UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

¨  TRANSITION REPORT PURSUANT TO SECTION 13 March 31, 2023

OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-38202

SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.
Virgin Galactic Holdings, Inc.
(Exact name of registrant as specified in its charter)

Cayman Islands98-1366046

Delaware

85-3608069
(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

120 Hawthorne Avenue

Palo Alto, CA

94301
1700 Flight Way
Tustin California
92782
(Address of Principal Executive Offices)(Zip Code)

(650) 521-9007
(949)774-7640
(Registrant’s telephone number, including area code)

N/A
N/A
(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par value per shareSPCENew York Stock Exchange
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¨ ☒ Nox

☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yesx ☒ No¨

☐

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.

Large accelerated filer¨☒Accelerated filer¨☐
Non-accelerated filerx☐Smaller reporting company¨☐
Emerging growth companyx☐

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.¨

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yesx☐No¨

☒

As of November 13, 2017,May 3, 2023, there were 69,000,000282,586,299 shares of the Company’s Class A ordinary shares, par value $0.0001, and 17,250,000 sharescommon stock outstanding.

Table of the Company’s Class B ordinary shares, par value $0.0001, issued and outstanding.

Contents

VIRGIN GALACTIC HOLDINGS, INC.

SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.

Quarterly Report on Form 10-Q

TABLE OF CONTENTS

Page
Page
PART I –- FINANCIAL INFORMATION
Cautionary Note Regarding Forward-Looking Statements
2
4
4
1
CondensedConsolidated Statements of Operations and Comprehensive Loss
25
6
37
48
1217
1423
1423
PART II - OTHER INFORMATION
PART II – OTHER INFORMATION
1524
1524
1524
1624
1624
1624
1724
SIGNATURES26
18

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.

CONDENSED BALANCE SHEET

SEPTEMBER 30, 2017

(Unaudited)

ASSETS    
Current Assets    
Cash $933,763 
Prepaid expenses  368,098 
Total Current Assets  1,301,861 
     
Cash and marketable securities held in Trust Account  690,203,220 
Total Assets $691,505,081 
     
LIABILITIES AND SHAREHOLDERS’ EQUITY    
Current Liabilities    
Accounts payable and accrued expenses $133,947 
Advances from related party  115,971 
Promissory note – related party  100,000 
Total Current Liabilities  349,918 
     
Deferred underwriting fees  24,150,000 
Total Liabilities  24,499,918 
     
Commitments    
Class A ordinary shares subject to possible redemption, 66,181,024 shares at redemption value  662,005,162 
     
Shareholders’ Equity    
Preferred shares, $0.0001 par value; 5,000,000 authorized; none issued and outstanding    
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 2,818,976 shares issued and outstanding (excluding 66,181,024 shares subject to possible redemption)  282 
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 17,250,000 shares issued and outstanding  1,725 
Additional paid-in capital  5,065,530 
Accumulated deficit  (67,536)
Total Shareholders’ Equity  5,000,001 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $691,505,081 

The accompanying notes are an integral part of the unaudited condensed financial statements.

1



1
Table of ContentsSOCIAL CAPITAL HEDOSOPHIA

Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning us and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of management, as well as assumptions made by, and information currently available to management.
Forward-looking statements may be accompanied by words such as “achieve,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “future,” “grow,” “increase,” “intend,” “may,” “opportunity,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strategy,” “target,” “will,” “would,” or similar words, phrases, or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside our control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the following:
•any delay in completing the flight test program and final development of our spaceflight fleet, which is comprised of our spaceship, VSS Unity, and our mothership carrier aircraft, VMS Eve;
•our ability to successfully develop our next generation vehicles, and the time and costs associated with doing so;
•our ability to conduct test flights;
•our ability to operate our spaceflight system after commercial launch;
•the safety of our spaceflight systems;
•the development of the markets for commercial human spaceflight and commercial research and development payloads;
•our ability to effectively market and sell human spaceflights;
•our ability to convert our backlog or inbound inquiries into revenue;
•our anticipated full passenger capacity;
•our ability to achieve or maintain profitability;
•delay in development or the manufacture of spaceflight systems;
•our ability to supply our technology to additional market opportunities;
•our expected capital requirements and the availability of additional financing;
•our ability to attract or retain highly qualified personnel;
•the effect of terrorist activity, armed conflict, including any escalation of hostility arising out of the conflict between Russia and Ukraine, natural disasters or pandemic diseases, including without limitation the COVID-19 pandemic, on the economy generally, and on our future financial or operational results, and our access to additional financing;
•consumer preferences and discretionary purchasing activity, which can be significantly adversely affected by unfavorable economic or market conditions;
•extensive and evolving government regulation that impact the way we operate;
•risks associated with international expansion;
•our ability to maintain effective internal control over financial reporting and disclosure and procedures; and
•our ability to continue to use, maintain, enforce, protect and defend our owned and licensed intellectual property, including the Virgin brand.
2
Table of Contents
Additional factors that may cause actual results to differ materially from current expectations include, among other things, those set forth in Part I, Item 1.“Business,” Part I, Item 1A. “Risk Factors,” and Part II, Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Annual Report on Form 10-K") and in Part I, Item 2. “Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q. Although we believe that the expectations reflected in the forward-looking statements are reasonable, our information may be incomplete or limited, and we cannot guarantee future results. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
Each of the terms the “Company,” “Virgin Galactic,” “we,” “our,” “us” and similar terms used herein refer collectively to Virgin Galactic Holdings, Inc., a Delaware corporation, and its consolidated subsidiaries, unless otherwise stated.


3
Table of Contents
PART I. FINANCIAL INFORMATION
VIRGIN GALACTIC HOLDINGS, CORP.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

  Three Months
Ended
September 30,		  For the Period
from May 5, 2017
(inception)
through
September 30,		 
  2017  2017 
       
Operating costs $265,350  $270,756 
Loss from operations  (265,350)  (270,756)
         
Other income:        
Interest income  205,464   205,464 
Unrealized loss on marketable securities held in Trust Account  (2,244)  (2,244)
Other income, net  203,220   203,220 
         
Net loss $(62,130) $(67,536)
         
Weighted average shares outstanding, basic and diluted  12,066,894   11,284,826 
         
Basic and diluted net loss per ordinary share $(0.02) $(0.02)

TheINC.

Condensed Consolidated Balance Sheets
(Unaudited; in thousands, except share and per share amounts)
March 31, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$415,682 $302,291 
Restricted cash40,408 40,336 
Marketable securities, short-term417,923 606,716 
Inventories22,170 24,043 
Prepaid expenses and other current assets23,608 28,228 
Total current assets919,791 1,001,614 
Marketable securities, long-term— 30,392 
Property, plant and equipment, net60,365 53,658 
Other non-current assets53,357 54,274 
Total assets$1,033,513 $1,139,938 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$25,597 $16,326 
Accrued liabilities59,406 61,848 
Customer deposits102,078 102,647 
Other current liabilities3,749 3,232 
Total current liabilities190,830 184,053 
Non-current liabilities:
Convertible senior notes, net416,255 415,720 
Other long-term liabilities59,647 59,942 
Total liabilities666,732 659,715 
Commitments and contingencies (Note 13)
Stockholders' Equity
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; none issued and outstanding— — 
Common stock, $0.0001 par value; 700,000,000 shares authorized; 281,664,887 and 275,397,229 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively28 28 
Additional paid-in capital2,154,123 2,111,316 
Accumulated deficit(1,783,180)(1,623,795)
Accumulated other comprehensive loss(4,190)(7,326)
Total stockholders' equity366,781 480,223 
Total liabilities and stockholders' equity$1,033,513 $1,139,938 
See accompanying notes are an integral partto condensed consolidated financial statements.
4
Table of the unaudited condensed financial statements.

2
Contents

SOCIAL CAPITAL HEDOSOPHIAVIRGIN GALACTIC HOLDINGS, CORP.

CONDENSED STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM MAY 5, 2017 (INCEPTION) THROUGH SEPTEMBER 30, 2017

(Unaudited)

Cash flows from operating activities:   
Net loss $(67,536)
Adjustments to reconcile net loss to net cash used in operating activities:    
Interest earned on marketable securities held in Trust Account  (205,464)
Unrealized loss on marketable securities held in Trust Account  2,244 
Changes in operating assets and liabilities:    
Prepaid expenses  (368,098)
Accounts payable and accrued expenses  133,947 
Net cash used in operating activities  (504,907)
     
Cash flows from investing activities:    
Investment of cash in Trust Account  (690,000,000)
Net cash used in investing activities  (690,000,000)
     
Cash flows from financing activities:    
Proceeds from sale of Units, net of underwriting discounts paid  680,000,000 
Proceeds from sale of Private Placement Warrants  12,000,000 
Proceeds from issuance of Class B ordinary shares  25,000 
Advances from related parties  115,971 
Proceeds from promissory note  100,000 
Payment of offering costs  (802,301)
Net cash provided by financing activities  691,438,670 
     
Net change in cash  933,763 
Cash at beginning of period  — 
Cash at ending of period $933,763 
     
Non-cash investing and financing activities:    
Initial classification of ordinary shares subject to possible redemption $662,058,983 
Change in value of ordinary shares subject to possible redemption $(53,821)
Deferred underwriting fee payable $24,150,000 

TheINC.

Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited; in thousands, except per share amounts)
Three Months Ended March 31,
20232022
Revenue$392 $319 
Operating expenses:
Customer experience318 25 
Selling, general and administrative50,365 37,007 
Research and development109,870 51,827 
Depreciation and amortization3,245 2,852 
Total operating expenses163,798 91,711 
Operating loss(163,406)(91,392)
Interest income7,330 818 
Interest expense(3,211)(2,474)
Other income, net30 16 
Loss before income taxes(159,257)(93,032)
Income tax expense128 25 
Net loss(159,385)(93,057)
Other comprehensive income (loss):
Foreign currency translation adjustment35 (25)
Unrealized income (loss) on marketable securities3,101 (5,780)
Total comprehensive loss$(156,249)$(98,862)
Net loss per share:
Basic and diluted$(0.57)$(0.36)
Weighted-average shares outstanding:
Basic and diluted278,450 258,288 
See accompanying notes are an integral partto condensed consolidated financial statements.
5
Table of the unauditedContents
VIRGIN GALACTIC HOLDINGS, INC.
Condensed Consolidated Statements of Stockholders' Equity    
(Unaudited; in thousands, except share amounts)
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive
Loss		Total
SharesAmount
Balance as of December 31, 2021258,166,417 $26 $2,019,750 $(1,123,643)$(1,869)$894,264 
Net loss— — (93,057)— (93,057)
Other comprehensive loss— — — (5,805)(5,805)
Stock-based compensation— — 10,895 — — 10,895 
Issuance of common stock pursuant to stock-based awards, net of withholding taxes307,471 — (1,882)— — (1,882)
Transaction costs— — (52,318)— — (52,318)
Balance as of March 31, 2022258,473,888 $26 $1,976,445 $(1,216,700)$(7,674)$752,097 
Common StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comprehensive
Income (Loss)		Total
SharesAmount
Balance as of December 31, 2022275,397,229 $28 $2,111,316 $(1,623,795)$(7,326)$480,223 
Net loss— — — (159,385)— (159,385)
Other comprehensive income— — — — 3,136 3,136 
Stock-based compensation— — 12,976 — — 12,976 
Issuance of common stock pursuant to stock-based awards, net of withholding taxes508,159 — (1,870)— — (1,870)
Issuance of common stock pursuant to the at-the-market offering5,759,499 — 32,044 — — 32,044 
Transaction costs— — (343)— — (343)
Balance as of March 31, 2023281,664,887 $28 $2,154,123 $(1,783,180)$(4,190)$366,781 
See accompanying notes to condensed consolidated financial statements.

3

6

Table of ContentsSOCIAL CAPITAL HEDOSOPHIA
VIRGIN GALACTIC HOLDINGS, CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

(Unaudited)

NOTE 1. ORGANIZATION AND PLAN OF BUSINESS OPERATIONS

Social Capital HedosophiaINC.

Condensed Consolidated Statements of Cash Flows
(Unaudited; in thousands)
Three Months Ended March 31,
20232022
Cash flows from operating activities:
Net loss$(159,385)$(93,057)
Stock-based compensation12,976 10,895 
Depreciation and amortization3,245 2,852 
Amortization of debt issuance costs535 403 
Other non-cash items(236)86 
Change in operating assets and liabilities:
Inventories1,873 201 
Other current and non-current assets5,721 2,282 
Accounts payable and accrued liabilities(297)1,126 
Customer deposits(569)9,228 
Other current and long-term liabilities68 (67)
Net cash used in operating activities(136,069)(66,051)
Cash flows from investing activities:
Capital expenditures(2,767)(1,773)
Purchases of marketable securities(83,287)(204,898)
Proceeds from maturities and calls of marketable securities305,791 — 
Net cash provided by (used in) investing activities219,737 (206,671)
Cash flows from financing activities:
Payments of finance lease obligations(59)(34)
Proceeds from convertible senior notes— 425,000 
Debt issuance costs— (11,248)
Purchase of capped call— (52,318)
Proceeds from issuance of common stock32,044 — 
Proceeds from issuance of common stock pursuant to stock options exercised— 49 
Withholding taxes paid on behalf of employees on net settled stock-based awards(1,870)(1,932)
Transaction costs related to issuance of common stock(320)— 
Net cash provided by financing activities29,795 359,517 
Net increase in cash, cash equivalents and restricted cash113,463 86,795 
Cash, cash equivalents and restricted cash at beginning of period342,627 550,030 
Cash, cash equivalents and restricted cash at end of period$456,090 $636,825 
Cash and cash equivalents$415,682 $601,464 
Restricted cash40,408 35,361 
Cash, cash equivalents and restricted cash$456,090 $636,825 
See accompanying notes to condensed consolidated financial statements.
7
Table of Contents
VIRGIN GALACTIC HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements

(1) Description of Business and Basis of Presentation
Virgin Galactic Holdings, Corp. (the “Company”Inc., together with its consolidated subsidiaries ("Virgin Galactic" or the "Company"), is a newly incorporated blank check company incorporated as a Cayman Islands exempted companyfocused on the development, manufacture and formedoperation of spaceships and related technologies for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”).

At September 30, 2017, the Company had not yet commenced any operations. All activity from May 5, 2017 (inception) through September 30, 2017 related to the Company’s formation, the offering described belowconducting commercial human spaceflight and identifying a target company for a Business Combination.

The registration statements for the Company’s initial public offering were declared effective on September 13, 2017. The Company consummated a public offering of 69,000,000 units on September 18, 2017 (the “Public Offering”), including 9,000,000 units subject to the underwriters’ over-allotment option, generating gross proceeds of $690,000,000flying commercial research and net proceeds of $679,197,699 after deducting $10,802,301 of transaction costs ($24,150,000 of deferred underwriting expenses may be paid upon the completion of a Business Combination), which is discussed in Note 3. The units (“Units”) sold pursuant to the Offering were sold at an offering price of $10.00 per Unit. Each Unit consists of one of the Company’s Class A ordinary shares, par value $0.0001 per share, and one-third of one warrant. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share, subject to certain adjustments. In addition, the Company generated proceeds of $12,000,000 from the private placement (the “Private Placement”) of 8,000,000 warrants (“Private Placement Warrants”) at a price of $1.50 per warrant to SCH Sponsor Corp. (the “Sponsor”).

In connection with the closing of the Offering and the Private Placement on September 18, 2017 (the “Closing Date”), an amount of $690,000,000 (or $10.00 per Class A ordinary share sold to the public in the Offering included in the Units (“Public Shares”)) from the sale of the Units and Private Placement Warrants was placed in a trust account (the “Trust Account”). Funds held in the Trust Account are invested only in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations until the earlier of (i) the consummation of the Company’s initial Business Combination and (ii) the redemption of any Public Shares properly tendered in connection with a shareholder vote to amend the Company’s Amended and Restated Memorandum and Articles of Association to modify the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if it does not complete a Business Combination within 24 months from the Closing Date; and (iii) the Company’s failure to consummate a Business Combination within the prescribed time. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. Additionally, the interest earned on the Trust Account balance may be released to the Company to pay the Company’s tax obligations. Placing funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek to have all vendors, service providers, prospective target businesses or other entities it engages, execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. The Sponsor has agreed that it will be liable to the Company under certain circumstances if and to the extent any claims by such persons reduce the amount of funds in the Trust Account below (1) $10.00 per Public Share or (2) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the indemnity of the underwriters of the Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended, (the “Securities Act”). The Company has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believes that the Sponsor’s only assets are securities of the Company. Therefore, the Sponsor may not be able to satisfy those obligations should they arise.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering and Private Placement, although substantially all of the net proceeds are intended to be generally applied toward consummating a Business Combination. The Company’s Units, warrants and Class A ordinary shares are listed on the New York Stock Exchange (“NYSE”). Pursuant to the NYSE listing rules, the Company’s initial Business Combination must be with a target business or businesses whose collective fair market value is at least equal to 80% of the balance in the Trust Account (excluding deferred underwriting commissions and taxes payable on the income earned on the Trust Account) at the time of the execution of a definitive agreement for such Business Combination, although this may entail simultaneous acquisitions of several target businesses. There is no assurance that the Company will be able to effect a Business Combination successfully.

In connection with any proposed initial Business Combination, the Company will either (1) seek shareholder approval of such initial Business Combination at a meeting called for such purpose or (2) provide shareholders with the opportunity to sell their Public Shares to the Company by means of a tender offer, in each case where shareholders may seek to redeem their Public Sharesdevelopment payloads into their pro rata share of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid. If the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions in connection with a Business Combination pursuant to the tender offer rules, the Company’s Amended and Restated Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its Public Shares with respect to an aggregate of more than 15% of the Public Shares sold in the Public Offering.

4
space.

SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

(Unaudited)

The Company will proceed with a Business Combination only if it has net tangible assets of at least $5,000,001 upon consummation of the Business Combination and, in the case of a shareholder vote, a majority of the issued and outstanding shares of the Company voted are voted in favor of the Business Combination. In connection with any shareholder vote required to approve any Business Combination, the Sponsor has agreed (i) to vote any of its respective shares in favor of the initial Business Combination and (ii) not to redeem any of its respective ordinary shares in connection therewith.

Holders of warrants sold as part of the Units will not be entitled to vote on the proposed Business Combination and will have no conversion or liquidation rights with respect to their ordinary shares underlying such warrants.

Pursuant to the Company’s Amended and Restated Memorandum and Articles of Association, if the Company is unable to complete its initial Business Combination within 24 months from the Closing Date, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding Public Shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining holders of ordinary shares and the Company’s board of directors, dissolve and liquidate. If the Company is unable to consummate an initial Business Combination within 24 months from the Closing Date and is forced to redeem 100% of the outstanding Public Shares for a pro rata portion of the funds held in the Trust Account, each holder will receive a full pro rata portion of the amount then in the Trust Account, plus any pro rata interest earned on the funds held in the Trust Account and not released to the Company to pay any of its taxes payable and less up to $100,000 of interest that may be released to the Company to pay dissolution expenses. The Sponsor has entered into a letter agreement with the Company, pursuant to which they have waived their rights to liquidating distributions from the Trust Account with respect to their Founder Shares (as defined in Note 7) if the Company fails to complete a Business Combination within 24 months after the Closing Date. However, if the Sponsor acquires Public Shares after the Public Offering, it will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete the Business Combination within 24 months after the Closing Date.

If the Company is unable to complete its initial Business Combination within 24 months from the Closing Date and expends all of the net proceeds of the Public Offering not deposited in the Trust Account, without taking into account any interest earned on the Trust Account, the Company expects that the per-share redemption price for Class A ordinary shares will be $10.00. The proceeds deposited in the Trust Account could, however, become subject to claims of the Company’s creditors that are in preference to the claims of the Company’s shareholders. In addition, if the Company is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate and subject to the claims of third parties with priority over the claims of the Company’s shareholders. Therefore, the actual per-share redemption price may be less than $10.00.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SECSecurities and Exchange Commission for interim financial reporting. Accordingly, they do not include all theCertain information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensedfootnote disclosures, normally included in annual consolidated financial statements includeprepared in accordance with U.S. generally accepted accounting principles ("GAAP"), have been condensed or omitted pursuant to such rules and regulations. However, in management's opinion, the condensed consolidated financial statements reflect all adjustments, consistingincluding those of a normal recurring nature, which are necessary for a fair presentation ofto present fairly the Company's financial position, operating results of operations and cash flows for the periods presented.

The operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the entire fiscal year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company's prospectus as filed with the SEC on September 15, 2017, as well as the Company’s CurrentAnnual Report on Form 8-K, as filed with the SEC on September 22, 2017. The interim results10-K for the three monthsfiscal year ended September 30, 2017 and for the period from May 5, 2017 (inception) through September 30, 2017 are not necessarily indicative of the results to be expected for the period from May 5, 2017 (inception) through December 31, 2017 or for any other future periods.

5
2022.

SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

(Unaudited)

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies 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 has elected not to 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 emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date ofin the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

(2) Cash, Cash Equivalents and Marketable Securities
The Company maintains certain cash balances restricted as to withdrawal or use. Restricted cash consists of cash deposits received from future astronauts that are contractually restricted for operational use until the reported amountscondition of revenuescarriage is signed or the deposits are refunded.
The amortized cost, unrealized loss and expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimateestimated fair value of the effectCompany's cash, cash equivalents and marketable securities are as follows:

March 31, 2023
Amortized CostGross Unrealized Gain (Loss)Fair Value
(In thousands)
Cash and cash equivalents:
Cash and restricted cash$49,143 $— $49,143 
Money market364,722 — 364,722 
Certificate of deposits42,225 — 42,225 
Marketable securities:
U.S. treasuries98,873 29 98,902 
Corporate bonds323,263 (4,242)319,021 
$878,226 $(4,213)$874,013 
8
Table of a condition, situation or setContents
VIRGIN GALACTIC HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements

December 31, 2022
Amortized CostGross Unrealized LossFair Value
(In thousands)
Cash and cash equivalents:
Cash and restricted cash$51,651 $— $51,651 
Money market249,249 — 249,249 
Certificate of deposits41,727 — 41,727 
Marketable securities:
U.S. treasuries79,570 (53)79,517 
Corporate bonds564,853 (7,262)557,591 
$987,050 $(7,315)$979,735 
The Company included $2.7 million and $4.5 million of circumstances that existed atinterest receivable in prepaid expenses and other current assets as of March 31, 2023 and December 31, 2022, respectively.
The Company recognizes amortization and accretion of purchase premiums and discounts on its marketable securities within interest income, net. The Company recognized $0.4 million in accretion income, net and $2.2 million in amortization expense, net for its marketable securities within interest income, net for the datethree months ended March 31, 2023 and 2022, respectively.
As of March 31, 2023, the amortized cost and estimated fair value of the financial statements, which management consideredCompany's marketable securities were $422.1 million and $417.9 million, respectively. These marketable securities all had contractual maturities within one year and, accordingly, have been presented in formulating its estimate, could changecurrent assets in the near termaccompanying condensed consolidated balance sheet.
(3) Inventories
Inventories are comprised of the following:
March 31, 2023December 31, 2022
(In thousands)
Raw materials$15,691 $15,033 
Spare parts6,479 9,010 
$22,170 $24,043 

9
Table of Contents
VIRGIN GALACTIC HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(4) Property, Plant and Equipment
Property, plant and equipment consists of the following:
March 31, 2023December 31, 2022
(In thousands)
Land$1,302 $1,302 
Buildings9,117 9,117 
Aircraft740 195 
Machinery and equipment37,662 37,223 
Information technology software and equipment34,126 33,387 
Leasehold improvements31,448 31,086 
Construction in progress12,126 4,339 
126,521 116,649 
Less: accumulated depreciation and amortization66,156 62,991 
$60,365 $53,658 
The following table sets forth a summary of depreciation and amortization expense related to property, plant and equipment:
Three Months Ended March 31,
20232022
(In thousands)
Selling, general and administrative$2,001 $1,599 
Research and development1,244 1,253 
$3,245 $2,852 
(5) Leases
The components of expense related to leases are as follows:
Three Months Ended March 31,
20232022
(In thousands)
Operating lease cost$2,810 $1,975 
Variable lease cost701 1,249 
Short-term lease cost6 — 
Finance lease cost
Amortization of assets under finance leases65 29 
Interest on finance lease liabilities19 5 
Total finance lease cost84 34 
Total lease cost$3,601 $3,258 
10
Table of Contents
VIRGIN GALACTIC HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
The components of supplemental cash flow information related to leases are as follows:
Three Months Ended March 31,
20232022
(In thousands, except term and rate data)
Cash Flow Information:
Operating cash flows for operating leases$2,055 $1,758 
Operating cash flows for finance leases$19 $5 
Financing cash flows for finance leases$59 $34 
Non-cash Activity:
Assets acquired in exchange for lease obligations:
Operating leases$— $502 
Finance leases$86 $— 
Other Information:
Weighted average remaining lease term:
Operating leases (in years)10.411.5
Finance leases (in years)3.21.9
Weighted average discount rates:
Operating leases12.1 %11.7 %
Finance leases12.7 %8.1 %

The supplemental balance sheet information related to leases is as follows:
March 31, 2023December 31, 2022
(In thousands)
Operating Leases:
Long-term right-of-use assets$47,952 $48,463 
Short-term operating lease liabilities$3,534 $3,020 
Long-term operating lease liabilities56,321 56,645 
Total operating lease liabilities$59,855 $59,665 

Right-of-use assets are presented in other non-current assets and lease liabilities are presented in other current liabilities and other long-term liabilities in the accompanying condensed consolidated balance sheets.

11
Table of Contents
VIRGIN GALACTIC HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(6) Accrued Liabilities
The components of accrued liabilities are as follows:
March 31, 2023December 31, 2022
(In thousands)
Accrued contract labor$17,919 $16,415 
Accrued payroll8,284 3,861 
Accrued vacation7,979 7,132 
Accrued bonus7,064 15,561 
Other accrued expenses18,160 18,879 
$59,406 $61,848 
(7) Convertible Senior Notes
On January 19, 2022, the Company completed an offering of $425 million aggregate principal amount of convertible senior notes (the "2027 Notes"). The 2027 Notes are senior unsecured obligations of the Company and bear interest at a fixed rate of 2.50% per year. Interest is payable in cash semi-annually in arrears on February 1 and August 1 of each year, beginning on August 1, 2022. The 2027 Notes mature on February 1, 2027 unless earlier repurchased, redeemed or converted.
The net carrying value of the 2027 Notes is as follows:
March 31, 2023
(In thousands)
Principal$425,000 
Less: unamortized debt issuance costs8,745 
Net carrying amount$416,255 
During the three months ended March 31, 2023, the Company recognized $3.2 million of interest expense on the 2027 Notes, including $0.5 million of amortized debt issuance costs.
(8) Income Taxes
Income tax expense was $128,000 and $25,000 for the three months ended March 31, 2023 and 2022, respectively. The effective income tax rate was nil for three months ended March 31, 2023 and 2022. The effective tax rate differs from the U.S. statutory rate primarily due to a full valuation allowance against net deferred tax assets where it is more likely than not that some or all of the deferred tax assets will not be realized.
(9) Stockholders' Equity
On August 4, 2022, the Company entered into a distribution agency agreement with Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC (each, an “Agent” and collectively, the “Agents”) providing for the offer and sale of up to $300 million of shares of the Company's common stock from time to time through the Agents, acting as sales agents, or directly to one or more future confirming events. Accordingly, the actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2017.

Cash and Marketable Securities Held in Trust Account

At September 30, 2017, the assets held in the Trust Account were held in cash and U.S. Treasury Bills.

Ordinary Shares Subject to Possible Redemption

The Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption uponAgents, acting as principal, through an "at the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2017, ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.

6
market offering" program (the "2022 ATM program").

SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

(Unaudited)

Offering Costs

Offering costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the Public Offering. Offering costs amounting to $34,952,301 were charged to shareholders’ equity upon the completion of the Public Offering. 

Income Taxes

The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of September 30, 2017, there were no unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position over the next twelve months.

The Company may be subject to potential examination by U.S. federal, U.S. states or foreign taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, U.S. state and foreign tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

The Company’s tax provision is zero because the Company is organized in the Cayman Islands with no connection to any other taxable jurisdiction. As such, the Company has no deferred tax assets. The Company is considered to be an exempted Cayman Islands company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States.

Net Loss per Ordinary Share

The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding for the period. The Company applies the two-class method in calculating earnings per share. Ordinary shares subject to possible redemption at September 30, 2017, which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic loss per share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company has not considered the effect of warrants sold in the Public Offering and Private Placement to purchase 31,000,000 Class A ordinary shares in the calculation of diluted loss per share, since the exercise of the warrants is contingent upon the occurrence of future events. As a result, diluted loss per ordinary share is the same as basic loss per ordinary share for the periods.

Reconciliation of Net Loss per Ordinary Share

The Company’s net loss is adjusted for the portion of income that is attributable to ordinary shares subject to redemption, as these shares only participate in the income of the Trust Account and not the losses of the Company. Accordingly, basic and diluted loss per ordinary share is calculated as follows:

  Three Months
Ended
September 30,		  For the Period
from May 5, 2017
(inception)
through
September 30,		 
  2017  2017 
Net loss $(62,130) $(67,536)
Less: Income attributable to ordinary shares subject to redemption  (194,908)  (194,908)
Adjusted net loss $(257,038) $(262,444)
         
Weighted average shares outstanding, basic and diluted  12,066,894   11,284,826 
         
Basic and diluted net loss per ordinary share $(0.02) $(0.02)

7

SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

(Unaudited)

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of a cash account in a financial institution which, at times may exceed the Federal depository insurance coverage of $250,000. At September 30, 2017, the Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.

Recently Issued Accounting Standards

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.

NOTE 3. INITIAL PUBLIC OFFERING

In its Public Offering, the Company sold 69,000,000 Units at a price of $10.00 per Unit in the Public Offering. Each Unit consists of one Class A ordinary share and one-third of one warrant (each whole warrant, a “Warrant”). Each whole Warrant entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share. Each Warrant will become exercisable commencing on the later of 30 days after the Company’s completion of an initial Business Combination or 24 months from the Closing Date and expire five years from the completion of a Business Combination. The Company may redeem the outstanding Warrants at a price of $0.01 per Warrant upon a minimum of 30 days’ prior written notice of redemption, and only in the event that the last sale price of the Class A ordinary shares is at least $18.00 per share for any 20 trading days within a 30-trading day period ending on the third day prior to the date on which notice of redemption is given. If the Company redeems the Warrants as described above, it will have the option to require all holders that wish to exercise their Warrants to do so on a “cashless basis.” In accordance with the warrant agreement relating to the Warrants sold in the Public Offering, the Company is required to use its best efforts to file a registration statement covering the issuance of the shares underlying the Warrants within 15 business days after the closing of the Business Combination and to maintain the effectiveness of such registration statement. No Warrants will be exercisable for cash unless the Company has an effective registration statement covering the Class A ordinary shares issuable upon exercise of the Warrants and a current prospectus relating to such shares. If the issuance of the shares issuable upon exercise of the Warrants is not registered under the Securities Act, holders will be permitted to exercise their Warrants on a cashless basis. If the Company is unable to consummate a Business Combination within 24 months from the Closing Date, the Company will redeem 100% of the Public Shares using the funds in the Trust Account as described in Note 1. In such event, the Warrants will expire worthless.

NOTE 4. PRIVATE PLACEMENT

Simultaneously with the Public Offering, the Company’s Sponsor purchased an aggregate of 8,000,000 Private Placement Warrants at $1.50 per warrant (for an aggregate purchase price of $12,000,000) from the Company. All of the proceeds received from these purchases were placed in the Trust Account.

The Private Placement Warrants are identical to the Warrants included in the Units sold in the Public Offering except that the Private Placement Warrants: (i) are not redeemable by the Company, (ii) may be exercised for cash or on a cashless basis, so long as they are held by the Sponsor or any of its permitted transferees and (iii) are entitled to registration rights (including the ordinary shares issuable upon exercise of the Private Placement Warrants). Additionally, the purchasers have agreed not to transfer, assign or sell any of the Private Placement Warrants, including the Class A ordinary shares issuable upon exercise of the Private Placement Warrants (except to certain permitted transferees), until 30 days after the completion of the Company’s initial Business Combination. 

8

SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

(Unaudited)

In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial Business Combination, the Company’s Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants of the post business combination entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants.

NOTE 5. RELATED PARTY TRANSACTIONS

Promissory Note — Related Party and Advance from Related Party

The Company issued a $300,000 principal amount unsecured promissory note to the Sponsor on May 10, 2017. The note is non-interest bearing and payable on the earlier of (i) December 31, 2017 and (ii) the consummation of the Public Offering. As of September 30, 2017, $100,000 of this loan was still outstanding.

A related party advanced an aggregate of $115,971 for costs associated with the formation of the Company and offering costs. The advances are non-interest bearing, unsecured and due on demand. As of September 30, 2017, $115,971 in advances were still outstanding.

Administrative Services Agreement

The Company entered into an agreement whereby, commencing on September 18, 2017 through the earlier of the consummation of a Business Combination or the Company’s liquidation, the Company will pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, administrative and support services. ForDuring the three months ended September 30, 2017 and the period from May 5, 2017 (inception) through September 30, 2017,March 31, 2023, the Company incurred $10,000sold 5.8 million shares of common stock under the 2022 ATM program, generating $32.0 million in fees for these services, whichgross proceeds, before deducting $0.3 million in underwriting discounts, commissions and other expenses.

Since inception and through March 31, 2023, the Company sold a total of 22.0 million shares of common stock under the 2022 ATM program, generating $135.4 million in gross proceeds, before deducting $1.4 million in underwriting discounts, commissions and other expenses.
12
Table of Contents
VIRGIN GALACTIC HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(10) Earnings Per Share
The following table presents net loss per share and related information:
Three Months Ended March 31,
20232022
(In thousands, except per share amounts)
Basic and diluted:
Net loss$(159,385)$(93,057)
Weighted average common shares outstanding278,450 258,288 
Basic and diluted net loss per share$(0.57)$(0.36)
Basic and diluted net loss per share is included in accounts payable and accrued expenses incomputed using the accompanying balance sheet.

NOTE 6. COMMITMENTS AND CONTINGENCIES

weighted-average number of shares of common stock outstanding during the period. The computation of diluted net loss per share excludes the effect of all potential common shares outstanding as their impact would have been anti-dilutive.

The Company granted the underwriters a 45-day option to purchase up to 9,000,000 additional Units to cover over-allotments. On September 14, 2017, the underwriters elected to exercise their over-allotment option to purchase 9,000,000 Units at a purchase price of $10.00 per Unit. The underwriters were paid a cash underwriting discount of $10,000,000 of the gross proceeds of the Public Offering. In addition, the underwriters are entitled to a deferred fee of threehas excluded stock-based awards and one-half percent (3.5%) of the gross proceeds of the Public Offering, or $24,150,000, payable upon the closing of a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement. The underwriters have agreed to waive their right to the deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business Combination.

The underwriters agreed to reimburse the Company for an amount equal to 10% of the discount paid to the underwriters for financial advisory services provided by Connaught (UK) Limited in connection with the Public Offering, of which $1,000,000 was paid at the closing of the Public Offering and up to $2,415,000 will be payable at the time of the closing of the initial Business Combination.

The Sponsor, the holders of the Private Placement Warrants (or underlying Class A ordinary shares) and the holders of any warrants (or underlying Class A ordinary shares) issued upon conversion of working capital loans made by the Company’s Sponsor, officers, directors or their affiliates, if any such loans are issued, will be entitled to registration rights with respect to their securities pursuant to an agreement dated as of September 13, 2017. The holders of 30% of the registrable securities are entitled to demand that the Company register these securities. In addition, the holders have certain “piggy-back” registration rights on registration statements filed after the Company’s consummation of a Business Combination. However, the registration rights agreement will provide that the Company will not permit any registration statement to become effective until termination of applicable lock-up periods with respect to such securities.

NOTE 7. SHAREHOLDERS’ EQUITY

Preferred Shares

The Company is authorized to issue 5,000,000 preferred shares with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2017, there are no preferred shares issued or outstanding.

9

SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

(Unaudited)

Ordinary Shares

The Company is authorized to issue 500,000,000 Class A ordinary shares and 50,000,000 Class B ordinary shares, both with a par value of $0.0001 per share.

The Company had entered into a Securities Subscription Agreement, dated as of May 10, 2017 (the “Founder’s Purchase Agreement”), with the Sponsor pursuant to which the Sponsor subscribed for an aggregate of 14,375,000 Class B ordinary shares, par value $0.0001 per share of the Company, for an aggregate purchase price of $25,000. On May 18, 2017, the Sponsor surrendered 2,875,000 Class B ordinary shares for no value, and on August 23, 2017 and September 13, 2017, the Company approved share capitalizations resulting in an aggregate of 17,250,000 Class B ordinary shares issued and outstanding and held by the Sponsor (including the Class A ordinary shares issuable upon conversion thereof, the “Founder Shares”), of which 2,250,000 were subject to forfeiture. As a result of the underwriters’ election to fully exercise their over-allotment option on September 14, 2017, no Founder Shares are subject to forfeiture.

Holders of the Class A ordinary shares are entitled to one vote for each Class A ordinary share; provided that only holders of the Class B ordinary shares have the right to vote on the election of directors prior to the initial Business Combination. At September 30, 2017, there were 2,818,976 Class A ordinary shares issued and outstanding (excluding 66,181,024 Class A ordinary shares subject to possible redemption).

The Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination, on a one-for-one basis, subject to adjustment for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional Class A ordinary shares, or equity-linked securities, are issued or deemed issued in excess of the amounts sold in the Public Offering and related to the closing of the initial Business Combination, the ratio at which the Class B ordinary shares shall convert into Class A ordinary shares will be adjusted (unless the holders of a majority of the outstanding Class B ordinary shares agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of Class A ordinary shares issuable upon conversion of all Class B ordinarythe 2027 Notes from the diluted loss per share calculation because their effect was anti-dilutive. The total number of shares will equal,excluded for the three months ended March 31, 2023 and 2022 were 47.2 million and 42.2 million, respectively.

(11) Stock-Based Compensation
Pursuant to the 2019 Incentive Award Plan ("2019 Plan"), the Company has the ability to grant incentive stock options, non-qualified stock options and restricted stock units ("RSUs") to employees, directors and other service providers. Performance stock units ("PSUs") are RSUs that vest based on achievement of specified performance criteria. Performance stock options ("PSOs") are stock options that vest based on achievement of specified performance criteria.
A summary of the components of stock-based compensation expense included in selling, general and administrative and research and development expenses in the aggregate, 20%condensed consolidated statements of operations and comprehensive loss is as follows:
Three Months Ended March 31,
20232022
(in thousands)
Stock option and PSO expense:
   Selling, general and administrative$1,638 $1,722 
   Research and development533 689 
      Total stock option and PSO expense2,171 2,411 
RSU and PSU expense:
   Selling, general and administrative8,322 5,555 
   Research and development2,483 2,929 
      Total RSU and PSU expense10,805 8,484 
      Total stock-based compensation expense$12,976 $10,895 
As of March 31, 2023, the sumCompany had unrecognized stock-based compensation expense of all ordinary shares outstanding upon completion of the Public Offering plus all Class A ordinary shares$8.0 million for stock options and equity-linked securities issued or deemed issued in connection with the initial Business Combination, excluding any Class A ordinary shares or equity-linked securities issued, or$0.2 million for PSOs. These amounts are expected to be issued,recognized over weighted-average periods of 0.9 years and 0.2 years, respectively. Unrecognized stock-based compensation expense as of March 31, 2023 for RSUs and PSUs totaled $74.4 million and $8.3 million, respectively, which are expected to any seller in the initial Business Combination. Holdersbe recognized over weighted-average periods of Founder Shares may also elect1.3 years and 1.4 years, respectively.
13
Table of Contents
VIRGIN GALACTIC HOLDINGS, INC.
Notes to convert their Class B ordinary shares into an equal number of Class A ordinary shares. At September 30, 2017, 17,250,000 Class B ordinary shares were issued and outstanding.

The holders of the Class B ordinary shares agreed not to transfer such shares until one year after the date of the consummation of an initial Business Combination or earlier if, subsequent to an initial Business Combination, (i) the last reported sales price of the Company’s Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions reorganizations recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination or (ii) the Company consummates a subsequent liquidation, merger, share exchange or other similar transaction which results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.

NOTE 8. FAIR VALUE MEASUREMENTS 

Condensed Consolidated Financial Statements

(12) Fair Value Measurements
The Company follows the guidance in ASC 820 for its financial assets and liabilitiesutilizes valuation techniques that are re-measured and reported at fair value at each reporting period and non-financial assets and liabilities that are re-measured and reported at fair value at least annually. 

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internalto the extent possible. The Company estimates fair value based on assumptions about howthat market participants would price assets and liabilities). Theuse in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy is used to classify assets and liabilities based on thedistinguishes between observable inputs and unobservable inputs, which is categorized in one of the following levels:

•Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date;
•Level 2 inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability; and
•Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in order to valuewhich there is little, if any, market activity for the assets and liabilities:

Level 1:Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

10
asset or liability at the measurement date.

SOCIAL CAPITAL HEDOSOPHIA HOLDINGS CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017

(Unaudited)

Level 3:Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

The following table presents information abouttables present the Company’sCompany's financial assets that are measuredrecorded at fair value on a recurring basis, at September 30, 2017, and indicatessegregated among the appropriate levels within the fair value hierarchyhierarchy:

March 31, 2023
Level 1Level 2Level 3Total
(In thousands)
Assets:
Money market$364,722 $— $— $364,722 
Certificates of deposit42,225 — — 42,225 
U.S. treasuries98,902 — — 98,902 
Corporate bonds— 319,021 — 319,021 
Total assets at fair value$505,849 $319,021 $— $824,870 
December 31, 2022
Level 1Level 2Level 3Total
(In thousands)
Assets:
Money market$249,249 $— $— $249,249 
Certificates of deposit41,727 — — 41,727 
U.S. treasuries79,517 — — 79,517 
Corporate bonds— 557,591 — 557,591 
Total assets at fair value$370,493 $557,591 $— $928,084 
The following tables present the Company's financial liabilities that are recorded at amortized cost, segregated among the appropriate levels within the fair value hierarchy:
March 31, 2023
Level 1Level 2Level 3Total
(In thousands)
Liabilities:
2027 Notes$— $204,255 $— $204,255 
Total liabilities at fair value$— $204,255 $— $204,255 
14
Table of Contents
VIRGIN GALACTIC HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
December 31, 2022
Level 1Level 2Level 3Total
(In thousands)
Liabilities:
2027 Notes$— $193,439 $— $193,439 
Total liabilities at fair value$— $193,439 $— $193,439 
(13) Commitments and Contingencies
Leases
The Company has certain non-cancelable operating leases primarily for its premises. These leases generally contain renewal options for periods ranging from 3 to 20 years and require the Company to pay all executory costs, such as maintenance and insurance. Certain lease arrangements have rent free periods or escalating payment provisions, and the Company recognizes rent expense for such arrangements on a straight line basis.
Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum finance lease payments as of March 31, 2023 are as follows:
Operating LeasesFinance Leases
(In thousands)
2023 (for the remaining period)$7,176 $213 
202410,074 211 
202510,190 182 
202610,347 131 
202710,313 16 
Thereafter61,216 6 
Total payments109,316 759 
Less: present value discount/imputed interest49,461 137 
Present value of lease liabilities$59,855 $622 
Legal Proceedings
From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. The Company applies accounting for contingencies to determine when and how much to accrue for and disclose related to legal and other contingencies. Accordingly, the Company discloses contingencies deemed to be reasonably possible and accrues loss contingencies when, in consultation with legal advisors, it is concluded that a loss is probable and reasonably estimable. Although the ultimate aggregate amount of monetary liability or financial impact with respect to these matters is subject to many uncertainties and is therefore not predictable with assurance, management believes that any monetary liability or financial impact to the Company from these matters, individually and in the aggregate, beyond that provided at March 31, 2023, would not be material to the Company’s consolidated financial position, results of operations or cash flows. However, there can be no assurance with respect to such result, and monetary liability or financial impact to the Company from legal proceedings, lawsuits and other claims could differ materially from those projected.
15
Table of Contents
VIRGIN GALACTIC HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
Lavin v. the Company
On May 28, 2021, a class action complaint was filed against the Company in the Eastern District of New York captioned Lavin v. Virgin Galactic Holdings, Inc., Case No. 1:21-cv-03070. In September 2021, the Court appointed Robert Scheele and Mark Kusnier as co-lead plaintiffs for the purported class. Co-lead plaintiffs amended the complaint in December 2021, asserting violations of Sections 10(b), 20(a) and 20A of the valuation inputsSecurities Exchange Act of 1934 against the Company utilizedand certain of its current and former officers and directors on behalf of a putative class of investors who purchased the Company's common stock between July 10, 2019 and October 14, 2021.
The amended complaint alleges, among other things, that the Company and certain of its current and former officers and directors made false and misleading statements and failed to determine such fair value:

Description Level  September 30,
2017		 
Assets:        
Cash and marketable securities held in Trust Account  1  $690,203,220 
         

NOTE 9. SUBSEQUENT EVENTS

disclose certain information regarding the safety of the Company's ships and success of its commercial flight program. Co-lead plaintiffs seek damages, interest, costs, expenses, attorneys' fees, and other unspecified equitable relief. The defendants moved to dismiss the amended complaint and, on November 7, 2022, the court granted in part and denied in part the defendants’ motion and gave the plaintiffs leave to file a further amended complaint. Plaintiffs’ filed a second amended complaint on December 12, 2022. The second amended complaint contains many of the same allegations as in the first amended complaint. The defendants moved to dismiss the second amended complaint on February 24, 2023 and their motion will be fully briefed as of May 5, 2023.The Company evaluates subsequent eventsintends to continue to vigorously defend against this matter.

Spiteri, Grenier, Laidlaw, St. Jean, and transactions that occur after the balance sheet date up to the date that the financial statements were issued. Based upon this review,D. Abughazaleh derivatively on behalf of the Company did not identify any subsequent events that would have required adjustment or disclosurevs. Certain Current and Former Officers and Directors
On February 21, 2022, March 1, 2022, September 21, 2022, and December 13, 2022, four alleged shareholders filed separate derivative complaints purportedly on behalf of the Company against certain of its current and former officers and directors in the financial statements.

11
Eastern District of New York captioned Spiteri v. Branson et al., Case No. 1:22-cv-00933, Grenier v. Branson et al., Case No. 1:22-cv-01100, Laidlaw v. Branson et al., Case No. 1:22-cv-05634, and St. Jean v. Branson et al., Case No. 1:22-cv-7551, respectively. On February 13, 2023, an alleged shareholder filed a derivative complaint purportedly on behalf of the Company against certain of its current and former officers and directors in the District of Delaware captioned Abughazaleh v. Branson et al., Case No. 23-cv-00156. Collectively, the complaints assert violations of Sections 10(b), 14(a), and 21D of the Securities Exchange Act of 1934 and claims of breach of fiduciary duty, aiding and abetting breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, contribution and indemnification, and unjust enrichment arising from substantially similar allegations as those contained in the securities class action described above. The complaints seek an unspecified sum of damages, interest, restitution, expenses, attorneys’ fees and other equitable relief. The cases are at a preliminary stage.

(14) Supplemental Cash Flow Information
Three Months Ended March 31,
20232022
(in thousands)
Supplemental disclosure of cash flow information:
Cash payments for:
Income taxes$128 $7 
Interest5,313 — 
Supplemental disclosure of non-cash investing and financing activities:
Unpaid property, plant and equipment$7,125 $1,115 
Issuance of common stock through RSUs vested4,218 4,949 

16

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

References

Unless the context otherwise requires, all references in this report (the “Quarterly Report”)section to the “Company,” "Virgin Galactic," “we,” “us”“us,” or the “Company”“our” refer to Social Capital HedosophiaVirgin Galactic Holdings, Corp. References to our “management” or our “management team” refer to our officersInc. and directors, and references to our “Sponsor” refer to SCH Sponsor Corp. Theits subsidiaries.
You should read the following discussion and analysis of the Company’sour financial condition and results of operations should be read in conjunctiontogether with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited financial statements and the related notes thereto, contained elsewhere in this Quarterly Report. Certain information contained inand the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in thisunder “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regardingand “Business” included in our Annual Report on Form 10-K for the Company’s financial position, business strategyfiscal year ended December 31, 2022 (the "Annual Report on Form 10-K"). This discussion contains forward-looking statements that reflect our plans, estimates, and the plansbeliefs that involve risks and objectivesuncertainties. As a result of management for future operations, are forward-looking statements. Wordsmany factors, such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “seek”those set forth under the “Risk Factors” section of our Annual Report on Form 10-K and variations thereofunder the "Cautionary Note Regarding Forward-Looking Statements" section and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, basedelsewhere in this Quarterly Report on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could causeForm 10-Q, our actual results tomay differ materially from those anticipated in these forward-looking statements.

Overview
Virgin Galactic Holdings, Inc. is an aerospace and space travel company offering access to space for private individuals, researchers and government agencies. Our missions include flying passengers to space as tourists, as well as flying scientific payloads and researchers to space in order to conduct experiments for scientific and educational purposes. Our operations include the forward-looking statements, please referdesign and development, manufacturing, ground and flight testing, and post-flight maintenance of our spaceflight system vehicles. Our spaceflight system is developed using our proprietary technology and processes and is focused on providing space experiences for private astronauts, researcher flights and professional astronaut training. We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services for third parties, such as research, design, development, manufacturing and integration of advanced technology systems.
Factors Affecting Our Performance
We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in Part 1, Item 1A. of our Annual Report on Form 10-K titled “Risk Factors.”
Commercial Launch of Our Human Spaceflight Program
We are the first spaceline to receive Federal Aviation Administration approval to carry commercial customers to space. This was through an update to our existing commercial spaceflight license which we have held since 2016. We are in the final phases of developing our commercial spaceflight program. Prior to launch of commercial service, we must complete a period of planned maintenance and enhancements to the Risk Factors sectionvehicles, as well as subsequent vehicle flight testing. Commercial service is currently expected to commence in the second quarter of 2023. We continuously monitor our supply chain for potential risk associated with the delivery of materials from our suppliers, which in turn could impact the schedule for completion of the Company’s final prospectusenhancement period and the start of commercial service. We have identified some areas of risk for its Public Offering filed withtimely delivery and continue to work on mitigating these identified risks. Any delays in successful completion of our test flight program, whether due to supply chain issues, general macroeconomic factors or otherwise, will impact our ability to generate revenue from human spaceflight.
Customer Demand
While not yet in commercial service for human spaceflight, we have already received significant interest from potential future astronauts. Going forward, we expect the U.S. Securitiessize of our backlog and Exchange Commission (the “SEC”). The Company’s securities filings canthe number of future astronauts that have flown to space on our spaceflight system to be accessed onan important indicator of our future performance. As of March 31, 2023, we had reservations for space flights for approximately 800 future astronauts. In August 2021, following Sir Richard Branson's successful test flight, we reopened ticket sales to a select group and increased the EDGAR sectionpricing of our consumer offerings to a base price of $450,000 per seat. In February 2022, we opened ticket sales to the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

general public. We are a blank check company incorporated on May 5, 2017 as a Cayman Islands exempted companyreserving our first 100 seats within our first 1,000 commercial seats sold for research and formed forscientific experiments. As of March 31, 2023, the purposetickets sold represent approximately $211 million in expected future spaceflight revenue upon completion of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our initial Business Combination using cash from the proceedsspace flights.

17
Table of the Public Offering, the sale of warrants in a private placement that occurred simultaneously with the consummation of the Public Offering, our shares, debt or a combination of these as the consideration to be paid in our initial Business Combination.

The issuance of additional shares in a Business Combination:

●may significantly dilute the equity interest of investors, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares;
●may subordinate the rights of holders of ordinary shares if preferred shares are issued with rights senior to those afforded our ordinary shares;
●could cause a change of control if a substantial number of our ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
●may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and
●may adversely affect prevailing market prices for our Class A ordinary shares and/or warrants.

Similarly, if we issue debt securities or otherwise incur significant indebtedness, it could result in:

●default and foreclosure on our assets if our operating revenues after an initial Business Combination are insufficient to repay our debt obligations;
●acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
●our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
●our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
●our inability to pay dividends on our ordinary shares;

12
Contents

Available Capacity and Annual Flight Rate

●using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
●limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
●increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
●limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

We expect to continuecommence commercial operations with a single spaceship, VSS Unity, and a single mothership carrier aircraft, VMS Eve, which together comprise our only spaceflight system. As a result, our annual flight rate will be constrained by the availability and capacity of this spaceflight system. Additionally, we may commence commercial operations while temporarily assigning one of the four passenger seats in VSS Unity to incur significant costsbe occupied by one of our employees to gather input about the experience in order to help us create a better experience for our customers in the pursuitlong-term. To reduce the capacity constraint associated with having only one spaceflight system, we are currently developing our next generation spaceflight vehicles, which include our Delta class spaceships and our next generation motherships, which will allow us to increase our annual flight rate. We believe that expanding the fleet will allow us to increase our annual flight rate once commercialization is achieved. We are dedicating significant engineering resources to the work that precedes production of the future fleet. Simultaneously, we are focused on the launch and flight consistency of Unity and Eve to begin bringing our customers to space and to demonstrate the value of our acquisition plans.product.
Safety Performance of Our Spaceflight Systems
Our spaceflight systems are highly specialized with sophisticated and complex technology. We cannot assure youhave built operational processes to ensure that the design, manufacture, performance and servicing of our plansspaceflight systems meet rigorous quality standards. However, our spaceflight systems are still subject to raise capitaloperational and process risks, such as manufacturing and design issues, human errors, or cyber-attacks. Any actual or perceived safety issues may result in significant reputational harm to complete a Business Combination will be successful.

our business and our ability to generate human spaceflight revenue.

Results of Operations

We have neither engaged in any

The following tables set forth our results of operations nor generated any revenuesfor the periods presented. The period-to-period comparisons of financial results is not necessarily indicative of future results.
Three Months Ended March 31,
20232022
(In thousands)
Revenue$392 $319 
Operating expenses:
Customer experience318 25 
Selling, general and administrative50,365 37,007 
Research and development109,870 51,827 
Depreciation and amortization3,245 2,852 
Total operating expenses163,798 91,711 
Operating loss(163,406)(91,392)
Interest income7,330 818 
Interest expense(3,211)(2,474)
Other income, net30 16 
Loss before income taxes(159,257)(93,032)
Income tax expense128 25 
Net loss$(159,385)$(93,057)





18
For the Three Months Ended March 31, 2023 Compared to date. Our only activities from May 5, 2017 (inception) to September 30, 2017 were organizational activities and those necessary to consummate the Public Offering, described below, and identifying a target companyThree Months Ended March 31, 2022
Revenue
Three Months Ended March 31,$
Change		%
Change
20232022
(In thousands, except %)
Revenue$392 $319 $73 23 %
Revenue for a Business Combination. Following the Public Offering, we do not expect to generate any operating revenues until after the completion of our Business Combination. We expect to generate non-operating income in the form of interest income on cash and marketable securities held after the Public Offering. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three months ended September 30, 2017, we had net lossMarch 31, 2023 was primarily attributable to membership fees related to our Future Astronaut community. Revenue for the three months ended March 31, 2022 was primarily attributable to membership fees related to our Future Astronaut community as well as the performance of $62,130, which consistsengineering services.

Customer Experience
Three Months Ended March 31,$
Change		%
Change
20232022
(In thousands, except %)
Customer experience$318 $25 $293 1,172 %
Customer experience costs for the three months ended March 31, 2023 were primarily attributable to costs related to our Future Astronaut community. Customer experience costs for the three months ended March 31, 2022 were primarily attributable to the performance of operatingengineering services.
Selling, General and Administrative
Three Months Ended March 31,$
Change		%
Change
20232022
(In thousands, except %)
Selling, general and administrative$50,365 $37,007 $13,358 36 %
Selling, general and administrative expenses increased from $37.0 million for the three months ended March 31, 2022 to $50.4 million for the three months ended March 31, 2023. The increase was primarily driven by a $7.6 million increase in compensation and other employee benefit costs, a $2.6 million increase in stock-based compensation, a $1.1 million increase in information technology and software costs and a $1.0 million increase in legal and other professional costs.
Research and Development
Three Months Ended March 31,$
Change		%
Change
20232022
(In thousands, except %)
Research and development$109,870 $51,827 $58,043 112 %
Research and development expenses increased from $51.8 million for the three months ended March 31, 2022 to $109.9 million for the three months ended March 31, 2023. The increase was primarily driven by a $42.4 million increase in contract and sub-contract labor, material costs and other direct costs, and a $13.5 million increase in compensation and other employee benefit costs.
Depreciation and Amortization
Three Months Ended March 31,$
Change		%
Change
20232022
(In thousands, except %)
Depreciation and amortization$3,245 $2,852 $393 14 %
Depreciation and amortization expense increased from $2.9 million for the three months ended March 31, 2022 to $3.2 million for the three months ended March 31, 2023, an increase of $265,350$0.4 million due to the acquisition of property, plant and an unrealized lossequipment.
19
Interest Income
Three Months Ended March 31,$
Change		%
Change
20232022
(In thousands, except %)
Interest income$7,330 $818 $6,512 796 %
Interest income increased from $0.8 million for the three months ended March 31, 2022 to $7.3 million for the three months ended March 31, 2023. This increase was primarily driven by higher interest rates on marketable securities heldand deposits in interest bearing accounts.
Interest Expense
Three Months Ended March 31,$
Change		%
Change
20232022
(In thousands, except %)
Interest expense$3,211 $2,474 $737 30 %
Interest expense increased from $2.5 million for three months ended March 31, 2022 to $3.2 million for the three months ended March 31, 2023. This increase was primarily driven by a full quarter of interest expense and amortization of debt issuance costs related to our Trust Account of $2,244, offset by interestconvertible senior notes.
Income Tax Expense
Three Months Ended March 31,$
Change		%
Change
20232022
(In thousands, except %)
Income tax expense$128 $25 $103 412 %
Income tax expense was immaterial for the three months ended March 31, 2023 and 2022. We have accumulated net operating losses at the U.S. federal and state levels, as we have not yet started commercial operations. We maintain a full valuation allowance against our net U.S. federal and state deferred tax assets. The income on marketable securities heldtax expense is primarily related to corporate income taxes for our operations in the Trust Account of $205,464.

For the period from May 5, 2017 (inception) through September 30, 2017, we had net loss of $67,536,United Kingdom, which consists of operating costs of $270,756 and an unrealized lossoperates on marketable securities held in our Trust Account $2,244, offset by interest income on marketable securities held in the Trust Account $205,464.

a cost-plus arrangement.

Liquidity and Capital Resources

On September 18, 2017,

As of March 31, 2023, we consummated the Public Offeringhad cash, cash equivalents and restricted cash of 69,000,000 Units, which includes the full exercise by the underwriters’$456.1 million and marketable securities of their over-allotment option in the amount$417.9 million. Our principal sources of 9,000,000 Units, at a priceliquidity have come from sales of $10.00 per Unit, generating gross proceedsour common stock and offering of $690,000,000. Simultaneously with the closingconvertible senior notes ("2027 Notes").
Historical Cash Flows
Three Months Ended March 31,
20232022
(In thousands)
Net cash provided by (used in):
Operating activities$(136,069)$(66,051)
Investing activities219,737 (206,671)
Financing activities29,795 359,517 
Net increase in cash, cash equivalents and restricted cash$113,463 $86,795 
20
Operating Activities
Net cash used in operating activities was $504,907, consisting$136.1 million for the three months ended March 31, 2023, and consisted primarily of $159.4 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $13.0 million and depreciation and amortization expense of $3.2 million, as well as $6.8 million of cash provided from changes in working capital.
Net cash used in operating activities was $66.1 million for the three months ended March 31, 2022, and consisted primarily of $93.1 million of net losses, adjusted for non-cash items, which primarily included stock-based compensation expense of $10.9 million and depreciation and amortization expense of $2.9 million, as well as $12.8 million of cash provided from changes in working capital.
Investing Activities
Net cash provided by investing activities was $219.7 million for the three months ended March 31, 2023, and consisted of $305.8 million in proceeds from maturities and calls of marketable securities, partially offset by $83.3 million in purchases of marketable securities and $2.8 million in capital expenditures.
Net cash used in investing activities was $206.7 million for the three months ended March 31, 2022, and consisted of $204.9 million in purchases of marketable securities and $1.8 million in capital expenditures.
Financing Activities
Net cash provided by financing activities was $29.8 million for the three months ended March 31, 2023, and consisted primarily of net losscash proceeds from the sale and issuance of $67,536 and interest earned on cash and marketable securities held in the Trust Accountcommon stock of $205,464,$31.7 million, partially offset by an unrealized loss on marketable securities held in our Trust Accounttax withholdings paid for net settled stock-based awards of $2,244. Changes in operating assets$1.9 million.
Net cash provided by financing activities was $359.5 million for the three months ended March 31, 2022, and liabilities used $234,151 of cash from operating activities.  

As of September 30, 2017, we had cash and marketable securities held in the Trust Account of $690,203,220 (including approximately $203,000 of interest income) consisting of U.S. treasury bills with a maturity of 180 days or less. Interest income on the balance in the Trust Account may be used by us to pay taxes. Through September 30, 2017, we did not withdraw any funds from the interest earned on the Trust Account.  

We intend to use substantially allconsisted primarily of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable and excluding deferred underwriting commissions) to complete our initial Business Combination. To the extent that our ordinary shares or debt is used, in whole or in part, as consideration to complete our initial Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operationsissuance of the target business or businesses, make other acquisitions and pursue our growth strategies.

As2027 Notes for net proceeds of September 30, 2017, we had cash of $933,763 held outside$413.8 million, partially offset by the purchase of the Trust Account. capped call related to the 2027 Notes of $52.3 million and tax withholdings paid for net settled stock-based awards of $1.9 million.

Funding Requirements
We intendexpect our expenses to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.

13

We may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon completion of our Business Combination, in which case we may issue additional securities or incur debtincrease substantially in connection with such Business Combination.

our ongoing activities, particularly as we continue to advance the development of our spaceflight system and the commercialization of our human spaceflight operations. In orderaddition, we expect our operating expenses to fund workingincrease significantly as we commence commercial operations and add additional spaceships to our operating fleet.

Specifically, our operating expenses will increase as we:
•scale up our manufacturing processes and capabilities to support expanding our fleet with additional spaceships, carrier aircraft and rocket motors upon commercialization;
•pursue further research and development on our future human spaceflights, including those related to our research and education efforts on point-to-point travel;
•hire additional personnel in research and development, manufacturing operations, testing programs, maintenance operations and guest services as we increase the volume of our spaceflights upon commercialization;
•seek regulatory approval for any changes, upgrades or improvements to our spaceflight technologies and operations in the future, especially upon commercialization;
•maintain, expand and protect our intellectual property portfolio;
•establish our astronaut campus in New Mexico; and
•hire additional personnel in management to support the expansion of our operational, financial, information technology, and other areas to support our operations as a public company.
21
We expect our arrangements with third-party providers, including under our Master Agreements with Aurora Flight Sciences Corporation (“Aurora"), a wholly owned subsidiary of The Boeing Company, for the design and manufacture of our next generation of carrier aircraft and Bell Textron Inc. ("Bell") and Qarbon Aerospace ("Qarbon") to manufacture key subassemblies for our next generation spaceships, will require significant capital deficiencies or finance transaction costsexpenditures from us. Certain estimated amounts in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officersthird-party arrangements are subject to future negotiations and directors may, but are not obligated to, loan us funds as maycannot be required. In the eventestimated with reasonable certainty.Although we believe that our initial Business Combination does not close,current capital is adequate to sustain our operations for at least the next twelve months, changing circumstances may cause us to consume capital significantly faster than we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants issued to our Sponsor. We do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such fundscurrently anticipate, and provide a waiver against any and all rights to seek access to funds in our Trust Account.

If we are unable to complete our Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtainspend more money than currently expected because of circumstances beyond our control. Additionally, we are in the final phases of developing our commercial spaceflight program. While we anticipate initial commercial launch with a single spaceship, we currently have additional financingspaceship vehicles under construction. We anticipate the costs to manufacture additional vehicles will begin to decrease as we continue to scale up our manufacturing processes and capabilities. Until we achieve technological feasibility with our spaceflight systems, we will not capitalize expenditures incurred to construct any additional components of our spaceflight systems and we will continue to expense these costs as incurred to research and development.

Issuances of Common Stock
On August 4, 2022, we entered into a distribution agency agreement with Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC (each, an “Agent” and collectively, the “Agents”) providing for the offer and sale of up to $300 million of shares of our common stock from time to time through the Agents, acting as sales agents, or directly to one or more of the Agents, acting as principal, through an "at the market offering" program (the "2022 ATM program").
Since inception and through March 31, 2023, we sold a total of 22.0 million shares of common stock under the 2022 ATM program, generating $135.4 million in ordergross proceeds, before deducting $1.4 million in underwriting discounts, commissions and other expenses.
Short-term Liquidity and Capital Resources
For at least the next twelve months, we expect our principal demand for funds will be for our ongoing activities described above. We expect to meet our obligations.

Off-balance sheet financing arrangements

short-term liquidity requirements primarily through our cash, cash equivalents and marketable securities on hand. We believe we will have nosufficient liquidity available to fund our business needs, commitments and contractual obligations assetsfor the next twelve months.

Long-term Liquidity and Capital Resources
Beyond the next twelve months, our principal demand for funds will be to sustain our operations, including the construction of additional motherships under an agreement with a third-party contractor, and spaceship vehicles, construction of our astronaut campus, expansion of the New Mexico Spaceport, and for the payment of the principal amount of our convertible senior notes as it becomes due. We expect to begin generating revenue from our human spaceflight program, which is expected to launch in the second quarter of 2023. To the extent this source of capital as well as the sources of capital described above are insufficient to meet our needs, we may also conduct additional offerings of our securities or liabilitiesrefinance debt. We expect these resources will be adequate to fund our ongoing operating activities.
The commercial launch of our human spaceflight program and the anticipated expansion of our fleet have unpredictable costs and are subject to significant risks, uncertainties and contingencies, many of which would be considered off-balance sheet arrangementsare beyond our control, that may affect the timing and magnitude of these anticipated expenditures. Some of these risk and uncertainties are described in more detail in our Annual Report on Form 10-K under the heading Item 1A. “Risk Factors—Risks Related to Our Business.”
Contractual Obligations and Commitments
Except as of September 30, 2017. We do not participateset forth in transactions that create relationships with unconsolidated entities orthe notes to our condensed consolidated financial partnerships, often referred to as variable interest entities, which wouldstatements included elsewhere in this Quarterly Report on Form 10-Q, there have been establishedno material changes outside the ordinary course of business to our contractual obligations and commitments as described in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K. Additionally, in some cases, we have entered arrangements with third-party providers for services, such as the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliatedesign and manufacture of our Sponsor a monthly feenext generation of $10,000 for office space,carrier aircraft. The amounts we would pay under those arrangements will be significant but are not contractually committed until we execute specific task orders with the applicable counterparty, are subject to future negotiations and administrative and support services provided to the Company. We began incurring these fees on September 18, 2017 and will continue to incur these fees monthly until the earliercannot be estimated with reasonable certainty.


22
Critical Accounting Policies

and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires managementus to make estimates, assumptions and assumptionsjudgments that affect the reported amounts of assets, liabilities, revenues, costs and liabilities, disclosure of contingent assetsexpenses and liabilities atrelated disclosures. We believe that the date ofestimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements and, incometherefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and expenses during the periods reported. Actualassumptions on an ongoing basis. Our actual results could materiallymay differ from those estimates. The Company has not identified anythese estimates under different assumptions and conditions.
During the fiscal quarter ended March 31, 2023, there were no significant changes to our critical accounting policies.

Recent accounting pronouncements

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effectpolicies and estimates compared to those previously disclosed in "Critical Accounting Policies and Estimates" included in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 2022 Annual Report on the Company’s condensed financial statements.

Form 10-K.

ITEM

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

All activity through September 30, 2017 relatesQuantitative and Qualitative Disclosures about Market Risk

During the fiscal quarter ended March 31, 2023, there were no significant changes to our formationmarkets risks compared to those previously disclosed in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk included in our Public Offering. We did not have any financial instruments that were exposed to market risks at September 30, 2017.

2022 Annual Report on Form 10-K.

ITEM

Item 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

14

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15

Limitations on Effectiveness of Controls and 15d-15 under the Exchange Act, our Chief Executive OfficerProcedures
In designing and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2017. Based upon their evaluation, our Co-Chief Executive Officers and Chief Financial Officer concluded thatevaluating our disclosure controls and procedures (as defined in Rules 13a-15 (e)13a-15(e) and 15d-15 (e)15d-15(e) under the Exchange Act), management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2023, our disclosure controls and procedures were effective.

effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

During the most recently completed fiscal quarter, there has been

There were no changechanges in our internal control over financial reporting during the three months ended March 31, 2023 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.










23

PART II - OTHER INFORMATION

ITEM

Item 1. LEGAL PROCEEDINGS.

None.

Legal Proceedings
We are from time to time subject to various claims, lawsuits and other legal and administrative proceedings arising in the ordinary course of business. Some of these claims, lawsuits and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and could result in damages, fines, penalties, non-monetary sanctions or relief. However, we do not consider any such claims, lawsuits or proceedings that are currently pending, individually or in the aggregate, to be material to our business or likely to result in a material adverse effect on our future operating results, financial condition or cash flows. See Note 13 in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

ITEM

Item 1A. RISK FACTORS.

Risk Factors that

Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described as risk factors, any one or more of which could, directly or indirectly, cause our actual operating results and financial condition to differvary materially from thosepast, or anticipated future, operating results and financial condition. For a discussion of our potential risks and uncertainties, see the risk factors previously disclosed in Part I, Item 1. “Business,” Part I, Item 1A. “Risk Factors,” and Part II, Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and in Part I, Item 2. “Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report are any of the risks described in our prospectus dated September 13, 2017 filed with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, thereForm 10-Q. There have been no material changes to the risk factors disclosed in our prospectus dated September 13, 2017 filed with the SEC, except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Annual Report on Form 10-K.

ITEM

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Unregistered Sales of Equity Securities

On May 10, 2017, our sponsor, subscribed for an aggregate of 14,375,000 founder shares, for an aggregate offering price of $25,000 at an average purchase price of approximately $0.002 per share. On May 18, 2017, our sponsor surrendered 2,875,000 founder shares for no value, and on August 23, 2017 and September 13, 2017, we effected a share capitalization resulting in an increase in the total number of founder shares issued and outstanding by 5,750,000 (from 11,500,000 to 17,250,000). The number of founder shares issued was determined based on the expectation that the founder shares would represent 20% of the issued and outstanding ordinary shares upon completion of the Public Offering. Such securities were issued in connection with our incorporation pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Our Sponsor is an accredited investor for purposes of Rule 501 of Regulation D.

Simultaneously with the consummation of the Public Offering on September 18, 2017, we consummated a private placement of 8,000,000 Private Placement Warrants at a price of $1.50 per warrant to our Sponsor, generating total proceeds of $12,000,000. The Private Placement Warrants are the same as the warrants sold in the Public Offering, except that the Private Placement Warrants (i) are not redeemable by the Company, (ii) may be exercised for cash or on a cashless basis, so long as they are held by the Sponsor or any of its permitted transferees, and (iii) are entitled to registration rights (including the ordinary shares issuable upon exercise of the Private Placement Warrants). In addition, the Private Placement Warrants and their underlying securities will not be transferable, assignable or salable until 30 days after the consummation of the Business Combination. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Our Sponsor, as purchaser, is an accredited investor for purposes of Rule 501 of Regulation D.

Use of Proceeds

On September 18, 2017, we consummated our Public Offering of 69,000,000 units (inclusive of 9,000,000 units sold pursuant to the underwriters’ exercising their over-allotment option), with each unit consisting of one Class A ordinary share and one-third of one warrant, each whole warrant entitling the holder to purchase one Class A ordinary share at a price of $11.50. No fractional shares will be issued upon exercise of the warrants. Each warrant will become exercisable on the later of 30 days after the completion of our Business Combination or 12 months from the closing of the Public Offering. However, if we do not complete a Business Combination within the period allotted to complete the Business Combination, the warrants will expire at the end of such period. If we are unable to deliver registered Class A ordinary shares to the holder upon exercise of warrants issued in connection with the 69,000,000 units during the exercise period, there will be no net cash settlement of these warrants and the warrants will expire worthless, unless they may be exercised on a cashless basis in the circumstances described in the warrant agreement. The warrants will expire five years after the completion of our initial Business Combination or earlier upon redemption or liquidation. Once the warrants issued in connection with the Public Offering become exercisable, we may redeem those outstanding warrants in whole and not in part at a price of $0.01 per warrant upon a minimum of 30 days’ prior written notice of redemption, but if, and only if, the last sale price of our Class A ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders.

15

None.

The units in the Public Offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $690,000,000. Credit Suisse Securities (USA) LLC acted as the sole manager. The securities sold in the Public Offering were registered under the Securities Act on registration statements on Form S-1 (No. 333-220130 and 333-220453). The SEC declared the registration statements effective on September 13, 2017.

We paid a total of $10,000,000 in underwriting discounts, and commissions and $802,301 for other costs and expenses related to the Public Offering. The underwriters agreed to defer an additional $24,150,000 in underwriting discounts and commissions, payable upon consummation of the Business Combination. After deducting the underwriting discounts and commissions (excluding the deferred portion of $24,150,000 in underwriting discounts and commissions, which will be released from the Trust Account upon consummation of the Business Combination, if consummated) and the estimated offering expenses, the total net proceeds from our Public Offering and the Private Placement was $667,047,699, of which $690,000,000 (or $10.00 per unit sold in the Public Offering) was placed in the Trust Account.

ITEM

Item 3. DEFAULTS UPON SENIOR SECURITIES.

Defaults Upon Senior Securities

None.

ITEM

Item 4. MINE SAFETY DISCLOSURES.

Mine Safety Disclosures

Not applicable.

ITEM

Item 5. OTHER INFORMATION.

None.

16
Other Information

Not applicable.

ITEM

Item 6. EXHIBITS.

Exhibits

The following documents are filed as part of this report:
(1) Exhibits. The following exhibits are filed, as part of,furnished or incorporated by reference into,as part of this Quarterly Report on Form 10-Q.

Incorporated by Reference
Exhibit No.Exhibit DescriptionFormFile No.ExhibitFiling DateFiled/Furnished Herewith
3.18-K001-382023.110/29/2019
3.28-K001-382023.210/29/2019
10.1(1)
10-K001-3820210.13(a)2/28/2023
31.1*
24
Table of Contents
No.Description of Exhibit
3.1(1)Amended and Restated Memorandum and Articles of Association of the Company.Incorporated by Reference
4.4(1)Exhibit No.Exhibit DescriptionWarrant Agreement, dated September 13, 2017, between the Company and Continental Stock Transfer & Trust Company, as warrant agent.FormFile No.ExhibitFiling DateFiled/Furnished Herewith
10.1(1)31.2Letter Agreement, dated September 13, 2017, among the Company, the Sponsor, the Company’s officers and directors and the other individuals party thereto.
10.2(1)Investment Management Trust Agreement, dated September 13, 2017, between the Company and Continental Stock Transfer & Trust Company, as trustee.
10.3(1)Registration Rights Agreement, dated September 13, 2017, among the Company, the Sponsor and certain other security holders named therein.
10.4(1)Administrative Services Agreement, dated September 13, 2017, between the Company and The Social+Capital Partnership, LLC.
10.5(1)Sponsor Warrants Purchase Agreement, dated September 13, 2017, between the Company and the Sponsor.
10.6(1)Indemnity Agreement, dated September 13, 2017, between the Company and Chamath Palihapitiya.
10.7(1)Indemnity Agreement, dated September 13, 2017, between the Company and Ian Osborne.
10.8(1)Indemnity Agreement, dated September 13, 2017, between the Company and Philip Deutch.
10.9(1)Indemnity Agreement, dated September 13, 2017 between the Company and Sachin Sood.
10.10(1)Indemnity Agreement, dated September 13, 2017, between the Company and Simon Williams.
10.11(1)Indemnity Agreement, dated September 13, 2017, between the Company and Anthony Bates.
10.12(1)Indemnity Agreement, dated September 13, 2017, between the Company and Adam Bain.
10.13(1)Indemnity Agreement, dated September 13, 2017, between the Company and Andrea Wong.
31.1*Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2**
32.1**32.1**
32.2* *32.2**
101.INS*101.INSInline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*
101.CAL*101.SCHInline XBRL Taxonomy Extension Schema Document*
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document*
101.SCH*101.DEFXBRL Taxonomy Extension Schema Document
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB*101.LABInline XBRL Taxonomy Extension Labels Linkbase Document*
101.PRE*101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document*

(1) Incorporated by reference to our Current Report on Form 8-K filed on September 18, 2017.

*   Filed herewith.

** Furnished herewith.

10417Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*

*Filed herewith.

**Furnished herewith.

(1) Indicates management contract or compensatory plan.



25
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Social Capital Hedosophia Holdings Corp.
Virgin Galactic Holdings, Inc.
Date: November 14, 2017/s/ Chamath Palihapitiya
Date: May 9, 2023/s/ Michael Colglazier
Name:Chamath PalihapitiyaMichael Colglazier
Title:

Chief Executive Officer


(Principal Executive Officer)

Date: November 14, 2017/s/ Sachin Sood
Date: May 9, 2023/s/ Douglas Ahrens
Name:Sachin SoodDouglas Ahrens
Title:

Chief Financial Officer

(Principal Financial and Accounting Officer)

18

26