Prospectus Supplement No. 10

(to Prospectus dated April 26, 2023)

Filed Pursuant to Rule 424(b)(3)
Registration No. 333-265337

EVE HOLDING, INC.

319,264,425 SHARES OF COMMON STOCK

14,250,000 WARRANTS TO PURCHASE SHARES OF COMMON STOCK

66,845,072 SHARES OF COMMON STOCK UNDERLYING WARRANTS

 

This Prospectus Supplement, dated November 7, 2023 (the “Supplement”), supplements the prospectus, dated April 26, 2023, filed by Eve Holding Inc., a Delaware corporation (the “Company”), with the Securities and Exchange Commission (“SEC”) on April 26, 2023 pursuant to Rule 424(b) under the Securities Act of 1933, as amended, relating to the Registration Statement on Form S-1, as amended (File No. 333-265337) (the “Prospectus”), relating to the issuance by the Company of up to 66,845,072 shares of common stock, comprising (i) the shares of common stock that may be issued upon exercise of 11,500,000 outstanding public warrants (as defined in the Prospectus), (ii) the shares of common stock that may be issued upon exercise of 14,250,000 outstanding private placement warrants (as defined in the Prospectus), and (iii) up to 41,095,072 shares of common stock that may be or have been issued upon exercise of the new warrants (as defined in the Prospectus). The Prospectus also relates to the resale by certain of the Selling Securityholders (as defined in the Prospectus) of up to 319,264,425 shares of common stock, comprising (i) 220,000,000 shares of common stock issued in connection with the business combination with the urban air mobility business of Embraer S.A., a Brazilian corporation (sociedade anônima) (“Embraer”), originally issued at a price of $10.00 per share in exchange for Embraer’s interests in EVE UAM, LLC, (ii) 35,730,000 shares of common stock issued to certain qualified institutional buyers and accredited investors in private placements consummated in connection with the business combination, originally issued at a price of $10.00 per share, (iii) 5,750,000 shares of common stock that were converted in connection with the business combination on a one-to-one basis from Zanite Acquisition Corp. Class B common stock originally issued at a price of $0.004 per share, (iv) 260,000 shares of common stock underlying restricted stock units granted to certain directors and an officer of the Company, (v) 140,000 restricted shares of common stock granted to an officer of the Company, (vi) up to 14,250,000 shares of common stock that may be issued upon exercise of private placement warrants held by certain parties to the Amended and Restated Registration Rights Agreement (as defined in the Prospectus), originally issued at a price of $1.00 per warrant, (vii) up to 41,095,072 shares of common stock that may be or have been issued upon exercise of new warrants that have been issued or are issuable, subject to triggering events, to United Airlines Ventures, Ltd., a Cayman Islands company (“United”), and certain Strategic PIPE Investors (as defined in the Prospectus) originally issued in connection with entering into certain commercial arrangements without the payment of any purchase price and (viii) 2,039,353 shares of common stock issued to United in a private placement consummated on September 6, 2022 for a purchase price per share of $7.36 and an aggregate purchase price of $15,000,000. The Prospectus also relates to the resale by certain of the Selling Securityholders of 14,250,000 private placement warrants held by certain parties to the Amended and Restated Registration Rights Agreement, originally issued at a price of $1.00 per warrant.

This Supplement is being filed to update and supplement the information contained in the Prospectus with the information from our Form 10-Q, filed with the SEC on November 7, 2023 (the “Form 10-Q”). Accordingly, we have attached the Form 10-Q to this Supplement.

This Supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This Supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this Supplement, you should rely on the information in this Supplement.

Our common stock and public warrants trade on the New York Stock Exchange under the symbols “EVEX” and “EVEXW,” respectively. On November 6, 2023, the last quoted sale price for our common stock as reported on NYSE was $7.49 per share and the last quoted sale price for our public warrants was $0.6278 per warrant.

We are an “emerging growth company,” as defined under the federal securities laws, and, as such, may elect to comply with certain reduced public company reporting requirements for this prospectus and for future filings.

Investing in our securities involves a high degree of risk. Before buying any securities, you should carefully read the discussion of the risks of investing in our securities in “Risk Factors” beginning on page 12 of the Prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if the Prospectus or this Supplement is truthful or complete. Any representation to the contrary is a criminal offense.

This Supplement is dated November 7, 2023





 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




FORM 10-Q




(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023
Or


TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to             
Commission File No. 001-39704




EVE HOLDING, INC. 


(Exact name of registrant as specified in its charter)

 

Delaware

85-2549808

(State or other jurisdiction of
incorporation or organization) 

(I.R.S. Employer
Identification No.) 

1400 General Aviation Drive

Melbourne, FL 32935

(Address of Principal Executive Offices, including zip code)

(321) 751-5050
(Registrants telephone number, including area code)

 

N/A

(Former name and address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

Warrants, each whole warrant exercisable for one share of Common Stock

 

EVEX

EVEXW

 

The New York Stock Exchange

The New York Stock Exchange

 

 

 

 

 




Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act. 
 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes      No  

As of November 7, 2023, there were 269,359,021 shares of common stock, par value $0.001 per share, issued and outstanding.




EVE HOLDING, INC.

(FORMERLY EVE UAM, LLC)


Table of Content


PART I FINANCIAL INFORMATION (Unaudited) F-1



Item 1. Financial Statements F-1

Condensed Consolidated Balance Sheets F-1

Condensed Consolidated Statements of Operations F-2

Condensed Consolidated Statements of Comprehensive Loss F-3

Condensed Consolidated Statements of Equity F-4

Condensed Consolidated Statements of Cash Flows F-6

Notes to Condensed Consolidated Financial Statements F-7

Note 1 – Organization and Nature of Business F-7

Note 2 – Summary of Significant Accounting Policies F-8

Note 3 – Cash and Cash Equivalents F-11

Note 4 – Financial Investments F-11

Note 5 – Related Party Transactions F-11

Note 6 – Other Balance Sheet Components F-13

Note 7 – Debt F-14

Note 8 – Derivative Financial Instruments F-16

Note 9 – Fair Value Measurement  F-16

Note 10 – Equity F-17

Note 11 – Common Stock Warrants F-17

Note 12 – Share-based Payments F-20

Note 13 – Earnings Per Share F-20

Note 14 – Research and Development F-21

Note 15 – Selling, General and Administrative F-21

Note 16 – Income Taxes F-21

Note 17 – Commitments ​and Contingencies F-21

Note 18 – Segments
F-22

Note 19 – Subsequent Events
F-22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 1
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
Item 4. Controls and Procedures 13



PART II OTHER INFORMATION 15



Item 1. Legal Proceedings 15
Item 1A. Risk Factors 15
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities. 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Mine Safety Disclosures 15
Item 5. Other Information 15
Item 6. Exhibits 16

Signatures 17

PART I  FINANCIAL INFORMATION (Unaudited)

Item 1.  Financial Statements

EVE HOLDING, INC.

(FORMERLY EVE UAM, LLC)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)




September 30,

December 31,



2023


2022


ASSETS








Current assets

 






 

 


      Cash and cash equivalents

 


$ 10,097,318


$

49,146,063


      Financial investments



164,448,485



178,781,549

      Related party receivables

 



1,624,098


 

203,712


      Related party loan receivable



81,805,950



82,650,375

      Other current assets

​​



1,586,393


 

1,425,507


Total current assets

​​



259,562,244


 

312,207,206


      Property, plant & equipment, net



477,928



451,586

      Right-of-use assets, net



534,733



216,636

      Other non-current assets



976,467



-

Total non-current assets


1,989,128



668,222

Total assets


$ 261,551,372


$

312,875,428












LIABILITIES AND EQUITY






 

 


Current liabilities






 

 


     Accounts payable

 


$ 1,832,288


$

2,097,097


     Related party payables




20,267,182



12,625,243

     Derivative financial instruments



13,395,000


 

3,562,500


     Other current payables



10,664,611

 

6,648,171


Total current liabilities



46,159,081


 

24,933,011


     Long-term debt



11,319,690



-

     Other non-current payables



2,027,786



1,020,074

Total non-current liabilities


13,347,476



1,020,074

Total liabilities

 



59,506,557


 

25,953,085


Equity









     Common stock, $0.001 par value


269,209



269,094

     Additional paid-in capital


507,175,781



503,661,571

     Accumulated deficit


(305,400,175 )

(217,008,322 )
Total equity


202,044,815



286,922,343

Total liabilities and equity

 


$ 261,551,372


$

312,875,428


 

The accompanying notes are an integral part of these condensed consolidated financial statements.

Amounts may not add due to rounding.


F-1


EVE HOLDING, INC.

(FORMERLY EVE UAM, LLC)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended

Nine Months Ended

September 30,

September 30,




2023


2022




2023


2022

Operating expenses
















Research and development

$ 28,642,065

$ 14,298,925
$ 71,991,658
$ 33,830,890

Selling, general and administrative


5,034,782


6,845,045

17,822,207

23,892,011
New Warrants expenses 

-


17,424,230


-


104,776,230

Loss from operations


(33,676,847 )

(38,568,200 )

(89,813,865 )

(162,499,131 )
(Loss)/gain from change in fair value of derivative liabilities

(853,575 )

285,000

(9,832,500 )

6,127,500

Financial investment income


2,802,189


1,492,292


9,039,037



2,380,240

Other financial gain, net 


1,616,035


536,562

3,789,856

635,180

Loss before income taxes


(30,112,198 )

(36,254,346 )

(86,817,472 )

(153,356,211 )

Income tax expense 


(1,097,647 )

(490,376 )

(1,574,382 )

(620,084 )

Net loss

$ (31,209,845 ) $ (36,744,722 ) $ (88,391,854 ) $

(153,976,295

)
















Weighted-average number of shares outstanding – basic and diluted
275,887,223


272,040,343


275,671,199


247,010,044
Net loss per share basic and diluted $
(0.11
)
$
(0.14
)
$
(0.32
)
$
(0.62
)


 The accompanying notes are an integral part of these condensed consolidated financial statements.

Amounts may not add due to rounding.


F-2

EVE HOLDING, INC.

(FORMERLY EVE UAM, LLC)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

 



Three Months Ended

Nine Months Ended


September 30,



September 30,




2023


2022

2023


2022

Net loss


$ (31,209,845 )
$ (36,744,722 )
$ (88,391,854 )
$ (153,976,295 )

Total comprehensive loss 


$ (31,209,845 )
$ (36,744,722 )
$ (88,391,854 )
$ (153,976,295 )


The accompanying notes are an integral part of these condensed consolidated financial statements.

Amounts may not add due to rounding.


F-3

EVE HOLDING, INC.

(FORMERLY EVE UAM, LLC)
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)


Common Stock



















Shares



Amount




Additional Paid-In Capital



Accumulated Deficit



Accumulated Other Comprehensive Loss



Total Equity


Balance as of December 31, 2021

220,000,000

$ 220,000

$ 53,489,579

$ (42,977,964 )
$ (32,226 )
$ 10,699,389
Separation-related adjustment

-


-


(707,846 )

-


32,226


(675,620 )
Balance as of January 1, 2022

220,000,000

$ 220,000
$ 52,781,733

$ (42,977,964 )
$ -
$
10,023,769
Net loss

-


-


-



(10,010,008
)

-



(10,010,008 )
Contributions from Parent

-


-


732,776


-


-


732,776
Balance as of March 31, 2022

220,000,000

$ 220,000

$ 53,514,509
$ (52,987,972 )
$ -

$ 746,537
Net loss

-


-


-


(107,221,565 )

-


(107,221,565 )
Reclassification of Public Warrants from liability to equity

-


-


10,580,000


-


-


10,580,000
Issuance of fully vested New Warrants

-


-


87,352,000


-


-


87,352,000
Issuance of common stock upon reverse recapitalization, net of fees

43,392,132


43,392


315,283,325


-


-


315,326,717
Share-based compensation and issuance of stock

140,000


140


1,935,848

-


-


1,935,988
Exercise of warrants held by PIPE investor

800,000


800


7,200

-


-


8,000
Share-based payment with non-employees

-


-


1,028,182


-


-


1,028,182
Contributions from Parent

-



-



(2,105,409
)

-


-



(2,105,409
)
Balance as of June 30, 2022

264,332,132

$ 264,332

$ 467,595,655

$ (160,209,537 )
$ -

$ 307,650,450
Net loss (as restated)


-


-


-


(36,744,722 )

-


(36,744,722 )
Issuance of New Shares


2,039,353


2,039


14,997,961


-


-


15,000,000
Issuance of fully vested New Warrants

-


-


17,424,230


-


-


17,424,230
Issuance of restricted stock and restricted stock expense

-


-


653,699


-


-


653,699
Share based payment with non-employees

-


-


691,909


-


-


691,909
Balance as of September 30, 2022

266,371,485

$ 266,371

$ 501,363,454

$ (196,954,259 )
$ -

$ 304,675,566


The accompanying notes are an integral part of these condensed consolidated financial statements.

Amounts may not add due to rounding.



EVE HOLDING, INC.

(FORMERLY EVE UAM, LLC)
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)



Common Stock















Shares



Amount




Additional Paid-In Capital



Accumulated Deficit



Total Equity


Balance as of December 31, 2022

269,094,021

$
269,094

$
503,661,571

$
(217,008,322 )
$ 286,922,343
Net loss 


-


-


-


(25,771,982 )

(25,771,982 )
Share-based compensation

-


-


867,893


-


867,893
Share-based payment with non-employees

-


-


480,000


-


480,000
Balance as of March 31, 2023


269,094,021
$ 269,094

$ 505,009,464

$ (242,780,304 )
$ 262,498,254
Net loss 


-


-


-


(31,410,026 )

(31,410,026 )
Share-based compensation and issuance of stock

69,900


70


650,005


-


650,075
Balance as of June 30, 2023


269,163,921

$ 269,164

$ 505,659,469

$
(274,190,330 )
$ 231,738,303


Net loss


-


-


-


(31,209,845 )

(31,209,845 )
Exercise of public warrants


100


-


1,150


-


1,150
Share-based compensation and issuance of stock

45,000


45


1,515,162


-


1,515,207
Balance as of September 30, 2023

269,209,021

$ 269,209

$ 507,175,781

$ (305,400,175 )
$ 202,044,815


The accompanying notes are an integral part of these condensed consolidated financial statements.

Amounts may not add due to rounding.


EVE HOLDING, INC.

(FORMERLY EVE UAM, LLC)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Nine Months Ended

September 30,

2023


2022

 

Cash flows from operating activities: 

 


 


 

 

 

Net loss

 

$ (88,391,854 )

$

(153,976,295

)

Adjustments to reconcile net loss to net cash used by operating activities:

 





 

 

 

       Depreciation and loss on disposal of property 


141,714



-

       Non-cash lease expenses


54,766



-

       Amortization of debt issuance costs


1,750



-

       Unrealized (gain) on exchange rate translation

(384,791
)

(53,517 )
      Share-based compensation


3,320,330



2,589,688

      Warrant expenses


480,000



106,496,321

      Change in fair value of derivative financial instruments

9,832,500



(6,127,500
)
  Changes in operating assets and liabilities:







        Accrued interest on financial investments, net


(5,666,936
)

(1,354,049 )
        Accrued interest on related party loan receivable, net


844,425



(638,145
)

      Other assets

 


(732,745 )

 

3,263,583

      Related party receivables

 


(1,898,477 )

 

14,814

      Accounts payable

 


(256,735 )

 

2,865,325

      Related party payables

8,015,787


4,641,968

      Other payables

 


4,643,734

 

3,575,088

 

Net cash used by operating activities 

 


(69,996,532 )


(38,702,719

)
Cash flows from investing activities: 







          Redemptions of financial investments


72,500,000



-

       Purchases of financial investments


(52,500,000 )

(169,000,000 )
       Related party loan

-


(81,000,000 )
       Expenditures for property, plant and equipment


(168,056
)

(418,721
)
Net cash provided (used) by investing activities

19,831,944

(250,418,721 )
Cash flows from financing activities:







          Proceeds from issuance of debt

11,375,385



-

          Non-creditor debt issuance costs


(375,201
)

-

          Tax withholding on share-based compensation


(287,154 )

-

       Capital contribution net of transaction costs reimbursed to Zanite

-


369,830,250
       Transaction Costs reimbursed to parent

-


(15,754,066 )
       Distribution to parent, net

-


(1,372,633 )
       Proceeds from exercise of public warrants


1,150



-

Net cash provided by financing activities

10,714,180

352,703,551
          Effect of exchange rate changes on cash and cash equivalents

401,663



(17,263
)
          (Decrease) increase in cash and cash equivalents


(39,048,745 )

63,564,848

Cash and cash equivalents at the beginning of the period

 


49,146,063

 

14,376,523

 

Cash and cash equivalents at the end of the period

 

$ 10,097,318

$

77,941,371

 

Supplemental disclosure of cash information

 





 

 

 

   Cash paid for:








         Income taxes

$
874,810

$
489,590
Supplemental disclosure of other non-cash investing and financing activities







         Recognition of the Right-of-use assets and operating lease liabilities

$ 372,863


$ -

         Issuance of common stock for vested Restricted Stock Units 

$
1,365,750


$
1,584,800


The accompanying notes are an integral part of these condensed consolidated financial statements.

Amounts may not add due to rounding.

 

F-6

EVE HOLDING, INC.

(FORMERLY EVE UAM, LLC)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 1 Organization and Nature of Business


Eve Holding, Inc. (together with its subsidiaries, as applicable, “Eve,” “Eve Holding,” the “Company,” “we,” “us,” or “our”), is an aerospace company that is dedicated to accelerating the urban air mobility (“UAM”) ecosystem. Benefitting from a startup mindset and with a singular focus, Eve is taking a holistic approach to progressing the UAM ecosystem with an advanced electric vertical take-off and landing (“eVTOL”) project, a comprehensive global services and support network, and a unique air traffic management solution. The Company is organized in Delaware with operations in Melbourne, Florida and São Paulo, Brazil.


The Company is a former blank check company incorporated on November 19, 2020, under the name Zanite Acquisition Corp. (“Zanite”) as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. 

Business Combination

On December 21, 2021, Zanite entered into a Business Combination Agreement (the “BCA”), with Embraer S.A., a Brazilian corporation (“sociedade anonima”) (“ERJ”), Embraer Aircraft Holding, Inc., a Delaware corporation (“EAH”) wholly owned by ERJ, and EVE UAM, LLC, a Delaware limited liability company (“Eve Sub”), a former subsidiary of EAH, that was formed for purposes of conducting the UAM business.  For transactions beyond the Business Combination (as defined below) and initial financing, ERJ and EAH are collectively referred to as “Embraer.”

On May 9, 2022, the closing (the “Closing”) of the transactions contemplated by the BCA occurred (“Business Combination”).  Pursuant to the BCA, Zanite issued 220,000,000 shares of Class A common stock to EAH in exchange for all of the issued and outstanding limited liability company interests of Eve Sub (the “Equity Exchange”). As a result, Eve Sub became a wholly owned subsidiary of Zanite, which changed its name to “Eve Holding, Inc.”

Financing

On December 21, 2021, December 24, 2021, March 9, 2022, March 16, 2022, and April 4, 2022, in connection with the Business Combination, Zanite entered into subscription agreements or amendments thereto (as amended from time to time, the “Subscription Agreements”) with certain investors, including certain strategic investors and/or investors with existing relationships with ERJ (the “Strategic Investors”), Zanite Sponsor LLC, a Delaware limited liability company (the “Sponsor”), and EAH (collectively, the “PIPE Investors”), pursuant to which and on the terms and subject to the conditions of which, Zanite agreed to issue and sell to the PIPE Investors in private placements to close immediately prior to the Closing, an aggregate of 35,730,000 shares of Class A common stock at a purchase price of $10.00 per share, for an aggregate purchase price of $357,300,000, which included the commitment of the Sponsor to purchase 2,500,000 shares of Class A common stock for a purchase price of $25,000,000 and the commitment of EAH to purchase 18,500,000 shares of Class A common stock for a purchase price of $185,000,000 (the “PIPE Investment”). The PIPE Investment was consummated substantially concurrently with the Closing.  Upon Closing, all shares of Zanite Class A and Class B common stock were converted into, on a one-for-one basis, shares of common stock of Eve Holding.

Accounting Treatment of the Business Combination

The Business Combination was accounted for as a reverse recapitalization, equivalent to the issuance of shares by Eve Sub for the net monetary assets of Zanite accompanied by a recapitalization. Accordingly, the consolidated assets, liabilities, and results of operations of Eve Sub became the historical financial statements of the Company. The assets, liabilities, and results of operations of Zanite were consolidated with Eve Sub beginning on the Closing date. For accounting purposes, these financial statements of the Company represent a continuation of the financial statements of Eve Sub. The net assets of Zanite were recorded at historical costs with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are presented as those of Eve Sub. 

Both Embraer and Zanite’s sponsors incurred costs in connection with the business combination (“Transaction Costs”). The Transaction Costs that were determined to be directly attributable and incremental to the Company, and as the primary beneficiary of these expenses, were deferred and recorded as other assets in the balance sheet until the Closing. Such costs were subsequently recorded either as an expense of the Business Combination or a reduction of cash contributed with a corresponding reduction of additional paid-in capital if they were attributable to one or multiple sub-transactions of the Business Combination. 

After the Closing, EAH did not lose control over Eve Sub as EAH still held approximately 90% of Eve Holding’s shares. Therefore, the transaction did not result in a change in control that would otherwise necessitate business combination accounting. 

Basis of Presentation
 

The Company’s unaudited condensed consolidated financial statements included in this report reflect (i) the historical operating results of Eve Sub prior to the Business Combination on May 9, 2022, prepared on a carve-out basis, (ii) the combined results of Eve Sub and Zanite following the Closing, (iii) the assets and liabilities of Eve Sub at their historical cost, and (iv) the Company’s retroactive recast of the equity structure recapitalization including EPS for all periods presented.

Until the Closing date on May 9, 2022, the condensed consolidated financial statements of Eve Sub reflect the assets, liabilities and expenses that management determined to be specifically attributable to Eve Sub, as well as allocations of certain corporate level assets, liabilities and expenses, deemed necessary to fairly present the financial position, results of operations and cash flows of Eve, as discussed further below. Management believes that the assumptions used as basis for the allocations of expenses, direct and indirect, as well as assets and liabilities in the condensed consolidated financial statements are reasonable. However, these allocations may not be indicative of the actual amounts that would have been recorded had Eve operated as an independent, publicly traded company for the periods presented.

The accompanying condensed consolidated financial statements are presented in US Dollars, unless otherwise noted, and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities Exchange Commission (“SEC”) for interim financial reporting.

Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. Additionally, operating results for interim periods are not necessarily indicative of the results that can be expected for a full year. The unaudited condensed consolidated financial statements herein should be read in conjunction with our audited consolidated financial statements and notes thereto included within our most recent Annual Report on Form 10-K. These unaudited condensed consolidated financial statements reflect, in the opinion of management, all material adjustments (which include normal recurring adjustments) necessary to fairly state, in all material respects, the Company’s financial position, results of operations, and cash flows for the periods presented. All intercompany balances and transactions were eliminated in consolidation. Certain columns and rows may not add due to rounding.

Note 2 Summary of Significant Accounting Policies


The information presented under Debt updates our Significant Accounting Policies information presented in our most recent Annual Report on Form 10-K to reflect the debt agreement Eve entered into during the nine months ended September 30, 2023.


Change in Carve-Out Methodology

Prior to the separation from Embraer, Eve Sub has historically operated as part of Embraer and not as a standalone company. Therefore, a carve-out methodology was necessary to prepare historical financial statements since Eve Sub’s inception in 2017 until the Closing on May 9, 2022. For reporting periods prior to and for the year ended December 31, 2021, the management approach was used as the carve-out methodology. The management approach takes into consideration the assets that were being transferred to determine the most appropriate financial statement presentation. A management approach may also be appropriate when a parent entity needs to prepare financial statements for the sale of a legal entity, but prior to divestiture, certain significant operations of the legal entity are contributed to the parent in a common control transaction.

The Master Service Agreement (“MSA”) and Shared Service Agreement (“SSA”) were executed on December 14, 2021. Beginning January 1, 2022, Embraer started charging Eve Sub for most of the expenses Eve Sub previously carved out. Refer to Note 5 – Related Party Transactions for information regarding these agreements. On the Closing date, Embraer concluded that all relevant assets and liabilities were contributed to Eve Sub. Based on the direct charges under the MSA and SSA and the transfer of assets and liabilities to Eve Sub, the Company determined it to be appropriate to change the carve-out methodology to the legal entity approach.  The legal entity approach is often appropriate in circumstances when the transaction structure is aligned with the legal entity structure of the divested entity.  The Company applied the legal entity approach beginning January 1, 2022 until the Closing date May 9, 2022. For activity after the Closing date, no carve-out adjustments were necessary in preparation of Eve’s condensed consolidated financial statements. 

The Company has recorded the impacts of the change in carve-out methodology from the management approach to the legal entity approach  as adjustments (“Separation-Related Adjustments”) to the January 1, 2022 beginning balance sheet and not as a period activity attributable to the twelve month period ended December 31, 2022. The January 1, 2022 beginning balance sheet adjustments from the December 31, 2021 balances were as follows:


Separation-related Adjustments 




 December 31,


Separation-Related



January 1,

2021


Adjustments


2022
ASSETS








Current assets:







Cash and equivalents $ 14,376,523

$
(8 )
$ 14,376,515
Related party receivables
220,000


-


220,000
Other current assets
6,274,397


(8,567 )

6,265,830
Total current assets
20,870,920


(8,575 )

20,862,345
Capitalized software, net
699,753


(699,753 )

-
Total non-current assets
699,753

(699,753 )

-
Total assets $ 21,570,673

$ (708,328 )
$ 20,862,345












LIABILITIES AND NET PARENT EQUITY









Current liabilities:







Accounts payable

877,641


(718,232 )

159,409
Related party payables

8,642,340



1,110,032



9,752,372

Derivative financial instruments
32,226


(32,226 )

-
Other payables

616,156


(94,361 )

521,795
Total current liabilities
10,168,363


265,213


10,433,576
Other non-current payables
702,921


(297,921 )

405,000
Total non-current liabilities
702,921


(297,921 )

405,000
Total liabilities
10,871,284


(32,708 )

10,838,576
Net parent equity:







Net parent investment
10,731,615


(707,846 )

10,023,769
Accumulated other comprehensive loss
(32,226 )

32,226


-
Total net parent equity
10,699,389


(675,620 )

10,023,769
Total liabilities and net parent equity $ 21,570,673

$ (708,328 )
$ 20,862,345


Emerging Growth Company


The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.


Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that is not an emerging growth company or is an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.


Functional and Reporting Currency

 

Management has concluded that the US Dollar (“US Dollars,” “USD,” or “$”) is the functional and reporting currency of Eve. The balances and transactions of Eve Soluções de Mobilidade Aérea Urbana Ltda. ("Eve Brazil"), a direct wholly owned subsidiary of Eve based in Brazil, that were recorded in a Brazilian reais (“BRL” or “R$”) have been translated into the functional currency (USD) before being presented in the condensed consolidated financial statements.

 

Foreign currency gains and losses are related to transactions with suppliers recognized in USD, but settled in BRL. The financial impact is recognized in “Other financial gain, net” within the condensed consolidated statements of operations.

 

Prior Period Reclassification


We have reclassified certain prior period amounts to conform to the current period presentation. Exchange rate effects due to translation were reclassified from line items within “Changes in operating assets and liabilities” to “Unrealized gain on exchange rate translation” and “Effect of exchange rate changes on cash and cash equivalents” within the condensed consolidated statements of cash flows.


Use of Estimates

The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires the Company’s management to make estimates and judgments that affected the reported amounts of assets and liabilities and allocations of expenses. These judgments were based on the historical experience, management’s evaluation of trends in the industry and other factors that were deemed relevant at that time. The estimates and assumptions were reviewed on a regular basis and the changes to accounting estimates were recognized in the period in which the estimates were revised. The Company’s management recognize that the actual results could be materially different from the estimates. Under the legal entity approach, the significant estimates include, but are not limited to the measurement of warrants, fair value measurement and income taxes.

 

Debt

On January 23, 2023, Eve entered into a line of credit agreement. Any debt or borrowings from banks with an original maturity date falling within twelve months will be classified within current liabilities, as well as the current portion of any long-term debt. Debt or borrowings from banks with maturity dates greater than twelve months (long-term debt) will be classified within non-current liabilities, net of any current portion. Refer to Note 7 for additional information.  

 

New Accounting Pronouncements Not Yet Adopted

 

There are no recent accounting pronouncements pending adoption that the Company expects will have a material impact on our condensed consolidated financial statements and related disclosures.

 

F-10


Cash and cash equivalents include deposits in Bank Deposit Certificates (“CDBs”) issued by financial institutions in Brazil that are immediately available for redemption and fixed term deposits in US Dollars with original maturities of 90 days or less.  Balances consisted of the following:




 September 30,

December 31,



2023



2022

Cash 
$ 5,521,119

$ 14,446,534
CDBs

4,576,199


4,483,260
Fixed deposits

-



30,216,269

Total

$ 10,097,318

$ 49,146,063

  


Held to maturity (“HTM”) investments are recorded in the condensed consolidated balance sheets at amortized cost. These investments include time deposits with original maturities of one year or less, but greater than 90 days. 


September 30, 2023
Amortized Cost Unrealized Gains Unrealized Losses Fair Value
HTM securities, at cost:
Time deposits $ 164,448,485 $ - $ (111,646 ) $ 164,336,839

December 31, 2022
Amortized Cost Unrealized Gains Unrealized Losses
Fair Value
HTM securities, at cost: 

Time deposits $ 178,781,549 $ - $ (1,127,925 )
$ 177,653,624


No allowance for credit losses were recognized as of September 30, 2023 and December 31, 2022.


Note 5 – Related Party Transactions

Relationship with Embraer

Prior to the Closing of the transaction with Zanite, Eve Sub was managed, operated, and funded by Embraer. Accordingly, certain shared costs have been allocated to Eve and reflected as expenses in Eve's stand-alone condensed consolidated financial statements. In December 2021, Embraer started charging research and development (“R&D”) and selling, general and administrative (“SG&A”) expenses to Eve through the Master Service Agreement and Shared Service Agreement, respectively. The expenses reflected in the condensed consolidated financial statements may not be indicative of expenses that will be incurred by Eve in the future.


Corporate Costs  Embraer incurs corporate costs for services provided to Eve. These costs include, but are not limited to, expenses for information systems, accounting, treasury, purchasing, human resources, legal, and facilities. These costs benefit Eve, but are not covered under the MSA or SSA. The corporate costs are allocated between the “Research and development” and “Selling, general and administrative” line items of the condensed consolidated statements of operations as appropriate. 


Transaction Costs  During the nine month period ended September 30, 2022, Embraer paid for Transaction Costs attributable to Eve Sub. The Transaction Costs comprise, but were not limited to, costs associated with legal, finance, consulting, and auditing services with the objective to effectuate the transaction with Zanite, as described in Note 1. Expenses directly related to the anticipated closing of the transaction with Zanite were capitalized and the remaining expenses were charged to the statement of operations as SG&A expenses.

 

Master Service Agreement and Shared Service Agreement  In connection with the transfer of the assets and liabilities of the UAM business to Eve Sub, Embraer and Eve Sub entered into the MSA and SSA on December 14, 2021. The initial terms for the MSA and SSA are 15 years. The MSA can be automatically renewed for additional successive one-year periods. The MSA established a fee so that Eve may have access to Embraer’s R&D and engineering department structure, as well as, at Eve’s option, the ability to access manufacturing facilities in the future. The SSA established a cost overhead pool to be allocated, excluding any margin, so that Eve may be provided with access to certain of Embraer’s administrative services and facilities such as shared service centers. In addition, on December 14, 2021, Eve Sub entered into a MSA with Atech Negócios em Tecnologias S.A., a Brazilian corporation (sociedade anônima) (“Atech”) and wholly owned subsidiary of Embraer, for an initial term of 15 years (the “Atech MSA”). Fees under the Atech MSA are for services related to Air Traffic Management, defense systems, simulation systems, engineering, and consulting services.

  

Related Party Receivables and Payables  Certain employees have transferred from Embraer to Eve. On the transfer date of each employee, all payroll related accruals for the employee are transferred to Eve. Embraer is responsible for payroll related costs prior to the transfer date. Eve recognizes a receivable from Embraer for payroll costs incurred prior to the transfer date in the "Related party receivables" line of the condensed consolidated balance sheets. Fees and expenses in connection with the MSA are set to be payable within 45 days after receipt of the invoice by Eve together with documentation supporting the fees and expenses. Costs and expenses incurred in connection with the provision of shared services to Eve pursuant to the SSA are set to be payable within 45 days of receipt by Eve. Services provided under the MSA and SSA are recognized in "Related party payables" within the condensed consolidated balance sheets.

 

Royalty-Free Licenses  Under the MSA and SSA, Eve has a royalty-free license to access Embraer’s intellectual property to be used within the UAM market. 


Leases  Eve enters into agreements with Embraer to lease corporate office space and other facilities. In 2021, Eve Brazil signed an agreement with Embraer to lease two facilities, one in São José dos Campos and another in Gavião Peixoto, both in the state of São Paulo, Brazil. The leases never commenced and were terminated during the second quarter 2023. There were no costs associated with the lease termination. During the period ended September 30, 2023, the Company signed two new leases with Embraer for different sites. The São José dos Campos lease commenced on June 12, 2023. At lease commencement, a right-of-use (“ROU”) asset and operating lease liabilities of $338,006 were recognized in the “Right-of-use assets, net”, “Other current payables”, and “Other non-current payables” lines of the condensed consolidated balance sheets. The lease for the Gavião Peixoto site has not commenced as of September 30, 2023.


Related Party Loan  On August 1, 2022, the Company entered into a loan agreement (the “Loan Agreement”) with EAH, a wholly owned U.S. subsidiary of Embraer, in order to efficiently manage the Company’s cash at a rate of return that is favorable to the Company for an  initial term of 12 months. On August 1, 2023, Eve and EAH agreed to amend the Loan Agreement ("Amended Loan Agreement") to extend the term an additional 12 months to August 1, 2024 and increase the interest rate to 5.97% per annum. The aggregate principal amount remains to be up to $81,000,000. All accrued interest prior to the amendment was paid. The date may be extended upon mutual written agreement by the Company and Embraer. Any outstanding principal amount under the Loan Agreement may be prepaid at any time, in whole or in part, by EAH at its election and without penalty. The Company may request full or partial prepayment of any outstanding principal amount under the Loan Agreement at any time.

 

Related Party Expenses


The following table summarizes the related party expenses for the presented periods:

 



Three Months Ended
Nine Months Ended


September 30,


September 30,





2023



2022



2023



2022

Research and development
$ 20,955,523


$ 11,327,149


$ 53,363,778


$ 27,555,717

Selling, general and administrative

664,874



502,636



2,157,575



7,707,429

Total

$
21,620,397


$
11,829,785


$
55,521,353


$
35,263,146



Other Current Assets


Other current assets are comprised of the following:



September 30,

December 31,


2023


2022


Prepaid Directors & Officers insurance

$
816,405


$
1,292,317

Advances to suppliers



510,805




-


Advances to employees

209,749



74,064

Income tax advance payments (a)

-



34,642

Other assets

49,434



24,484

Total


$

1,586,393


$

1,425,507


(a) Includes federal withholding taxes and recoverable income taxes.


Property Plant and Equipment

Property, plant and equipment consisted of the following:




September 30,


December 31,


2023



2022


Development mockup


$

418,721



$

418,721


Leasehold improvement

166,740



-

Construction in progress ("CIP")


-



44,375

Computer hardware


14,684



13,368

Total property, plant and equipment

$

600,145


$

476,465


Less: Accumulated depreciation


(122,217
)

(24,879
)
Total property, plant and equipment, net $
477,928
$
451,586

Depreciation expense for the three months ended September 30, 2023 and 2022 was $37,220 and $0, respectively. Depreciation expense for the nine months ended September 30, 2023 and 2022 was $95,979 and $0, respectively. During the nine months ended September 30, 2023, the Company disposed of CIP assets associated with the site where the lease was terminated as described in Note 5. The expense is recognized in the "Selling, general and administrative" line of the condensed consolidated statement of operations.


Other Current Payables


Other current payables are comprised of the following items:




September 30,

December 31,


2023


2022


Payroll accruals
$
5,514,622

$ 4,033,516
Accrued expenses


4,314,525


2,491,847

Income tax payable



692,448




-


Other payables


143,016



122,808

Total


$

10,664,611


$

6,648,171


Other Non-Current Payables


Other non-current payables are comprised of the following items:




September 30,

December 31,


2023


2022


Advances from customers (a)


$

1,075,000



$

800,000


Payroll accruals
546,998

42,144
Other payable


405,788



177,930

Total


$

2,027,786


$

1,020,074


(a) Advances from customers relate to customers who have signed non-binding Letters of Intent to purchase eVTOLs.


Note 7 Debt


On January 23, 2023, Eve Brazil entered into a loan agreement (the “BNDES Loan Agreement”) with Banco Nacional de Desenvolvimento Economico e Social (“BNDES”), pursuant to which BNDES agreed to grant two loans to Eve Brazil with an aggregate amount of R$490 million (approximately $98 million), to support the first phase of the development of the Company’s eVTOL project. All USD approximations use foreign currency exchange rate data as of September 30, 2023.


The first loan (“Sub-credit A”), in the amount of R$80 million (approximately $16 million), will be granted in Brazilian reais by Fundo Nacional Sobre Mudança Climática (“FNMC”), a BNDES fund that supports businesses focused on mitigating climate change and reducing carbon emissions. Sub-credit A has maturity dates on a monthly basis from March 2026 through February 2035. The second loan (“Sub-credit B”), in the amount of R$410 million (approximately $82 million), will be granted in US Dollars, as adjusted on a daily basis by the US Dollar sale rate published by the Central Bank of Brazil as the “PTAX” rate. Sub-credit B has maturity dates on a quarterly basis from May 2027 through February 2035. Eve Brazil made its first draw from the loans on September 12, 2023. In connection with the first draw from Sub-credit B, a one-time R$2 million (approximately $415,000) fee to BNDES was withheld from the proceeds.



The Company's long-term debt outstanding as of September 30, 2023 included:








September 30,
2023
Title Type Interest Rate Fair Value Carrying Amount
Sub-credit A Term Loan 4.55% $ 4,589,843 $ 5,819,957
Sub-credit B Term Loan (a) 4,911,539 5,903,767
Long-term debt principal $