, including “bugs”, 32 Table of Contents malicious code, misconfigurations, and other problems or vulnerabilities that could unexpectedly interfere with the operation of our information systems.
In addition, hardware and operating system software and applications that we or third parties that we rely upon produce or procure and integrate into our or our third-party service providers’ systems, products or services may contain defects in design or manufacture, including “bugs”, malicious code, misconfigurations, and other problems or vulnerabilities that could unexpectedly interfere with the operation of our information systems.
While we have successfully completed six commercial flights with our Unity spaceflight system, we are continuing to develop our Delta Class spaceships and our next generation motherships, with which we anticipate commencing revenue service in 2026. We have not yet tested flights of our Delta Class spaceships at their full passenger capacity of six persons.
While we have successfully completed seven commercial flights with our Unity spaceflight system, we are continuing to develop our Delta Class spaceships, with which we anticipate commencing commercial service in 2026. We have not yet tested flights of our Delta Class spaceships at their full passenger capacity of six persons.
License approval includes an interagency review of safety, operational, spectrum coordination, national security, and foreign policy and international obligations implications, as well as a review of foreign ownership. Additionally, the FAA Office of Commercial Space Transportation enforces informed consent and cross-waiver requirements for spaceflight participants and has the authority to regulate training and medical requirements for crew.
License approval includes an interagency review of safety, operational, spectrum coordination, national security, and foreign policy and international obligations implications, as well as a review of foreign ownership. Additionally, the FAA Office of Commercial Space Transportation enforces informed consent, cross-waiver, and training requirements for spaceflight participants and crew, and also fitness requirements for crew.
Any operational or manufacturing delays or other unplanned changes to our ability to operate spaceflights could have a material adverse effect on our business, financial condition and results of operations. We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy.
Any operational or manufacturing delays or other unplanned changes to our ability to operate spaceflights could have a material adverse effect on our business, financial condition and results of operations. We may be unable to manage our future growth effectively.
The successful development of our spaceflight systems and related technology involves many uncertainties, some of which are beyond our control, including: • timing in finalizing spaceflight systems design and specifications; • successful completion of flight test programs, including flight safety tests; • our ability to obtain additional applicable approvals, licenses or certifications from regulatory agencies, if required, and maintaining current approvals, licenses or certifications; • performance of our manufacturing facilities despite risks that disrupt productions, such as natural disasters and hazardous materials; • performance of a limited number of suppliers for certain raw materials and supplied components; • performance of our third-party contractors that support our research and development activities; • performance of our third-party contractors to design and manufacture our next generation carrier aircraft as well as manufacture key subassemblies for our next generation spaceships; • our ability to maintain rights from third parties for intellectual properties critical to our research and development activities; • our ability to continue funding and maintain our current research and development activities; and • the impact of the COVID-19, or an outbreak of another highly infectious or contagious disease or other health concern, on us, our customers, suppliers and distributors, and the global economy. 23 Table of Contents Any inability to operate our spaceflight systems at our anticipated flight rate could adversely impact our business, financial condition and results of operations.
The successful development of our spaceflight systems and related technology involves many uncertainties, some of which are beyond our control, including: • timing in finalizing spaceflight systems design and specifications; • successful completion of flight test programs, including flight safety tests; • our ability to obtain additional applicable approvals, licenses or certifications from regulatory agencies, if required, and maintaining current approvals, licenses or certifications; • performance of our manufacturing facilities despite risks that disrupt productions, such as natural disasters and hazardous materials; • performance of a limited number of suppliers for certain raw materials and supplied components; • performance of our third-party contractors that support our research and development activities; • performance of our third-party contractors to design and manufacture our next-generation carrier aircraft as well as manufacture key subassemblies for our next-generation spaceships; • our ability to maintain rights from third parties for intellectual properties critical to our research and development activities; • our ability to continue funding and maintain our current research and development activities; and • the impact of an outbreak of a highly infectious or contagious disease or other health concern, on us, our customers, suppliers and distributors, and the global economy.
We have not yet started commercial spaceflight operations, and our estimates of the required team size to support our estimated flight rates may require increases in staffing levels that may require significant capital expenditure.
We have paused commercial spaceflight operations, and our estimates of the required team size to support our future estimated flight rates may require increases in staffing levels that may require significant capital expenditure.
The success of our business will be highly dependent on our ability to effectively market and sell spaceflights. Although we commenced commercial operations in June 2023, we have generated only limited revenue from spaceflight, and we expect that our success will be highly dependent, especially in the foreseeable future, on our ability to effectively market and sell spaceflight experiences.
The success of our business will be highly dependent on our ability to effectively market and sell spaceflights. We have generated only limited revenue from spaceflight, and we expect that our success will be highly dependent, especially in the foreseeable future, on our ability to effectively market and sell spaceflight experiences.
If we commercialize spaceflights outside the United States, we will be exposed to a variety of risks associated with international operations that could materially and adversely affect our business. As part of our growth strategy, we expect to leverage our initial U.S. operations to expand internationally.
We plan to commercialize spaceflights outside the United States, and such expansion will expose us to a variety of risks associated with international operations that could materially and adversely affect our business. As part of our growth strategy, we expect to leverage our initial U.S. operations to expand internationally.
Four derivative suits have also been filed in the Eastern District of New York, as well as one derivative suit in the District of Delaware, alleging, in some combination and among other claims, violations of federal securities laws and fiduciary duty breaches, including 37 Table of Contents substantially similar allegations as those in the class action lawsuit.
Five derivative suits have also been filed in the Eastern District of New York, as well as one derivative suit in the District of Delaware, one derivative suit in the Central District of California, and one derivative suit in the Delaware Court of Chancery, alleging, in some combination and among other claims, violations of federal securities laws and fiduciary duty breaches, including substantially similar allegations as those in the class action lawsuit.
Although we commenced commercial operations with our Unity spaceflight system in June 2023, we expect to pause Unity spaceflights in mid-2024 and re-commence flying with test flights for our Delta Class spaceships in 2025, in advance of revenue service expected to begin in 2026.
Although we commenced commercial operations with our Unity spaceflight system in June 2023, we paused Unity spaceflights in mid-2024 and expect to commence flying with test flights of our Delta Class spaceships in advance of commercial service, which is expected to begin in 2026.
These requirements include, for example: • specialized disclosure and accounting requirements unique to government contracts; • financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the U.S. government; • public disclosures of certain contract and company information; and • mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements. 31 Table of Contents Government contracts are also generally subject to greater scrutiny by the government, which can initiate reviews, audits and investigations regarding our compliance with government contract requirements.
These requirements include, for example: • specialized disclosure and accounting requirements unique to government contracts; • financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the U.S. government; • public disclosures of certain contract and company information; and • mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements.
On 42 Table of Contents and after November 1, 2026, noteholders will have the right to convert their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.
Prior to November 1, 2026, noteholders will have the right to convert their notes only upon the occurrence of certain events. On and after November 1, 2026, noteholders will have the right to convert their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.
We could suffer increased costs, exposure to significant liability, reputational harm, material financial penalties, and other serious negative consequences if we or our third-party service providers fail to protect confidential information and/or sustain cyberattacks or other cybersecurity incidents that adversely affect our business, operations, or financial condition, or result in the dissemination of information, including proprietary or confidential information about us or our customers, suppliers or other third parties.
We could suffer increased costs, exposure to significant liability, reputational harm, material financial penalties, and other serious negative consequences if we or our third-party service providers fail to protect confidential information and/or sustain cyberattacks or other cybersecurity incidents that adversely affect our business, operations, or financial condition.
Additionally, as these requirements may be inconsistent from one jurisdiction to another or conflict with other rules or our practices, our practices may not have complied or may not comply in the future with all such laws, regulations, requirements and obligations.
These requirements, and their application and interpretation, are continuously evolving and subject to potentially differing interpretations. Additionally, as these requirements may be inconsistent from one jurisdiction to another or conflict with other rules or our practices, our practices may not have complied or may not comply in the future with all such laws, regulations, requirements and obligations.
To be successful, we will need to maintain a sufficient flight rate, which will be negatively impacted if we are not able to operate our spaceflight systems for any reason.
To be successful once we begin flying again with our Delta Class spaceships, we will need to maintain a sufficient flight rate, which will be negatively impacted if we are not able to operate our spaceflight systems for any reason.
However, in light of such development, we expect to pause Unity spaceflights in mid-2024 and re-commence flying with test flights for our Delta Class spaceships in 2025, in advance of revenue service expected to begin in 2026.
However, in light of such development, we paused Unity spaceflights in mid-2024 and expect to commence flying with test flights of our Delta Class spaceships in advance of commercial service, which is expected to begin in 2026.
We are subject to many hazards and operational risks that can disrupt our business, including interruptions or disruptions in service at our primary facilities, which could have a material adverse effect on our business, financial condition and results of operations.
We are subject to many hazards and operational risks that can disrupt our business, which could have a material adverse effect on our business, financial condition and results of operations.
Our reliance on suppliers to secure these raw materials and supplied components exposes us to volatility in the prices and availability of these materials. We may not be able to obtain sufficient supply of raw materials or supplied components, on favorable terms or at all, which could result in delays in manufacture of our spacecraft or increased costs.
We may not be able to obtain sufficient supply of raw materials or supplied components, on favorable terms or at all, which could result in delays in manufacture of our spacecraft or increased costs.
Our success depends in part upon successful prosecution, maintenance, enforcement and protection of our owned and licensed intellectual property, including the Virgin brand and other intellectual property that we license from Virgin under the Amended TMLA.
Our success depends in part upon successful prosecution, maintenance, enforcement and protection of our owned and licensed intellectual property, including the Virgin brand and other intellectual property that we license from Virgin under the Amended TMLA. Under the terms of the Amended TMLA, Virgin has the primary right to take actions to obtain, maintain, enforce and protect the Virgin brand.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese are oriented around and informed by industry standard control frameworks including the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF), specifically NIST 800-171, as well as ISO 27001/27002. Our Chief Information Officer ("CIO") is principally responsible for executing our cybersecurity risk management program and has many years of experience in managing technical and cybersecurity organizations.
Biggest changeThese are oriented around and informed by industry standard control frameworks including the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF), specifically NIST 800-171, as well as ISO 27001/27002.
Our Chief Information Officer presents the status of the Information Security Program to the Audit Committee quarterly and includes security control performance, technical capability enhancements, threat intelligence, information about certain cybersecurity incidents (if any) and resource performance to demonstrate the risk posture and cyber risk management practices of the organization.
Our Information Security Department presents the status of the Information Security Program to the Audit Committee quarterly and includes security control performance, technical capability enhancements, threat intelligence, information about certain cybersecurity incidents (if any) and resource performance to demonstrate the risk posture and cyber risk management practices of the organization.
The Audit Committee’s risk-based decisions related to cybersecurity are primarily reflective of the information presented by the Chief Information Officer.
The Audit Committee’s risk-based decisions related to cybersecurity are primarily reflective of the information presented.
He is supported by our Information Security Department, which includes relevant expertise and leadership, and by external cybersecurity consultants as needed. The CIO and the Information Security Department are principally focused on assessing and managing our material risks from cybersecurity threats and the prevention, detection, and minimization of the effects of cybersecurity incidents.
The Information Security Department is focused on assessing and managing our material risks from cybersecurity threats and the prevention, detection, and minimization of the effects of cybersecurity incidents.
Added
Our Senior Director of Information Technology is principally responsible for executing our cybersecurity risk management program and has more than 15 years of global experience in managing technical and cybersecurity organizations. He is supported by our Information Security Department, which includes relevant expertise and leadership, and by external cybersecurity consultants as needed.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIt is situated adjacent to the Phoenix-Mesa Gateway Airport. This facility will be used to assemble our next generation Delta Class spaceships and motherships. We expect to occupy the spaceship factory in the second quarter of 2024.
Biggest changeIn July 2024, we completed our final assembly facility in Arizona, which consists of two hangars with an aggregate of approximately 150,000 square feet. This facility, which is located in the Phoenix-Mesa area, will be used to assemble our next-generation Delta Class spaceships and motherships.
Item 2. Properties We currently operate primarily at three locations in California and New Mexico. All of our current operating facilities are located on land that is leased from third parties.
Item 2. Properties We currently operate primarily at our locations in California, New Mexico and Arizona. All of our current operating facilities are located on land that is leased from third parties.
Located on more than 25 square miles of desert landscape and with access to more than 6,000 square miles of protected airspace. Spaceport America is the world’s first purpose-built commercial spaceport and is home to the Virgin Galactic Gateway to Space terminal.
We conduct our commercial operations at Spaceport America in Sierra County, New Mexico. Located on more than 25 square miles of desert landscape and with access to more than 6,000 square miles of protected airspace. Spaceport America is the world’s first purpose-built commercial spaceport and is home to the Virgin Galactic Gateway to Space terminal.
Our design and engineering center located in Tustin, California encompasses approximately 61,000 square feet of office space and also functions as our corporate headquarters. This facility houses our management, research, design, development, marketing, finance and other administrative functions. Our final assembly facility, located in Mesa, Arizona consists of two hangars with an aggregate of approximately 151,000 square feet.
Our design and engineering center located in Tustin, California encompasses approximately 100,000 square feet of office space and also functions as our corporate headquarters. This facility houses our management, research, design, development, marketing, finance and other administrative functions.
We maintain more than 200,000 square feet of manufacturing and operations facilities at the Mojave Air and Space Port in Mojave, California. This campus includes four main operational buildings and several storage buildings under separate lease agreements that collectively house office, test and rocket motor production.
We believe that such facilities meet our current and future anticipated needs. 44 Table of Contents We maintain more than 200,000 square feet of manufacturing and operations facilities at the Mojave Air and Space Port in Mojave, California.
These facilities are leased pursuant to separate 46 Table of Contents agreements, which generally have renewal options. Several leases are either operating in renewal periods or on a month-to-month basis. We conduct our commercial operations at Spaceport America in Sierra County, New Mexico.
This campus includes four main operational buildings and several storage buildings under separate lease agreements that collectively house office, test and rocket motor production. These facilities are leased pursuant to separate agreements, which generally have renewal options. Several leases are either operating in renewal periods or on a month-to-month basis.
Removed
We also currently lease facilities in Arizona and own land in New Mexico, which we plan to develop further to support the assembly of our next generation spaceships and develop a new astronaut campus and training facility, respectively. We believe that such facilities meet our current and future anticipated needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
Item 4. Mine Safety Disclosures Not applicable. Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NYSE under the symbol “SPCE.” Holders As of February 13, 2024, there were 774 holders of record of our shares of common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NYSE under the symbol “SPCE.” Holders As of February 14, 2025, there were 63 holders of record of our shares of common stock.
Removed
Stock Performance Graph The following graph shows the total stockholder return of an investment of $100 cash on October 28, 2019 (the date our common stock began trading on the NYSE after the Virgin Galactic Business Combination) through December 31, 2023 for (1) our common stock, (2) the Standard & Poor's ("S&P") 500 Index and (3) the S&P Aerospace and Defense Select Industry Index.
Removed
In addition, because we have elected to change to the S&P Aerospace and Defense Select Industry Index from certain previously specified self-selected comparable companies which we used in our Annual Report on Form 10-K for the year ended 47 Table of Contents December 31, 2022 (the “2022 Comparable Companies”), the graph below also includes a comparison to such 2022 Comparable Companies.
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We elected to change from the self-selected 2022 Comparable Companies to a published industry index, the S&P Aerospace and Defense Select Industry Index, because we believe that the industry index provides more meaningful stockholder return information.
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The 2022 Comparable Companies consisted of The Boeing Company, Comtech Telecommunications Corp., EchoStar Corporation, Hexcel Corporation, Iridium Communications Inc., KVH Industries Inc., L3 Harris Technologies Inc., Lockheed Martin Corp., Northrop Grumman Corp., and Tesla, Inc.
Removed
Atlas Air Worldwide Holdings, Inc. was previously included in the 2022 Comparable Companies but was removed from the peer group for all periods as it is no longer publicly traded as of March 2023. All values assume reinvestment of the full amount of all dividends.
Removed
The comparisons in the table are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock.
Removed
This graph shall not be deemed "soliciting material" or be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeHistorical Cash Flows Year Ended December 31, 2023 2022 (In thousands) Net cash provided by (used in): Operating activities $ (448,193) $ (380,241) Investing activities (116,273) (286,165) Financing activities 475,431 459,003 Net decrease in cash, cash equivalents and restricted cash $ (89,035) $ (207,403) Operating Activities Net cash used in operating activities was $448.2 million for the year ended December 31, 2023, and consisted primarily of $502.3 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $44.3 million and depreciation and amortization expense of $13.4 million. 53 Table of Contents Net cash used in operating activities was $380.2 million for the year ended December 31, 2022, and consisted primarily of $500.2 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $45.7 million, depreciation and amortization expense of $11.1 million, as well as $50.3 million of cash provided from changes in operating assets and liabilities.
Biggest changeNet cash used in operating activities was $448.2 million for the year ended December 31, 2023, and consisted primarily of $502.3 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $44.3 million, depreciation and amortization expense of $13.4 million, and $7.9 million of net changes in operating assets and liabilities, partially offset by $15.1 million of accretion of marketable securities purchased at a discount.
Investing Activities Net cash used in investing activities was $116.3 million for the year ended December 31, 2023, and consisted of $1.0 billion in purchases of marketable securities and $44.3 million in capital expenditures, partially offset by $937.9 million in proceeds from maturities and calls of marketable securities.
Net cash used in investing activities was $116.3 million for the year ended December 31, 2023, and consisted of $1.0 billion in purchases of marketable securities and $44.3 million in capital expenditures, partially offset by $937.9 million in proceeds from maturities and calls of marketable securities.
This increase is primarily due to the acquisition of property, plant and equipment. Special Charges In November 2023, we commenced a restructuring plan designed to decrease costs and strategically realign our resources. In connection with this plan, we announced a workforce reduction of approximately 185 employees, constituting approximately 18% of our workforce.
The increase was primarily due to the acquisition of property, plant and equipment. Special Charges In November 2023, we commenced a restructuring plan designed to decrease costs and strategically realign our resources. In connection with this plan, we announced a workforce reduction of approximately 185 employees, constituting approximately 18% of our workforce.
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.
We maintain a full valuation allowance against our net U.S. federal and state deferred tax assets. The income tax expense was primarily related to corporate income taxes for our operations in the United Kingdom, which operates on a cost-plus arrangement.
We anticipate the costs to manufacture additional vehicles will begin to decrease as we continue to scale up our manufacturing processes and capabilities. 54 Table of Contents 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.
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.
Following the launch of commercial service and achievement of technological feasibility, we began presenting the operating expenses supporting our commercial spaceline activities as spaceline operations expense in the accompanying consolidated statements of operations and comprehensive loss.
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 consolidated statements of operations and comprehensive loss.
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.
Any actual or perceived safety issues may result in significant reputational harm to our business and our ability to generate spaceflight revenue. 48 Table of Contents 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.
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").
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").
Research and development costs will consist primarily of equipment, material, and labor costs (including from 51 Table of Contents 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 costs 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.
We completed the 2022 ATM Program in June 2023, selling a total of 59.4 million shares of common stock and generating $300.0 million in gross proceeds since its inception, before deducting $3.0 million in underwriting discounts, commissions and other expenses.
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.
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 $175.1 million for the year ended December 31, 2022 to $174.9 million for the year ended December 31, 2023.
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 $174.9 million for the year ended December 31, 2023 to $125.5 million for the year ended December 31, 2024.
Selling, General and Administrative Year Ended December 31, $ Change % Change 2023 2022 (In thousands, except %) Selling, general and administrative $ 174,864 $ 175,118 $ (254) n.m 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.
Selling, General and Administrative Year Ended December 31, $ Change % Change 2024 2023 (In thousands, except %) Selling, general and administrative $ 125,496 $ 174,864 $ (49,368) (28) % 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.
This increase was primarily driven by a full year of interest expense and amortization of debt issuance costs related to our convertible senior notes in 2023. Income Tax Expense Income tax expense was immaterial for the years ended December 31, 2023 and 2022. We have accumulated net operating losses at the U.S. federal and state levels.
Interest expense primarily consisted 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 years ended December 31, 2024 and 2023. We have accumulated net operating losses at the U.S. federal and state levels.
Research and Development Year Ended December 31, $ Change % Change 2023 2022 (In thousands, except %) Research and development $ 295,140 $ 314,174 $ (19,034) (6) % 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 Year Ended December 31, $ Change % Change 2024 2023 (In thousands, except %) Research and development $ 152,678 $ 295,140 $ (142,462) (48) % 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.
Spaceline Operations Year Ended December 31, $ Change % Change 2023 2022 (In thousands, except %) Spaceline operations $ 50,538 $ 1,906 $ 48,632 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.
Spaceline Operations Year Ended December 31, $ Change % Change 2024 2023 (In thousands, except %) Spaceline operations $ 90,024 $ 50,538 $ 39,486 78 % 49 Table of Contents 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 astronaut community; and costs to provide payload cargo and engineering services.
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 December 31, 2023, we have reservations for spaceflights for approximately 750 future 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.
Research and development expenses decreased from $314.2 million for the year ended December 31, 2022 to $295.1 million for the year ended December 31, 2023.
Research and development expenses decreased from $295.1 million for the year ended December 31, 2023 to $152.7 million for the year ended December 31, 2024.
Spaceline operations expense for the year ended December 31, 2023 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 years ended December 31, 2024 and 2023, following achievement of technological feasibility in July 2023, were 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 astronaut community.
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.
Prior to achievement of technological feasibility, spaceline operations expense included costs to support our astronaut community and costs related to payload cargo and engineering services.
We expect to generate revenue from our spaceflight program, which commenced with our first commercial spaceflight, 'Galactic 01,' in June 2023. To the extent this source of capital as well as the sources of capital described above are insufficient to meet our needs, we may need to seek additional debt or equity financing.
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.
Depreciation and Amortization Year Ended December 31, $ Change % Change 2023 2022 (In thousands, except %) Depreciation and amortization $ 13,369 $ 11,098 $ 2,271 20 % Depreciation and amortization expense increased from $11.1 million for the year ended December 31, 2022 to $13.4 million for the year ended December 31, 2023.
Depreciation and Amortization Year Ended December 31, $ Change % Change 2024 2023 (In thousands, except %) Depreciation and amortization $ 15,467 $ 13,369 $ 2,098 16 % Depreciation and amortization expense increased from $13.4 million for the year ended December 31, 2023 to $15.5 million for the year ended December 31, 2024.
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.
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; and • scale up required operational facilities, such as hangars and warehouses; 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.
We have estimated the fair value for each PSO and PSU award with market-based conditions as of the grant date using the Monte-Carlo simulation method. The Monte-Carlo simulation method considers, among other factors, the discount rates and future market conditions.
We have estimated the fair value for each PSO and PSU award with market-based conditions as of the grant date using the Monte-Carlo simulation method. The Monte-Carlo simulation method considers, among other factors, the discount rate and future market conditions . Item 7A. Quantitative and Qualitative Disclosures about Market Risk Not applicable for smaller reporting companies.
As of December 31, 2023, the tickets sold represent approximately $205 million in expected future spaceflight revenue upon completion of spaceflights. 49 Table of Contents Available Capacity and Annual Flight Rate We commenced our commercial operations with VSS Unity and VMS Eve, which together comprise our current spaceflight system.
As of December 31, 2024, we have reservations for spaceflights for approximately 700 future astronauts, which represent approximately $190 million in expected future spaceflight revenue upon completion of the spaceflights. Available Capacity and Annual Flight Rate In 2023, we commenced our commercial operations with VSS Unity and VMS Eve, which together comprised our initial commercial spaceflight system.
As of December 31, 2023, we sold a total of 79.7 million shares of common stock under the 2023 ATM Program, generating $287.5 million in gross proceeds, before deducting $2.9 million in underwriting discounts, commissions and other expenses.
As of December 31, 2024, we sold a total of 4.1 million shares of common stock under the 2024 ATM Program, generating $29.1 million in gross proceeds since its inception, before deducting $0.9 million in underwriting discounts, commissions and other expenses.
Financing Activities Net cash provided by financing activities was $475.4 million for the year ended December 31, 2023, and consisted primarily of net cash proceeds from the sale and issuance of common stock of $478.9 million, partially offset by tax withholdings paid for net settled stock-based awards of $3.2 million.
Financing Activities Net cash provided by financing activities was $134.3 million for the year ended December 31, 2024, and consisted primarily of net cash proceeds from the sale and issuance of common stock pursuant to our at-the-market offering programs of $135.7 million, partially offset by tax withholdings paid for net settled stock-based awards of $1.2 million.
These decreases were partially offset by a $47.6 million increase in manufacturing sub-contractor and contract labor costs, consulting, and other direct costs associated with the development of our spaceflight systems.
These decreases were partially offset by a $7.8 million increase in sub-contractor and contract labor costs associated with the development of our next-generation spaceflight vehicles.
We adjust these reserves when facts and circumstances change, such as the closing of a tax audit or refinement of an estimate.
As we grow, we will face increased complexity in determining the appropriate tax jurisdictions for revenue and expense items. We adjust these reserves when facts and circumstances change, such as the closing of a tax audit or refinement of an estimate.
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 and in the section of this Annual Report on Form 10-K titled “Risk Factors.” Customer Demand We have already received significant interest from potential astronauts.
In December 2024, we entered into an Agreement of Cooperation with Ente Nazionale per l'Aviazione Civile, the civil aviation authority of Italy, to jointly study the feasibility of conducting spaceflight operations from Grottaglie Spaceport in the Puglia region of Southern Italy. 47 Table of Contents 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 and in the section of this Annual Report on Form 10-K titled “Risk Factors.” Customer Demand We have already received significant interest from potential astronauts.
Net cash used in investing activities was $286.2 million for the year ended December 31, 2022, and consisted of $704.6 million in purchases of marketable securities and $16.5 million in capital expenditures, partially offset by $434.9 million in proceeds from maturities and calls of marketable securities.
Investing Activities Net cash provided by investing activities was $175.7 million for the year ended December 31, 2024, and consisted primarily of $543.4 million in purchases of marketable securities and $121.9 million in capital expenditures, partially offset by $840.3 million in proceeds from maturities and calls of marketable securities.
This decrease was primarily driven by a $4.2 million decrease in consulting and other professional fees and a $1.2 million decrease in cash compensation and other employee benefit costs. This decrease was partially offset by a $2.8 million increase in information technology and software costs and a $2.7 million increase in marketing and promotion costs.
The decrease was primarily driven by a $33.7 million decrease in cash compensation and other employee benefit costs primarily due to a reduction in headcount, a $8.9 million decrease in consulting 50 Table of Contents and other professional fees, a $4.2 million decrease in marketing and promotion expense, and a $1.7 million decrease in facility costs.
Year Ended December 31, 2023 2022 2021 (In thousands) Revenue $ 6,800 $ 2,312 $ 3,292 Operating expenses: Spaceline operations 50,538 1,906 272 Research and development 295,140 314,174 144,223 Selling, general and administrative 174,864 175,118 166,814 Depreciation and amortization 13,369 11,098 11,518 Special charges 4,398 — — Total operating expenses 538,309 502,296 322,827 Operating loss (531,509) (499,984) (319,535) Interest income 42,234 12,502 1,208 Interest expense (12,872) (12,130) (25) Change in fair value of warrants — — (34,650) Other income, net 263 58 182 Loss before income taxes (501,884) (499,554) (352,820) Income tax expense 453 598 79 Net loss $ (502,337) $ (500,152) $ (352,899) 50 Table of Contents Comparison of Results of Operations for Year Ended December 31, 2023 to Year Ended December 31, 2022 Revenue Year Ended December 31, $ Change % Change 2023 2022 (In thousands, except %) Revenue $ 6,800 $ 2,312 $ 4,488 194 % Revenue for the year ended December 31, 2023 was primarily attributable to revenue generated from our commercial spaceflights and membership fees related to our Future Astronaut community.
Year Ended December 31, 2024 2023 (In thousands) Revenue $ 7,036 $ 6,800 Operating expenses: Spaceline operations 90,024 50,538 Research and development 152,678 295,140 Selling, general and administrative 125,496 174,864 Depreciation and amortization 15,467 13,369 Special charges — 4,398 Total operating expenses 383,665 538,309 Operating loss (376,629) (531,509) Interest income 42,352 42,234 Interest expense (12,927) (12,872) Other income, net 538 263 Loss before income taxes (346,666) (501,884) Income tax expense 74 453 Net loss $ (346,740) $ (502,337) Comparison of Results of Operations for Year Ended December 31, 2024 to Year Ended December 31, 2023 Revenue Year Ended December 31, $ Change % Change 2024 2023 (In thousands, except %) Revenue $ 7,036 $ 6,800 $ 236 3 % Revenue for the years ended December 31, 2024 and 2023 were primarily attributable to revenue generated from our commercial spaceflights and access fees related to our astronaut community.
We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. As we grow, we will face increased complexity in determining the appropriate tax jurisdictions for revenue and expense items.
Accordingly, in assessing our future taxable income on a jurisdictional basis, we consider the effect of our transfer pricing policies on that income. 54 Table of Contents We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.
The following is a discussion and analysis of, and a comparison between, our results of operations for the years ended December 31, 2023 and 2022.
The following is a discussion and analysis of, and a comparison between, our results of operations for the years ended December 31, 2024 and 2023. Overview We are an aerospace and space travel company offering access to space for private individuals, researchers and government agencies.
We have built operational processes to ensure that the design, manufacture, performance and servicing of our spaceflight system meets rigorous quality standards. However, our spaceflight system is still subject to operational and process risks, such as manufacturing and design issues, human errors, or cyber-attacks.
However, our spaceflight systems are still subject to operational and process risks, such as manufacturing and design issues, human errors, or cyber-attacks.
For additional information regarding our lease obligations, see Note 16 in our consolidated financial statements included in Item 8 of this Annual Report in Form 10-K. 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.
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.
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.
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.
We believe we will have sufficient liquidity available to fund our business needs, commitments and contractual obligations for the next twelve months.
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 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.
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.
In November 2023, we announced our plan to pause Unity spaceflights in mid-2024 and that we expect to re-commence flying with test flights for our Delta Class spaceships in 2025, in advance of revenue service expected to begin in 2026. In January 2024, we completed our sixth commercial spaceflight.
Following the 'Galactic 07' flight, we paused Unity spaceflights and expect to commence flying with test flights of our new Delta Class spaceships in advance of restarting commercial service, which is expected to begin in 2026.
Income Taxes We record income tax expense for the anticipated tax consequences of the reported results of operations using the asset and liability method.
If the carrying amount of the asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Income Taxes We record income tax expense for the anticipated tax consequences of the reported results of operations using the asset and liability method.
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.
Our spaceflight system was developed using our proprietary technology and processes and is focused on providing space travel 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.
As a result, our annual flight rate will be constrained by the availability and capacity of this spaceflight system. To reduce the capacity constraint associated with having only one spaceflight system, we are currently developing our next generation spaceflight vehicles.
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.
Net cash provided by financing activities was $459.0 million for the year ended December 31, 2022, and consisted primarily of the issuance of the 2027 Notes for net proceeds of $413.7 million and net cash proceeds from the sale and issuance of common stock of $102.1 million, partially offset by the purchase of the capped call related to the 2027 Notes of $52.3 million and tax withholdings paid for net settled stock-based awards of $4.0 million.
Net cash provided by financing activities was $475.4 million for the year ended December 31, 2023, and consisted primarily of net cash proceeds from the sale and issuance of common stock pursuant to our at-the-market offering programs of $478.9 million, partially offset by tax withholdings paid for net settled stock-based awards of $3.2 million. 52 Table of Contents Contractual Obligations We lease certain facilities and assets under non-cancellable operating lease arrangements that expire at various dates through 2065.
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 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.
Liquidity and Capital Resources As of December 31, 2023, we had total cash, cash equivalents and restricted cash of $253.6 million and total marketable securities of $728.8 million. Our principal sources of liquidity have come from sales of our common stock and offering of convertible senior notes ("2027 Notes").
Liquidity and Capital Resources As of December 31, 2024, we had total cash, cash equivalents and restricted cash of $210.9 million and total marketable securities of $445.9 million.
As a result, we recorded severance and related benefit costs for the involuntarily terminated employees as special charges in the accompanying 2023 consolidated statement of operations and comprehensive loss.
As a result, we recorded $4.4 million in severance and related benefit costs for the involuntarily terminated employees as special charges during the year ended December 31, 2023. In January 2024, we fully paid the $1.4 million liability balance associated with these costs that was accrued at December 31, 2023.
This increase was primarily driven by increased average balances of marketable securities, higher investment returns on marketable securities and higher interest rates on deposits in interest bearing accounts.
Interest Income Interest income increased from $42.2 million for the year ended December 31, 2023 to $42.4 million for the year ended December 31, 2024. Interest income was driven by investment returns on our marketable securities and deposits in interest-bearing accounts. Interest Expense Interest expense was $12.9 million for each of the years ended December 31, 2024 and 2023.
Removed
A discussion and analysis of, and a comparison between, our results of operations for the years ended December 31, 2022 and 2021 can be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Added
Recent Developments In January 2024, we completed our sixth commercial spaceflight, 'Galactic 06,' marking the first time all four seats aboard VSS Unity were occupied by private astronauts. 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.
Removed
We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services for third parties. Recent Developments In June 2023, we completed our first commercial spaceflight, ' Galactic 01,' which marked the start of our commercial service.
Added
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.
Removed
In July 2023, we concluded that technological feasibility had been achieved for our initial spaceship, VSS Unity, and mothership carrier aircraft, VMS Eve, which together comprise our current spaceflight system. As a result, future costs associated with this spaceflight system, including the manufacture of related rocket motors, will no longer qualify as research and development activities.
Added
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.
Removed
Following the launch of commercial service and achievement of technological feasibility, we began presenting the operating expenses supporting our commercial spaceline activities as spaceline operations expense in the accompanying consolidated statements of operations and comprehensive loss. Expenses incurred prior to the achievement of technological feasibility were classified as research and development and selling, general and administrative expenses.
Added
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.
Removed
In August 2021, we reopened ticket sales to a select group and increased the pricing of our consumer offerings to a base price of $450,000 per seat. In February 2022, we opened ticket sales to the general public for a limited time.
Added
All shares of our common stock, per-share data and related information included in this Annual Report on Form 10-K have been retroactively adjusted as though the Reverse Stock Split had been effected prior to all periods presented.
Removed
These next generation spaceflight vehicles, which include our Delta Class spaceships and our next generation motherships, will allow us to increase our annual flight rate. We are dedicating significant engineering resources to the work that precedes production of the future fleet. In 2023, we demonstrated the flight consistency of Unity and Eve by safely bringing our customers to space.
Added
In July 2024, we completed our new manufacturing facility in 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.
Removed
In 2024, we expect to adjust the flight cadence of Unity to quarterly and then pause flights starting mid-year to focus our resources on the development of the Delta Class spaceship fleet. Safety Performance of Our Spaceflight System Our spaceflight system is highly specialized with sophisticated and complex technology.
Added
In October 2024, we settled the lawsuit and all claims between us and The Boeing Company and Aurora Flight Sciences Corporation, a Boeing Company. See Note 15 in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
Removed
Revenue for the year ended December 31, 2022 was primarily attributable to membership fees related to our Future Astronaut community, fees related to our Future Astronaut community event, and scientific research services under government contracts.
Added
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.
Removed
Spaceline operations expense for the year ended December 31, 2022 was primarily attributable to costs related to our Future Astronaut community event, other costs to maintain our Future Astronaut community, labor costs provided for scientific research services, and incremental costs related to payload services.
Added
The decrease was primarily driven by a $65.8 million decrease in cash compensation and other employee benefit costs primarily due to the completion of the VSS Unity and VMS Eve modifications, a reduction in headcount and labor allocated to capitalizable Delta projects; a $49.3 million decrease in materials, consulting, and other costs primarily due to the completion of the VSS Unity and VMS Eve modifications; the settlement of certain disputed vendor invoices, resulting in a reversal of $18.6 million of accrued costs; an $8.3 million decrease in other operational costs primarily due to a technology license fee expensed in 2023; and a $5.2 million decrease in consulting and other professional fees.
Removed
This decrease was primarily driven by a $51.7 million decrease in materials costs associated with the development of our spaceflight systems, a $7.2 million decrease in cash compensation and other employee benefit costs, a $4.7 million decrease in stock-based compensation, and a $3.4 million decrease in facility costs.
Added
Our principal sources of liquidity have come from sales of our common stock and offering of convertible senior notes ("2027 Notes"). 51 Table of Contents Historical Cash Flows Year Ended December 31, 2024 2023 (In thousands) Net cash provided by (used in): Operating activities $ (352,703) $ (448,193) Investing activities 175,656 (116,273) Financing activities 134,340 475,431 Net decrease in cash, cash equivalents and restricted cash $ (42,707) $ (89,035) Operating Activities Net cash used in operating activities was $352.7 million for the year ended December 31, 2024, and consisted primarily of $346.7 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $29.8 million and depreciation and amortization expense of $15.5 million, partially offset by $16.6 million of accretion of marketable securities purchased at a discount and $38.2 million of net changes in operating assets and liabilities, which were driven primarily by the reversal of $18.6 million of accrued costs in connection with the settlement of certain disputed vendor invoices.
Removed
The unpaid severance and related benefit costs of $1.4 million as of December 31, 2023 are expected to be fully paid during the first quarter of 2024. 52 Table of Contents Interest Income Year Ended December 31, $ Change % Change 2023 2022 (In thousands, except %) Interest income $ 42,234 $ 12,502 $ 29,732 238 % Interest income increased from $12.5 million for the year ended December 31, 2022 to $42.2 million for the year ended December 31, 2023.
Added
The capital expenditures were primarily driven by costs associated with our next-generation Delta spaceships and our new facility in Arizona, which will be used to assemble the spaceships.
Removed
Interest Expense Year Ended December 31, $ Change % Change 2023 2022 (In thousands, except %) Interest expense $ 12,872 $ 12,130 $ 742 6 % Interest expense increased from $12.1 million for the year ended December 31, 2022 to $12.9 million for the year ended December 31, 2023.
Added
As of December 31, 2024, future minimum payments under non-cancellable operating leases were $120.6 million. For additional information regarding our lease obligations, see Note 15 in our consolidated financial statements included in Item 8 of this Annual Report in Form 10-K.
Removed
Contractual Obligations We lease certain facilities and assets under non-cancellable operating lease arrangements that expire at various dates through 2065. As of December 31, 2023, future minimum payments under non-cancellable operating leases were $128.2 million.
Added
In November 2024, we terminated the 2023 ATM Program, having sold a total of 12.8 million shares of common stock and generating $396.2 million in gross proceeds, before deducting $3.9 million in underwriting discounts, commissions and other expenses. 53 Table of Contents In November 2024, we entered into an open market sale agreement with Jefferies LLC ("Jefferies") providing for the offer and sale of up to $300 million of shares of our common stock from time to time through Jefferies, acting as sales agent, or directly to Jefferies, acting as principal, through an "at-the-market offering" program (the "2024 ATM Program").
Removed
As our fleet of spaceships expands, we expect our expenditures to increase as we scale our commercial operations.
Added
Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset to be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by that asset group to its carrying amount.
Removed
While we have completed our initial commercial launch with a single spaceship, we are currently developing our next generation spaceflight vehicles.
Added
The estimate of cash flows includes management's assumptions of cash inflows and outflows directly resulting from the use of those assets in operations. We assess impairment for asset groups, which represent a combination of assets that produce distinguishable cash flows.
Removed
Beyond the next twelve months, our principal demand for funds will be to sustain our operations, including the construction of additional spaceships and motherships, expansion of our footprint at Spaceport America in New Mexico, construction of our astronaut campus and payment of the principal amount of our convertible senior notes as they become due.
Removed
Inventories Inventories consist of materials expected to be used in our spaceflight operations. Inventories are stated at the lower of cost or net realizable value using the average cost method. We record a provision for excess and obsolete inventory based primarily on forecasted product demand and production requirements.

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