☒~~QUARTERLY REPORT PURSUANT TO SECTION 13 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 ~~______~~ _____________

(Exact ~~name~~Name of ~~registrant~~Registrant as ~~specified~~Specified in its ~~charter)~~Charter)

~~Check~~Indicate by check mark whether the ~~issuer~~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 ~~past~~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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ 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”,~~filer,” “accelerated ~~filer”,~~filer,” “smaller reporting ~~company”,~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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). Yes ☒☐ No ☐☒

As of ~~September 17, 2020, 30,000,000~~November 7, 2022, the registrant had 211,926,952 shares of Class A common stock, $0.0001 par value ~~$0.0001~~ per share, outstanding and ~~7,906,250~~55,539,188 shares of Class B common stock, $0.0001 par value ~~$0.0001~~ per share, ~~were issued and~~ outstanding.

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

CONDENSED ~~STATEMENT~~CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)

~~For the period from June 2, 2020 (inception) through June 30, 2020~~(Unaudited)

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

CONDENSED ~~STATEMENT~~CONSOLIDATED STATEMENTS OF ~~CHANGES IN STOCKHOLDER’S EQUITY~~COMPREHENSIVE LOSS
(In thousands)

~~For the period from June 2, 2020 (inception) through June 30, 2020~~(Unaudited)

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

CONDENSED ~~STATEMENT~~CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~STOCKHOLDERS’ EQUITY
Nine Months Ended September 30, 2022

~~For the period from June 2, 2020 (inception) through June 30, 2020~~(In thousands, except share data)

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

CONDENSED CONSOLIDATED STATEMENTS OF TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)
Nine Months Ended September 30, 2021

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

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

Note 1—1 — Description of ~~Organization,~~ Business, ~~Operations and~~ Basis of Presentation and Significant Accounting Policies

Astra Space, Inc. designs, tests, manufactures and operates the next generation of launch services and space products and services that it expects to enable a new generation of global communications, earth observation, precision weather monitoring, navigation, and surveillance capabilities. Astra Space, Inc.'s mission is to Improve Life on Earth from Space® through greater connectivity and more regular observation and to enable a wave of innovation in low Earth orbit by expanding its space platform offerings.

Holicity Inc. ~~(the “Company”~~(“Holicity”) was originally incorporated in Delaware onand was established as a special purpose acquisition company, which completed its initial public offering in August 2020. On June ~~2, 2020. The Company was formed for the purpose of effecting~~30, 2021 (the “Closing Date”), Holicity consummated a ~~merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar~~ business combination ~~with one or more businesses~~ (the “Business Combination”). Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to initially focus its search on identifying a prospective target business in the technology, media and telecommunications (“TMT”) industries in the United States and other developed countries.

As of June 30, 2020, the Company had not commenced any operations. All activity for the period from June 2, 2020 (inception) through June 30, 2020 relates to the Company’s formation and preparation for the initial public offering described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering (as defined below). The Company has selected December 31 as its fiscal year end.

The registration statement for the Company’s Initial Public Offering was declared effective on August 4, 2020. On August 7, 2020, the Company consummated the Initial Public Offering of 27,500,000 units (the “Units” and the shares of Class A common stock included in the Units, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $275.0 million (the “Initial Public Offering”), and incurring offering costs of approximately $15.5 million, inclusive of approximately $9.6 million in deferred underwriting commissions. The underwriters were granted a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 4,125,000 additional Units (the “Over-Allotment Units”) to cover over-allotments (the “Over-Allotment Option”), if any, at $10.00 per Unit (Note 3). ~~The Company’s sponsor is Pendrell Holicity Holdings Corporation, a Washington corporation (the “sponsor”).~~

~~Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of~~ 5,000,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to the sponsor, each exercisable to purchase one share of Class A common stock at $11.50 per share, at a price of $1.50 per Private Placement Warrant, generating gross proceeds to the Company of $7.5 million.

~~On August 11, 2020, the underwriters purchased 2,500,000 Over-Allotment Units~~ pursuant to the ~~partial exercise~~Business Combination Agreement dated as of the Over-Allotment Option. The Over-Allotment Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $25.0 million. Simultaneously with the sale of the Over-Allotment Units, the Company consummated a private saleFebruary 2, 2021 (the ~~“Over-Allotment Private Placement”~~“BCA”) ~~of an additional 333,333 Private Placement Warrants to the sponsor, at a purchase price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $0.5 million.~~

~~Following the closing of the Initial Public Offering~~, by and among Holicity, Holicity Merger Sub Inc., a ~~total~~wholly owned subsidiary of ~~$300.0 million, consisting of the net proceeds of the Initial Public Offering, the Private Placement,~~ ~~the partial exercise of the Over-Allotment Option~~ Holicity (“Merger Sub”), and ~~the Over-Allotment Private Placement, was~~ ~~placed in a trust account~~Astra Space Operations, Inc. (“Trust Account”) with Continental Stock Transfer & Trust Company acting as trustee, and is invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, having a maturity of 185 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 completion of a Business Combination or (ii) the distribution of the Trust Account as described below.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (as defined above) (net of amounts disbursed to management for working capital purposes and excluding the amount of any deferred underwriting discount held in trust) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”pre-combination Astra”).

The Company will provide holders of the Company’s outstanding shares of Class A common stock, par value $0.0001 per share, sold in the Initial Public Offering (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares (as defined below) Immediately upon the ~~completion~~consummation of ~~a Business Combination either (i) in connection with a stockholder meeting called to approve~~ the Business Combination, ~~or (ii) without~~Merger Sub merged with and into pre-combination Astra with pre-combination Astra surviving the merger as a ~~stockholder vote by means~~wholly owned subsidiary of ~~a tender offer. The decision as~~Holicity. Holicity changed its name to ~~whether~~“Astra Space, Inc.” and pre-combination Astra changed its name to “Astra Space Operations, Inc.”

Unless the ~~Company will seek stockholder approval of a~~context otherwise requires, “we”, “us”, “our”, “Astra” and the “Company” refers to Astra Space, Inc., the combined company and its subsidiaries following the Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per Public Share). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will payand Astra Space Operations, Inc. prior to the ~~underwriters (as discussed in~~Business Combination. See Note 6). These Public Shares will be recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination if a majority of the shares voted are voted in favor3 — Acquisitions for further discussion of the Business Combination. The ~~Company will not redeem~~Company’s Class A common stock is listed on the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the initial stockholders (as defined below) have agreed to vote their Founder Shares (as defined below in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the initial stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.

The Company’s Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder 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”)), is restricted from redeeming its shares with respect to more than an aggregate of 20% or more of the Public Shares, without the prior consent of the Company.

The sponsor and the Company’s officers and directors (the “initial stockholders”) have agreed not to propose an amendment to the Certificate of Incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or with respect to any other material provisions relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

If the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering (the “Combination Period”), 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 the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less amounts released to pay taxes and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, liquidate and dissolve, subject, in each case, to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the warrants, which will expire worthless if the Company fails to complete a Business Combination within the 24- month time period.

The initial stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to the deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00. In order to protect the amounts held in the Trust Account, the sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination agreement (a “Target”), reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or Target that executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claimsNasdaq under the ~~Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”)~~symbol “ASTR”. The Company will seek to reduce the possibility that the sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

The accompanying ~~unaudited~~ condensed consolidated financial statements ~~are presented in U.S. dollars~~include the accounts of Astra and its subsidiaries, and have been prepared in ~~accordance~~conformity with accounting principles generally accepted in the United States of America (“~~U.S.~~ GAAP”) ~~for interim financial information~~as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and in accordance with the instructions to Form 10-Q and Article 8 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 ~~SEC~~U.S. Securities and Exchange Commission (“SEC”) for ~~interim~~ financial reporting. ~~Accordingly, they do not include~~The condensed consolidated financial statements included herein are unaudited, and reflect all ~~the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In~~adjustments which are, in the opinion of management, ~~the accompanying unaudited condensed financial statements include all adjustments, consisting~~ of a normal recurring nature ~~which are~~and necessary for a fair ~~presentation~~statement of the ~~financial position, operating~~ results ~~and cash flows~~ for the periods presented.

The ~~accompanying unaudited~~December 31, 2021 condensed consolidated balance sheet data were derived from Astra’s audited consolidated financial statements ~~should be read~~included in ~~conjunction with the Company’s prospectus~~its Annual Report on Form 10-K for ~~its Initial Public Offering~~year ended December 31, 2021 as filed with the ~~SEC on August 6, 2020, as well as the Company’s Current Reports on Form 8-K, as filed with the SEC on August 10, 2020~~SEC. All intercompany transactions and ~~August 13, 2020.~~balances have been eliminated in consolidation. The ~~interim~~operating results for the ~~period from June 2, 2020 (inception) through June~~three and nine months ended September 30, ~~2020~~2022 are not necessarily indicative of the results tothat may be expected for the ~~period from June 2, 2020 (inception) through~~year ending December 31, ~~2020~~2022, or for any other future ~~periods.~~period.

Business Combination

~~Emerging Growth Company~~

On June 30, 2021, the Business Combination pursuant to the BCA, by and among Holicity, Merger Sub, and pre-combination Astra, was accounted for as a reverse recapitalization as pre-combination Astra was determined to be the accounting acquirer under ASC 805. The ~~Company~~determination is ~~an “emerging growth company,” as defined in Section 2(a)~~primarily based on the evaluation of the ~~Securities Act, as modified by~~ following facts and circumstances:

•

the ~~Jumpstart Our Business Startups Act~~equity holders of ~~2012 (the “JOBS Act”),~~pre-combination Astra hold the majority of voting rights in the Company;

•

the board of directors of pre-combination Astra represent a majority of the members of the board of directors of the Company;

•

the senior management of pre-combination Astra became the senior management of the Company; and ~~it may take advantage~~

•

the operations 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~~pre-combination Astra comprise the ongoing operations of the Company.

In connection with the ~~independent registered public accounting firm attestation requirements of Section 404~~Business Combination, outstanding common stock and preferred convertible stock 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 stockholder approval of any golden parachute payments not previously approved.

~~Further, Section 102(b)(1)~~pre-combination Astra was converted into common stock 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~~Company, par value of $0.0001 per share, representing a ~~Securities Act registration statements declared effective or do not have a class of securities registered under~~recapitalization, and the ~~Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out~~net assets of the ~~extended transition period~~Company were acquired and ~~comply~~recorded at historical cost, with no goodwill or intangible assets recorded. Pre-combination Astra was deemed to be the ~~requirements that apply~~predecessor and the condensed consolidated assets and liabilities and results of operations prior to ~~non-emerging growth companies but any such an election~~the Closing Date are those of pre-combination Astra. Reported shares and earnings per share available to ~~opt out is irrevocable.~~common stockholders, prior to the Business Combination, have been retroactively restated as shares reflecting the exchange ratio established in the BCA. The ~~Company has elected not to opt out~~number of ~~such extended transition period, which means that when a standard is issued or revised and it has different application dates~~shares of preferred stock was also retroactively restated based on the exchange ratio. See Note 3 — Acquisitions for ~~public or private companies,~~additional information.

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Liquidity

The accompanying unaudited condensed consolidated interim financial statements have been prepared assuming the Company will continue 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~~a going concern. The going concern basis of the Company’s financial statements with those of another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

~~Liquidity and Capital Resources~~

~~As of June 30, 2020, the Company had no cash and a working capital deficit of $17,565.~~

Prior to the completion of the Initial Public Offering (Note 3) and the Private Placement (Note 4), the Company’s liquidity needs had been satisfied through the sponsor’s payment of $25,000 of the Company’s liabilities in exchange for the issuance of the Founder Shares, and a promissory note (the “Note”) issued by the sponsor (Note 5). As of June 30, 2020, ~~the Company had $3,654 outstanding under the Note.~~ ~~The Company repaid the Note on August 7, 2020.~~

Subsequent to the consummation of the Initial Public Offering and Private Placement, the Company’s liquidity needs have been satisfied with the proceeds from the consummation of the Private Placement not held in the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination, the sponsor may, but is not obligated to, provide the Company Working Capital Loans (see Note 5). ~~To date, there were no amounts outstanding under any Working Capital Loan.~~

~~Based on the foregoing, management believes~~presentation assumes that the Company will ~~have sufficient working capital~~continue in operation one year after the date these unaudited condensed consolidated interim financial statements are issued and ~~borrowing capacity~~will be able to ~~meet~~realize its ~~needs through~~assets and discharge its liabilities and commitments in the ~~earlier~~normal course of business.

Pursuant to the requirements of the ~~consummation~~Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a ~~Business Combination~~Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from ~~this filing. Over this~~the date these unaudited condensed consolidated interim financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the unaudited condensed consolidated interim financial statements are issued. When substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the unaudited condensed consolidated interim financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the unaudited condensed consolidated interim financial statements are issued.

The Company evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern over the next twelve months through November 2023. Since inception, the Company has incurred significant operating losses and has an accumulated deficit of approximately $1,775.5 million. As of September 30, 2022, the Company’s existing sources of liquidity included cash and cash equivalents of $67.6 million and marketable securities of $82.9 million. The Company believes that its current level of cash and cash equivalents and marketable securities are not sufficient to fund commercial scale production and sale of its services and products. These conditions raise substantial doubt regarding its ability to continue as a going concern for a period of at least one year from the date of issuance of these unaudited condensed consolidated financial statements.

In order to proceed with the Company’s business plan, the Company will need to raise substantial additional funds through the issuance of additional debt, equity or both. Until such time, ~~period,~~if ever, the Company can generate revenue sufficient to achieve profitability, the Company expects to finance its operations through equity or debt financings, which may not be available to the Company on the timing needed or on terms that the Company deems to be favorable. To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the ownership interest of its stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting the Company’s ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If the Company is unable to obtain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. The Company may be required to delay, limit, reduce or terminate its product development activities or future commercialization efforts. There can be no assurance that the Company will be ~~using~~able to obtain the needed financing on acceptable terms or at all.

In an effort to alleviate these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.

~~Management~~conditions, management continues to seek and evaluate opportunities to raise additional capital through the ~~impact~~issuance of equity or debt securities. As an example, on August 2, 2022, the Company entered into a Common Stock Purchase Agreement with B. Riley Principal Capital II LLC ("B. Riley"), which would allow the Company to sell newly issued shares of its Class A Common Stock to B. Riley in aggregate amount not to exceed $100.0 million or 19.99% of the ~~COVID-19 pandemic~~aggregate outstanding Class A and ~~has concluded that~~Class B Common Stock of the ~~specific impact is not readily determinable~~Company as of August 2, 2022. See Note 13 – Stockholders’ Equity for additional information about this financing arrangement. However, actual sales of shares under the ~~date~~Purchase Agreement will depend on a variety of factors including, among other things, market conditions and the trading price of the ~~balance sheet. The unaudited~~Class A Common Stock, and the full amount of capital may not be fully realized. As we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or at all. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry.

As a result of these uncertainties, and notwithstanding management’s plans and efforts to date, there is substantial doubt about the Company’s ability to continue as a going concern. If we are unable to raise substantial additional capital in the near term, our operations and production plans will be scaled back or curtailed. If the funds raised are insufficient to provide a bridge to full commercial production at a profit, our operations could be severely curtailed or cease entirely and we may not realize any significant value from our assets.

We have, however, prepared these condensed consolidated financial statements on a going concern basis, assuming that our financial resources will be sufficient to meet our capital needs over the next twelve months. Accordingly, our financial statements do not include ~~any~~ adjustments relating to the recoverability and realization of assets and classification of liabilities that might ~~result from~~be necessary should we be unable to continue in operation.

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Impairment of long-lived assets, indefinite-lived intangibles and goodwill

The Company performs an annual impairment review of goodwill and indefinite-lived intangible assets during the ~~outcome~~fourth fiscal quarter of ~~this uncertainty.~~

~~Note 2—Summary of Significant Accounting Policies~~

~~Concentration of Credit Risk~~

~~Financial instruments that potentially subject~~each year, and more frequently if the Company believes that indicators of impairment exist. Long-lived assets are tested for recoverability when events or changes in circumstances indicate that their carrying amounts may not be recoverable. As of the third quarter of fiscal year 2022, the Company determined that impairment indicators were present based on the existence of substantial doubt about the Company’s ability to ~~concentrations~~continue as a going concern, a sustained decrease in the Company’s share price and macroeconomic factors. Accordingly, the Company proceeded with the quantitative impairment tests.

For indefinite-lived intangible assets, the Company compared the carrying amount of ~~credit risk consist of cash accounts~~the asset to its fair value, resulting in a ~~financial institution, which, at times, may exceed~~non-cash impairment charge, as described further in Note 5 – Goodwill and Intangible Assets.

For the ~~Federal Depository Insurance Coverage limit of $250,000. At June 30, 2020,~~long-lived assets, the Company ~~has~~compared the sum of the undiscounted future cash flows attributable to the Launch Services and Space Products asset groups (the lowest level for which identifiable cash flows are available) to their respective carrying amounts and concluded that the Space Products asset group was recoverable. The Launch Services asset group was not ~~experienced losses on these accounts~~recoverable, and ~~management believes~~ the Company ~~is not exposed~~proceeded with the comparison of the asset group’s carrying amount to ~~significant risks~~its fair value, resulting in a non-cash impairment charge, as described further in Note 4 – Supplemental Financial Information.

For goodwill, the Company compared the carrying amount of the reporting unit to its fair value. During the third quarter of fiscal year 2022, the Company took steps to realign management and internal reporting, resulting in two operating and reportable segments, as described further in Note 16 – Segment Information. In accordance with the accounting guidance under ASC 350, the reorganization triggered a goodwill impairment test based on ~~such accounts.~~the reporting structure immediately before the reorganization, as a single reporting unit, resulting in a non-cash impairment charge writing off the entire goodwill balance, as described further in Note 5 – Goodwill and Intangible Assets.

Fair ~~Value of Financial Instruments~~

~~The fair value~~values of the Company’s ~~assets~~reporting units were determined using the discounted cash flow model and ~~liabilities, which qualify~~fair value ofthe tradename was determined using the relief-from-royalty method. Significant inputs include discount rates, growth rates, and cash flow projections, and for the tradename, the royalty rate. These valuation inputs are considered Level 3 inputs as ~~financial instruments under FASB~~defined by ASC 820 ~~“Fair~~Fair Value ~~Measurements~~Measurement.

Impact of the COVID-19 Pandemic

The Company has been actively monitoring the ongoing COVID-19 pandemic situation and ~~Disclosures,” approximates~~its impact on the ~~carrying amounts represented~~Company’s business while keeping abreast of the latest developments, particularly the variants of the virus, to ensure preparedness for Astra’s employees and its business. The COVID-19 pandemic had disrupted everyday life and markets worldwide, leading to significant business and supply-chain disruption, as well as broad-based changes in supply and demand. The Company has been diligent in testing and monitoring its employees, and there have been disruptions in productivity, although these disruptions have not resulted in suspension of its manufacturing facilities. However, there has been a trend in many parts of the ~~balance sheet.~~world of increasing availability and administration of vaccines against COVID-19, as well as an easing of restrictions on social, business, travel and government activities and functions. On the other hand, infection rates and regulations continue to fluctuate in various regions and there are ongoing global impacts resulting from the pandemic, including challenges and increases in costs for logistics and supply chains, such as increased intermittent supplier delays and a shortfall of semiconductor supply. Ultimately, the Company cannot predict the duration of the COVID-19 pandemic. The Company will continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve its business as appropriate and deploy its production, workforce and other resources accordingly.

Use of Estimates and Judgements

The preparation of the condensed consolidated financial statements in conformity with ~~U.S.~~ GAAP requires ~~the Company’s~~ management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the condensed consolidated financial statements and ~~disclosure~~accompanying notes. The Company bases these estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of ~~contingent~~which form the basis for making judgments about the carrying amounts of assets and liabilities ~~at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.~~that are not readily apparent from other sources. Actual results could differ ~~materially~~significantly from ~~these~~those estimates.

~~Deferred Offering Costs~~

~~Deferred offering costs consist~~ Significant items subject to such estimates and assumptions include the valuation of ~~legal, accounting, underwriting fees~~goodwill and other costs incurred through the Initial Public Offering date that are directly related to the Initial Public Offering. Deferred offering costs amounting to $16.8 million were charged to stockholders’ equity upon the completionlong-lived assets, inventory valuation and reserves, stock-based compensation, pre-combination Astra common stock, useful lives of ~~the Initial Public Offering and the partial exercise of the Over-Allotment Option.~~

~~Income Taxes~~

~~The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax~~intangible assets and ~~liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets~~property, plant and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect onequipment, deferred tax assets, income tax uncertainties, contingent consideration, and ~~liabilities~~other contingencies.

Other than those described below, there have been no changes to the Company’s significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, that have had a material impact on its unaudited condensed consolidated financial statements and related notes.

Segment reporting. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding resource allocation and assessing performance. Prior to the third quarter of fiscal year 2022, the Company operated as one operating and reportable segment, as the CODM reviewed financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance.

During the third quarter of fiscal year 2022, the Company took steps to realign management and internal reporting, resulting in two operating and reportable segments: Launch Services and Space Products. The segment reporting for prior periods has been reclassified to conform to the current period presentation. Refer to Note 16 – Segment Information for more information.

Marketable securities. Marketable securities consist of U.S. Treasury securities, corporate debt securities, commercial paper, and asset backed securities. The Company classifies marketable securities as available-for-sale at the time of purchase and reevaluates such classification as of each balance sheet date. Interest receivable on these securities is presented in other current assets on the condensed consolidated balance sheets. All marketable securities are recorded at their estimated fair values. When the fair value of a ~~change in tax rates~~marketable security declines below its amortized cost basis, the carrying value of the security will be reduced to its fair value if it is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets were deemed immaterial as of June 30, 2020.

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statements 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 that management is required to sell the impaired security before recovery of its amortized basis, or management has the intention to sell the security. If neither of these conditions are met, the Company determines whether any portion of the decline is due to credit losses. Any portion of that decline attributable to credit losses, to the extent expected to be ~~sustained upon examination by taxing authorities. There were no unrecognized tax benefits as~~nonrecoverable before the sale of ~~June 30, 2020.~~ the security, is recognized in the Company’s condensed consolidated statement of operations. When the fair value of the security declines below its amortized cost basis due to changes in interest rates, such amounts are recorded in accumulated other comprehensive income (loss) and are recognized in the Company’s condensed consolidated statement of operations only if the Company sells or intends to sell the security before recovery of its cost basis. Realized gains and losses are determined based on the specific identification method and are reported in other income (expense), net in the Company’s condensed consolidated statements of operations.

Note 2 — Revenues

The Company recognizes ~~accrued interest~~revenue to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Through its current offerings, the Company expects to generate revenue by providing the following goods or services:

Launch Services — To provide rapid, global, and ~~penalties related~~affordable launch services to ~~unrecognized tax benefits as income tax expense. No amounts were accrued~~satellite operators and governments in partnership with third-party spaceport providers globally. The launch services include services tied directly to launch along with complementary services that are not part of the Company's fixed pricing for ~~the payment of interest~~which we charge a separate fee. The Company operated its launches from Pacific Spaceport Complex in Kodiak, Alaska and ~~penalties as of June 30, 2020.~~Cape Canaveral Space Force Station in Cape Canaveral, Florida. The Company is ~~currently~~in discussions with SaxaVord UK Spaceport regarding an opportunity to launch from the United Kingdom.

Space Products — To design and provide space products based on the customers' needs for a successful satellite launch and other products that the Company may sell in the future. Currently the Company offers two in-space electric propulsion systems.

As of September 30, 2022, the Company has entered into contracts for launch services and space products. The Company’s contracts may provide customers with termination for convenience clauses, which may or may not ~~aware~~include termination penalties. In some contracts, the size of ~~any issues under review that could result~~the contractual termination penalty increases closer to the scheduled launch date. At each balance sheet date, the Company evaluates each contract’s termination provisions and the impact on the accounting contract term, i.e., the period in ~~significant payments, accruals or material deviation from its position.~~which the Company has enforceable rights and obligations. This includes evaluating whether there are termination penalties and if so, whether they are considered substantive. The Company ~~is subject~~applies judgment in determining whether the termination penalties are substantive. In July 2022, the Company decided to ~~income tax examinations~~focus on the development and production of the next version of its launch system. As a result, the Company has discontinued the production of launch vehicles supported by ~~major taxing authorities since inception.~~

~~Net Loss Per Common Share~~

its current launch system and does not plan to conduct any further commercial launches in 2022. The Company ~~complies~~has begun discussions with ~~accounting~~customers for whom it agreed to launch payloads on launch vehicles supported by its old launch system and ~~disclosure requirements~~the shift of ~~FASB ASC Topic 260, “Earnings Per Share.” Net loss per share is computed~~those flights to launch vehicles supported by ~~dividing net loss by~~our new launch vehicle. If a customer terminates its contract with the ~~weighted average number~~Company due to the shifting of ~~shares~~the flights, the customer may not be obligated to pay the termination for convenience penalties. As of ~~common stock outstanding during~~September 30, 2022, the ~~period. This number excludes 406,250 shares of Class B common stock that are potentially subject to forfeiture~~Company has not incurred any termination penalties in launch services as a result of the ~~underwriters’ partial exercise~~shifting of ~~their Over-Allotment Option on August~~ flights.

11 ~~2020 (see Note 3). At June 30, 2020,~~

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Recognition of Revenue

The work performed by the Company ~~did~~in fulfilling launch services and space products performance obligations is not ~~have any dilutive securities~~expected to create an asset to the customer since the launch vehicle that is built to deliver the customer’s payload into orbit will not be owned by the customer or the propulsion systems that are built to thrust the customers' satellite into orbit will not be owned by the customer until they are delivered to the customer. The Company recognizes revenue at a point in time upon satisfaction of the performance obligations under its launch services and space products agreements. The following table presents revenue disaggregated by type of revenue for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Launch services	$	—	$	—	$	5,899	$	—
Space products		2,777		—		3,471		—
Total revenues	$	2,777	$	—	$	9,370	$	—

Contracts with governmental entities involving research and development milestone activities do not represent contracts with customers under ASC 606 and as such, amounts received are recorded in other ~~contracts that could, potentially, be exercised or converted into shares of common stock and then share~~income (expense), net in the ~~earnings~~condensed consolidated statements of operations. No such income was recorded for the three months ended September 30, 2022. The Company recorded $0.4 million in other income for the nine months ended September 30, 2022. No such income was recorded for the three and nine months ended September 30, 2021.

Contract Balances and Remaining Performance Obligations

Contract balances. Contract assets and liabilities represent the differences in the timing of revenue recognition from the receipt of cash from the Company’s customers and billings. Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the ~~Company. As a result, diluted loss per share~~satisfaction of performance under the contract. Receivables represent rights to consideration that are unconditional. Such rights are considered unconditional if only the passage of time is required before payment of that consideration is due. The Company had no contract assets as of September 30, 2022 and December 31, 2021. The Company had contract liabilities of $18.0 million and $10.4 million as of September 30, 2022 and December 31, 2021, respectively. The Company recognized revenue of $0.3 million and $5.2 million during the ~~same as basic loss per share~~three and nine months ended September 30, 2022, respectively, that was included in the contract liabilities balance at the beginning of the period. No revenue was recognized for the ~~period presented.~~three and nine months ended September 30, 2021.

~~Recent Accounting Pronouncements~~

~~The Company’s management~~Remaining performance obligations. Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied. It includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods and does not ~~believe that any recently issued, but~~include contracts where the customer is not ~~yet effective, accounting standards if currently adopted would have~~committed. Customers are not considered committed when they are able to terminate their contractual obligations to us without payment of a ~~material effect on~~substantive penalty under the ~~accompanying financial statements.~~

~~Note 3—Initial Public Offering~~

~~On August 7, 2020,~~contract. Many of the Company’s contracts allow the customer to terminate the contract prior to launch or delivery without a substantive penalty, and therefore the enforceable contract is for a period less than the stated contractual term. Further, the Company ~~consummated~~has elected not to disclose the ~~Initial Public Offering~~value of ~~27,500,000 Units~~ at $10.00 per Unit, generating gross proceeds of $275.0 million, and incurring offering costs of approximately $15.5 million, inclusive of approximately $9.6 million in deferred underwriting commissions. ~~Each Unit consists~~unsatisfied performance obligations for contracts with an original expected length of one ~~share~~year or less. The Company had unsatisfied performance obligations of $40.6 million as of September 30, 2022.

Note 3 — Acquisitions

Acquisition of Apollo Fusion, Inc.

On July 1, 2021, or the Apollo Acquisition Date, the Company, through its wholly owned indirect subsidiary, merged with Apollo Fusion, Inc. ("Apollo"). The results of Apollo’s operations have been included in the unaudited condensed consolidated financial statements since that date. Apollo designs, tests, manufactures and operates propulsion modules to enable satellites to orbit in space.

The fair value of the consideration paid as of July 1, 2021, was $70.8 million, net of cash acquired (the "Apollo Merger"), which consisted of the following:

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Purchase Consideration (in thousands)
Cash paid for outstanding Apollo common stock and options	$	19,926
Fair value of Astra Class A common stock issued		33,008
Fair value of contingent consideration		18,400
Total purchase consideration		71,334
Less: cash acquired		566
Total purchase consideration, net of cash acquired	$	70,768

The fair value of the shares of Class A common stock par value $0.0001 per share, and one-third of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7).

Additionally, the Company granted the underwriters a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 4,125,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price, less underwriting discounts and commissions. On August 11, 2020, the underwriters purchased 2,500,000 Over-Allotment Units pursuant to the partial exercise of the Over-Allotment Option. The Over-Allotment Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $25.0 million. If the underwriters do not exercise the remaining portion of their Over-Allotment Option (1,625,000 Over-Allotment Units), the initial stockholders will forfeit 406,250 shares which would be returned resultingissued in the ~~initial stockholders holding an aggregate of 7,500,000 shares of Class B common stock. The shares forfeited by the initial stockholders would be cancelled by the Company.~~

~~Including the partial exercise of the Over-Allotment Option, there were an aggregate of 30,000,000 Units sold to-date, generating total gross proceeds of $300.0 million.~~

~~Note 4—Private Placement~~

~~Simultaneously with~~Apollo Merger was determined based on the closing ~~of the Initial Public Offering, the Company consummated the Private Placement of~~ 5,000,000 Private Placement Warrants to the sponsor, each exercisable to purchase one share of Class A common stock at $11.50 per share, at a price of $1.50 per Private Placement Warrant, generating gross proceeds to the Company of $7.5 million.

On August 11, 2020, simultaneously with the sale of the Over-Allotment Units discussed in Note 3, the Company consummated a private sale (the “Over-Allotment Private Placement”) of an additional 333,333 Private Placement Warrants to the sponsor, at a purchase price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $0.5 million.

Each whole Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants to the sponsor was added to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable for cash and exercisable on a cashless basis so long as they are held by the sponsor or its permitted transferees.

The sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.

~~Note 5—Related Party Transactions~~

~~Founder Shares~~

On June 4, 2020, Pendrell Corporation (“Pendrell”) paid for certain offering costs for an aggregate price of $25,000 in exchange for issuance of 7,187,500 shares of the Company’s Class B common stock, par value $0.0001 per share, (the “Founder Shares”). Pendrell transferred such shares to the sponsor on June 9, 2020. In July 2020, the sponsor transferred shares to its independent director nominees and various other directors, officers, employees and consultants of the Company and Pendrell, in each case for approximately the same per-share price as initially paid by the Company’s sponsor. On August 4, 2020, the Company effected a effected a 1.1-for-1 common stock split (the “Stock Split”) ~~resulting in 7,906,250 shares outstanding held as follows:~~ 33,000 shares by each of Wayne Perry, Dennis Weibling and Cathleen A. Massey, its independent directors, 165,000 shares held by Craig O. McCaw, 110,000 shares held by Randy Russell, 88,000 shares held by R. Gerard Salemme, 44,000 shares held by Steve Ednie, 262,900 shares held by other directors, officers, employees and consultants of Pendrell, and 7,137,350 shares held by the sponsor. The initial stockholders have agreed to forfeit up to 1,031,250 Founder Shares to the extent that the Over-Allotment Option is not exercised in full by the underwriters. The forfeiture will be adjusted to the extent that the Over-Allotment Option is not exercised in full by the underwriters so that the Founder Shares will represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering (see Note 3).

The initial stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (i) one year after the completion of the initial Business Combination and (ii) the date following the completion of the initial Business Combination on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their common stock for cash, securities or other property. Notwithstanding the foregoing, if the closingmarket price of the Company’s Class A common stock ~~equals~~on the Apollo Acquisition Date.

The vesting of all unvested stock options of Apollo granted prior to the Apollo Acquisition Date were accelerated prior to the acquisition and were then cancelled in exchange for a right of each option-holder to cash, equity and contingent consideration based on their pro-rata percentage, assuming all stock options of Apollo had been exercised.

The contingent consideration requires the Company to pay up to $75.0 million of additional consideration to Apollo’s former shareholders and option-holders, if Apollo meets certain customer revenue related milestones over a two and half year period ending on December 31, 2023. The contingent consideration is earned, which is a combination of total contract value and relevant payout ratio, if the contract with the customer is entered into after the acquisition date and 25% of revenue under the contract is recognized by December 31, 2023 under ASC 606. Contingent consideration is payable on a quarterly basis based on the milestones achieved. The fair value of the contingent consideration arrangement at the acquisition date was $18.4 million. The Company estimated the fair value of the contingent consideration using a Monte Carlo simulation model. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820. As of September 30, 2022, the contingent consideration recognized increased to $43.0 million as a result of changes in forecasted revenues subject to milestone payments and the passage of time. The Company has recognized $24.6 million in cumulative net losses on changes in fair value of contingent consideration from the Apollo Acquisition Date, of which $12.0 million and $29.2 million in loss was recognized in the condensed consolidated statement of operations for the three and nine months ended September 30, 2022, respectively.

An additional $10.0 million of cash ("Cash Earnout") will be paid to employees of Apollo that joined Astra, subject to certain vesting conditions, as amended. The Cash Earnout is accounted for as compensation expense over the requisite service period in the post-acquisition period as the payment is subject to the employee's continued employment with the Company. The Company has recognized $8.4 million in compensation cost from the Apollo Acquisition Date, of which $2.6 million in compensation cost was recognized in research and development expense in the condensed consolidated statement of operations for the nine months ended September 30, 2022. During the third quarter of 2022, the agreement was amended to remove the performance conditions and the Company paid $1.7 million to fulfill the Company’s remaining obligation under the Cash Earnout as of September 30, 2022. The remaining accrued liability of $1.9 million was written off as of September 30, 2022, since the total eligible compensation under the Cash Earnout was fully paid.

In addition, the Company awarded 1,047,115 Performance Stock Units ("PSUs") to employees of Apollo that joined Astra, subject to certain performance-based milestones, as amended, and other vesting provisions. The PSUs are accounted for as compensation expense over the requisite service period in the post-acquisition period as the vesting of PSUs is subject to time-based and performance-based vesting conditions. During the third quarter of 2022, the performance stock award agreements were amended to remove the performance-based milestone as a vesting condition. The PSUs now are only subject to vesting based on the applicable employees’ years of service. See Note 14 — Stock-Based Compensation for additional information.

The Company allocated the fair value of the purchase consideration to the tangible assets, liabilities and intangible assets acquired, based on the fair values as of the acquisition date. We have completed the valuation as of March 31, 2022. The excess purchase price over those fair values is recorded as goodwill. The valuation assumptions of acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets. The final purchase consideration allocation is presented in the following table.

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(in thousands)	Fair Value
Inventory	$	131
Prepaid and other current assets		796
Property, plant and equipment		996
Right of use assets		163
Goodwill		58,251
Intangible assets		15,350
Other non-current assets		75
Total assets acquired		75,762
Accounts payable		(950	)
Accrued expenses and other current liabilities		(1,939	)
Operating lease obligation		(163	)
Other non-current liabilities		(1,942	)
Total liabilities assumed		(4,994	)
Fair value of net assets acquired	$	70,768

Goodwill is primarily attributable to the assembled workforce and anticipated synergies expected from the integration of the Apollo business. The synergies include operating efficiencies, and other strategic benefits projected to be achieved as a result of the Apollo Merger. Goodwill is not deductible for tax purposes.

There were $2.8 million and $3.5 million of revenues recorded during the three and nine months ended September 30, 2022, respectively, related to Apollo. It was impracticable to determine the effect on net income attributable to Apollo as the Company had integrated a substantial portion of Apollo into its ongoing operations during the year.


Intangible Assets
	Fair Value		Weighted-Average Amortization Periods
	(in thousands)		(in years)
Developed technology	$	12,100	6
Customer contracts and related relationships		2,900	3
Order backlog		200	1
Tradename		150	2
Total identified intangible assets	$	15,350

Developed technology relates to propulsion modules. The Company valued the developed technology using the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted revenue that are expected to be generated by developed technology. The economic useful life was determined based on the technology cycle related to the developed technology, as well as the cash flows over the forecast period.

Customer contracts and related relationships represent the fair value of future projected revenue that will be derived from sales of products to existing customers of Apollo. Customer contracts and related relationships were valued using the multi-period excess earnings method under the income approach. This method reflects the present value of the projected cash flows that are expected to be generated by the customer contracts and related relationships less charges representing the contribution of other assets to those cash flows. The economic useful life was determined based on historical customer turnover rates.

Order backlog represents business under existing contractual obligations. The fair value of backlog was determined using the multi-period excess earnings method under the income approach based on expected operating cash flows from future contractual revenue. The economic useful life was determined based on the expected life of the backlog and the cash flows over the forecast period.

Trade name relates to the “Apollo” trade name. The fair value was determined by applying the relief-from-royalty method under the income approach. This method is based on the application of a royalty rate to forecasted revenue under the trade name. The economic useful life was determined based on the expected life of the trade name and the cash flows anticipated over the forecast period.

The Company believes the amounts of purchased intangible assets recorded above represent the fair values of, and approximate the amounts a market participant would pay for, these intangible assets as of the Apollo Acquisition Date.

Unaudited Pro Forma Information

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The following unaudited pro forma financial information presents combined results of operations for each of the periods presented, as if Apollo had been acquired as of the beginning of fiscal year 2020. The unaudited pro forma results include certain pro forma adjustments to revenue and net loss that were directly attributable to the acquisition including transaction costs and amortization of intangible assets. Transactions costs of approximately $4.4 million are assumed to have occurred on January 1, 2020 and are recognized as if incurred in the first quarter of 2020. Of these transaction costs, $0.4 million are incurred by Apollo and $4.0 million are incurred by the Company. Intangible assets are assumed to be recognized at their assigned fair values as of the pro forma close date of January 1, 2020 and are amortized over their estimated useful lives. The amortization expenses were $0.8 million and $2.5 million for the three and nine months ended September 30, 2021, respectively. The unaudited pro forma information presented below is for informational purposes only and is not necessarily indicative of our consolidated results of operations of the combined business had the acquisition actually occurred at the beginning of fiscal year 2020 or ~~exceeds $12.00~~of the results of our future operations of the combined business.


in thousands	For the Three Months Ended September 30, 2021			For The Nine Months Ended September 30, 2021
Pro forma net revenues	$	—		$	400
Pro forma net loss and net loss attributable to common stockholders	$	(13,038	)	$	(207,789	)

Reverse Recapitalization

On June 30, 2021, pre-combination Astra Space, Inc. and Holicity Inc. consummated the Business Combination contemplated by the BCA, with pre-combination Astra surviving the merger as a wholly owned subsidiary of Holicity. Upon consummation of the Business Combination, Holicity changed its name to Astra Space, Inc., and pre-combination Astra changed its name to Astra Space Operations, Inc.

Immediately following the Business Combination, there were 198,090,903 shares of Class A common stock and 56,239,189 shares of Class B common stock issued and outstanding with a par value of $0.0001. Additionally, there were outstanding options to purchase an aggregate of 5,993,412 shares of Class A common stock and outstanding warrants to purchase 15,813,829 shares of Class A common stock.

The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP as pre-combination Astra has been determined to be the accounting acquirer. Under this method of accounting, while Holicity was the legal acquirer, it has been treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination was treated as the equivalent of pre-combination Astra issuing stock for the net assets of Holicity, accompanied by a recapitalization. The net assets of Holicity were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of pre-combination Astra. Reported shares and earnings per share ~~(as adjusted~~available to holders of the Company’s common stock, prior to the Business Combination, have been retroactively restated as shares reflecting the exchange ratio established in the BCA (approximately one pre-combination Astra share to 0.665 of the Company's shares).

The most significant change in the post-combination Company’s reported financial position and results was an increase in cash, net of transactions costs, of $463.6 million, including $200.0 million in gross proceeds from the private placements (the “PIPE”). In connection with the Business Combination, $25.2 million of transaction costs were paid on the Closing Date. Additionally, on the Closing Date, the Company repaid the short-term promissory notes with Pendrell (the “Bridge Loan”) of $10.4 million, which included principal of $10.0 million and end of term fee of $0.4 million as of June 30, 2021. The Company also repaid the outstanding principal and interest of $4.6 million for ~~stock splits, stock capitalizations, reorganizations, recapitalizations~~the term loan and equipment advances with Silicon Valley Bank. Refer to Note 6 – Long-term Debt.

The Company incurred $25.5 million in transaction costs relating to the merger with Holicity, of which $23.3 million has been recorded against additional paid-in capital in the Condensed Consolidated Balance Sheets and the ~~like)~~remaining amount of $2.2 million was recognized as general and administrative expenses on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021. On the date of the Business Combination, the Company recorded a liability related to the Public and Private Placement Warrants of $56.8 million, with an offsetting entry to additional paid-in capital. In relation to the Public and Private Placement Warrants, the Company recognized a portion of pre-combination Astra’s capitalizable transaction costs relating to the merger with Holicity, using the relative fair value method, as general and administrative expenses in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021.

Upon closing of the Business Combination, the shareholders of Holicity, including Holicity founders, were issued 37,489,019 shares of Class A common stock. In connection with the Closing, holders of 10,981 shares of common stock of Holicity were redeemed at a price per share of $10.00. In connection with the Closing 20,000,000 shares were issued to PIPE investors at a price per share of $10.00.

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The number of shares of Class A common stock issued immediately following the consummation of the Business Combination were:


Common stock of Holicity			29,989,019
Holicity founder shares			7,500,000
Shares issued in PIPE			20,000,000
Business Combination and PIPE shares			57,489,019
Pre-combination Astra shares			140,601,884
Total shares of Class A common stock immediately after Business Combination			198,090,903

In addition, in connection with the consummation of the Business Combination, 56,239,189 shares of Class B common stock were issued to two executive officers and founders of the Company: Chris Kemp and Adam London in exchange for an aggregate 73,699,647 shares of common stock and an aggregate 10,870,562 shares of Founders Preferred Stock of pre-combination Astra.

Note 4 — Supplemental Financial Information

Inventories


in thousands	As of September 30, 2022		As of December 31, 2021
Raw materials	$	1,015	$	5,775
Work in progress		4,159		941
Finished goods		—		959
Inventories	$	5,174	$	7,675

There were no inventory write-downs recorded during the three months ended September 30, 2022. There were $18.8 million of inventory write-downs recorded within cost of revenues during the nine months ended September 30, 2022, of which $10.2 million related to the discontinuance of production of the current version of its launch vehicle as the Company focuses on developing the new version of its launch system. There were no inventory write-downs recorded during the three and nine months ended September 30, 2021.

Property, Plant and Equipment, net

Presented in the table below are the major classes of property, plant and equipment:


in thousands	As of September 30, 2022			As of December 31, 2021
Construction in progress	$	6,381		$	39,246
Computer and software		6,501			3,092
Leasehold improvements		58,255			14,177
Research equipment		14,478			8,935
Production equipment		23,439			10,442
Furniture and fixtures		1,523			1,001
Total property, plant and equipment		110,577			76,893
Less: accumulated depreciation		(20,241	)		(10,577	)
Less: accumulated impairment charges		(70,288	)		—
Property, plant and equipment, net	$	20,048		$	66,316

Depreciation expense amounted to $3.7 million and $0.8 million for the three months ended September 30, 2022 and 2021, respectively. Depreciation expense amounted to $9.7 million and $3.0 million for the nine months ended September 30, 2022 and 2021, respectively.

The Company recorded a non-cash impairment charge of $70.3 million primarily related to leasehold improvements, production equipment and research equipment of Launch Services in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022. No impairment charges were recorded for the three and nine months ended September 30, 2021. See Note 1 – Description of Business, Basis of Presentation and Significant Accounting Policies, for discussion of triggers for impairment as of September 30, 2022.

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Accrued Expenses and Other Current Liabilities


in thousands	As of September 30, 2022		As of December 31, 2021
Employee compensation and benefits	$	5,882	$	9,927
Contract liabilities, current portion		12,028		10,162
Construction in progress related accruals		1,072		3,726
Accrued expenses		5,280		3,464
Other (miscellaneous)		3,120		2,620
Accrued expenses and other current liabilities	$	27,382	$	29,899

Other Non-Current Liabilities


in thousands	As of September 30, 2022		As of December 31, 2021
Contract liabilities, net of current portion		6,013		149
Other (miscellaneous)		1,264		750
Other non-current liabilities	$	7,277	$	899

Other (Expense) Income, Net


	Three Months Ended September 30,					Nine Months Ended September 30,
in thousands	2022			2021		2022		2021
Change in fair value of warrant liabilities	$	—		$	20,447	$	—	$	20,447
Gain on forgiveness of PPP note		—			4,850		—		4,850
Other (miscellaneous)		(25	)		598		314		(120	)
Other (expense) income, net	$	(25	)	$	25,895	$	314	$	25,177

Note 5 — Goodwill and Intangible Assets

Goodwill

The following table summarizes the changes in the carrying amount of goodwill:


(in thousands)	Carrying Amount		Accumulated Impairment Charge			Net Book Value
Goodwill	$	58,251	$	(58,251	)	$	—

The Company recorded a pre-tax impairment charge of $58.3 million for the three and nine months ended September 30, 2022, respectively, fully impairing its goodwill balance. There was no impairment charge for the three and nine months ended September 30, 2021. See Note 1 – Description of Business, Basis of Presentation and Significant Accounting Policies for discussion of events triggering the goodwill impairment test.

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Intangible Assets


in thousands	Gross Carrying Amount		Accumulated Impairment Charge			Accumulated Amortization			Net Book Value
As of September 30, 2022:
Definite-lived intangible assets
Developed technology	$	12,100	$	(2,191	)	$	(2,521	)	$	7,388
Customer contracts and related relationship		2,900		(517	)		(1,208	)		1,175
Order backlog		200		—			(200	)		—
Trade names		150		(27	)		(94	)		29
Intangible assets subject to amortization		15,350		(2,734	)		(4,023	)		8,593
Indefinite-lived intangible assets
Trademarks		4,200		(2,094	)		—			2,106
Total	$	19,550	$	(4,828	)	$	(4,023	)	$	10,699

The Company recorded a pre-tax impairment charge of $4.8 million for the three and nine months ended September 30, 2022, respectively. There was no impairment charge for the three and nine months ended September 30, 2021. See Note 1 – Description of Business, Basis of Presentation and Significant Accounting Policies for discussion of events triggering the impairment assessment of definite-lived and indefinite-lived intangible assets.


in thousands	Gross Carrying Amount		Accumulated Amortization			Net Book Value
As of December 31, 2021:
Definite-lived intangible assets
Developed technology	$	12,100	$	(1,008	)	$	11,092
Customer contracts and related relationship		2,900		(483	)		2,417
Order backlog		200		(100	)		100
Trade names		150		(38	)		112
Intangible assets subject to amortization		15,350		(1,629	)		13,721
Indefinite-lived intangible assets
Trademarks		4,200		—			4,200
Total	$	19,550	$	(1,629	)	$	17,921

Based on the amount of intangible assets as of September 30, 2022, the expected amortization expense for each of the next five years and thereafter is as follows:


in thousands	Expected Amortization Expense
2022 (remainder)	$	567
2023		2,247
2024		1,891
2025		1,555
2026		1,555
Thereafter		778
Total Intangible assets subject to amortization	$	8,593

Note 6 — Long-Term Debt

There is no short-term and long-term debt outstanding as of September 30, 2022 and December 31, 2021, respectively. In connection with the Business Combination, all outstanding debt with the exception of the Paycheck Protection Program note was paid on June 30, 2021. Refer to Note – 3 Acquisitions. In August 2021, the Company's application for forgiveness of the Paycheck Protection Program note was approved in the full amount of the outstanding principal balance and accrued interest.

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Term Loan and Equipment Advances

On December 25, 2018, the Company entered into a loan agreement (the “2018 Loan Agreement”) with Silicon Valley Bank (“SVB”). Pursuant to the 2018 Loan Agreement, the Company could borrow up to a total of $3.0 million term loans (“2018 Term Loans”) and $7.0 million equipment loans (“2018 Equipment Advances”) with access period ended on April 30, 2020 for 2018 Term Loans and June 30, 2019 for 2018 Equipment Advances. Amounts borrowed under the 2018 Loan Agreement were repaid prior to or on June 30, 2021.

In connection with the execution of the 2018 Loan Agreement, the Company entered into a 2018 warrant agreement which granted certain warrants to SVB (the “Warrants”). The Warrants were issued in one initial tranche on December 25, 2018 and three subsequent tranches in 2019 each time the Company made an additional debt draw under the 2018 Loan Agreement. Pursuant to the warrant agreement, SVB had the option to purchase an aggregate of 480,520 shares of Class A common stock. The warrants had a weighted average exercise price of $0.24 per share and were exercisable for a period of 10 years. The Company accounted for all the Warrants issued as equity instruments since the Warrants were indexed to the Company’s common shares and met the criteria for classification in stockholders’ equity. In July 2021, SVB exercised all the outstanding Warrants and the Company issued 472,113 shares of Company's Class A Common Stock, net of exercise price.

Paycheck Protection Program Note (“PPP Note”)

On April 20, 2020, the Company received loan proceeds of approximately $4.9 million under the Paycheck Protection Program (“PPP”), offered by the U.S. Small Business Administration (the “SBA”) pursuant to Title 1 of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The PPP Note proceeds were available to be used to pay for payroll costs, including salaries, commissions, and similar compensation, group health care benefits, and paid leaves, rent and utilities, and mortgage interest payments. The PPP Note was subject to forgiveness to the extent proceeds were used for payroll costs, including payments required to continue group health care benefits, and certain rent, utility, and mortgage interest expenses (collectively, “Qualifying Expenses”), pursuant to the terms and limitations of the PPP Note.

The Company used the PPP Note amount intended for Qualifying Expenses. During the three months ended March 31, 2021, the Company submitted a forgiveness application to its lender seeking full forgiveness of the PPP Note. On August 24, 2021, the Company received notice from the lender that the Small Business Administration has approved the application for forgiveness of the PPP Note in the full amount.

Convertible Notes

Issuance of Convertible Notes

From June 2019 through July 2019, the Company issued $14.8 million of convertible promissory notes (the “June 2019 Convertible Notes”) to certain investors. The June 2019 Convertible Notes matured on June 10, 2021 and accrued interest at 2.37% or 2.13%, compounded annually on basis of 360-days year of twelve 30-day months. Principal and any ~~20 trading days within~~accrued but unpaid interest were due and payable at maturity.

From October 2019 through December 2020, the Company issued $45.0 million of convertible promissory notes (the “October 2019 Convertible Notes” and collectively with the June 2019 Convertible Notes, the “Convertible Notes”) to certain investors. The October 2019 Convertible Notes matured on October 1, 2021 and accrued interest at 1.69%, 1.59% or 1.85%, compounded annually on basis of 360-days year of twelve 30-day months. Principal and any ~~30-trading day period commencing~~accrued but unpaid interest were due and payable at maturity.

Settlement of Convertible Notes

On January 28, 2021, the Company entered a stock purchase agreement with certain investors to close the issuance of Series C convertible preferred stock at a cash purchase price of $6.62 per share and settle all outstanding Convertible Notes through Series C convertible preferred stock at a conversion price of $1.33 or $1.71 per share (“Series C Financing”). The Company issued 38,323,292 shares of Series C Convertible Preferred Shares (pre-combination) for conversion of outstanding Convertible Notes of $61.0 million.

The June 2019 Convertible Notes were settled pursuant to the contractual conversion upon the Next Equity Financing feature with such financing yielding at least ~~150 days after~~$20.0 million in a single transaction. The Company credited the ~~initial Business Combination~~net carrying amount of the June 2019 Convertible Notes of $14.5 million, including any unamortized debt discount, to Series C convertible preferred stock with no gain or ~~(2) if~~loss recognized.

The October 2019 Convertible Notes were settled based on negotiated terms between the Company ~~consummates~~and the note holders as the Series C Financing did not meet the definition of Next Equity Financing for the October 2019 Convertible Notes. The Company assessed the economics of the settlement of the October 2019 Convertible Notes and concluded that it should be treated as a privately negotiated

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debt redemption/settlement transaction ~~after~~where debt extinguishment accounting should be applied. Therefore, the ~~initial Business Combination which results~~Company derecognized the net carrying amount, including any unamortized debt discount, of the October 2019 Convertible Notes of $42.6 million and recognized the Series C convertible preferred stock issued specifically to settle the October 2019 Convertible Notes at fair value as the reacquisition consideration. Accrued and unpaid interest of $0.6 million was settled and not paid in cash and therefore it was included in calculating the extinguishment loss. The difference between the net carrying amount of the October 2019 Convertible Notes, plus accrued and unpaid interest, and the reacquisition consideration was recorded as a loss on extinguishment in the ~~stockholders having~~condensed consolidated statement of operations for the ~~right~~nine months ended September 30, 2021.

The Company issued in aggregate 26,727,308 shares of Series C convertible preferred stock (pre-combination) to ~~exchange their shares~~settle the October 2019 Convertible Notes. The fair value of the Series C convertible preferred stock was determined to be $176.9 million using the cash purchase price of $6.62 per share on January 28, 2021. These October 2019 Convertible Notes had a carrying amount plus accrued and unpaid interest of $43.2 million upon settlement. The difference of $133.8 million was recognized as a loss on extinguishment on the Company’s condensed consolidated statement of operations for ~~cash, securities or other property,~~ the ~~Founder Shares will be released from~~nine months ended September 30, 2021.

Bridge Loan

On May 20, 2021, the ~~lock-up.~~

~~Related Party Loans~~

~~On June 4, 2020,~~Company entered into a short-term promissory note (the “Bridge Loan”) with Pendrell as the lender, pursuant to which Pendrell agreed to ~~loan~~make available to the Company ~~an aggregate of~~ up to ~~$0.3~~$20.6 million ~~to cover expenses related to~~in borrowings. Pendrell is the ~~Initial Public Offering pursuant to a promissory note (the “Note”). Pendrell assigned the Note to~~parent of X-icity Holdings Corporation, the sponsor of Holicity. The interest rate on ~~June 9, 2020, which assumed all obligations thereunder. The loan~~the Bridge Loan borrowings was ~~non-interest bearing, unsecured and due at the earlier~~a fixed rate of ~~December 31, 2021 or the completion of the Initial Public Offering. At June 30, 2020, the Company had $3,654 outstanding under the Note. The loan was~~5.00% per annum. However, if repaid ~~upon~~in full in connection with the closing of the ~~Initial Public Offering out~~Business Combination, then no interest will be due and payable. The Company was required to pay an upfront fee in the amount of 1.00% of the ~~$1.0 million~~principal amount and an end of ~~offering proceeds that has been allocated to~~term fee in the ~~payment~~amount of ~~offering expenses.~~

~~In addition, in order to finance transaction costs in connection with a Business Combination, the sponsor or an affiliate~~2.00% of the ~~sponsor, or certain of~~principal amount. The funds drawn on the ~~Company’s officers and directors~~Bridge Loan may ~~but are not obligated to, loan~~be prepaid by the Company ~~funds as may be required (“Working Capital Loans”). If~~at any time. The Bridge Loan matures upon the ~~Company completes a Business Combination, the Company would repay the Working Capital Loans out~~earliest of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. At June 30, 2020, the Company did not have any borrowings under the Working Capital Loans.

~~Administrative Services Agreement~~

~~The Company has entered into an agreement that provides that, subsequent to~~(a) the closing of the ~~Initial Public Offering and continuing until~~Business Combination, (b) 60 days following the ~~earlier~~abandonment of the ~~Company’s consummation of a~~ Business Combination and (c) the date when the commitment amount is otherwise paid in full or accelerated pursuant to the ~~Company’s liquidation,~~terms of the Bridge Loan. Under the terms of the Bridge Loan, the Company ~~will pay~~borrowed $10.0 million in June 2021, and subsequently paid off the outstanding principal and end of term fee totaling $10.4 million on June 30, 2021. Refer to Note – 3 Acquisitions.

Note 7 — Warrant Liabilities

As part of Holicity’s initial public offering ("IPO") in 2020, Holicity issued 9,999,976 warrants to third party investors, and each whole warrant entitled the holder to purchase one share of the Company's Class A common stock at an exercise price of $11.50 per share (the “Public Warrants”). Simultaneously with the closing of the IPO, Holicity completed the private sale of 5,333,333 warrants to Holicity’s sponsor (“Private Placement Warrants”) and each Private Placement Warrant allowed the sponsor ~~a total~~to purchase one share of ~~$10,000~~the Company's Class A common stock at $11.50 per ~~month for office space, secretarial and administrative services.~~share.

The sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee will review on a quarterly basis all payments that were made to the sponsor, officers, directors or their affiliates.

~~Note 6—Commitments and Contingencies~~

~~Registration Rights~~

~~The holders of Founder Shares,~~ Private Placement Warrants and ~~warrants that may be issued upon conversion of Working Capital Loans, if any (and any~~the shares of ~~Class A~~ common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares), are entitled to registration rights pursuant to a registration rights agreement. These holders are entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection with the filing of any such registration statement. The registration rights agreement doeswere not ~~provide for any maximum cash penalties nor any penalties connected with delays in registering the Company’s Class A common stock.~~

~~Risks and Uncertainties~~

Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might results from the outcome of this uncertainty.

~~Underwriting Agreement~~

The underwriters were paid a cash underwriting discount of $0.20 per unit, or $6.0 million in the aggregate, upon the closing of the Initial Public Offering and the partial exercise of the Over-Allotment Option. In addition, $0.35 per unit, or approximately $10.5 million in the aggregate, will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

~~Note 7—Stockholders’ Equity~~

~~Class A Common Stock~~—The Company is authorized to issue 200,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of June 30, 2020, there were no shares of Class A common stock issued or outstanding.

~~Class B Common Stock~~~~—The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share.~~ ~~In June 2020, the Company issued 7,187,500 shares of Class B common stock. On August 4, 2020, the Company~~ ~~effected a Stock Split~~ ~~resulting in 7,906,250 shares of Class B common stock outstanding.~~ The 7,906,250 shares of Class B common stock outstanding include an aggregate of up to 1,031,250 shares of Class B common stock that are subject to forfeiture to the Company by the initial stockholders for no consideration to the extent that the underwriters’ Over-Allotment Option is not exercised in full, so that the initial stockholders will collectively own 20% of the Company’s issued and outstanding common stock after the Initial Public Offering (see Note 3).

Stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders except as required by law.

The Class B common stock will automatically convert into Class A common stock at the time of the initial Business Combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection with the initial Business Combination, the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by Public Stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial Business Combination and any Private Placement Warrants issued to the sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.

~~Preferred Stock~~—The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of June 30, 2020, there were no shares of preferred stock issued or outstanding.

~~Warrants~~—Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless” basis, and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

If (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the initial stockholders or their affiliates, without taking into account any Founder Shares held by the initial stockholders or such affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 50% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Class A common stock during the 10 trading day period starting on the trading day after the day on which the Company consummates the initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the Warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price of the Warrants will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.

The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or ~~saleable~~salable until ~~30 days~~ after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants ~~will be~~were exercisable for cash or on a cashless basis, at the holder’s option, and were non-redeemable so long as they ~~are~~were held by the ~~sponsor~~initial purchasers or ~~its~~their permitted transferees. If the Private Placement Warrants ~~are~~were held by someone other than the ~~sponsor~~initial purchasers or ~~its~~their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public ~~Warrants.~~Warrant.

The Company accounted for Public Warrants and Private Placement Warrants as liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity ("ASC 480") and ASC 815, Derivatives and Hedging ("ASC 815"). Specifically, the exercise of the Public and Private Placement Warrants may ~~call~~be settled in cash upon the occurrence of a tender offer or exchange that involves 50% or more of the Company’s Class A shareholders. Because not all of the Company’s shareholders needed to participate in such tender offer or exchange to trigger the potential cash settlement and the Company did not control the occurrence of such an event, the Company concluded that the Public Warrants and Private Placement Warrants did not meet the conditions to be classified in equity. Since the Public and Private Placement Warrants met the definition of a derivative under ASC 815, the Company recorded these warrants as liabilities on the balance sheet at fair value upon the closing of the Business Combination, with subsequent changes in their respective fair values recognized in the consolidated statement of operations at each reporting date.

On November 26, 2021, the Company issued a notice of redemption to redeem all of its Public Warrants and Private Placement Warrants ("Redeemable Warrants") outstanding as of December 27, 2021. Under the Warrant Agreement, the Company was entitled to redeem not less than all of the outstanding Redeemable Warrants at a Redemption Price of $0.10 per Redeemable Warrant, provided that the last reported sales price of the Class A common stock had been at least $10.00 per share on the trading day prior to the date on which notice of redemption is given, and further provided that there is an effective registration statement covering the shares of Class A common stock issuable upon exercise of the Redeemable Warrants and a current prospectus relating thereto, available through the Redemption Date.

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Under the notice of redemption, Company required holders of the Redeemable Warrants to exercise their Warrants on a cashless basis, (the “Cashless Exercise Option”) and holders were not permitted to exercise Redeemable Warrants by paying the $11.50 per share exercise price in cash. Pursuant to the Cashless Exercise Option, an exercising holder of the Redeemable Warrants received a number of shares of Class A common stock (the “Exercise Shares”) equal to the quotient obtained by dividing the product of the number of shares of Class A common stock underlying the Redeemable Warrants, multiplied by the excess of the fair market value of the Class A common stock over the exercise price of the Redeemable Warrants by the fair market value. Since the fair market value was less than the exercise price of the Redeemable Warrants, no Exercise Shares would have been issued if a holder would have elected to exercise its Redeemable Warrant pursuant to the Cashless Exercise Option. Alternatively, holders of the Redeemable Warrants were entitled to elect to receive, in lieu of the redemption price or exercising their Redeemable Warrants pursuant to the Cashless Exercise Option, 0.2560374 shares of Class A common stock for each Redeemable Warrants.

In connection with the redemption, the holders of 9,413,895 Public Warrants and 5,333,333 Private Placement Warrants elected to receive, in lieu of the redemption price, an aggregate 3,775,709 shares of Class A common stock at 0.2560374 shares of Class A Common Stock per Warrant. A total of 586,075 Public Warrants remained unexercised as of December 27, 2021 and the Company redeemed the Public Warrants for ~~redemption:~~a redemption price of $0.10 per Redeemable Warrant on December 27, 2021.

Note 8 — Income Taxes

●

~~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; and~~

●

if, and only if, the last sales price of the Class A common stock equals or exceeds $18.00 per share on each of 20 trading days within the 30-trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders.

The Company computes its provision for income taxes by applying the estimated annual effective tax rate to year-to-date income from recurring operations and adjust the provision for discrete tax items recorded in the period.

IfThere has historically been no federal or state provision for income taxes because the Company ~~calls~~has incurred operating losses and maintains a full valuation allowance against its net deferred tax assets. For the ~~Public Warrants~~three and nine months ended September 30, 2022, the Company recognized no provision for ~~redemption, management~~income taxes consistent with the losses incurred and the valuation allowance against the deferred tax assets. For the three and nine months ended September 30, 2021, the Company recognized a tax benefit of $0.4 million primarily due to the change in the realizability of certain U.S. deferred tax assets as a result of the Apollo Fusion Inc. acquisition.

Utilization of net operating loss carryforwards, tax credits and other attributes may be subject to future annual limitations due to the ownership change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions.

The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is not currently under examination by income tax authorities in federal, state or other jurisdictions. All tax returns will remain open for examination by the federal and state authorities for three and four years, respectively, from the date of utilization of any net operating loss or credits.

On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. Based on our current analysis of the provisions, we do not believe this legislation will have a material impact on our consolidated financial statements. The Company will continue to monitor for additional guidance related to the ~~option~~Act.

Note 9 — Leases

The Company has operating leases for warehouse, production, and office facilities and equipment. Lease contracts have remaining lease terms of less than one year to ~~require all holders~~seven years, some of which include options to extend the term by up to 5 years. The Company included renewal options that ~~wish~~are reasonably certain to be exercised as part of the lease term. Additionally, some lease contracts include termination options. The Company does not expect to exercise the ~~Public Warrants to do so on a “cashless basis,” as described in~~majority of termination options and generally excludes such options when determining the ~~warrant agreement.~~term of leases.

~~In no event will~~The operating lease costs were $1.0 million and $0.5 million for the ~~Company be required to net cash settle any warrant. If~~three months ended September 30, 2022 and 2021, respectively. The operating lease costs were $1.9 million and $1.2 million for the ~~Company is unable to complete a Business Combination within~~nine months ended September 30, 2022 and 2021, respectively. For the ~~Combination Period~~three and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.

~~Note 8—Subsequent Events~~

~~The Company evaluated subsequent events~~nine months ended September 30, 2022 and transactions that occurred after the balance sheet date through September 17, 2020, the date the unaudited condensed financial statements were issued. Other than as described in these financial statements in relation to the Company’s Initial Public Offering and related transactions,2021, the Company did not ~~identify any~~have material short-term leases.

The weighted average remaining lease term was 4.93 years and 6.68 years as of September 30, 2022 and December 31, 2021, respectively. The weighted average discount rate was 8.21% as of September 30, 2022 and 7.34% as of December 31, 2021.

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Cash flows arising from lease transactions for the three and nine months ended September 30, 2022 and 2021 were as follows (in thousands):


	For the Three Months Ended September 30,						Nine Months Ended September 30,
in thousands	2022			2021			2022			2021
Cash paid for amounts included in the measurements of lease liabilities — operating cash flows	$	(893	)	$	(484	)	$	(1,834	)	$	(1,254	)
Right-of-use assets obtained in exchange for operating leases liabilities	$	6,949		$	—		$	7,200		$	—

Future minimum lease payments under non-cancellable leases in effect as of September 30, 2022 are as follows (in thousands):


	Operating Leases
2022 (remainder)	$	1,010
2023		4,069
2024		3,941
2025		3,233
2026		2,075
Thereafter		3,705
Total future undiscounted minimum lease payments	$	18,033
Less: imputed interest		3,156
Total reported lease liability	$	14,877

Note 10 — Fair Value Measurements

The Company measures its financial assets and liabilities at fair value each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value, as follows:

Level 1 Observable inputs, such as quoted prices in active markets for identical assets or liabilities;

Level 2 Inputs, other ~~subsequent events~~than quoted prices in active markets, that ~~would have required adjustment~~are observable either directly or ~~disclosure~~indirectly; and

Level 3 Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company uses the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The carrying amounts of Company's financial instruments, which include cash equivalents, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued liabilities and certain other current liabilities approximate fair value because of their short-term maturities.

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis (in thousands):


	As of September 30, 2022
Description	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Money market account	$	17,349	$	—	$	—	$	17,349
Marketable securities
US Treasury securities		15,746		—		—		15,746
Corporate debt securities		—		14,406		—		14,406
Commercial paper		—		48,253		—		48,253
Asset backed securities		—		4,531		—		4,531
Total financial assets	$	33,095	$	67,190	$	—	$	100,285
Liabilities:
Contingent consideration	$	—	$	—	$	42,950	$	42,950
Total financial liabilities	$	—	$	—	$	42,950	$	42,950


	As of December 31, 2021
Description	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Money market account	$	100,000	$	—	$	—	$	100,000
Total financial assets	$	100,000	$	—	$	—	$	100,000
Liabilities:
Contingent consideration	$	—	$	—	$	13,700	$	13,700
Total financial liabilities	$	—	$	—	$	13,700	$	13,700

The following table presents a summary of the changes in fair value of the Company's Level 3 financial instruments:


in thousands	Contingent Consideration
Fair value as of December 31, 2021	$	13,700
Loss on change in fair value of contingent consideration included in other income (expense), net		29,249
Fair value as of September 30, 2022	$	42,949

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The fair value of the contingent consideration related to the Apollo acquisition is classified as Level 3 financial instruments. To determine the fair value of the contingent consideration, the Company used a Monte Carlo simulation model. The Monte Carlo simulation considered assumptions including revenue volatilities, risk free rates, discount rates and additional revenue discount rate. Additionally, other key assumptions included forecasted revenues from new customers and probability of achieving it. The following table sets forth the range of inputs for the significant assumptions utilized to determine the fair value of contingent consideration as of September 30, 2022 and December 31, 2021:


	As of September 30, 2022			As of December 31, 2021
Risk-free interest rate		4.08	%		0.56	%
Expected revenue volatility		19.0	%		20.0	%
Revenue discount rate		9.00	%		5.50	%
Discount rate		4.80	%		3.25	%

The Company began investing in available-for-sale marketable securities in the ~~unaudited~~first quarter of 2022. These marketable securities are classified as short term investments on the condensed ~~financial statements.~~consolidated balance sheets. The following is a summary of available-for-sale marketable securities as of September 30, 2022 (in thousands):


	As of September 30, 2022
Description	Amortized Cost		Gross Unrealized Loss			Fair Value
U.S. Treasury securities	$	15,798	$	(52	)	$	15,746
Corporate debt securities		14,528		(122	)		14,406
Commercial paper		48,253		-			48,253
Asset backed securities		4,559		(28	)		4,531
Total available-for-sale marketable securities	$	83,138	$	(202	)	$	82,936

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

The following table presents the breakdown of the available-for-sale marketable securities in an unrealized loss position as of September 30, 2022 (in thousands).


	September 30, 2022
	Fair Value		Gross Unrealized Loss
U.S. Treasury securities
Less than 12 months	$	15,746	$	52
Total	$	15,746	$	52

Corporate debt securities
Less than 12 months	$	14,406	$	122
Total	$	14,406	$	122

Commercial paper
Less than 12 months	$	48,253	$	-
Total	$	48,253	$	-

Asset backed securities
Less than 12 months	$	4,531	$	28
Total	$	4,531	$	28

The Company does not believe these available-for-sale marketable securities to be other-than-temporarily impaired as of September 30, 2022. There was a realized loss of $0 and $0.1 million on available-for-sale marketable securities during the three and nine months ended September 30, 2022.


	As of September 30, 2022
in thousands	Amortized Cost		Fair Value
Due in 1 year or less	$	83,138	$	82,936

Note 11 — Commitments and Contingencies

Legal Proceedings

The Company is party to ordinary and routine litigation incidental to its business. On a case-by-case basis, the Company engages inside and outside counsel to assess the probability of potential liability resulting from such litigation. After making such assessments, the Company makes an accrual for the estimated loss only when the loss is probable, and an amount can be reasonably estimated.

On February 9, 2022, a putative class action was filed in ~~this report~~the United States District Court for the Eastern District of New York styled Artery v. Astra Space, Inc. et al., Case No. 1:22-cv-00737 (E.D.N.Y.) (the ~~“Quarterly Report”~~“Artery Action”). The complaint alleges that the Company and certain of its current and former officers violated provisions of the Securities Exchange Act of 1934 with respect to certain statements concerning the Company's capabilities and business prospects. The complaint seeks unspecified damages on behalf of a purported class of purchasers of the Company's securities between February 2, 2021 and December 29, 2021. On March 23, 2022, a second putative class action was filed in the United States District Court for the Eastern District of New York styled Riley v. Astra Space, Inc., et al., Case No. 1:22-cv-01591 (E.D.N.Y.) (the “Riley Action,” with the Artery Action, the “Securities Actions”). The Riley Action alleges the same claims, based upon similar facts, against the same defendants, and seeks the same damages. The Company expects that the two cases will be consolidated into a single action. Defendants intend to ~~“we,” “us”~~move to dismiss once an amended complaint is filed. The co-lead plaintiffs have requested an extension to file their amended complaint for which the Court has not yet issued a decision. The Company believes that the Securities Actions are without merit and intends to defend them vigorously. Due to the early stage of the cases, neither the likelihood that a loss, if any, will be realized, nor an estimate of the possible loss or range of loss, if any, can be determined.

On March 8, 2022, a stockholder derivative suit was filed in the ~~“Company” refer to Holicity Inc. References to our “management” or our “management team” refer to our officers and~~United States District Court for the State of Delaware styled Meyer, et al., v. Kemp, et al., Case No. 22-cv-00308 (D. Del.). The complaint asserts claims against the current members of the Company's board of directors and ~~references to~~certain of its current and former officers, for breach of their fiduciary duty, waste, unjust enrichment, and contribution under the ~~“Sponsor” refer to Pendrell Holicity Holdings Corporation.~~Securities Exchange Act of 1934, based upon the conduct alleged in the Artery Action. The ~~following discussion and analysis~~plaintiffs seek monetary damages in favor of the Company in an unstated amount, reformation of the Company’s ~~financial condition~~corporate governance and ~~results~~internal procedures, restitution including a disgorgement of ~~operations should~~any compensation, profits or other benefits achieved, and reimbursement of the plaintiffs’ reasonable fees and costs, including attorney's fees. The Company believes that the case is without merit and intends to defend it vigorously. Due to the early stage of the case, neither the likelihood that a loss, if any, will be ~~read in conjunction with~~realized, nor an estimate of the ~~financial statements and~~possible loss or range of loss, if any, can be determined. On July 8, 2022, the ~~notes thereto contained elsewhere in~~plaintiffs voluntarily dismissed this ~~Quarterly Report. Certain information contained~~suit. The dismissal was without prejudice to plaintiffs’ right to re-file the lawsuit in the ~~discussion~~Court of Chancery of the State of Delaware.

On April 27, 2022, a stockholder derivative suit was filed in the United States District Court for the Eastern District of New York styled Gonzalez v. Kemp, et al., Case No. 22-cv-02401 (E.D.N.Y.). The complaint asserts claims against the current members of the Company’s board of directors and ~~analysis set forth below includes forward-looking statements that involve risks~~certain of its current and ~~uncertainties.~~

~~Note Regarding Forward-Looking Statements~~

~~This Quarterly Report includes “forward-looking statements” within the meaning~~former officers for alleged breaches of their fiduciary duties, unjust enrichment, abuse of control, mismanagement, and waste of corporate assets, alleged violations of Section ~~27A~~14(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), and for contribution under Section ~~21E~~10(b) and 21D of the Exchange Act based upon the conduct alleged in the Artery Action described above. The plaintiff seeks monetary damages in favor of the Company in an unstated amount, reforms to the Company’s corporate governance and internal procedures, restitution including disgorgement of any compensation, profits or other benefits received, and reimbursement of the plaintiff's reasonable fees and costs, including attorney's fees. The Company believes that the case is without merit and intends to defend it vigorously. Due to the early stage of the case, neither the likelihood that a loss, if any, will be realized, nor an estimate of the possible loss or range of loss, if any, can be determined.

The Company has tendered defense of each of the three foregoing claims under its Directors' and Officers’ policy. The retention under this policy is $20.0 million.

Indemnification Obligations to former Company Board Members

On May 20, 2022, a putative class action was filed in the Court of Chancery of the State of Delaware styled Newbold v. McCaw et. al., Case No. 2022-0439 (the “Newbold Action”). The complaint alleges that Pendrell Corporation, X-icity Holdings Corporation f/k/a Pendrell Holicity Holdings and certain former officers, directors or controlling stockholders of Holicity, Inc. n/k/a Astra Space, Inc., breached their fiduciary duties to the Company in closing on the Business Combination. The complaint seeks unspecified damages on behalf of a purported class of stockholders of the Company's securities from June 28, 2021 through June 30, 2021.

Neither the Company nor any of its board members are parties in this action. The Company’s former board member, Mr. McCaw, is a defendant in this action, but the allegations relate to periods prior to the Business Combination. Astra is obligated to indemnify certain of the defendants in the Newbold Action. The Company has tendered defense of this action under its Directors’ and Officers' Policy. The Company tendered defense of this claim under the tail policy it was required to purchase in connection with the Business Combination. The retention under that policy is $1.5 million. Due to the early stage of this case, neither the likelihood that a loss, if any, will be realized, nor an estimate of the possible loss or range of loss, if any, can be determined.

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Purchase Commitments

In order to reduce manufacturing lead times and to have access to an adequate supply of components, the Company enters into agreements with certain suppliers to procure component inventory based on the Company's production needs. A significant portion of the Company's purchase commitments arising from these agreements consist of firm and non-cancelable commitments. As of September 30, 2022, we had purchase commitments aggregating $39.0 million for which the Company was or will become obligated to make payments within 12 months to 60 months from the execution date of the agreements. Of these, there are agreements containing an aggregate of $32.1 million in early termination penalties. For example, one of the supply agreement penalties includes payment of 50% of the remaining purchase commitment at any point during the contract term. In another agreement, the Company may terminate the supply agreement by paying the balance on the remaining purchase commitment only after the first anniversary of the commencement date. If the agreement is terminated before the first anniversary, the Company has to pay the entire contract amount of $9.6 million.

Note 12 — Convertible Preferred Stock

Convertible Preferred Stock

From pre-combination Astra’s inception until the consummation of the Business Combination, approximately $100.2 million of cash capital contributions was raised, net of issuance costs, through the issuance of three rounds of convertible preferred equity.

The three classes of convertible preferred stock of pre-combination Astra were: Series A convertible preferred stock, Series B convertible preferred stock and Series C convertible preferred stock (collectively, the “Convertible Preferred Stock”). Immediately before the consummation of the Business Combination, the Convertible Preferred Stock of pre-combination Astra consisted of:


Series	Shares Outstanding (pre-combination Astra)		Liquidation Price Per Share		Conversion Price Per Share		Annual Noncumulative Dividend Rights Per Share
A		65,780,540	$	0.243233	$	0.243233	$	0.019459
B		70,713,123		1.333008		1.333008		0.106640
C		50,483,785		6.620970		6.620970		0.529680
Total		186,977,448

Upon the consummation of the Business Combination in June 2021, 186,977,448 shares of Convertible Preferred Stock (pre-combination Astra) converted into 124,340,003 shares of Class A common stock of the Company. The Company no longer had Convertible Preferred Stock authorized, issued or outstanding subsequent to the close of Business Combination in June 2021.

On January 28, 2021, concurrent with Series C Financing, the Company amended its certificate of incorporation to add a merger with a special purpose acquisition company (“SPAC Transaction”) as one of the defined Deemed Liquidation events. In addition, upon triggering of the Deemed Liquidation events, the holders of the Convertible Preferred Stock were entitled to receive the greater of their liquidation preference per share and the as converted value per share. As of March 31, 2021, the Company assessed the probability of a SPAC Transaction to be probable and therefore, the Convertible Preferred Stock were considered probable of becoming redeemable.

Subsequent measurement of Convertible Preferred Stock was then required for the three months ended March 31, 2021. The Company elected to apply the current redemption value method to measure the redeemable Convertible Preferred Stock. Under the method, changes in the redemption value were recognized immediately as they occurred and the carrying value of the Convertible Preferred Stock was adjusted to the redemption value at the end of each reporting date. In the absence of retained earnings, adjustments to redemption value were recorded against additional paid-in capital, if any, and then to accumulated deficit. As of March 31, 2021, adjustments to the carrying amount of the Convertible Preferred Stock of $1.1 billion, reflecting the estimated redemption value of $7.18 per share as of March 31, 2021, were treated as deemed dividends and were recognized against additional paid-in capital and accumulated deficit on the consolidated balance sheet.

On the Closing Date of the Business Combination, all outstanding Convertible Preferred Stock converted into Class A common stock of the Company, therefore, the Company applied conversion accounting to derecognize the existing carrying amount of the Convertible Preferred Stock and increased additional paid-in capital as of June 30, 2021.

Note 13 — Stockholders’ Equity

Common and Preferred Stock

As of September 30, 2022, the Company had authorized a total of 466,000,000 shares of stock, consisting of (i) 400,000,000 shares of Class A common stock, par value $0.0001 per share (“Class A common stock”), (ii) 65,000,000 shares of Class B common stock, par value $0.0001 per share (“Class B common stock”), and (iii) 1,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”). As of September 30, 2022, the Company had 211,824,567 and 55,539,188 shares of Class A and Class B common stock issued and outstanding, respectively. There were no shares of preferred stock outstanding as of September 30, 2022.

Holders of the Class A and Class B common stock have identical distribution rights, except that holders of the Class A common stock are entitled to one vote per share and holders of the Class B common stock are entitled to ten votes per share. Each share of Class B common stock can be converted into one share of Class A common stock at any time at the option of the stockholder and automatically convert upon sale or transfer, except for certain transfers specified in the Company's amended and restated certificate of incorporation.

In connection with the Business Combination, the Company’s executive officers and founders, Chris Kemp and Adam London, converted an aggregate 10,870,562 shares of Founders Preferred Stock and an aggregate 3,599,647 shares of Class A common stock of pre-combination Astra, which were entitled to one vote per share, into 9,622,689 shares of Class B common stock of the Company, which are entitled to ten votes per share.

Founders Convertible Preferred Stock

The Company issued 18,500,000 shares of pre-combination Astra’s Founders Convertible Preferred Stock in 2016. Upon vesting, the compensation expense associated with the Founders Convertible Preferred Stock was recorded as stock-based compensation based on the fair value of the Founders Convertible Preferred Stock on the grant date fair value. Immediately before the closing of the Business Combination, 10,870,562 shares of pre-combination Astra’s Founders Convertible Preferred Stock were outstanding. Upon closing of the Business Combination, the shares of Founders Convertible Preferred Stock were converted into shares of Class B common stock of the Company, which are entitled to ten votes per share. Refer to Note 3 – Acquisitions.

Common Stock Purchase Agreement

On August 2, 2022, the Company entered into a Common Stock Purchase Agreement and a Registration Rights Agreement (the “Registration Rights Agreement”) with B. Riley. Pursuant to the Purchase Agreement, the Company will have the right to sell to B. Riley up to the lesser of (i) $100,000,000 of newly issued shares (the “Shares”) of the Class A Common Stock, and (ii) 53,059,650 Shares of Class A Common Stock, which number of shares is equal to 19.99% of the sum of Class A Common Stock and Class B common stock issued and outstanding immediately prior to the execution of the Purchase Agreement (subject to certain conditions and limitations), from time to time during the term of the Purchase Agreement. However, the Purchase Agreement prohibits the Company from issuing or selling any shares of Class A Common Stock to B. Riley if such a sale, when aggregated with all other shares of Class A Common Stock then beneficially owned by B. Riley and its affiliates, would result in B. Riley beneficially owning more than 4.99% of the outstanding shares of Class A Common Stock.

Sales of the Shares pursuant to the Purchase Agreement, and the timing of any sales, are solely at the option of the Company over the 24-month period from the date of initial satisfaction of the conditions to B. Riley set forth in the Purchase Agreement, including that a registration statement registering the resale by B. Riley of the Class A Common Stock under the Securities Act that may be sold to B. Riley by the Company under the Purchase Agreement is declared effective by the Securities and Exchange Commission (the “SEC”) and a final prospectus relating thereto is filed with the SEC. Actual sales of Shares to B. Riley under the Purchase Agreement will depend on a variety of factors to be determined by the Company including, among other things, market conditions, the trading price of the Class A Common Stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations.

The purchase price of the Class A Common Stock that the Company may sell to B. Riley pursuant to the Purchase Agreement will be 97% of the average of the volume weighted average price of the Company’s Class A Common Stock as calculated per the terms set forth in the Purchase Agreement. The net proceeds from sales, if any, under the Purchase Agreement, will depend on the frequency and prices at which the Company sells the Shares of Class A Common Stock. To the extent the Company sells the Shares of Class A Common Stock under the Purchase Agreement, the Company currently plans to use any proceeds for working capital and general corporate purposes.

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The right to sell Shares under the Common Stock Purchase Agreement is classified as a financial instrument and is measured at fair value. The fair value of the financial instrument at execution date and as of September 30, 2022 was not significant. Upon execution of the Purchase Agreement, the Company issued 359,098 shares of Class A Common Stock to B. Riley as consideration for its irrevocable commitment to purchase shares of our Class A Common Stock from time to time.

For the three and nine months ended September 30, 2022, no shares were sold to B. Riley. The Company recognized $0.6 million of issuance costs related to the Purchase Agreement within “General and administrative” expenses.

As of September 30, 2022, the Company is in compliance with the terms and conditions of the Purchase Agreement and the remaining availability under the Purchase Agreement was $100 million, subject to certain limitations described above.

Note 14 — Stock-based Compensation

Stock-based incentive awards are provided to employees under the terms of various Astra equity incentive plans.

2021 Omnibus Incentive Plan

In June 2021, the Board of Directors approved the 2021 Omnibus Incentive Plan (the “2021 Plan”), which reserved 36.8 million shares of Class A common stock for issuance for awards in accordance with the terms of the 2021 Plan. On January 1, 2022, pursuant to the terms of the 2021 Plan, the number of shares of Class A common stock available for issuance under the 2021 Plan increased by 13.1 million. Similarly, the share reserve increases on January 1 of each year from 2023 to 2031 by the lesser of (i) 5% of the sum of number of shares of (x) Class A common stock and (y) Class B common stock outstanding as of the close of business on the immediately preceding December 31 and (ii) the number of shares of Class A common stock as determined by the Board. On June 1, 2022, the shareholders of the Company approved the amendment of 2021 Plan to increase the Class A common stock available for issuance under the 2021 plan by 6 million. The purpose of the 2021 Plan is to advance the Company’s interests by providing for the grant to employees, directors, consultants and advisors of stock and stock-based awards. As of September 30, 2022, 16.8 million shares remain available for issuance under the plan.

2021 Employee Stock Purchase Plan

In June 2021, the Board of Directors approved the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) to reserve 5.0 million shares of Class A common stock for issuance for awards in accordance with the terms of the ESPP. On January 1, 2022, pursuant to the terms of the 2021 ESPP, the number of shares of Class A common stock available for issuance under the 2021 ESPP increased by 2.6 million. Similarly, the number of shares of Class A common stock reserved for issuance under the 2021 ESPP will ultimately increase on January 1 of each year from 2023 to 2031 by the lesser of (i) 1% of the sum of number of shares of Class A common stock and Class B common stock outstanding as of the close of business on the immediately preceding December 31 and (ii) the number of shares of Class A common stock as determined by the Board. The purpose of the 2021 ESPP is to enable eligible employees to use payroll deductions to purchase shares of Class A common stock and thereby acquire an interest in the company. Eligible employees are offered shares through a 24-month offering period, which consists of four consecutive 6-month purchase periods. Employees may purchase a limited amount of shares of the Company's stock at a discount of up to 15% of the lesser of the fair market value at the beginning of the offering period or the end of each 6-month purchase period. 0.5 million shares were issued under the Employee Stock Purchase Plan during the nine months ended September 30, 2022. As of September 30, 2022, 7.2 million shares remain available for issuance under the 2021 ESPP. As of September 30, 2022, the Company had $1.1 million of unrecognized stock-based compensation expense related to the 2021 ESPP. This cost is expected to be recognized over a weighted-average period of 0.93 years.

2016 Equity Incentive Plan

In 2016, pre-combination Astra adopted the 2016 Equity Incentive Plan (the “2016 Plan”). Under this Plan, the Board of Directors or a committee appointed by the Board of Directors is authorized to provide stock-based compensation in the form of stock options, stock appreciation rights, restricted stock, and other performance or value-based awards within parameters set forth in the Plan to employees, directors, and non-employee consultants.

In connection with the Business Combination, the Company assumed the 2016 Plan upon closing. Each outstanding and unexercised option (“Astra Option”) was converted, at the exchange ratio established in the BCA, into an option (“New Astra Option”) to acquire shares of the Company’s Class A common stock with the same terms and conditions as applicable to the Astra Option immediately prior to the Business Combination. As of September 30, 2022, there were no shares available for issuance under the plan.

The following table summarizes stock-based compensation expense that the Company recorded in the condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021, respectively:

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	For the Three Months Ended September 30,				For The Nine Months Ended September 30,
in thousands	2022		2021		2022		2021
Cost of revenues	$	109	$	—	$	806	$	—
Research and development		5,565		1,334		17,133		4,638
Sales and marketing		1,562		15		4,559		70
General and administrative		6,512		1,339		21,082		15,757
Stock-based compensation expense	$	13,748	$	2,688	$	43,580	$	20,465

On November 22, 2021, under the 2021 Plan, the Company's compensation committee issued 1,047,115 PSUs to the employees of Apollo who joined Astra. PSUs are subject to certain performance-based and service-based vesting conditions and would vest over four years with 25% of awards vesting on July 1, 2022, and the remaining 75% vesting quarterly over the remaining 12 quarters beginning on November 15, 2022, only for the portion of PSUs that is eligible to become vested which will be determined based upon timely satisfaction of performance conditions. The number of PSUs vested is determined by multiplying the total number of PSUs granted by the percentage of milestones achieved and by the percentage of PSUs that satisfy the time-based vesting condition on such time-vesting date.

Certain performance conditions for PSUs are subjective and the number of PSUs related to these performance conditions did not meet the criteria for the grant date. Accordingly, 523,557 PSUs and 52,355 PSUs related to the performance conditions that are not ~~historical facts,~~subjective were considered granted as of November 22, 2021 and ~~involve risks~~January 21, 2022, respectively.

In July 2022, the PSU agreements were amended to remove the performance-based vesting conditions and ~~uncertainties~~only retain the time-based vesting condition. Therefore, the Company recognized $0.3 million and $1.5 million compensation costs related to PSUs for the three and nine months ended September 30, 2022, respectively, to reflect the PSUs that ~~could cause actual results~~satisfied the time-based vesting condition on the time-vesting dates.

On September 20, 2021, under the 2021 Plan, the Company’s compensation committee granted 3,972,185 restricted stock units (“RSUs”), 3,426,094 time-based stock options and 13,016,178 performance stock options ("PSOs") to ~~differ materially~~its executive officers. RSUs and time-based stock options granted have service-based vesting conditions only. The service conditions vary for each executive officer and is based on their continued service to the Company. Option holders have a 10-year period to exercise their options before options expire. Forfeitures are recognized in the period of occurrence and stock-based compensation costs are recognized based on grant-date fair value as RSUs and time-based stock options vest.

PSOs, only eligible to the executive officers of the Company, are subject to performance conditions as follows, and the milestones do not need to be achieved in any specific order or sequence:

Milestone A: The Company has had a successful orbital delivery.

Milestone B: The Company has had six orbital launches during a six consecutive month period.

Milestone C: The Company has completed a prototype for a spacecraft that has achieved an orbital launch.

Milestone D: The Company has conducted twenty-six orbital launches during a six consecutive month period.

Milestone E: The Company has achieved an orbital launch for an aggregate of 100 spacecraft.

These PSOs also require the volume weighted average share price for a period of thirty trading days meet share price thresholds of $15.00, $20.00, $30.00, $40.00 and $50.00 following the achievement of the first milestone, second milestone, third milestone, fourth milestone and fifth milestone, respectively, before a milestone will be deemed achieved. After each milestone is achieved, 20% of the PSOs will vest on the vesting date immediately following the date at which the price thresholds are met. For this purpose, a "vesting date" is February 15, May 15, August 15 and November 15 of any applicable year. The milestones must be achieved over a period of approximately five years, with the earliest vesting date of November 15, 2022, and the last vesting date no later than November 15, 2026, if all vesting conditions are met. No unvested portion of the PSOs shall vest after November 15, 2026. As of September 30, 2022, the Company assessed the probability of success for the five milestones mentioned above and determined that it is probable that the Company will achieve Milestone A and Milestone B within the requisite period. Therefore, the Company recognized $5.2 million and $14.2 million compensation costs related to PSOs for the three and nine months ended September 30, 2022, respectively. As of September 30, 2022, we had unrecognized stock-based compensation expense of $32.8 million for the milestones that were not considered probable of achievement.

In April 2021, the Board of Directors approved the acceleration of the vesting of 1,900,000 pre-combination Astra stock options issued to two executive officers: Kelyn Brannon and Martin Attiq, on December 27, 2020. The Company recognized the remaining

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stock-based compensation expense of $7.2 million on its Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021.

In February 2021, the Board of Directors approved the acceleration in vesting of 206,250 pre-combination Astra stock options that were issued to one employee on May 15, 2020. The remaining unvested options were fully vested upon acceleration. The Company recorded a $1.4 million stock-based compensation expense related to the modification for the three months ended March 31, 2021.

As of September 30, 2022, the Company had $103.9 million of unrecognized stock-based compensation expense related to all of the Company's stock-based awards. This cost is expected to be recognized over a weighted-average period of 3.0 years.

Secondary Sales

In April 2021, four executive officers, Chris Kemp, CEO, Adam London, CTO, Kelyn Brannon, Chief Financial Officer (“CFO”), and Martin Attiq, Chief Business Officer (“CBO”), entered into stock purchase agreements with new investors to sell 2,534,793, 865,560, 1,500,000 and 400,000 shares, respectively, of Class A common stock of pre-combination Astra, at a purchase price per share of $5.66 (“April 2021 Secondary Sales”). No additional stock-based compensation expense was recognized for the three and nine months ended September 30, 2021 as the purchase price was below fair market value of Class A common stock of pre-combination Astra at the time of the sales.

In January 2021, concurrent with Series C Financing, two executive officers, Chris Kemp, founder and Chief Executive Officer (“CEO”), and Adam London, founder and Chief Technology Officer (“CTO”), entered into stock purchase agreements with certain investors including ACME SPV AS, LLC to sell 3,775,879 and 2,265,529 shares, respectively, of Founders Convertible Preferred Stock at purchase prices in excess of the estimated fair value at the time of the transactions (“January 2021 Secondary Sales”) to certain investors. Upon the sale, the Founders Convertible Preferred Stock automatically converted into Series C Convertible Preferred Stock. The Company’s board member, Scott Stanford, is a member of ACME SPV AS, LLC and the Company facilitated the January 2021 Secondary Sales. As a result, for the three months ended March 31, 2021, the Company recorded a total of $8.2 million in stock-based compensation expense for the difference between the price paid by these investors and the estimated fair value of the Founders Convertible Preferred Stock on the date of the transaction.

Stock Options Awards

The following is a summary of stock option activity for the nine months ended September 30, 2022:


	No. of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Term (in Years)		Aggregate Intrinsic Value
Outstanding – December 31, 2021		20,326,384		$	7.52		9.4	$	22,782,654
Granted		1,242,027			4.85
Exercised		(620,145	)		0.45
Forfeited		(267,189	)		1.18
Expired		(5,067	)		6.75
Outstanding – September 30, 2022		20,676,010		$	7.61		8.7	$	414,014

Unvested – September 30, 2022		520,648		$	8.37		8.86	$	124,254
Exercisable – September 30, 2022	20,155,362			$	3.83		7.6	$	289,760

The Company uses the Black-Scholes option pricing-model to calculate the grant date fair value of time-based options. The following table summarizes the assumptions used in estimating the fair value of options granted in the nine months ended September 30, 2022:


	Time Based Stock Options

Expected terms (years)(1)		5.81
Expected volatility(2)		68.9	%
Risk-free interest rate(3)		1.70	%
Expected dividend rate(4)		-
Grant-date fair value	$	3.20

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____________

(1)

The expected term is the length of time the grant is expected to be outstanding before it is exercised or terminated. This number is calculated as the midpoint between the vesting term and the original contractual term (contractual period to exercise). If the option contains graded vesting, then the vesting term would be based on the vesting pattern.

(2)

Expected volatility, or the standard deviation of annualized returns, was calculated based on comparable companies’ reported volatilities.

(3)

Risk-free interest was obtained from ~~those~~US treasury notes for the expected terms noted as of the valuation date.

(4)

The Company has assumed a dividend yield of zero as it has no plans to declare dividends in the foreseeable future.

Restricted Stock Units Awards

The following is a summary of restricted stock units for the nine months ended September 30, 2022:


	Number of RSUs Outstanding			Weighted- Average Grant Date Fair Value Per Share
Outstanding – December 31, 2021		10,678,818		$	9.20
Granted		13,760,707			2.51
Vested		(2,737,757	)		8.40
Forfeited		(2,941,954	)		7.18
Outstanding – September 30, 2022		18,759,814		$	4.73

Total fair value as of the respective vesting dates of restricted stock units vested for the nine months ended September 30, 2022 was approximately $6.5 million. As of September 30, 2022, the aggregate intrinsic value of unvested restricted stock units was $11.7 million.

Note 15 — Loss per Share

Founders Convertible Preferred Stock and ~~projected. All statements, other than statements~~Convertible Preferred Stock were participating securities in periods of ~~historical fact~~income, as the Founders Convertible Preferred Stock and Convertible Preferred Stock participated in undistributed earnings on an as-if-converted or as-vested basis. However, the Founders Convertible Preferred Stock and Convertible Preferred Stock, did not share in losses.

The Company computes earnings per share of Common Stock using the two-class method required for participating securities and does not apply the two-class method in periods of net loss. Basic and diluted earnings per share were the same for the periods presented as the inclusion of all potential Common Stock outstanding would have been anti-dilutive. Earnings per share calculations for all periods prior to the Business Combination have been retrospectively restated to the equivalent number of shares reflecting the exchange ratio established in the BCA. Subsequent to the Business Combination, earnings per share was calculated based on weighted average number of shares of common stock then outstanding.

The following tables set forth the computation of basic and diluted loss for the three months ended September 30, 2022 and 2021, and the nine months ended September 30, 2022 and 2021:


	For The Three Months Ended September 30,
	2022						2021
(in thousands, except share and per share amounts)	Class A Common			Class B Common			Class A Common			Class B Common
Net loss attributed to common stockholders	$	(157,592	)	$	(41,522	)	$	(12,697	)	$	(3,551	)
Basic weighted average common shares outstanding		210,788,116			55,539,188			201,080,003			56,239,188
Dilutive weighted average common shares outstanding		210,788,116			55,539,188			201,080,003			56,239,188
Loss per share attributable to common stockholders:
Basic and Diluted loss per share	$	(0.75	)	$	(0.75	)	$	(0.06	)	$	(0.06	)

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	For The Nine Months Ended September 30,
	2022						2021
(in thousands, except share and per share amounts)	Class A Common			Class B Common			Class A Common			Class B Common
Net loss attributed to common stockholders	$	(290,145	)	$	(76,985	)	$	(126,985	)	$	(79,532	)
Adjustment to redemption value on Convertible Preferred Stock		—			—			(622,098	)		(389,628	)
Net loss attributed to common stockholders	$	(290,145	)	$	(76,985	)	$	(749,083	)	$	(469,160	)
Basic weighted average common shares outstanding		209,317,361			55,539,188			79,784,524			49,970,071
Dilutive weighted average common shares outstanding		209,317,361			55,539,188			79,784,524			49,970,071
Loss per share attributable to common stockholders:
Basic and Diluted loss per share	$	(1.39	)	$	(1.39	)	$	(9.39	)	$	(9.39	)

There were no preferred dividends declared or accumulated as of September 30, 2022. The following Class A securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive:


	As of September 30,
	2022		2021
	Class A Common		Class A Common
Stock options		7,139,177		20,752,943
RSUs		18,759,814		9,352,100
Convertible Preferred Stock		—		—
Warrants		—		15,333,309
Total		25,898,991		45,438,352

The Class A securities excluded in the computation of diluted shares outstanding were the same for the three and nine months ending September 30, 2022 and September 30, 2021 There were no Class B securities that were excluded in the computation of diluted shares outstanding for the three and nine months ending September 30, 2022 and September 30, 2021.

Note 16 — Segment Information

The Company reports segment information based on a “management” approach to reflect the operating segments for which the Company’s Chief Executive Officer, as the Chief Operating Decision Maker (“CODM”), makes decisions and assesses performance. Prior to the current reporting period, the Company had a single operating and reportable segment. Following commencement of revenue-generating activities for Space Products (as defined below) during the third quarter of fiscal year 2022, the Company restructured the management, operations, and periodic management and internal reporting packages to address the shift in strategy. As a result of these changes, the Company determined that its reportable segments had changed and that beginning in the current reporting period the Company has two operating and reportable segments: Launch Services and Space Products. The Company recast prior period information related to the change in segments, however, there were no revenues or cost of revenues associated to these segments in the prior year.

Launch services segment provides launch services to satellite operators and governments in partnership with third-party spaceport providers globally, including complementary services that are not part of the Company's fixed pricing.

Space Products consist of designing and providing space products based on the customers' needs for a successful satellite launch and other products that the Company may sell in the future.

The accounting policies of the various segments are the same as those described in Note 2.

The following table shows revenue by reportable segment for the three and nine months ended September 30, 2022 and 2021:

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	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022			2021
Revenues:
Launch services	$	—	$	—	$	5,899		$	—
Space products		2,777		—		3,471			—
Total revenues:	$	2,777	$	—	$	9,370		$	—

Cost of revenues:
Launch services		—		—		28,193			—
Space products		1,071		—		1,337			—
Total cost of revenues:	$	1,071	$	—	$	29,530		$	—

Gross profit (loss):
Launch services		-		—		(22,294	)		—
Space products		1,706		—		2,134			—
Total gross profit (loss):	$	1,706	$	—	$	(20,160	)	$	—

The Company evaluates the performance of its reportable segments based on segment gross profit. Segment gross profit is segment revenue less segment cost of revenue. Unallocated expenses include operating expenses related to research and development, selling and marketing and general and administrative expenses as they are not considered when management evaluates segment performance.

The following table reconciles segment gross profit to loss before income taxes for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2022			2021			2022			2021
Gross profit (loss)	$	1,706		$	—		$	(20,160	)	$	—
Research and development		32,821			21,724			111,546			44,159
Selling and marketing		4,052			1,090			13,452			2,229
General and administrative		19,222			19,730			60,816			50,712
Impairment expense		75,116			—			75,116			—
Goodwill impairment		58,251			—			58,251			—
Loss on change in fair value of contingent consideration		11,949			—			29,249			—
Interest (income) expense, net		(616	)		(18	)		(1,146	)		1,194
Other expense (income), net		25			(25,895	)		(314	)		(25,177	)
Loss on extinguishment of convertible notes		—			—			—			131,908
Loss on extinguishment of convertible notes attributable to related parties		—			—			—			1,875
Loss before taxes	$	(199,114	)	$	(16,631	)	$	(367,130	)	$	(206,900	)

The Company does not evaluate performance or allocate resources based on reporting segment’s total assets or operating expenses, and therefore such information is not presented.

All of the Company’s long-lived assets are located in the United States. The Company is subject to International Traffic in Arms Regulations (“ITAR”) and generates all of its revenue in the United States.

For the three and nine months ended September 30, 2022, one customer accounted for 100% and 37% of the Company’s total revenues, which pertained to the revenues within the Space Products segment. In addition, a second customer accounted for 59% of the Company's total revenues for the nine months ended September 30, 2022, which pertained to the revenues within the Launch Services segment. The Company did not generate revenue in the three and nine months ended September 30, 2021.

Note 17 — Related Party Transactions

Cue Health, Inc.

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In August 2021, the Company entered into a six-month subscription arrangement with Cue Health Inc. for the purchase of COVID-19 test readers and the related test cartridges. Under Cue Health Inc.’s standard subscription arrangement, the Company receives a twenty percent (20%) discount on each Cue Reader and fourteen percent (14%) discount on each test cartridge. Mr. Stanford, a member of the Board and the Company’s Lead Director, serves on the board of directors of Cue Health Inc. Funds affiliated with ACME Capital collectively beneficially own 10.4% of the outstanding common stock of Cue Health Inc. Mr. Stanford was not involved in the negotiation of the Company’s arrangement with Cue Health Inc. The Company conducted its independent evaluation of Cue’s services and determined in its sole judgment Cue’s product and services were the best option for the Company to ensure it could maintain a safe and productive work environment. The Company made purchases of $0.2 million and $0.8 million during the three and nine months ended September 30, 2022. In September 2022, the Company and Cue Health Inc. entered an amendment to the purchase agreement for a last time buy of test cartridges, with the agreement expected to be terminated in the fourth quarter of 2022. No such purchases were made during the three and nine months ended September 30, 2021.

Convertible Promissory Notes

In June 2019, the Company issued promissory convertible notes to A/NPC Holdings LLC and Sherpa Ventures Fund, II LP for gross proceeds of $10.0 million and $0.6 million, respectively. In November 2020, the Company issued promissory convertible notes to Sherpa Ventures Fund II, LP and Eagle Creek Capital LLC, for gross proceeds of $0.2 million and $0.5 million, respectively. Some of the Company’s board members at that time were or are related parties of these entities. Nomi Bergman, who was serving as the Company's director when the promissory convertible notes were issued, is a principal of A/NPC Holdings LLC and Scott Stanford, who serves as the Company's director, is a principal of Sherpa Ventures Fund II, LP and a member of Eagle Creek Capital, LLC. In all instances the terms of these transactions were the same as third-party investors.

On January 28, 2021, the Company settled the promissory convertible notes through the issuance of Series C convertible preferred stock. 7,819,887 and 469,193 shares of Series C convertible preferred stock were issued to A/NPC Holdings LLC and Sherpa Ventures Fund II, LP at a per share price of $1.33 to settle $10.4 million and $0.6 million outstanding principal and accrued interest, respectively. Additionally, 264,928 and 115,771 shares of Series C convertible preferred stock were issued to Eagle Creek Capital, LLC and Sherpa Ventures Fund II, LP at a per share price of $1.71 to settle $0.5 million and $0.2 million outstanding principal and accrued interest, respectively. See Note 6 — Long-Term Debt for mechanism of settlement.

Note 18 — Subsequent Events

NASDAQ Deficiency Notice

On October 6, 2022, the Company received a deficiency notice from NASDAQ that it was not in compliance with Rule 5450(a)(1) of the listing requirements because its per share closing bid price has been below $1.00 for the last thirty consecutive business days. This notice has no immediate effect on the listing of the Company's Class A common stock. NASDAQ’s notice stated that if, at any time before April 4, 2023, the per share closing bid price of the Company's Class A common stock is at least $1.00 for a minimum of ten consecutive business days, NASDAQ’s staff will provide the Company written notice that it complies with the Minimum Bid Price Requirement.

The Company intends to monitor the per share closing bid price of its Class A common stock and consider available options if its Class A common stock does not trade at a level likely to result in the Company regaining compliance with Minimum Bid Price Requirement by April 4, 2023.

If the Company does not regain compliance with the Minimum Bid Price Requirement by April 4, 2023, Astra may be eligible for an additional 180 calendar day compliance period. To qualify, the Company would need to, among other things, meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for NASDAQ, with the exception of the Minimum Bid Price Requirement, and provide written notice to NASDAQ that it intends to cure the deficiency during the second compliance period.

If NASDAQ concludes that the Company will not be able to cure the deficiency during the second compliance period, or the Company does not make the required representations, then NASDAQ will give notice that the Company's Class A common stock is subject to delisting and the Company will be able to appeal that delisting before a NASDAQ hearings panel.

Headcount Reduction

On November 8, 2022, the Company announced a reduction in force affecting approximately 16% of its existing employees, with such employees’ last day being November 9, 2022. Affected employees were paid (i) salary and benefits continuation through January 8, 2023, and (ii) were also offered an additional one month of base salary and the employer portion of benefits premium, along with outplacement services, as severance benefits, in exchange for a release of claims. The Company expects to see savings from this ~~Quarterly Report including, without limitation, statements~~reduction in ~~this “Management’s~~existing headcount during the first quarter of 2023.

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

The following discussion and analysis of the ~~Company’s~~ financial ~~position, business strategy~~condition and results of operations of Astra Space, Inc. should be read together with our audited consolidated financial statements as of and for the ~~plans~~years ended December 31, 2021 and ~~objectives~~2020 and unaudited interim condensed consolidated financial statements as of ~~management~~and for ~~future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek”~~the three and ~~variations~~nine months ended September 30, 2022 and ~~similar words and expressions are intended to identify such forward-looking statements. Such~~2021, together with related notes thereto. This discussion may contain forward-looking statements ~~relate to future events or future performance, but reflect management’s~~based upon current ~~beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance~~expectations that involve risks and ~~results discussed in the forward-looking statements. For information identifying important factors that could cause~~uncertainties. Our actual results tomay differ materially from those ~~anticipated~~projected in ~~the~~these forward-looking statements please refer to the Risk Factors section of the Registration Statement on Form S-1 (Registration No. 333-239926) filed with the SEC. The Company’s securities filings can be accessed on the EDGAR section of 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.~~

~~We are a blank check company formed under~~various factors, including those set forth in the ~~laws of the State of Delaware~~risk factors previously disclosed in our annual report on ~~June 2, 2020~~Form 10-K for the ~~purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar Business Combination~~year ended December 31, 2021, filed with ~~one or more businesses. We intend to effectuate our Business Combination utilizing cash from~~ the proceeds of the Initial Public Offering, the partial exercise of the Over-Allotment Option and the sale of the Private Placement Warrants, our capital stock, debt or a combination of cash, stock and debt. Although we are not limited to a particular industry or sector for purposes of consummating a Business Combination, we intend to initially focus our searchSEC on ~~identifying a prospective target business~~March 31, 2022, as updated by factors disclosed in the ~~technology, media~~section titled "Risk Factors" in this Quarterly Report on Form 10-Q and telecommunications (“TMT”) industries in the United States and other developed countries. We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.

~~Our registration statement~~our Quarterly Report on Form 10-Q for the ~~initial public offering (the “Initial Public Offering”) was declared effective~~quarter ended June 30, 2022, filed with the SEC on August 4, ~~2020. On August 7, 2020,~~ ~~we consummated~~2022 and in this Quarterly Report on Form 10-Q. Certain amounts may not foot due to rounding. Unless the ~~Initial Public Offering of 27,500,000 Units at a price of $10.00 per Unit, at $10.00 per Unit, generating gross proceeds of $275.0 million. Simultaneously with~~context otherwise requires, all references in this section to “the Company” “Astra,” “us,” “our” or “we” refer to Astra Space, Inc. after the closing of the ~~Initial Public Offering, we consummated the sale of 5,000,000 Private Placement Warrants~~Business Combination on June 30, 2021, and Astra Space Operations, Inc., formerly known as Astra Space, Inc., prior to the ~~Sponsor~~Business Combination.

Our mission is to launch a new generation of launch services and space products to Improve Life on Earth from Space®. These services and products are enabled by new constellations of small satellites in Low Earth Orbit (“LEO”), which have rapidly become smaller, cheaper, and many times more numerous than legacy satellites. Launch vehicles, however, have not evolved in the same way — most rockets remain focused on serving legacy satellites and human spaceflight missions and we aim to provide the world’s first mass-produced orbital launch system. We manage our business and report our financial results in two segments: Launch Services and Space Products.

In July 2022, we decided to focus on the development and production of the next version of our launch system, which we unveiled at our inaugural SpaceTech Day on May 12, 2022. As a ~~price~~result, we have discontinued the production of ~~$1.50 per warrant, generating gross proceeds~~launch vehicles supported by our current launch system and do not plan to conduct any further commercial launches in 2022. As part of ~~$7.5 million.~~the development cycle for our new launch system, we expect to conduct test launches of our new launch system in the later part of 2023, and at this time, do not expect that we will be able to conduct paid commercial launches until 2024 using this new launch system. Whether and when we will be able to conduct paid commercial launches in 2024 will depend in part upon the success of these test launches.

Our new launch system is intended to support launch vehicles that will serve a market focused on populating mega constellations. We have designed this launch system to support more payload capacity, greater reliability, and a more frequent launch cadence, which we believe will allow us to offer our customers more dependable services. We have begun discussions with customers for whom we agreed to launch payloads on our Rocket 3 series launch vehicles (aka launch system 1.0) and the shift of those flights to our Rocket 4 series (aka Launch System 2).

We have also been focusing on the growth of our space products business with sales of our Astra Spacecraft EngineTM. The Astra Spacecraft Engine is a propulsion engine that assists satellites in achieving and maintaining targeted orbits. Including 14 units in Apollo Fusion’s backlog on July 1, 2021, we have received cumulative committed orders for 214 Astra Spacecraft EnginesTM as of September 30, 2022, an increase of 107.8% compared to June 30, 2022, and 237 Astra Spacecraft Engines™ as of November 2, 2022, an increase of 130% compared to June 30, 2022. We have also completed the delivery of two full programs of our Astra Spacecraft Engines™.

As discussed in Note 16 – Segments Information to our consolidated financial statements included in Part I, Item 1 of this form 10-Q, our reportable segments changed during the three and nine months ended September 30, 2022. The segment reporting for prior periods has been reclassified to conform to the current period presentation; however, there were no revenues or cost of revenues associated to these segments in the prior period.

We identify our reporting segments based on the organizational units used by management to monitor performance and make operating decisions. The Company previously had one operating and reportable segment. Following the realignment, the Company now has the following two operating and reportable segments: (i) Launch Services and (ii) Space Products. In conjunction with the realignment of our management and internal reporting in the third quarter of 2022, the Company reclassified assets and liabilities, as well as goodwill, to the reporting units.

On ~~August~~March 11, 2020, the ~~underwriters purchased 2,500,000 Over-Allotment Units pursuant to~~World Health Organization declared the ~~partial exercise~~novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. The extent of the ~~Over-Allotment Option.~~impact of the coronavirus pandemic on Astra’s operational and financial performance will depend on various future developments, including variants of the disease, the duration and spread of the outbreak and impact on its customers, suppliers, and employees, all of which is uncertain at this time. Astra believes the COVID-19 pandemic may adversely impact future revenue and results of operations, but Astra is unable to predict at this time the size and duration of this adverse impact. Astra has seen some signs of positive effects for its long-term business prospects and partnerships as a result of the pandemic. The ~~Over-Allotment Units were sold at~~COVID-19 pandemic has created an ~~offering price~~even greater need for broadband internet access, and businesses are thinking differently about how their workforce can stay connected. There have also been recent government and commercial announcements about continuous investments in this area and we believe this will continue to support the growth of ~~$10.00 per Unit, generating gross proceeds~~the small satellite market for the foreseeable future.

We believe that our performance and future success depend on a number of ~~$25.0 million. Simultaneously~~factors that present significant opportunities for us but also pose risks and challenges, including competition from better known and well-capitalized companies, the risk of actual or perceived safety issues and their consequences for our reputation, the potential delisting of our Class A common stock from the NASDAQ Global Select Market, our ability to operate as a going concern and the other factors discussed under “Risk Factors” in our Annual Report on Form 10-K for the period ended December 31, 2021, filed with the sale of the Over-Allotment Units, we consummated a private sale (the “Over-Allotment Private Placement”) of an additional 333,333 Private Placement Warrants to the Sponsor, at a purchase price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $0.5 million.

~~Following the Initial Public Offering, the partial exercise of the Over-Allotment Option and the sale of the Private Placement Warrants, a total of $300.0 million was placed~~SEC on March 31, 2022, as updated by factors disclosed in the ~~Trust Account~~section titled "Risk Factors" in this Quarterly Report on Form 10-Q and ~~we had $1.7 million of cash held outside of the Trust Account, after payment of costs related to the Initial Public Offering, and available for working capital purposes. We incurred $16.8 million~~ in ~~transaction costs, including $6.0 million of underwriting fees, $10.5 million of deferred underwriting fees and $0.3 million of other costs.~~

Our management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.

If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or August 7, 2022 (the “Combination Period”), we will (i) cease all operations exceptour Quarterly Report for the ~~purpose~~quarter ended June 30, 2022, filed with the SEC on August 4, 2022. We believe the factors discussed below are key to our success.

We commenced paid commercial launch services in 2022, with our launch on February 10, 2022, of ~~winding up, (ii) as promptly as reasonably possible but not~~launch vehicle LV0008. We have made substantial progress towards demonstrating a monthly launch production capability during the first three quarters of 2022, with a goal of reaching an even more ~~than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit~~frequent launch production capability in the ~~Trust Account, including interest earned~~future with our new Launch System 2. As a result, we have decided to focus on the ~~funds held~~development of our new launch system and thus, have discontinued the production of launch vehicles supported by our current launch system. When we refer to a “commercial launch,” we mean a launch conducted under an FAA commercial launch license.

We also commenced delivery of space products during the second quarter of 2022. We expect the volume of delivery of our space products would increase in the ~~Trust Account and not previously released~~future as we continue to us (less taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject, in the case of clauses (ii) and (iii), tofulfill our obligations under ~~Delaware law~~existing space products contracts and enter into contracts with potential new customers. In late July 2022, the Company entered into a lease agreement for approximately 60,000 square feet of manufacturing facility in Sunnyvale, California having a lease term of 36 months. This new lease facility will enable expansion of our space products production and development capacity, thermal testing capacity.

We aim to ~~provide for claims~~be a cost-efficient dedicated orbital launch system provider. We plan to increase the maximum payload capacity of ~~creditors~~our launch vehicle to meet customer needs and ~~in all cases subject to the other requirements~~demands through a process of ~~applicable law.~~

iterative development and improvement. We have ~~neither engaged~~made significant investment in ~~any operations nor generated any revenues~~our manufacturing facility located in Alameda, California. Please see risk factors previously disclosed in our Annual Report on Form 10-K for the period ended December 31, 2021, filed with the SEC on March 31, 2022, as updated by factors disclosed in the section titled "Risk Factors" in this Quarterly Report on Form 10-Q and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, filed with the SEC on August 4, 2022, for factors that could affect our ability to ~~date. Our only activities~~realize benefits from the investment in our manufacturing facility.

We plan to develop, license or acquire core space technologies that we expect to commercialize and incorporate into our launch vehicles, spacecrafts and other infrastructure that we will use to deliver our product and space service offerings. These core technologies including, among other things, electric propulsion and solar power. For example, we acquired propulsion technology through our merger with Apollo Fusion, which we announced on June 2, ~~2020 (inception) through June~~2021, and closed on July 1, 2021.

As of September 30, ~~2020~~2022, we were ~~organizational activities, those necessary~~in the preliminary stages of developing our space services offering, but have since decided to ~~prepare for~~put these development efforts on hold as we focus on our primary objectives of developing our new Launch System 2 and the ~~Initial Public Offering, described below,~~production and ~~after~~delivery of our ~~Initial Public Offering, identifying~~Astra Spacecraft Engines™. As a ~~target company for a Business Combination. We~~result, we do not expect to generate any ~~operating revenues until after~~revenue and are planning to reduce our investments in our space services offerings for the ~~completion~~remainder of 2022 and in 2023. We continue to explore opportunities to develop or

partner in the development of our space services offering as it remains a significant part of our long-term business strategy. Once developed, we would expect our space services offering to include providing modular configurable satellite buses for customers, leveraging both in-house and partner-provided subsystem components and in-house design and integration services, as well as operational support of satellites on orbit, to turn-key provision of entire constellations, offering "concept to constellation" in months instead of years. Specifically, we would expect our space services to encompass all aspects of hosted satellite and constellation services, including hosting customer payloads onto our satellites, and delivering services, such as communication services. These services are expected to allow customers to focus on developing innovative payloads rather than having to design or develop complete satellite buses or satellites or constellations, which we will provide, along with ancillary services that are likely to include telemetry, tracking and control ("TT&C"), communications, processing, as well as software development and maintenance.

Impairment of long-lived assets, indefinite-lived intangible assets and goodwill

As of the third quarter of fiscal year 2022, the Company determined that impairment indicators were present based on the existence of substantial doubt about the Company’s ability to continue as a going concern, a sustained decrease in the Company’s share price and macroeconomic factors. As a result, we performed quantitative impairment testing and recorded a total impairment charge of $133.4 million for the three and nine months ended September 30, 2022. The total impairment charge reflects a $58.3 million charge in goodwill, $2.1 million charge in indefinite-lived intangible assets and $73 million in long-lived assets of Launch Services related to property, plant and equipment. For further information, refer to Note 1 - Description of Business, ~~Combination.~~ Basis of Presentation and Significant Accounting Policies, Note 4 – Supplemental Financial Information, and Note 5 – Goodwill and Intangible Assets to our condensed consolidated financial statements included in Part I, Item 1 of this form 10-Q.

We are an early-stage company and our historical results may not be indicative of our future results for reasons that may be difficult to anticipate. Accordingly, the drivers of our future financial results, as well as the components of such results, may not be comparable to our historical or future results of operations.

We commenced our first paid commercial launch, which occurred in February 2022, followed by subsequent paid commercial launches which occurred in March 2022 and June 2022. These launches represent the start of our paid commercial launch operations. As discussed earlier, we have discontinued the production of launch vehicles supported by our current launch system and do not plan to conduct any further commercial launches in 2022. See “Overview” for more information about our decision to stop producing launch vehicles supported by our current launch system.

We also commenced delivery of space products to our customers during the three and nine months ended September 30, 2022. As we are in the very early stages of developing our space services offering and have decided to put these development activities on hold for the near future, we do not expect to generate ~~non-operating income in~~revenues by delivering space services to our customers at this time.

Cost of revenues consist primarily of direct material, direct labor, manufacturing overhead, other personnel-related expenses, which include salaries, bonuses, benefits and stock-based compensation expense and depreciation expense. Cost of revenues also includes inventory write-downs to reduce the ~~form~~carrying value of interest income on marketable securities held after the Initial Public Offering. We incur 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 period from June 2, 2020 (inception) through June 30, 2020, we had a net loss of $1,369, which consisted of formation costs.~~

~~As of June 30, 2020, we had no cash and a working capital deficit of $17,565.~~

Prior to the completion of the Initial Public Offering, our liquidity needs had been satisfied through the Sponsor’s payment of $25,000 of our liabilities in exchange for the issuance of the Founder Shares, and a promissory note (the “Note”) issued by the Sponsor. As of June 30, 2020, ~~we had $3,654 outstanding under the Note.~~ ~~We repaid the Note on August 7, 2020.~~

Subsequent to the period covered by this Quarterly Report, on August 7, 2020, we consummated the Initial Public Offering of 27,500,000 Units at a price of $10.00 per Unit, at $10.00 per Unit, generating gross proceeds of $275.0 million. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 5,000,000 Private Placement Warrants to the Sponsor at a price of $1.50 per warrant, generating gross proceeds of $7.5 million.

On August 11, 2020, the underwriters purchased 2,500,000 Over-Allotment Units pursuant to the partial exercise of the Over-Allotment Option. The Over-Allotment Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $25.0 million. Simultaneously with the sale of the Over-Allotment Units, we consummated a private sale (the “Over-Allotment Private Placement”) of an additional 333,333 Private Placement Warrants to the Sponsor, at a purchase price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $0.5 million.

Following the Initial Public Offering, the partial exercise of the Over-Allotment Option and the sale of the Private Placement Warrants, a total of $300.0 million was placed in the Trust Account and we had $1.7 million of cash held outside of the Trust Account, after payment of costsinventory related to launch services when the ~~Initial Public Offering, and available for working capital purposes.~~carrying value exceeds its estimated net realizable value. We ~~incurred $16.8 million in transaction costs, including $6.0 million of underwriting fees, $10.5 million of deferred underwriting fees and $0.3 million of other costs.~~

We intend to utilize substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less deferred underwriting commissions and income taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

We intend 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.

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the initial stockholders or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a Business Combination does not close, 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 identical to the Private Placement Warrants, at a price of $1.00 per warrant at the option of the lender.

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prioranticipate recording write-downs to our ~~Business Combination. Moreover,~~inventory over the foreseeable future as 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 consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination. 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 obtain additional financing in order to meet our 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 our Sponsor a monthly fee of $10,000 for office space, administrative and support services. We began incurring these fees on August 4, 2020 and will continue to ~~incur these fees monthly until the earlier~~ramp production of ~~the completion~~launch vehicles supported by our new launch system. We expect our cost of ~~the Business Combination or~~revenues to increase in future periods as we sell more launch services and space products. As we grow into our ~~liquidation.~~current capacity and execute on cost-reduction initiatives, we expect our gross margins to improve over time.

~~The holders~~Our research and development expenses consist primarily of ~~Founder Shares, Private Placement Warrants,~~internal and securities that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration rights pursuant to a registration rights agreement dated as of August 4, 2020. These holders are entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. We will bear theexternal expenses incurred in connection with our research activities and development programs. These expenses include, but are not limited to, development supplies, testing materials, personnel and personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation expense), depreciation expense, amortization of intangible assets, overhead allocation (consisting of various support and facility costs) and consulting fees. Research and development costs are expensed as incurred.

We allocate research and development costs by function rather than by project, as a significant majority of our historical research and development spending was related to the ~~filing~~initial development and testing of our underlying technology, including preparation for multiple test launches.

Our current primary research and development objectives focus on the development and finalization of our offerings. The successful development of these offerings involves many uncertainties, including:

A change in the outcome of any ~~such registration statements.~~of these variables could delay the development of our launch systems and space products, which in turn could impact the timing of commercialization of our offerings.

As we are developing and building our launch services, we have expensed all research and development costs associated with developing and building our launch services offering. We expect that our research and development expenses will increase in the short-term as we invest in improving and further reducing the costs of our launch system.

Sales and marketing expenses consist of personnel and personnel-related expenses (including stock-based compensation expense) for our business development team as well as advertising and marketing expenses. We expect to increase our sales and marketing activities in order to grow our customer base and increase market share in the future.

~~The underwriters were granted a 45-day option from~~General and Administrative Expense

General and administrative expenses consist primarily of personnel and personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation expense) for personnel in executive, finance, accounting, corporate development and other administrative functions. General and administrative expenses also include legal fees, professional fees paid for accounting, auditing, consulting, tax, and investor relations services, insurance costs, and facility costs not otherwise included in research and development expenses and costs associated with compliance with the ~~date~~rules and regulations of the ~~final prospectus~~SEC and the stock exchange.

Our income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. We maintain a valuation allowance against the full value of our U.S. and state net deferred tax assets because we believe the recoverability of the tax assets is not more likely than not.

Other income (expense), net primarily consists of income from government research and development contracts.

Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. Preparation of the financial statements requires our management to make a number of judgments, estimates and assumptions relating to the ~~Initial Public Offering to purchase up to 4,125,000 additional Units to cover over-allotments, if any, at $10.00 per Unit.The underwriters exercised a portion of their Over-Allotment Option on August 11, 2020.~~

The underwriters were paid a cash underwriting discount of $0.20 per unit, or $6.0 million in the aggregate, upon the closing of the Initial Public Offering and the partial exercise of the Over-Allotment Option. In addition, $0.35 per unit, or approximately $10.5 million in the aggregate, will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported ~~amounts~~amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements

and ~~income~~the reported amounts of revenue and expenses during the ~~periods reported. Actual results~~reporting period. We consider an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could ~~materially differ from those estimates. We have not identified any critical accounting policies.~~

~~Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would~~ have a material ~~effect~~impact on our consolidated financial statements. Our significant accounting policies are described in Note 2 in our Annual Report on Form 10-K for the year ended December 31, 2021, as updated as applicable in Note 1 to the condensed consolidated financial statements herein.

Except as outlined below, there were no significant changes in our critical accounting estimates during the three and nine months ended September 30, 2022 compared to those previously disclosed in “Critical Accounting Estimates” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2021 Annual Report on Form 10-K.

~~Off-Balance Sheet Arrangements~~Goodwill and indefinite-lived intangible assets

Goodwill and indefinite-lived intangible assets are not subject to amortization. We perform an annual impairment review of goodwill and indefinite-lived intangible assets during the fourth fiscal quarter of each year, and more frequently if we believe that indicators of impairment exist. We compare the fair value of our reporting unit to the respective carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value.

We believe that estimating for goodwill and indefinite-lived intangible assets requires significant judgments that are based on several factors including operating results and market conditions. We estimate fair value through various valuation methods, including the use of discounted expected future cash flows of each reporting unit, as well as the use of the relief-from-royalty method to estimate the fair value of our indefinite-lived intangible asset. During the third quarter of fiscal year 2022, we reorganized our reporting structure and determined to perform an interim quantitative impairment test. As a result, for the nine months ended September 30, 2022, we recognized impairment losses related to goodwill and indefinite-lived intangible assets of $58.3 million and $2.1 million, respectively.

Long-lived assets are primarily comprised of property, plant, and equipment and definite-lived intangible assets. We evaluate long-lived assets for impairment when events or changes in circumstances indicate, in management’s judgement, that the carrying amount of such assets may not be recoverable. Long-lived asset recoverability is measured by comparing the carrying amount of the asset group with its estimated future undiscounted pre-tax cash flows over the remaining life of the primary long-lived asset of the asset group. If the carrying amount exceeds the estimated future undiscounted cash flows as part of the recoverability assessment, an impairment charge is recognized equal to the difference between the carrying amount and fair value of the asset group. The impairment charge is allocated to the underlying long-lived assets in the asset group on a relative carrying amount basis; however, carrying amount after allocated impairment is subject to a floor of fair value on an individual asset basis.

We believe the accounting estimates used in the long-lived asset impairment assessment are critical accounting estimates because of the judgment required in identifying indicators of impairment, determining asset groups, assessing future undiscounted cash flows of the asset groups, and as applicable, evaluating the fair value of the determined asset groups as well as the underlying long-lived assets, once indicators of impairment have been identified. As a result of the reorganization, together with a sustained decrease in the Company’s share price, existence of substantial doubt about the Company’s ability to continue as a going concern, and macroeconomic factors we determined that triggers were present indicating long lived assets may not be recoverable. For the nine months ended September 30, 2022, we concluded that indicators of impairment were present and recorded a non-cash impairment charge on long-lived assets of $70.3 million related to property, plant, and equipment and $2.7 million related to definite-lived intangible assets.

Revenues were $2.7 million for the three months ended September 30, 2022. All of which was related to space products. We commenced delivery of space products to our customers during the three months ended September 30, 2022. No revenues were recognized during the three months ended September 30, 2021.

Revenues were $9.4 million for the nine months ended September 30, 2022 of which $5.9 million related to launch services and $3.4 million related to space products. We commenced paid commercial launch services and delivery of space products during the nine months ended September 30, 2022. We launched launch vehicles LV0008, LV0009 and LV0010 on February 10, 2022, March 15, 2022 and June 12, 2022, respectively, all of which were paid launches. The orbital launch of LV0009 conducted on March 15, 2022, represents our first paid delivery of customer payloads into Earth orbit. No revenues were recognized for the nine months ended September 30, ~~2020,~~2021. We do not anticipate any revenues related to our launch services business in 2023 as we work to develop and test the next version of our launch system: Launch System 2.

Cost of revenues were $1.1 million for the three months ended September 30, 2022 which was driven by the cost of space products. The cost of space products does not reflect the actual gross margins as certain inventory values were recorded at net realizable value. No cost of revenues were recognized for the three months ended September 30, 2021.

Cost of revenues were $29.5 million for the nine months ended September 30, 2022 which was primarily driven by recording of $18.8 million of inventory write-downs and $6.9 million of cost of launch services and space products. The $18.8 million of inventory write-downs was driven by $10.2 million related to the discontinuance of launch vehicles supported by our current launch system, $5.5 million related to the net realizable value write-downs and $3.1 million of other write-downs. The cost of launch services does not reflect the actual gross margins as certain inventory values were recorded at net realizable value. In the first nine months of 2022, we conducted our first paid commercial launch and have not yet achieved economies of scale in our manufacturing processes. We also decided to stop paid commercial launches for the remainder of 2022 so that we can focus on developing our new launch system. As a result, we will continue to incur negative gross margins for the remainder of 2022. No cost of revenues were recognized for the nine months ended September 30, 2021.

Research and development costs were $32.8 million for the three months ended September 30, 2022, compared to $21.7 million for the three months ended September 30, 2021. The $11.1 million increase mainly reflected a $4.3 million increase in stock-based compensation expense, a $2.3 million increase in depreciation and amortization expense, a $2.3 million increase in third party consulting and recruitment costs offset by a $1.2 million decrease in technology licensed and software subscription licenses related expenses with the remainder due to changes in other research and development expenses. These increases were to support our product roadmap and launch services.

Research and development costs were $111.5 million for the nine months ended September 30, 2022, compared to $44.2 million for the nine months ended September 30, 2021. The $67.4 million increase mainly reflected a $24.5 million increase in personnel-related costs due to headcount increases in research and development departments, a $9.7 million increase in research and development materials expense, a $13.3 million increase in stock-based compensation expense, a $7.8 million increase in third party consulting and recruitment costs, a $6.7 million increase in depreciation and amortization expense and a $0.7 million increase in technology licensed and software subscription licenses related expenses with the remainder due to changes in other research and development expenses. These increases were to support our product roadmap and launch services.

Sales and marketing expenses were $4.1 million for the three months ended September 30, 2022, compared to $1.1 million for the three months ended September 30, 2021. The $3.0 million increase mainly reflected a $1.5 million in stock-based compensation expense, $1.3 million increase in personnel-related costs, with the remainder due to changes in other sales and marketing expenses. These increases were to support business development and marketing activities.

Sales and marketing expenses were $13.5 million for the nine months ended September 30, 2022, compared to $2.2 million for the nine months ended September 30, 2021. The $11.2 million increase mainly reflected a $4.7 million increase in personnel-related costs, a $4.5 million in stock-based compensation expense and a $0.8 million increase in depreciation expense with the remainder due to changes in other sales and marketing expenses. These increases were to support business development and marketing activities.

General and administrative expenses were $19.2 million for the three months ended September 30, 2022, compared to $19.7 million for the three months ended September 30, 2021. The $0.5 million decrease was primarily due to a $5.7 million decrease in insurance related expenses, $4.3 million decrease from transaction costs incurred and expensed by the Company in relation to the Business Combination, offset by a $5.1 million decrease in stock-based compensation expense, a $1.6 million increase in third party consulting and recruitment costs, $0.7 million increase in employee costs due to increased headcount, $0.3 million increase in accounting, audit and legal related fees which is partially with the remainder due to changes in facilities costs, IT equipment fees, and other services.

General and administrative expenses were $60.8 million for the nine months ended September 30, 2022, compared to $50.7 million for the nine months ended September 30, 2021. The $10.1 million increase was primarily due to a $11.1 million increase in employee costs due to increased headcount, a $5.3 million increase in stock-based compensation expense, a $4.0 million increase in accounting, audit and legal related fees, a $1.6 million increase in third party consulting and recruitment costs offset by $8.0 million decrease from transaction costs incurred and expensed by the Company in relation to the Business Combination, $2.0 million decrease in insurance related expenses with the remainder due to changes in facilities costs, IT equipment fees, and other services.

Impairment expense was $75.1 million for the three and nine months ended September 30, 2022 and was triggered by the existence of substantial doubt about the Company’s ability to continue as a going concern, a sustained decrease in the Company’s share price and macroeconomic factors. The impairment expense reflects charges of $70.3 million in property, plant and equipment, $2.7 million in definite-lived intangible assets, and $2.1 million in indefinite-lived intangible assets. No impairment charges were recorded for the three and nine months ended September 30, 2021.

Goodwill impairment was $58.3 million for the three and nine months ended September 30, 2022 and was triggered by the existence of substantial doubt about the Company’s ability to continue as a going concern, a sustained decrease in the Company’s share price and other macroeconomic factors. The expense reflects the full impairment of the Company’s goodwill balance. No goodwill impairment was recorded for the three and nine months ended September 30, 2021.

Loss on change in fair value of contingent consideration of $11.9 million and $29.2 million for the three and nine months ended September 30, 2022, respectively, was due to higher revenues forecasted in estimating the fair value of contingent consideration. No loss on change in fair value of contingent consideration was recorded for the three and nine months ended September 30, 2021.

Interest income was $0.6 million for the three months ended September 30, 2022, compared to interest expense of less than $0.1 million for the three months ended September 30, 2021. The $0.6 million increase in interest (expense) income, net was primarily due to the settlement of outstanding debt during the year ended December 31, 2021. Therefore, we did not ~~have~~incur any ~~off-balance sheet arrangements~~interest expense during the period and an increase of $0.4 million in interest income related during the three months ended September 30, 2022.

Interest income was $1.1 million for the nine months ended September 30, 2022, compared to interest expense of $1.2 million for the nine months ended September 30, 2021. The $1.7 million increase in interest (expense) income, net was primarily due to the settlement of outstanding debt during the year ended December 31, 2021. Therefore, we did not incur any interest expense during the period and an increase of $0.8 million in interest income related to investment in marketable securities during the nine months ended September 30, 2022.

Other expense, net was less than $0.1 million for the three months ended September 30, 2022, compared to other income, net of $25.9 million for the three months ended September 30, 2021. The $26.0 million decrease in other income was primarily due to $20.4 million in income from change in fair value of warrant liability, $4.9 million in income from a gain on forgiveness of PPP Note and $0.6 million in income from government research and development contracts for the three months ended September 30, 2021.

Other income, net was $0.3 million for the nine months ended September 30, 2022, compared to other income, net of $25.2 million for the three months ended September 30, 2021. The $24.9 million decrease in other income was primarily due to $20.4 million in income from change in fair value of warrant liability, $4.9 million in income from a gain on forgiveness of PPP Note and $0.6 million in income from government research and development contracts for the nine months ended September 30, 2021 offset by $0.8 million due to a nonrecurring payment to one of our investors for the nine months ended September 30, 2021.

No loss on extinguishment of convertible notes was recorded for the three months ended September 30, 2022 and 2021.

No loss on extinguishment of convertible notes was recorded for the nine months ended September 30, 2022. Loss on extinguishment of convertible notes of $131.9 million was recorded for the nine months ended September 30, 2021 due to the settlement of convertible notes on January 28, 2021.

No loss on extinguishment of convertible notes attributable to related parties was recorded for the three months ended September 30, 2022 and 2021.

No loss on extinguishment of convertible notes attributable to related parties was recorded for the nine months ended September 30, 2022. Loss on extinguishment of convertible notes attributable to related parties of $1.9 million was recorded for the nine months ended September 30, 2021 due to the settlement of convertible notes attributable to related parties on January 28, 2021.

We did not incur income tax expense for the three and nine months ended September 30, 2022.

We recorded an income tax benefit of $0.4 million as ~~defined~~the result of Apollo acquisition for the three months and nine months ended September 30, 2021.

No adjustment to redemption value on convertible preferred stock was recorded for the three months ended September 30, 2022.

No adjustment to redemption value on convertible preferred stock was recorded for the nine months ended September 30, 2022. Adjustment to redemption value on Convertible Preferred Stock of $1,011.7 million for the nine months ended September 30, 2021 was recorded due to the re-measurement of Convertible Preferred Stock to its redemption value due to the likelihood of a redemption event becoming probable.

The following section discusses our principal liquidity and capital resources as well as our primary liquidity requirements and uses of cash. Our cash and cash equivalents are maintained in ~~Item 303(a)(4)(ii)~~highly liquid investments with remaining maturities of ~~Regulation S-K.~~90 days or less at the time of purchase. We believe our cash equivalents are liquid and accessible.

~~JOBS Act~~We measure liquidity in terms of our ability to fund the cash requirements of our research and development activities and our current business operations, including our capital expenditure needs, contractual obligations and other commitments. Our current liquidity needs relate to business operations, research and development activities, mainly in connection with the ongoing development of our technology, lease obligations and capital expenditures, which primarily relate to the development of our manufacturing facility.

~~The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions~~Given our current liquidity position and historical operating losses, we believe there is substantial doubt that among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, andwe can continue as a ~~result, we may not comply with new or revised accounting standards on~~going concern. Substantial doubt about an entity’s ability to continue as a going concern exists when conditions and events, considered in the ~~relevant dates on which adoption of such standards~~aggregate, indicate that it is ~~required for non-emerging growth companies. As a result,~~probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. See Part II, Item 1A “Risk Factors” for information about the risks related to our ability to continue operating as a going concern.

We have, however, prepared the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q on a going concern basis, assuming that our financial resources will be sufficient to meet our capital needs over the next twelve months. Accordingly, our financial statements do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

As of September 30, 2022, our existing sources of liquidity included cash and cash equivalents of $67.6 million and marketable securities of $82.9 million. We have a limited history of operations and have incurred negative cash flows from operating activities and loss from operations in the past as reflected in the accumulated deficit of $1,775.5 million as of September 30, 2022. We expect to continue to incur operating losses due to the investments we intend to make in its business, including the development of our products and services, although we expect those losses to be offset by revenues recognized through the delivery of our space products in 2023. Management remains focused on managing its cash expenditures, including but not limited to, reducing its capital expenditures, consulting services and re-focusing its hiring efforts. In addition, Management continues to evaluate opportunities to strengthen our financial position, including through the issuance of additional equity securities or by entering into new financing arrangements, as appropriate. The Company believes that it has limited cash resources at the current level to fund commercial scale production and sale of its services and products. However, if we are able to obtain additional financing and assuming our plans to manage capital expenditures are effective, including savings expected to be realized from our approximately 16% reduction in existing headcount implemented on November 8, 2022 (of which there can be no assurance), we would expect that our existing sources of liquidity will be sufficient to fund operating and capital expenditure requirements through at least 12 months from the date of filing this Quarterly Report on Form 10-Q. The Company’s current liquidity may not be ~~comparable~~sufficient to ~~companies that comply~~meet the required long-term liquidity needs associated with ~~new or revised accounting pronouncements~~continued use of cash from operating activities at historical levels, in addition to its other liquidity needs associated with its capital expenditures, and other investing requirements and the Company is actively evaluating other sources of liquidity to further support its long-term business operations. For additional information regarding our cash requirements from contractual obligations and lease obligations, see Note 11 — Commitments and Contingencies and Note 9 — Leases in Part I, Item 1 of this Quarterly Report on Form 10-Q.

On August 2, 2022, we entered into an $100 million Class A common stock purchase agreement with B. Riley to support working capital and other general corporate needs. Under the terms of this agreement, we have the right, without obligation, to sell and issue up to $100 million of our Class A common stock over a period of 24 months to B. Riley at the Company’s sole discretion, subject to certain limitations and conditions. See Note 13 — Stockholders' Equity in Part I, Item 1 of this Quarterly Report on Form 10-Q for more details.

Summary Statement of Cash Flows for the Nine Months Ended September 30, 2022 and 2021

The following table sets forth the primary sources and uses of cash and cash equivalents for the periods presented below:

Our cash flows from operating activities are significantly affected by our cash expenditures to support the growth of our business in areas such as research and development and general and administrative and working capital. Our operating cash inflows include cash from milestone billing under certain space products and launch services contracts. These cash inflows are offset by our payments to suppliers for production materials and parts used in our manufacturing process as we ramp up our production for space products, payments to our employees and other operating expenses.

For the nine months ended September 30, 2022, net cash used in operating activities was $134.6 million. The primary factors affecting the Company’s operating cash flows during the period were a net loss of $367.1 million. This is offset by non-cash charges including stock-based compensation expense of $43.6 million, inventory reserves including write-offs and net realizable value write-downs of $18.8 million, loss on change in fair value of contingent consideration of $29.2 million, depreciation and amortization expense of $12.1 million and non-cash lease expense of $1.4 million. Changes in operating working capital items is mainly due to decrease in inventories of $15.5 million, trade accounts receivable of $3.1 million, accrued expense and other current liabilities of $2.1 million, other non-current assets of $1.3 million, and lease liabilities of $1.2 million. Changes in operating working capital items was partially

offset by an increase in other non-current liabilities of $10.4 million, prepaid and other current assets of $3.8 million and accounts payable of $3.0 million.

For the nine months ended September 30, 2021, net cash used in operating activities was $79.6 million. The primary factors affecting the Company’s operating cash flows during this period were net loss of $206.5 million and a non-cash gain of $20.4 million due to change in fair value of warrant liability and $4.9 million due to a gain on forgiveness of PPP Note, offset by non-cash charges including a non-cash loss on extinguishment of convertible notes of $133.8 million, stock-based compensation expense of $20.5 million, depreciation and amortization expense of $3.9 million, and amortization of convertible note debt discounts of $0.4 million. Changes in operating working capital items primarily reflect the increase in inventories of $4.2 million, prepaid and other current assets of $13.9 million, accounts payable of $1.3 million, accrued expenses and other current liabilities of $11.3 million and decrease in other non-current liabilities of $0.2 million.

For the nine months ended September 30, 2022, net cash used in investing activities was $124.1 million, which was comprised mainly of purchases of marketable securities of $136.4 million, purchases of property, plant and equipment of $40.0 million mainly related to the construction of our manufacturing facility at our corporate headquarters in Alameda, California, and acquisition of an indefinite-lived intangible trademark asset of $0.9 million. This was partially offset by maturities of marketable securities of $47.3 million and proceeds from sales of marketable securities of $6.0 million.

For the nine months ended September 30, 2021, net cash used in investing activities was $41.3 million, which was comprised mainly of cash paid as purchase price consideration in the acquisition of Apollo Fusion, Inc., net of cash acquired of $19.4 million, acquisition of an indefinite-lived intangible trademark asset of $3.2 million and purchases of property, plant and equipment of $18.7 million.

For the nine months ended September 30, 2022, net cash provided by financing activities amounted to $1.3 million and consisted primarily of $1.3 million of proceeds from the sale of shares of the Company’s Class A common stock and issuance of shares of Class A common stock under equity plans.

For the nine months ended September 30, 2021, net cash provided by financing activities amounted to $488.9 million and consisted primarily of proceeds from the Business Combination and private offering, net of transaction costs, of $463.6 million, proceeds from the issuance of Series C of $30.0 million and borrowings of $10.0 million, proceeds from the issuance of stock under equity plans of $1.8 million, offset by repayments on borrowings of $16.4 million.

We are a party to operating leases primarily for land and buildings (e.g., office buildings, manufacturing and testing facilities and spaceport) and certain equipment (e.g., copiers) under non-cancellable operating leases. The following table summarizes our lease commitments as of ~~public company effective dates.~~September 30, 2022:

On July 28, 2022, the Company entered into a lease agreement for approximately 60,000 square feet of manufacturing facility in Sunnyvale, California having a lease term of 36 months with an option to extend for a period of an additional 36 months. The undiscounted base rent payments for the first year of this lease is approximately $1.8 million with a 4% increase in base rent for each subsequent year. In addition to base rent, the Company will be responsible for the management fee of 5% of the base rent. In lieu of a cash security deposit, the Company is required to provide the landlord an irrevocable letter of credit in the ~~process~~amount of ~~evaluating~~$0.3 million. This

new lease facility is expected to enable expansion of space product production and development capacity, thermal testing capacity. The Company is finalizing the ~~benefits~~build-out of ~~relying~~this facility and is targeting the completion of that building during the first quarter of 2023.

In order to reduce manufacturing lead times and to have access to an adequate supply of components, we enter into agreements with certain suppliers to procure component inventory based on our production needs. A significant portion of our purchase commitments arising from these agreements consist of firm and non-cancelable commitments. As of September 30, 2022, we had purchase commitments aggregating $39.0 million for which we were or will become obligated to make payments within 12 months to 60 months from the execution date of the agreements. Of these, there are agreements containing an aggregate of $32.1 million in early termination penalties. For example, one of the supply agreement penalties includes payment of 50% of the remaining purchase commitment at any point during the contract term. In another agreement, we may terminate the supply agreement by paying the balance on the remaining purchase commitment only after the first anniversary of the commencement date. If this agreement is terminated before the first anniversary of the commencement date, we have to pay the entire contract amount of $9.6 million.

Apart from the aforementioned leases and purchase commitments, we do not have any other ~~reduced reporting~~material contractual obligations, commitments or contingent obligations.

Compliance with the Continued Listing Standards of the NASDAQ Global Select Market (“NASDAQ”)

On October 6, 2022, the Company received a deficiency notice from NASDAQ that it was not in compliance with Rule 5450(a)(1) of the listing requirements ~~provided by~~because its per share closing bid price has been below $1.00 for the ~~JOBS Act. Subject~~last thirty consecutive business days. This notice has no immediate effect on the listing of the Company’s Class A common stock. Pursuant to ~~certain conditions~~Rule 5810(c)(3)(A), the Company has 180 calendar days, or until April 4, 2023, to regain compliance with the minimum bid price requirement set forth in Rule 5450(a)(1) (the “Minimum Bid Price Requirement”).

Nasdaq’s notice stated that if, at any time before April 4, 2023, the ~~JOBS Act,~~per share closing bid price of Astra’s Class A common stock is at least $1.00 for a minimum of ten consecutive business days, NASDAQ’s staff will provide the Company written notice that it complies with the Minimum Bid Price Requirement.

The Company intends to monitor the per share closing bid price of its Class A common stock and consider available options if asits Class A common stock does not trade at a level likely to result in the Company regaining compliance with Minimum Bid Price Requirement by April 4, 2023.

If the Company does not regain compliance with the Minimum Bid Price Requirement by April 4, 2023, the Company may be eligible for an ~~“emerging growth company,” we choose to rely on such exemptions we may not be required~~additional 180 calendar day compliance period. To qualify, Astra would need to, among other things, ~~(i)~~meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for NASDAQ, with the exception of the Minimum Bid Price Requirement, and provide ~~an auditor’s attestation~~written notice to Nasdaq that it intends to cure the deficiency during the second compliance period.

If Nasdaq concludes that the Company will not be able to cure the deficiency during the second compliance period, or the Company does not make the required representations, then NASDAQ will give notice that the Company’s Class A common stock is subject to delisting and the Company will be able to appeal that delisting before a NASDAQ hearings panel.

There can be no assurance that the Company will regain compliance with the Minimum Bid Price Requirement or that it will otherwise remain in compliance with the other listing requirements for NASDAQ. The Company had previously failed to comply with Nasdaq’s requirement that its quarterly and annual reports be timely filed when its annual report on ~~our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all~~Form 10-K for the year ended December 31, 2022, was filed late as a result of the ~~compensation disclosure~~change in the Company’s filer status. The Company promptly notified Nasdaq when it became aware that ~~may~~its filer status had changed and its Form 10-K would be ~~required~~late. Please also see Risk Factors in Part II, Item 1A of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’sthis quarterly report ~~providing additional~~on Form 10-Q for more information about risks associated with the ~~audit and~~Company’s failure to remain in compliance with the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisonscontinuing listing standards of ~~the CEO’s compensation to median employee compensation. These exemptions will apply for a period~~NASDAQ.

We have not, to date, been exposed to material market risks given our early stage of operations. As we expand our commercial operations, we expect to be exposed to foreign currency exchange rate and commodity price risks, particularly related to rocket propellants, helium, and aluminum, among others, and potentially other market risks, including those related to interest rates or valuation of financial instruments, among others.

~~We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.~~ Interest Rate Risk

As of ~~June~~September 30, ~~2020,~~2022, we ~~were not subject to any market or interest rate risk. Following the consummation~~had $17.3 million of ~~our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been~~cash equivalents invested ~~in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or~~ in money market funds ~~meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act~~and $82.9 million invested in marketable securities, which ~~invest only in direct~~consisted of U.S. ~~government treasury obligations. Due to the short-term nature of these~~Treasury securities, corporate debt securities, commercial paper and asset backed securities. Our cash and cash equivalents are held for working capital purposes. We do not enter into investments ~~we believe there will be~~for trading or speculative purposes. There was no ~~associated~~ material ~~exposure to~~ interest rate ~~risk.~~risk for the nine months ended September 30, 2022 and year ended December 31, 2021.

We are exposed to inflation risk. Inflationary factors, such as increases in raw material and overhead costs, could impair our operating results. Although there has been a significant increase in inflation recently, it has not had a substantial impact on our results of operations for the three and nine months ended September 30, 2022, respectively. However, a higher rate of inflation in the future may have ~~not engaged in any hedging activities since~~an adverse effect on our ~~inception~~ability to recover increasing costs and we domight not ~~expect~~be able to ~~engage~~pass along cost increases to our customers.

There was no material foreign currency risk for the three and nine months ended September 30, 2022 and year ended December 31, 2021. Our activities to date have been limited and were conducted in ~~any hedging activities with respect to~~ the ~~market risk to which we are exposed~~United States.

Evaluation of ~~Disclosure Controls~~disclosure controls and ~~Procedures~~procedures

~~Under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, our management evaluated the effectiveness of the design and operation of our~~We maintain disclosure controls and procedures (as that term is defined in ~~Rule~~Rules 13a-15(e) and 15d-15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report on Form 10-Q (the “Evaluation Date”). Based upon~~Act) that ~~evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective~~are designed to ensure that information required to be disclosed in ~~the~~our reports ~~that we file~~filed or ~~submit~~submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission’s~~SEC’s rules and ~~forms.~~forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, who serves as our principal executive officer, and Chief Financial Officer, who serves as our principal financial officer, as appropriate, to allow for timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, 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.

~~Changes~~Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of the end of the period covered by this quarterly report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as that term is defined in ~~Internal Control over Financial Reporting~~

~~There was no change~~Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of September 30, 2022, due to the material weaknesses in our internal control over financial reporting described below.

As previously disclosed, we have identified material weaknesses in our internal control over financial reporting and these material weaknesses continued to exist as of September 30, 2022. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that ~~occurred~~there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, material weaknesses identified are:

We did not maintain an effective control environment to enable the identification and mitigation of risks of material accounting errors based on the following control deficiencies:

We did not design and maintain controls over an effective risk assessment, including: (i) identifying, assessing, and communicating appropriate objectives, (ii) identifying and analyzing risks to achieve these objectives, and (iii) identifying and assessing changes in the business that could impact our system of internal controls.

We did not design and maintain effective control activities as the control activities did not adequately (i) address relevant risks, (ii) provide evidence of performance, (iii) provide appropriate segregation of duties, or (iv) operate at a level of precision to identify all potentially material errors.

We did not design and implement controls over information and communication relating to communicating accurate information internally and externally, including providing information pursuant to objectives, responsibilities, and functions of internal control.

We did not design and implement effective monitoring controls to ascertain whether the components of internal control are present and functioning.

These material weaknesses resulted in a restatement to Additional paid-in-capital, Accumulated deficit and Adjustment to redemption value on Convertible Preferred Stock as well as audit adjustments to substantially all of our accounts and disclosures, which were recorded as of and for the year ended December 31, 2021. Additionally, these material weaknesses could result in a misstatement of substantially all of our account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Our management, including our Chief Executive Officer and Chief Financial Officer continue to work to design and implement both a short- term and a long-term remediation plan to correct the material weaknesses in our disclosure controls and procedures and our internal control over financial reporting as updated below. We are focused on, designing and implementing effective internal control measures to improve our internal control over financial reporting and remediate the material weaknesses. These remediation measures include, but are not limited to:

As we continue our evaluation and assess the effectiveness of our internal control over financial reporting going forward, management may modify the actions described above or identify and take additional measures to address control deficiencies. While we prioritize achieving the effectiveness of our internal control over financial reporting and disclosure controls, until our remediation efforts, including any additional measures management identifies as necessary, are completed, validated and tested over a sustained period, the material weaknesses described above will continue to exist and management will not be able to conclude that it is remediated. We are committed to continuous improvement and will continue to diligently review our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

In the third quarter of 2022, we completed deployment of a new ERP system implementation for finance and procurement processes. As a result of the ERP system implementation, in the third quarter of 2022 certain internal controls over financial reporting have been automated, modified, or implemented to address the new control environment associated with the ERP system. While management believes that this new system will enhance its internal control over financial reporting, there are inherent risks in implementing any new system, and we will continue to evaluate and monitor these control changes as part of our assessment of the control design and effectiveness throughout 2022.

There have been no other changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~period covered by this Quarterly Report on Form 10-Q~~three months ended September 30, 2022 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

Discussion of legal matters is incorporated by reference from Part I, Item 1, Note 11 - Commitments and Contingencies, of this Quarterly Report on Form 10-Q, and should be considered an integral part of Part II, Item 1, “Legal Proceedings.”

Except for the risk factors set forth below, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the period ended December 31, 2021, filed with the SEC on March 31, 2022, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, filed with the SEC on August 4, 2022, and investors are encouraged to review these risk factors prior to making an investment in the Company and in conjunction with their review of this Quarterly Report on Form 10-Q.

A summary of the material risks affecting our business, operations and financial results that have been included in this Quarterly Report on Form 10-Q include the following:

Our losses from operations and liquidity condition raise substantial doubt about our ability to continue as a going concern. As a result, there is significant risk in the investment in shares of our Class A common stock and you may lose all or part of your investment.

As of September 30, 2022, we had cash and cash equivalents of $67.6 million and marketable securities of $82.9 million, and have not generated sufficient revenues to enable us to finance our business operations internally. We have incurred significant losses since our inception and had an accumulated deficit of $1,776 million as of September 30, 2022 and we expect to continue to incur net losses into the future. These conditions raise substantial doubt about our ability to continue as a going concern during the next twelve months. Our ability to continue as a going concern is dependent on our ability to generate cash flows from operations and find additional sources of funding through either equity offerings, debt financings, or a combination of any such transactions.

To extend our financial runway, we continue to seek and evaluate opportunities to raise additional capital through the issuance of equity or debt securities. As an example, on August 2, 2022, the Company entered into a Common Stock Purchase Agreement with B. Riley Principal Capital II LLC ("B. Riley"), which would allow the Company to sell newly issued shares of its Class A Common Stock to B. Riley in aggregate amount not to exceed $100.0 million or 19.99% of the aggregate outstanding Class A and Class B Common Stock of the Company as of August 2, 2022. In addition, on November 8, 2022, we implemented a reduction of approximately 16% of our existing headcount. We are exploring other plans to mitigate an expected shortfall of capital to support future operations including raising additional funds through borrowings or additional sales of securities or other sources, and managing our working capital. However, there is no assurance that savings we expect as a result of our headcount reduction will be

realized or additional financing will be available when needed or that we will be able to obtain financing on terms acceptable to us or whether or when we will become profitable and generate positive operating cash flow. If we are unable to raise substantial additional capital, our operations and production plans may be scaled back or curtailed. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, there is substantial doubt that we will be able to continue as a going concern. If the foregoing plans are unsuccessful and we are unable to continue as a going concern, you could lose all or part of your investment in us.

We currently fail to satisfy certain continued listing requirements of the NASDAQ Global Select Market, have failed to satisfy certain of these requirements in the past and could fail to satisfy those requirements again in the future, which could negatively affect the market price of our Class A common stock, our liquidity and our ability to raise capital. Our failure to meet the continued listing requirements ofNasdaqGlobal Select Market could result in a delisting of our Class A common stock.

Currently, our common stock trades on the NASDAQ Global Select Market. On October 6, 2022, we received a deficiency notice from NASDAQ that we were not in compliance with Rule 5450(a)(1) of the listing requirements (the “Minimum Bid Price Requirement”) because our per share closing bid price has been below $1.00 for the last thirty consecutive business days. As of the date of this ~~Quarterly Report,~~quarterly report, our per share closing bid price remains below $1.00. While this notice had no immediate effect on the listing of the Company’s Class A common stock, if we are unable to regain compliance with the Minimum Bid Price Requirement or otherwise maintain compliance with the other listing standards for NASDAQ, it could resulting the delisting of our Class A common stock from Nasdaq, which could have a material impact on your ability to sell shares of our Class A common stock.

Pursuant to Rule 5810(c)(3)(A), we have 180 calendar days, or until April 4, 2023, to regain compliance with the Minimum Bid Price Requirement. NASDAQ’s notice stated that if, at any time before April 4, 2023, the per share closing bid price of Astra’s Class A common stock is at least $1.00 for a minimum of ten consecutive business days, Nasdaq’s staff will provide us written notice that it complies with the Minimum Bid Price Requirement.

While we intend to monitor the per share closing bid price of our Class A common stock and consider available options, including a reverse stock split, if our Class A common stock does not trade at a level likely to result in us regaining compliance with Minimum Bid Price Requirement by April 4, 2023, we cannot be certain that those available options, including a reverse stock split, would be sufficient to increase the closing per share price of our Class A common stock to more than $1.00 or prevent it from dropping below $1.00 at some point in the future.

If we do not regain compliance with the Minimum Bid Price Requirement by April 4, 2023, we may be eligible for an additional 180 calendar day compliance period. To qualify, we would need to, among other things, meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for NASDAQ, with the exception of the Minimum Bid Price Requirement, and provide written notice to NASDAQ that it intends to cure the deficiency during the second compliance period. There is no guarantee that we will regain compliance with the Minimum Bid Price Requirement, that we will maintain compliance with other NASDAQ listing standards, or that we will be eligible for a second compliance period. We have previously failed to comply with listing standards as a result of our late filing of our annual report on Form 10-K for the year ended December 31, 2021 and there can be no assurance that we will not violate other NASDAQ listing standards in the future.

If Nasdaq concludes that we will not be able to cure the deficiency during the second compliance period, or we do not make the required representations, then NASDAQ will give notice that our Class A common stock is subject to delisting and we will be able to appeal that delisting before a NASDAQ hearings panel. Such a delisting would likely have ~~been~~a negative effect on the price of our Class A common stock and would impair your ability to sell or purchase our Class A common stock when you wish to do so. In the event of a delisting, we would expect to take actions to restore our compliance with NASDAQ’s listing requirements, but we can provide no assurance that any such action taken by us would allow our Class A common stock to become listed again or improve the liquidity of our Class A common stock.

If we are delisted from Nasdaq, but obtain a substitute listing for our Class A common stock, it will likely be on a market with less liquidity, and therefore experience potentially more price volatility than experienced on NASDAQ. You may not be able to sell your shares of Class A common stock on any such substitute market in the quantities, at the times, or at the prices that could potentially be available on a more liquid trading market. As a result of these factors, if our Class A common stock is delisted from NASDAQ, the value and liquidity of our Class A common stock would likely be significantly adversely affected. A delisting of our common stock from NASDAQ could also adversely affect our ability to obtain financing for our operations and/or result in a loss of confidence by investors, employees and/or business partners.

We are highly dependent on our senior management team and other highly skilled personnel, and if we are not successful in attracting or retaining highly qualified personnel or are unable to find and integrate appropriate replacements for employees who choose to leave the Company (including in our finance function where we have had significant recent turnover), we may not be able to successfully implement our business strategy and our results of operation and ability to execute on our growth strategy will be affected.

Our success depends, in significant part, on the continued services of our senior management team and on our ability to attract, motivate, develop and retain a sufficient number of other highly skilled personnel, including engineers, manufacturing and quality assurance, design, finance, marketing, sales and support personnel. Our senior management team has extensive experience in the aerospace industry, and we believe that their depth of experience is instrumental to our continued success. The loss of any one or more members of our senior management team, for any reason, including resignation or retirement, could impair our ability to execute our business strategy and have a material ~~changes~~adverse effect on our business, financial condition and results of operations.

Competition for qualified highly skilled personnel can be strong, and we can provide no assurance that we will be successful in attracting or retaining such personnel now or in the future.. Further, any inability to recruit, develop and retain qualified employees may result in high employee turnover and may force us to pay significantly higher wages, which may harm our profitability. The loss of any key employee or our inability to recruit, develop and retain these individuals as needed, could have a material adverse effect on our business, financial condition and results of operations.

Further, in the last six months, we have experienced turnover in critical leadership positions in our finance team, including the chief financial officer, the corporate controller and the director of SEC reporting. If we are unable to retain and successfully integrate their replacements, as well as retain the remaining members of our finance team, it could have a material adverse impact on our business and the reliability of our financial statements. Over the same period, we have also experienced turnover in other areas of our business, particularly related to engineering and operations. Similarly, if we are unable to integrate their replacements or retain other critical members of these functions, our ability to execute on our growth strategy and develop Launch System 2 and the production and delivery of our space products will be materially impeded.

We are unsure how the news of our headcount reduction will impact our retention efforts for those employees who are not affected (the “retained employees”). If any of the retained employees decide to leave the Company and we are unable to find and integrate qualified replacements for them, our business and future growth plans will be materially impacted.

We use social media as part of our marketing strategy and to provide information to our investors and the general public about our products and services, including the stages of development of our rocket and launch system. If we do not appropriately manage the content, timing and delivery of our communications through these social media channels and the content that others, including our employees, post regarding our business, products and services, our reputation could be damaged or we could be subject to regulatory or other violations, all of which could have a material adverse effect on our business operations.

Despite our efforts to monitor evolving social media communication guidelines and comply with applicable rules, there is risk that the use of social media by us, our employees or our customers to communicate about our products, services or business may cause us to be found in violation of applicable requirements. For example, due to text restrictions on certain social media platforms, information that we share on social media may not be qualified as forward-looking statements or could be viewed as not providing full and complete information about our business. Further, images we share through social media may not meet certain requirements under export regulations such as ITAR and EAR, despite our best efforts to review such material before it is submitted. As a result, we may be subject to enforcement actions from regulatory bodies related to our social media activities. Efforts we take to correct disclosures may be viewed negatively by our investors. In addition, adverse events with respect to our company, including launch failures, unapproved marketing or other unintended messages posted on social media could require an active response from us, which may not be completed in a timely manner and could result in reputational damage. Further, our employees may knowingly or inadvertently make use of social media in ways that may not comply with our corporate policies or other legal or contractual requirements. This, may give rise to liability or lead to the ~~risk factors disclosed~~loss of trade secrets or other intellectual property or disclosure of material non-public information. Furthermore, negative posts or comments about us or our products and services in social media could seriously damage our ~~Registration Statement filed with the SEC.~~reputation, brand image and goodwill, which would have a material adverse effect on our business, financial condition, and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of ~~Proceeds.~~Proceeds

On June 4, 2020, Pendrell Corporation (“Pendrell”) paid for certain offering costs for an aggregate price of $25,000 in exchange for issuance of 7,187,500 shares of our Class B common stock, par value $0.0001 per share. Pendrell transferred such shares to the Sponsor on June 9, 2020. In July 2020, the Sponsor transferred shares to its independent director nominees and various other directors, officers, employees and consultants of the Company and Pendrell, in each case for approximately the same per-share price as initially paid by our Sponsor. On August 4, 2020, we effected a effected a 1.1-for-1 common stock split (the “Stock Split”) ~~resulting in 7,906,250 shares outstanding~~ ~~The foregoing issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.~~

On August 7, 2020, we consummated the Initial Public Offering of 27,500,000 Units. The Units sold in the Initial Public Offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $27.5 million. Deutsche Bank Securities Inc. and BofA Securities, Inc. acted as joint book-running managers of the Initial Public Offering. The securities in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-239926). The Securities and Exchange Commission declared the registration statement effective on August 4, 2020.

Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 5,000,000 Private Placement Warrants to the Sponsor at a price of $1.50 per warrant, generating gross proceeds of $7.5 million. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

The Private Placement Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants are not transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.

Simultaneously with the sale of the Over-Allotment Units, we consummated a private sale (the “Over-Allotment Private Placement”) of an additional 333,333 Private Placement Warrants to the Sponsor, at a purchase price of $1.50 per Private Placement Warrant, generating gross proceeds of approximately $0.5 million. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

We paid a total of $6.0 million in underwriting fees and $0.3 million for other costs and expenses related to the Initial Public Offering and the partial exercise of the Over-Allotment Option. In addition, the underwriters agreed to defer up to $10.5 million in underwriting fees.

Kelyn Brannon’s last day of employment with us is November 9, 2022. Axel Martinez, our current Executive Vice President of Finance, will be promoted to Chief Financial Officer effective November 10, 2022. Mr. Martinez will also serve as our principal financial officer and principal accounting officer.

Our financial arrangements with Ms. Brannon in connection with the transition of her employment and Mr. Martinez’ compensation were previously disclosed on a current report on Form 8-K filed with the Securities and Exchange Commission on September 30, 2022, and have not changed.

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.

~~Delaware~~		~~85-1270303~~
Delaware	85-1270303
(State or other jurisdiction of incorporation or organization)		(~~IRS~~I.R.S. Employer Identification No.)
1900 Skyhawk Street Alameda, CA	94501
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
~~Units, each consisting of one share of~~ Class A ~~common stock and one-third of one redeemable warrant~~	~~HOLUU~~	~~The Nasdaq Capital Market~~
~~Class A common stock,~~Common Stock, par value $0.0001 per share	~~HOL~~ ASTR	The ~~Nasdaq Capital~~NASDAQ Global Select Market
~~Warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share~~	~~HOLUW~~	~~The Nasdaq Capital Market~~

		~~Page~~
	~~PART I. FINANCIAL INFORMATION~~	Page
PART I.	FINANCIAL INFORMATION	1

Item 1.	Condensed Consolidated Financial Statements ~~(unaudited):~~(Unaudited)	1
	Condensed Consolidated Balance ~~Sheet as of June 30, 2020~~Sheets	1
	Condensed ~~Statement~~Consolidated Statements of Operations ~~for the period from June 2, 2020 (inception) through June 30, 2020~~	2
	Condensed ~~Statement~~Consolidated Statements of ~~Changes in Stockholder’s~~Stockholders' Equity ~~for the period from June 2, 2020 (inception) through June 30, 2020~~	3 4
	Condensed ~~Statement~~Consolidated Statements of Cash Flows ~~for the period from June 2, 2020 (inception) through June 30, 2020~~	4 6
	Notes to Unaudited Condensed Consolidated Financial Statements	5 8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13 35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16 47
Item 4.	Controls and Procedures	16 47

	PART II.	OTHER INFORMATION	50

Item 1.	Legal Proceedings	17 50
Item 1A.	Risk Factors	17 50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17 52
Item 3.	Defaults Upon Senior Securities	18 52
Item 4.	Mine Safety Disclosures	18 52
Item 5.	Other Information	18 52
Item 6.	Exhibits	18 54
Signatures		19 55


	As of
	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	67,608		$	325,007
Marketable securities		82,936			—
Trade accounts receivable		4,923			1,816
Inventories		5,174			7,675
Prepaid and other current assets		7,609			12,238
Total current assets		168,250			346,736
Non-current assets:
Property, plant and equipment, net		20,048			66,316
Right-of-use asset		14,909			9,079
Goodwill		—			58,251
Intangible assets, net		10,699			17,921
Other non-current assets		1,999			721
Total assets	$	215,905		$	499,024

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,347		$	9,122
Operating lease obligation, current portion		3,903			1,704
Contingent consideration, current portion		32,420			—
Accrued expenses and other current liabilities		27,382			29,899
Total current liabilities		73,052			40,725
Non-current liabilities:
Operating lease obligation, net of current portion		10,974			7,180
Contingent consideration, net of current portion		10,530			13,700
Other non-current liabilities		7,277			899
Total liabilities		101,833			62,504

Commitments and Contingencies (Note 11)

STOCKHOLDERS’ EQUITY
Founders convertible preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding as of September 30, 2022 and December 31, 2021		—			—
Class A common stock, $0.0001 par value; 400,000,000 shares authorized; 211,824,567 and 207,451,107 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		22			22
Class B common stock, $0.0001 par value; 65,000,000 shares authorized; 55,539,188 and 55,539,189 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		6			6
Additional paid in capital		1,889,759			1,844,875
Accumulated other comprehensive loss		(202	)		—
Accumulated deficit		(1,775,513	)		(1,408,383	)
Total stockholders’ equity		114,072			436,520
Total liabilities and stockholders’ equity	$	215,905		$	499,024

~~Assets:~~
~~Deferred offering costs~~	$	~~41,196~~
~~Total Assets~~	$	~~41,196~~
~~Liabilities and Stockholder’s Equity:~~
~~Current liabilities:~~
~~Accrued expenses~~	$	~~13,911~~
~~Promissory note – related party~~		~~3,654~~
~~Total current liabilities~~		~~17,565~~
~~Commitments and Contingencies~~
~~Stockholder’s Equity:~~
~~Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding~~		—
~~Class A common stock, $0.0001 par value, 200,000,000 shares authorized; none issued and outstanding~~		—
~~Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 7,906,250 shares issued and outstanding~~⁽¹⁾⁽²⁾		~~791~~
~~Additional paid-in capital~~		~~24,209~~
~~Accumulated deficit~~		~~(1,369~~	)
~~Total stockholder’s equity~~		~~23,631~~
~~Total Liabilities and Stockholder’s Equity~~	$	~~41,196~~


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 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


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

General and administrative expenses	$	1,369
Net loss	$	(1,369	)
Weighted average shares outstanding, basic and diluted ⁽¹⁾⁽²⁾		7,500,000
Basic and diluted net loss per share	$	(0.00	)

	Common Stock								Additional					Total
	Class A				Class B				Paid-In		Accumulated			Stockholder’s
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance—June 2, 2020 (inception)		—	$	—		—	$	—	$	—	$	—		$	—
Issuance of Class B common stock to Pendrell⁽¹⁾⁽²⁾		—		—		7,906,250		791		24,209		—			25,000
Net loss		—		—		—		—		—		(1,369	)		(1,369	)
Balance—June 30, 2020		—	$	—		7,906,250	$	791	$	24,209	$	(1,369	)	$	23,631

Cash Flows from Operating Activities:
Net loss	$	(1,369	)
Net cash used in operating activities		(1,369	)
Cash Flows from Financing Activities:
Proceeds from promissory note – related party		1,369
Net cash provided by financing activities		1,369
Net change in cash		—
Cash—beginning of the period		—
Cash—end of the period	$	—
Supplemental disclosure of noncash operating and financing activities:
Deferred offering costs paid by Pendrell in exchange for issuance of Class B common stock	$	25,000
Deferred offering costs included in promissory note – related party		2,285
Deferred offering costs included in accrued expenses		13,911



	Class A Common Stock				Class B Common Stock					Additional Paid in		Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Shares			Amount		Capital		Loss			Deficit			Equity

Balance as of December 31, 2021		207,451,107	$	22		55,539,189		$	6	$	1,844,875	$	—		$	(1,408,383	)	$	436,520
Stock-based compensation		—		—		(1	)		—		17,041		—			—			17,041
Issuance of common stock under equity plans		1,159,383		—		—			—		793		—			—			793
Unrealized gain (loss) on available-for-sale marketable securities		—		—		—			—		—		(155	)		—			(155	)
Net loss		—		—		—			—		—		—			(85,713	)		(85,713	)
Balance as of March 31, 2022		208,610,490	$	22		55,539,188		$	6	$	1,862,709	$	(155	)	$	(1,494,096	)	$	368,486
Stock-based compensation		—		—		—			—		12,791		—			—			12,791
Issuance of common stock under equity plans		797,935		—		—			—		27		—			—			27
Unrealized loss on available-for-sale marketable securities		—		—		—			—		—		(78	)		—			(78	)
Net loss		—		—		—			—		—		—			(82,303	)		(82,303	)
Balance as of June 30, 2022		209,408,425	$	22		55,539,188		$	6	$	1,875,527	$	(233	)	$	(1,576,399	)	$	298,923
Stock-based compensation		—		—		—			—		13,748		—			—			13,748
Issuance of common stock under equity plans		2,057,044		—		—			—		484		—			—			484
Issuance of common stock as consideration for the commitment under the Common Stock Purchase agreement (Note 13)		359,098		—		—			—		—		—			—			—
Unrealized gain on available-for-sale marketable securities		—		—		—			—		—		31			—			31
Net loss		—		—		—			—		—		—			(199,114	)		(199,114	)
Balance as of September 30, 2022		211,824,567	$	22		55,539,188		$	6	$	1,889,759	$	(202	)	$	(1,775,513	)	$	114,072


	Temporary Equity						Permanent Equity
	Convertible Preferred Stock						Common Stock (Pre-combination Astra)						Class A Common Stock ( New Astra)				Class B Common Stock (New Astra)				Founders Preferred Stock						Additional Paid in			Accumulated			Total Stockholders'
	Shares			Amount			Shares			Amount			Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Equity (Deficit)
Balance as of December 31, 2020		90,768,286		$	108,829			62,961,258	��	$	6			—	$	—		—	$	—		12,302,500		$	1		$	50,282		$	(190,697	)	$	(140,408	)
Cumulative effect adjustment due to adoption of ASU 2020-06		—			—			—			—			—		—		—		—		—			—			(9,719	)		691			(9,028	)
Stock-based compensation		—			—			—			—			—		—		—		—		—			—			2,177			—			2,177
Exercise of options		—			—			498,807			—			—		—		—		—		—			—			228			—			228
Issuance of Series C Convertible Preferred Stock, net of issuance costs		28,498,141			221,943			—			—			—		—		—		—		—			—			—			—			—
Conversion of Founders Convertible Preferred Stock to Series C Convertible Preferred Stock		5,073,576			—			—			—			—		—		—		—		(5,073,576	)		—			8,156			—			8,156
Adjustment to redemption value on Convertible Preferred Stock		—			1,011,726			—			—			—		—		—		—		—			—			(51,131	)		(960,595	)		(1,011,726	)
Net loss		—			—			—			—			—		—		—		—		—			—			—			(158,972	)		(158,972	)
Balance as of March 31, 2021		124,340,003		$	1,342,498			63,460,065		$	6			—	$	—		—	$	—	$	7,228,924		$	1		$	(7	)	$	(1,309,573	)	$	(1,309,573	)
Stock-based compensation		—			—			—			—			—		—		—		—		—			—			7,444			—			7,444
Exercise of options		—			—			1,812,081			—			—		—		—		—		—			—			1,081			—			1,081
Adjustment to redemption value on Convertible Preferred Stock		—			(1,011,726	)		—			—			—		—		—		—		—			—			1,011,726			—			1,011,726
Merger recapitalization- Class A		(124,340,003	)		(330,772	)		(16,261,881	)		(2	)		140,601,884		14		—		—		—						330,751			—			330,763
Merger recapitalization- Class B		—			—			(49,010,265	)		(4	)		—		—		56,239,189		6		(7,228,924	)		(1	)		—			—			1
Private offering and merger financing, net of redemptions and equity issuance costs of $23,337		—			—			—			—			57,489,019		6		—		—		—			—			406,863			—			406,869
Net loss		—			—			—			—			—		—		—		—		—			—			—			(31,297	)		(31,297	)
Balance as of June 30, 2021		—		$	—			—		$	—			198,090,903	$	20		56,239,189	$	6		—		$	—		$	1,757,858		$	(1,340,870	)	$	417,014
Stock-based compensation		—			—			—			—			—		—		—		—		—			—			2,688			—			2,688
Exercise of options		—			—			—			—			912,760		1		—		—		—			—			469			—			470
Exercise of warrants		—			—			—			—			472,113		—		—		—		—			—			—			—			—
Issuance of common stock upon acquisition of Apollo Fusion, Inc.		—			—			—			—			2,558,744		—		—		—		—			—			33,008			—			33,008
Net loss		—			—			—			—			—		—		—		—		—			—			—			(16,248	)		(16,248	)
Balance as of September 30, 2021		—		$	—			—		$	—			202,034,520	$	21		56,239,189	$	6		—		$	—		$	1,794,023		$	(1,357,118	)	$	436,932


Assets acquired included in accounts payable, accrued expenses and other current liabilities		2,777		4,903
Public and private placement of warrants acquired as part of business combination		—		56,786
Change in redemption value of Convertible Preferred Stock		—		1,011,726
Issuance of Class A common stock upon acquisition of Apollo Fusion, Inc.		—		33,008
Fair value of contingent consideration provided upon acquisition of Apollo Fusion, Inc.		—		23,000
Supplemental disclosures of cash flow information:
Cash paid for interest	$	15	$	691


	For The Three Months Ended September 30,				Period over period change				For The Nine Months Ended September 30,					Period over period change
(in thousands, except percentages)	2022		2021		($)		(%)		2022			2021		($)			(%)
Revenues:
Launch services	$	—	$	—		—	n.m.		$	5,899		$	—	$	5,899		n.m.
Space products		2,777		—		2,777	n.m.			3,471			—		3,471		n.m.
Total revenues		2,777		—		2,777		—		9,370			—		9,370			—

Cost of revenues:
Launch services		—		—		—	n.m.			28,193			—		28,193		n.m.
Space products		1,071		—		1,071	n.m.			1,337			—		1,337		n.m.
Total cost of revenues		1,071		—		1,071		—		29,530			—		29,530			—

Gross profit (loss):
Launch services		—		—		—	n.m.			(22,294	)		—		(22,294	)	n.m.
Space products		1,706		—		1,706	n.m.			2,134			—		2,134		n.m.
Total gross profit (loss)		1,706		—		1,706		—		(20,160	)		—		(20,160	)		—


	Minimum Lease Commitment
	(in thousands)
2022 (remainder)	$	1,010
2023		4,069
2024		3,941
2025		3,233
2026		2,075
Thereafter		3,705
Total future undiscounted minimum lease payments	$	18,033
Less: Imputed Interest		3,156
Total reported lease liability	$	14,877


		Incorporated by Reference
Exhibit Number	Description	Form	SEC File No.	Exhibit	Filing Date
10.1*	Standard Industrial/Commercial Single Lessee Lease Net with SS (Oakmead) LLC dated July 28, 2022
10.2	Common Stock Purchase Agreement, dated August 2, 2022, between Astra Space, Inc. and B. Riley Principal Capital II, LLC.	8-K	001-39426	10.1	August 2, 2022
10.3	Registration Rights Agreement, dated August 2, 2022, between Astra Space, Inc. and B. Riley Principal Capital II, LLC.	8-K	001-39426	10.2	August 2, 2022
10.4	Employment Agreement with Axel Martinez dated September 27, 2022	8-K	001-39426	10.1	September 30, 2022
31.1*	Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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~~Exhibit~~ ~~Number~~		~~Description~~
31.1*		Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		~~Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
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		~~HOLICITY INC.~~
		~~(Registrant)~~ Astra Space, Inc.

Date: ~~September 17, 2020~~November 9, 2022	~~By:~~	By:	/s/ S~~teve~~ E~~dnie~~Chris C. Kemp
		~~Steve Ednie~~	Chris C. Kemp
			Chief Executive Officer

Date: November 9, 2022		By:	/s/ Kelyn J. Brannon
			Kelyn J. Brannon
			Chief Financial Officer, ~~and Secretary~~
		Principal Financial Officer and Principal Accounting Officer