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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM 10-Q
____________________________
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 001-40823
____________________________
INTUITIVE MACHINES, INC.
(Exact name of registrant as specified in its charter)
____________________________
Delaware36-5056189
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
13467 Columbia Shuttle Street
Houston, Texas
77059
(Address of Principal Executive Offices)(Zip Code)
(281) 520-3703
Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share
LUNR
The Nasdaq Stock Market LLC
Warrants to purchase one share of Class A Common Stock, each at an exercise price of $11.50 per share
LUNRW
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
x
Smaller reporting company
x
Emerging growth company
x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of May 8, 2024, the Registrant had 53,723,453 shares of Class A common stock, $0.0001 par value, 0 shares of Class B common stock, $0.0001 par value, and 70,909,012 shares of Class C common stock, $0.0001 par value, outstanding.



INTUITIVE MACHINES, INC.
Table of Contents
Page
Unaudited Condensed Consolidated Statements of Mezzanine Equity




CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would,” “strategy,” “outlook,” the negative of these words or other similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements include, but are not limited to statements regarding our expectations and plans relating to our first mission to the Moon, including the expected timing thereof and our progress and preparation thereof; our expectations with respect to, among other things, demand for our product portfolio, our submission of bids for contracts; our expectations regarding protests of government contracts awarded to us; our operations, our financial performance and our industry; our business strategy, business plan, and plans to drive long term sustainable shareholder value; and our expectations on revenue and cash generation. These forward-looking statements reflect our predictions, projections or expectations based upon currently available information and data. Our actual results, performance or achievements may differ materially from those expressed or implied by the forward-looking statements, and you are cautioned not to place undue reliance on these forward-looking statements. The following important factors and uncertainties, among others, could cause actual outcomes or results to differ materially from those indicated by the forward-looking statements in this Quarterly Report:

our reliance upon the efforts of our Board of Directors (the “Board”) and key personnel to be successful;
our limited operating history;
our failure to manage our growth effectively;
competition from existing or new companies;
unsatisfactory safety performance of our spaceflight systems or security incidents at our facilities;
failure of the market for commercial spaceflight to achieve the growth potential we expect;
any delayed launches, launch failures, failure of our satellites or lunar landers to reach their planned orbital locations, significant increases in the costs related to launches of satellites and lunar landers, and insufficient capacity available from satellite and lunar lander launch providers;
our customer concentration;
risks associated with commercial spaceflight, including any accident on launch or during the journey into space;
risks associated with the handling, production and disposition of potentially explosive and ignitable energetic materials and other dangerous chemicals in our operations;
our reliance on a limited number of suppliers for certain materials and supplied components;
failure of our products to operate in the expected manner or defects in our products;
counterparty risks on contracts entered into with our customers and failure of our prime contractors to maintain their relationships with their counterparties and fulfill their contractual obligations;
failure to comply with various laws and regulations relating to various aspects of our business and any changes in the funding levels of various governmental entities with which we do business;
our failure to protect the confidentiality of our trade secrets and know how;
our failure to comply with the terms of third-party open source software our systems utilize;
our ability to maintain an effective system of internal control over financial reporting, and to address and remediate existing material weaknesses in our internal control over financial reporting;
the U.S. government’s budget deficit and the national debt, as well as any inability of the U.S. government to complete its budget process for any government fiscal year, and our dependence on U.S. government contracts;
our failure to comply with U.S. export and import control laws and regulations and U.S. economic sanctions and trade control laws and regulations;



uncertain global macro-economic and political conditions (including as a result of a failure to raise the “debt ceiling”) and rising inflation;
our history of losses and failure to achieve profitability in the future or failure of our business to generate sufficient funds to continue operations;
our public securities’ potential liquidity and trading; and
and other factors detailed under the section titled Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report on Form 10-K”), the section titled Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations and the section titled Part II., Item 1A. “Risk Factors” in this Quarterly Report and in our subsequent filings with the U.S. Securities and Exchange Commission (the “SEC”).

These forward-looking statements are based on information available as of the date of this Quarterly Report and current expectations, forecasts, and assumptions, and involve a number of judgments, risks, and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws. We intend the forward-looking statements contained in this Quarterly Report to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, the (“Exchange Act”).




Part I – Financial Information
Item 1. Financial Statements
1


INTUITIVE MACHINES, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share data and par value)
(Unaudited)
March 31,
2024
December 31,
2023
ASSETS
Current assets
Cash and cash equivalents$55,242 $4,498 
Restricted cash2,042 62 
Trade accounts receivable, net of allowance for expected credit losses of $1,660 and $0, respectively
35,223 16,881 
Contract assets19,846 6,489 
Prepaid and other current assets3,375 3,681 
Total current assets115,728 31,611 
Property and equipment, net19,523 18,349 
Operating lease right-of-use assets35,402 35,853 
Finance lease right-of-use assets118 95 
Total assets$170,771 $85,908 
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued expenses$47,429 $16,771 
Accounts payable - affiliated companies7,904 3,493 
Current maturities of long-term debt8,000 8,000 
Contract liabilities, current28,729 45,511 
Operating lease liabilities, current3,857 4,833 
Finance lease liabilities, current32 25 
Other current liabilities8,862 4,747 
Total current liabilities104,813 83,380 
Contract liabilities, non-current3,610  
Operating lease liabilities, non-current31,260 30,550 
Finance lease liabilities, non-current80 67 
Earn-out liabilities36,629 14,032 
Warrant liabilities38,312 11,294 
Other long-term liabilities4 4 
Total liabilities214,708 139,327 
Commitments and contingencies (Note 12)
MEZZANINE EQUITY
Series A preferred stock subject to possible redemption, $0.0001 par value, 25,000,000 shares authorized, 5,000 and 26,000 shares issued and outstanding
5,560 28,201 
Redeemable noncontrolling interests443,181 181,662 
SHAREHOLDERS’ DEFICIT
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 52,496,932 and 22,237,988 shares issued, and 51,246,932 and 20,987,988 outstanding
5 2 
Class B common stock, $0.0001 par value, 100,000,000 shares authorized, 0 shares issued and outstanding
  
Class C common stock, $0.0001 par value, 100,000,000 shares authorized, 70,909,012 shares issued and outstanding
7 7 
Treasury stock, at cost, 1,250,000 shares, at cost
(12,825)(12,825)
Paid-in capital  
Accumulated deficit(480,837)(250,466)
Total shareholders’ deficit attributable to the Company(493,650)(263,282)
Noncontrolling interests 972  
Total shareholders’ deficit(492,678)(263,282)
Total liabilities, mezzanine equity and shareholders’ deficit$170,771 $85,908 
The accompanying notes are an integral part of these condensed consolidated financial statements
2


INTUITIVE MACHINES, INC.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(Unaudited)
Three Months Ended March 31,
20242023
Revenue$73,068 $18,236 
Operating expenses:
Cost of revenue (excluding depreciation)60,911 23,126 
Depreciation414 296 
General and administrative expense (excluding depreciation)17,143 8,777 
Total operating expenses78,468 32,199 
Operating loss(5,400)(13,963)
Other expense, net:
Interest expense, net(20)(279)
Change in fair value of earn-out liabilities(22,597)(3,726)
Change in fair value of warrant liabilities(23,964) 
Change in fair value of SAFE Agreements (2,353)
Loss on issuance of securities(68,676) 
Other income, net1 89 
Total other expense, net(115,256)(6,269)
Loss before income taxes(120,656)(20,232)
Income tax expense (3,215)
Net loss(120,656)(23,447)
Net loss attributable to Intuitive Machines, LLC prior to the Business Combination (5,751)
Net loss (post Business Combination)(120,656)(17,696)
Net loss attributable to redeemable noncontrolling interest(23,291)(8,336)
Net income attributable to noncontrolling interest972  
Net loss attributable to the Company(98,337)(9,360)
Less: Preferred dividends(471)(328)
Net loss attributable to Class A common shareholders$(98,808)$(9,688)
Net loss per share (1)
Net loss per share of Class A common stock - basic and diluted$(2.70)$(0.64)
Weighted-average common shares outstanding
Weighted average shares outstanding - basic and diluted36,612,27015,224,378
(1)As a result of the Business Combination, the capital structure changed and the net loss per share information for 2023 represents results after the Closing Date of the Business Combination, for the period from February 13, 2023 through March 31, 2023. See Note 1 - Business Description and Note 11 - Net Loss per Share for additional information.


The accompanying notes are an integral part of these condensed consolidated financial statements
3


INTUITIVE MACHINES, INC.
Condensed Consolidated Statements of Mezzanine Equity
(In thousands except per share data)
(Unaudited)


Three Months Ended March 31, 2024
Series A Preferred StockRedeemable Noncontrolling Interest
SharesAmount
Balance, December 31, 202326,000$28,201 $181,662 
Conversion of Series A preferred stock (Note 7)(21,000)(23,120)— 
Cumulative preferred dividends471 — 
Accretion of preferred stock discount8 — 
Subsequent remeasurement of redeemable noncontrolling interests— 284,810 
Net loss attributable to redeemable noncontrolling interests— (23,291)
Balance, March 31, 20245,000$5,560 $443,181 


Three Months Ended March 31, 2023
Series A Preferred StockRedeemable Noncontrolling Interest
SharesAmount
Balance, December 31, 2022   
Issuance of Series A preferred stock26,000 25,827 — 
Cumulative preferred dividends328 — 
Establishment of redeemable noncontrolling interests— (85,865)
Subsequent remeasurement of redeemable noncontrolling interests— 830,229 
Net loss attributable to redeemable noncontrolling interests— (8,336)
Balance, March 31, 202326,000$26,155 $736,028 



The accompanying notes are an integral part of these condensed consolidated financial statements
4


INTUITIVE MACHINES, INC.
Condensed Consolidated Statements of Shareholders’ Deficit
(In thousands except per share data)
(Unaudited)


Three Months Ended March 31, 2024
Common Stock
Class A
Common Stock
Class C
Treasury StockPaid-in
Capital
Accumulated
Deficit
Shareholders’ Deficit attributable to the CompanyNCITotal Shareholders’ Deficit
SharesAmountSharesAmount
Balance, December 31, 202322,279,876$2 70,909,012$7 $(12,825)$ $(250,466)$(263,282)$ $(263,282)
Share-based compensation expense— — — 3,926 — 3,926 — 3,926 
Cumulative preferred dividends— — — (471)— (471)— (471)
Accretion of preferred stock discount— — — (8)— (8)— (8)
Conversion of Series A preferred stock (Note 7)7,738,7431 — — 23,119 — 23,120 — 23,120 
Class A common stock issued for warrants exercised18,823,6332 — — 126,210 — 126,212 — 126,212 
Class A common stock issued related to loan conversion (Notes 5 and 7)3,487,278— — — — — — —  
Class A common stock issued for stock options exercised167,402— — — — — — —  
Subsequent remeasurement of redeemable noncontrolling interests— — — (152,776)(132,034)(284,810)— (284,810)
Net income attributable to noncontrolling interest— — — — — — 972 972 
Net loss attributable to the Company— — — — (98,337)(98,337)— (98,337)
Balance, March 31, 202452,496,932$5 70,909,012$7 $(12,825)$ $(480,837)$(493,650)$972 $(492,678)


Three Months Ended March 31, 2023
Members UnitsCommon Stock
Class A
Common Stock
Class B
Common Stock
Class C
Treasury StockPaid-in
Capital
Accumulated
Deficit
Total Shareholders’ Deficit
UnitsAmountSharesAmountSharesAmountSharesAmount
Balance, December 31, 2022122,505,500$1 $ $ $ $ $14,967 $(72,587)$(57,619)
Issuance of units21,500— — — — — 22 — 22 
Share-based compensation expense— — — — — 101 — 101 
Net loss— — — — — — (5,751)(5,751)
Effects of Business Combination
Recapitalization(122,527,000)(1)13,736,9322 10,566— 68,140,1886 — 47,438 — 47,445 
Conversion of SAFE Agreements— 2,066,667— — — — 20,667 — 20,667 
Issuance of warrants to preferred shareholders— — — — — 173 — 173 
Transaction costs— — — — — (24,445)— (24,445)
Establishment of the earn-out liabilities— — — — — (99,659)— (99,659)
Establishment of redeemable noncontrolling interest— — — — — 85,865 — 85,865 
Activities subsequent to the Business Combination
Share-based compensation expense— — — — — 106 — 106 
Cumulative preferred dividends— — — — — (328)— (328)
Repurchase of common stock— — — — (12,825)— — (12,825)
Class A common stock issued for warrants exercised— 218,205— — — — 2,509 — 2,509 
Subsequent remeasurement of redeemable noncontrolling interests— — — — — (47,416)(782,813) 
Net income attributable to the Company— — — — — — (9,360)(9,360)
Balance, March 31, 2023$ 16,021,804$2 10,566$ 68,140,188$6 $(12,825)$ $(870,511)$(883,328)

The accompanying notes are an integral part of these condensed consolidated financial statements
5


INTUITIVE MACHINES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended March 31,
20242023
Cash flows from operating activities:
Net loss$(120,656)$(23,447)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation414 296 
Bad debt expense1,660  
Share-based compensation expense3,926 207 
Change in fair value of SAFE Agreements 2,353 
Change in fair value of earn-out liabilities22,597 3,726 
Change in fair value of warrant liabilities23,964  
Loss on issuance of securities68,676  
Other 582 
Changes in operating assets and liabilities:
Trade accounts receivable, net(20,002)(1,006)
Contract assets(13,357)(4,727)
Prepaid expenses305 (2,785)
Other assets, net429 178 
Accounts payable and accrued expenses30,658 6,994 
Accounts payable – affiliated companies4,411 170 
Contract liabilities – current and long-term(13,172)(8,140)
Other liabilities3,705 6,933 
Net cash used in operating activities(6,442)(18,666)
Cash flows from investing activities:
Purchase of property and equipment(1,588)(8,565)
Net cash used in investing activities(1,588)(8,565)
Cash flows from financing activities:
Proceeds from Business Combination 8,055 
Proceeds from issuance of Series A Preferred Stock 26,000 
Transaction costs (782)
Proceeds from borrowings10,000  
Repayment of loans(10,000) 
Proceeds from issuance of securities10,000  
Stock option exercises165 22 
Forward purchase agreement termination 12,730 
Warrants exercised50,589 2,243 
Net cash provided by financing activities60,754 48,268 
Net increase in cash, cash equivalents and restricted cash52,724 21,037 
Cash, cash equivalents and restricted cash at beginning of the period4,560 25,826 
Cash, cash equivalents and restricted cash at end of the period57,284 46,863 
Less: restricted cash2,042 62 
Cash and cash equivalents at end of the period$55,242 $46,801 
Supplemental disclosure of cash flow information
Cash paid for interest, net$212 $464 
Cash paid for taxes$ $9 
Noncash financing activities:
Transaction costs$ $(23,663)
SAFE Agreements$ $20,667 
Conversion of Series A preferred stock (Note 7)$23,120 $ 
Preferred dividends$(471)$(328)

The accompanying notes are an integral part of these condensed consolidated financial statements
6



INTUITIVE MACHINES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BUSINESS DESCRIPTION

Intuitive Machines, Inc. (formerly known as Inflection Point Acquisition Corp. or “IPAX”), collectively with its subsidiaries (the “Company,” “IM,” “Intuitive Machines,” “we,” “us” or “our”) designs, manufactures and operates space products and services. Intuitive Machines’ near-term focus is to create and operate space systems and space infrastructure on and in the vicinity of the Moon that enable scientific and human exploration and utilization of lunar resources to support sustainable human presence on the Moon and exploration to Mars and beyond. Intuitive Machines offers its customers the flexibility needed to pioneer a thriving and diverse lunar economy designed to enable a permanent presence in lunar orbit and on the lunar surface. IM is currently headquartered in Houston, Texas.

Intuitive Machines, Inc. was a blank check company originally incorporated on January 27, 2021 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On September 24, 2021, IPAX consummated an initial public offering, after which its securities began trading on the Nasdaq Stock Market LLC (“Nasdaq”).

IPAX Business Combination

On September 16, 2022, IPAX entered into a certain Business Combination Agreement (the “Business Combination Agreement”) by and between IPAX and Intuitive Machines, LLC, a Delaware limited liability company (formerly, a Texas limited liability company). On February 10, 2023, IPAX filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and certificate of corporate domestication with the Secretary of State of the State of Delaware, pursuant to which IPAX was domesticated and continues as a Delaware corporation, changing its name to “Intuitive Machines, Inc.”

On February 13, 2023 (the “Closing Date”), Intuitive Machines, Inc. and Intuitive Machines, LLC consummated the previously announced business combination (the “Business Combination”) and related transactions (the “Transactions”) contemplated by the Business Combination Agreement. As a result of the Transactions, all of the issued and outstanding common units of Intuitive Machines, LLC were converted into common stock of Intuitive Machines, Inc. using an exchange ratio of 0.5562 shares of Intuitive Machines, Inc. common stock per each unit of Intuitive Machines, LLC Common Unit. In addition, Intuitive Machines, LLC’s share-based compensation plan and related share-based compensation awards were exchanged or converted, as applicable, into common stock of Intuitive Machines, Inc.

In connection with the Transactions, the Company was reorganized into an Up-C structure, in which substantially all of the assets and business of the Company are held by Intuitive Machines, LLC and continue to operate through Intuitive Machines, LLC and its subsidiaries. Intuitive Machines, Inc. is a holding company whose only material asset is its equity ownership interests of Intuitive Machines, LLC. While Intuitive Machines, LLC became a subsidiary of Intuitive Machines, Inc. and Intuitive Machines, Inc. was appointed as its managing member, Intuitive Machines, LLC was deemed to be the acquirer in the Business Combination for accounting purposes. Accordingly, the Business Combination was accounted for as a reverse recapitalization, in which case the condensed consolidated financial statements of the Company represent a continuation of the Intuitive Machines, LLC and the issuance of common stock in exchange for the net assets of Intuitive Machines, Inc. was recorded at historical cost with no recognition of goodwill or other intangible assets. Operations prior to the Business Combination are those of Intuitive Machines, LLC. In addition, the number of shares subject to, and the exercise price of, the Company’s outstanding options were adjusted to reflect the Business Combination. The treatment of the Business Combination as a reverse recapitalization was based upon the pre-merger members of Intuitive Machines, LLC holding the majority of the voting interests of Intuitive Machines, Inc., Intuitive Machines, LLC’s existing management team serving as the initial management team of Intuitive Machines, Inc., Intuitive Machines, LLC’s appointment of the majority of the initial board of directors of Intuitive Machines, Inc., and the significance of Intuitive Machines, LLC’s operations prior to the Business Combination which represent the entirety of Company’s operations.

In connection with the Business Combination, approximately $34.1 million of cash held in trust, net of redemptions by IPAX’s public shareholders, became available for use by the Company as well as proceeds received from the contemporaneous sale of preferred stock in connection with the closing of a PIPE investment. In addition, the Company entered into a common stock purchase agreement, dated September 16, 2022 (the “Cantor Purchase Agreement”) relating to an equity facility under which shares of newly issued Intuitive Machines Class A common stock, par value $0.0001 per share (the “Class A Common Stock”) may be sold to CF Principal Investments LLC (“CFPI”), at the Company’s discretion, up to the lesser of (i.) $50.0 million and (ii) the “exchange cap” specified therein, subject to certain customary conditions and limitations set for in the Cantor Purchase Agreement. Beginning on February 14, 2023, the Company’s
7


Class A Common Stock and warrants to purchase the Class A Common Stock at an exercise price of $11.50 per share (the “Public Warrants”) began trading on Nasdaq under the symbols “LUNR” and “LUNRW,” respectively.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation
The Company’s unaudited condensed consolidated financial statements and related notes have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim reporting and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements. Our condensed consolidated financial statements include the accounts of Intuitive Machines, the accounts of Intuitive Aviation Inc. (“IA” or “Intuitive Aviation”), a wholly owned subsidiary, Space Network Solutions, LLC (“SNS” or “Space Network Solutions”) a majority-owned subsidiary, and IX, LLC, a variable interest entity (“VIE”) for which we are the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of and for the years ended December 31, 2023 and 2022 contained in our Annual Report on Form 10-K, filed with the SEC on March 25, 2024. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. Management’s opinion is that all adjustments for a fair statement of the results for the interim periods have been made, and all adjustments are of a normal recurring nature or a description of the nature and amount of any adjustments other than normal recurring adjustments have been appropriately disclosed.
Emerging Growth Company
The Company is an emerging growth company (“EGC”), as defined in Section 2(a) of the Securities Act of 1933, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 102(b)(1) of the JOBS Act exempts EGCs from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company did not opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an EGC, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
Use of Estimates
The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Due to the inherent uncertainty involved in making estimates, actual results could differ from those estimates.
The Company bases its estimates and assumptions on historical experience, other factors, including the current economic environment, and various other judgments that it believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future reporting periods.
Segment Reporting
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding resource allocation and assessing performance. All of the Company’s assets are maintained in the United States. The Company has determined that it operates in one operating segment and one reportable segment, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance.
8


Concentration of Credit Risks
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. By their nature, all such financial instruments involve risks, including the credit risk of nonperformance by counterparties.

The majority of the Company’s cash and cash equivalents are held at major financial institutions. Certain account balances exceed the Federal Deposit Insurance Corporation insurance limits of $250,000 per account. The Company generally does not require collateral to support the obligations of the counterparties and cash levels held at banks are more than federally insured limits. The Company limits its exposure to credit loss by maintaining its cash and cash equivalents with highly rated financial institutions. The Company has not experienced material losses on its deposits of cash and cash equivalents.
The Company monitors the creditworthiness of its customers to whom it grants credit terms in the normal course of its business. The Company evaluates the collectability of its accounts receivable based on known collection risks and historical experience. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations to the Company (e.g., bankruptcy filings, substantial downgrading of credit ratings), the Company records a specific allowance for expected credit losses against amounts to reduce the net recognized receivable to the amount it reasonably believes will be collected and revenue recognition is deferred until the amount is collected and the contract is completed. For all other customers, the Company records allowances for credit losses based on the specific analysis of the customer’s ability to pay on an as needed basis.
Major customers are defined as those individually comprising more than 10% of the Company’s total revenue. There was one major customer that accounted for 93% and 74%, respectively, of the Company’s total revenue for the three months ended March 31, 2024 and 2023, respectively. The largest customer’s accounts receivable balance was 84% and 80% as of March 31, 2024 and December 31, 2023, respectively.
Major suppliers are defined as those individually comprising more than 10% of the annual goods or services purchased. For the three months ended March 31, 2024 the Company had one major supplier representing 38% of goods and services purchased. For the three months ended March 31, 2023, the Company had two major suppliers representing 63% and 11% of goods and services purchased. As of March 31, 2024 and December 31, 2023, the one major supplier represented 45% and 2%, respectively, of the accounts payable balance.
Liquidity and Capital Resources

The unaudited condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023, and related notes were prepared on the basis of a going concern, which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business.
As of March 31, 2024, the Company had cash and cash equivalents of $55.2 million and working capital of $10.9 million. The Company has historically funded its operations through internally generated cash on hand, proceeds from sales of its capital stock including the execution of SAFE Agreements, proceeds from warrant exercises, and proceeds from the issuance of bank debt. In the first quarter of 2024, the Company received approximately $60.6 million in gross proceeds from warrant exercises and other equity transactions, as further described in Notes 7 and 8.
In connection with the Business Combination as discussed in Notes 1 and 7, the Company entered into the Cantor Purchase Agreement, pursuant to which the Company may direct CFPI, at the Company’s discretion, to purchase up to the lesser of (i) $50.0 million of newly issued shares of Class A Common Stock and (ii) the “exchange cap” specified therein, subject to certain customary conditions and limitations set forth in the agreement. Additionally, in April 2024, the Company and Cantor entered into a Controlled Equity Offering Sales Agreement with Cantor acting as the Company’s exclusive sales agent for the sale of newly issued shares of Class A Common Stock for aggregate proceeds up to $100.0 million.

Management believes that the cash and cash equivalents as of March 31, 2024, and the additional liquidity available with the Cantor Purchase Agreement and Controlled Equity Offering Sales Agreement discussed in Note 7, will be sufficient to fund the short-term liquidity needs and the execution of the business plan through at least the twelve-month period from the date the financial statements are issued.
9


Transaction Costs

Business Combination

Transaction costs consist of direct legal, consulting, audit and other fees related to the consummation of the Business Combination and related transactions as described further in Note 1. These costs were initially capitalized as incurred and recorded as prepaid expenses in our condensed consolidated balance sheets and totaled $5.3 million as of December 31, 2022. Upon the completion of the Business Combination, transaction costs directly related to the issuance of shares were netted against the proceeds from the merger and recorded as an offset in additional paid-in capital upon consummation of the transactions. Total transaction costs charged to additional paid in capital were approximately $24.4 million during the three months ended March 31, 2023. During the first quarter of 2023, approximately $782 thousand in transaction costs were paid by Intuitive Machines, LLC and $8.1 million in transaction costs were accrued in accounts payable in our condensed consolidated balance sheets. The remaining difference was paid by Intuitive Machines, LLC in 2022 or by IPAX prior to the closing of the Business Combination.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business entity to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For public business entities, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continue to provide the pre-ASU disclosures for the prior periods or may apply the amendments retrospectively by providing the revised disclosures for all period presented. The Company is assessing the potential impact of adopting the ASU on its financial statements.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. It requires a public entity to disclose the title and position of the Chief Operating Decision Maker. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company is assessing the potential impact of adopting the ASU on its financial statements.

Other Current Liabilities

As of March 31, 2024 and December 31, 2023, other current liabilities consisted of the following (in thousands):

March 31,
2024
December 31,
2023
Payroll accruals5,687 2,553 
Income tax payable20 20 
Professional fees accruals715 832 
Commercial insurance financing1,007 493 
Commitment shares liability (see Note 7)
755 755 
Other accrued liabilities678 94 
Other current liabilities$8,862 $4,747 

10


NOTE 3 - REVENUE
Disaggregated Revenue
We disaggregate our revenue from contracts with customers by contract type. The following table provides information about disaggregated revenue for the three months ended March 31, 2024 and 2023 (in thousands):
Three Months Ended March 31,
20242023
Revenue by Contract Type
Cost reimbursable$42,040 58 %$  %
Fixed price29,208 40 %16,595 91 %
Time and materials1,820 2 %1,641 9 %
Total$73,068 100 %$18,236 100 %
Contract Assets and Liabilities
Contract assets primarily relate to deferred contract costs for subcontracted launch services, as well as work completed not yet billed for performance obligations that are satisfied over time. Deferred contract costs and unbilled receivables are recorded contract assets on our condensed consolidated balance sheets. Contract assets related to deferred contract costs are amortized straight-line across the life of the long-term service arrangement. Contract assets related to work completed for performance obligations that are satisfied over time are transferred to receivables when the right to consideration becomes unconditional. Contract liabilities relate to billings or consideration received in advance of performance (obligation to transfer goods or services to a customer) under the contract as well as provisions for loss contracts. Contract liabilities are recognized as revenue when the performance obligation has been performed. Current deferred revenue and provisions for loss contracts are recorded in current contract liabilities on our condensed consolidated balance sheets. Long-term deferred revenue and provisions for loss contracts are recorded in long-term contract liabilities on our condensed consolidated balance sheets.
The following table presents contract assets as of March 31, 2024 and December 31, 2023 (in thousands):
March 31,
2024
December 31,
2023
Contract Assets
Unbilled receivables$13,289 $6,146 
Deferred contract costs6,557 343 
Total$19,846 $6,489 
Amortization expense associated with deferred contract costs for subcontracted launch services was recorded in cost of revenue and was $4.7 million and $9.9 million for the three months ended March 31, 2024 and 2023, respectively.
The following table presents contract liabilities as of March 31, 2024 and December 31, 2023 (in thousands):
March 31,
2024
December 31,
2023
Contract liabilities – current
Deferred revenue$19,184 $22,926 
Contract loss provision7,760 9,567 
Accrued launch costs1,785 13,018 
Total contract liabilities – current28,729 45,511 
Contract liabilities – long-term
Contract loss provision3,610  
Total contract liabilities – long-term3,610  
Total contract liabilities$32,339 $45,511 
Revenue recognized from amounts included in contract liabilities at the beginning of the period was $7.2 million and $15.8 million during the three months ended March 31, 2024 and 2023, respectively.
11


Loss Contracts
Contract losses are a result of constraining variable consideration and estimated contract costs exceeding current contract price. The Company experiences favorable or unfavorable changes to contract losses from time to time due to changes in estimated contract costs and modifications that result in changes to contract price. We recorded (favorable) and unfavorable changes in net losses related to contracts with customers of $(8.2) million and $6.7 million for the three months ended March 31, 2024 and 2023, respectively.
As of March 31, 2024, the status of these loss contracts was as follows:
The first contract, for lunar payload services, became a loss contract in 2019 due to the constraint of variable consideration. The contract was successfully completed in February 2024. As a result of the successful mission, previously constrained variable consideration of $12.3 million as of December 31, 2023 was released and approximately $11.6 million was recognized as revenue during the first quarter of 2024. For the three months ended March 31, 2024, and 2023, changes in estimated contract costs resulted in (favorable) and unfavorable changes of $(6.7) million and $5.4 million contract loss, respectively. As of December 31, 2023, the contract loss provision recorded in contract liabilities, current in our condensed consolidated balance sheets was $10 thousand.
The second contract, for lunar payload services, became a loss contract in 2021 due to the constraint of variable consideration and estimated contract costs exceeding current contract price. Variable consideration has been constrained to $0 from a total potential amount of $9.4 million. For the three months ended March 31, 2024 and 2023, changes in estimated contract costs resulted in an additional $1.1 million and $0.2 million in contract loss, respectively. As of March 31, 2024, and 2023, this contract was approximately 59% complete and 40% complete, respectively. The period of performance for this contract currently runs through June 2024 although we anticipate that the launch and post-launch services will occur in 2025 as a result of ongoing discussions with the customer and pending modifications to the contract. As of March 31, 2024 and December 31, 2023, the contract loss provision recorded in contract liabilities, current was $5.3 million and $7.4 million, respectively, and $3.6 million and zero, respectively, in contract liabilities, non-current in our condensed consolidated balance sheets.
The third contract, for lunar payload services, became a loss contract in 2022 due to the constraint of variable consideration and estimated contract costs exceeding current contract price. Variable consideration has been constrained to $0 from a total potential amount of $13.0 million. For the three months ended March 31, 2024 and 2023, changes in estimated contract costs resulted in (favorable) and unfavorable changes of $(1.9) million and $0.9 million contract loss, respectively. As of March 31, 2024 this contract was approximately 85% complete. The period of performance for this contract currently runs through June 2024 although we anticipate that the launch and post-launch services will occur in late 2024 as a result of ongoing discussions with the customer and pending modifications to the contract. As of March 31, 2024 and December 31, 2023, the contract loss provision recorded in contract liabilities, current in our condensed consolidated balance sheets was $2.5 million and $2.1 million, respectively.
The remaining loss contracts are individually and collectively immaterial.
Remaining Performance Obligations
Remaining performance obligations represent the remaining transaction price of firm orders for which work has not been performed and excludes unexercised contract options. As of March 31, 2024, the aggregate amount of the transaction price allocated to remaining fixed price performance obligations was $65.8 million. The Company expects to recognize revenue on approximately 50-55% of the remaining performance obligations over the next 9 months, 40-45% in 2025 and the remaining thereafter. Remaining performance obligations do not include variable consideration that was determined to be constrained as of March 31, 2024.
For time and materials contracts and cost reimbursable contracts, we have adopted the practical expedient that allows us to recognize revenue based on our right to invoice; therefore, we do not report unfulfilled performance obligations for time and materials agreements.

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NOTE 4 - PROPERTY AND EQUIPMENT, NET
As of March 31, 2024 and December 31, 2023, property and equipment, net consisted of the following (in thousands):
March 31,
2024
December 31,
2023
Vehicles and trailers$129 $129 
Computers and software2,700 2,864 
Furniture and fixtures1,707 1,666 
Machinery and equipment3,365 2,772 
Construction in progress14,688 13,795 
Property and equipment, gross22,589 21,226 
Less: accumulated depreciation and amortization(3,066)(2,877)
Property and equipment, net$19,523 $18,349 
Total depreciation expense related to property and equipment was $414 thousand and $296 thousand for the three months ended March 31, 2024 and 2023, respectively.
As of March 31, 2024 and December 31, 2023, the Company pledged property and equipment with net book value of approximately $19.5 million and $18.3 million, respectively, as security for its Credit Mobilization Facility (as defined in Note 5) with Live Oak Banking Company.
As of March 31, 2024, construction in progress includes construction costs of $14.7 million associated with the fabrication of a commercial communications satellite. The Company capitalized interest in connection with construction in progress of $213 thousand and $173 thousand for the three months ended March 31, 2024 and 2023, respectively.

NOTE 5 - DEBT
The following table summarizes our outstanding debt (in thousands):
March 31,
2024
December 31,
2023
Credit Mobilization Facility$8,000 $8,000 
Less: deferred financing costs  
Less: current maturities(8,000)(8,000)
Long-term debt, net of current maturities$ $ 
As of March 31, 2024 and December 31, 2023, the weighted-average interest rate on short-term borrowings outstanding was 10.62% and 10.20%, respectively.
Live Oak Credit Mobilization Facility
In December 2019, the Company entered into a loan agreement with Live Oak Banking Company (the “Credit Mobilization Facility”) which provided a $12.0 million credit mobilization facility that was paid in full as of November 2023. In July 2022, we entered into the Second Amended and Restated Loan Agreement with Live Oak Banking Company which provided an $8.0 million credit mobilization facility with a loan maturity of July 14, 2024. The Credit Mobilization Facility bears interest (payable monthly) at a rate per annum equal to the greater of (a) the prime rate, as published in the Wall Street Journal newspaper, plus 2.0% and (b) 5.0% and requires the Company to meet certain financial and other covenants and are secured by substantially all of the assets of the Company. There was $8.0 million outstanding under the Credit Mobilization Facility as of March 31, 2024 and December 31, 2023.

Bridge Loan

On January 10, 2024, the Company entered into a series of loan documents with Pershing LLC, an affiliate of Bank of New York Mellon, pursuant to which Pershing LLC agreed to an extension of credit in an amount not to exceed $10.0 million to the Company (the “Bridge Loan”). Borrowings under the Bridge Loan bear interest at the target interest rate set by the Federal Open Market Committee (“Fed Funds Rate”), subject to a 5.5% floor, plus a margin. For borrowings, the
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applicable rate margin is 0.9%. The $10.0 million in borrowings are available for working capital needs and other general corporate purposes must be repaid by February 22, 2024.

The Bridge Loan included guarantees (the “Credit Support Guarantees”) by Ghaffarian Enterprises, LLC (an affiliate of Dr. Kamal Ghaffarian) (“Ghaffarian Enterprises” or “Guarantor”) and documentation by which Ghaffarian Enterprises, LLC supported such Credit Support Guarantees with collateral including marketable securities (the “Credit Support”), in each case in favor of the lender for the benefit of the Company. On January 10, 2024, the Company and Ghaffarian Enterprises entered into a credit support fee and subrogation agreement, where the Company agreed to pay a support fee of $148 thousand for the Credit Support.

On January 29, 2024, the Bridge Loan was repaid in full as a result of $10.0 million in contributions from the Guarantor under the Bridge Loan Conversion transaction further described in Note 7.
NOTE 6 - INCOME TAXES

The Company is a corporation and thus is subject to United States (“U.S.”) federal, state and local income taxes. Intuitive Machines, LLC is a partnership for U.S. federal income tax purposes and therefore does not pay U.S. federal income tax on its taxable income. Instead, the Intuitive Machines, LLC unitholders, including the Company, are liable for U.S. federal income tax on their respective shares of Intuitive Machines, LLC’s taxable income. Intuitive Machines, LLC is liable for income taxes in those states which tax entities classified as partnerships for U.S. federal income tax purposes.

For the three months ended March 31, 2024 and 2023, we recognized a combined U.S. federal and state expense for income taxes of zero and $3.2 million, respectively. The effective combined U.S. federal and state income tax rates were zero and (15.9%) for the three months ended March 31, 2024 and 2023, respectively. For three months ended March 31, 2024, our effective tax rate differed from the statutory rate of 21% primarily due to deferred taxes for which no benefit is being recorded and losses attributable to noncontrolling interest unitholders that are taxable on their respective share of taxable income. For the three months ended March 31, 2023, our effective tax rate differed from the statutory rate primarily due to Intuitive Machines, LLC's status as a partnership for U.S. federal income tax purposes.

In conjunction with the consummation of the Transactions, Intuitive Machines, Inc. entered into the TRA with Intuitive Machines, LLC and the TRA Holders. Pursuant to the TRA, Intuitive Machines, Inc. is required to pay the TRA Holders 85% of the amount of cash tax savings, if any, in U.S. federal, state, and local income tax that are based on, or measured with respect to, net income or profits, and any interest related thereto that Intuitive Machines, Inc. realizes, or is deemed to realize, as a result of certain Tax Attributes, including (A) existing tax basis of certain assets of Intuitive Machines, LLC and its subsidiaries, (B) tax basis adjustments resulting from taxable exchanges of Intuitive Machines, LLC Common Units acquired by Intuitive Machines, Inc. (C) certain tax benefits realized by Intuitive Machines, Inc. as a result of the Business Combination, and (D) tax deduction in respect of portions of certain payments made under the TRA. All such payments to the TRA Holders are the obligations of the Intuitive Machines, Inc. and not that of Intuitive Machines, LLC. As of March 31, 2024, there have been no exchanges of Intuitive Machines, LLC units for Class A Common Stock and, accordingly, no deferred tax assets subject to the TRA or TRA liabilities currently exist.
NOTE 7 - MEZZANINE EQUITY AND EQUITY

Private Placement Transaction

On September 5, 2023, the Company consummated a securities purchase agreement (the “Purchase Agreement”) with Armistice Capital Master Fund Ltd (the “Purchaser”) pursuant to which the Company agreed to sell securities to the Purchaser in a private placement (the “Private Placement”). The Purchase Agreement provided for the sale and issuance by the Company of (i) an aggregate of 4,705,883 shares of the Company’s Class A Common Stock (the “PIPE Shares”) and (ii) an accompanying (a) warrant to purchase up to 4,705,883 shares of Class A Common Stock (the “Initial Series A Warrant”) at an exercise price of $4.75 per share and (b) warrant to purchase up to 4,705,883 shares of Class A Common Stock (the “Initial Series B Warrant”) at an exercise price of $4.75 per share, for aggregate gross proceeds of $20.0 million, before deducting related transaction costs of $1.4 million. The Initial Series A Warrant and the Initial Series B Warrant are immediately exercisable and will expire on March 5, 2029 and March 5, 2025, respectively.

See Note 8 for additional information on the Initial Series A and the Initial Series B Warrants.

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Bridge Loan Conversion

On January 28, 2024, the Company and the Guarantor entered into a letter agreement (the “Letter Agreement”) pursuant to which, on January 29, 2024 the Guarantor contributed $10.0 million to the Company for purposes of repaying the principal amount owed to the lender under the Bridge Loan in exchange for which the Company issued to the Guarantor 3,487,278 shares of the Company’s Class A Common Stock and Conversion Warrants described further in Note 8. Following the contribution, all amounts due to the Lender in satisfaction of the Bridge Loan were repaid in full.

See Note 8 for further discussion of the Conversion Warrants.

Capital Stock

The table below reflects share information about the Company’s capital stock as of March 31, 2024.

Par ValueAuthorizedIssuedTreasury StockOutstanding
Class A Common Stock$0.0001 500,000,00052,496,932(1,250,000)51,246,932
Class B Common Stock$0.0001 100,000,000
Class C Common Stock$0.0001 100,000,00070,909,01270,909,012
Series A Preferred Stock$0.0001 25,000,0005,0005,000
Total shares725,000,000123,410,944(1,250,000)122,160,944

Equity Facility

On September 16, 2022, the Company entered into the Cantor Purchase Agreement with CFPI relating to an equity facility under which shares of newly issued Class A Common Stock may be sold to CFPI by Intuitive Machines, Inc. Pursuant to the terms of the Cantor Purchase Agreement, Intuitive Machines, Inc. will have the right, but not the obligation, from time to time at its sole discretion, until the first day of the month following the 18-month period from and after the Commencement (as defined in the Cantor Purchase Agreement), to direct CFPI to purchase up to the lesser of (i) $50.0 million of newly issued shares of Class A Common Stock and (ii) the Exchange Cap, by delivering written notice to CFPI prior to the commencement of trading on any trading day, subject to certain customary conditions and limitations set forth in the Cantor Purchase Agreement. In connection with the execution of the Cantor Purchase Agreement, the Company agreed to issue 100,000 shares of Class A Common Stock to CFPI. The Company entered into a registration rights agreement with CFPI, pursuant to which it agreed to register for resale, pursuant to Rule 415 under the Securities Act, the shares of Class A Common Stock that are sold to CFPI under the equity facility and the Commitment Shares. During the second quarter of 2023, we recorded a recapitalization adjustment to increase other current liabilities and decrease to paid-in capital for $1.0 million to recognize the Commitment Share liability within our condensed consolidated balance sheets which was not previously recognized in the balance sheet of IPAX prior to the closing of the Business Combination.

In June 2023, the Company issued 95,785 Commitment Shares to CFPI. Under the terms of the Cantor Purchase Agreement, to the extent after the resale of the Commitment Shares by CFPI is less than $1.0 million, the Company will pay CFPI the difference between $1.0 million and the net proceeds of the resale of the Commitment Shares received by CFPI in cash. As of March 31, 2024, none of the Commitment Shares have been sold by CFPI and the Company has recorded a liability of approximately $755 thousand, reflected in other current liabilities in our condensed consolidated balance sheets as of March 31, 2024, representing the difference between $1.0 million and the fair value of the Commitment Shares.

As of March 31, 2024, no shares of Class A Common Stock have been sold to CFPI under the Cantor Purchase Agreement.

Controlled Equity Offering Sales Agreement

On March 27, 2024, the Company entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor” or “agent”) to sell shares of the Class A Common Stock having an aggregate sale price of up to $100.0 million through an “At The Market Offering” program (“the ATM Program) under which Cantor acts as the sales agent. The sales of the shares made under the ATM Program may be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The agent sells the Class A Common Stock based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose). Under the ATM Program, the agent is entitled to total compensation at a commission rate of up to 3.0% of the sales price per share sold.
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As of March 31, 2024, the Company has sold no shares of Class A Common Stock under the ATM Program.

Series A Preferred Stock (Mezzanine Equity)

As a result of the Private Placement Transaction on September 5, 2023 discussed above and in accordance with the terms of the Certificate of Designation, the Series A Preferred Stock conversion price was reduced from $12.00 per share to $5.10 per share. Additionally, as a result of the Warrant Exercise Agreement on January 10, 2024 in conjunction with the warrant transactions discussed in Note 8, the Series A Preferred Stock conversion price was further reduced from $5.10 per share to $3.00 per share.

In a series of notifications to the Company during February 2024, the registered holder of 21,000 shares of Series A Preferred Stock elected to convert all of its Series A Preferred Stock holdings into Class A Common Stock at a conversion price of $3.00 per share. The Company issued 7,738,743 shares of Class A Common Stock as a result of the conversion and recorded an increase to equity of approximately $23.1 million and a corresponding decrease to Series A Preferred Stock in the condensed consolidated balance sheets.

Redeemable Noncontrolling Interests (Mezzanine Equity)

As of March 31, 2024, the prior investors of Intuitive Machines, LLC own 58.0% of the outstanding common units of Intuitive Machines, LLC. The prior investors of Intuitive Machines, LLC have the right to exchange their common units in Intuitive Machines, LLC (along with the cancellation of the paired shares of Class B Common Stock or Class C Common Stock in Intuitive Machines, Inc.) for shares of Class A Common Stock on a one-to-one basis or cash proceeds for an equivalent amount. The option to redeem Intuitive Machines, LLC’s common units for cash proceeds must be approved by the Board, which as of March 31, 2024, is controlled by the prior investors. The ability to put common units is solely within the control of the holder of the redeemable noncontrolling interests. If the prior investors elect the redemption to be settled in cash, the cash used to settle the redemption must be funded through a private or public offering of Class A Common Stock and subject to the Company’s Board approval.
.
The financial results of Intuitive Machines, LLC and its subsidiaries are consolidated with Intuitive Machines, Inc. with the redeemable noncontrolling interests' share of our net loss separately allocated.
NOTE 8 - WARRANTS

Public and Private Warrants

In conjunction with the closing of the Business Combination, on February 13, 2023, the Company assumed a total of 23,332,500 warrants to purchase one share of the Company’s Class A Common Stock with an exercise price of $11.50 per share, subject to adjustment. Of the warrants, 16,487,500 Public Warrants were originally issued in the IPAX initial public offering (the “IPO”) and 6,845,000 private warrants (the “Private Warrants”) were originally issued in a private placement in connection with the IPO. The Company evaluated the terms of the warrants and determined they meet the criteria in ASC 815, “Derivatives and Hedging”, to be classified in shareholders’ equity upon issuance. The warrants became exercisable 30 days after the closing of the Business Combination and will expire five years after the closing of the Business Combination.

The Private Warrants are identical to the Public Warrants except that the Private Warrants may not, subject to certain limited exceptions, be transferred assigned or sold by the holders until 30 days after the closing of the Business Combination. The Public Warrants and Private Warrants do not entitle the holder to any voting rights, dividends or other rights as a shareholder of the Company prior to exercise.

Once the warrants become exercisable, the Company may redeem the outstanding warrants, in whole or in part, at a price of $0.01 per warrant upon a minimum of 30 days prior written notice of redemption and if, and only if, the closing price of the Company’s Class A Common Stock equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise pursuant to any anti-dilution adjustments) for any 20 days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders. The number of Class
16


A Common Stock issuable on exercise of each warrant will be increased in proportion to certain increases in outstanding Class A Common Stock including any share capitalization payable, sub-division of shares or other similar events.

During three months ended March 31, 2024, Public Warrants of 101 were exercised resulting in the issuance of an equal number of shares of Class A Common Stock. During the year ended December 31, 2023, Public Warrants of 1,402,106 were exercised resulting in the issuance of an equal number of shares of Class A Common Stock.

Series A Preferred Warrants

In conjunction with the issuance of Series A Preferred Stock at closing of the Business Combination, the Company issued 541,667 Preferred Investor Warrants to purchase one share of the Company’s Class A Common Stock with an exercise price of $15.00, subject to adjustment. The Company evaluated the terms of the Preferred Investor Warrants and determined they meet the criteria to be classified in shareholders’ equity upon issuance.

The Preferred Investor Warrants were immediately exercisable upon issuance and expire five years from the closing of the Business Combination. The Preferred Investor Warrants include customary cash and cashless exercise provisions and may be exercised on a cashless basis if, at any time after the six month anniversary of the Closing Date, there is not an effective registration statement with respect to the Class A Common Stock. The Preferred Investor Warrants have the same terms and conditions as the Public Warrants. The Preferred Investor Warrants do not entitle the holder to any voting rights, dividends or other rights as a shareholder of the Company prior to exercise.

As result of the Private Placement Transaction on September 5, 2023 discussed in Note 7 and in accordance with the terms of the Certificate of Designation, the Series A Preferred Warrants exercise price was reduced from $15.00 to $11.50 per share and the aggregate number of shares of Class A Common Stock issuable upon exercise of the Series A Preferred Warrants was proportionally increased to 706,522.

As of March 31, 2024, there have been no exercises of the Preferred Investor Warrants.

Warrant Exercise Agreement and Warrant Exercises

On January 10, 2024, the Company entered into a Warrant Exercise Agreement with the Armistice Capital Master Fund Ltd (the “Purchaser”) to exercise in full a warrant to purchase up to an aggregate 4,705,883 shares of Class A Common Stock (the “Initial Series B Warrant”). In consideration for the immediate and full exercise of the Initial Series B Warrant, the existing investor received (i) a new unregistered Series A Common Stock Purchase Warrant to purchase up to an aggregate of 4,705,883 shares of Class A Common Stock with an exercise price of $2.75 per share and a term of 5.5 years (the “New Series A Warrant”) and (ii) a new unregistered Series B Common Stock Purchase Warrant to purchase up to an aggregate of 4,705,883 shares of Class A Common Stock with an exercise price of $2.75 per share and a term of 18 months (the “New Series B Warrant”), collectively, (the “New Warrants”), in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933. In connection with the Warrant Exercise Agreement, the Company also agreed to reduce the exercise price of the Initial Series B Warrant from $4.75 to $2.50 per share and reduced the exercise price of a warrant to purchase up to 4,705,883 shares of Class A Common Stock (the “Initial Series A Warrant”) from $4.75 to $2.75 per share.

As a result of the modifications to the 4,705,883 Initial Series A Warrant and the 4,705,883 Initial Series B Warrant, collectively (the “Initial Warrants”), the Company recognized an unfavorable change in fair value of warrant liabilities of $1.2 million in the condensed consolidated statement of operations. Upon the immediate exercise of the 4,705,883 Initial Series B Warrants, the Company issued 4,705,883 shares of Class A Common Stock, received cash proceeds of approximately $11.8 million and recognized a gain on issuance of securities of approximately $1.3 million in the condensed consolidated statements of operations.

The New Series A Warrant and New Series B Warrant were immediately exercisable and have a term of 5.5 years and 18 months, respectively. The Company evaluated the terms of the New Warrants and determined they meet the criteria in ASC 815, “Derivatives and Hedging”, to be classified as a derivative liability, initially measured at fair value with changes in fair value recognized in other income (expense) on the condensed consolidated statement of operations. The New Series A Warrant and New Series B Warrant had an initial fair value of $10.8 million and $5.7 million, respectively, which was recorded as a $16.6 million loss on issuance of securities in our condensed consolidated statement of operations.

Subsequently, the Purchaser exercised 4,705,883 Initial Series A Warrants, 4,705,883 New Series A Warrants and 4,705,883 New Series B Warrants during the period from February 9, 2024 to February 23, 2024. As a result, the Company issued 14,117,649 shares of Class A Common Stock and received cash proceeds of approximately $38.8 million.
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The Company recorded a loss on issuance of securities of approximately $47.9 million as a result of these warrant exercises.

Conversion Warrants

In connection with the Bridge Loan Conversion discussed further in Note 7, the Company agreed to issue to the Guarantor, pursuant to Section 4(a)(2) of the Securities Act of 1933, (i) a new unregistered Series A Common Stock Purchase Warrant to purchase up to an aggregate of 4,150,780 shares of, at the Guarantor’s election, Class A Common Stock (at an exercise price per share equal to $2.57 per share), Class C Common Stock (at an exercise price per share equal to $0.0001 per share), or a combination thereof, and a term of 5 years, (the “Conversion Series A Warrant”) and (ii) a new unregistered Series B Common Stock Purchase Warrant to purchase up to an aggregate of 4,150,780 shares of, at the Guarantor’s election, Class A Common Stock (at an exercise price per share equal to $2.57 per share), Class C Common Stock (at an exercise price per share equal to $0.0001 per share), or a combination thereof, and a term of 18 months (the “Conversion Series B Warrant”), collectively (the “Conversion Warrants”). The Company evaluated the terms of the Conversion Warrants and determined they meet the criteria in ASC 815, “Derivatives and Hedging”, to be classified as a derivative liability, initially measured at fair value with changes in fair value recognized in earnings in other income (expense) on the consolidated statement of operations.

The Conversion Series A Warrant and Conversion Series B Warrant had an initial fair value of $10.0 million and $5.5 million, respectively. The gross proceeds of $10.0 million from the Letter Agreement were allocated to the Conversion Warrants resulting in a loss on the transaction of approximately $5.5 million recognized as loss on issuance of securities in our condensed consolidated statement of operations. As of March 31, 2024, the fair value of the Conversion Series A Warrant and Conversion Series B Warrant increased to approximately $21.8 million and $16.5 million, respectively, resulting in a loss of approximately $22.8 million recognized as change in fair value of warrant liabilities in our condensed consolidated statement of operations.

As of March 31, 2024, there have been no exercises of the Conversion Warrants.


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NOTE 9 - SHARE-BASED COMPENSATION
2021 Unit Option Plan
On May 25, 2021, the Intuitive Machines, LLC’s board of directors adopted, and its members approved the 2021 Unit Option Plan (the “2021 Plan”). The 2021 Plan allowed the Intuitive Machines, LLC to grant incentive unit options (“Incentive Unit Options”) to purchase Class B unit interests. Pursuant to the 2021 Plan, up to 6,125,000 shares of Class B units were reserved for issuance, upon exercise of the aforementioned Incentive Unit Options made to employees, directors and consultants.

As a result of the Business Combination discussed in Note 1 and per the terms of the Second Amended and Restated Intuitive Machines, LLC Operating Agreement, the unexpired and unexercised outstanding Incentive Unit Options at the closing of the Business Combination, whether vested or unvested, were proportionately adjusted using a conversion ratio of 0.5562 (rounded down to the nearest whole number of options). The exercise price of each option was adjusted accordingly. Each Incentive Unit Option continues to be subject to the terms and conditions of the 2021 Plan and will be exercisable for Class B common units of Intuitive Machines, LLC (the “Class B Common Units”). When an option is exercised, the participant will receive Class A Common Stock. As a result of the conversions, there was no incremental compensation cost and the terms of the outstanding options, including fair value, vesting conditions and classification, were unchanged.
As of March 31, 2024, Intuitive Machines, LLC was authorized to issue a total of 1,146,245 Class B Common Units upon exercise of the Incentive Unit Options under the 2021 Plan. The following table provides a summary of the option activity under the 2021 Plan for the three months ended March 31, 2024:
Number of
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
(Years)
Aggregate
Intrinsic Value
(000’s)
Outstanding as of December 31, 20231,325,354$3.15 7.61
Granted 
Exercised(167,985)1.80 
Forfeited(11,124)8.63 
Balance as of March 31, 2024
1,146,245$3.30 7.46$3,986,920 
Exercisable as of March 31, 2024
402,868$2.65 7.35$1,570,005 
Aggregate intrinsic value represents the difference between the exercise price of the options and the market price of our Class A Common Stock.
The following table provides a summary of weighted-average grant-date fair value of unit options under the 2021 Plan:
Weighted-
Average
Grant Date
Fair Value
Non-vested as of December 31, 2023$1.80 
Granted 
Vested0.54 
Forfeited5.50 
Non-vested as of March 31, 2024
$1.89 
Share-based compensation expense related to options was $114 thousand and $207 thousand for the three months ended March 31, 2024 and 2023, respectively, and was classified in the condensed consolidated statement of operations under general and administrative expense. As of March 31, 2024, the Company had $585 thousand in estimated unrecognized share-based compensation costs related to outstanding unit options that is expected to be recognized over a weighted average period of 3.19 years.

Following the consummation of the Business Combination, no new awards will be granted under the 2021 Plan.

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Intuitive Machines, Inc. 2023 Long Term Omnibus Incentive Plan (the “2023 Plan”)

The 2023 Plan, which became effective in conjunction with closing of the Business Combination, provides for the award to certain directors, officers, employees, consultants and advisors of the Company of incentive and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards as well as cash-based awards and dividend equivalents, as determined, and subject to the terms and conditions established, by the Company’s Compensation Committee. Under the 2023 Plan, a maximum of 12,706,811 shares of Class A Common Stock are authorized to be issued. As of March 31, 2024, the Company has issued restricted stock units (“RSUs”) and performance stock units (“PSUs) as outlined in the following disclosures. No other awards have been granted under the 2023 Plan.

Restricted Stock Units and Performance Stock Units

Pursuant to the 2023 Plan, the Company grants RSUs with time-based vesting requirements which typically vest over one to four years and PSUs with target performance-based vesting requirements based on continuous service. The fair value of RSUs and PSUs are based on the Company’s closing stock price on the date of grant.

The following table provides a summary of the Company’s RSU and PSU activity:

Number of
Units(1)
Weighted Average Grant Date Fair Value
Outstanding as of December 31, 20231,826,946$7.00 
Granted3,143,6073.50 
Vested(137,500)7.56 
Forfeited(416,597)7.56 
Balance as of March 31, 20244,416,456$4.44 

(1)    PSU grants of 919,007 were included at the 100% attainment level which were based on several performance goals related to our mission which successfully completed in February 2024.

For the three months ended March 31, 2024, share-based compensation expense was $1.1 million for RSUs and $2.7 million for PSUs, and classified in the condensed consolidated statement of operations under general and administrative expense. As of March 31, 2024, the Company had $12.1 million in estimated unrecognized share-based compensation costs related to unvested RSUs that is expected to be recognized over a weighted average period of 3.42 years. As of March 31, 2024, the Company had $0.5 million in estimated unrecognized share-based compensation costs related to unvested PSUs that is expected to be recognized in April 2024.
NOTE 10 - FAIR VALUE MEASUREMENTS
The following tables summarize the fair value of assets and liabilities that are recorded in the Company’s condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 at fair value on a recurring basis.

March 31, 2024
Frequency of
Measurement
TotalLevel 1Level 2Level 3
Liabilities
Earn-out liabilitiesRecurring$36,629 $ $ $36,629 
Warrant liabilities - Series ARecurring21,792   21,792 
Warrant liabilities - Series BRecurring16,520   16,520 
  Warrant liabilities38,312   38,312 
Total liabilities measured at fair value$74,941 $ $ $74,941 
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December 31, 2023
Frequency of
Measurement
TotalLevel 1Level 2Level 3
Liabilities
Earn-out liabilitiesRecurring$14,032 $ $ $14,032 
Warrant liabilities - Series ARecurring8,612   8,612 
Warrant liabilities - Series BRecurring2,682   2,682 
  Warrant liabilities
11,294   11,294 
Total liabilities measured at fair value$25,326 $ $ $25,326 

The following table provides a roll-forward of the Company’s Level 3 liabilities (in thousands):

Earn-out liabilitiesWarrant liabilities - Series AWarrant liabilities - Series BTotal Warrant liabilities
Balance, December 31, 2023$14,032 $8,612 $2,682 $11,294 
Additions 20,827 11,262 32,089 
Change in fair value22,597 12,823 11,141 23,964 
Converted to equity (20,471)(8,564)(29,035)
Balance, March 31, 2024$36,629 21,791 16,521 38,312 

Earn-out Liabilities

The fair value of the earn-out liabilities as of March 31, 2024 was estimated using a Monte Carlo simulation approach that modeled the triggering events including the simulated stock price of the Company over the maturity dates. The significant assumptions utilized in estimating the fair value of the earn-out liabilities include: (i) Intuitive Machines stock price of $6.25; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 4.32%; and (iv) expected volatility of 85%.

As a result of the Business Combination, certain Intuitive Machines, LLC members received 10,000,000 earn out units of Intuitive Machines, LLC (“Earn Out Units”) subject to certain triggering events. Upon the vesting of any Earn Out Units, each of the certain Intuitive Machines, LLC members will be issued (i) by Intuitive Machines, LLC an equal number of Intuitive Machines, LLC Common Units and (ii) by Intuitive Machines, an equal number of shares of Class C Common Stock, in exchange for surrender of the applicable Earn Out Units and the payment to Intuitive Machines, Inc. of a per-share price equal to the par value per share of the Class C Common Stock. Under the earn out agreement, Earn Out Units of 2,500,000 vested for the year ended December 31, 2023. For the three months ended March 31, 2024, there was no vesting of Earn Out Units.

Warrant Liabilities

Initial Warrants

Pursuant to the Warrant Exercise Agreement on January 10, 2024 (as further described in Note 8 and discussed below), the terms of the Initial Warrants were modified, and the Initial Series B Warrant was exercised in full and converted to equity. The pre-modification fair value of the Initial Warrant liabilities was estimated using a Black-Scholes-Merton model. The significant assumptions utilized in estimating the pre-modification fair value of the Series A Warrant liabilities include: (i) a per share price of the Class A Common Stock of $2.83; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 3.99%; and (iv) expected volatility of 104%. The significant assumptions utilized in estimating the pre-modification fair value of the Series B Warrant liabilities include: (i) a per share price of the Class A Common Stock of $2.83; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 4.75%; and (iv) expected volatility of 85%.

During February 2024, the investor also fully exercised and converted to equity the Initial Series A Warrant. Refer to Note 8 for more information on the warrant exercises.

New Warrants

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Pursuant to the Warrant Exercise Agreement on January 10, 2024 as described further in Note 8, the fair values of the New Series A Warrant and the New Series B Warrant liabilities were estimated at $10.8 million and $5.7 million, respectively, utilizing the Black-Scholes-Merton model. The significant assumptions utilized in estimating the fair value of the New Series A Warrant liabilities include: (i) a per share price of the Class A Common Stock of $2.83; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 4.00%; and (iv) expected volatility of 105%. The significant assumptions utilized in estimating the fair value of the New Series B Warrant liabilities include: (i) a per share price of the Class A Common Stock of $2.83; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 4.55%; and (iv) expected volatility of 83%.

During February 2024, the investor fully exercised and converted to equity the New Warrants. Refer to Note 8 for more information on the warrant exercises.

Conversion Warrants

Pursuant to the Letter Agreement and the issuance of warrants on January 29, 2024 as described further in Notes 5 and 8, the fair values of the Conversion Series A Warrant and the Conversion Series B Warrant liabilities were estimated at $10.0 million and $5.5 million, respectively, utilizing the Black-Scholes-Merton model. The significant assumptions utilized in estimating the fair value of the Conversion Series A Warrant liabilities include: (i) a per share price of the Class A Common Stock of $3.05; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 3.97%; and (iv) expected volatility of 102%. The significant assumptions utilized in estimating the fair value of the Conversion Series B Warrant liabilities include: (i) a per share price of the Class A Common Stock of $3.05; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 4.53%; and (iv) expected volatility of 76%.

The fair value of the Conversion Series A Warrant and the Conversion Series B Warrant liabilities as of March 31, 2024 was estimated using a Black-Scholes-Merton model. The significant assumptions utilized in estimating the fair value of the Conversion Series A Warrant liabilities include: (i) a per share price of the Class A Common Stock of $6.25; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 4.23%; and (iv) expected volatility of 95%. The significant assumptions utilized in estimating the fair value of the Conversion Series B Warrant liabilities include: (i) a per share price of the Class A Common Stock of $6.25; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 4.88%; and (iv) expected volatility of 65%.


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NOTE 11 - NET LOSS PER SHARE

Basic net loss per share of Class A common stock is computed by dividing net loss attributable to Class A common shareholders for the three months ended March 31, 2024 and the period from February 13, 2023, or the Closing Date, to March 31, 2023 by the weighted-average number of shares of Class A common stock outstanding for the same periods.

Diluted net income per share of Class A common stock includes additional weighted average common shares that would have been outstanding if potential common shares with a dilutive effect had been issued using the if-converted method for the Series A Preferred Stock and the treasury method for our RSUs, PSUs, options, and warrants. During loss periods, diluted net loss per share for all periods presented is the same as basic net loss per share as the inclusion of the potentially issuable shares would be anti-dilutive.

The following table presents the computation of the basic and diluted income per share of Class A Common Stock (in thousands, except share data):
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2023
Numerator
Net loss (post Business Combination)$(120,656)$(17,696)
Less: Net loss attributable to redeemable noncontrolling interest(23,291)(8,336)
Less: Net income attributable to noncontrolling interest972  
Net loss attributable to the Company$(98,337)$(9,360)
Less: Cumulative preferred dividends(471)(328)
Net loss attributable to Class A common shareholders$(98,808)$(9,688)
Denominator
Basic weighted-average shares of Class A common stock outstanding36,612,27015,224,378
Net loss per share of Class A common stock - basic and diluted$(2.70)$(0.64)
The following table presents potentially dilutive securities, as of the end of the period, excluded from the computation of diluted net loss per share of Class A Common Stock as their effect would be anti-dilutive or because of unsatisfied contingent issuance conditions.
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2023
RSUs and PSUs(1)
4,416,456