FLY 10-K & 10-Q changes, risk factors and insider trading

In addition to the information set forth in this Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Part I—Item 1A—Risk FactorFactors” of our most recent Annual Report on Form 10-K, with such factors incorporated herein by reference. There have been no material changes in our risk factors from those included in our Form 10-K.

The following is a discussion and analysis of our financial condition and results of operations as of, and for,for the periods presented. The following discussion and analysis of our financial condition and result of operations should be read in conjunction with the sections entitled “Risk Factors”, “Cautionary Note Regarding Forward-Looking Statements” and with the unaudited condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q. Certain information contained in this discussion and analysis includes forward-looking statements, including statements regarding our expectations for the future of our business and our liquidity and capital resources as well as other non-historical statements. These statements are based upon our current plans, expectations, and beliefs, and are subject to numerous risks and uncertainties, including those described in the “Risk Factors” section of our Annual Report on Form 10-K and the “Cautionary Note Regarding Forward-Looking Statements” sections of this Quarterly Report on Form 10-Q. Our actual results may differ materially from those contained in or implied by these forward-looking statements.

Our company is a market-leading space and defense technology company providing comprehensive mission solutions to national security, government, and commercial customers with an established track record of success. Our mission is to reliably and repeatedly launch, land, and operate space systems from Earth to the Moon and beyond. Backed by our world-class team and proven technology, we have designed, developed, and deployed our class-leading launch vehicles and dynamic spacecraft solutions,solutions to support critical customer missions across the space domain. We operate as a single reportable segment and serve this critical domain through our differentiated and scalable platforms of Launch and Spacecraft Solutions. Our offerings include:

Launch: Our launch vehicles provide dedicated and responsive launch capabilities for national security, government, and commercial customers. We are the only U.S. company with a liquid-powered orbital launch vehicle in the 1,000-kilogram payload class. Our Alpha launch vehicle employs a distinct combination of technologies designed to ensure high performance and efficiency at low cost. It uses a unique lightweight, rigid, and thermally insulated carbon composite technology for both the primary rocket structure as well as the propellant tanks, which ensures more of the usable mass goes to the mission payload. Alpha is also powered by our patented tap-off cycle engine technology, which is more efficient than legacy systems and provides greater reliability by employing fewer parts than those in traditional rocket engines. We have utilized this proprietary technology to develop and testin all of our rocket enginesengines, which have been developed and tested in-house. Alpha has five engines: four first stage Reaver engines, and one second stage Lightning engine. In addition to its track record of successful, dedicated, and responsive launch, Alpha is also designed to support testing of hypersonic payloads, providing significant growth opportunities for hypersonic deterrents, reconnaissance, and future national security needs. We are also expanding our launch pad operations from Vandenberg Space Force Base to add Virginia’s Mid-Atlantic Regional Spaceport on Wallops Island and the Esrange Space Center in Sweden to support more missions, customers, and additional launch cadence opportunities. Built in collaboration with the SSC Space, the launch pad in Sweden will be our first expansion outside the U.S. and an initial step in our international market strategy. Sweden represents a proving ground for expansion of Alpha production and operations to U.S. allied nations – such as the United Kingdom, Japan, South Korea, Australia, and additional opportunities in Europe and the Middle East – as we look to serve global market demand for a sovereign-led franchise business model.

Spacecraft Solutions: Firefly is the only company to achieve a fully successful Moon landing, completing 100% of our mission objectives set out before launch. Following the first Blue Ghost Mission 1,mission, we have a total of threefour additional missions under NASA CLPS task orders. We expect our Blue Ghost lander to fly regular missions to the Moon, with payload services customized to the technology and exploration goals of our customers. Offering ride-share opportunities and dedicated missions, Blue Ghost is built to host and deliver payloads nearly anywhere on the lunar surfacesurface, andas well as other planetary bodies. The next Blue Ghost Mission 2 is expected to land on the far side of the Moon and conduct at least 10 days of Blue Ghost lander lunar surface operations with the Blue Ghost lander,operations, with an Elytra spacecraft supporting as a communications relay. This Elytra spacecraft is expected to remain operational in lunar orbit for up to five years. The second Blue Ghost Mission 2mission is fully manifested with both NASA and commercial payloads, including a commercial rover and a ride-sharing international satellite. The remaining Blue Ghost Missionmissions 3include will deliver NASA and commercial payloadsone to the Moon’s Gruithuisen Domes and(for which we have selected Blue Origin as a partner to develop a rover to be delivered to the lunar surface.surface), as well as another to the lunar south pole. Or most recent award will return to the Moons near side. All Blue Ghost MissionMissions 4are was awarded in July 2025 bycarrying NASA and willcommercial land at the Moon’s south pole region.payloads.

Elytra is a dynamic spacecraft that is highly maneuverable and extensible to perform hundreds of rendezvous proximity operations in support of space domain awareness and warfighting missions,warfighting, long-range communications relay missions,relay, on-orbit edge processing missions,processing, and advanced Spacespace Explorationexploration missions. A constellation of Elytra is expected to power a future long-haul communications relay for multiple customers. Blue Ghost and Elytra are highly complementary and compatible technologies that share a common core. Most of Elytra’s core hardware and software were proven at a variety of orbits through Blue Ghost’s successful Missionfirst 1.mission. As part of our end-to-end space services, Elytra offers robust on-orbit solutions and responsive defense capabilities when and where customers need them. Elytra is currently contracted to perform a responsive on-orbit mission in support of the U.S. Department of War’s (the “DoW”) Defense Innovation Unit (“DIU”). During this mission, Elytra will serve as a space maneuver vehicle to perform a series of on-orbit tasks including space domain awareness operations in Low Earth Orbit (“LEO”). Firefly is also contracted with NASA’s Jet Propulsion Laboratory to deliver four drones to the Moon’s south pole using an Elytra in support of the agency’s MoonFall mission. Available to launch on Alpha and Eclipse, our Elytra vehicles are positioned to service the entire lifecycle of government and commercial missions. This unique interoperability makes Firefly a one-stop shop and partner of choice for national security, government, and commercial customers requiring these capabilities.

On October 31, 2025, we closedcompleted the acquisition of SciTec, which bolsters Spacecraft Solutions hardware with AI-enabled defense software proven in operations for missile warning and defense, intelligence, surveillance and reconnaissance, space domain awareness, remote sensing and analysis, and autonomous command and control. SciTec'sSciTec’s big data processing for national security and commercial customers includes cloud-based, on-premise, and edge processing of high-volume data at rate from satellites across all orbits to enable rapid decision making for warfighters, supports defense applications, and unlocks new service categories for commercial and government deep space missions. More broadly, SciTec'sSciTec’s support of national security programs advances U.S. and allied defense capabilities, including Golden Dome, with a full suite of hardware and software for space-based interceptor missions, hypersonic test missions, and space domain awareness missions.

Customers: Our track record of success and our reputation as a trusted provider for our customers results in a highly attractive, diversified business model defined by significant backlog and cash flow visibility. Strong customer demand backs our financial profile with approximately $1.3$1.5 billion in backlog and multi-launch agreements across our product lines as of MarchJune 31,30, 2026. Underpinning our financial profile is the combination of efficient contract structure and milestone-based billing. Before launch, we typically have collected approximately 90% of the total contract value, which is highly advantageous as production ramps. We are also differentiated in our ability to successfully execute on firm-fixed-price contracts. We are ahead of the curve as the industry shifts in favor of firm-fixed-price contracts and are well-positioned to capitalize on this change. The addition of SciTec further diversifieddiversifies our customer base and addedadds a mixture of cost-plus and firm-fixed-price contracts.

As the space market continues to grow and evolve, we are well positionedwell-positioned to serve our customers’ most complex missions with rapid response times and purpose-built solutions. Our collaborations with leading national security agencies and aerospace companies, such as Lockheed Martin Corporation, Northrop Grumman, L3Harris, NASA, the U.S. Space Force, Missile Defense Agency, National Geospatial-Intelligence Agency, Space Development Agency, and the National Reconnaissance Office, and NASAOffice demonstrate the value and criticality of our new space defense and technology leadership in this market.

Operations: We strategically deploy capital to build state-of-the-art infrastructure to design, produce, test, and manufacture our products to the highest standard at a regular cadence. OurWe have four primary facilities supporting our corporate operations and launch vehicle and spacecraft production – Nexus corporate headquarters, Hive and Cortex spacecraft facilities, and Rocket Ranch manufacturing and testing site–site, which are only 25 miles apart, providing unique proximity between design, manufacturing, and production. The proximity of our corethese facilities enables agile and rapid vehicle development and production at lower cost versus competitors. The acquisition of SciTec adds data centers, modeling and simulation labs, mission operations centers, and classified infrastructure with six locations strategically positioned near key space and defense customers.

Our purpose-built research and development, manufacturing, and testing footprint is the product of significant investments and the backbone of our manufacturing process. We designed our advanced manufacturing process through years of optimization that now allow us to replicate our additional facilities with significantly less capital outlay. Each of our launch sites were chosen intentionally to enhance flexibility for our customers. Our early investment in cutting-edge technology and best-in-class facilities is a competitive advantage, creating a platform primed for continued growth. The acquisition of SciTec added data centers, modeling and simulation labs, mission operations centers, and classified infrastructure with six locations strategically positioned near key space and defense customers.

We view backlog as a key measure of our future business prospects. We monitor our backlog because we believe it is a forward-looking indicator of potential salesrevenue which can be helpful to investors in evaluating the performance of our business and identifying trends over time. Although backlog reflects business associated with contracts that are considered to be firm, terminations, amendments, or contract cancellations may occur, which could result in a reduction in our total backlog and potential future revenue that never gets recognized.

In recent years, geopolitical instability, including wars and conflicts, as well as impacts from other global events, have resulted in opportunities for companies in the space and defense technology market. However, certain disruptions to the global economy, including market disruptions, monetary, and fiscal policy uncertainty, supply chain challenges, high interest rates and inflationary pressures have contributed to an inflationary environment that has adversely affected, and may continue to adversely affect, the price and availability of certain products and services necessary for our operations, which in turn may adversely impact our business and operating results. SinceBeginning in early 2025, the U.S. presidential administration announced the imposition of tariffs on substantially all countries that trade with the United States.States, Ascertain of which were subsequently paused. Although the implementationmajority of the previously announced tariffs iswere ongoing,determined to be unconstitutional, more tariffs may be added in the future under separate statutory authority and countermeasures still may be adopted by other countries. In addition, any additional tariffs imposed by the U.S. presidential administration or retaliatory tariffs announced by other countries could result in a trade war, lead to market disruptions, including significant volatility in commodity prices, credit, and capital markets, as well as supply chain interruptions for equipment. These tariffs could adversely impact our business, financial condition, and results of operations, and if we are unable to pass such price increases through to our customers, it would likely increase our cost of salescosts and, as a result, decrease our gross margins, operating income, and net income. The impact of tariffs on our business and results of operations will depend on their timing, duration and magnitude.

The launchmarkets marketwe isserve are rapidly expanding, with significant demand for launch and spacecraft solutions and services. Our success and ability to generate higher revenue will depend in large part on our ability to expand our Launch and Spacecraft Solutions offerings and to continue the deployment and development of our launch vehicles on a timely basis. As a result, our revenue and results of operations are subject to fluctuation depending on the number of launch missions scheduled and completed in a period and any launch delays.

We expect to continue to ramp up our launch cadence as we increase our production rate on Alpha rockets, and complete development of Eclipse. We successfully completed our first lunar landing on March 2, 2025, with threefour additional Blue Ghost missions planned through 2029. Empowered by our successful Blue Ghost mission and common technologies across spacecraft, we believe we are well positioned to unlock adjacent markets and contracts via our multi-mission orbital vehicle, Elytra. Any delays in commencing our missions, including due to delays or cost overruns in obtaining licenses or other regulatory approvals, launch delays or operational failures (forsuch example, failures similar to the event on September 29, 2025 during the testing ofas our Alpha Flight 7 rocket at our facility in Briggs, Texas, which resulted in damage to the test stand butanomaly noin materialSeptember impact to our results of operations2025), or entering into future agreements with additional customers could adversely impact our ability to generate revenue, results of operations, and growth plans. We have approximately $1.3$1.5 billion in backlog,backlog as of MarchJune 31,30, 2026, and we are in active discussions with numerous potential customers, including government agencies and private companies, to potentially add to our backlog.

The growth of our business is dependent on our ability to improve our profit margins over time while successfully scaling our business, including through continued investment in initiatives to improve our operating leverage. We believe continued reduction in costs and an increase in production and service volumes will enable a reduction of the cost of launch vehicles and an improvement of our gross margins. As we increase our launch cadence, we expect to be able to continue to improve our cost structurestructure, as fixed and overhead costs are amortized over a greater number of launches.launches and missions. Revenue, net income, and the timing of our cash flows also depend on our ability to perform on our contracts, and profitability can fluctuate depending on the mix of contracts awarded. To manage these fluctuations, we have implemented several strategies, such as closely monitoring project and related services timelines to anticipate cash flow needs. Despite these measures, the inherent variability in milestone achievements means that quarter-to-quarter comparisons of our results of operations may not necessarily be indicative of future performance.

To continue gaining market share and attracting customers, we plan to continue to make substantial investments in research and development (“R&D”) for the continued enhancements of our Launch and Spacecraft Solutions.Solutions products. Our growth opportunity is dependent on our continued ability to expand our addressable launch market, win lunar and orbital missions and expand our portfolio of services related to those offerings. For instance, building on our launch, lander, transit, and operations success with Alpha and Blue Ghost, we are on track for our offerings to facilitate payload hosting services, transport services, utility services, and data services in LEO, MEO, and GEO. Our acquisition of SciTec adds the development of adaptable missile defense and mission data processing capability to our Spacecraft Solutions service portfolio. We plan to continue to forge strategic partnerships with industry leaders to enhance our technological capabilities and market reach.

Revenue – Our revenue is primarily derived from long-term contracts to provide launch and integration services for payloads requiring transportation into orbit via launch vehicles and to provide end-to-end services for the integrationdevelopment and transportationintegration of payloads,platforms and tosystems providefor productsspace domain and services to government entities for national defense missions.mission operations.

Launch revenue includes revenues from contracts with commercial and government entities to provide launch and integration services for payloads requiring transportation into orbit via launch vehicles. These contracts may include milestone payments and deposits. We consider the performance obligation to be the initiation of the launch and recognize revenue at that point in time. We also enter into contracts with our customers to provide engineering services, including the development of launch sites and related components, and to develop and provide licenses to intellectual property. In these cases, our service obligation is satisfied over time since the tasks are performed according to the customer’s specifications, which creates an asset with no alternative use to us and we have an enforceable right to payment for performance completed to date.

Spacecraft Solutions revenue includes revenue from contracts with commercial and government entities to provide end-to-end services to integrate payloads into Blue Ghost and Elytra for transport to the Moon and for on-orbit space domain awareness missions, respectively, as well as to develop and provide software, sensor, and data processing capabilities for national defense missions. These contracts include firm-fixed-price, cost-plus, and time-and-materials pricing structures. For commercial payload services we consider the performance obligation to be the integration of customer payloads for delivery to specified destinations. These contracts typically require that the customer make milestone payments as specific conditions and tasks are performed. For software, sensor, and data processing contracts, we consider the performance obligation to be the development and implementation of the contracted solution. These contracts require customers to make milestone payments as specific conditions and tasks are performed, or regular periodic payments as costs are incurred. Performance obligations are satisfied over time since either (1) the tasks are performed according to the customer’s specifications and create an asset with no alternative use to us, or (2) the customer receives and consumes benefits as work is completed and we have an enforceable right to payment for performance completed to date.

Generally, our Spacecraft Solutions contracts do not contain an embedded lease because the Company is able to derive more than insignificant economic benefits from the various capabilities provided through these contracts. However, in the limited instances when the customer obtainsis determined at contract inception to obtain substantially all of the economic benefits, determined at contract inception, the contract is determined to include an embedded lease. For such arrangements, the Company has determined that the customer is the deemed accounting owner of the asset during the construction period. As a result, the Company determined it is providing services for the integration and delivery of the customer payload for those arrangements, and accounts for them based on the guidance for contracts with customers.

Selling, General, and Administrative – includes personnel-related expenses, depreciation and amortization, and facilities-related costs primarily for our executive, marketing, finance, accounting, legal, and human resources functions. Selling, general, and administrative expenses also include expenses related to advertising, insurance, sales commission and fees for professional services principally consisting of legal, audit, and tax, as well as executive management expenses and transaction-related costs. Selling, general, and administrative expenses are expensed as incurred. We expect to incur additional selling, general, and administrative expenses as we begin operationsgrow as a public company, including expenses related to compliance with public company reporting obligations, and increased costs for insurance, investor relations, and professional services. As a result, we expect that our selling, general, and administrative expenses will increase in future periods and vary from period to period as a percentage of revenue.

Interest Income – consists primarily of interest income earned on cash and cash equivalents.equivalents and short-term investments.

Interest Expense – consists primarily of interest expense incurred on borrowings under our Revolving Credit Facility.borrowings.

Other Income (Expense) Income,, Net – reflects miscellaneous income and expense unrelated to our core business activities.

(Benefit) Provision for Income Taxes – consists of an estimate for federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance to offset all federal and state net deferred tax assets, as realization of such assets does not meet the more-likely-than-not threshold required under ASC 740, Income Taxes.

The following discusses our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025.

Comparison of the Three Months Ended MarchJune 31,30, 2026 to the Three Months Ended MarchJune 31,30, 2025

Total revenue increased by $25.0$102.1 million, or 45%,657%, to $80.9$117.7 million during the three months ended MarchJune 31,30, 2026 from $55.9$15.5 million during the three months ended MarchJune 31,30, 2025, primarily driven by the factors discussed below.

Launch revenue increased by $8.1$3.1 million, or 156%,48%, to $13.3$9.4 million during the three months ended MarchJune 31,30, 2026 from $5.2$6.3 million during the three months ended MarchJune 31,30, 2025, primarily due to our successful Alpha Flight 7 launch, increased progress on Eclipse design and manufacturing, and engineering services contracts related tofor the development of launch facilities.

Spacecraft Solutions revenue increased by $16.9$99.1 million, or 33%,1,077%, to $67.6$108.3 million during the three months ended MarchJune 31,30, 2026 from $50.7$9.2 million during the three months ended MarchJune 31,30, 2025 driven by contributionsthe frominclusion of SciTec, which was acquired in the fourth quarter of 2025, and continued progress on Blue Ghost Missions 2, 3, and 4. The first quarter of 2025 included revenue related to the successful completion ofour Blue Ghost Missionand 1.Elytra spacecraft missions.

Cost of sales increased by $9.8$82.3 million, or 18%,712%, to $63.4$93.8 million during the three months ended MarchJune 31,30, 2026 from $53.6$11.6 million during the three months ended MarchJune 31,30, 2025, aligning with the increases in revenue related to our Spacecraft Solutions and Launch programs.

Research and development costs increased by $19.5$25.8 million, or 41%,56%, to $67.5$71.5 million during the three months ended MarchJune 31,30, 2026 from $48.0$45.8 million during the three months ended MarchJune 31,30, 2025. The growth is primarily driven by an increase in costs related to the Alpha program associated with the launch of Alpha Flight 7 and ramping production on our Alpha Block II configuration upgrade, stock-based compensation expense, depreciation and amortization from newly acquired assets being placed into service, and other R&D efforts.initiatives.

Selling, general, and administrative expenses increased by $32.9$35.0 million, or 258%,278%, to $45.6$47.5 million during the three months ended MarchJune 31,30, 2026 from $12.8$12.6 million during the three months ended MarchJune 31,30, 2025, the increase was primarily driven by includingthe a full quarterinclusion of SciTec expenses, stock-based compensation expense, and growth in our corporate infrastructure to support public company operations.costs.

Interest income increased by $4.9$2.6 million, or 481%,146%, to $6.0$4.3 million during the three months ended MarchJune 31,30, 2026 from $1.0$1.8 million during the three months ended MarchJune 31,30, 2025, reflecting interest income earned on the strategic investment of our IPO proceeds for the benefit of our working capital.

Interest expense decreased by $2.6$5.2 million, or 42%,74%, to $3.6$1.8 million during the three months ended MarchJune 31,30, 2026 from $6.2$7.0 million during the three months ended MarchJune 31,30, 2025. Interest expense during the firstthree quartermonths ofended 2026June was primarily comprised of interest on the Revolving Credit Facility. Interest expense during the first quarter of30, 2025 was primarily comprised of interest related to the Term Loans.