Description of Restatement Adjustments

In August 2024, the Company began a comprehensive review of its accounting practices and procedures with respect to revenue recognition related to certain (i) contracts in its “Space as a Service” business (the “Space Services Contracts”) and (ii) contracts in its customer-funded or co-funded research and development arrangements (the “R&D Services Contracts,” and together with the Space Services Contracts, the “Space Services and R&D Services Contracts”) under applicable accounting standards and guidance. As a result of its comprehensive review, the Company determined that a restatement of its previously issued consolidated financial statements for the Affected Periods were required related to consideration of embedded leases for a Space Services Contract, recognition of an allowance for current expected credit loss related to a note receivable issued to a customer, revenue recognition for Space Services and R&D Services Contracts, and income statement classification of costs related to R&D Services Contracts.

The Company previously accounted for Space Services Contracts by recognizing revenue separately for each project phase (e.g., development, manufacturing, launch, and satellite operations). Because the Space Services Contracts involve bespoke satellites developed under customer requirements, the Company first evaluated whether any of the Space Services Contracts contain embedded leases. Based on this review, the Company concluded that one Space Services Contract contained embedded leases of satellites to the customer, but because the customer controls the satellites being constructed under this specific contract, it was a

failed build-to-suit arrangement under Accounting Standards Codification (“ASC”) Topic 842, Leases, and therefore, should still be accounted for under ASC 606, Revenue from Contracts with Customers. The Company determined that the contract requires the transaction price to be allocated to the following performance obligations: design/build, launch, operation, and material rights for up to ten additional satellites. As a result, the Company corrected the financial statements for the Affected Periods to reflect the correct pattern of revenue recognition: over time for the design/build of satellites controlled by the customer, utilizing an input method based on a cost-to-cost measure of progress over the period from initial design to launch; at the point in time when the launch occurred for launch service; over time utilizing an output method based on the number of satellite months as the measure of progress for operating the satellite; and when (or as) the underlying future services are transferred, or when the options expire, for material rights. The Company also made the following correction to account for costs incurred for this contract: construction-related costs were expensed as incurred rather than capitalized as property and equipment, and the prepaid fees for launch services were capitalized as costs to fulfill the contract within other current assets on the consolidated balance sheets, rather than capitalized as property and equipment. The capitalized prepaid launch costs will be recognized as expense upon the successful launch of the satellites.

In addition, under this contract, the customer provided a $4,500 promissory note to the Company to cover the launch costs. Historically, the Company had not recorded an allowance for current expected credit loss (“CECL”) on the promissory note balance. Management determined that the note receivable is subject to CECL guidance and recorded an allowance for current expected credit loss on the notes receivable balance for the applicable period as of the year ended December 31, 2023.

For the Space Services Contracts that do not contain an embedded lease, the Company concluded that, given the contractual clauses in Space Services Contracts by which each company retains its intellectual property, no control of intellectual property was transferred to the end customer during the pre-space period, and therefore, no performance obligation for the pre-space period exists. The Space Services Contracts were determined to generally only have one performance obligation for the overall space service. The transfer of control of the service to the customer starts when the satellite is in operation and the data service commences. As a result, the Company corrected the consolidated financial statements for the Affected Periods to remove revenue recognized during the pre-space period and recognize revenue over time utilizing an output measure of progress based on satellite months during its intended service period. In addition to the one performance obligation for the space service, certain Space Services Contracts have additional performance obligations for customers’ material rights to purchase additional satellites or services in the future at a discounted price, which resulted in the transaction price being allocated to the material rights in addition to the space service performance obligation. Revenue allocated to material rights is recognized over the period of service to which the material right relates or at the time the material right expires. The Company concluded that no change was required to the accounting treatment for costs associated with these contracts as the Company's existing practice of capitalizing satellite costs within property and equipment, the capitalization of costs to obtain the contracts within other current assets, and the related recognition of expense over the expected life of the assets or term of the contracts were appropriate.

For the R&D Services Contracts, the Company determined that its previous revenue recognition practice of revenue recognition on completion of each contractual milestone did not accurately represent the pattern of control transfer for the related intellectual property under the contract. The Company concluded that the pattern of control transfer for the intellectual property occurs over time as the Company performs its research and development activities. Therefore, the Company determined that revenue related to customer-funded research and development arrangements should have been recognized by using an input method based on a cost-to-cost measure of progress, over the period from initial design to launch, generally resulting in earlier revenue recognition, as the Company’s performance precedes the related milestone. All costs associated with the R&D Services Contracts were reclassified from research and development to cost of revenue within gross profit on the face of the consolidated statements of operations. In the past, these costs were classified as research and development within operating expenses. The costs for the Company’s internal research and development projects will remain as research and development expense within operating expenses.

As a result of the accounting errors detailed above, revenue, cost of revenue, research and development expense, other expense, income tax provision, accumulated other comprehensive loss, contract assets, contract liabilities, property and equipment, and allowance for current expected credit loss on notes receivable were determined to be incorrect on the Company’s consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive loss, consolidated statements of stockholders' equity and consolidated statements of cash flows as of and for the Affected Periods.

Other Adjustments

The Company historically incorrectly recorded advances made to vendors for property and equipment in other current assets before clearing it to property and equipment, except for the balance as of September 30, 2022, which was included in property and equipment in the condensed consolidated balance sheets. As advances to vendors were included in other current assets, the cash flows associated with these payments were incorrectly reflected in operating activities in the consolidated statements of cash flows. The Company determined that the advances made to vendors for property and equipment should be included in property and equipment. Therefore, advances to vendors were reclassified to property and equipment and the cash flows associated with the advances made were reclassified from operating activities to investing activities in the consolidated statements of cash flows for the applicable Affected Periods (beginning December 31, 2022).

The Company identified that the cost associated with a supply chain department should have been classified as cost of revenue but was incorrectly classified as general and administrative expense for the years ended December 31, 2023, and December 31, 2022, as well as the interim periods within such years. The Company corrected the classification by reclassifying all expenses recognized in that department from general and administrative expense to cost of revenue for the Affected Periods.

The Company identified that the cash balances held in certain foreign subsidiaries' accounts were remeasured incorrectly. The incorrect remeasurement impacted (i) the cash balance on the condensed consolidated balance sheets as of June 30, 2023 and September 30, 2023, and the consolidated balance sheets as of December 31, 2023; (ii) the foreign currency remeasurement loss on the condensed consolidated statements of operations for the three months and six months ended June 30, 2023 and the three months and nine months ended September 30, 2023; and the consolidated statements of operations for the year ended December 31, 2023. The Company corrected the remeasurement of the affected cash balances in the Affected Periods.

The Company did not accrue expenses for Delaware franchise taxes in the proper periods on its consolidated balance sheets and the expenses for Delaware franchise taxes were classified as other expense, net on its consolidated statements of operations. As part of this restatement, the Company accrued for the Delaware franchise taxes in the appropriate periods and reclassified the amounts from other expense, net to general and administrative expenses.

The Company identified that certain state taxes that were originally classified as other expense, net are related to state minimums or franchise-like taxes, which are based on revenues. Therefore, those amounts were incorrectly classified as other expense, and should have been classified as general and administrative expense. As part of this restatement, the Company reclassified the amounts from other expense, net to general and administrative expenses.

The Company identified that a settlement for a vendor dispute was incorrectly included in other expense, net on its consolidated statements of operations in the three and nine months ended September 30, 2023. As the settlement for a vendor dispute related to operating activities, the Company reclassified the amount from other expense, net to general and administrative expenses.

The Company identified that a customer deposit was incorrectly classified as other accrued expenses instead of contract liability on its consolidated balance sheets. As part of this restatement, the Company reclassified the amount from other accrued expense to contract liabilities, non-current.

Consolidated Financial Statements - Restatement Reconciliation Tables

The following tables reflect the impact of the restatement to the specific line items presented in the Company’s previously reported consolidated financial statements as of and for the years ended December 31, 2023 and 2022. The Company has provided in Note 16 the restated unaudited quarterly condensed consolidated financial information for each of the interim periods in the fiscal years ended December 31, 2023 and 2022. The accompanying applicable Notes to Consolidated Financial Statements have been updated to reflect the effects of the restatement.

The impact of the restatement to the consolidated statements of changes in stockholders’ equity includes increases of $32,683 and $19,081 in accumulated deficit as of December 31, 2023 and 2022, respectively, and a $9,480 increase to accumulated deficit as of January 1, 2022.

The amounts in the "As Previously Reported" columns are amounts derived from the Company's previously filed consolidated financial statements in the Original Form 10-K. The amounts in the "Restatement Adjustments" columns present the impact of the following adjustments:

(1) The shares of the Company's common stock and the per share amounts for the year ended December 31, 2022 have been retroactively adjusted to reflect the 1-for-8 reverse stock split (Note 1).

Description of restatement adjustments in the consolidated statements of operations:

Description of restatement adjustments in the consolidated statements of comprehensive loss:

Description of restatement adjustments in the consolidated statements of cash flows: