Vertical Aerospace (EVTL) Risk Analysis

We are currently an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies," including the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act ("Section 404"), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We will remain an emerging growth company until the earliest of December 31, 2026, or such earlier date, in the event that we qualify as a "large accelerated filer," with at least $700 million of equity securities held by non-affiliates. Upon the loss of our qualification as an emerging growth company, we will, among other things, become subject to the auditor attestation requirements of Section 404. We anticipate that we will be required to comply with such auditor attestation requirements in respect of our internal control over financial reporting for the fiscal year ending December 31, 2026, with such attestation report included in our Annual Report on Form 20-F to be filed in 2027. Auditors' processes required for their delivery of Section 404 attestations typically involve substantial investment by the companies they audit in documentation, testing and remediation of any control weaknesses. Such an investment in the Company's limited resources may further exacerbate our ability to achieve our business plans in a timely manner, or at all. See "Our business plans require a significant amount of additional capital beyond our current cash and cash equivalents. Such additional capital might not be available to us in a timely manner or on terms that are acceptable, or at all. In addition, our future capital needs may require us to sell additional equity or debt securities that may dilute our shareholders or introduce covenants that may restrict our operations or our ability to pay dividends." We cannot predict if investors will find our securities less attractive if we choose to rely on these exemptions. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities, and the price of our securities may be more volatile.

As of December 31, 2025, we had sold approximately 3 million ordinary shares under the ATM receiving approximately $17.1 million, net of commissions, of the $100 million total amount available for sale under the Sales Agreement to our ATM. As of December 31, 2025, a total of 15,264,935 Public Warrants were issued and outstanding, with ten such warrants entitling the registered holder to purchase one ordinary share at a price of $115.00 per share (as adjusted for the Reverse Share Split). The Public Warrants became exercisable 30 days after the completion of the Business Combination and will expire at 5:00 p.m., New York City time, on December 16, 2026, or earlier upon redemption or liquidation. Furthermore, as of December 31, 2025, 7,450,000 Tranche A Warrants and 7,500,000 Tranche B Warrants were issued and outstanding. Each whole Tranche A Warrant entitles the holder thereof to purchase one Company ordinary share at an exercise price of $6.00 per share, is immediately exercisable as of its issuance and will expire at 5:00 p.m. New York City time on the five-year anniversary of the initial date of issuance (falling on January 23, 2030). Each whole Tranche B Warrant entitles the holder thereof to purchase one Company ordinary shares at an exercise price of $7.50 per share, is immediately exercisable as of its issuance and will expire at 5:00 p.m. New York City time on the five-year anniversary of the initial date of issuance (falling on January 23, 2030). In addition, we have also adopted the 2021 Incentive Plan and entered into the EMI Option Agreements with certain of our employees, pursuant to which 18,842,343 ordinary shares are either issued or reserved for issuance as of December 31, 2025. Under the 2021 Incentive Plan, the number of shares reserved for issuance: (A) for awards granted to employees (excluding awards granted at any time to (i) the Chief Executive Officer; or (ii) any non-employee director), is 9,045,000 ordinary shares, or, if greater and if determined by the Board to be required to fulfil the purposes of the Plan, up to an amount equal to 5% of the Company's issued and outstanding ordinary shares from time to time; (B) for awards granted at any time to non-employee directors (excluding the Chair of the Board), an amount that does not exceed 1% of the Company's issued and outstanding ordinary shares from time to time; and (C) for awards granted at any time to the Chief Executive Officer and Chair of the Board, an amount that does not exceed 3.4% of the Company's issued and outstanding ordinary shares from time to time. The Convertible Senior Secured Notes also may be converted at any time prior to the close of business on the second scheduled trading day immediately before the maturity date of the Convertible Senior Secured Notes, which would result in the issuance of additional ordinary shares. Additionally, 4 million private Convertible Notes Warrants were issued to Mudrick Capital on December 16, 2021, with 10 such warrants exercisable for one ordinary share of the Company at an exercise price of $115.00 per share (as adjusted for the Reverse Share Split). The 2,625,000 private Initial Virgin Atlantic Warrants issued to Virgin Atlantic immediately after the Closing of the Business Combination are also exercisable with 10 such warrants exercisable for one ordinary share of the Company at an exercise price of $100.00 (as adjusted for the Reverse Share Split). Additionally, there are 50,000,000 private SF Warrants issued to Imagination Aero on March 13, 2024, with 10 such warrants exercisable for one ordinary share of the Company at an exercise price of $50.00 (as adjusted for the Reverse Share Split). To the extent additional ordinary shares are sold through the ATM, the warrants or options are exercised, the Convertible Senior Secured Notes are converted, or awards are made under the 2021 Incentive Plan or the EMI Option Agreements, additional ordinary shares will be issued, which will result in dilution to our shareholders and increase the number of ordinary shares eligible for resale in the public market. Sales of substantial numbers of such securities in the public market or the fact that such securities may be exercised could adversely affect the market price of our securities. Furthermore, we may issue additional equity or convertible debt securities in the future which may dilute our existing shareholders' holdings. In accordance with our Articles, we are currently authorized to issue 1,000,000,000 ordinary shares and 10,000,000 preferred shares, of which 102,468,004 ordinary shares were issued as of the date of this Annual Report, with 140,000 of such issued ordinary shares held in treasury. Existing shareholders will have no pre-emptive rights in connection with such further issuances. We cannot predict the size or nature of future issuances or the effect that future issuances and sales of our ordinary shares will have on the market price of our ordinary shares. Issuances of a substantial number of additional ordinary shares, or the perception that such issuances could occur, may adversely affect prevailing market prices for our ordinary shares. With any additional issuance of our ordinary shares, our investors will suffer dilution to their voting power and economic interest.

We cannot predict the prices at which our securities will trade. The market price of our securities may fluctuate substantially and may be lower than the current market price. In addition, the trading price of our securities is likely to be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our control. These fluctuations could cause you to lose all or part of your investment in our securities as you might be unable to sell your securities at or above the price you paid. Factors that could cause fluctuations in the trading price of our securities include the following: - our ability to secure additional funding to continue as a going concern;- actual or anticipated fluctuations in our financial condition or results of operations;- variance in our financial performance from expectations of securities analysts;- our ability to remain in compliance with continued listing standards of the NYSE;- changes in our projected operating and financial results;- delays in the certification or production of our aircraft;- changes in laws or regulations applicable to our platform;- changes in senior management or key personnel;- announcements by us or our competitors of significant business developments, acquisitions or new offerings;- changes in the pricing of our products and services;- significant data breaches, disruptions to or other incidents involving our platform;- our involvement in litigation;- conditions or developments affecting the eVTOL industry;- future sales of our ordinary shares by us or our shareholders;- the trading volume of securities;- changes in the anticipated future size and growth rate of our markets;- sales and short-selling of our ordinary shares;- publication of research reports or news stories about us, our competitors or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts;- general economic and market conditions; and - other events or factors, including those resulting from geopolitical conflicts, war and civil unrest, incidents of terrorism, global pandemics or responses to these events. Broad market and industry fluctuations, as well as general economic, political, regulatory and market conditions, may also negatively impact the market price of our securities. In addition, technology stocks have historically experienced high levels of volatility. In the past, companies who have experienced volatility in the market price of their securities have been subject to securities class action litigation. We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management's attention.

The trading market for our ordinary shares will rely in part on the research and reports that equity research analysts publish about us and our business. The analysts' estimates are based upon their own opinions and are often different from our estimates or expectations. If our results of operations are below the estimates or expectations of public market analysts and investors, the price of our ordinary shares could decline. Moreover, the price of our ordinary shares could decline if one or more securities analysts downgrade our ordinary shares or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

We expect to issue additional share capital in the future (including through the conversion of the Convertible Senior Secured Note, private placement transactions, public offerings and/or the ATM) that will result in dilution to all other shareholders. We have granted, and expect we will continue to grant equity awards to employees and directors under our equity incentive plans. We may also raise capital through equity financings in the future. As part of our business strategy, we may make or receive investments in companies, solutions or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional share capital may cause shareholders to experience significant dilution of their ownership interests and the per share value of our ordinary shares to decline. On December 23, 2024, we entered into a Shareholder Letter Agreement with Mudrick Capital, Stephen Fitzpatrick and Imagination Aero (the "Shareholder Letter Agreement"), pursuant to which, among other things, we granted Mudrick Capital and Mr. Fitzpatrick certain rights to participate in our future equity offerings so long as Mudrick Capital and Mr. Fitzpatrick beneficially owns greater than 20% or 3% of our issued and outstanding ordinary shares, respectively. If Mudrick Capital or Mr. Fitzpatrick exercises such participation right, our other shareholders will experience further dilution of their ownership interests.

The NYSE's corporate governance rules require listed companies to comply with a number of corporate governance standards. As a foreign private issuer, we are permitted, and we intend, to follow certain home country corporate governance practices in lieu of several of such NYSE requirements, provided that we disclose the requirements we are not following and describe the corporate governance practices of the Cayman Islands that we are following. For example, as long as we rely on the foreign private issuer exemptions under the rules of the NYSE, our audit committee is not required to have at least three members and shareholder approval is neither required for equity compensation plans and material revisions to those plans nor the issuance of more than 1% of our outstanding ordinary shares (including derivative securities thereof) in either number or voting power, the issuance of 20% or more of our outstanding ordinary shares (including derivative securities thereof) in either number or voting power or an issuance that would result in a change of control. Therefore, our board of directors' approach to governance and securities issuances may be different from that of a board of directors of a U.S. domestic issuer, and, as a result, the oversight of our Company may be more limited than if we were subject to all of the NYSE corporate governance standards and shareholder approval requirements. We may in the future elect to follow home country practices with regard to other matters. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all NYSE corporate governance requirements.

In the event we no longer qualify as a foreign private issuer, we intend to rely on the "controlled company" exemption under the NYSE corporate governance rules. A "controlled company" under the NYSE corporate governance rules is a company of which more than 50% of the voting power is held by an individual, group or another company. Our ultimate controlling party controls a majority of the voting power of our outstanding ordinary shares making us a "controlled company" within the meaning of the NYSE corporate governance rules. As a controlled company, we would be eligible to, and, in the event we no longer qualify as a foreign private issuer, we intend to, elect not to comply with certain of the NYSE corporate governance standards. Accordingly, our shareholders may not have the same protection afforded to shareholders of companies that are subject to all of the NYSE corporate governance standards.

Mudrick Capital (including funds, investors, entities or accounts that are managed, sponsored or advised by it or its affiliates) is our ultimate controlling party, and, as of February 27, 2026, held approximately 55% of the voting power of our outstanding share capital. Effective as of December 23, 2024, the Company's Articles were amended to include certain amendments that, among other things, provide for a Board to consist of a majority of independent directors, and grant Mudrick Capital director nomination rights for a number of directors proportionate in number (rounded to the nearest whole number), on the basis of a Board consisting of seven directors, to its share ownership percentage so long as Mudrick Capital beneficially owns greater than 10% of our issued and outstanding ordinary shares (each an "Appointed Director"), provided that such nomination rights shall terminate on the first date on which Mudrick Capital beneficially owns less than 10% of our issued and outstanding ordinary shares on a fully diluted basis (assuming the exercise or exchange of all of our warrants, options and other similar instruments that are able to be exercised or exchanged as at the relevant date, and the full conversion of our outstanding Convertible Senior Secured Notes), and that the maximum number of Appointed Directors shall be capped as six so long as Mr. Fitzpatrick is entitled to remain on the Board as a result of his beneficial ownership in the Company remaining above 3%. Furthermore, pursuant to the Shareholder Letter Agreement, we granted Mudrick Capital certain rights to participate in our future equity offerings so long as Mudrick Capital beneficially owns greater than 20% of our issued and outstanding ordinary shares. Accordingly, Mudrick Capital (including funds, investors, entities or accounts that are managed, sponsored or advised by it or its affiliates) currently exercises control over, and even if and when Mudrick Capital (including funds, investors, entities or accounts that are managed, sponsored or advised by it or its affiliates) ceases to own a majority of our outstanding ordinary shares, will continue to exercise significant influence with respect to the composition of our board of directors as well as our management, business plans and policies. In particular, pursuant to rights granted to Mudrick Capital under the Shareholder Letter Agreement, Mudrick Capital may be able to cause or prevent a change of control of the Company or a change in the composition of our board of directors and could preclude any acquisition of the Company, which could deprive you of an opportunity to receive a premium for your ordinary shares as part of such acquisition and ultimately could affect the market price of our ordinary shares.