Intuitive Machines (LUNR) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01Our ability to be successful depends upon the efforts of our Board and key personnel and the loss of such persons could negatively impact the operations and profitability of our business
2. 02Our limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter
3. 03If we fail to manage our growth effectively, we may be unable to execute our business plan and our business, results of operations, and financial condition could be harmed
4. 04Customer concentration creates risks for our business
5. 05Competition 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
6. 06Disruptions in U.S. government operations and funding could harm our business, results of operations, and financial condition could be harmed
7. 07Unsatisfactory performance of our spaceflight systems or security incidents at our facilities could have a material adverse effect on our business, results of operations, and financial condition
8. 08The market for commercial spaceflight is still emerging and may not achieve the growth potential we expect or may grow more slowly than expected
9. 09We may experience delayed satellite launches, failure of our satellites to reach their planned orbital locations, significant increases in production costs of our satellites. Any such issue could harm our business, results of operations and financial condition
10. 10Our business involves significant risks and uncertainties that may not be covered by insurance. Also, due to the inherent risks associated with commercial spaceflight, there is the possibility that any accident or catastrophe could lead to the loss of human life or a medical emergency
11. 11The release, unplanned ignition, explosion, or improper handling of dangerous materials used in our business could disrupt and harm our business, results of operations, and financial condition
12. 12We rely on a limited number of suppliers for certain materials and supplied components. We may not be able to obtain sufficient materials or supplied components to meet our manufacturing and operating needs, or obtain such materials on favorable terms
13. 13Our revenue, results of operations and reputation may be negatively impacted if our products contain defects or fail to operate in the expected manner
14. 14Rising inflation may materially impact our business, results of operations and financial condition
15. 15We are dependent on technology and automated systems to operate our business
16. 16We 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
17. 17Global pandemics, epidemics, outbreaks of infectious diseases or public health crises have disrupted our business and could have a material adverse effect on our business, results of operations and financial condition

Risks Relating to Compliance with Law, Government Regulation and Litigation

1. 18Our business with various governmental entities is subject to the policies, priorities, regulations, mandates and funding levels of such governmental entities and may be negatively or positively impacted by any change thereto
2. 19If we are unable to protect the confidentiality of our trade secrets and know-how, our business and competitive position may be harmed
3. 20Our systems utilize third-party open source software, and any failure to comply with the terms of one or more of these open source software licenses could adversely affect our business, subject us to litigation, or create potential liability
4. 21Uncertain macro-economic and political conditions could materially adversely affect our business, results of operations and financial condition

Risks Relating to Our Capital Resources

1. 22Our indebtedness could expose us to risks that could adversely affect our business, results of operations and financial condition
2. 23Our actual results may differ significantly from our earnings guidance
3. 24We are a “smaller reporting company” under federal securities laws and we cannot be certain whether the reduced reporting requirements applicable to such companies will make our common stock less attractive to investors
4. 25Our operating results may vary significantly from quarter to quarter
5. 26Any increased purchase requests we receive as a result of the U.S. government’s fiscal year end would serve to increase our third or fourth quarter revenue, but will generally decrease profit margins for that quarter, as these activities generally are not as profitable as our typical offerings
6. 27Changes in our accounting estimates and assumptions could negatively affect our business, results of operations and financial position

Risks Relating to Our Organizational Structure

1. 28The Tax Receivable Agreement with the TRA Holders (as defined below) requires us to make cash payments to them in respect of certain tax benefits to which we may become entitled, and we expect that the payments we will be required to make will be substantial
2. 29In certain cases, payments under the Tax Receivable Agreement to the TRA Holders may be accelerated and/or significantly exceed any actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement
3. 30We will not be reimbursed for any payments made to the TRA Holders under the Tax Receivable Agreement in the event that any tax benefits are disallowed
4. 31we would not be able to recover payments we previously made under the Tax Receivable Agreement even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status
5. 32If we were deemed to be an investment company under the Investment Company Act, as a result of our ownership of Intuitive Machines, LLC, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business
6. 33We and Intuitive Machines, LLC are controlled by our Founders (as defined below), whose interests may differ from those of our public stockholders
7. 34We cannot predict the impact our multi-class structure may have on our stock price

Risks Relating to the Ownership of Our Class A Common Stock

1. 35Delaware law and the Certificate of Incorporation and our bylaws (the “By-Laws”) contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
2. 36These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Board or management
3. 37Our business and operations could be negatively affected if it becomes subject to certain claims, litigation or shareholder activism, which could, among other things, cause us to incur significant expense, negatively impact our reputation, hinder execution of business and growth strategy and impact our stock price
4. 38We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of Class A Common Stock, which could depress the trading price of our Class A Common Stock
5. 39Sales of a substantial number of our securities in the public market by our existing securityholders could cause the price of our shares of Common Stock to fall
6. 40Our issuance of additional capital stock in connection with financings, acquisitions, investments, the Equity Incentive Plan or otherwise will dilute all other stockholders