20-F: Vertical Aerospace Faces Going Concern Doubt Amid Funding Needs

Vertical Aerospace Ltd. reported a net profit of £232.9 million for 2025, primarily driven by fair value gains on financial liabilities, while continuing to face significant capital requirements and going concern uncertainties for its eVTOL aircraft development.

Summary

• Reported a net profit of £232.9 million for the year ended December 31, 2025, a significant improvement from a £781.2 million loss in 2024, primarily due to fair value gains on financial liabilities.
• Operating loss increased by 108% to £127.4 million in 2025 from £61.1 million in 2024.
• Research and development (R&D) expenses increased by 20% to £71.9 million in 2025, driven by increased staff costs and consultancy.
• Administrative expenses rose by 23% to £53.3 million, mainly due to increased marketing, staff, IT, and HR advisory costs.
• Net finance income was £330.0 million in 2025, a substantial shift from a £720.0 million net finance cost in 2024, primarily due to fair value gains on Convertible Senior Secured Notes.
• An income tax credit of £30.3 million was recognized in 2025, compared to a £45 thousand charge in 2024, due to R&D tax relief under the ERIS scheme and adjustments for prior years.
• Cash and cash equivalents stood at £69.1 million as of December 31, 2025, but decreased to approximately £43 million by March 24, 2026.
• Projected net cash outflows from operations for the next 12 months are approximately £145 million, indicating existing resources will fund operations only until mid-2026.
• The company projects a breach of a $10 million minimum cash balance covenant under the Convertible Senior Secured Notes Indenture by mid-2026 without additional capital, which would trigger an event of default and debt acceleration.
• Successfully completed piloted thrustborne and wingborne flight test phases (Phase 2 and 3) for its second full-scale prototype in 2025 and commenced Phase 4 (piloted transition flight) testing in November 2025.
• Completed assembly of a third full-scale prototype, identical to the second, to accelerate flight testing.
• Unveiled 'Valo' as the successor to the VX4 prototype, targeting a pilot and up to six passengers, 100-mile range, and 150 mph cruise speed.
• Announced new long-term agreements with Evolito for Electric Propulsion Units (EPUs) and Syensqo for composite and adhesive materials.
• Mudrick Capital became the ultimate controlling party as of December 23, 2024, holding approximately 55% of voting power as of February 27, 2026, following the conversion of half of the Convertible Senior Secured Notes into 47,343,585 ordinary shares.
• Raised $90 million gross proceeds from the January 2025 Offering and $69 million gross proceeds from the July 2025 Offering.
• Sold approximately 3 million ordinary shares under the At-the-Market (ATM) program for $17.1 million net proceeds as of December 31, 2025, and $21.3 million net as of March 24, 2026.
• Named as a defendant in a patent infringement lawsuit by Archer Aviation Inc. on February 23, 2026.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a challenging period for Vertical Aerospace, marked by significant financial uncertainty and a projected breach of debt covenants, despite notable progress in flight testing and strategic partnerships. The reliance on future capital raises and the 'going concern' warning temper the positive operational developments.

Positives

• Achieved a net profit of £232.9 million in 2025, a significant turnaround from the previous year's substantial loss, primarily driven by fair value gains on financial liabilities.
• Successfully completed piloted thrustborne and wingborne flight test phases (Phase 2 and 3) for the second full-scale prototype, demonstrating stability, control, and design validation.
• Commenced Phase 4 (piloted transition flight) testing in November 2025, a critical step towards commercial passenger service.
• Completed assembly of a third identical full-scale prototype to significantly accelerate the flight test program and demonstration capability.
• Unveiled 'Valo' with an advanced design, targeting a pilot and up to six passengers, 100-mile range, 150 mph cruise speed, minimal noise, and zero operating emissions.
• Secured long-term supplier partnerships with Evolito for Electric Propulsion Units (EPUs) and Syensqo for composite and adhesive materials, leveraging industry leaders for critical components.
• Maintained Design Organisation Approval (DOA) from the CAA after the first 24-month audit, with an expanded scope, streamlining the certification process.
• Maintained a strong pre-order book of approximately 1,500 aircraft from major customers including American Airlines, Avolon, Bristow, Marubeni, Kakao Mobility, Iberojet, FLYINGGROUP, JetSetGo, and Héli Air Monaco.
• Received a pre-delivery payment from Marubeni for 25 aircraft and a commitment for a pre-delivery payment from American Airlines for 50 aircraft.
• Successfully raised capital through the January 2025 Offering ($90 million gross) and July 2025 Offering ($69 million gross).
• Established an At-the-Market (ATM) equity offering program for up to $100 million, with $21.3 million already raised net of commissions as of March 24, 2026.
• Benefits from UK government R&D tax reliefs, including the Enhanced R&D Intensive Support (ERIS) scheme, contributing a £30.3 million income tax credit in 2025.
• Strategic partnerships with industry leaders like Honeywell (flight controls), Aciturri (airframe), Dassault (digital systems), Molicel (battery cells), and CAE (flight simulation and pilot training) enhance development and manufacturing capabilities.
• Developing a complementary hybrid-electric aircraft variant to extend payload and range for defense, logistics, and air ambulance services, opening new market opportunities.
• Strengthened management team and Board of Directors with deep aerospace, automotive, and regulatory expertise, including Dmhnal Slattery as Chairman and Patrick Ky, former EASA Executive Director, as a Board member.

Negatives

• Incurred a significant operating loss of £127.4 million in 2025, indicating high ongoing operational costs without revenue generation.
• Has a limited cash position of approximately £43 million as of March 24, 2026, with existing resources projected to fund operations only until mid-2026.
• Faces a material uncertainty regarding its ability to continue as a going concern due to recurring losses, net cash outflows, and dependency on raising additional capital.
• Projects a breach of the $10 million minimum cash balance covenant under the Convertible Senior Secured Notes Indenture by mid-2026 without additional capital, which could lead to an event of default and debt acceleration.
• All pre-orders for aircraft are conditional, non-legally binding, and terminable without penalty, posing a significant risk to future revenue streams.
• Identified material weaknesses in internal control over financial reporting due to insufficient trained professionals and lack of formal accounting policies, which could affect accurate financial reporting and fraud prevention.
• Named as a defendant in a patent infringement lawsuit by Archer Aviation Inc. on February 23, 2026, which could incur significant costs and divert management attention.
• Existing shareholders have experienced and will continue to experience dilution from equity issuances, including the conversion of Convertible Senior Secured Notes and sales through the ATM program.
• The exercise price of most outstanding warrants is significantly above recent share price trends, making their exercise unlikely and limiting potential capital inflow from them.
• The option granted to Stephen Fitzpatrick to invest up to $25 million in ordinary shares was not exercised during the 12-month period following the January 2025 Offering, indicating a missed capital inflow opportunity.
• Exposure to fluctuations in currency exchange rates could adversely affect cash flows and results of operations.
• High reliance on government grants and R&D tax relief, which are subject to potential changes or reductions in the future.
• Risk of unforeseen faults, defects, or performance issues in aircraft, such as higher noise, lower payload/range, or shorter battery life, which could harm reputation and delay certification.
• Dependence on single-source suppliers for critical components creates supply chain risks, including potential delays or increased costs.
• The market for eVTOL and hybrid-electric aircraft is still in early stages, with uncertain public acceptance and evolving regulatory frameworks.

Risks

• Limited operating history and no non-prototype aircraft manufactured or sold, with no assurance of successful commercial production.
• Requires a significant amount of additional capital beyond current cash and cash equivalents, which may not be available in a timely manner or on acceptable terms, or at all.
• Limited cash and cash equivalents, recurring losses from operations, and dependency on raising additional capital indicate a material uncertainty regarding the ability to continue as a going concern.
• eVTOL aircraft may not be certified by transportation authorities (CAA, EASA, FAA) in a timely manner, or at all, adversely affecting prospects and operations.
• May not be able to produce or launch aircraft in the volumes or timelines projected due to significant manufacturing challenges and capital requirements.
• Aircraft may not perform at expected levels (e.g., noise profile, payload, capacity, range, useful life, charging times) or may have defects, leading to reputational harm and increased costs.
• Dependence on partners and suppliers for components and operational needs, with risks of delays, interruptions, disagreements, or inability to scale.
• Dependence on recruiting and retaining senior management and other highly skilled personnel in a competitive market.
• As a pre-revenue, early-stage company with a history of losses, expects to incur significant expenses and continuing losses for the foreseeable future.
• Markets for offerings are in relatively early stages of growth, and slower or no growth could harm business, financial condition, and results of operations.
• Accidents or incidents involving eVTOL or hybrid-electric aircraft (ours or competitors) could have a material adverse effect on business, financial condition, and results of operations.
• All pre-orders are conditional, non-legally binding, and may be terminated without penalty, materially affecting business, results of operations, liquidity, and cash flow if cancelled or delayed.
• Development of a hybrid-electric vertical take-off and landing variant of Valo is subject to significant technological, regulatory, and operational challenges, including securing customer-funded contracts.
• Convertible Senior Secured Notes may impact financial results, result in dilution of shareholders, create downward pressure on share price, and restrict ability to raise additional capital.
• May need to initiate or defend against intellectual property infringement or misappropriation claims, which may be time-consuming and expensive.
• Inability to protect proprietary information and intellectual property rights or prevent unauthorized use by third parties.
• Failure to protect Confidential Information or experience a security incident could harm reputation, reduce demand for services, and incur significant liabilities.
• Any material disruption in IT Systems could adversely affect business operations.
• May be unable to secure adequate insurance policies, or secure them at reasonable prices, for eVTOL technology risks.
• Changes in tax rates, unavailability of certain tax credits or reliefs, or exposure to additional tax liabilities could affect profitability.
• May incur tax liabilities in relation to incentive awards held by employees.
• Business may be adversely affected by union activities, leading to higher employee costs or work stoppages.
• Subject to many hazards and operational risks that can disrupt business, including interruptions or disruptions in service at facilities.
• Legal proceedings, investigations, or claims (e.g., patent infringement lawsuit by Archer Aviation Inc.) could be costly and time-consuming.
• Business could be impacted by ongoing geopolitical conflicts, affecting design, development, certification, and commercialization timelines and costs.
• Evolving and varied views on environmental sustainability and social initiatives could increase costs, harm reputation, and adversely impact financial results.
• International nature of business subjects the company to additional risks, including currency fluctuations, trade restrictions, and political volatility.
• Subject to laws and regulations worldwide, many of which are unsettled and still developing, increasing costs or adversely affecting business.
• Aircraft might not comply with all requirements to operate according to Instrument Flight Rules (IFR), limiting flight conditions and sales.
• May be unable to obtain the relevant regulatory approvals needed to produce and sell the aircraft on expected timelines, or at all.
• Prospective operators of aircraft may not be able to obtain the relevant regulatory approvals to operate the aircraft.
• Regulatory and planning authorities may introduce regulatory, procedural, or policy changes that detrimentally impact deployment and commercialization.
• If current airspace and zoning regulations are not modified to increase air traffic capacity, business could be subject to considerable capacity limitations.
• Changes in government regulations imposing additional requirements and restrictions on manufacturing and other operations could increase costs and result in delays.
• Business is subject to export and import control laws and national security laws; non-compliance could have a material adverse effect.
• Subject to anti-corruption, anti-bribery, anti-money laundering, economic and trade sanctions laws; non-compliance can subject the company to criminal or civil liability.
• Subject to federal, state, and foreign laws and regulations concerning collection, processing, storage, sharing, disclosure, and use of Personal Information; non-compliance could result in significant liability.
• The price of securities may be volatile, and the value may decline.
• Issuance of additional share capital will dilute all other shareholders; certain shareholders benefit from contractual rights to participate in future equity financings, resulting in greater dilution for others.
• As an emerging growth company, reduced reporting and disclosure requirements may make securities less attractive to investors.
• As a foreign private issuer, not subject to U.S. proxy rules and has more lenient and less frequent Exchange Act reporting obligations.
• Previously identified material weaknesses in internal control over financial reporting; remediation may not be effective, or failure to maintain effective controls could affect financial reporting accuracy.
• Controlled by its ultimate controlling party (Mudrick Capital), whose interests may conflict with other shareholders.
• No intention to pay dividends for the foreseeable future, relying on share price appreciation for investment return.
• Public Warrant Agreement and Convertible Notes Warrant Agreement designate specific courts as the sole and exclusive forum for certain actions, potentially limiting warrant holders' ability to obtain a favorable judicial forum.
• As a holding company, depends on its subsidiaries for cash to fund operations and expenses.
• May be characterized as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, causing adverse U.S. federal income tax consequences to U.S. investors.

Future Outlook

The company targets Valo certification in 2028 and expects to incur significant expenses and continuing losses until commercial manufacturing begins. It plans to expand operations significantly, including hiring and training new staff, expanding management, forecasting production and revenue, controlling expenses, establishing/expanding facilities, and enhancing administrative infrastructure. Funding for these plans is expected to come from future financing opportunities, including public offerings, private placements, and the ATM program. The company anticipates two new manufacturing facilities (expanded Flight Test Centre and battery facility) will come online in 2026 and foresees continued investment in infrastructure, workforce, and R&D. It will continue to work with regulators for certification and validation, explore Valo variants for emergency services, cargo, and military logistics, and develop pilot training services and battery management solutions for aftermarket revenue.

Management Comments

• "Our vision is to transform how the world moves."
• "Safety is our highest priority."
• "We are working to meet the most stringent aircraft certifications around the world, and our aircraft is being designed with certification in mind from the beginning."
• "We believe that our management team is crucial to our success, including our ability to create proprietary systems and work closely with our strategic partners to bring what we believe will be an industry-leading eVTOL aircraft to market."
• "We believe that our aircraft will offer compelling operating costs across a range of potential missions."
• "We believe our expected low operating costs will enable operators to offer prices at a reduction to existing helicopter ridesharing services, ensuring affordability for passengers and enabling mass adoption."
• "We believe our low production costs and ability to rapidly scale production to meet customer demands will also help to drive our future OEM sales."
• "We believe that with its regulatory advancement and technological advantages, Japan has great potential in terms of commercializing the AAM market."
• "We believe that partnering with Bristow will enable us to accelerate the commercial operation of eVTOLs and effectively disrupt the helicopter market with our zero operating emissions, quiet, low operating cost Valo as an alternative to traditional helicopters."

Industry Context

StockSavvy.ai notes that Vertical Aerospace operates in the nascent and rapidly evolving Advanced Air Mobility (AAM) market, which is projected to grow significantly, with the urban air mobility market alone estimated at $1 trillion by 2040. The company's strategy of targeting existing helicopter and ride-hailing markets, alongside developing a hybrid-electric variant for defense and logistics, positions it to capture diverse segments within this emerging industry. The emphasis on achieving airliner-level safety certification with CAA and EASA, and leveraging strategic partnerships with established aerospace players like Honeywell and Aciturri, reflects a common industry approach to de-risk development and accelerate market entry in a highly regulated environment. However, the industry faces challenges in public acceptance, infrastructure development, and intense competition from other eVTOL developers.

Comparison to Industry Standards

• Valo is being designed to target safety standards 'the same as those to which large commercial airliners are subject,' which are 'multitudes times safer than those applicable to small single engine helicopters.'
• Valo's expected noise profile of 'less than 70dBA in hover, the same as low-level city traffic, and less than 50dBA in cruise, which is likely to be unnoticeable in an urban environment,' aims to surpass typical helicopter noise levels.
• The company's strategy of partnering with industry leaders like Honeywell (flight controls), Aciturri (airframe), Evolito (EPUs), and CAE (pilot training) aligns with a de-risked approach seen in other emerging aerospace companies, contrasting with some competitors who pursue more vertically integrated manufacturing or automotive-centric partnerships.
• The target of 200Wh/kg battery performance is a key metric for eVTOLs, aiming for high power density and enabling back-to-back missions with fast charging, which is competitive within the developing eVTOL battery technology landscape.
• The company's pre-order book of approximately 1,500 aircraft, including commitments from major airlines and lessors (American Airlines, Avolon), is substantial compared to many early-stage eVTOL competitors, indicating strong market interest.

Management Changes

Corporate Governance

Legal Proceedings

• On February 23, 2026, named as defendants in a patent infringement lawsuit filed by Archer Aviation Inc. in the U.S. District Court for the Eastern District of Texas, alleging infringement of Archer Aviation Inc.'s design and utility patents under the U.S. Patent Act. The company believes the asserted claims are without merit and intends to defend the allegations vigorously. The outcome and any potential financial effect cannot be determined with sufficient reliability at this preliminary stage.

Related Party Transactions

• Mudrick Capital purchased $200 million principal amount of Convertible Senior Secured Notes for $192 million in December 2021 and was issued 4 million Convertible Notes Warrants.
• On December 15, 2024, a Forbearance Agreement was entered into with Mudrick Capital, Stephen Fitzpatrick, and Imagination Aero, where Mudrick Capital agreed to forbear from exercising rights upon certain defaults.
• On December 23, 2024, the First Supplemental Indenture amended the Convertible Senior Secured Notes, increasing interest rates (10% cash, 12% PIK), extending maturity to December 15, 2028, and fixing conversion prices ($2.75 for half principal, $3.50 for other half).
• On December 23, 2024, Mudrick Capital converted half (approximately $130 million principal) of the Convertible Senior Secured Notes into 47,343,585 ordinary shares at a fixed conversion price of $2.75 per share.
• Following the partial conversion, VAGL became a guarantor of the Convertible Senior Secured Notes under the Second Supplemental Indenture.
• Mudrick Capital committed to fund up to $50 million in a subsequent funding round via an Investment Agreement dated December 20, 2024, contributing $25 million to the January 2025 Offering and $12.5 million to the July 2025 Offering.
• Mudrick Capital was granted pre-emptive rights to maintain its ownership percentage (if >20% beneficial ownership) and consent rights on certain Article amendments and Board composition changes via a Shareholder Letter Agreement dated December 23, 2024.
• Imagination Industries Investments Ltd (wholly owned by Stephen Fitzpatrick) provided office space to VAGL, with £263 thousand paid in 2025.
• On February 22, 2024, the SF Investment Agreement was entered into with Imagination Aero (wholly owned by Stephen Fitzpatrick), for the purchase of up to $50 million of ordinary shares and 50,000,000 SF Warrants, with $25 million gross proceeds received on March 13, 2024.
• The SF Investment Agreement obligations were deemed expired on December 20, 2024, replaced by a 12-month option for Stephen Fitzpatrick to invest up to $25 million in ordinary shares, which was not exercised.
• Stephen Fitzpatrick was granted pre-emptive rights to maintain his ownership percentage (if >3% beneficial ownership) via the Shareholder Letter Agreement.
• Clahane Capital SEZC Ltd. (wholly owned by Dmhnal Slattery) provided executive assistant services to Mr. Slattery, with £13 thousand charged in 2025.
• The company agreed to reimburse Stephen Fitzpatrick for Stephen Welch's Board compensation (capped at $75 thousand) on December 20, 2024, and later waived the cap to settle all outstanding compensation in January 2025.
• Stuart Simpson and Dmhnal Slattery have anti-dilution provisions in their engagement agreements, adjusting their respective holdings and anti-dilution thresholds to 2.0% and 1.4% of issued and outstanding ordinary shares, respectively.

Stakeholder Impact

• Shareholders face significant dilution from past and future equity issuances, including the conversion of Convertible Senior Secured Notes and sales through the ATM program, and risk of further dilution if additional capital raises are equity-based.
• Shareholders are exposed to potential share price volatility due to financial uncertainty, market conditions, operational risks, and the ongoing patent infringement lawsuit.
• Mudrick Capital's controlling stake (67.7% voting power) means its interests may conflict with other shareholders, and no dividends are expected in the foreseeable future.
• Employees benefit from continued investment in R&D and administrative staff, but competition for skilled personnel is intense, and equity awards may lose value if the share price declines.
• Customers with pre-orders face uncertainty due to the conditional and non-binding nature of these agreements, and potential delays in certification or production could impact their AAM service launch plans.
• Suppliers and partners are critical to the company's asset-light business model, but single-source dependencies create supply chain risks, while successful collaborations can lead to long-term contracts.
• Creditors, particularly holders of Convertible Senior Secured Notes, face the risk of default if the company breaches its minimum cash balance covenant, potentially leading to debt acceleration.
• Regulators are actively engaged in the certification process, and their decisions on new frameworks for eVTOLs will significantly impact the company's market entry and operational timelines.
• Communities and the public are impacted by the company's commitment to minimal noise and zero operating emissions, but public perception of eVTOL safety and the development of vertiport infrastructure remain critical for market acceptance.

Next Steps

• Continue Phase 4 (piloted transition flight) testing, systematically expanding the flight envelope.
• Begin flight testing the third full-scale prototype following commissioning.
• Build five flying and two static aircraft for certification purposes prior to the end of 2027.
• Work with Evolito to certify the Electric Propulsion Unit (EPU) to airliner-level safety certification with CAA and EASA.
• Work with Syensqo to supply composite and adhesive materials for pre-production and certified aircraft.
• Advance plans with Marubeni for a future AAM route network across Japan and progress piloted demonstration flights in the Osaka Bay area.
• Work with Bristow to bring AAM into commercial operation, including access to certified aircraft, trained pilots, maintenance, and insurance.
• Continue joint working group with Iberojet to evaluate AAM opportunities in Spanish and Caribbean markets.
• Continue joint working group with Kakao Mobility to drive commercialization of AAM services in South Korea.
• Establish a framework with JetSetGo to jointly develop route networks, operating models, regulatory engagement, and commercial rollout in India.
• Integrate Valo into Héli Air Monaco's high-end mobility services, supported by airport infrastructure adaptations.
• Negotiate long-form master purchase agreements for pre-orders.
• Seek additional equity or debt financing to fund operations beyond mid-2026 and achieve Valo certification by 2028.
• Remediate identified material weaknesses in internal control over financial reporting.
• Defend against the patent infringement lawsuit by Archer Aviation Inc.
• Decide on further longer-term manufacturing locations in 2026.
• Bring two new manufacturing facilities (expanded Flight Test Centre and battery facility) online in 2026.
• Develop specific mission variants of Valo for tourism, cargo, medical, and military logistics.
• Explore scaling the vehicle into increased range and payload.
• Develop pilot simulators as part of the ongoing aircraft certification program for pilot training services.
• Optimize battery utilization and replacement timing through smart charging and advanced battery health diagnostics.
• Expand battery services into other industries (automotive, stationary grid storage) once technology is developed.
• Continue policy engagements with regulators, decision makers, and communities.
• Work with local authorities and stakeholders to identify and develop procedures along high-demand routes for increased airspace scalability.
• Develop community-based concepts and technologies for mature and autonomous operations.

Key Dates

Recommendation

The company faces severe liquidity challenges, with existing cash projected to last only until mid-2026 and a high probability of breaching a critical debt covenant, which could lead to the acceleration of its Convertible Senior Secured Notes. While operational progress in flight testing and strategic partnerships are positive, the 'material uncertainty' regarding its ability to continue as a going concern, coupled with the need for 'significant additional capital' in an uncertain market, presents an extremely high-risk investment profile. The recent patent infringement lawsuit adds further legal and financial uncertainty. Investors should consider selling due to the substantial financial risks and the explicit going concern warning.

Keywords

eVTOL, electric aircraft, advanced air mobility, AAM, Valo, VX4, aerospace, aviation, certification, flight testing, capital raise, financial results, SEC filing, 20-F, Vertical Aerospace, EVTL, Mudrick Capital, corporate governance, risk factors, hybrid-electric aircraft, battery technology, propulsion systems, supply chain, regulatory approval, UK CAA, EASA, FAA, patent infringement, going concern