York Space Systems (YSS) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01If we experience cost overruns on our contracts, we would have to absorb the excess costs which could adversely affect our financial results
2. 02We derive a substantial amount of our revenues and backlog from our largest customer, the Space Development Agency. A material adverse change in the SDA’s mandate could materially reduce our revenues and backlog
3. 03Our quarterly operating results have fluctuated and may in the future fluctuate and be less than prior periods, our projections or the expectations of securities analysts or investors, which could materially adversely affect our stock price
4. 04Our limited operating history in an evolving industry makes it difficult to evaluate our business and future prospects and the risks and challenges we may encounter
5. 05If we fail to implement and maintain an effective system of internal control over financial reporting, we may not be able to accurately determine or disclose our financial results. As a result, our stockholders could lose confidence in our financial results
6. 06Failure to comply with the requirements of the National Industrial Security Program Operating Manual Rule could result in interruption, delay, or suspension of our ability to provide our products and services and could result in loss of current and future business with the U.S. government
7. 07If we fail to establish and maintain important relationships with government agencies and prime contractors, our ability to successfully maintain and develop new business could be materially adversely affected
8. 08We face significant competition in the global space and satellite market
9. 09If we are unable to manage the increasing technological complexity of our business, or achieve or manage our expected growth, our business could be adversely affected
10. 10If our spacecraft systems and related software and components fail to operate as intended, we may experience claims for product failures, schedule delays or other problems with existing or new products, which could have a material adverse effect on our business, financial condition, and results of operations
11. 11Our revenue, results of operations and reputation may be negatively impacted if our products contain defects or fail to operate in the expected manner
12. 12Our future revenue and operating results are dependent on our ability to generate a sustainable order rate for our products and services and develop new technologies to meet the needs of our customers or potential new customers
13. 13Our inability to hire or retain key personnel could have a material adverse effect on us
14. 14We often rely on a single vendor or a limited number of vendors to provide certain key products or services and the inability of these key vendors to meet our needs could have a material adverse effect on our business
15. 15If critical components used to manufacture our products or used in our development programs become scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our development programs, which could damage our business
16. 16Our leases may be terminated or we may be unable to renew our leases on acceptable terms and if we wish to relocate, we may incur additional costs if we terminate a lease
17. 17Our business may be adversely affected by changes in budgetary priorities of the U.S. government
18. 18Disruptions in U.S. government operations and funding could have a material adverse effect on our revenues, earnings, and cash flows, and otherwise adversely affect our financial condition
19. 19Uncertain global macro-economic and political conditions could materially adversely affect our results of operations and financial condition
20. 20The market for spacecraft platforms and satellite software is still emerging, and shifting, and the market may not achieve the growth potential we expect
21. 21We may experience difficulties or disruptions in consummating future acquisitions and integrating the operations of acquired companies into our business, or entering into any partnerships or joint ventures, and in realizing the expected benefits of these transactions
22. 22We may not be successful in developing new technology, and the technology we are successful in developing may not meet the needs of our customers or potential new customers
23. 23We are subject to certain unique business risks as a result of supplying services to the U.S. government
24. 24Many of our contracts are government contracts or issued under government contracts. The inability to comply with any of our contracts or meet eligibility requirements may result in financial liabilities, failure to receive security clearance certifications, and loss of current and future business
25. 25Some of our contracts with the U.S. government allow it to use technical data developed under the contracts and to disclose technical data to third parties, which could harm our ability to compete
26. 26Due to the competitive process to obtain contracts and the likelihood of bid protests, we may be unable to achieve or sustain revenue growth and profitability
27. 27We may use artificial intelligence 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
28. 28Certain future operational facilities may require significant expenditures in capital improvements and operating expenses to develop and foster basic levels of service needed for our operations, and the ongoing need to maintain existing operational facilities requires us to expend capital
29. 29We are routinely subject to audit by our customers on government contracts and the results of those audits could have an adverse effect on our business, reputation and results of operations
30. 30We may be unable to obtain or maintain required authorization or contractual arrangements
31. 31We may need to invest in new information technology systems and infrastructure to scale our operations and meet compliance requirements
32. 32Our customers’ inability to obtain financing for their purchases from us and/or their inability to obtain financing to maintain their business could have a material adverse effect on our business
33. 33Interruption or failure of our infrastructure, including our information technology and communications systems, could hurt our ability to effectively perform our daily operations and provide and produce our products and services, which could damage our reputation and harm our operating results
34. 34Our products have a finite useful life
35. 35Tariffs on certain imports to the United States and other potential changes to U.S. tariff and import/export regulations could have a material adverse effect on global economic conditions and our business, financial condition, and results of operations
36. 36If we are unable to adapt to and satisfy customer demands with respect to our product and service offerings in a timely and cost-effective manner, or if we are unable to manufacture our spacecraft platforms at a quantity and quality that our customers demand, our ability to grow our business may suffer
37. 37We have classified contracts with the U.S. government, which may limit investor insight into portions of our business
38. 38Failure to maintain a level of corporate social responsibility could damage our reputation and could materially adversely affect our business, financial condition, and results of operations
39. 39We are subject to many hazards and operational risks that can disrupt our business, including interruptions or disruptions in service at our headquarters in Colorado, which could have a material adverse effect on our business, financial condition, and results of operations
40. 40Our operations depend on our manufacturing facilities, which are subject to physical and other risks that could disrupt production
41. 41Adverse publicity stemming from any incident involving us, our competitors, or our customers could have a material adverse effect on our business, financial condition, and results of operations
42. 42A preference for small, small disadvantaged, service-disabled veteran-owned, woman-owned businesses or other preferred socioeconomic designations could impact our ability to be a prime contractor and limit our opportunity to work as a subcontractor on certain governmental procurements
43. 43Labor-related matters, including labor disputes, may adversely affect our operations
44. 44Our cash flow and profitability could be reduced if expenditures are incurred prior to the final receipt of a contract
45. 45We are highly dependent on the services of Dirk Wallinger, our President, Chief Executive Officer and Founder, and if we are unable to retain Mr. Wallinger, our ability to compete could be harmed
46. 46We may need to raise additional capital, and we cannot be sure that additional financing will be available
47. 47We have a history of losses, we anticipate increasing operating expenses and capital expenditures in the future and we may not be able to achieve and, if ever achieved, maintain profitability
48. 48If we fail to manage our growth effectively, we may be unable to execute our business plan and our business, financial condition, and results of operations could be harmed
49. 49Changes in our accounting estimates and assumptions could negatively affect our financial position and results of operations
50. 50A significant portion of our management team has limited experience managing a public company

Risks Related to Litigation and Regulation

1. 51Our business is subject to various regulatory risks that could adversely affect our operations
2. 52We may become involved in litigation that may materially adversely affect us
3. 53Our 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
4. 54Our business and operations could be negatively affected if we become subject to any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of business and growth strategy, and impact our stock price
5. 55Our proprietary software may not operate properly, which could damage our reputation, give rise to claims against us or divert application of our resources from other purposes, any of which could harm our business
6. 56A failure of our information technology systems, physical or electronic security protections, or an interruption in their operation due to internal or external factors including cyberattacks or insider threats, could have a material adverse effect on our business, financial condition, or results of operations
7. 57The U.S. government’s determination to award a future contract or contract option may be challenged by an interested party, and, if that challenge is successful, that future contract or option may be terminated
8. 58Our 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
9. 59Our insurance, customer indemnifications or other liability protections may be insufficient to protect us from product and other liability claims or losses
10. 60Contracting in the defense industry is subject to significant regulation, including rules related to bidding, billing, and accounting kickbacks and false claims, and any non-compliance could subject us to fines and penalties or possible debarment
11. 61Failure to comply with anti-corruption laws, including the FCPA and similar laws associated with our activities outside of the United States, could subject us to penalties and other adverse consequences
12. 62We use third-party licensed software and services in or with our solutions, and the inability to maintain these licenses and services arrangements, or issues with the software we license or services we leverage, could result in increased costs or reduced service levels, which would adversely affect our business
13. 63Protecting and defending against intellectual property claims may have a material adverse effect on our business
14. 64Environmental matters, including costs associated with compliance and remediation efforts and government and third-party claims, could have a material adverse effect on our reputation and our business, financial condition, and results of operations
15. 65Our 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
16. 66Laws and regulations designed to address climate change may result in additional compliance costs
17. 67Efforts by the U.S. government to revise its organizational conflict of interest rules could limit our ability to successfully compete for new contracts or task orders, which would materially adversely affect our business, financial condition, and results of operations
18. 68We may experience claims for product failures, schedule delays or other problems with existing or new products
19. 69New sustainability and climate-related disclosure obligations could result in unforeseen costs associated with compliance, government and third-party claims, operations, and increased reputational and litigation risk
20. 70Our ability to use our net operating loss carryforwards may be limited
21. 71We entered into a Tax Receivable Agreement that requires us to make payments in relation to certain tax attributes of York Space Systems and its subsidiaries to our pre-IPO owner (or certain transferees or successors), and such payments may be substantial
22. 72The Tax Receivable Agreement requires us to make cash payments to TRA Holders 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
23. 73The amounts that we may be required to pay to TRA Holders under the Tax Receivable Agreement may be accelerated in certain circumstances and may also significantly exceed the actual tax benefits that we ultimately realize
24. 74We may not be able to realize all or a portion of the tax benefits that are currently expected to result from the tax attributes covered by the Tax Receivable Agreement and from payments made under the Tax Receivable Agreement
25. 75The Tax Receivable Agreement will continue to be payable regardless of whether TRA Holders or its beneficial owners continue to own an interest in York Space Systems

Risks Related to Our Indebtedness

1. 76Our substantial indebtedness could materially adversely affect our financial condition
2. 77We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful
3. 78Agreements governing our current and future indebtedness will contain covenants that restrict our current and future operations, including our ability to respond to changes or to take certain actions

Risks Related to Ownership of Our Common Stock

1. 79The market price of our common stock may be volatile or may decline steeply or suddenly regardless of our operating performance. You may not be able to resell your shares at or above the price at which you purchased such shares and may lose all or part of your investment
2. 80An active trading market for our common stock may never develop or be sustained
3. 81Future sales of our common stock and other actions by existing stockholders could cause our stock price to decline
4. 82Your ability to achieve a return on your investment will depend on appreciation in the price of our common stock because we currently do not intend to pay dividends on our common stock, and our indebtedness could limit our ability to pay dividends on our common stock
5. 83Future issuances of our common stock could result in significant dilution to our stockholders, dilute the voting power of our common stock and depress the market price of our common stock
6. 84We will incur increased costs and devote substantial management time as a result of operating as a public company
7. 85We are an “emerging growth company” and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors

Risks Related to Our Organizational Structure

1. 86AE Industrial Partners has significant influence over us, and its interests may conflict with ours or yours in the future
2. 87AE Industrial Partners and its respective affiliates have the ability to exercise significant influence over us, which could delay or prevent a change of corporate control or result in the entrenchment of our management and/or our board of directors
3. 88Provisions in our certificate of incorporation and bylaws could make a merger, tender offer, or proxy contest difficult, thereby depressing the trading price of our common stock
4. 89Our certificate of incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities
5. 90We are a “controlled company” within the meaning of the NYSE rules and, as a result, qualify for and intend to rely on exemptions from certain corporate governance requirements