What changed in this filing

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Item 1A. Risk Factors

2025-02-27 compared with 2024-02-27 · 110 added, 59 removed, 365 unchanged (32% of the section changed)

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Certification & Regulatory

We may be unable to obtain relevant regulatory approvals for the commercialization of our aircraft or operation of our mobility service.

We may be unable to obtain relevant regulatory approvals for the commercialization of our aircraft or operation of our mobility service, either in the United States or in foreign markets.

The commercialization of new aircraft and the operation of an aerial mobility service requires certain regulatory authorizations and certifications, including Type Certification, Production Certification and an air carrier certificate issued by the FAA under Part 119 with Part 135 operations specifications.

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Circumstances outside of our control could delay the receipt of our required certifications.

For example, FAA staffing depends, in large part, on the annual appropriations process and their ability to retain and recruit sufficient resources with relevant experience.

For example, FAA staffing depends, in large part, on the annual appropriations process and the agency’s ability to retain and recruit sufficient resources with relevant experience and expertise.

Failure to pass an annual appropriation bill has in the past resulted in temporary government shutdowns.

A future shutdown, or a failure by Congress to pass an FAA reauthorization bill (or extension) could delay the rulemaking and certification process.

Additionally, recent focus on reducing the size of the federal workforce could negatively impact the availability of resources within the FAA which could delay our progress towards certification.

We are also pursing certification of our aircraft and approval to operate our services in other countries.

While many of these countries have established processes for validating a type certificate issued by the FAA, others, such as the UAE, are developing new processes to leverage our work with the FAA and provide a path for approval of initial operations that could precede type certification in the United States.

The regulatory agencies charged with granting approval for our aircraft and our services in other countries may be subject to many of the same funding and staffing risks that exist in the United States.

Additionally, pursuing certification and operations outside the United States is subject to additional risks, including regulatory regimes that may be less familiar to us or may have less experience in certifying and approving new and novel aircraft.

If we fail to obtain any of the required authorizations or certificates, or do so in a timely manner, or any of these authorizations or certificates are modified, suspended or revoked after we obtain them, we may be unable to launch our commercial service or do so on the timelines we project and may have an adverse impact on our business, financial condition and results of operations.

Regulatory authorities may disagree with our view that integrating our service into the National Airspace System is possible without changes to existing regulations and procedures.

There are a number of existing laws, regulations and standards that apply to our aircraft and our service, including standards that were not originally intended to apply to electric aircraft.

There are a number of existing laws, regulations and standards that apply to our aircraft and our service, including standards that were not originally intended to apply to eVTOL aircraft or air taxi services.

While our aircraft and our service are designed, at launch, to operate within the existing U.S.

regulatory framework, the FAA or other regulatory authorities within the markets in which we intend to operate may disagree with this view, which may prohibit, restrict, or delay our ability to launch in the relevant market.

Regulatory authorities have in the past and may in the future introduce changes specifically to address high-volume flights that could delay our ability to launch our service and have an adverse impact on our business, financial condition and results of operations.

In addition, any changes to the National Airspace System, as a result of privatization or otherwise, could increase the costs to operate our service.

Finally, regulatory authorities have in the past and may in the future introduce changes specifically to address high-volume flights that could delay our ability to launch our service and have an adverse impact on our business, financial condition and results of operations.

If current airspace regulations are not modified to increase air traffic capacity, our business could be subject to considerable capacity limitations.

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While our aircraft is designed to operate in the National Airspace System under existing rules, our business at scale will likely require airspace allocation for UAM operations and could result in regulatory changes.

Our inability to obtain sufficient access to the National Airspace System or to comply with any regulatory changes could increase our costs and pricing of our services, which could reduce demand and have an adverse impact on our business, financial condition and results of operations.

Our inability to obtain sufficient access to the National Airspace System or to comply with any regulatory changes could

increase our costs and pricing of our services, which could reduce demand and have an adverse impact on our business, financial condition and results of operations.

Changes in government regulation could increase our operating costs or extend our certification timeline.

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In May 2022, the FAA decided to certify eVTOLs under the “powered lift” classification, rather than existing Part 23 requirements for Normal Category Airplanes.

In addition, the FAA indicated that they do not expect the relevant operational regulations, or Special Federal Aviation Regulations (“SFARs”), for eVTOL aircraft to be finalized until late 2024.

If the publication of the SFARs is further delayed, if the FAA requires further modification to our existing G-1 certification basis, or if there are other regulatory changes or revisions this could delay our ability to obtain type certification, and could delay our ability to launch our commercial passenger service.

The FAA finalized the relevant operational regulations, or Special Federal Aviation Regulations (“SFARs”), for eVTOL aircraft in October 2024.

If the FAA requires further modification to our existing G-1 certification basis, or if there are other regulatory changes or revisions to the SFARs or other regulations, this could delay our ability to obtain type certification, and could delay our ability to launch our commercial passenger service.

The DOT and the FAA could issue additional regulations relating to the operation of our aircraft or further revise existing requirements that could require significant expenditures, resulting in additional time to certification as well as increased costs for us and our passengers.

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The Transportation Security Administration (“TSA”) is responsible for certain civil aviation security matters, including the regulation of air carriers that operate under Part 135 of the Federal Aviation Regulations as well as passenger and baggage screening at U.S.

Because we are introducing an innovative service that operates from both airports and skyports, the security regulatory scheme that will apply is uncertain.

Because we are introducing an innovative service that operates from both airports and vertiports, the security regulatory scheme that will apply is uncertain.

If the TSA imposes burdensome security requirements on our services, it could reduce the convenience of our service for our customers, resulting in lower demand and higher cost and have an adverse impact on our business, financial condition and results of operations.

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Given the great discretion the government has in issuing or denying such authorizations, there can be no assurance we will be successful in our future efforts to secure and maintain necessary licenses, registrations, or other regulatory approvals which may have an adverse impact on our business, financial condition and results of operations.

In addition, the global economy has recently seen a rise in tariffs and threats of tariffs.

While tariffs have not had a material impact on our business, financial condition or results of operations to date, new tariffs could increase the costs of raw materials and other goods, both for us and our suppliers, which could impact our business, particularly as we begin to scale our manufacturing operations.

We will be subject to rapidly changing and increasingly restrictive laws, regulations and other obligations relating to privacy, data protection, and data security, which may be costly and difficult to comply with.

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If we fail to attract passengers, deliver sufficient value to our passengers, or accurately predict demand and price sensitivity, it would harm our financial performance and our competitors’ products may achieve greater market adoption and may grow at a faster rate than our service.

We may not be able to launch our aerial ridesharing service beginning in 2025, as currently projected.

We will need to address significant regulatory, political, operational, logistical, and other challenges in order to launch our aerial ridesharing service.

We may face delays in launching our commercial service.

We will need to address significant regulatory, political, operational, logistical, and other challenges in order to launch our commercial service.

We do not currently have infrastructure in place to operate the service and such infrastructure may not be available or may be occupied on an exclusive basis by competitors.

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For example, in February 2022, one of our remotely piloted, experimental prototype aircraft was involved in an accident during flight testing.

At this time, we do not expect the accident to have a significant impact on our business operations or

certification timing.

Although the accident did not have a significant impact on our business operations or certification timing, any similar event occurring closer in time to the launch of our commercial service could result in significant delays.

Any delay in the financing, design, manufacture and commercial release of our aircraft, which are often experienced by aircraft manufacturers, could materially damage our brand, business, prospects, financial condition and operating results.

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If we are unable to integrate our service with ground transportation services it may limit customer adoption and harm our business.

Our service will depend, in part, on third-party ground operators to take customers from their origin to their departure skyport and from their arrival skyport to their ultimate destination.

Our service will depend, in part, on third-party ground operators to take customers from their origin to their departure vertiport and from their arrival vertiport to their ultimate destination.

While we expect to be able to integrate these third-party ground operators into our service, we cannot guarantee that we will be able to do so effectively, at prices that are favorable to us, or at all.

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Passengers and other stakeholders may not differentiate between us and the broader aviation industry or, more specifically, the UAM service industry.

If other participants in this market have problems such as safety, technology development, engagement with certification authorities or other regulators, community engagement, security, data privacy, flight delays, or customer service, such problems could impact the public perception of the entire industry, including our business.

If other participants in this market have problems related to matters such as safety, technology development, engagement with certification authorities or other regulators, community engagement, security, data privacy, flight delays, or customer service, such problems could impact the public perception of the entire industry, including our business.

We may fail to adequately differentiate our brand, our services and our aircraft from others in the market which could impact our ability to attract passengers or engage with other key stakeholders and have an adverse impact on our business, financial condition and results of operations.

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Additionally, our industry has not aligned around a single charging standard.

While we have developed a charging system designed to support all types of electric aircraft, if skyport operators select a different charging system it could result in longer charge times and increase our operating costs.

While we have developed a charging system designed to support all types of electric aircraft, if vertiport operators select a different charging system it could result in longer charge times and increase our operating costs.

There is also a complex patchwork of federal, regional and municipal regulatory considerations applicable to asset management and property development in general, and aviation assets and infrastructure in particular.

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Our aircraft utilization may be lower than expected due to weather and other factors.

Our aircraft may not be able to fly safely in poor weather conditions, including snowstorms, thunderstorms, high winds, lightning, hail, known icing conditions and/or fog.

Our aircraft may not be able to fly in poor weather conditions, including snowstorms, thunderstorms, high winds, lightning, hail, known icing conditions and/or fog.

Our inability to operate in these conditions will reduce our aircraft utilization and cause delays and disruptions in our services.

We intend to maintain a high daily aircraft utilization rate,

which is the amount of time our aircraft spend in the air carrying passengers.

This is achieved, in part, by reducing turnaround times at skyports.

We intend to maintain a high daily aircraft utilization rate, which is the amount of time our aircraft spend in the air carrying passengers.

This is achieved, in part, by reducing turnaround times at vertiports.

Aircraft utilization is reduced by delays and cancellations from various factors, many of which are beyond our control, including adverse weather conditions, security requirements, air traffic congestion and unscheduled maintenance events.

The success of our business is dependent, in part, on the utilization rate of our aircraft, and reductions in utilization will adversely impact our financial performance, cause passenger dissatisfaction and may have an adverse impact on our business, financial condition and results of operations.

The success of our business is dependent, in part, on the utilization rate of our aircraft, and reductions in utilization

will adversely impact our financial performance, cause passenger dissatisfaction and may have an adverse impact on our business, financial condition and results of operations.

Aircraft and Production

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We expect to introduce new and additional features and capabilities to the aircraft and our service over time.

For example, we may initially operate under VFR only, and then add the ability to operate under IFR pursuant to block upgrade to the aircraft.

For example, we plan to initially operate under VFR only, and then add the ability to operate under IFR pursuant to block upgrade to the aircraft.

We may be unable to develop or certify these upgrades in a timely manner or at all which may have an adverse impact on our business, financial condition and results of operations.

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However, we may not be able to engage suppliers for the remaining components in a timely manner, at an acceptable price, in the necessary quantities or at all.

We will need to do extensive testing to ensure that the aircraft is in compliance with all applicable regulations prior to beginning mass production.

We will need to do extensive testing to ensure that the aircraft is in compliance with all applicable regulations prior to beginning scaled production.

In addition to certification of the aircraft, we will be required to obtain approval from the FAA to manufacture completed aircraft pursuant to an FAA-approved type design ( e.g.

, type certificate).

Production approval involves initial FAA manufacturing approval and extensive ongoing oversight of mass-produced aircraft.

Production approval involves initial FAA manufacturing approval and extensive ongoing oversight of aircraft production.

If we are unable to obtain production approval for the aircraft, or the FAA imposes unanticipated restrictions as a condition of approval, our projected costs of production could increase substantially.

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If any of the foregoing risks occurs, it could adversely affect our business, financial condition, operating results and prospects.

Crashes, accidents or incidents of eVTOL aircraft or involving lithium-ion batteries involving us or our competitors could have a material adverse effect on our business, financial condition, and results of operations.

Crashes, accidents or incidents of eVTOL and other aircraft could have a material adverse effect on our business, financial condition, and results of operations.

Test flying prototype aircraft is inherently risky, and crashes, accidents or incidents involving our aircraft are possible.

In February 2022, one our remotely piloted, experimental prototype aircraft was involved in an accident during flight testing.

At this time, we do not expect the accident to have a significant impact on our business operations or certification timing.

This, or any other such occurrence may negatively impact our development, testing and certification efforts, and could result in re-design, certification delay and/or postponements or delays to our commercial service launch.

In February 2022, one of our remotely piloted, experimental prototype aircraft was involved in an accident during flight testing.

Although the accident did not have a significant impact on our business operations or certification timing, any other such occurrence in the future could negatively impact our development, testing and certification efforts, and could result in re-design, certification delay and/or postponements or delays to our commercial service launch.

Operating aircraft is subject to various risks, and we expect demand for our aerial ridesharing services to be impacted by accidents or other safety issues regardless of whether such accidents or issues involve our aircraft.

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Our aircraft may require maintenance at frequencies or at costs which are unexpected.

Our aircraft are highly technical vehicles that require regular maintenance and support.

Our aircraft will require regular maintenance and support.

We are still developing our understanding of the long-term maintenance profile of the aircraft.

If useful lifetimes are shorter than expected this may lead to greater maintenance costs than we anticipate.

If our aircraft and related equipment require maintenance more frequently than we plan for or at costs that exceed our estimates, that would disrupt the operation of our service and result in higher operating cost, which could have a material adverse effect on our business, financial condition and results of operations.

If our aircraft and related equipment require maintenance more frequently than we plan for or at costs that exceed our estimates, that would disrupt the operation of our service and result in higher operating costs, which could have a material adverse effect on our business, financial condition and results of operations.

Government Contracts and Pre-Certification Operations

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government may modify or terminate its contracts with us, without prior notice and at its convenience.

We believe that the Department of Defense is potentially shifting its priorities under the Agility Prime program towards hybrid aircraft and autonomous flight technology and, as a result, our existing contracts may be reduced or modified.

In addition, funding may be reduced or withheld as part of the annual U.S.

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We may be unable to grow our relationship with the U.S.

government and the Department of Defense, which will limit our ability to operate prior to receiving an FAA certification of airworthiness.

We are projecting that we will enter into additional contracts with the U.S.

government and the Department of Defense.

We may enter into additional contracts with the U.S.

government which would enable us to operate our aircraft as a service provider for the Department of Defense or other U.S.

government agencies both prior to receiving an airworthiness certificate from the FAA and after.

Failure to obtain these contracts would limit our ability to gain operational learnings about our aircraft and secure meaningful revenue, which could have a material adverse effect on our business, financial condition and results of operations.

While we believe we are uniquely qualified to participate in future initiatives,

particularly those related to autonomous flight and hybrid aircraft, there can be no guarantees of our ability to negotiate and secure additional contracts in these areas.

Failure to obtain these contracts could limit our ability to gain additional operational learnings about our aircraft and secure meaningful revenue, which could have a material adverse effect on our business, financial condition and results of operations.

We conduct a portion of our business pursuant to U.S.

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Furthermore, if our future growth and operating performance fail to meet investor or analyst expectations, or if we have future negative cash flow or losses resulting from our investment in acquiring customers or expanding our operations, this could have a material adverse effect on our business, financial condition and results of operations.

We will need additional capital in the future, including to build high-volume manufacturing, and to develop a skyport network to support a high-volume service.

Our proposed operations contemplate significant manufacturing capacity, aircraft fleet and infrastructure development, including additional skyports where our aircraft can land, both within the United States and internationally.

Construction of manufacturing facilities, skyports or other operating facilities will require significant capital expenditures, as will future expansion of and improvements to our operations.

We will need additional capital in the future, including to build high-volume manufacturing, and to develop a vertiport network to support a high-volume service.

Our proposed operations contemplate significant manufacturing capacity, aircraft fleet and infrastructure development, including additional vertiports where our aircraft can land, both within the United States and internationally.

Construction of manufacturing facilities, vertiports or other operating facilities will require significant capital expenditures, as will future expansion of and improvements to our operations.

Although we intend to partner with third-party owners and operators for some of these facilities, we cannot be assured that such partnership opportunities will be available on commercially reasonable terms, or at all.

In addition, as our facilities and aircraft mature, our business will require capital expenditures for the maintenance, renovation and improvement of such locations to remain competitive.

This creates an ongoing need for capital, and, to the extent we cannot fund capital expenditures from cash flows from operations, we will need to borrow or otherwise obtain funds.

Prior to the consummation of the Merger, we financed our operations and capital expenditures primarily through private financing rounds.

In the future, we may need to raise capital through public or private financing or other arrangements.

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Similar pandemics or other disruptions to global markets could adversely impact our ability to access capital.

In addition, increased interest rates in 2022 and 2023 led to a widespread slowdown in investment and funding opportunities, especially for pre-revenue companies, that is expected to continue in the near-term.

In addition, increased interest rates in 2022 and 2023 led to a widespread slowdown in investment and funding opportunities, especially for pre-revenue companies.

We may sell equity securities or debt securities in one or more transactions at prices and in a manner that may materially dilute our current investors.

For example, in 2024 we sold 46,000,000 shares of our common stock at a price per share of $5.05 in an underwritten public offering and entered into a Stock Purchase Agreement to issue and sell up to an aggregate of 99,403,579 shares of our common stock to Toyota.

We also entered into an Equity Distribution Agreement for the sale

of up to an additional $300,000,000 of our common stock in an “at the market” offering.

Any debt financing, if available, may involve restrictive covenants that could reduce our operational flexibility or profitability.

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If we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures which may have an adverse impact on our business, financial condition and results of operations.

The Toyota Investment is subject to closing conditions, including conditions beyond our control, and no assurance can be given that closing will take place on the timeline currently anticipated or at all.

Any failure to close one or both of the tranches of the Toyota Investment could adversely impact our future liquidity and our financial condition.

On October 1, 2024, we entered into the Stock Purchase Agreement with Toyota providing for the potential issuance and sale of up to an aggregate of 99,403,579 shares of our common stock to Toyota (the “Toyota Investment”).

The Toyota Investment is structured in two equal tranches of $250.0 million each.

The closing of each tranche is subject to the satisfaction of certain closing conditions set forth in the Stock Purchase Agreement.

The first tranche is subject to conditions including, but not limited to:

(i) the satisfaction of certain regulatory approvals or clearances, including with respect to the Committee on Foreign Investment in the United States and under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder;

(ii) the adoption of certain changes to the provisions of our amended and restated bylaws;

(iii) the authorization by our board of directors of an amendment to certain provisions of our Certificate of Incorporation (the “Charter Amendment”), subject to approval by our stockholders at our annual meeting in 2025;

(iv) the execution of an amendment and restatement of the Amended and Restated Collaboration Agreement, dated August 30, 2019, between us and Toyota;

(v) the execution of a services agreement by us and Toyota;

and (vi) certain other customary closing conditions.

The second tranche is subject to conditions including, but not limited to:

(i) the execution of a strategic alliance agreement relating to, among other things, manufacturing arrangements, by us and Toyota;

(ii) the approval of the Charter Amendment by our stockholders at our annual meeting in 2025;

and (iii) certain other customary closing conditions.

The agreements to be entered into in connection with such conditions are subject to the receipt of regulatory approvals, the parties negotiating and entering into definitive agreements and the conditions included within the applicable definitive documents.

As of the date of this Annual Report, no closings have occurred under the Stock Purchase Agreement.

We may experience delays and difficulties in satisfying the conditions for closing on either or both of the tranches of the Toyota Investment, and no assurance can be given that closing will take place on the timeline currently anticipated or at all.

Some of the conditions to closing are outside of our control and it is possible that not all of the closing conditions to the Toyota Investment will be satisfied or that we will not receive the entire amount of expected proceeds on the timeline currently anticipated or at all.

For example, the second tranche of the Toyota Investment is subject to, among others, the approval of the Charter Amendment by our stockholders at our annual meeting in 2025.

In addition, certain closing conditions require us and Toyota to successfully negotiate and enter into definitive agreements.

The final terms of such definitive agreements are not yet established and the negotiation and execution of such agreements may take longer than expected or may not be possible to accomplish on terms acceptable to us, or at all.

No assurance can be given that any agreement we may reach will achieve our goals or be on terms that prove to be economically or strategically beneficial to us.

Such adverse developments, including any failure to close one or both of the tranches of the Toyota Investment, could adversely impact our business, financial condition, results of operations and liquidity.

We have broad discretion in how we use our assets, and we may not use them effectively.

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In general, an “ownership change” occurs if there is a greater than 50 percentage point change (by value) in a corporation’s equity ownership by certain stockholders over a rolling three-year period.

We may have experienced ownership changes in the past and may experience ownership changes in the future as a result of subsequent shifts in our stock ownership (some of which shifts are outside our control).

We may have experienced ownership changes in the past and may experience

ownership changes in the future as a result of subsequent shifts in our stock ownership (some of which shifts are outside our control).

As a result, our ability to use our pre-change federal NOLs and other tax attributes to offset future taxable income and taxes could be subject to limitations.

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In connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2022, we identified a material weakness in our internal control over financial reporting which was fully remediated as of the year ended December 31, 2023.

If we fail to implement and maintain effective internal control over financial reporting could

result in errors in our financial statements that may lead to a restatement of our financial statements or cause us to fail to meet our reporting obligations.

If we fail to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that may lead to a restatement of our financial statements or cause us to fail to meet our reporting obligations.

In addition, our internal control over financial reporting will not prevent or detect all errors and fraud.

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We may choose not to, or may fail to, pursue or maintain such forms of protection for our technology in the United States or foreign jurisdictions, which could harm our ability to maintain our competitive advantage in such jurisdictions.

It is also possible that we will fail to identify patentable aspects of our technology before it is too late to obtain patent protection, that we will be unable to devote the resources to file and prosecute all patent applications for such technology, or that we will lose protection for failing to comply with all procedural, documentary, payment, and other obligations during the patent prosecution process.

failing to comply with all procedural, documentary, payment, and other obligations during the patent prosecution process.

The laws of some countries do not protect proprietary rights to the same extent as the laws of the United States, and mechanisms for enforcement of intellectual property rights in some foreign countries may be inadequate to prevent other parties from infringing our proprietary technology.

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and Delta Air Lines may adversely impact our ability to successfully launch and maintain our consumer-facing UAM services.

Conflicts with foreign partners may adversely impact our ability to scale operations

outside the U.S.

Conflicts with foreign partners may adversely impact our ability to scale operations outside the U.S.

If such conflicts arise it may adversely affect our business, financial condition and results of operations.

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For example, our subsidiary, H2FLY, is working on the development of an optimized fuel cell system for hydrogen-electric aircraft.

Additionally, in 2024 we acquired the assets of the autonomy division of Xwing Inc.

Any such research and development efforts could distract management from current operations and would divert capital and other resources from our more established technologies.

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Our services will also involve the storage, processing and transmission of our customers’ data, including personal and financial information.

We also engage and plan to engage third-party service providers to store and process this data.

We also engage third-party service providers to store and process this data.

While we believe we and our service providers take reasonable steps to secure these networks and systems, our information technology infrastructure may be vulnerable to computer viruses or physical or electronic intrusions that our security measures may not detect.

Any such security incident, including those resulting from cybersecurity attacks, phishing attacks, unauthorized access or usage, virus or similar breach or disruption could result in the loss, destruction, alteration or disclosure of this data, which could damage our reputation and lead to litigation, regulatory investigations, or other liabilities.

These attacks may come from individual hackers, corporations, criminal groups, and state-sponsored organizations.

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Techniques used to sabotage or obtain unauthorized access to systems or networks are constantly evolving and, in some instances, are not identified until after they have been launched against a target.

We and our service providers may be unable to anticipate these techniques, react in a timely manner, or implement adequate preventative and mitigating

We and our service providers may be unable to anticipate these techniques, react in a timely manner, or implement adequate preventative and mitigating measures.

If we are unable to efficiently and effectively maintain and upgrade our system safeguards, we may incur unexpected costs and certain of our systems may become more vulnerable to unauthorized access or disruption.

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As a result, our business and financial results are particularly susceptible to natural disasters, outbreaks and pandemics, growth constraints, economic, social, weather, and regulatory conditions or other circumstances applicable to these metropolitan areas.

Because we will initially have a limited number of locations, a significant interruption or disruption in service at an individual skyport or metropolitan area where we have a significant volume of flights could have a severe impact on our business, results of operations and financial condition.

Our concentration in large metropolitan areas and heavily trafficked airports also makes our business susceptible to an outbreak of a contagious disease, such as COVID-19, both due to the high volume of travelers flying into and out of such airports and the ease at which contagious diseases can spread through densely populated areas.

Disruption of operations at skyports, whether caused by labor relations, utility or communications issues, power outages, or changes in federal, state and local regulatory requirements could harm our business.

Certain airports may regulate our flight operations, including limiting the number of landings per year, banning our operations or introducing new permitting requirements, which could significantly disrupt our operations.

In addition, demand for our advanced air mobility services could be impacted if drop-offs or pick-ups of passengers become inconvenient because of airport rules or regulations, or more expensive because of airport-imposed fees, which would adversely affect our business, financial condition and operating results.

Because we will initially have a limited number of locations, a significant interruption or disruption in service at an individual vertiport or metropolitan area where we have a significant volume of flights could have a severe impact on our business, results of operations and financial condition.

Our concentration in large metropolitan areas and heavily trafficked airports also makes our business susceptible to an outbreak of a contagious disease, both due to the high volume of travelers flying into and out of such airports and the ease at which contagious diseases can spread through densely populated areas.

Disruption of operations at vertiports, whether caused by labor relations, utility or communications issues, power outages, or changes in federal, state and local regulatory requirements could harm our business.

Certain airports may regulate our flight operations, including limiting the number of landings, banning our operations or introducing new permitting requirements, which could significantly disrupt our operations.

In addition, demand for our services could be impacted if drop-offs or pick-ups of passengers become inconvenient because of airport rules or regulations, or more expensive because of airport-imposed fees, which would adversely affect our business, financial condition and operating results.

We currently have subsidiaries located outside of the United States and plans for international operations in the future, which could subject us to political, operational and regulatory challenges.

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In addition, we currently have subsidiaries engaged in limited test manufacturing, R&D and other activities in foreign countries.

We have also begun working with regulators in other countries, including the United Kingdom, Japan, South Korea and the UAE to pursue commercialization opportunities in those markets and have signed contracts with potential partners in each of these markets under which we make various commitments related to early operations.

While foreign certification in many countries leverages our work with the FAA and in some cases, such as the UAE, it may also provide a path to commercial operations prior to receiving certification in the United States, applicable regulations outside the U.S.

We have also begun working with regulators in other countries, including the United Kingdom, Japan, South Korea, Australia and the UAE to pursue commercialization opportunities in those markets and have signed contracts with potential partners in each of these markets under which we make various commitments related to early operations.

While foreign certification in many countries leverages our work with the FAA and in some cases, such as the UAE, may also provide a path to commercial operations prior to receiving certification in the United States, applicable regulations outside the U.S.

may differ from or be more stringent than analogous U.S.

International operations are subject to a number of additional risks, including local political or economic instability, cross-border political tensions, challenges in effectively managing employees in foreign jurisdictions, including local labor laws that may be stricter or more costly to comply with than in the U.S., and exposure to potential liabilities under anti-corruption or anti-bribery laws, including the U.S.

International operations are subject to a number of additional risks, including local political or economic instability, cross-border political tensions, global tariffs, challenges in effectively managing employees in foreign jurisdictions, including local labor laws that may be stricter or more costly to comply with than in the U.S., and exposure to potential liabilities under anti-corruption or anti-bribery laws, including the U.S.

Foreign Corrupt Practices Act, the UK Bribery Act and similar laws and regulations.

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We are subject to risks arising from natural disasters and severe weather conditions and risks associated with climate change, including the potential increased impacts of severe weather events on our operations and infrastructure.

Natural disasters, including wildfires, tornados, hurricanes, floods and earthquakes, and severe weather conditions, may damage our manufacturing plants, facilities or aircraft or disrupt our operating routes.

Our Bonny Doon facilities, in particular, are located in an area that is at high risk due to wildfire.

Our Bonny Doon facilities are also subject to a risk of closure due to zoning and permitting issues.

Natural disasters, including wildfires, tornados, hurricanes, tsunamis, floods and earthquakes, and severe weather conditions, may damage our manufacturing plants, facilities or aircraft or disrupt our operating routes.

Our Santa Cruz testing facilities, in particular, are located in an area that is at high risk due to wildfire.

These facilities are also subject to a

risk of closure due to zoning and permitting issues.

Destruction or our inability to use any of our facilities for a prolonged period of time could materially impact our ability to meet our projected timelines.

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We are subject to many hazards and operational risks that can disrupt our business, including interruptions or disruptions in service at our facilities, for which we may not be able to secure adequate insurance policies, or secure insurance policies at reasonable prices.

Our operations are subject to many hazards and operational risks, including general business risks, product liability and damage to third parties, our infrastructure or properties that may be caused by natural disasters, power losses, telecommunications failures, terrorist attacks (including hijacking, use of the aircraft as a weapon, or use of the aircraft to disperse a chemical or biological agent), security related incidents or human errors.

Our operations are subject to many hazards and operational risks, including general business risks, product liability, and damages to third parties, our infrastructure or properties that may be caused by natural disasters, power losses, telecommunications failures, terrorist attacks (including hijacking, use of the aircraft as a weapon, or use of the aircraft to disperse a chemical or biological agent), security related incidents or human errors.

Additionally, our manufacturing operations are hazardous at times and may expose us to safety risks, including environmental risks and health and safety hazards to our employees or third parties.

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Our success depends, in significant part, on the continued services of our senior management team and on our ability to attract, motivate, develop and retain a sufficient number of other highly skilled personnel.

While our efforts to hire key personnel have generally been successful overall, hiring in the areas of software development and verification has progressed more slowly than initially expected, due to high levels of competition in the markets in which we operate.

While our efforts to hire key personnel have generally been successful overall, the markets in which we operate are generally characterized by high levels of competition for skilled employees.

We have in the past, and may in the future, experience delays in filling certain positions.

In addition, in December 2024, our Chief Financial Officer notified us of his resignation, effective December 13, 2024, for personal reasons.

While we search for a new Chief Financial Officer, these duties are being carried out by other individuals within the management team.

In addition, there is a shortage of pilots that is expected to exacerbate over time as more pilots in the industry approach mandatory retirement age.

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As restrictions on resale end, the sale or possibility of sale of these shares could have the effect of increasing the volatility in our share price or the market price of our common stock could decline if the holders of currently restricted shares sell them or are perceived by the market as intending to sell them.

If we are deemed to be an investment company under the Investment Company Act of 1940, our results of operations could be harmed.

Under the Investment Company Act of 1940, as amended (the “Investment Company Act”), absent an applicable exemption, a company generally will be deemed to be an “investment company” if (a) it is in the business of investing, reinvesting, owning, holding, or trading in securities and (b) it owns or proposes to acquire “investment securities” having a value exceeding 40% of its total assets (other than U.S.

government securities and cash items) on an unconsolidated basis (such second prong, the “40% Test”).

We do not believe that we or any of our subsidiaries are an “investment company” for purposes of the Investment Company Act, including in part, because neither we nor any of our subsidiaries are in the business of investing, reinvesting, owning, holding, or trading in securities, as required under Section 3(a)(1)(C) of the Investment Company Act, and because we qualify for the safe harbor from “investment company” status provided in Rule 3a-8 under the Investment Company Act.

We are engaged primarily in developing an all-electric, vertical take-off and landing air taxi, and our historical development, public representations of policy, the activity of our officers and directors, the nature of our present assets, the sources of our present income, and the public perception of the nature of our business all support the conclusion that we are an operating company and not an investment company.

Further, we and certain of our subsidiaries qualify for the nonexclusive safe harbor from the definition of “investment company” provided in Rule 3a-8 under the Investment Company Act, which applies to certain research and development companies.

We currently conduct, and intend to continue to conduct, our operations so that neither we, nor any of our subsidiaries, is required to register as an “investment company” under the Investment Company Act.

If we were obligated to register as an “investment company,” we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things, limitations on capital structure, restrictions on specified investments, prohibitions on transactions with affiliates, and compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would increase our operating and compliance costs, could make it impractical for us to continue our business as contemplated, and could have a material adverse effect on our business.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors