Financial Performance and Funding - The company has not yet manufactured any non-prototype aircraft or sold any eVTOL aircraft to customers, indicating a limited operating history in the eVTOL aircraft industry [91]. - The company has secured up to $50 million in committed funding from its founder, which is expected to support anticipated capital expenditures into Q2 2025 [102]. - The company has not generated any revenue from the design, development, or manufacturing of electric aircraft, relying solely on government grants and research and development tax relief [108]. - The company expects to seek additional equity or debt financing to support its capital expenditures, which may not be available on acceptable terms [103]. - The company filed a shelf registration statement allowing it to offer and sell securities with an aggregate offering price of up to $180 million, effective November 16, 2023 [105]. - The company has a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future [94]. - As of December 31, 2023, the company had £48.7 million in cash and cash equivalents, with an expectation to receive an additional $25 million in gross proceeds from the SF Investment in March 2024 [110]. - The company anticipates net cash outflows from operating activities to be approximately £70 million over the next 12 months, factoring in expected R&D tax receipts and grants of around £28 million [111]. - The SF Investment is projected to extend the company's cash runway into the second quarter of 2025, necessitating further capital raises to sustain operations [112]. Regulatory and Compliance Risks - The company faces significant risks related to its ability to remain compliant with NYSE listing standards, which could lead to delisting and negatively impact its share price [91]. - The company received a notice from the NYSE regarding non-compliance with listing standards due to an average share price below $1.00 over a 30-day period [118]. - If the company fails to regain compliance with NYSE standards, it may face delisting, which could adversely affect share price and liquidity [120]. - The company must obtain necessary regulatory approvals, including aircraft type certification from CAA, EASA, and FAA, which may impact production timelines [126]. - The company is subject to significant fines for breaches of the GDPR and U.K. GDPR, which can reach up to €20 million or 4% of total global annual turnover [247]. - The company is required to comply with evolving EU and U.K. privacy laws on cookies and e-marketing, which may lead to increased operational costs and liabilities [248]. - The company may need to modify its data collection practices to comply with state-level privacy laws like the California Consumer Privacy Act, increasing compliance costs and potential liabilities [249]. - The company is subject to anti-corruption and anti-bribery laws, which if violated, could result in significant civil and criminal penalties [240]. - The company is subject to sanctions laws that could prohibit sales to embargoed jurisdictions, resulting in significant fines and reputational damage if violated [243]. Operational Challenges - The company has not yet constructed a production facility for aircraft manufacturing, and plans for such facilities are still in process [125]. - The company faces significant challenges in mass-producing aircraft, including high capital requirements and regulatory complexities [124]. - The company is evaluating and negotiating contracts with suppliers for planned production, which may affect the timely availability of components [125]. - The company faces risks related to supply chain disruptions, as many components are sourced from single suppliers, which could lead to delays in production [139]. - The company is reliant on key suppliers for critical components, such as battery cells from Molicel and flight control systems from Honeywell, and any need to find alternative suppliers could increase costs and cause delays [140]. - The company anticipates that regulatory approvals for its aircraft may be delayed, which could adversely affect customer relationships and sales timelines [229]. - The company may face capacity limitations in air traffic due to existing zoning regulations and airspace constraints, affecting future operations [233]. Market and Competitive Landscape - The market for eVTOL aircraft is still in a relatively early stage, and the company's success depends on effective marketing and public perception of advanced air mobility [138]. - The company faces intense competition for skilled personnel in the eVTOL sector, which may hinder its ability to attract and retain qualified employees [158][160]. - The company may encounter stronger market resistance during international expansion, including regulatory and competitive challenges [183]. - The company anticipates substantial international revenue growth, but is exposed to currency exchange rate fluctuations that could adversely affect reported revenue and profitability [196]. Technology and Development Risks - The company anticipates that its aircraft will rely on sophisticated software and technology systems, which may pose development risks [179]. - The company must obtain regulatory certification for its eVTOL aircraft, which is subject to complex technologies and independent third-party operator adoption, with no current certifications from CAA, EASA, or FAA [130]. - The company expects to introduce new features and capabilities to its aircraft over time, but initial operations may be limited to visual flight rules until further testing and certification are completed [133]. - The company is working to ensure its aircraft comply with Instrument Flight Rules (IFRs), but there is no assurance of success in certification [225]. - The company relies on third-party partners for emerging technologies, which may not be commercially viable or meet production requirements [180]. Legal and Liability Risks - Legal proceedings and claims could increase costs and divert management's attention, potentially harming the company's reputation and financial condition [216]. - The company faces potential civil claims and class action litigation related to data breaches, which could result in substantial compensation liabilities [247]. - The company may face inquiries and claims regarding intellectual property infringement, which could divert resources and damage its reputation [250]. Internal Controls and Governance - Material weaknesses in internal control over financial reporting have been identified, which could lead to inaccurate financial results and potential regulatory issues if not effectively remediated [275][279]. - The company is required to maintain adequate internal controls over financial reporting as per the Sarbanes-Oxley Act, with management responsible for assessing their effectiveness annually [276][280]. - There is a risk that existing internal controls may become inadequate due to changes in business conditions or accounting principles, potentially impacting financial reporting accuracy [281][282]. - The growth and expansion of the company's operations may strain its financial and operational resources, affecting the ability to implement necessary improvements to systems and controls [283]. - Failure to maintain effective internal controls could adversely affect investor confidence and the market price of the company's securities [280]. Shareholder and Market Risks - The market price of the company's ordinary shares and warrants may fluctuate significantly, influenced by various factors including financial performance and market conditions [255]. - The company may experience volatility in its securities prices, which could lead to potential losses for investors [257]. - There is a risk that an active trading market for the company's ordinary shares and warrants may not develop or be sustained, affecting liquidity [258]. - The company does not intend to pay dividends in the foreseeable future, relying instead on price appreciation for returns on investment [261]. - The company may face significant dilution of current shareholders' equity if additional ordinary shares are issued below the last reported sale price, particularly if the issuance exceeds 2.5% of outstanding shares [194].

LONDON--(BUSINESS WIRE)--Vertical Aerospace (Vertical) [NYSE: EVTL], a global aerospace and technology company that is pioneering zero emissions aviation, entered into an investment agreement with its founder, majority shareholder and Chief Executive Officer, Stephen Fitzpatrick, in respect of a commitment by Mr. Fitzpatrick to provide up to $50 million of funding to the company in the form of an equity investment. This follows the January 21, 2024 previously announced legally binding termsheet agreement re ...

LONDON & NEW YORK--(BUSINESS WIRE)--Vertical Aerospace (Vertical) [NYSE: EVTL], a global aerospace and technology company that is pioneering zero emissions aviation, today announces it has been awarded £8 million ($10 million) in grant funding by the UK Government, through the Aerospace Technology Institute (ATI) Programme, to develop its next-generation propellers for use on its VX4 aircraft. The project is the third awarded to Vertical by the ATI Programme and brings total UK Government grant funding t ...

Production and Manufacturing Risks - The company has not yet manufactured any non-prototype aircraft or sold any eVTOL aircraft to customers, indicating a significant risk in achieving commercial production[89]. - The company is currently in the process of evaluating and negotiating contracts with suppliers for planned production aircraft, but may face delays in component procurement[94]. - The company has not constructed a high-volume production facility, and its manufacturing facility plans are still in the concept stage, which could impact production timelines[93]. - The company anticipates significant increases in expenses and continuing losses until it begins commercial manufacturing of its aircraft[100]. - The company faces challenges in obtaining necessary regulatory approvals, which could delay production and impact customer relationships[95]. - The company relies on key suppliers for components, and any disruptions in the supply chain could adversely affect production timelines and costs[103]. - The company expects to incur higher losses in future periods as it ramps up production and marketing efforts[101]. - The company faces risks related to regulatory certification, as no eVTOL aircraft are currently certified for commercial operations by relevant authorities[114]. Market and Competitive Landscape - The market for eVTOL aircraft is still in early stages, and the company's success depends on effective marketing and public perception of advanced air mobility[102]. - The competitive landscape is intensifying, with the risk that competitors may commercialize their technology before the company does[134][136]. - The company faces significant competition from larger corporations with greater resources, which may impact its ability to secure design wins and market share[137]. - The market for electric aircraft is new and untested, characterized by rapidly changing technologies and uncertain customer demands, which poses risks to the company's business prospects[142]. Financial Performance and Funding - The company has incurred net losses since inception and has not generated any revenue from the design, development, manufacturing, engineering, and sale or distribution of electric aircraft[167]. - As of December 31, 2022, the company had £122.8 million in cash and cash equivalents, including short-term deposits[167]. - The company expects funding requirements of approximately £90 million over the next 12 months to support prototype aircraft creation, certification processes, and personnel investments[168]. - The company entered into a Purchase Agreement with Nomura to purchase up to $100 million in ordinary shares, having sold approximately 1.1 million shares at a weighted average price of $7.70, netting about $8.5 million[176]. - The company issued $200 million principal amount of Convertible Senior Secured Notes, convertible at a rate of 90.9091 ordinary shares per $1,000 principal amount, bearing interest at 7.00% per annum[180]. - The company faces significant uncertainty regarding its ability to continue as a going concern, which may adversely affect its share price and ability to obtain financing[167][171]. - The company may need to raise additional capital through equity offerings, which could significantly dilute existing shareholders[170]. Regulatory and Compliance Challenges - The company must develop complex software and technology systems in coordination with partners, and any failure in this area could harm its competitive position[150]. - Regulatory approvals are necessary for the production and sale of aircraft, and failure to obtain these could adversely impact customer relationships and reputation[222]. - Changes in government regulations could impose additional requirements, increasing compliance costs and causing delays in operations[228]. - The company is subject to stringent export and import control laws, which could materially adversely affect its business and financial condition if compliance is not maintained[230]. - The company is subject to various anti-corruption and anti-bribery laws, which if violated, could result in significant fines, penalties, and reputational harm[232]. Operational and Strategic Risks - The company may experience challenges in maintaining confidence among customers and partners, which could affect sales and business relationships[131]. - The aircraft's utilization may be lower than expected due to environmental conditions, impacting financial performance[132]. - There is a shortage of qualified pilots and mechanics, which could hinder the company's ability to sell aircraft at scale and meet growth timelines[140]. - The ongoing COVID-19 pandemic has disrupted manufacturing and supply chains, leading to a global decrease in aircraft sales and potential delays in the company's production schedules[148]. - The ongoing conflict in Ukraine may disrupt design, development, and supply chains, potentially increasing costs and impacting commercialization timelines[209]. Data Privacy and Security Risks - The company may incur significant liabilities and reputational harm if it experiences a security breach, including unauthorized access to customer data[192]. - The company relies on standard contractual clauses for transferring personal data outside the EEA and U.K., which is currently complex and uncertain due to evolving data protection regulations[187]. - The company expects to face additional costs and operational changes due to evolving EU and U.K. privacy laws on cookies and e-marketing, which require informed consent for data collection[189]. - The company engages third-party service providers for data processing, which may expose it to additional risks of cyberattacks and unauthorized access to sensitive information[195]. Internal Control and Governance - The company has identified material weaknesses in its internal control over financial reporting, which may affect the accuracy of financial results[262]. - The company anticipates investing significant resources to enhance and maintain its financial controls and reporting systems[265]. - The company may not be able to maintain an effective internal control environment, which could impair its ability to report financial results accurately[266]. - The company is classified as a "controlled company," allowing it to rely on exemptions from certain NYSE corporate governance standards[259]. Shareholder and Market Considerations - The company does not intend to pay any cash dividends in the foreseeable future, relying on price appreciation for returns on investment[250]. - The company expects to issue additional share capital in the future, which will result in dilution for existing shareholders[249]. - The market price of the company's securities may be volatile, influenced by fluctuations in financial performance and broader market conditions[243]. - The company may be subject to securities class action litigation due to market price volatility, which could divert management's attention and incur substantial expenses[246].

Aircraft Development and Market Potential - The company aims to complete certification of its VX4 eVTOL aircraft and commence manufacturing in 2025, with first deliveries expected in that year [461]. - The VX4 aircraft is designed to transport a pilot and up to four passengers over distances exceeding 100 miles at speeds over 200 mph, producing zero operating emissions [448]. - The urban air mobility market is projected to grow to a total addressable market size of $1 trillion by 2040, indicating significant growth potential for the company [464]. - The company is actively pursuing certification from the CAA and EASA, which is expected to occur concurrently, facilitating global sales efforts [449]. - The company plans to develop a sophisticated eVTOL ecosystem, focusing on high-quality user experiences and system integration [450]. - The company is targeting a sales pipeline from over 5,000 airlines worldwide, leveraging partnerships to expand its market presence [462]. Financial Performance and Projections - The company expects to incur a net increase in cash of approximately $286 million as a result of its Business Combination with Broadstone [459]. - Revenue increased by £45 thousand, or 52%, from £87 thousand in 2020 to £132 thousand in 2021, primarily due to increased activity by VAEL [483]. - The company incurred a net loss of £245,224 thousand in 2021, compared to a net loss of £12,326 thousand in 2020, reflecting a 1,889% increase in losses [501]. - Total finance costs amounted to £32,015 thousand in 2021, a significant increase from a net finance income of £807 thousand in 2020, indicating a 4,067% change [481]. - The company expects to require approximately $450 million from the Business Combination to achieve profitability by 2025, with $130 million needed within the next 12 months for prototype aircraft development and certification [502][503]. Expenses and Cash Flow - Research and development expenses rose by £14,320 thousand, or 144%, from £9,971 thousand in 2020 to £24,291 thousand in 2021, driven by increased research and testing activities related to aircraft [487]. - Administrative expenses surged by £260,500 thousand, or 6,928%, from £3,760 thousand in 2020 to £264,260 thousand in 2021, largely due to share-based payment expenses related to the Business Combination [488]. - Other operating income increased by £9,035 thousand, or 390%, from £2,317 thousand in 2020 to £11,352 thousand in 2021, with government grants contributing £8,829 thousand and R&D tax credits totaling £2,388 thousand [490]. - Net cash used in operating activities increased by £15,538 thousand, or 130%, from £12,012 thousand in 2020 to £27,550 thousand in 2021, primarily due to increased R&D spending [517]. - Net cash used in investing activities rose by £2,666 thousand, or 387%, from £688 thousand in 2020 to £3,354 thousand in 2021, mainly due to the acquisition of intangible assets [518]. - Net cash from financing activities surged by £232,203 thousand, or 1,856%, from £12,510 thousand in 2020 to £244,713 thousand in 2021, driven by proceeds from the Business Combination and PIPE Financing [519]. Capital Requirements and Funding - Future capital requirements will depend on factors such as R&D expenses, capital expenditures for manufacturing, and general administrative expenses as operations scale [504]. - The company had cash and cash equivalents of £212,660 thousand as of December 31, 2021, indicating a need for ongoing funding to cover operating expenses and planned capital expenditures [501]. - The company issued Convertible Senior Secured Notes with an aggregate principal amount of $200,000,000, sold for a purchase price of $192,000,000, and issued 4,000,000 warrants at $11.50 per share [510]. - The Convertible Senior Secured Notes are convertible into up to 18,181,820 ordinary shares at an initial conversion rate of 90.9091 shares per $1,000 principal amount [511]. - The Convertible Senior Secured Notes bear interest at 7.00% per annum if paid in cash or 9.00% if paid in-kind, with an additional 2.00% added during an event of default [513]. Internal Controls and Compliance - The company identified material weaknesses in internal control over financial reporting due to insufficient trained professionals, affecting the design and maintenance of controls [748]. - Remediation activities include hiring additional accounting staff and utilizing external specialists for complex accounting matters [750]. - The company is in the process of implementing an enterprise resource planning system to enhance internal controls over financial reporting [751]. Impact of External Factors - The company is monitoring the impact of the COVID-19 pandemic and the war in Ukraine on its operations, supply chain, and costs [454][458].