Vertical Aerospace .(US:EVTL)2023-03-21 16:00Production 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].