Intuitive Machines, Inc. Class A Common Stock

Digital transformation and innovation · Artificial intelligence and automation

We may use artificial intelligence ('AI') in our business or systems, and challenges with properly managing its use could result in competitive and reputational harm and negatively impact the operations and profitability of our business. We may incorporate AI solutions into our core offerings and business, and these applications may become important in our operations over time.

Cybersecurity and data protection · Data breaches and cyber attacks

If any of our systems, the systems of any critical Third Parties upon which we rely or our customers' systems are, or appear to be, breached, damaged, or if unauthorized processing of customer or third-party data is otherwise performed, public perception of our products services may be harmed, and we may lose business and incur losses or liabilities. Threat actors (such as ransomware groups) are becoming increasingly sophisticated and using tools and techniques that are designed to circumvent security controls, to evade detection and to remove or obfuscate forensic evidence.

Technology infrastructure · Disaster recovery and business continuity

While we have implemented what we believe is an appropriate information security program with cybersecurity procedures, practices, and controls, the control systems, cybersecurity program, infrastructure, physical facilities of, and personnel associated with Third Parties that we rely on are beyond our control and we cannot guarantee that our or our Third Parties' systems and networks have not been breached.

Digital transformation and innovation · Technology obsolescence and evolution

The satellite manufacturing industry is driven by continued investment in technologies to meet changing customer demand for complex and reliable services. Our satellite systems embody complex technologies and may not always be compatible with current and evolving technical standards and systems developed by others. Failure or delays to develop technologies or team with providers to obtain technologies to meet the requisite and evolving industry or user standards could have a material adverse effect on our business, financial condition, and results of operations.

Capital structure and performance · Financial performance volatility

We have a history of net operating losses and may not achieve profitability in the future. We may need additional capital to fund our operations. If we fail to obtain additional capital, we may be unable to sustain operations.

Credit and liquidity · Liquidity and cash flow constraints

Our business may not generate cash flow from operations in the future sufficient to service our indebtedness and to make necessary capital expenditures, and we may otherwise be unable to maintain sufficient cash reserves to fund our current obligations or any additional indebtedness that we may incur.

Credit and liquidity · Debt service and covenant compliance

Significant fluctuations in our operating results for a particular quarter could cause us to fall out of compliance with the financial covenants related to our debt, which if not waived, could restrict our access to capital and cause us to take extreme measures to pay down the debt, if any.

Customer and revenue · Changing customer preferences and behavior

Our growth is dependent on the growth in the sales of services provided by our customers, our customers' ability to anticipate market trends and our ability to anticipate changes in the businesses of our customers and to successfully identify and enter new markets. If we fail to anticipate such changes in demand, our business, results of operations and financial position could be adversely affected.

Market position and competition · Competitive pressure and market share loss

Competition from existing or new companies could cause us to experience downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities, and the loss of market share. We operate in highly competitive markets and generally encounter intense competition to win contracts from many other firms, including lower and mid-tier federal contractors with specialized capabilities and the federal government.

Innovation and product development · Intellectual property protection and infringement

If we are unable to protect the confidentiality of our proprietary information, trade secrets and know-how, our business and competitive position may be harmed. To protect our proprietary rights, we rely on a combination of patent protections, copyrights, trade secrets, trademark laws, confidentiality agreements with employees and third parties and protective contractual provisions such as those contained in license agreements with consultants, subcontractors, vendors and customers.

Market position and competition · Disruptive competitors and new market entrants

We may also face competition in the future from more emerging low-cost competitors, some of which could be subsidized or well-funded. Competition in our lunar market is mainly divided between incumbents, such as Lockheed Martin and Blue Origin who pursue larger, more complex contracts such as crewed lunar missions, and next generation players, including our competitors on the CLPS contract such as Astrobotic and Firefly Aerospace.

Core operations · Capacity utilization and efficiency

Our continued growth, including recent awards, could increase the strain on our resources, and we could experience operating difficulties, including difficulties in hiring and training employees, finding manufacturing capacity to produce our space vehicles and related equipment, and delays in production.

Core operations · Quality control and product defects

Our revenue, results of operations and reputation may be negatively impacted if our products contain defects or fail to operate in the expected manner. We sell complex and technologically advanced products and services, including rocket launch services, mission services, spacecraft, satellites, and spacecraft components. Sophisticated software used in our products and services, including software developed by us, may contain defects that can unexpectedly interfere with the software's intended operation.

Project and contract management · Government contract dependency

If our prime contractors fail to maintain their relationships with their counterparties and fulfill their contractual obligations, our performance as a subcontractor and our ability to obtain future business could be materially and adversely impacted and our actual results could differ materially and adversely from those anticipated. We act as a subcontractor to prime contractors on multiple government contracts, including NASA's JETS Program and SDA's Tracking Layer Program.

Human capital and workforce · Talent acquisition and retention

These challenges and uncertainties may impair our ability to attract, retain and motivate key personnel. The departure of key employees because of issues related to the uncertainty and difficulty of integration or a desire not to remain with us could have a negative effect on our business, financial condition, and results of operations.

Tax and financial reporting · Tax compliance and changes in tax law

We anticipate that Intuitive Machines, LLC will continue to be treated as a partnership for U.S. federal income tax purposes and, as such, will not be subject to any entity-level U.S. federal income tax. Instead, taxable income will be allocated to holders of interests in Intuitive Machines, LLC, including us. Accordingly, we will incur income taxes on our allocable share of any net taxable income of Intuitive Machines, LLC.

Tax and financial reporting · Financial reporting and accounting standards

Changes in our accounting estimates and assumptions could negatively affect our business, results of operations and financial position. We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles ('U.S. GAAP'). These accounting principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements.

Legal and litigation · Litigation and legal proceedings

For example, on November 22, 2024, an alleged successor in interest to a purported former holder of shares of our Series A Preferred Stock (the 'Plaintiff') filed a breach of contract action in the Delaware Court of Chancery alleging that Plaintiff's predecessor received fewer shares of common stock upon conversion of its shares of Series A Preferred Stock than it was allegedly entitled to receive under the terms of the applicable certificate of designation.

Economic and market conditions · Economic recession and downturns

Current or potential customers may delay or decrease spending on our products and services as their business and/or budgets are impacted by economic and political conditions. The inability of current and potential customers to pay us for our products and services may adversely affect our earnings and cash flows.

Economic and market conditions · Inflation and deflation pressures

Rising inflation may materially impact our business, financial condition, and results of operations. Inflation has increased recently. Inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, shipping costs, supply shortages, increased costs of labor and other similar effects.