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

A description of the risk factors impacting the Company can be found in Part I, Item 1A “Riskof Factors”Part inI of the 2025 Annual Report on Form 10-K. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition or future results.

The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. You should read the following discussion and analysis of the Company’s financial condition and results of operations together with "Risk Factors" in Item 1A of Part I of the 2025 Annual Report on Form 10-K, the section entitled "Special Note Regarding Forward-Looking Statements" and our unaudited condensed consolidated financial statements and related notes included in Item 1, of Part I of this Quarterly Report on Form 10-Q. This discussion and analysis contains 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 but not limited to the risks and uncertainties described in “Risk Factors” in Item 1A of Part I of the 2025 Annual Report on Form 10-K and the section entitled “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by these forward-looking statements.

On January 28, 2026, the Registration Statement on Form S-1 ("the Registration Statement") filed with respect to our IPO was declared effective and on January 29, 2026, our stock began trading on the New York Stock Exchange (the "NYSE") under the ticker “YSS”. Refer to Note 1 – Description of Business and Basis of Presentation of the accompanying notes to the unaudited condensed consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information.

York is a leading, U.S.-based, national defense and commercial prime providing a comprehensive suite of mission-critical solutions for national security, government and commercial customers. York is one of the only space and defense primes with proprietary hardware and software capabilities designed to address customers’ complex mission requirements across the critical elements of the entire space ecosystem throughout the mission lifecycle. York is a partner of choice for our customers, with differentiated performance versus traditional primes based on price, speed to deployment, and sophistication of capabilities. For contracts which we have been awarded, our price per satellite has been approximately half the price per satellite of our competitors. We have also been the first to deliver and launch satellites for multiple PWSADoW programs. York is the first and only company to demonstrate Link-16 connectivity from space, highlighting our unique and innovative capabilities.

York is purpose built to address evolving national security space challenges and to adapt to the ongoing shift in the U.S. government’s mission needs and procurement processes, where economics, agility, rapid capabilities, and heritage drive customer decision making. We deliver mission-critical solutions in a zero-tolerance for error environment where systems must work, and we believe we are well positioned to capturewin outsizedawards growthto successfully leverage production capabilities at scale in our core markets. York provides customers a vertically integrated, full technology stack of solutions including design, production, integration, and operation of spacecraft with turnkey offerings to manage spacecraft and constellations throughout their entire mission lifecycle. York has significant space heritage, having 74 missions with flight heritage, created 17 products with flight heritage, and logged over four million on-orbit hours. York’s position as a prime enables us to monetize the entire space vertical from launch to mission operations, from spacecraft to payloads, and from edge computing to data transfer.

Our model allows us to capture recurring revenue driven by ongoing satellite-based software and services as well as hardware replacement cycles. Once spacecraft are fielded, we provide continuous operational support, downlinkground antennaterminal usage, and proprietary software solutions, including on-spacecraft upgrades during the full orbital lifespan. Contracts have historically provided a fixed cost for software maintenance with upgrade options available for purchase. The expected replacement cycle for the current portfolio of space vehicles is approximately five to six years. Our full lifecycle solution and ongoing operational support distinguishes us from our competitors, positioning us to act as prime for the replacement and potential expansion of competitors’ aging constellations. As a result, we expect our recurring revenue to increase as the installed base of spacecraft in orbit grows, creating a highly visible revenue model, accelerating growth and increasing margins.

We have significant production capability and believe we will be able to meet demand to manufacture and test over 1,000 satellites annually, supporting our position as a leader in rapid, high volume spacecraft delivery. This investment in infrastructure and inventory is meant to create a durable competitive advantage, enabling us to capitalize on the rapidly growing space economy with the ability to reliably deliver spacecraft faster and more affordably than traditional primes.

The increase in backlog as of MarchJune 31,30, 2026 compared to December 31, 2025 was primarily due to the execution of a new commercial contract during the period partially offset by revenue recognized during the period. We expect to recognize over 55% of our backlog as of MarchJune 31,30, 2026 as revenue within the next 12 months, and the balance thereafter.

OrbionSolestial Space Technology Acquisition

On MarchMay 6,15, 2026, we entered into the OrbionSolestial Merger Agreement. The transaction closed on June 4, 2026. Pursuant to the OrbionSolestial Merger Agreement, we acquired all of the issued and outstanding equity interests of OrbionSolestial, Inc. in exchange for consideration consisting of cash totaling $11.2$15.5 million and 2,812,141approximately 1.7 million shares of the Company's common stock. Pursuant to the OrbionSolestial Merger Agreement, the number of shares delivered to the sellers was calculated using an agreed upon price of $34.00 per share. OrbionSolestial is headquartered in Tempe, Arizona and is the only space solar provider with self-healing silicon technology proven on orbit, enabling performance while maintaining a Michigan-basedpath manufacturerto ofhigh-volume flight-proven electric propulsion systems.manufacturing. Refer to Note 4 – Acquisitions of the accompanying notes to the unaudited condensed consolidated financial statements included in Item 1 of Part I, Item 1 in this Quarterly Report on Form 10-Q for additional information.

On April 29, 2026, we entered into the "All.Space Merger Agreement"Agreement. withThe All.Space.transaction closed on July 8, 2026. Pursuant to the All.Space Merger Agreement, the Company agreed to undertakeundertook a series of contributions, after which the Company will acquireacquired the outstanding equity interests of All.Space, and All.Space which will becomebecame an indirect wholly owned subsidiary of the Company. The purchase price to be paid by the Company isacquired $355All.Space million, which will be comprised of approximatelyfor $155 million in cash and the issuance of up toapproximately 5.9 million shares.shares Theof transactionthe isCompany’s subjectcommon stock, which at a price per share of common stock on the NYSE as of July 8, 2026, totaled consideration of approximately $300 million. Refer to customaryNote closing16 conditions,– includingSubsequent Events of the receiptaccompanying notes to the unaudited condensed consolidated financial statements included in Item 1 of allPart required regulatory approvals and clearances (or, where applicable, the expiration or termination of waiting periods), including those relating to antitrust, foreign investment and telecommunications matters. We expect the transaction to closeI in thethis secondQuarterly halfReport ofon 2026.Form 10-Q for additional information.

To continue gaining market share and attracting customers, we plan to continue investing in our infrastructure to expand our production capabilities, including our satellite-based services, and to create a durable competitive advantage with the goal of enabling us to capitalize on the rapidly growing space economy. Our growth opportunity is dependent on our continued ability to expand our addressable market, winincluding but not limited to, space data network, space-based sensing and targeting, as well as Golden Dome missions, and to develop our portfolio of products and services related to our offerings. We intend to expand our operations and offerings significantly, but any difficulties in achieving or effectively managing our growth could have a negative effect on our operating results.

We consider strategic acquisitions of businesses and other investments to expand our software and services footprint, deepen vertical integration, and accelerate entry into adjacent mission areas, with the goal of expanding our current portfolio and accessing new customers and technologies. We target companies that not only enhance our technical capabilities but also embed us more deeply into our customers’ mission workflows. By integrating strategic acquisitions with our strong internal execution, we aim to build a broader product and service offering with a goal of enhancing our growth and market share. We also may explore the divestiture of businesses that no longer meet our needs or strategy or that could perform better outside of our organization. These strategic transactions may beare costly, time consuming and challenging to consummate and/or integrate with our existing businesses, and may result in fluctuations in our operating results and financial position across periods that may be unrelated to our underlying performance. A portion of the consideration of the acquisitions we have completed recently has consisted of shares of our common stock, which dilute existing stockholders. Any particular acquisition or other investment we make could prove less successful than anticipatedanticipated, cause further stockholder dilution and have a negative effect on our business.

Cost of Revenues—primarily consists of direct material and labor costs, which include salaries, bonuses, and benefits directly attributable to fulfilling our obligations under customer contracts, and related overhead. Overhead costs primarily include allocable amounts of rent, software subscriptions, depreciation and amortization expense on assets used directly in revenue producing activities, indirect materials, and production and test administrative expenses. We expect ourOur cost of revenues to increase in absolute dollars inmoves future periodsdirectionally as we enterperform intounder morecurrent contracts andas makewell as being impacted by strategic acquisitions and investments.

Income Tax (Expense) Benefit—includes the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amount and the tax basis of assets and liabilities, along with net operating loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse.

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

Two contracts accounted for 48% and 37%, respectively, of the gross favorable EAC adjustment for the three months ended March 31, 2026 which were primarily due to lower‑than‑anticipated labor, materials, and subcontractor costs required to meet customer requirements in our sale of satellites. In contrast, two contracts accounted for 64% and 36% respectively, of the gross unfavorable EAC adjustment for the three months ended MarchJune 31,30, 2026.2026 The adjustmentswhich were primarily due to additional unplanned labor, materials and subcontractor costs. OneTwo contractcontracts accounted for 100%47% and 35% of the gross unfavorable EAC adjustment for the periodthree months ended MarchJune 31,30, 2025, due to aunplanned changelabor, inmaterials theand estimatedsubcontractor total transaction price resulting from a contract modification.costs. Refer to Note 3 - Revenues of the accompanying notes to the unaudited condensed consolidated financial statements included in Item 1 of Part I in this Quarterly Report on Form 10-Q for additional information related to our net EAC adjustments.

Revenue increased by $10.1$8.7 million, or 9%,10%, to $116.3$92.5 million during the three months ended MarchJune 31,30, 2026, as compared to $106.3$83.8 million during the three months ended MarchJune 31,30, 2025. The period-over-period increase in revenue was primarily relateddriven toby increasesrevenue ingenerated progressfrom towardsrecently completionacquired businesses and achievementincreased ofrevenue certainfrom milestonesground services during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31, 2025, partially offset by a decrease in progress as a significant project nears completion during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The period-over-period increase in revenue was largely driven by existing contracts, with 85% of the revenue growth related to contracts that were already in place at March 31,30, 2025. Refer to Note 3 - Revenues of the accompanying notes to the unaudited condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information related to our net EAC adjustments.

Cost of revenues increaseddecreased by $12.5$3.9 million, or 15%,5%, to $94.2$70.4 million for the three months ended MarchJune 31,30, 2026, as compared to $81.7$74.3 million for the three months ended MarchJune 31,30, 2025. The period-over-period increasedecrease in cost of revenues was primarily driven by increasesdecreases of $5.3$10.3 million in direct materials and subcontractor costs relatedoffset toby largeran contractsincrease thatin havedirect increased progress towards the design and buildlabor of satellites$3.5 during the period.million. Other increases were attributedattributable to depreciation and amortization of $3.2$0.8 million, direct labor costs of $2.4 million,million and other overhead costs of $1.6$2.1 million as well as the impact of the Company's acquisition of ATLAS.activity.

Gross profit decreasedincreased by $2.4$12.7 million, or 10%,133%, to $22.2 million for the three months ended MarchJune 31,30, 2026, as compared to $24.6$9.5 million for the three months ended MarchJune 31,30, 2025. As a percentage of revenues, gross margin was 19%24% and 23%11% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The period-over-period decreaseincrease in gross margin as a percentage of revenues was primarily attributed to lower net unfavorable EAC adjustments during the three months ended MarchJune 31,30, 2026, as compared to a net favorable EAC adjustment for the same period in 2025.

SG&A expenses increased by $9.9$15.0 million, or 37%,58%, to $36.7$40.8 million for the three months ended MarchJune 31,30, 2026, as compared to $26.8$25.8 million for the three months ended MarchJune 31,30, 2025. The period-over-period increase in SG&A expenses was primarily attributed to increases in compensation and other employee-related costs, as well as professional fees for audit, tax and legal servicesservices, ashigher welladvertising asexpenses and the impact of the Company's acquisition of ATLAS.activity.

Stock-based compensation expense was $84.7$10.9 million for the three months ended MarchJune 31,30, 2026, as compared to $0 for the three months ended MarchJune 31,30, 2025. See Note 10 – Stock-based Compensation of the accompanying notes to the unaudited condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information related to our stock compensation.

R&D increased by $0.9 million, or 20%,18%, to $5.3$5.8 million for the three months ended MarchJune 31,30, 2026, as compared to $4.4$4.9 million for the three months ended MarchJune 31,30, 2025. The period-over-period increase in R&D costs was primarily driven by increasesR&D inactivity compensationof andrecently otheracquired employee-relatedbusinesses costs.subsequent to their dates of acquisition.

Transactions costs were $5.9$6.0 million for the three months ended MarchJune 31,30, 2026, as compared to $0$0.1 million for the three months ended MarchJune 31,30, 2025. Transaction costs relate to the Company’s acquisition activity and one-time IPO offering costs.activity.

Interest expense decreased by $4.2 million, or 59%, to $2.9 million for the three months ended MarchJune 31,30, 2026, as compared to $7.1 million for the three months ended MarchJune 31,30, 2025. The period-over-period decrease is attributable to a decline in the floating interest rate tied to Secured Overnight Financing Rate ("SOFR") during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, combined with a lower fixed-rate component under the Term Loan Facility during the three months ended MarchJune 31,30, 2026, as compared to the Original Term Loan Facility for the same period in 2025.

Interest income increased by $4.1$4.0 million, or 754%, to $4.6$4.2 million for the three months ended MarchJune 31,30, 2026, as compared to $0.5$0.2 million for the three months ended MarchJune 31,30, 2025. The period-over-period increase in interest income was primarily driven by higher cash and cash equivalent balances, as well as higher market interest rates that increased yields on those balances.

Other (expense) income, net decreased by $6.3$0.3 million to $6.2 million of other (expense) for the three months ended March 31, 2026, as compared to $0.1$0.9 million of other income for the three months ended MarchJune 31,30, 2026, as compared to $1.2 million of other income for the three months ended June 30, 2025. This period-over-period decrease was driven by a decrease in unrealized loss on foreign exchange derivative instruments asoffset well aswith a lossgain from our investment in Orbion.Solestial.

Income Tax (Expense) Benefit

Income tax benefit decreased by $1.2$3.0 million to $0.1$0.3 million income tax expense for the three months ended MarchJune 31,30, 2026, as compared to $1.3$2.7 million income tax benefit for the three months ended MarchJune 31,30, 2025. The decrease in the income tax (expense) benefit is primarily due to the valuation allowance of U.S. Federal and U.S. State deferred tax assets.