York Space Systems Inc. (YSS)

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

The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. You should read the following discussion and analysis of the Company’s financial condition and results of operations together with "Risk Factors" in Item 1A of Part I of the 2025 Annual Report on Form 10-K, the section entitled "Special Note Regarding Forward-Looking Statements" and our unaudited condensed consolidated financial statements and related notes included in Item 1, of Part I of this Quarterly Report on Form 10-Q. This discussion and analysis contains forward-looking statements, including statements regarding our expectations for the future of our business and our liquidity and capital resources as well as other non-historical statements. These statements are based upon our current plans, expectations, and beliefs, and are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in “Risk Factors” in Item 1A of Part I of the 2025 Annual Report on Form 10-K and the section entitled “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by these forward-looking statements.

Business Overview

On January 28, 2026, the Registration Statement on Form S-1 ("the Registration Statement") filed with respect to our IPO was declared effective and on January 29, 2026, our stock began trading on the "NYSE" under the ticker “YSS”. Refer to Note 1 – Description of Business and Basis of Presentation of the accompanying notes to the unaudited condensed consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information.

York is a leading, U.S.-based, national defense and commercial prime providing a comprehensive suite of mission-critical solutions for national security, government and commercial customers. York is one of the only space and defense primes with proprietary hardware and software capabilities designed to address customers’ complex mission requirements across the critical elements of the entire space ecosystem throughout the mission lifecycle. York is a partner of choice for our customers, with differentiated performance versus traditional primes based on price, speed to deployment, and sophistication of capabilities. For contracts which we have been awarded, our price per satellite has been approximately half the price per satellite of our competitors. We have also been the first to deliver and launch satellites for multiple DoW programs. York is the first and only company to demonstrate Link-16 connectivity from space, highlighting our unique and innovative capabilities.

York is purpose built to address evolving national security space challenges and to adapt to the ongoing shift in the U.S. government’s mission needs and procurement processes, where economics, agility, rapid capabilities, and heritage drive customer decision making. We deliver mission-critical solutions in a zero-tolerance for error environment where systems must work, and we believe we are well positioned to win awards to successfully leverage production capabilities at scale in our core markets. York provides customers a vertically integrated, full technology stack of solutions including design, production, integration, and operation of spacecraft with turnkey offerings to manage spacecraft and constellations throughout their entire mission lifecycle. York has significant space heritage, having 74 missions with flight heritage, created 17 products with flight heritage, and logged over four million on-orbit hours. York’s position as a prime enables us to monetize the entire space vertical from launch to mission operations, from spacecraft to payloads, and from edge computing to data transfer.

York was founded to create an innovative space technology mission prime, with a goal of meeting the evolving national security threats from space by providing mission-critical spacecraft at scale, faster, and at lower cost. We provide our customers with the ability to quickly and effectively field responsive space-based technologies. We have a demonstrated ability to win contracts in space and are a trusted partner to U.S. national security, intelligence and defense agencies, such as the U.S. Air Force and classified customers, as well as commercial and civil customers. Our proprietary hardware, software and mission operations solutions are designed to address the United States’ national security priorities: missile defense (crucial to the Golden Dome), counter-space capabilities, space domain awareness, space data network and space sensing and targeting capabilities.

Our capabilities include a differentiated suite of spacecraft solutions with proven, common technologies. We offer the S-CLASS, LX-CLASS, and M-CLASS spacecraft, which are high-quality, low-cost satellite platforms that are proven and scalable to a wide array of space market needs. Our spacecraft are supported by proprietary satellite software enabling versatile integration of a variety of payloads for customers and supply chain commonalities across platforms.

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Our model allows us to capture recurring revenue driven by ongoing satellite-based software and services as well as hardware replacement cycles. Once spacecraft are fielded, we provide continuous operational support, ground terminal usage, and proprietary software solutions, including on-spacecraft upgrades during the full orbital lifespan. Contracts have historically provided a fixed cost for software maintenance with upgrade options available for purchase. The expected replacement cycle for the current portfolio of space vehicles is approximately five to six years. Our full lifecycle solution and ongoing operational support distinguishes us from our competitors, positioning us to act as prime for the replacement and potential expansion of competitors’ aging constellations. As a result, we expect our recurring revenue to increase as the installed base of spacecraft in orbit grows, creating a highly visible revenue model, accelerating growth and increasing margins.

We have significant production capability and believe we will be able to meet demand to manufacture and test over 1,000 satellites annually, supporting our position as a leader in rapid, high volume spacecraft delivery. This investment in infrastructure and inventory is meant to create a durable competitive advantage, enabling us to capitalize on the rapidly growing space economy with the ability to reliably deliver spacecraft faster and more affordably than traditional primes.

Backlog

We view backlog as a key measure of our business growth. Backlog represents our estimate of the revenue we expect to realize in future periods as a result of performing work on contracts that have been awarded to us (net of any revenue already recognized as of the backlog date). We include the aggregate expected revenue of awarded contracts in our backlog upon the execution of a legally binding agreement, even though our contracts include certain termination rights exercisable by our customers with advance notice. We exclude unexercised contract options from our backlog. Contract liabilities recognized on our unaudited condensed consolidated balance sheets consists of payments and billings that we have received in excess of revenue that we have recognized. Because cash receipts from these contracts have not been recognized into revenue, they are included in our backlog calculation.

We monitor our backlog because we believe it is a forward-looking indicator of potential sales which can be helpful to investors in evaluating the performance of our business and identifying trends over time. Although backlog reflects business associated with contracts that are considered to be firm, terminations, amendments, or contract cancellations may occur, which could result in a reduction in our total backlog and potential future revenue that is never recognized.

The increase in backlog as of June 30, 2026 compared to December 31, 2025 was primarily due to the execution of a new commercial contract during the period partially offset by revenue recognized during the period. We expect to recognize over 55% of our backlog as of June 30, 2026 as revenue within the next 12 months, and the balance thereafter.

Recent Developments

Solestial Space Technology Acquisition

On May 15, 2026, we entered into the Solestial Merger Agreement. The transaction closed on June 4, 2026. Pursuant to the Solestial Merger Agreement, we acquired all of the issued and outstanding equity interests of Solestial, Inc. in exchange for consideration consisting of cash totaling $15.5 million and approximately 1.7 million shares of the Company's common stock. Pursuant to the Solestial Merger Agreement, the number of shares delivered to the sellers was calculated using an agreed upon price of $34.00 per share. Solestial is headquartered in Tempe, Arizona and is the only space solar provider with self-healing silicon technology proven on orbit, enabling performance while maintaining a path to high-volume manufacturing. Refer to Note 4 – Acquisitions of the accompanying notes to the unaudited condensed consolidated financial statements included in Item 1 of Part 1 in this Quarterly Report on Form 10-Q for additional information.

All.Space Holdings, Inc. Acquisition

On April 29, 2026, we entered into the All.Space Merger Agreement. The transaction closed on July 8, 2026. Pursuant to the All.Space Merger Agreement, the Company undertook a series of contributions, after which the Company

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acquired the outstanding equity interests of All.Space, and All.Space became an indirect wholly owned subsidiary of the Company. The Company acquired All.Space for $155 million in cash and approximately 5.9 million shares of the Company’s common stock, which at a price per share of common stock on the NYSE as of July 8, 2026, totaled consideration of approximately $300 million. Refer to Note 16 – Subsequent Events of the accompanying notes to the unaudited condensed consolidated financial statements included in Item 1 of Part I in this Quarterly Report on Form 10-Q for additional information.

Other

In July 2026, we successfully deployed 21 satellites of the second layer of the DoW Tranche 1 Transport Layer mission and confirmed healthy status of all 21 satellites in less than five hours after launch from a dedicated Falcon 9 rocket.

Trends and Key Factors Affecting Performance

Contract Award Outlook

Through 2026, and increasingly into the second quarter of 2026, we have seen the U.S. Government transition from a linear constellation deployment approach to one where Indefinite Delivery, Indefinite Quantity contracts ("IDIQs") are awarded as on-boarding opportunities for large operational systems. We had previously expected Congress to pass a new budget resolution which we anticipated to have funding for new contract awards in several key areas where we have competitive advantages. However, we believe it is more likely for Congress to pass smaller program specific funding bills as well as continuing resolutions in order to incrementally fund existing programs. As a result, we, as well as other space primes, have not been awarded the large contracts that we expected in 2026, and instead have been awarded several IDIQs.

We were awarded three IDIQ’s in the second quarter of 2026 and another in the third quarter and have been awarded two task orders against those IDIQs thus far. While these initial task orders are for less dollars than the contract awards we had expected to win earlier in the year, we believe these on-ramp t

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of our financial condition and results of operations as of, and for, the periods presented. You should read the following discussion and analysis of the Company’s financial condition and results of operations together with "Risk Factors" in Item 1A of Part I of this Annual Report on Form 10-K, the section entitled "Special Note Regarding Forward-Looking Statement" and our audited consolidated financial statements and related notes included in Item 8 of Part II of this Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements, including statements regarding our expectations for the future of our business and our liquidity and capital resources as well as other non-historical statements. These statements are based upon our current plans, expectations, and beliefs, and are subject to numerous risks and uncertainties, including but not limited to the risks and uncertainties described in “Risk Factors” in Item 1A of Part I of this Annual Report on Form 10-K and the section entitled “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by these forward-looking statements.

Business Overview

On January 28, 2026, the Registration Statement was declared effective and on January 29, 2026, our stock began trading on the NYSE under the ticker “YSS”. Refer to Note 1 – Description of Business and Basis of Presentation of the accompanying notes to the audited consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for additional information.

Our primary operating entity, York Space Systems is a leading, U.S.-based, space and defense prime providing a comprehensive suite of mission-critical solutions for national security, government and commercial customers. York is one of the only space and defense primes with proprietary hardware and software capabilities designed to address customers’ complex mission requirements across the critical elements of the entire space ecosystem throughout the mission lifecycle. York is a partner of choice for our customers, with differentiated performance versus traditional primes based on price, speed to deployment, and sophistication of capabilities. For contracts which we have been awarded, our price per satellite has been approximately half the price per satellite of our competitors. We have also been the first to deliver and launch satellites for multiple PWSA programs. York is the first and only company to demonstrate Link-16 connectivity from space, highlighting our unique and innovative capabilities.

York is purpose built to address evolving national security space challenges and to adapt to the ongoing shift in the U.S. government’s mission needs and procurement processes, where economics, agility, rapid capabilities, and heritage drive customer decision making. We deliver mission-critical solutions in a zero-tolerance for error environment where systems must work and we believe we are positioned to capture outsized growth in our core markets. York provides customers a vertically integrated, full technology stack of solutions including design, production, integration, and operation of spacecraft with turnkey offerings to manage spacecraft and constellations throughout their entire mission lifecycle. York has significant space heritage, having 74 missions with flight heritage, created 17 products with flight heritage, and logged over four million on-orbit hours. York’s position as a prime enables us to monetize the entire space vertical from launch to mission operations, from spacecraft to payloads, and from edge computing to data transfer.

York was founded in 2012 by our CEO, Dirk Wallinger, to create an innovative space technology mission prime, with a goal of meeting the evolving national security threats from space by providing mission-critical spacecraft at scale, faster, and at lower cost. We believe that York’s proven production and delivery capabilities place it among a very limited number of companies who have the capability to deliver the required solutions for the Golden Dome based on its current timeline. We provide our customers with the ability to quickly and effectively field responsive space-based technologies. We have a demonstrated ability to win contracts in space and are a trusted partner to U.S. national security, intelligence and defense agencies, such as the U.S. Air Force and the SDA, as well as commercial and civil customers. Our proprietary

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hardware, software and mission operations solutions are designed to address the United States’ national security priorities: missile defense (crucial to the Golden Dome), counter-space capabilities, and space domain awareness.

Increasing geopolitical tensions are driving near-peer adversaries to invest heavily in military space capabilities to gain advantage in orbit—the next domain in global conflict. In today’s threat environment, rapidly deployable satellites are critical to providing denied benefit in space, maintaining space superiority and countering these emerging threats. This paradigm shift in global warfighting is driving significant growth in defense spending, with the global satellite market projected to grow by approximately $320 billion to over $600 billion from 2023 to 2032 at approximately an 8% CAGR, up from approximately $280 billion in 2022 according to Allied Market Research. This growth is supported by the Golden Dome, the space intelligence community and the PWSA program. We have invested in our infrastructure and expanded our production capabilities with a goal of meeting this evolving threat with executed contracts comprised of 107 spacecrafts remaining to be delivered as of December 31, 2025.

We believe we distinguish ourselves from other space mission primes by offering a fully integrated portfolio of proprietary spacecraft, software and services. Our versatile spacecraft are built on a modular platform, allowing us to move quickly from design and development to deployment to meet our customers’ needs for their rapid response missions. In addition, we provide software throughout the space layer, including flight control and edge computing, and we recently added more than 45 ground antennas in connection with the ATLAS Acquisition. Our software is designed to enable autonomous, real-time decision making and constellation management to support mission execution. By coupling spacecraft production with mission operations and ground integration, we offer a turnkey solution designed to reduce technical and programmatic risk for both government and commercial customers.

Our capabilities include a differentiated suite of spacecraft solutions with proven, common technologies. We offer the S-CLASS, LX-CLASS, and M-CLASS spacecraft, which are high-quality, low-cost satellite platforms that are proven and scalable to a wide array of space market needs. Our spacecraft are supported by proprietary satellite software enabling versatile integration of a variety of payloads for customers and supply chain commonalities across platforms. The various spacecraft classes are designed and engineered to address a broad cross section of the spacecraft market while maximizing payload accommodation. The LX-CLASS is double the mass of the S-CLASS and leverages the S-CLASS design, sharing more than 90% of its technology with the S-CLASS, to offer a specialized platform with enhanced capabilities. Similarly, the M-CLASS utilizes the previous satellite platform designs, sharing approximately 75% of its hardware and 95% of its software with the S-CLASS and LX-CLASS, while greatly enhancing scale and power for spacecraft mass up to 2,000 kg and 8kW+ peak power consumption. Our proven suite of platforms provide solutions from 100 to 2,000 kgs and enables us to serve a large total addressable market. This vertically integrated, cost-effective, scalable model is designed to deliver highly effective end-to-end capability for our customers.

York’s spacecraft architecture framework results in significant commonality across platforms and software, allowing for scalable solutions at lower cost. York’s three different platforms share approximately 75% of the same hardware and 95% of the software leading to significant cost reductions throughout the value chain while maximizing product quality. This approach also reduces NRE cost associated with platform development while reducing failure risks inherent to a unique design. Key in-house hardware components include C&DH, flight computers, ACS, EPS and production testing. These components complement our spacecraft production while our software-enabled services underpin autonomous, resilient operations and support key defense technologies.

While the standardized spacecraft architecture framework provides scalable building blocks for rapid constellation deployment, York’s proprietary software supports key elements of operational success from mission planning to ongoing mission operations. Autonomous constellation planning and hands-off operations are essential for managing the increasing quantity of spacecraft deployed in orbit. Technologies include the M-MOC, a secure, autonomous, command structure that manages multiple York spacecraft, and Bastion, York’s mission-ready ground software solution, which allows operators to manage entire fleets from a single ground architecture across more than 45 antennas throughout the world. York hardware and software solutions are vertically integrated across the technology stack.

Our model allows us to capture recurring revenue driven by ongoing satellite-based software and services as well as hardware replacement cycles. Once spacecraft are fielded, York provides continuous operational support, downlink antenna usage, and proprietary software solutions, including on-spacecraft upgrades during the full orbital lifespan. Contracts have historically provided a fixed cost for software maintenance with upgrade options available for purchase. The expected replacement cycle for the current portfolio of space vehicles is approximately five to six years. York’s full lifecycle solution and ongoing operational support distinguishes York from its competitors, positioning us to act as prime for the replacement and potential expansion of competitors’ aging constellations. As a result, we expect our recurring revenue to

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increase as the installed base of spacecraft in orbit grows, creating a highly visible revenue model, accelerating growth and increasing margins.

We believe our integrated spacecraft solutions make us a preferred government provider. Our space technology has proven itself in military exercises, demonstrating seamless integration and autonomous hands-off operations. This elevates our ability to serve more demanding missions and customers across the full mission lifecycle. We leverage our proprietary software across spacecraft classes and support all relevant industry standard payload data interfaces on our vehicles. Competitors who design single-system software solutions, outsource their software solutions and spacecraft manufacturing, or do not have a diversity of spacecraft platform systems are at a competitive disadvantage with many roadblocks to rapidly deploying advanced systems. York maintains a strong and strategically vital partnership with the PWSA. The DoD’s SDA is responsible for rapidly developing and fielding next-generation space capabilities to enhance national security, while the PWSA is its flagship initiative to build resilient, proliferated LEO constellations supporting global warfighting needs as near-peer adversaries are increasing their anti-satellite, intelligence gathering, and signal jamming and spoofing operations from space. Our innovative, modular s

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