Vertical Aerospace .(EVTL)2024-03-13 16:00Financial 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 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].