[Q3 2024 Highlights and Management Commentary](index=1&type=section&id=Q3%20Highlights) Intuitive Machines achieved record revenue, cash, and backlog in Q3 2024, driven by strategic contract wins and a focus on core service pillars and cost efficiency - CEO Steve Altemus emphasized the company's focus on three core service pillars: delivery, data transmission, and infrastructure services, which are foundational to commercial and government lunar exploration[3](index=3&type=chunk)[5](index=5&type=chunk) - CFO Pete McGrath stated a new focus on managing costs efficiently to drive the company towards profitability and achieve financial targets[5](index=5&type=chunk) Q3 2024 Key Financial & Operational Metrics (in millions) | Metric | Value | Note | | :--- | :--- | :--- | | **Revenue** | $58.5 | Up 359% YoY | | **Gross Margin** | $4.1 | Positive | | **Ending Cash** | $89.6 | Highest in company history | | **Ending Backlog** | $316.2 | Highest in company history | - Awarded a **$116.9 million** contract through NASA's CLPS initiative, marking the company's fourth such award, more than any other vendor[7](index=7&type=chunk) - Secured a sole awardee Near Space Network (NSN) data services contract from NASA with a maximum potential value of **$4.82 billion**[7](index=7&type=chunk) [2024 Outlook](index=1&type=section&id=2024%20Outlook) The company narrowed its full-year 2024 revenue guidance to **$215-$235 million** and anticipates strong year-end cash and further backlog growth Full-Year 2024 Financial Outlook (in millions) | Metric | Guidance/Projection | | :--- | :--- | | **Revenue Outlook** | $215 - $235 | | **Cash Balance (as of Oct 2024)** | $106.9 | - The company expects backlog to grow, driven by potential awards such as Near Space Network 1.2 / 1.3 Direct to Earth, LTVS Phase 2, and additional task orders for OMES and Near Space Network 2.2 - Cislunar Relay[8](index=8&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) Consolidated financial statements for Q3 2024 show significant asset and liability growth, substantial revenue increase, and a net loss primarily due to non-cash expenses [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2024, total assets significantly increased to **$224.8 million**, with total liabilities rising to **$229.3 million**, primarily due to earn-out and warrant liabilities Balance Sheet Highlights (in thousands) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $89,605 | $4,498 | | **Total current assets** | $168,267 | $31,611 | | **Total assets** | $224,798 | $85,908 | | **Total current liabilities** | $95,314 | $81,533 | | **Total liabilities** | $229,335 | $137,480 | | **Total shareholders' deficit** | ($495,353) | ($261,435) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 2024 revenue surged **359%** to **$58.5 million**, with operating loss narrowing, but a **$55.5 million** net loss for Class A shareholders due to non-cash charges Statement of Operations Highlights - Three Months Ended Sep 30 (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | **Revenue** | $58,478 | $12,731 | | **Operating loss** | ($13,724) | ($24,004) | | **Net income (loss) attributable to Class A common shareholders** | ($55,543) | $32,629 | Statement of Operations Highlights - Nine Months Ended Sep 30 (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | **Revenue** | $173,338 | $48,960 | | **Operating loss** | ($43,999) | ($53,628) | | **Net income (loss) attributable to Class A common shareholders** | ($134,966) | $51,678 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$55.6 million** for the nine months ended September 30, 2024, largely offset by **$147.9 million** from financing activities, increasing cash to **$89.6 million** Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Cash Flow Category | 2024 | 2023 | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($55,622) | ($22,933) | | **Net cash used in investing activities** | ($5,185) | ($27,668) | | **Net cash provided by financing activities** | $147,894 | $65,489 | | **Net increase in cash** | $87,087 | $14,888 | | **Cash and cash equivalents at end of period** | $89,605 | $40,652 | [Non-GAAP Financial Measures & Other Metrics](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Other%20Metrics) The company utilizes non-GAAP measures like Adjusted EBITDA and Free Cash Flow, alongside record backlog, to provide additional insight into its financial and operational performance [Adjusted EBITDA](index=7&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA loss significantly improved to **$6.9 million** in Q3 2024 and **$30.5 million** for the nine-month period, reflecting enhanced operational performance Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Period | Net Income (Loss) | Adjusted EBITDA | | :--- | :--- | :--- | | **Three Months Ended Sep 30, 2024** | ($80,411) | ($6,913) | | **Three Months Ended Sep 30, 2023** | $14,311 | ($22,119) | | **Nine Months Ended Sep 30, 2024** | ($181,787) | ($30,456) | | **Nine Months Ended Sep 30, 2023** | $7,163 | ($49,936) | [Free Cash Flow](index=7&type=section&id=Free%20Cash%20Flow) Free cash flow for the nine months ended September 30, 2024, was an outflow of **$60.8 million**, primarily due to increased net cash used in operating activities Free Cash Flow Reconciliation - Nine Months Ended Sep 30 (in thousands) | Line Item | 2024 | 2023 | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($55,622) | ($22,933) | | **Purchases of property and equipment** | ($5,185) | ($27,668) | | **Free cash flow** | **($60,807)** | **($50,601)** | [Backlog](index=8&type=section&id=Backlog) Contracted backlog reached a record **$316.2 million** as of September 30, 2024, driven by **$235.6 million** in new awards, primarily from a new IM-4 CLPS contract Backlog Growth (in thousands) | Date | Backlog Amount | | :--- | :--- | | **September 30, 2024** | $316,164 | | **December 31, 2023** | $268,566 | - The backlog increase was driven by **$235.6 million** in new awards, offset by **$173.4 million** in revenue recognized and **$14.6 million** in contract value adjustments[30](index=30&type=chunk)

Financial Performance - Total revenue for the three months ended June 30, 2024, was $41,408,000, representing a 130.5% increase from $17,993,000 in the same period of 2023[16] - Operating loss for the three months ended June 30, 2024, was $28,174,000, compared to a loss of $13,183,000 in the prior year, indicating a worsening of 113.5%[16] - Net income attributable to Class A common shareholders for the three months ended June 30, 2024, was $18,143,000, down from $28,866,000 in the same period of 2023, a decrease of 37.2%[16] - The company reported a net loss of $104,675,000 for the six months ended June 30, 2024, compared to a loss of $4,670,000 in the same period of 2023, indicating a substantial increase in losses[16] - Total operating expenses for the three months ended June 30, 2024, were $69,582,000, up from $31,176,000 in the same period of 2023, an increase of 123.5%[16] - For the six months ended June 30, 2024, the net loss was $104.675 million, compared to a net loss of $4.670 million for the same period in 2023[33] Assets and Liabilities - Total current assets increased to $83,111,000 as of June 30, 2024, from $31,611,000 at December 31, 2023, reflecting a growth of 162.5%[14] - Total liabilities rose to $150,490,000 as of June 30, 2024, compared to $139,327,000 at December 31, 2023, an increase of 8.3%[14] - The company had a total asset value of $140,121,000 as of June 30, 2024, compared to $85,908,000 at December 31, 2023, reflecting an increase of 63.2%[14] - As of June 30, 2024, the total common stock balance increased to 62,469,364 shares with a total amount of $6 million, while Class C shares remained at 66,109,012 shares with an amount of $7 million[26] - The balance of accumulated deficit as of June 30, 2024, was $(222,203,000), an increase from $(250,466,000) at the end of the previous period[28] - The total shareholders' deficit as of June 30, 2024, was $(234,227,000), compared to $(263,282,000) at the end of the previous period[28] Cash Flow and Financing Activities - Cash and cash equivalents significantly increased to $31,631,000 as of June 30, 2024, from $4,498,000 at December 31, 2023, marking a growth of 603.5%[14] - Cash used in operating activities for the six months ended June 30, 2024, was $37.702 million, an increase from $15.774 million in the prior year[33] - The company reported a total cash and cash equivalents balance of $31.631 million at the end of the period, down from $39.087 million at the end of June 2023[33] - Cash flows from financing activities generated a net cash inflow of $70.608 million for the six months ended June 30, 2024, compared to $49.297 million in the prior year[33] - The Company issued 3,582,583 shares of Class A common stock related to the ATM Program, raising approximately $17,045,000[28] - The company raised approximately $17.0 million in net proceeds during the second quarter of 2024 through the ATM program[54] Share-Based Compensation - Share-based compensation expense for the six months ended June 30, 2024, was $5,895,000, reflecting an increase from the previous period[28] - The company reported a share-based compensation expense of $1,969,000 for the three months ended June 30, 2024[26] - Share-based compensation expense increased to $5.895 million for the six months ended June 30, 2024, from $1.192 million in the same period of 2023[33] - Share-based compensation expense related to options was $106 thousand for the three months ended June 30, 2024, and $220 thousand for the six months ended June 30, 2024[119] - Share-based compensation expense related to RSUs was $1.4 million for the three months ended June 30, 2024, and $2.5 million for the six months ended June 30, 2024[123] Revenue Sources and Contracts - The company reported that 95% of its revenue for the three months ended June 30, 2024 came from cost reimbursable contracts, totaling $39.3 million[60] - One major customer accounted for 90% of the company's total revenue for the three months ended June 30, 2024[50] - Revenue recognized from contract liabilities was $4.4 million for the six months ended June 30, 2024, down from $27.5 million for the same period in 2023, reflecting a decline of approximately 84%[64] - Remaining performance obligations totaled $94.6 million as of June 30, 2024, with an expectation to recognize revenue on approximately 45-50% over the next six months[66] - Revenue recognized from Axiom Space, Inc. for the three and six months ended June 30, 2024, was $50 thousand and $124 thousand, respectively[143] Business Operations and Structure - The company’s business focus is on creating and operating space systems and infrastructure for lunar exploration and resource utilization[35] - Intuitive Machines, Inc. underwent a business combination on February 13, 2023, resulting in a reverse recapitalization structure[38] - The company operates in one reportable segment, with all assets maintained in the United States[46] - The company is classified as a smaller reporting company and is not required to provide additional market risk disclosures[270] Joint Ventures and Partnerships - The company is the primary beneficiary of the Space Network Solutions joint venture, holding a 90% interest[150] - Intuitive Machines holds a 51% interest in the IX, LLC joint venture with X-energy, which holds a 49% interest[152] - The IX LLC JV was formed to develop nuclear space propulsion and surface power systems for future space exploration[153] - The OMES III joint venture agreement between Intuitive Machines and KBR has a profit interest of 47% for Intuitive Machines and 53% for KBR[151]

[Part I – Financial Information](index=6&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) Q1 2024 saw revenue rise to **$73.1 million**, but net loss widened to **$120.7 million** due to non-operating items [Condensed Consolidated Financial Statements](index=7&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $55,242 | $4,498 | | Total current assets | $115,728 | $31,611 | | Total assets | $170,771 | $85,908 | | Total current liabilities | $104,813 | $83,380 | | Total liabilities | $214,708 | $139,327 | | Total shareholders' deficit | $(492,678) | $(263,282) | Condensed Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Revenue | $73,068 | $18,236 | | Operating loss | $(5,400) | $(13,963) | | Total other expense, net | $(115,256) | $(6,269) | | Net loss | $(120,656) | $(23,447) | | Net loss per share (basic and diluted) | $(2.70) | $(0.64) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,442) | $(18,666) | | Net cash used in investing activities | $(1,588) | $(8,565) | | Net cash provided by financing activities | $60,754 | $48,268 | | Net increase in cash | $52,724 | $21,037 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company designs, manufactures, and operates space products and services with a near-term focus on lunar systems and infrastructure, becoming publicly traded in February 2023 through a SPAC business combination[29](index=29&type=chunk)[31](index=31&type=chunk) - A single major customer, NASA, accounted for **93%** of total revenue for the three months ended March 31, 2024[44](index=44&type=chunk) Revenue by Contract Type (in thousands) | Contract Type | Q1 2024 Revenue | % of Total | Q1 2023 Revenue | % of Total | | :--- | :--- | :--- | :--- | :--- | | Cost reimbursable | $42,040 | 58% | $0 | 0% | | Fixed price | $29,208 | 40% | $16,595 | 91% | | Time and materials | $1,820 | 2% | $1,641 | 9% | | **Total** | **$73,068** | **100%** | **$18,236** | **100%** | - The company recorded a favorable change in net losses on contracts of **$8.2 million** in Q1 2024, primarily due to the successful completion of the first lunar payload services contract in February 2024, which allowed for the recognition of **$11.6 million** in previously constrained variable consideration[58](index=58&type=chunk)[61](index=61&type=chunk) - In Q1 2024, the company raised significant capital through warrant exercises providing approximately **$50.6 million** in cash proceeds, and a **$10.0 million** bridge loan converted into Class A Common Stock and new warrants[76](index=76&type=chunk)[101](index=101&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Successful lunar landing drove **301%** revenue growth, but net loss expanded; liquidity improved with **$55.2 million** cash [Overview and Key Performance Factors](index=32&type=section&id=Overview%20and%20Key%20Performance%20Factors) - The company's Nova-C lander became the first U.S. vehicle to soft-land on the lunar surface since 1972, a key milestone demonstrating its capabilities[150](index=150&type=chunk) - The business operates through four units: Lunar Access Services, Orbital Services, Lunar Data Services, and Space Products and Infrastructure[155](index=155&type=chunk) - Future success depends on the ability to commence and expand spaceflight missions, expand product offerings, improve profit margins, and capitalize on government and private investment in the space economy[171](index=171&type=chunk)[173](index=173&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Comparison of Results of Operations (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | $ Change | | :--- | :--- | :--- | :--- | | Revenue | $73,068 | $18,236 | $54,832 | | Cost of revenue | $60,911 | $23,126 | $37,785 | | Operating loss | $(5,400) | $(13,963) | $8,563 | | Total other expense, net | $(115,256) | $(6,269) | $(108,987) | | Net loss | $(120,656) | $(23,447) | $(97,209) | - Revenue increased by **301%** (**$54.8 million**), primarily driven by the successful completion of the IM-1 mission, which resulted in the release of **$12.3 million** in previously constrained revenue, and **$41.8 million** in revenue from the new OMES III contract[200](index=200&type=chunk)[201](index=201&type=chunk) - The increase in total other expense was primarily due to a **$68.7 million** loss on issuance of securities and unfavorable changes in the fair value of earn-out liabilities (**$18.9 million**) and warrant liabilities (**$24.0 million**)[207](index=207&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2024, the company had cash and cash equivalents of **$55.2 million** and working capital of **$10.9 million**[223](index=223&type=chunk) - In Q1 2024, the company received approximately **$60.6 million** in gross proceeds from warrant exercises and other equity transactions, significantly bolstering its cash position[223](index=223&type=chunk) - Management believes current cash, along with available liquidity from the Cantor Purchase Agreement and a Controlled Equity Offering Sales Agreement, is sufficient to fund operations for at least the next twelve months[225](index=225&type=chunk) [Key Business Metrics and Non-GAAP Financial Measures](index=41&type=section&id=Key%20Business%20Metrics%20and%20Non-GAAP%20Financial%20Measures) Backlog (in thousands) | Date | Backlog | | :--- | :--- | | March 31, 2024 | $222,380 | | December 31, 2023 | $268,566 | Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net loss | $(120,656) | $(23,447) | | Adjustments | $119,596 | $10,000 | | **Adjusted EBITDA** | **$(1,060)** | **$(13,460)** | Free Cash Flow (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,442) | $(18,666) | | Purchases of property and equipment | $(1,588) | $(8,565) | | **Free cash flow** | **$(8,030)** | **$(27,231)** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is a smaller reporting company and is not required to provide the information for this item - As a smaller reporting company, Intuitive Machines is exempt from providing quantitative and qualitative disclosures about market risk[256](index=256&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2024 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[257](index=257&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[258](index=258&type=chunk) [Part II – Other Information](index=49&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company faces ordinary course litigation, with management not expecting a material adverse financial impact - The company is party to various lawsuits, claims, and legal proceedings that arise in the ordinary course of business, but management does not expect them to have a material adverse effect[260](index=260&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) New risk factor highlights litigation vulnerability, including a recent threat over preferred stock conversion - A new risk factor highlights that periods of high stock price volatility may result in securities class action litigation or shareholder activism, which could be costly and divert management's attention[263](index=263&type=chunk) - The company disclosed receiving a letter on April 8, 2024, threatening litigation over the number of shares issued in a preferred stock conversion, believing it has strong defenses to any claim[263](index=263&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Unregistered equity sales details were previously disclosed in January 2024 Form 8-K filings - Details on unregistered sales of equity securities were previously reported on Form 8-K filings on January 11, 2024, and January 30, 2024[264](index=264&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) Several company insiders adopted Rule 10b5-1 trading plans for Class A common stock sales in Q1 2024 Insider Trading Arrangements Adopted in Q1 2024 | Name | Title | Date Entered | | :--- | :--- | :--- | | Kamal Ghaffarian | Chairman of the Board | 03/22/2024 | | Stephen Altemus | Chief Executive Officer and Director | 03/22/2024 | | Timothy Crain | Chief Growth Officer | 03/22/2024 | [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report, including management certifications and XBRL data - The report includes standard exhibits such as CEO and CFO certifications pursuant to SEC rules and the Sarbanes-Oxley Act, along with Inline XBRL documents[271](index=271&type=chunk)

Part I [Item 1. Business](index=8&type=section&id=Item%201.%20Business) Intuitive Machines is a space infrastructure company with a first-mover advantage in the lunar economy, supported by NASA contracts and a successful Moon landing - Intuitive Machines is a space infrastructure and services company with a first-mover advantage, evidenced by three NASA Commercial Lunar Payload Services (CLPS) awards and the successful IM-1 mission, which saw its Nova-C lander become the **first U.S. vehicle to soft-land on the Moon since 1972**[19](index=19&type=chunk) - The company operates across four business units: **Lunar Access Services** (lunar landers), **Orbital Services** (satellite servicing), **Lunar Data Services** (lunar communications network), and **Space Products and Infrastructure** (propulsion, navigation systems)[30](index=30&type=chunk) - The company's growth strategy focuses on leveraging its first-mover advantage in lunar transport, expanding into adjacent lunar markets like power and habitats, and pursuing opportunities in the orbital services market[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) Key Business Metrics (as of December 31, 2023) | Metric | Value | | :--- | :--- | | **Contracted Backlog** | $268.6 million | | **FY 2023 Revenue** | $79.5 million | | **Lunar Access Services Contracted Value** | $336.6 million (NASA, commercial, rideshares) | | **OMES III Contract Value (Up to)** | $720.0 million | [Item 1A. Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant operational, financial, and structural risks, including a limited history, high customer concentration, and a 'controlled company' structure - Business and operational risks include a **limited operating history**, dependence on key personnel, intense competition, potential for launch failures or accidents, and reliance on a limited number of suppliers[85](index=85&type=chunk)[87](index=87&type=chunk)[93](index=93&type=chunk)[103](index=103&type=chunk) - The company has significant customer concentration, with approximately **74% of its revenues** for the year ended December 31, 2023, coming from one major customer[92](index=92&type=chunk) - The business is **heavily dependent on U.S. government contracts**, which are subject to partial funding, immediate termination, and heavy regulation[96](index=96&type=chunk)[134](index=134&type=chunk) - Structural and financial risks include the company's holding company structure (Up-C), which makes it dependent on distributions from its operating subsidiary to pay taxes and expenses, including substantial obligations under a **Tax Receivable Agreement**[154](index=154&type=chunk)[159](index=159&type=chunk) - The company is a **"controlled company"** as its founders control a majority of the voting power, allowing them to rely on exemptions from certain corporate governance requirements[173](index=173&type=chunk)[185](index=185&type=chunk) [Item 1B. Unresolved Staff Comments](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[194](index=194&type=chunk) [Item 1C. Cybersecurity](index=36&type=section&id=Item%201C.%20Cybersecurity) The company maintains a multi-layered cybersecurity strategy overseen by the Board and is compliant with key government contractor standards - The company employs a multi-layered approach to cybersecurity, using next-generation firewalls, malware blocking software, and vulnerability reporting tools, and engages third-party consultants for risk assessments[198](index=198&type=chunk) - The **Board of Directors maintains oversight of cybersecurity**, while the IT organization manages the overall security strategy and response[200](index=200&type=chunk)[201](index=201&type=chunk) - As a government contractor, the company complies with standards including ISO/IEC 27001, NIST SP 800 series, and is progressing towards **Cybersecurity Maturity Model Certification (CMMC) 2.0**[202](index=202&type=chunk) - The company has not experienced any cybersecurity incidents that have had a **material impact** on its business, operations, or financial condition[199](index=199&type=chunk) [Item 2. Properties](index=38&type=section&id=Item%202.%20Properties) The company's primary facility is its new Houston headquarters, with a significant employee presence at NASA's Goddard Space Flight Center - The main facility is the **Lunar Production and Operations Center (LPOC)** in Houston, Texas, completed in late 2023, which covers over 100,000 square feet[203](index=203&type=chunk) - The company also has a significant presence in Greenbelt, Maryland, with **over 100 employees** working at the Goddard Space Flight Center to support the OMES III contract for NASA[204](index=204&type=chunk) [Item 3. Legal Proceedings](index=38&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings arising in the ordinary course of business - The company is involved in various legal proceedings in the ordinary course of business, with further details provided in **Note 14** of the consolidated financial statements[205](index=205&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[206](index=206&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=39&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on Nasdaq with a concentrated number of holders, and there is no current plan to issue dividends - Class A Common Stock and Public Warrants trade on Nasdaq under the symbols **"LUNR"** and **"LUNRW"**[208](index=208&type=chunk) - As of March 15, 2024, there were **46 holders of record** of Class A Common Stock[209](index=209&type=chunk) - The company has **never paid dividends** and has no current plans to pay them in the foreseeable future[210](index=210&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue decreased in 2023, but net income turned positive due to non-operating gains, while the operating loss widened and the company secured new funding - The decrease in 2023 revenue was primarily driven by a **$27.9 million reduction** in revenue from the IM-1 mission, partially offset by a **$19.5 million increase** from engineering services[272](index=272&type=chunk) - The significant increase in net income was primarily due to non-operating gains, including a **$66.3 million favorable change** in the fair value of earn-out liabilities[278](index=278&type=chunk) - Backlog increased by $66.7 million to **$268.6 million** as of December 31, 2023, mainly due to new awards including the OMES III project[283](index=283&type=chunk)[284](index=284&type=chunk) - The company secured significant liquidity through the Business Combination ($34.1 million gross), a private placement ($20.0 million gross), and subsequent **warrant exercises and equity transactions in Q1 2024 ($60.6 million gross)**[296](index=296&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk) Results of Operations (Year Ended December 31) | (in thousands) | 2023 | 2022 | $ Change | | :--- | :--- | :--- | :--- | | **Revenue** | $79,521 | $85,946 | $(6,425) | | **Cost of revenue** | $100,472 | $75,513 | $24,959 | | **Operating loss** | $(56,237) | $(5,507) | $(50,730) | | **Total other income (expense), net** | $71,299 | $(921) | $72,220 | | **Net income (loss)** | $15,022 | $(6,405) | $21,427 | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, this disclosure is not required - The company is a smaller reporting company and is not required to provide this information[329](index=329&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=58&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements, which received an unqualified opinion from its independent auditor - The independent registered public accounting firm, Grant Thornton LLP, issued an **unqualified opinion** on the consolidated financial statements for the years ended December 31, 2023 and 2022[335](index=335&type=chunk) - The Business Combination in February 2023 was accounted for as a **reverse recapitalization**, with Intuitive Machines, LLC as the accounting acquirer[357](index=357&type=chunk) - Subsequent to year-end, in Q1 2024, the company raised approximately **$60.6 million in gross proceeds** from a series of warrant exercises and other equity transactions[374](index=374&type=chunk) Consolidated Balance Sheet Highlights (as of Dec 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | **Total Assets** | $85,908 | $67,004 | | **Total Liabilities** | $139,327 | $124,623 | | **Total Mezzanine Equity** | $209,863 | $0 | | **Total Shareholders' Deficit** | $(263,282) | $(57,619) | [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=101&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - None[561](index=561&type=chunk) [Item 9A. Controls and Procedures](index=101&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls over financial reporting were effective, with previously identified material weaknesses now remediated - Management concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2023[564](index=564&type=chunk) - Management assessed internal control over financial reporting using the COSO framework and concluded it was **effective** as of December 31, 2023[565](index=565&type=chunk)[566](index=566&type=chunk) - **Material weaknesses** previously reported in the 2022 Form 10-K related to revenue recognition, significant transactions, and segregation of duties were **successfully remediated** as of December 31, 2023[567](index=567&type=chunk)[568](index=568&type=chunk) [Item 9B. Other Information](index=103&type=section&id=Item%209B.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 trading plans in the fourth quarter - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the fourth quarter of 2023[572](index=572&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=104&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company's leadership and board structure are detailed, highlighting its status as a 'controlled company' exempt from certain governance rules - The executive team is led by co-founder **Stephen Altemus (CEO & President)**, with co-founder **Dr. Kamal Ghaffarian serving as Chairman of the Board**[574](index=574&type=chunk)[575](index=575&type=chunk)[585](index=585&type=chunk) - The Board is classified into three staggered three-year terms and has **four independent directors**[598](index=598&type=chunk)[606](index=606&type=chunk)[608](index=608&type=chunk) - The company qualifies as a **"controlled company"** under Nasdaq rules because its founders hold over 50% of the combined voting power, exempting it from certain governance requirements[604](index=604&type=chunk) - The Board has four standing committees: **Audit, Compensation, Nominating and Corporate Governance, and Conflicts**[606](index=606&type=chunk) [Item 11. Executive Compensation](index=111&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation for 2023 included base salaries and stock awards, with no cash bonuses paid for performance - **No discretionary cash bonuses** were paid to named executive officers for 2023; instead, the Board approved one-time special performance-based restricted stock unit (RSU) awards in February 2024[627](index=627&type=chunk)[630](index=630&type=chunk) - In May 2023, the company granted time-based RSUs to former CFO Erik Sallee (550,000 shares) and General Counsel Anna Jones (50,000 shares), which vest over four years[633](index=633&type=chunk) - The non-employee director compensation program includes an annual cash retainer of **$55,000** and an annual RSU award with a value of **$155,000**[654](index=654&type=chunk)[655](index=655&type=chunk)[659](index=659&type=chunk) 2023 Named Executive Officer Compensation | Name | Position | Total Compensation ($) | | :--- | :--- | :--- | | **Stephen Altemus** | President and CEO | 714,483 | | **Timothy Crain** | CTO | 441,190 | | **Erik Sallee** | Former CFO | 4,609,212 | | **Anna Jones** | General Counsel | 608,262 | [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=115&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Voting power is highly concentrated among the company's founders, who beneficially own over 83% of the total voting power - The company's capital structure includes Class A (1 vote/share) and Class C (3 votes/share) Common Stock, which **concentrates voting power with the founders**[661](index=661&type=chunk) - The company maintains two equity compensation plans: the 2021 Unit Option Plan and the **2023 Long Term Omnibus Incentive Plan**, which has 10,879,865 securities remaining available for future issuance[668](index=668&type=chunk)[670](index=670&type=chunk)[671](index=671&type=chunk) Security Ownership of Major Holders (as of March 15, 2024) | Beneficial Owner | % of Total Voting Power | | :--- | :--- | | **Dr. Kamal Ghaffarian (Chairman)** | 52.8% | | **Stephen Altemus (CEO)** | 18.9% | | **Dr. Timothy Crain (CGO)** | 12.0% | | **Armistice Capital, LLC** | 8.9% | | **All directors and executive officers as a group** | 83.4% | [Item 13. Certain Relationships and Related Transactions and Director Independence](index=118&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) The company engages in several related party transactions, primarily with entities affiliated with its Chairman, governed by a formal policy - In January 2024, Ghaffarian Enterprises, LLC, an entity affiliated with Chairman Dr. Kamal Ghaffarian, contributed **$10.0 million** to the company to repay a credit line in exchange for shares and warrants[673](index=673&type=chunk)[674](index=674&type=chunk)[675](index=675&type=chunk) - The company engages in ordinary course business with other entities affiliated with Dr. Ghaffarian, including **Axiom Space, X-energy, IBX/PTX, and ASES**[678](index=678&type=chunk)[679](index=679&type=chunk)[680](index=680&type=chunk)[682](index=682&type=chunk) - Key governance documents include the A&R Operating Agreement and the **Tax Receivable Agreement**, which requires the company to pay 85% of certain tax savings to original LLC members[685](index=685&type=chunk)[688](index=688&type=chunk) - The Board has a written **Related Person Transaction Policy** requiring review and approval of such transactions by the Audit Committee[703](index=703&type=chunk) [Item 14. Principal Accountant Fees and Services](index=124&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Total fees paid to the independent auditor, Grant Thornton LLP, increased significantly in 2023 to $3.1 million - The Audit Committee pre-approved all audit and non-audit services provided by Grant Thornton LLP, consistent with its charter and policies[711](index=711&type=chunk) Accountant Fees (in thousands) | Fee Type | 2023 | 2022 | | :--- | :--- | :--- | | **Audit fees** | $1,080 | $445 | | **Audit-related fees** | $828 | $1,225 | | **Tax fees** | $909 | $43 | | **All other fees** | $321 | $0 | | **Total fees** | **$3,138** | **$1,713** | Part IV [Item 15. Exhibits and Financial Statement Schedules](index=125&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including key agreements and certifications - This section provides an index of all exhibits filed with the annual report, including governance documents, material contracts, and required certifications[715](index=715&type=chunk)[717](index=717&type=chunk) [Item 16. Form 10-K Summary](index=127&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company elected not to provide a summary for this item - None[718](index=718&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ____________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number 001-40823 ____________________________ INTUITIVE MACHINES, INC. (Ex ...

Financial Performance - Total revenue for the three months ended June 30, 2023, was $17,993,000, a decrease of 6.36% from $19,217,000 in the same period of 2022[14]. - Operating loss for the three months ended June 30, 2023, was $13,183,000, compared to an operating loss of $2,219,000 for the same period in 2022, indicating a significant increase in losses[14]. - Net income for the three months ended June 30, 2023, was $18,777,000, a turnaround from a net loss of $2,554,000 in the same period of 2022[14]. - Net income attributable to Class A common shareholders for the three months ended June 30, 2023, was $28,866,000, compared to $19,178,000 for the same period in 2022[14]. - The company reported a net income attributable to the Company of $29,521 thousand for the quarter ended June 30, 2023, compared to a net loss of $(5,751) thousand for the same period in the previous year[23]. - Net loss for the six months ended June 30, 2023, was $4.67 million, an improvement from a net loss of $6.90 million in the same period of 2022[31]. Assets and Liabilities - Total assets as of June 30, 2023, were $95,763,000, up from $67,004,000 as of December 31, 2022, reflecting a growth of approximately 42.8%[12]. - Total liabilities increased to $168,582,000 as of June 30, 2023, compared to $124,623,000 as of December 31, 2022, representing a rise of about 35.3%[12]. - The company has a significant accumulated deficit of $665,456,000 as of June 30, 2023, compared to $72,587,000 as of December 31, 2022, indicating ongoing financial challenges[12]. - As of June 30, 2023, total shareholders' equity was $(678,272) thousand, reflecting a decrease from $(883,328) thousand as of March 31, 2023[21]. - As of June 30, 2023, the company's other current liabilities totaled $30,134,000, an increase from $15,178,000 as of December 31, 2022[91]. Cash Flow and Financing - Cash and cash equivalents increased to $39,087,000 as of June 30, 2023, from $25,764,000 as of December 31, 2022, marking a growth of approximately 51.5%[12]. - Net cash used in operating activities increased to $15.77 million for the six months ended June 30, 2023, compared to $11.14 million in the prior year[31]. - Net cash provided by financing activities was $49.30 million for the six months ended June 30, 2023, compared to $7.85 million in the same period of 2022[31]. - Cash flows from investing activities totaled $20.20 million for the six months ended June 30, 2023, significantly higher than $5.40 million in 2022[31]. - The company received approximately $34.1 million in gross proceeds from the Business Combination with IPAX on February 13, 2023[52]. Shareholder Information - The weighted average shares outstanding for basic shares was 15,705,265 for the three months ended June 30, 2023, compared to 15,543,800 for the same period in 2022[14]. - The balance of Class A common stock increased to 17,301,489 shares as of June 30, 2023, from 16,021,803 shares as of March 31, 2023[21]. - As of June 30, 2023, the total shares outstanding for Intuitive Machines, Inc. amounted to 86,728,243, with 17,301,489 shares of Class A Common Stock issued[142]. - The Series A Preferred Stock pays dividends at a rate of 10% of the original price per share, compounded semi-annually, and is convertible into Class A Common Stock at an initial conversion price of $12.00 per share[148][150]. Revenue Recognition - Revenue is recognized when performance obligations are satisfied, primarily through long-term contracts for advanced technology aerospace systems[68]. - The company utilizes the cost-to-cost method for revenue recognition, measuring performance based on contract costs incurred to date compared to total estimated contract costs[71]. - Fixed price contracts accounted for 89% of total revenue for the three months ended June 30, 2023, while time and materials contracts represented 11%[111]. - The Company recorded net losses related to contracts with customers of $7.0 million for the three months ended June 30, 2023, compared to zero in the same period of 2022[115]. - Remaining performance obligations totaled $73.4 million as of June 30, 2023, with an expectation to recognize 50-55% of this amount over the next six months[118]. Business Operations and Strategy - The company is focused on creating and operating space systems and infrastructure to support lunar exploration and resource utilization[33]. - Intuitive Machines, Inc. completed a business combination on February 13, 2023, resulting in a reorganization into an Up-C structure[36]. - The company holds a 90% interest in Space Network Solutions, LLC, which was formed to provide cyber security and communication services for lunar space missions[198]. - In Q2 2023, NASA awarded SNS, LLC a contract to support work related to the Joint Polar Satellite System, indicating a strategic partnership for future projects[199]. - The IX LLC JV is focused on developing nuclear space propulsion systems and received an award from Battelle Energy Alliance to design a fission surface power system for lunar operations[197]. Share-Based Compensation - Share-based compensation expense for the quarter was $985 thousand, indicating an increase from $101 thousand in the previous year[23]. - The company recognized share-based compensation expense based on the fair value of awards on the grant date, using the Black-Scholes option pricing model[90]. - Share-based compensation expense related to options was $278 thousand for the three months and $485 thousand for the six months ended June 30, 2023, compared to $124 thousand and $240 thousand for the same periods in 2022[167]. - The company had $1.2 million in estimated unrecognized share-based compensation costs related to outstanding unit options expected to be recognized over a weighted average period of 1.81 years[167]. Tax and Regulatory Matters - The company uses the asset and liability method for accounting income taxes, recognizing deferred tax assets and liabilities based on enacted income tax rates[82]. - The company has an uncertain tax position related to launch-related costs, pending IRS consent for a change in accounting method as of June 30, 2023[136]. - The company recognized a combined U.S. federal and state tax benefit of $3.5 million for the three months ended June 30, 2023, compared to an expense of $0.4 million for the same period in 2022[135].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ____________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission file number 001-40823 ____________________________ INTUITIVE MACHINES, INC. (Exact ...

Lunar Economy and Market Position - Intuitive Machines has secured three Commercial Lunar Payload Services (CLPS) awards, more than any competitor, establishing a strong position in the lunar economy[37]. - The Lunar Services market is estimated to be approximately $105 billion from 2021 to 2030, driven by crewed missions, infrastructure, and technology[46]. - Intuitive Machines' Lunar Access Services business unit has a contracted value of $289 million from NASA CLPS and Tipping Point contracts as of December 31, 2022[53]. - The company is positioned as a first mover in lunar transport with its IM-1 mission, which aims to be the first commercial lander on the Moon since Apollo 17 in 1972[69]. - The total addressable market for Intuitive Machines across space exploration, national security, and commercial satellite services is over $175 billion annually[45]. Financial Performance and Projections - The company achieved revenues of $86.6 million in the fiscal year 2022, with approximately $142.1 million in revenues already contracted for 2023[69]. - The total addressable market for the company is estimated to be approximately $120.0 billion over the next decade, including significant spending from the Department of Defense and Space Force[69]. - The company anticipates continued operating losses and will require substantial additional capital to fund operations and R&D programs[161]. - The company's financial results may vary significantly from quarter to quarter due to fixed expenses and the timing of revenue recognition[165]. - Payments under the TRA will reduce overall cash flow available to the company, potentially impacting liquidity and business operations[177]. Operational Capabilities and Growth - The Nova-C lander is designed to carry up to 130 kilograms of cargo and is intended to execute multiple experiments on the lunar surface in 2023[51]. - The company is pursuing a $720 million prime engineering contract for the NASA Landsat Servicing mission, indicating strategic growth opportunities[58]. - The company has manufacturing capabilities that include two EOS M290 machines, enabling rapid production of high-quality components for space applications[64]. - The company is constructing a state-of-the-art manufacturing and operations center in Spaceport Houston, expected to be operational in Q3 2023[84]. - The company has a robust R&D team focused on innovating space technology and optimizing its proprietary technology platform[78]. Risks and Challenges - The company faces significant costs related to compliance with various governmental regulations, which can materially impact capital expenditures and earnings[90]. - The competitive landscape includes intense pressure on pricing and market share due to existing and new competitors, as well as industry consolidation[102]. - The COVID-19 pandemic has disrupted operations, leading to delays in supply chains and decreased operational efficiency, which may continue to affect financial results[105]. - Over 80% of the company's revenues come from a small number of customers, creating risks if any large customer changes purchasing patterns[114]. - The company may experience production delays due to the handling of hazardous materials, which could disrupt operations and lead to financial liabilities[117]. Compliance and Regulatory Environment - The company must comply with stringent U.S. import and export control laws, including ITAR, which may pose risks to its competitive position[91]. - The company is subject to stringent U.S. export control laws, and violations could lead to significant penalties and impact business operations[142]. - Changes in export control regulations may restrict operations and require additional authorizations, potentially increasing costs and delays[144]. - Compliance with various laws and regulations is critical, and any changes could adversely affect operations and financial results[127]. Corporate Governance and Ownership Structure - The Founders control approximately 83.2% of the combined voting power of the common stock, which may limit the influence of public stockholders on corporate matters[188]. - The company is classified as a "controlled company" under Nasdaq rules, exempting it from certain corporate governance requirements, which may not provide the same protections to stockholders[200]. - The Board has the authority to issue preferred stock without stockholder approval, which could dilute the ownership of hostile acquirers[193]. - The requirement for a special meeting of stockholders to be called only by the Board may delay stockholder actions, including the removal of directors[198]. Litigation and Legal Matters - The company is involved in various pending and threatened litigation matters that could adversely affect its business[211]. - Negative audit findings on U.S. government contracts could result in revenue reductions or termination of contracts, impacting overall business operations[150]. - The company did not design effective controls over revenue recognition and performance obligations, which may lead to material misstatements in financial statements[139]. Tax and Financial Agreements - The Tax Receivable Agreement (TRA) requires cash payments to TRA Holders equal to 85% of cash tax savings, estimated at approximately $170.4 million over 20 years, based on a $10.00 per share trading price[176]. - The company expects to pay approximately $148.2 million under the TRA over the 20-year period, benefiting from the remaining 13% of tax benefits[176]. - If a Change of Control occurs, the company must make an immediate payment under the TRA, which could exceed actual future tax benefits realized[177].