Iridium Communications (IRDM) Risk Analysis

To achieve future revenue growth, we must develop and market new products and services. We currently face a variety of challenges, including maintaining the infrastructure and systems necessary for us to manage the growth of our business. As our product and service portfolio continues to expand, the responsibilities of our management team and demands on other company resources also increase. Consequently, we may further strain our management and other company resources with the increased complexities and administrative burdens associated with a larger, more complex portfolio of products and services. For example, we have in the past experienced quality issues and incorrect market assessments in connection with the introduction of new products and services, and we may experience such issues in the future. Our failure to meet these challenges as a result of insufficient management or other resources could significantly impede our ability to execute our business plan, which relies in part on our ability to leverage our largely fixed-cost infrastructure. To properly manage our growth, we may need to hire and retain additional personnel, upgrade our existing operational management and financial and reporting systems, and improve our business processes and controls. Failure to effectively manage the expansion of our portfolio of products and services in a cost-effective manner could result in declines in product and service quality and customer satisfaction, disruption of our operations, or increased costs, any of which would reduce our ability to increase our profitability.

We expect the secure transmission of confidential information over public networks to continue to be a critical element of our ability to compete for business, manage our risks, and protect our customers and our reputation. We and our distributors, partners, vendors and customers face numerous and evolving cybersecurity threats to the confidentiality, integrity and availability of our respective information technology systems, including threats from computer hackers and sophisticated nation-state or nation-state supported actors, as well as incidents attributable to employee error or wrongful conduct, malfeasance, the exploitation of misconfigurations, "bugs" and other vulnerabilities in hardware or software, or other disruptions caused by sophisticated social engineering and malware exploits (e.g., ransomware). Unauthorized access or use of information on our network, or the networks of our distributors, partners, vendors and customers, could result in material service interruptions, delays or malfunctions in our devices, services or operations, any of which could materially harm our reputation, cause demand for our products and services to fall, and compromise our ability to pursue our business plans. In addition, there are reportedly private products available today that may attempt to unlawfully intercept communications made using our network. Protecting against and responding to cybersecurity threats and attacks requires significant resources and compliance with applicable data breach and government contracting laws and regulations. Cyberattacks may also cause reputational harm and result in costly litigation. In addition, in the event of such a security incident, our customer contracts may not adequately protect us against liability to third parties with whom our customers conduct business. Threats to our physical sites or damage to physical infrastructure we rely on could also impact our operations. A successful security incident affecting us, our systems, devices or services could have a material adverse effect on our operations or financial results or reputation and result in substantial liability.

Litigation is very common in connection with the sale of public companies, regardless of whether the claims have any merit. One of the conditions to consummating the Merger is that no order preventing the consummation of the Merger shall have been issued by any court. Consequently, if any such lawsuit challenging the Merger is successful in obtaining an order preventing the consummation of the Merger, that order may delay or prevent the Merger from being completed. While we will evaluate and defend against any lawsuits, the time and costs of defending against litigation relating to the Merger may adversely affect our business.

We have significant operations outside the United States. We estimate that commercial data traffic originating outside the United States accounted for 96% and 94% of total commercial data traffic for the years ended December 31, 2025 and 2024, respectively, while commercial voice traffic originating outside the United States accounted for 92% and 91% of total commercial voice traffic for the years ended December 31, 2025 and 2024, respectively. We cannot provide the precise geographical distribution of revenue from end users because we do not contract directly with them. Instead, we determine the country in which we earn our revenue based on where we invoice our distributors. These distributors sell services directly or indirectly to end users, who may be located or use our products and services elsewhere. We and our distributors are also seeking authorization to sell our services in additional countries. Conducting operations outside the United States involves numerous risks and, while expanding our international operations would advance our growth, it would also increase our exposure to these risks. Risks associated with the potential expansion of our international operations include: - difficulties in penetrating new markets due to established and entrenched competitors;- difficulties in developing products and services that are tailored to the needs of local customers;- lack of local acceptance or knowledge of our products and services;- lack of recognition of our products and services;- unavailability of, or difficulties in establishing, relationships with distributors;- significant investments, including the development and deployment of dedicated gateways, as some countries require physical gateways within their jurisdiction to connect the traffic coming to and from their territory;- instability of international economies and governments;- effects of a global pandemic, including on international economies, supply chains and travel;- changes in laws and policies affecting trade and investment in other jurisdictions, including tariffs;- exposure to varying legal standards, including data privacy, security and intellectual property protection in other jurisdictions;- difficulties in obtaining required regulatory authorizations;- difficulties in enforcing legal rights in other jurisdictions;- local domestic ownership requirements;- requirements that operational activities be performed in-country;- changing and conflicting national and local regulatory requirements;- foreign currency exchange rates and exchange controls; and - ongoing compliance with the U.S. Foreign Corrupt Practices Act, U.S. export controls, anti-money laundering and trade sanction laws, and similar international anti-corruption and trade laws in other countries. If any of these risks were to materialize, it could affect our ability to successfully compete and expand internationally. Government organizations, foreign military and intelligence agencies, natural disaster aid associations, and event-driven response agencies use our commercial voice and data satellite communications services. Accordingly, we may experience fluctuations in usage due to changing global circumstances, including, for example a reduction in commercial voice and data subscribers in 2025 that we believe was caused, in part, by reductions in U.S. government funding. The prices for our products and services are typically denominated in U.S. dollars. Any appreciation of the U.S. dollar against other currencies will increase the cost of our products and services to our international customers and, as a result, may reduce the competitiveness of our international offerings and make it more difficult for us to grow internationally.

We depend on the continued service and institutional knowledge of key managerial and technical personnel and personnel with security clearances, as well as our ability to continue to attract and retain highly qualified personnel. We compete for such personnel with other companies, government entities, academic institutions and other organizations. The unexpected loss or interruption of the services of such personnel could compromise our ability to effectively manage our operations, execute our business plan and meet our strategic objectives.

We currently rely on a limited number of manufacturers of our devices, including our mobile handsets, L-band transceivers and SBD devices. We also utilize sole source suppliers for some of the component parts of our devices. If any of our suppliers terminate their relationship with us, we may not be able to find a replacement supplier in a timely manner, at an acceptable price or at all. Further, our manufacturers and suppliers may cease production of our components or products or become capacity-constrained, or could face financial difficulties, which could adversely impact our ability to fulfill customer orders, increase our costs and reduce revenues. U.S. trade policy changes in 2025 increased our costs and caused us to evaluate alternative sourcing arrangements. Future changes to trade policy by the U.S. or foreign governments, including tariff and customs regulations, could increase our costs, cause delays or cause us to further evaluate alternative sourcing, all of which could adversely impact our operations. Even if we are able to replace or supplement sole source or other component suppliers, there could be a substantial period of time in which our products would not be available; any new relationship may involve higher costs and delays in development and delivery, and we may encounter technical challenges in successfully replicating the manufacturing processes. If our manufacturers or suppliers terminate their relationships with us, fail to provide equipment or services to us on a timely basis, or fail to meet our performance expectations, we may be unable to provide products or services to our customers in a competitive manner, which could in turn negatively affect our financial results and our reputation.

Under our agreements with Motorola Solutions and the U.S. government, we are required to maintain an in-orbit liability insurance policy with de-orbiting coverage for Block 1 satellites. The current policy, together with the de-orbiting endorsement, covers amounts that we and other specified parties may become liable to pay for bodily injury and property damages to third parties related to processing, maintaining, and de-orbiting our first-generation satellites. Our current policy has a one-year term, which expires on December 8, 2026, and excludes coverage for all third-party damages relating to the 2009 collision of our satellite with a non-operational Russian satellite. Our current in-orbit liability insurance policy also contains, and we expect and future policies would likewise contain, specified exclusions and material change limitations that are customary in the industry. The price, terms and availability of insurance have fluctuated significantly since we began offering commercial satellite services. The cost of obtaining insurance can vary as a result of either satellite failures or general conditions in the insurance industry. Higher premiums on insurance policies would increase our cost. In-orbit liability insurance policies on satellites may not continue to be available on commercially reasonable terms or at all. In addition to higher premiums, insurance policies may provide for higher deductibles, shorter coverage periods and additional policy exclusions. In addition to our in-orbit liability insurance policy, we are required to maintain insurance to cover the potential liability of Motorola Solutions, the successor to the manufacturer of our first-generation satellites. We may not in the future be able to renew this coverage on reasonable terms and conditions, or at all. Our failure to maintain this insurance could increase our exposure to liability arising in relation to our first-generation satellites.

We face intense competition in all of our markets, which could result in a loss of customers and lower revenue and make it more difficult for us to enter new markets. We compete primarily on the basis of coverage, quality, portability, and pricing of services and products. Our competitors may have more extensive capital resources, or more specialized engineering, technical, marketing and servicing capabilities than we do in certain areas. Current and new competitors may develop new technologies, or new equipment, including new and proposed LEO constellations and satellite direct-to-device (D2D) services, that could successfully compete with our offerings. For example, in September 2025, SpaceX signed an agreement to acquire certain rights and licenses to an aggregate of 50MHz of S-band spectrum, and announced plans to develop a global satellite D2D service using the acquired spectrum. Although development of such a D2D service using the acquired spectrum faces regulatory, technical and business hurdles, if successfully deployed, it could significantly increase competition to portions of our business. In addition, we may face competition for our services in the United States from service providers with ancillary terrestrial component (ATC) authorities who are designing a satellite operating business and a terrestrial component around their spectrum holdings. Competition may adversely affect our results of operations and long-term prospects, including negatively affecting subscribers, product and service revenue, operating margin and potentially resulting in increased operating and capital expenditures, impairments and changes in capital allocation decisions. In addition to our satellite-based competitors, terrestrial voice and data service providers, both wireline and wireless, could further expand into rural and remote areas and provide the same general types of services and products that we provide through our satellite-based system. Although satellite communications services and terrestrial communications services are not entirely interchangeable, the two compete in some markets and for some services. Consumers generally perceive terrestrial wireless voice communication products and services as cheaper and more convenient than those that are satellite-based. Many of our terrestrial competitors have greater resources, wider name recognition and newer technologies than we do. In addition, industry consolidation could negatively affect our competitive position us by increasing the scale or scope of our competitors, thereby making it more difficult for us to compete in various market segments.