Virgin Galactic Holdings Inc
For the period ended Dec 31, 2024. Filed Feb 26, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 26, 2025
SPCE$2.77+16.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-27.
0001706946-24-000039
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-26.
0001706946-25-000038
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 101 previous paragraphs and 102 current paragraphs.
56 unchanged; 33 reworded; 13 added; 8 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
On June 12, 2024, at the Company’s 2024 annual meeting of stockholders, our stockholders approved, and on June 14, 2024, we effected, a 1-for-20 reverse stock split (the “Reverse Stock Split”), and our common stock began trading on a split-adjusted basis on June 17, 2024. Prior to the Reverse Stock Split, on May 29, 2024, we received a notice from the New York Stock Exchange (the “NYSE”) that we were no longer in compliance with Section 802.01C of the NYSE Listed Company Manual (“Section 802.01C”), which requires listed companies to maintain an average closing price per share of at least $1.00 over a 30 consecutive trading-day period. Following the Reverse Stock Split, on July 1, 2024, we received a letter from the NYSE stating that we regained compliance with Section 802.01C.
Current report
All shares of our common stock, per-share data and related information included in this Annual Report on Form 10-K have been retroactively adjusted as though the Reverse Stock Split had been effected prior to all periods presented.
Current report
In July 2024, we completed our new manufacturing facility in Arizona, where final assembly of our next-generation Delta Class spaceships is scheduled to begin in 2025. After the initial development of our first Delta Class spaceship, we estimate the recurring cost to make each additional spaceship to be between $50 and $60 million.
Current report
In October 2024, we settled the lawsuit and all claims between us and The Boeing Company and Aurora Flight Sciences Corporation, a Boeing Company. See Note 15 in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
Current report
In December 2024, we entered into an Agreement of Cooperation with Ente Nazionale per l'Aviazione Civile, the civil aviation authority of Italy, to jointly study the feasibility of conducting spaceflight operations from Grottaglie Spaceport in the Puglia region of Southern Italy.
Current report
Research and Development
Current report
and other professional fees, a $4.2 million decrease in marketing and promotion expense, and a $1.7 million decrease in facility costs.
Current report
In January 2024, we fully paid the $1.4 million liability balance associated with these costs that was accrued at December 31, 2023.
Current report
In November 2024, we terminated the 2023 ATM Program, having sold a total of 12.8 million shares of common stock and generating $396.2 million in gross proceeds, before deducting $3.9 million in underwriting discounts, commissions and other expenses.
Current report
In November 2024, we entered into an open market sale agreement with Jefferies LLC ("Jefferies") providing for the offer and sale of up to $300 million of shares of our common stock from time to time through Jefferies, acting as sales agent, or directly to Jefferies, acting as principal, through an "at-the-market offering" program (the "2024 ATM Program").
Current report
Long-Lived Assets
Current report
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset to be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by that asset group to its carrying amount. The estimate of cash flows includes management's assumptions of cash inflows and outflows directly resulting from the use of those assets in operations. We assess impairment for asset groups, which represent a combination of assets that produce distinguishable cash flows. If the carrying amount of the asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value.
Current report
Table of Contents
Removed paragraphs (8)
Previous report
In June 2023, we completed our first commercial spaceflight, 'Galactic 01,'which marked the start of our commercial service.
Previous report
In July 2023, we concluded that technological feasibility had been achieved for our initial spaceship, VSS Unity, and mothership carrier aircraft, VMS Eve, which together comprise our current spaceflight system. As a result, future costs associated with this spaceflight system, including the manufacture of related rocket motors, will no longer qualify as research and development activities.
Previous report
Revenue for the year ended December 31, 2022 was primarily attributable to membership fees related to our Future Astronaut community, fees related to our Future Astronaut community event, and scientific research services under government contracts.
Previous report
Spaceline operations expense for the year ended December 31, 2022 was primarily attributable to costs related to our Future Astronaut community event, other costs to maintain our Future Astronaut community, labor costs provided for scientific research services, and incremental costs related to payload services.
Previous report
The unpaid severance and related benefit costs of $1.4 million as of December 31, 2023 are expected to be fully paid during the first quarter of 2024.
Previous report
•establish our astronaut campus in New Mexico.
Previous report
Inventories
Previous report
Inventories consist of materials expected to be used in our spaceflight operations. Inventories are stated at the lower of cost or net realizable value using the average cost method. We record a provision for excess and obsolete inventory based primarily on forecasted product demand and production requirements. Once inventory provisions are established, the written-down value of the inventory becomes its new cost basis.
Reworded paragraphs (33)
Previous wording
The following is a discussion and analysis of, and a comparison between, our results of operations for the years ended December 31, 2023 and 2022. A discussion and analysis of, and a comparison between, our results of operations for the years ended December 31, 2022 and 2021 can be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Current wording
The following is a discussion and analysis of, and a comparison between, our results of operations for the years ended December 31, 2024 and 2023.
Previous wording
We are an aerospace and space travel company offering access to space for private individuals, researchers and government agencies. Our missions include flying passengers to space, as well as flying scientific payloads and researchers to space in order to conduct experiments for scientific and educational purposes. Our operations include the design and development, manufacturing, ground and flight testing, spaceflight operation, and post-flight maintenance of our spaceflight system. Our current spaceflight system was developed using our proprietary technology and processes and is focused on providing space experiences for private astronauts, researcher flights and professional astronaut training. We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services for third parties.
Current wording
We are an aerospace and space travel company offering access to space for private individuals, researchers and government agencies. Our missions include flying passengers to space, as well as flying scientific payloads and researchers to space in order to conduct experiments for scientific and educational purposes. Our operations include the design and development, manufacturing, ground and flight testing, spaceflight operation, and post-flight maintenance of our spaceflight system. Our spaceflight system was developed using our proprietary technology and processes and is focused on providing space travel experiences for private astronauts, researcher flights and professional astronaut training. We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services for third parties.
Previous wording
In January 2024, we completed our sixth commercial spaceflight.
Current wording
In January 2024, we completed our sixth commercial spaceflight,'Galactic 06,'marking the first time all four seats aboard VSS Unity were occupied by private astronauts.
Previous wording
In November 2023, we announced our plan to pause Unity spaceflights in mid-2024 and that we expect to re-commence flying with test flights for our Delta Class spaceships in 2025, in advance of revenue service expected to begin in 2026.
Current wording
In June 2024, we completed our second spaceflight of 2024 and seventh commercial spaceflight to date,'Galactic 07,'carrying one researcher and three private astronauts. Following the'Galactic 07'flight, we paused Unity spaceflights and expect to commence flying with test flights of our new Delta Class spaceships in advance of restarting commercial service, which is expected to begin in 2026.
Previous wording
We have already received significant interest from potential astronauts. Going forward, we expect the size of our backlog and the number of astronauts that have flown to space on our spaceflight system to be an important indicator of our future performance. As of December 31, 2023, we have reservations for spaceflights for approximately 750 future astronauts. In August 2021, we reopened ticket sales to a select group and increased the pricing of our consumer offerings to a base price of $450,000 per seat. In February 2022, we opened ticket sales to the general public for a limited time. As of December 31, 2023, the tickets sold represent approximately $205 million in expected future spaceflight revenue upon completion of spaceflights.
Current wording
We have already received significant interest from potential astronauts. Going forward, we expect the size of our backlog and the number of astronauts that have flown to space on our spaceflight system to be an important indicator of our future performance. As of December 31, 2024, we have reservations for spaceflights for approximately 700 future astronauts, which represent approximately $190 million in expected future spaceflight revenue upon completion of the spaceflights.
Previous wording
We commenced our commercial operations with VSS Unity and VMS Eve, which together comprise our current spaceflight system. As a result, our annual flight rate will be constrained by the availability and capacity of this spaceflight system. To reduce the capacity constraint associated with having only one spaceflight system, we are currently developing our next generation spaceflight vehicles. These next generation spaceflight vehicles, which include our Delta Class spaceships and our next generation motherships, will allow us to increase our annual flight rate. We are dedicating significant engineering resources to the work that precedes production of the future fleet. In 2023, we demonstrated the flight consistency of Unity and Eve by safely bringing our customers to space. In 2024, we expect to adjust the flight cadence of Unity to quarterly and then pause flights starting mid-year to focus our resources on the development of the Delta Class spaceship fleet.
Current wording
In 2023, we commenced our commercial operations with VSS Unity and VMS Eve, which together comprised our initial commercial spaceflight system. Our annual flight rate is constrained by the availability and capacity of this commercial spaceflight system. To expand capacity, we are currently developing our next-generation spaceflight vehicles. These next-generation spaceflight vehicles, which include our Delta Class spaceships and additional motherships, are expected to dramatically increase our annual flight rate.
Previous wording
Safety Performance of Our Spaceflight System
Current wording
Safety Performance of Our Spaceflight Systems
Previous wording
Our spaceflight system is highly specialized with sophisticated and complex technology. We have built operational processes to ensure that the design, manufacture, performance and servicing of our spaceflight system meets rigorous quality standards. However, our spaceflight system is still subject to operational and process risks, such as manufacturing and design issues, human errors, or cyber-attacks. Any actual or perceived safety issues may result in significant reputational harm to our business and our ability to generate spaceflight revenue.
Current wording
Our spaceflight systems are highly specialized with sophisticated and complex technology. We have built operational processes to ensure that the design, manufacture, performance and servicing of our spaceflight systems meet rigorous quality standards. However, our spaceflight systems are still subject to operational and process risks, such as manufacturing and design issues, human errors, or cyber-attacks. Any actual or perceived safety issues may result in significant reputational harm to our business and our ability to generate spaceflight revenue.
Previous wording
Revenue for the year ended December 31, 2023 was primarily attributable to revenue generated from our commercial spaceflights and membership fees related to our Future Astronaut community.
Current wording
Revenue for the years ended December 31, 2024 and 2023 were primarily attributable to revenue generated from our commercial spaceflights and access fees related to our astronaut community.
Previous wording
Spaceline operations expense includes costs to maintain and operate our spaceflight system; non-capitalizable costs to build our new vehicles and manufacture items required to support the making of our vehicles, such as rocket motors and spare parts; the consumption of rocket motors, fuel and other consumables; costs to maintain and support our Future Astronaut community; and costs to provide payload cargo and engineering services.
Current wording
Spaceline operations expense includes costs to maintain and operate our spaceflight system; non-capitalizable costs to build our new vehicles and manufacture items required to support the making of our vehicles, such as rocket motors and spare parts; the consumption of rocket motors, fuel and other consumables; costs to maintain and support our astronaut community; and costs to provide payload cargo and engineering services.
Previous wording
Following the launch of commercial service and achievement of technological feasibility, we began presenting the operating expenses supporting our commercial spaceline activities as spaceline operations expense in the accompanying consolidated statements of operations and comprehensive loss. Prior to achievement of technological feasibility, spaceline operations expense included costs to support our Future Astronaut community and costs related to payload cargo and engineering services, which were previously presented as customer experience expense.
Current wording
Following the launch of commercial service and achievement of technological feasibility in July 2023, we began presenting the operating expenses supporting our commercial spaceline activities as spaceline operations expense in the accompanying consolidated statements of operations and comprehensive loss. Prior to achievement of technological feasibility, spaceline operations expense included costs to support our astronaut community and costs related to payload cargo and engineering services.
Previous wording
Spaceline operations expense for the year ended December 31, 2023 was primarily attributable to costs to maintain and operate our spaceflight system; non-capitalizable costs to build our new vehicles and manufacture items required to support the making of our vehicles; and costs to maintain and support our Future Astronaut community.
Current wording
Spaceline operations expense for the years ended December 31, 2024 and 2023, following achievement of technological feasibility in July 2023, were primarily attributable to costs to maintain and operate our spaceflight system; non-capitalizable costs to build our new vehicles and manufacture items required to support the making of our vehicles; and costs to maintain and support our astronaut community.
Previous wording
Research and development costs consist primarily of equipment, material, and labor costs (including from third-party contractors) for designing the spaceflight system's structure, spaceflight propulsion system, and flight profiles for our next generation spaceships and motherships, as well as allocated facilities and other supporting overhead costs.
Current wording
Research and development expenses represent costs incurred to support activities that advance our future fleet towards commercialization, including basic research, applied research, concept formulation studies, design, development, and related testing activities. Research and development costs consist primarily of equipment, material, and labor costs (including from third-party contractors) for designing the spaceflight system’s structure, spaceflight propulsion system, and flight profiles for our next-generation spaceships and motherships, as well as allocated facilities and other supporting overhead costs.
Previous wording
Research and development expenses decreased from $314.2 million for the year ended December 31, 2022 to $295.1 million for the year ended December 31, 2023. This decrease was primarily driven by a $51.7 million decrease in materials costs associated with the development of our spaceflight systems, a $7.2 million decrease in cash compensation and other employee benefit costs, a $4.7 million decrease in stock-based compensation, and a $3.4 million decrease in facility costs. These decreases were partially offset by a $47.6 million increase in manufacturing sub-contractor and contract labor costs, consulting, and other direct costs associated with the development of our spaceflight systems.
Current wording
Research and development expenses decreased from $295.1 million for the year ended December 31, 2023 to $152.7 million for the year ended December 31, 2024. The decrease was primarily driven by a $65.8 million decrease in cash compensation and other employee benefit costs primarily due to the completion of the VSS Unity and VMS Eve modifications, a reduction in headcount and labor allocated to capitalizable Delta projects; a $49.3 million decrease in materials, consulting, and other costs primarily due to the completion of the VSS Unity and VMS Eve modifications; the settlement of certain disputed vendor invoices, resulting in a reversal of $18.6 million of accrued costs; an $8.3 million decrease in other operational costs primarily due to a technology license fee expensed in 2023; and a $5.2 million decrease in consulting and other professional fees. These decreases were partially offset by a $7.8 million increase in sub-contractor and contract labor costs associated with the development of our next-generation spaceflight vehicles.
Previous wording
Selling, general and administrative expenses decreased from $175.1 million for the year ended December 31, 2022 to $174.9 million for the year ended December 31, 2023. This decrease was primarily driven by a $4.2 million decrease in consulting and other professional fees and a $1.2 million decrease in cash compensation and other employee benefit costs. This decrease was partially offset by a $2.8 million increase in information technology and software costs and a $2.7 million increase in marketing and promotion costs.
Current wording
Selling, general and administrative expenses decreased from $174.9 million for the year ended December 31, 2023 to $125.5 million for the year ended December 31, 2024. The decrease was primarily driven by a $33.7 million decrease in cash compensation and other employee benefit costs primarily due to a reduction in headcount, a $8.9 million decrease in consulting
Previous wording
Depreciation and amortization expense increased from $11.1 million for the year ended December 31, 2022 to $13.4 million for the year ended December 31, 2023. This increase is primarily due to the acquisition of property, plant and equipment.
Current wording
Depreciation and amortization expense increased from $13.4 million for the year ended December 31, 2023 to $15.5 million for the year ended December 31, 2024. The increase was primarily due to the acquisition of property, plant and equipment.
Previous wording
In November 2023, we commenced a restructuring plan designed to decrease costs and strategically realign our resources. In connection with this plan, we announced a workforce reduction of approximately 185 employees, constituting approximately 18% of our workforce. As a result, we recorded severance and related benefit costs for the involuntarily terminated employees as special charges in the accompanying 2023 consolidated statement of operations and comprehensive loss.
Current wording
In November 2023, we commenced a restructuring plan designed to decrease costs and strategically realign our resources. In connection with this plan, we announced a workforce reduction of approximately 185 employees, constituting approximately 18% of our workforce. As a result, we recorded $4.4 million in severance and related benefit costs for the involuntarily terminated employees as special charges during the year ended December 31, 2023.
Previous wording
Interest income increased from $12.5 million for the year ended December 31, 2022 to $42.2 million for the year ended December 31, 2023. This increase was primarily driven by increased average balances of marketable securities, higher investment returns on marketable securities and higher interest rates on deposits in interest bearing accounts.
Current wording
Interest income increased from $42.2 million for the year ended December 31, 2023 to $42.4 million for the year ended December 31, 2024. Interest income was driven by investment returns on our marketable securities and deposits in interest-bearing accounts.
Previous wording
Interest expense increased from $12.1 million for the year ended December 31, 2022 to $12.9 million for the year ended December 31, 2023. This increase was primarily driven by a full year of interest expense and amortization of debt issuance costs related to our convertible senior notes in 2023.
Current wording
Interest expense was $12.9 million for each of the years ended December 31, 2024 and 2023. Interest expense primarily consisted of interest expense and amortization of debt issuance costs related to our convertible senior notes.
Previous wording
Income tax expense was immaterial for the years ended December 31, 2023 and 2022. We have accumulated net operating losses at the U.S. federal and state levels. We maintain a full valuation allowance against our net U.S. federal and state deferred tax assets. The income tax expense is primarily related to corporate income taxes for our operations in the United Kingdom, which operates on a cost-plus arrangement.
Current wording
Income tax expense was immaterial for the years ended December 31, 2024 and 2023. We have accumulated net operating losses at the U.S. federal and state levels. We maintain a full valuation allowance against our net U.S. federal and state deferred tax assets. The income tax expense was primarily related to corporate income taxes for our operations in the United Kingdom, which operates on a cost-plus arrangement.
Previous wording
As of December 31, 2023, we had total cash, cash equivalents and restricted cash of $253.6 million and total marketable securities of $728.8 million. Our principal sources of liquidity have come from sales of our common stock and offering of convertible senior notes ("2027 Notes").
Current wording
As of December 31, 2024, we had total cash, cash equivalents and restricted cash of $210.9 million and total marketable securities of $445.9 million. Our principal sources of liquidity have come from sales of our common stock and offering of convertible senior notes ("2027 Notes").
Previous wording
Net cash used in operating activities was $380.2 million for the year ended December 31, 2022, and consisted primarily of $500.2 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $45.7 million, depreciation and amortization expense of $11.1 million, as well as $50.3 million of cash provided from changes in operating assets and liabilities.
Current wording
Net cash used in operating activities was $352.7 million for the year ended December 31, 2024, and consisted primarily of $346.7 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $29.8 million and depreciation and amortization expense of $15.5 million, partially offset by $16.6 million of accretion of marketable securities purchased at a discount and $38.2 million of net changes in operating assets and liabilities, which were driven primarily by the reversal of $18.6 million of accrued costs in connection with the settlement of certain disputed vendor invoices.
Previous wording
Net cash used in operating activities was $448.2 million for the year ended December 31, 2023, and consisted primarily of $502.3 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $44.3 million and depreciation and amortization expense of $13.4 million.
Current wording
Net cash used in operating activities was $448.2 million for the year ended December 31, 2023, and consisted primarily of $502.3 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $44.3 million, depreciation and amortization expense of $13.4 million, and $7.9 million of net changes in operating assets and liabilities, partially offset by $15.1 million of accretion of marketable securities purchased at a discount.
Previous wording
Net cash used in investing activities was $286.2 million for the year ended December 31, 2022, and consisted of $704.6 million in purchases of marketable securities and $16.5 million in capital expenditures, partially offset by $434.9 million in proceeds from maturities and calls of marketable securities.
Current wording
Net cash provided by investing activities was $175.7 million for the year ended December 31, 2024, and consisted primarily of $543.4 million in purchases of marketable securities and $121.9 million in capital expenditures, partially offset by $840.3 million in proceeds from maturities and calls of marketable securities. The capital expenditures were primarily driven by costs associated with our next-generation Delta spaceships and our new facility in Arizona, which will be used to assemble the spaceships.
Previous wording
Net cash provided by financing activities was $459.0 million for the year ended December 31, 2022, and consisted primarily of the issuance of the 2027 Notes for net proceeds of $413.7 million and net cash proceeds from the sale and issuance of common stock of $102.1 million, partially offset by the purchase of the capped call related to the 2027 Notes of $52.3 million and tax withholdings paid for net settled stock-based awards of $4.0 million.
Current wording
Net cash provided by financing activities was $134.3 million for the year ended December 31, 2024, and consisted primarily of net cash proceeds from the sale and issuance of common stock pursuant to our at-the-market offering programs of $135.7 million, partially offset by tax withholdings paid for net settled stock-based awards of $1.2 million.
Previous wording
Net cash provided by financing activities was $475.4 million for the year ended December 31, 2023, and consisted primarily of net cash proceeds from the sale and issuance of common stock of $478.9 million, partially offset by tax withholdings paid for net settled stock-based awards of $3.2 million.
Current wording
Net cash provided by financing activities was $475.4 million for the year ended December 31, 2023, and consisted primarily of net cash proceeds from the sale and issuance of common stock pursuant to our at-the-market offering programs of $478.9 million, partially offset by tax withholdings paid for net settled stock-based awards of $3.2 million.
Previous wording
We lease certain facilities and assets under non-cancellable operating lease arrangements that expire at various dates through 2065. As of December 31, 2023, future minimum payments under non-cancellable operating leases were $128.2 million. For additional information regarding our lease obligations, see Note 16 in our consolidated financial statements included in Item 8 of this Annual Report in Form 10-K.
Current wording
We lease certain facilities and assets under non-cancellable operating lease arrangements that expire at various dates through 2065. As of December 31, 2024, future minimum payments under non-cancellable operating leases were $120.6 million. For additional information regarding our lease obligations, see Note 15 in our consolidated financial statements included in Item 8 of this Annual Report in Form 10-K.
Previous wording
•hire additional personnel in manufacturing operations, testing programs, maintenance operations and guest services as we increase the volume of our spaceflights;
Current wording
•hire additional personnel in manufacturing operations, testing programs, maintenance operations and guest services as we increase the volume of our spaceflights; and
Previous wording
•scale up required operational facilities, such as hangars and warehouses; and
Current wording
•scale up required operational facilities, such as hangars and warehouses;
Previous wording
We completed the 2022 ATM Program in June 2023, selling a total of 59.4 million shares of common stock and generating $300.0 million in gross proceeds since its inception, before deducting $3.0 million in underwriting discounts, commissions and other expenses.
Current wording
We completed the 2022 ATM Program in June 2023, selling a total of 3.0 million shares of common stock and generating $300 million in gross proceeds, before deducting $3.0 million in underwriting discounts, commissions and other expenses.
Previous wording
As of December 31, 2023, we sold a total of 79.7 million shares of common stock under the 2023 ATM Program, generating $287.5 million in gross proceeds, before deducting $2.9 million in underwriting discounts, commissions and other expenses.
Current wording
As of December 31, 2024, we sold a total of 4.1 million shares of common stock under the 2024 ATM Program, generating $29.1 million in gross proceeds since its inception, before deducting $0.9 million in underwriting discounts, commissions and other expenses.
Previous wording
Beyond the next twelve months, our principal demand for funds will be to sustain our operations, including the construction of additional spaceships and motherships, expansion of our footprint at Spaceport America in New Mexico, construction of our astronaut campus and payment of the principal amount of our convertible senior notes as they become due. We expect to generate revenue from our spaceflight program, which commenced with our first commercial spaceflight,'Galactic 01,' in June 2023. To the extent this source of capital as well as the sources of capital described above are insufficient to meet our needs, we may need to seek additional debt or equity financing.
Current wording
Beyond the next twelve months, our principal demand for funds will be to sustain our operations, operate our spaceline at Spaceport America in New Mexico, and expand our fleet of spaceships, motherships, and supporting facilities. We expect to generate revenue from our spaceflight program, which is expected to restart in 2026. To the extent this source of capital as well as sources of capital described above are insufficient to meet our needs, we may need to seek additional debt or equity financing.
Previous wording
We have estimated the fair value for each service-based stock option award as of the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model considers, among other factors, the expected life of the award and the expected volatility of our stock price. We have estimated the fair value for each PSO and PSU award with market-based conditions as of the grant date using the Monte-Carlo simulation method. The Monte-Carlo simulation method considers, among other factors, the discount rates and future market conditions.
Current wording
We have estimated the fair value for each service-based stock option award as of the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model considers, among other factors, the expected life of the award and the expected volatility of our stock price. We have estimated the fair value for each PSO and PSU award with market-based conditions as of the grant date using the Monte-Carlo simulation method. The Monte-Carlo simulation method considers, among other factors, the discount rate and future market conditions.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Following the launch of commercial service and achievement of technological feasibility, we began presenting the operating expenses supporting our commercial spaceline activities as spaceline operations expense in the accompanying consolidated statements of operations and comprehensive loss. Expenses incurred prior to the achievement of technological feasibility were classified as research and development and selling, general and administrative expenses.
Previous report — wording carried elsewhere
Research and development expenses represent costs incurred to support activities that advance our future fleet towards commercialization, including basic research, applied research, concept formulation studies, design, development, and related testing activities. Research and development costs will consist primarily of equipment, material, and labor costs (including from
Previous report — wording carried elsewhere
third-party contractors) for designing the spaceflight system’s structure, spaceflight propulsion system, and flight profiles for our next generation spaceships and motherships, as well as allocated facilities and other supporting overhead costs.
Previous report — wording carried elsewhere
We conduct research and development activities to support the advancement of our future fleet towards commercialization. These activities include basic research, applied research, concept formulation studies, design, development and related testing.