Eve Air Mobility Fourth Quarter & FY 2023 Results March 8, 2024 eveairmobility.com EVEX NYSE EV- Eve Holding, Inc. Fourth Quarter & FY2023 Year in review Eve Air Mobility accomplished several milestones on our journey to shape the global Urban Air Mobility (UAM) ecosystem in 2023. With suppliers of filght-critical components selected for our eVTOL, we defined its final architecture. The DNA of our alrcraft remains unchanged with a Lift + Cruise configuration - eight dedicated propellers for vertical take-of ...

[FORM 10-K Filing Information](index=1&type=section&id=FORM%2010-K) Eve Holding, Inc. filed its 2023 annual report as an accelerated filer and emerging growth company, with **269.4 million** common shares outstanding as of March 8, 2024 [Registrant Information](index=1&type=section&id=Registrant%20Information) Eve Holding, Inc. is an accelerated filer and emerging growth company, with **269.4 million** common shares outstanding as of March 8, 2024 - Eve Holding, Inc. is an accelerated filer and an emerging growth company[6](index=6&type=chunk) - | Metric | Value | | :----- | :---- | | Common Stock Outstanding (as of March 8, 2024) | 269,365,708 shares | | Aggregate Market Value of Common Stock (as of June 30, 2023) | ~$286.1 million | [Documents Incorporated by Reference](index=2&type=section&id=DOCUMENTS%20INCORPORATED%20BY%20REFERENCE) Part III information is incorporated by reference from the 2024 definitive proxy statement, to be filed within 120 days - Information for Part III of the 10-K is incorporated by reference from the 2024 definitive proxy statement, to be filed within 120 days after fiscal year end[9](index=9&type=chunk) [Table of Contents](index=3&type=section&id=Table%20of%20Contents) [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclosure](index=4&type=section&id=Forward-Looking%20Statements%20Disclosure) This report contains forward-looking statements subject to risks and uncertainties, with no obligation to update unless legally required - Forward-looking statements are based on current expectations and beliefs, but actual results may differ materially due to various risks and uncertainties[12](index=12&type=chunk)[13](index=13&type=chunk) - Key risks include ability to raise future financing, regulatory environment complexities, maintaining effective internal controls, growing market share, responding to economic conditions, managing growth, achieving profitability, accessing capital, success of strategic relationships, developing/certifying UAM solutions, competition, environmental requirements, retaining key employees, and reliance on Embraer services[15](index=15&type=chunk) - The company does not undertake to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by applicable securities laws[14](index=14&type=chunk) [PART I](index=5&type=section&id=PART%20I) [Business Overview](index=5&type=section&id=Item%201.%20Business) Eve Holding, Inc. develops comprehensive Urban Air Mobility solutions, including eVTOLs, services, and UATM, leveraging Embraer for a late 2026 eVTOL entry-into-service - Eve Holding, Inc. is an aerospace company developing a comprehensive Urban Air Mobility (UAM) solution, including eVTOLs, maintenance services, and UATM systems[19](index=19&type=chunk) - The company expects its eVTOL to reach entry-into-service in the latter half of 2026 and has an initial order pipeline of **2,850 vehicles valued at $8.6 billion** from 29 launch customers, though these agreements are non-binding[20](index=20&type=chunk)[21](index=21&type=chunk) - Eve leverages its strategic relationship with Embraer S.A. for aviation heritage, technology, intellectual property, and management experience to develop and commercialize its UAM solution globally[19](index=19&type=chunk) [Company Overview and UAM Solution](index=5&type=section&id=Overview) Eve Holding, Inc. specializes in UAM solutions, including eVTOLs, services, and UATM, targeting late 2026 entry-into-service with **2,850 non-binding orders valued at $8.6 billion** - Developing a comprehensive UAM solution: eVTOL design/production, maintenance/support services, and Urban Air Traffic Management (UATM) system[19](index=19&type=chunk) - Expected eVTOL entry-into-service: latter half of 2026[20](index=20&type=chunk) - Initial order pipeline: **2,850 vehicles valued at $8.6 billion** from 29 launch customers (non-binding agreements)[21](index=21&type=chunk) [Business Combination Details](index=5&type=section&id=Business%20Combination) Eve Holding, Inc. was formed on May 9, 2022, through a business combination involving Zanite Acquisition Corp. and Eve UAM, LLC, structured in three steps - The business combination with Zanite Acquisition Corp. and Eve UAM, LLC was consummated on May 9, 2022, resulting in Eve Holding, Inc. trading on NYSE under 'EVEX' and 'EVEXW'[23](index=23&type=chunk)[25](index=25&type=chunk) - EAH received **220,000,000 shares** of common stock of Zanite in exchange for Eve UAM, LLC interests[23](index=23&type=chunk) - The business combination involved a three-step process: Pre-Closing Restructuring, Preferred Stock Sale, and Equity Exchange[29](index=29&type=chunk) [Urban Air Mobility Market Development](index=6&type=section&id=Development%20of%20the%20Urban%20Air%20Mobility%20Market) The UAM market is driven by urbanization, congestion, and autonomous tech, offering significant eVTOL cost savings (up to **85%**) and reduced noise - Demand drivers: urbanization, traffic congestion, autonomous mobility technologies, and global carbon emission reduction initiatives[26](index=26&type=chunk) - Consumer assessment study (2020): **89%** of 14,000+ consumers would use UAM frequently; **83%** willing to pay **1.5x taxi fare** for time savings[27](index=27&type=chunk) - eVTOL operating cost savings: Estimated **65% savings** compared to conventional helicopters (piloted), **85% savings** (autonomous mode)[28](index=28&type=chunk) - eVTOL noise reduction: Designed for up to **90% lower noise footprint** compared to helicopters[30](index=30&type=chunk) [Key Success Factors for UAM Market](index=7&type=section&id=UAM%20Execution%20Requirements) UAM market success requires optimal aircraft design, certification expertise, comprehensive solutions, global scalability, and robust financial backing - Optimal Aircraft Design: 'lift plus cruise' configuration chosen for balance of performance, operating costs, and ease of certification[33](index=33&type=chunk) - Certification Experience: Essential for navigating complex, time-consuming regulatory processes (Type and Production certification)[34](index=34&type=chunk) - Solution Breadth: Need for comprehensive offerings including fleet operations, maintenance, air traffic management, and ground infrastructure[35](index=35&type=chunk) - Ability to Scale Globally: Requirement for a worldwide presence to serve diverse markets[37](index=37&type=chunk) - Financial Strength: Access to sufficient investment capital and a healthy order pipeline are critical for growth[38](index=38&type=chunk) [Eve's Integrated Business Model](index=8&type=section&id=Our%20Business%20Model) Eve's integrated business model combines eVTOL production, service solutions, and UATM, featuring a lift-plus-cruise design, leveraging Embraer, and requiring substantial capital - eVTOL Design: Lift plus cruise, eight redundant rotors, separate forward propulsion, fixed wing. Initially **4 passengers + pilot**, evolving to **6 passengers** (autonomous). Range: **100 km** at entry into service[39](index=39&type=chunk) - Service and Operations: Full suite of support (materials, maintenance, technical support, training, ground handling, data) for Eve and third-party eVTOLs, leveraging Embraer's network[40](index=40&type=chunk) - UATM: Next-generation system developed with Atech, offered as subscription software to air navigation service providers, fleet operators, and vertiport operators[41](index=41&type=chunk) - Strategic Partnership: Embraer acts as a subcontractor through Master Service Agreements (MSAs) and Shared Service Agreement (SSA), providing engineering, flight test, manufacturing, and aftermarket resources[42](index=42&type=chunk) - Current Financial Status: No revenue generated to date; requires substantial additional capital for product development and operations, financed through existing cash, public/private offerings, and debt[48](index=48&type=chunk) [Customer Base and Strategic Partnerships](index=9&type=section&id=Our%20Customers%20and%20Partners) Eve targets UAM service operators, with **2,850 non-binding orders valued at $8.6 billion**, supported by a broad partner network across technology, energy, vertiports, and financing - Initial order pipeline: **2,850 vehicles valued at $8.6 billion** from 29 launch customers (non-binding agreements)[49](index=49&type=chunk) - Target customers: Fixed Wing Operators (United Airlines, Republic Airways, SkyWest, GlobalX, Sydney Seaplanes), Helicopter Operators (Avantto, Bristow Group, Halo Aviation, Helisul Aviação, Nautilus Aviation, Omni Helicopters International), Aircraft Lessors (Azorra, Falko), and Ride Sharing Platforms (Blade Urban Air Mobility, Blade India, Flapper, Helipass)[49](index=49&type=chunk)[51](index=51&type=chunk) - Partner network includes: Technology (BAE Systems, Rolls-Royce, Thales Group), Renewable Energy (Acciona, EDP Group, Florida Power & Light), Vertiports (Heathrow Airport, Jetex, London City Airport, Pentastar Aviation, Rio de Janeiro International, Signature Aviation, Skyports, Universal Aviation), and Financing (BNDES, Bradesco BBI)[52](index=52&type=chunk) [Competitive Advantages](index=10&type=section&id=Our%20Competitive%20Strengths) Eve's competitive strengths include optimal eVTOL design, Embraer's certification experience, a holistic UAM solution, strategic support, a powerful partner network, revenue visibility, and an experienced team - Optimal Vehicle Design: Lift plus cruise eVTOL for range, speed, reliability, and clear certification pathway[53](index=53&type=chunk) - Proven Aircraft Certification Experience: Leveraging Embraer's **50-year track record** and relationships with ANAC, FAA, EASA[54](index=54&type=chunk) - Holistic UAM Solution: Comprehensive offering across eVTOL design/production, maintenance/support, and UATM systems[55](index=55&type=chunk) - Strategic Support from ERJ: Access to ~**5,000 Embraer employees** (**1,600 engineers**), flight test infrastructure, manufacturing resources, aftermarket network, and royalty-free IP license[56](index=56&type=chunk) - Powerful Partner Network: Over two dozen industry leaders globally across various segments[57](index=57&type=chunk) - Significant Revenue Visibility: Order pipeline of **2,850 vehicles** (**$8.6 billion**), exceeding expected shipments for the first four years[59](index=59&type=chunk) - Highly Experienced Management Team and Board: Leadership with extensive aviation industry experience, many from Embraer[60](index=60&type=chunk) [Growth Strategy Pillars](index=11&type=section&id=Our%20Growth%20Strategy) Eve's growth strategy combines startup agility with Embraer's execution, using hybrid innovation, established certification practices, and strategic partnerships to expand its UAM solution - Combine Startup Mindset with Established Execution Skills: Leverage agility of a disrupter with Embraer's support[61](index=61&type=chunk) - Utilize Hybrid Innovation Approach: Combine Embraer's background IP (royalty-free) with Eve's proprietary innovations (e.g., fly-by-wire systems with bespoke man-machine interface)[62](index=62&type=chunk) - Follow Established Development and Certification Practices: Extensive use of proof-of-concept vehicles, subscale models, and engagement with ANAC as primary certification authority[63](index=63&type=chunk) - Leverage Partnerships and Acquisitions: Expand partner ecosystem and selectively pursue strategic acquisitions for organic growth[64](index=64&type=chunk) [eVTOL Design and Safety Features](index=12&type=section&id=eVTOL%20Technology%20Considerations) Eve's eVTOL design prioritizes safety, low costs, zero emissions, and low noise, featuring a lift-plus-cruise configuration with redundant rotors, fixed wings, and distributed propulsion - Design Choice: Lift plus cruise configuration for high safety, optimal performance, and operational cost balance, avoiding complex tilting mechanisms[66](index=66&type=chunk) - Safety Features: Eight redundant rotors for lift, fixed wings for extended range after pusher failure, ensuring safe operation[67](index=67&type=chunk) - Battery Performance: Focus on maximizing energy, meeting power demands, fast charging, and long cycle life[68](index=68&type=chunk) - Noise Reduction: Distributed propulsion reduces rotor blade tip speeds, large rotor area, and electric motors make it significantly quieter (up to **90% less** than helicopters); rotors turn off during cruise[69](index=69&type=chunk) - Flight Control Systems: Complex fly-by-wire systems for control and stability, leveraging Embraer's experience[70](index=70&type=chunk) - Autonomy Evolution: Initial piloted operations, with a planned transition to fully autonomous flights as technology and ecosystem mature[71](index=71&type=chunk) [R&D Activities](index=13&type=section&id=Research%20and%20Development) Eve conducts extensive R&D on eVTOL concept vehicles, subsystems, and electric powertrains, using testbeds, simulations, and lab tests to optimize designs - Significant R&D efforts are focused on eVTOL concept vehicles, subsystems, battery systems, and electric powertrain components, utilizing testbeds, simulations, and lab tests[73](index=73&type=chunk) [Manufacturing Strategy](index=13&type=section&id=Manufacturing) Eve leverages Embraer and Atech MSAs for manufacturing, with initial production in Embraer's Brazilian facilities, planning a transition to Eve's own global modules - Manufacturing support: Leverages MSAs with Embraer (**15-year term**) and Atech (**10-year term**) for manufacturing support and software development services[74](index=74&type=chunk) - Initial production: Proof-of-concept vehicles, testbeds, simulators, and initial flight-test prototypes will be developed and manufactured in Embraer's existing facilities in Brazil[75](index=75&type=chunk) - Future expansion: Plans to transition to Eve's own manufacturing modules for serial production, with locations based on economic factors and proximity to customer markets[76](index=76&type=chunk) [Intellectual Property Protection](index=13&type=section&id=Intellectual%20Property) Eve protects its IP through patents, trademarks, copyrights, and trade secrets, holding **38 granted trademarks**, **19 pending applications**, and **9 granted patents** as of December 31, 2023 - IP Protection Methods: Patents, patent applications, trademarks, copyrights, trade secrets, and contracts (license, confidentiality, invention assignment agreements)[77](index=77&type=chunk) - Trademarks (as of Dec 31, 2023): **38 granted registrations**, **19 pending applications** (U.S. and Brazil)[78](index=78&type=chunk) - Patents (as of Dec 31, 2023): **9 granted patents**, **10 designs**, and **30 patent/industry design applications** filed, primarily for eVTOL vehicle technology (e.g., rotor configurations, cruise rotor control, flight control solutions)[78](index=78&type=chunk) [Regulatory and Certification Process](index=14&type=section&id=Governmental%20Regulation) Eve pursues eVTOL certification with ANAC as primary authority, leveraging Embraer's experience for FAA and EASA validation, aiming for common airworthiness criteria - Primary Certification Authority: ANAC (Brazil), with FAA and EASA as validating authorities[81](index=81&type=chunk) - ANAC Type Certificate Application: Accepted on February 3, 2022, establishing certification basis under RBAC no. 23 with special conditions[82](index=82&type=chunk) - Public Consultation: ANAC published proposed airworthiness criteria in December 2023, closing in February 2024[83](index=83&type=chunk) - Certification Basis: Discussions with FAA for 14 CFR Part 23 (amendment 64) and EASA SC-eVTOL for commercial purposes, aiming for commonality[83](index=83&type=chunk) [Competitive Landscape](index=15&type=section&id=Competition) Eve faces competition from UAM developers and aerospace firms; success hinges on eVTOL performance, timely certification, efficient manufacturing, strategic partnerships, and advanced technology - Primary Competitors: Focused UAM developers (Archer Aviation, Beta Technologies, Ehang, Joby Aviation, Lilium, Vertical Aerospace, Volocopter, Wisk) and established aerospace/automotive companies (Airbus, Bell Textron, Honda, Hyundai)[88](index=88&type=chunk) - Competition in specific segments: Service and Operations Solutions (Airbus, Bell Textron, Boeing), UATM (companies developing Unmanned Traffic Management systems)[89](index=89&type=chunk) - Key Success Factors: eVTOL performance, timely certification, efficient manufacturing, strategic partnerships for operations, value-added UAM services, next-gen technology, and high quality/reliability/safety[89](index=89&type=chunk) [Workforce and Labor Relations](index=15&type=section&id=Human%20Capital) As of December 31, 2023, Eve had **180 full-time employees** (**115 in engineering**), supplemented by up to **524 Embraer employees**, with good labor relations - | Metric | Value (as of Dec 31, 2023) | | :----- | :------------------------- | | Total Full-time Employees | 180 | | Engineering Workforce | 115 | | Embraer Employees (first priority access) | Up to 524 | - All Brazilian employees are unionized, and the company maintains good relationships with its employees, with no interruptions due to labor disagreements[90](index=90&type=chunk) [ESG Initiatives](index=16&type=section&id=Our%20Commitment%20to%20Environmental%2C%20Social%20and%20Governance%20Leadership) Eve is committed to ESG leadership, addressing congestion and climate change through efficient, electric, zero-emission aircraft, structured around Environmental, Social, and Governance pillars - Environmental Pillar: Focus on sustainable manufacturing, reducing resource use and energy consumption, full life-cycle design, chemical reduction, and tracking emissions/waste[94](index=94&type=chunk) - Social Pillar: Promote diversity, equity, inclusion, health, safety, and democratize UAM through affordable, green, and accessible solutions[95](index=95&type=chunk) - Governance Pillar: Uphold ethical business conduct, integrity, corporate responsibility, and integrate strong governance/enterprise risk management[96](index=96&type=chunk) [Publicly Available Information](index=16&type=section&id=Available%20Information) Eve's website (www.eveairmobility.com) provides access to its SEC filings, including 10-K, 10-Q, 8-K, and proxy statements - Company's website (www.eveairmobility.com) provides access to SEC filings, including 10-K, 10-Q, 8-K, and proxy statements[96](index=96&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) Investment in Eve Holding, Inc. securities involves high risk due to the emerging UAM market, operational challenges, regulatory uncertainties, partner reliance, and macroeconomic factors - Investment in Eve Holding, Inc. securities involves a high degree of risk[98](index=98&type=chunk) - The UAM market is emerging and may not achieve expected growth or consumer adoption[99](index=99&type=chunk) - eVTOL aircraft may not perform as expected, have defects, or face production challenges[100](index=100&type=chunk) - Regulatory approvals for commercialization (Type, Production, Operating Certifications) are critical and may be delayed[102](index=102&type=chunk) - Reliance on ERJ for services, products, and components exposes the company to supply chain and operational risks[100](index=100&type=chunk) - The company is an early-stage company with a history of losses and expects significant future losses, with no assurance of profitability[102](index=102&type=chunk) - Cybersecurity risks to operational systems, aircraft software, and customer data are significant[99](index=99&type=chunk) - Brazilian political and economic conditions, including inflation and exchange rate volatility, directly impact the business[100](index=100&type=chunk) [Summary of Key Risk Factors](index=18&type=section&id=Summary%20of%20Risk%20Factors) Key risks include an unestablished UAM market, consumer reluctance, airspace limitations, UATM underperformance, launch delays, production challenges, and financial risks from losses and capital needs - Market for UAM is emerging and may not achieve expected growth or consumer adoption[100](index=100&type=chunk) - eVTOL aircraft may not perform as expected (noise, payload, range, cost) or have defects[102](index=102&type=chunk) - Inability to produce eVTOL aircraft in projected volumes and timelines[100](index=100&type=chunk) - Crashes, accidents, or incidents involving eVTOLs or UATM solutions could materially affect the business[102](index=102&type=chunk) - Reliance on ERJ for development, certification, and supply of critical components exposes the company to risks[100](index=100&type=chunk) - Agreements with customers are non-binding, posing risks to order pipeline and future revenue[102](index=102&type=chunk) - Inability to obtain relevant regulatory approvals (Type, Production, Operating Certifications) for commercialization[102](index=102&type=chunk) - Company is an early-stage company with a history of losses and expects significant losses for the foreseeable future[102](index=102&type=chunk) [Business and Industry Specific Risks](index=20&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Industry) This section details risks specific to Eve's business and the UAM industry, covering market adoption, aircraft performance, production, regulatory hurdles, and operational challenges [Market and Service Risks](index=20&type=section&id=Market%20%26%20Service) Market risks include uncertain UAM growth, consumer reluctance, pricing issues, community rejection, airspace limitations, and UATM underperformance or regulatory delays - UAM market is still emerging; uncertain growth and consumer adoption[103](index=103&type=chunk) - Consumers may be unwilling to pay projected prices for aerial ridesharing services[105](index=105&type=chunk) - Local communities may reject eVTOL operations due to perceived safety risks or burdens (noise, visual pollution)[109](index=109&type=chunk) - Current airspace regulations may not be modified to increase air traffic capacity, leading to limitations[111](index=111&type=chunk)[112](index=112&type=chunk) - UATM systems may underperform, fail to provide adequate situational awareness, or not allow industrial scalability, impacting the UAM ecosystem's growth[119](index=119&type=chunk) [Aircraft and Production Risks](index=24&type=section&id=Aircraft%20and%20Production) Aircraft and production risks include unproven manufacturing, potential defects, inability to mass produce, reliance on ERJ, certification delays, supply chain disruptions, and union activities - No prior experience in manufacturing or delivering eVTOL aircraft, making business evaluation difficult[130](index=130&type=chunk) - eVTOL aircraft may not perform as expected (e.g., higher noise, lower payload, shorter range, higher costs) or may have defects[135](index=135&type=chunk) - Significant challenges in mass producing aircraft in projected volumes and timelines, including capital requirements, long lead times, and specialized expertise[139](index=139&type=chunk) - Reliance on ERJ and other sole-source suppliers for services, products, parts, and components exposes the company to supply chain disruptions and delivery failures[150](index=150&type=chunk) - Non-binding customer agreements for all current aircraft orders pose a risk if definitive agreements are not reached or orders are cancelled/modified[157](index=157&type=chunk) [Regulatory and Airspace Risks](index=30&type=section&id=Regulatory%20%26%20Airspace) Regulatory risks include delays in critical eVTOL certifications, increased operating costs from regulation changes, stringent export/import controls, and evolving data privacy laws with potential for non-compliance liabilities - Inability to obtain relevant regulatory approvals (Type, Production, Operating Certifications) for aircraft commercialization on anticipated timelines[160](index=160&type=chunk) - Changes in government regulation could impose additional requirements, increasing operating costs and causing service delays[161](index=161&type=chunk) - Stringent U.S. export and import control laws and economic sanctions laws pose compliance risks, potentially leading to penalties or loss of privileges[163](index=163&type=chunk)[166](index=166&type=chunk) - Rapidly changing privacy, data protection, and data security laws (e.g., CCPA) require significant compliance efforts, with non-compliance risking litigation, fines, and reputational damage[167](index=167&type=chunk)[169](index=169&type=chunk) [Macroeconomic and Technology Risks](index=32&type=section&id=Macroeconomic) Macroeconomic and technology risks include uncertain eVTOL market development, IP violations, insurance difficulties, partner relationship deterioration, technology maturation failures, and a history of significant losses with no guaranteed profitability - Uncertainty in eVTOL industry development, market adoption, and government certification (FAA, ANAC, EASA) for commercial operations[170](index=170&type=chunk) - Risks of intellectual property violations, inability to protect proprietary rights, and defending against infringement claims[173](index=173&type=chunk) - Difficulty in securing adequate insurance policies at reasonable prices as operations scale[174](index=174&type=chunk) - Deterioration or termination of relations with strategic partners (e.g., ERJ, Atech) could adversely affect business[179](index=179&type=chunk) - Failure of key technologies (e.g., autonomy, battery density) to mature as projected may impact service volume and pricing[181](index=181&type=chunk) - History of significant losses since inception (**$127.7 million in 2023**, **$174.0 million in 2022**, **$18.3 million in 2021**) and expectation of continued losses for the foreseeable future[183](index=183&type=chunk)[184](index=184&type=chunk) - Significant operating expenses expected to increase with development, manufacturing, and scaling, potentially outpacing revenue[186](index=186&type=chunk) [Operational and Infrastructure Risks](index=37&type=section&id=Operations%20and%20Infrastructure) Operational risks include cybersecurity threats, weather interruptions, maintenance costs, growth management challenges, talent acquisition, increased public company costs, and strategic alliance risks - Cybersecurity risks to operational systems, security systems, aircraft software, and customer data, potentially leading to disruptions, data loss, and reputational harm[191](index=191&type=chunk) - Shortage of qualified pilots and mechanics could increase operating costs and limit service deployment at scale[211](index=211&type=chunk) - Aircraft utilization may be lower than expected due to poor weather conditions (snowstorms, thunderstorms, icing, fog), leading to service delays and disruptions[214](index=214&type=chunk) - Unexpectedly high frequency or cost of aircraft maintenance could adversely impact business and operations[215](index=215&type=chunk) - Risks associated with climate change, including increased impacts of severe weather events on operations and infrastructure[217](index=217&type=chunk) - Inability to manage future growth effectively could strain resources and lead to operating difficulties[202](index=202&type=chunk) - Increased costs and management time devoted to compliance as a public company[203](index=203&type=chunk) [Financial Risks](index=42&type=section&id=Financial%20Risks) Financial risks include ineffective use of business combination proceeds, insufficient capital requiring dilutive financing, and stock price volatility influenced by analyst coverage - Broad discretion in using business combination proceeds, with potential for ineffective allocation[219](index=219&type=chunk) - Available capital resources may be insufficient, necessitating additional capital raises through equity or debt, potentially diluting stockholders or imposing restrictive covenants[221](index=221&type=chunk) - Market price and trading volume of common stock can be volatile, influenced by analyst research, financial results, and broad market factors[220](index=220&type=chunk) [Risks Related to Brazilian Operations](index=43&type=section&id=Risks%20Related%20to%20our%20Ties%20to%20Brazil) Eve's business is significantly impacted by Brazilian political and economic conditions, including government intervention, inflation, exchange rate volatility, and potential credit rating downgrades - Brazilian political and economic conditions directly impact the business, including government intervention, interest rates, exchange rates, inflation, and tax policies[223](index=223&type=chunk) - Uncertainty over government policies and political instability (e.g., corruption investigations) create volatility in the Brazilian economy and may adversely affect operations[227](index=227&type=chunk) - Historically high inflation rates in Brazil and government efforts to combat them can increase costs, reduce profit margins, and affect debt service[233](index=233&type=chunk) - Exchange rate volatility, particularly the depreciation of the Brazilian real against the U.S. dollar, can affect labor and engineering development costs, as well as the value of U.S. dollar-denominated cash[243](index=243&type=chunk)[249](index=249&type=chunk) - Infrastructure and workforce deficiencies in Brazil may limit economic growth and adversely affect the company[251](index=251&type=chunk) - Further downgrading of Brazil's sovereign credit rating could increase the cost of debt and impact the market price of common stock[252](index=252&type=chunk) - Decreases in Brazilian government-sponsored customer financing or increases in competitor financing could reduce the competitiveness of Eve's aircraft[255](index=255&type=chunk)[256](index=256&type=chunk)[262](index=262&type=chunk) [Business Combination Related Risks](index=49&type=section&id=Risks%20Related%20to%20the%20Business%20Combination) Business combination risks include warrant dilution, redemption issues, prior internal control weaknesses, market price volatility, NYSE listing compliance, and reliance on ERJ for administrative functions - Exercise of outstanding warrants (public, private placement, new warrants) will increase shares eligible for resale, resulting in dilution to stockholders[263](index=263&type=chunk) - Company may redeem unexpired public warrants and certain other warrants prior to their exercise at a disadvantageous time, making them worthless[264](index=264&type=chunk) - Prior material weaknesses in internal control over financial reporting led to financial statement restatements, creating potential for litigation[270](index=270&type=chunk)[272](index=272&type=chunk) - Market price and trading volume of securities may be volatile and could decline significantly due to various factors[277](index=277&type=chunk) - Inability to maintain compliance with NYSE listing standards could lead to delisting and adverse consequences[281](index=281&type=chunk) - Reliance on ERJ for administrative and support functions via Services Agreements, with risks if ERJ fails to perform or agreements terminate[292](index=292&type=chunk) - Payments under the Tax Receivable Agreement (TRA) to EAH may be substantial and could exceed actual tax benefits, potentially impairing liquidity or accelerating payments[296](index=296&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk) [Common Stock and Warrants Ownership Risks](index=58&type=section&id=Risks%20Related%20to%20Ownership%20of%20Common%20Stock%20and%20Warrants) Stockholder risks include management's limited public company experience, SOX compliance challenges, potential litigation, future stock sales depressing prices, and no anticipated dividends - Management has limited experience operating a public company, potentially leading to challenges in regulatory oversight and reporting obligations[304](index=304&type=chunk) - Failure to timely and effectively build accounting systems for Section 404(a) of Sarbanes-Oxley Act could adversely affect the business and investor confidence[305](index=305&type=chunk) - Future sales or resales of common stock by the company or existing securityholders (including PIPE Investors post-lock-up) could cause the market price to drop significantly[314](index=314&type=chunk) - The company does not intend to pay dividends for the foreseeable future, requiring investors to rely on stock sales for returns[312](index=312&type=chunk) - Potential for securities litigation due to stock price volatility, which could be expensive and divert management attention[313](index=313&type=chunk) [Unresolved Staff Comments](index=56&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) No unresolved staff comments were reported - No unresolved staff comments were reported[316](index=316&type=chunk) [Cybersecurity Risk Management and Governance](index=56&type=section&id=Item%201C.%20Cybersecurity) Eve adopts Embraer's NIST 800 and ISO 27001/2-based cybersecurity risk management, conducting regular assessments and maintaining incident response plans, with Board oversight - Adopts Embraer's cybersecurity processes based on NIST 800 and ISO 27001/2 for risk assessment, identification, and management[318](index=318&type=chunk) - Conducts security assessments, vulnerability management, penetration testing, security audits, and maintains incident response plans[319](index=319&type=chunk) - Third-party cybersecurity risk management process in place for suppliers with access to confidential information[320](index=320&type=chunk) - No known material cybersecurity incidents or risks to date[322](index=322&type=chunk) - Cybersecurity governance includes annual enterprise risk assessments by management, oversight by the Board and Audit Committee, and the CISO's primary responsibility for risk management[323](index=323&type=chunk) [Properties](index=57&type=section&id=Item%202.%20Properties) Eve operates from facilities in Melbourne, Florida, and Eugenio de Melo, Brazil, with a new leased site in Gavião Peixoto, all on Embraer-owned/leased land - Operates from facilities in Melbourne, Florida, and Eugenio de Melo, Brazil; a leased facility in Gavião Peixoto, Brazil, is yet to commence. All facilities are on Embraer-owned/leased land[324](index=324&type=chunk) [Legal Proceedings](index=57&type=section&id=Item%203.%20Legal%20Proceedings) No material legal claims, lawsuits, or proceedings are currently pending against the company that would adversely affect its business or financial results - No material legal proceedings are currently pending against the company[325](index=325&type=chunk) [Mine Safety Disclosures](index=57&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine Safety Disclosures are not applicable to the company - Mine Safety Disclosures are not applicable[326](index=326&type=chunk) [PART II](index=58&type=section&id=PART%20II) [Market for Common Equity and Stockholder Matters](index=58&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Eve's common stock trades on NYSE under 'EVEX', with **60 holders of record** as of December 31, 2023; no dividends are anticipated, and earnings will be retained - Common stock trades on the NYSE under the symbol 'EVEX'[328](index=328&type=chunk) - | Metric | Value (as of Dec 31, 2023) | | :----- | :------------------------- | | Holders of Record | 60 | - No cash dividends declared or paid, nor anticipated in the foreseeable future; future earnings will be retained for business growth[330](index=330&type=chunk) - No recent sales of unregistered securities or use of proceeds from registered offerings[333](index=333&type=chunk) [Reserved](index=58&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Eve is an early-stage UAM company with no revenue, incurring significant net losses in 2023 and 2022 due to R&D, relying on existing capital and debt, with future needs tied to eVTOL development and market conditions - Eve is a development stage company with no revenue generated to date, expecting to incur losses and negative operating cash flows until sustainable commercial operations commence[342](index=342&type=chunk)[377](index=377&type=chunk) - Net Loss (in thousands USD) | Year Ended December 31, | Net Loss | | :---------------------- | :------- | | 2023 | $(127,658) | | 2022 | $(174,030) | | 2021 | $(18,256) | - Research and development expenses increased significantly by **104% in 2023** compared to 2022, primarily due to increased headcount, engineering expenses, and prototype development costs[367](index=367&type=chunk)[368](index=368&type=chunk) [Company Overview](index=59&type=section&id=Overview) Eve Holding, Inc. aims to lead the UAM market by developing eVTOLs, maintenance services, and UATM systems, leveraging its strategic relationship with Embraer - Eve Holding, Inc. aims to be a leading UAM company by developing eVTOLs, maintenance/support services, and a UATM system, leveraging its strategic relationship with Embraer[338](index=338&type=chunk) [Eve's Core Business Offerings](index=59&type=section&id=Eve%27s%20Business%20Model) Eve's business model includes eVTOL production, agnostic service/support, and a subscription-based UATM system; it currently generates no revenue and requires substantial capital - eVTOL Production and Design: Designing and certifying eVTOLs for global UAM service operators and lessors[339](index=339&type=chunk) - Service and Operations Solutions: Offering comprehensive eVTOL service and support (materials, maintenance, technical support, training, ground handling, data) for its own and third-party eVTOLs[340](index=340&type=chunk) - Urban Air Traffic Management: Developing a next-generation UATM system as a subscription software for air navigation service providers, fleet operators, and vertiport operators[341](index=341&type=chunk) - Financial Status: No revenue generated to date; requires substantial additional capital for product development and operations[342](index=342&type=chunk) [Strategic Service Agreements](index=60&type=section&id=Service%20Agreements) Eve Sub has MSAs with Embraer and Atech, and an SSA with Embraer and EAH, providing access to R&D, engineering, manufacturing, and administrative services for UAM solution development - MSAs with Embraer and Atech: Provide services and products for eVTOL development, certification, manufacturing, and support (e.g., R&D, engineering, parts planning, MRO, training, administrative services)[343](index=343&type=chunk) - SSA with Embraer, EAH, and Eve Brazil: Provides corporate and administrative services to Eve[343](index=343&type=chunk) - Data Access Agreement: ERJ provides Eve Brazil access to certain IP and proprietary information for UAM business activities[343](index=343&type=chunk) [Key Factors Influencing Operating Results](index=60&type=section&id=Key%20Factors%20Affecting%20Operating%20Results) Operating results are influenced by Brazil's economy, the undeveloped UAM market, and critical government certifications; viability depends on timely eVTOL delivery, market adoption, and high utilization - Brazilian Economic Environment: Frequent government intervention, inflation, and exchange rate variations significantly impact financial condition and results[346](index=346&type=chunk) - Development of the UAM Market: Revenue tied to eVTOL development and sales; market is undeveloped with uncertain future demand and adoption drivers (time savings, safety, cost)[348](index=348&type=chunk) - Competition: Dynamic and increasingly competitive industry; risk of competitors reaching market first or benefiting from Eve's market development efforts[350](index=350&type=chunk) - Government Certification: Critical for commercialization (ANAC, FAA, EASA); delays or failure to obtain could adversely affect business[352](index=352&type=chunk)[353](index=353&type=chunk) - Initial Business Development Engagement: Engaged in CONOPS collaborations and secured non-binding letters of intent for over **2,850 eVTOLs**[354](index=354&type=chunk)[355](index=355&type=chunk) - Fully-Integrated Business Model: Uncertain payback periods; viability depends on timely eVTOL delivery at cost-effective prices, sufficient market adoption, and high aircraft utilization rates[357](index=357&type=chunk) [Recent Business Developments](index=62&type=section&id=Recent%20Developments) On October 9, 2023, Eve Sub and Embraer entered a supply agreement for the design, development, manufacturing, testing, and certification support of the EVE-100 eVTOL - Eve Sub and Embraer entered into a supply agreement on October 9, 2023, for the design, development, manufacturing, testing, and certification support of the EVE-100 eVTOL[358](index=358&type=chunk) [Analysis of Operating Results Components](index=62&type=section&id=Components%20of%20Results%20of%20Operations) Eve, a development-stage company, expects initial revenue in 2025 (services/UATM) and late 2026 (eVTOL sales), with increasing R&D, decreasing SG&A and New Warrants expenses, and impacts from derivative liabilities - Revenue: No revenue generated to date; projected to begin in **2025** for Service and Operations Solutions/UATM, and late **2026** for eVTOL sales[359](index=359&type=chunk) - Research and Development Expenses: Expected to increase significantly due to staffing, engineering, prototype building, and software development[360](index=360&type=chunk) - Selling, General and Administrative Expenses: Decreased by **$9.8 million in 2023** (**30% YoY**) due to non-recurring IPO-related expenses in 2022[362](index=362&type=chunk)[363](index=363&type=chunk) - New Warrants Expenses: Decreased by **$103.0 million in 2023** (**98% YoY**) due to non-recurring warrants issued to Strategic PIPE Investors in 2022[364](index=364&type=chunk)[367](index=367&type=chunk) - Change in Fair Value of Derivative Liabilities: Increased loss by **$20.0 million in 2023** (**209% YoY**) due to an increase in the value of Private Placement Warrants[369](index=369&type=chunk)[370](index=370&type=chunk)[371](index=371&type=chunk) [Consolidated Results of Operations (2023 vs. 2022)](index=63&type=section&id=Results%20of%20Operations) Eve reported a net loss of **$127.7 million in 2023**, an improvement from **$174.0 million in 2022**, driven by decreased New Warrants expenses and higher investment income - Consolidated Statements of Operations (in thousands USD) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------------------ | :------- | :------- | :--------- | :--------- | | Research and development expenses | $105,581 | $51,858 | $53,724 | 104% | | Selling, general and administrative expenses | $23,104 | $32,856 | $(9,752) | (30)% | | New Warrants expenses | $1,863 | $104,776 | $(102,913) | (98)% | | Loss from operations | $(130,549) | $(189,490) | $58,941 | (31)% | | (Loss)/gain from change in fair value of derivative liabilities | $(10,403) | $9,548 | $(19,950) | (209)% | | Financial investment income | $11,672 | $5,073 | $6,599 | 130% | | Interest income from related party loan | $4,385 | $1,650 | $2,735 | 166% | | Other (loss)/gain, net | $(945) | $122 | $(1,066) | (876)% | | Interest expense | $(252) | $- | $(252) | 100% | | Loss before income taxes | $(126,091) | $(173,097) | $47,007 | (27)% | | Income tax expense | $1,568 | $933 | $635 | 68% | | Net loss | $(127,658) | $(174,030) | $46,372 | (27)% | - Research and development expenses increased by **$53.7 million** (**104%**) due to higher headcount, engineering expenses, and prototype development costs[368](index=368&type=chunk) - Selling, general and administrative expenses decreased by **$9.8 million** (**30%**) due to non-recurring IPO-related expenses in 2022[369](index=369&type=chunk) - New Warrants expenses decreased by **$103.0 million** (**98%**) due to non-recurring warrants issued in 2022[370](index=370&type=chunk) - Loss from change in fair value of derivative liabilities increased by **$20.0 million** (**209%**) due to an increase in Private Placement Warrants value[371](index=371&type=chunk) - Financial investment income increased by **$6.6 million** (**130%**) due to 12 months of income in 2023 vs. 8 months in 2022[372](index=372&type=chunk) - Interest income from related party loan increased by **$2.7 million** (**166%**) due to 12 months of income in 2023 vs. 5 months in 2022[373](index=373&type=chunk) - Other loss, net increased by **$1.1 million** (**876%**) due to a net decrease in the BRL to USD exchange rate[374](index=374&type=chunk) - Interest expense increased by **$0.3 million** due to BNDES Loans secured in January 2023[375](index=375&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) Eve has incurred net losses and no revenue, requiring substantial capital; total liquidity was approximately **$316.3 million** as of December 31, 2023, but additional financing is likely needed for eVTOL development - Eve has incurred net losses since inception and has not generated revenue, requiring substantial additional capital for product development and operations[377](index=377&type=chunk) - Liquidity (as of Dec 31, 2023, in millions USD) | Metric | Amount | | :----- | :----- | | Cash | $46.9 | | Investments in marketable securities | $111.2 | | Related party loan receivable | $83.1 | | Available BNDES loan draws | $75.1 | | **Total Liquidity** | **~$316.3** | - Future capital requirements depend on R&D expenses, manufacturing expansion, operating costs, and marketing[380](index=380&type=chunk) - Existing funds are likely insufficient to complete all eVTOL development and commercial launch, necessitating future equity or debt financing[382](index=382&type=chunk) [Financing Activities](index=66&type=section&id=Financing%20Activities) In January 2023, Eve Brazil secured two BNDES loan facilities totaling R$490 million (approximately **$101.2 million**) for eVTOL development, with **$26.1 million** drawn by year-end - Eve Brazil secured two loan facilities from BNDES on January 23, 2023, totaling R$490 million (~**$101.2 million**) for eVTOL project development[384](index=384&type=chunk)[385](index=385&type=chunk) - BNDES Loan Status (as of Dec 31, 2023) | Metric | Amount (USD equivalent) | | :----- | :---------------------- | | Total Borrowing Availability | ~$101.2 million | | Debt Outstanding | $26.1 million | [Cash Flow Analysis (2023 vs. 2022)](index=66&type=section&id=Cash%20Flows) Net cash used in operating activities increased to **$94.5 million in 2023**, investing activities provided **$66.8 million**, and financing activities provided **$24.9 million** - Cash Flows (in thousands USD) | Cash Flow Category | 2023 | 2022 | Change ($) | | :----------------- | :------- | :------- | :--------- | | Operating Activities | $(94,509) | $(59,458) | $(35,051) | | Investing Activities | $66,832 | $(258,476) | $325,308 | | Financing Activities | $24,926 | $352,704 | $(327,778) | | Net (decrease) increase in cash and cash equivalents | $(2,264) | $34,770 | $(37,034) | - Net cash used by operating activities increased due to higher R&D expenses, partially offset by higher accounts payable to ERJ[387](index=387&type=chunk) - Net cash provided by investing activities resulted from net redemptions of investments to fund operations, contrasting with capital contributions and related party loans in 2022[388](index=388&type=chunk) - Net cash provided by financing activities decreased significantly due to the non-recurrence of proceeds from the business combination and PIPE Investment in 2022[389](index=389&type=chunk) [Critical Accounting Estimates](index=67&type=section&id=Critical%20Accounting%20Estimates) Valuation allowance for deferred tax assets is a critical accounting estimate, dependent on future taxable income, totaling **$395.9 million** as of December 31, 2023 - Valuation allowance of deferred taxes is a critical accounting estimate, dependent on the ability to generate sufficient future taxable income. As of December 31, 2023, valuation allowances against deferred tax assets were **$395.9 million**[391](index=391&type=chunk) [Credit Risk Management](index=68&type=section&id=Credit%20Risk) Eve's credit risk is concentrated in cash, financial investments, and a related party loan, held at major institutions, with minimal risk deemed after counterparty evaluations - Credit risk concentrations are in cash, cash equivalents, financial investments, and a related party loan receivable, held at major financial institutions. Minimal credit risk is deemed to exist[393](index=393&type=chunk)[394](index=394&type=chunk) [Emerging Growth Company Status](index=68&type=section&id=Emerging%20Growth%20Company%20Status) Eve's 'emerging growth company' status under the JOBS Act allows extended accounting transition and reduced disclosures, potentially complicating financial comparisons - Status: 'Emerging growth company' under the JOBS Act[395](index=395&type=chunk) - Benefits: Extended transition period for new accounting standards, reduced disclosure obligations (e.g., no auditor attestation for Section 404(b) SOX, reduced executive compensation disclosures)[396](index=396&type=chunk) - Impact: May make financial comparisons with other public companies more difficult[397](index=397&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Eve is exposed to market risks from Brazilian interest rates (CDI) and BRL to USD foreign currency fluctuations, managing interest rate risk while facing significant foreign currency exposure - The company is exposed to market risk from changes in the Brazilian interest rate CDI and foreign currency fluctuations (BRL to USD)[399](index=399&type=chunk)[403](index=403&type=chunk) - Interest Rate Risk Exposure (as of Dec 31, 2023, in thousands USD) | Risk Factor | December 31, 2023 | -50% Scenario | -25% Scenario | Probable Scenario | 25% Scenario | 50% Scenario | | :---------- | :---------------- | :------------ | :------------ | :---------------- | :----------- | :----------- | | CDI (Cash equivalents and financial investments) | $4,385 | $280 | $162 | $44 | $(74) | $(192) | | Interest rates considered (CDI) | 11.8% | 5.4% | 8.1% | 10.8% | 13.4% | 16.1% | - Foreign Currency Risk Exposure (as of Dec 31, 2023, in thousands USD) | Risk Factor | December 31, 2023 | -50% Scenario | -25% Scenario | Probable Scenario | 25% Scenario | 50% Scenario | | :---------- | :---------------- | :------------ | :------------ | :---------------- | :----------- | :----------- | | BRL (Net impact) | $(20,327) | $(9,935) | $(4,739) | $456 | $5,652 | $10,848 | | Exchange rates considered (BRL per USD) | 4.8413 | 2.4750 | 3.7125 | 4.9500 | 6.1875 | 7.4250 | [Financial Statements and Supplementary Data](index=70&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements for 2023, 2022, and 2021, prepared under U.S. GAAP, including auditor reports, core financial statements, and detailed notes - Audited consolidated financial statements for the years ended December 31, 2023, 2022, and 2021 are presented in conformity with U.S. GAAP[407](index=407&type=chunk)[415](index=415&type=chunk) [Report of Independent Registered Public Accounting Firm (KPMG)](index=71&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20%28PCAOB%20ID%20185%29) KPMG LLP issued an unqualified opinion on the 2023 and 2022 consolidated financial statements, affirming fair presentation under U.S. GAAP, without auditing internal controls - KPMG LLP issued an unqualified opinion on the consolidated financial statements for 2023 and 2022, affirming fair presentation in accordance with U.S. GAAP[407](index=407&type=chunk) - KPMG LLP has served as the Company's auditor since 2022 and did not perform an audit of internal control over financial reporting[409](index=409&type=chunk)[412](index=412&type=chunk) [Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP)](index=72&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20%28PCAOB%20ID%20238%29) PricewaterhouseCoopers LLP issued an unqualified opinion on the 2021 consolidated financial statements, affirming fair presentation under U.S. GAAP - PricewaterhouseCoopers LLP issued an unqualified opinion on the consolidated financial statements for the year ended December 31, 2021, affirming fair presentation in accordance with U.S. GAAP[415](index=415&type=chunk) - PricewaterhouseCoopers LLP served as the Company's auditor from 2021 to 2022[420](index=420&type=chunk) [Consolidated Balance Sheets](index=77&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased from **$312.9 million in 2022** to **$245.3 million in 2023**, while total liabilities increased to **$80.3 million**, and total equity decreased to **$165.1 million** - Consolidated Balance Sheet Highlights (in thousands USD) | Metric | Dec 31, 2023 | Dec 31, 2022 | Change ($) | | :-------------------------- | :----------- | :----------- | :--------- | | Cash and cash equivalents | $46,882 | $49,146 | $(2,264) | | Financial investments | $111,218 | $178,782 | $(67,564) | | Total current assets | $242,221 | $312,207 | $(69,986) | | Total assets | $245,339 | $312,875 | $(67,536) | | Total current liabilities | $51,989 | $24,933 | $27,056 | | Long-term debt | $25,764 | $- | $25,764 | | Total liabilities | $80,288 | $25,953 | $54,335 | | Total equity | $165,051 | $286,922 | $(121,871) | [Consolidated Statements of Operations](index=78&type=section&id=Consolidated%20Statements%20of%20Operations) Net loss improved to **$127.7 million in 2023** from **$174.0 million in 2022**, primarily due to reduced New Warrants expenses, with basic and diluted net loss per share improving to **$(0.46)** - Consolidated Statements of Operations Highlights (in thousands USD, except per share amounts) | Metric | 2023 | 2022 | 2021 | | :------------------------------------------ | :------- | :------- | :------- | | Research and development expenses | $105,581 | $51,858 | $13,280 | | Selling, general and administrative expenses | $23,104 | $32,856 | $4,899 | | New Warrants expenses | $1,863 | $104,776 | $- | | Loss from operations | $(130,549) | $(189,490) | $(18,179) | | (Loss)/gain from change in fair value of derivative liabilities | $(10,403) | $9,548 | $- | | Financial investment income | $11,672 | $5,073 | $- | | Net loss | $(127,658) | $(174,030) | $(18,256) | | Net loss per share–basic and diluted | $(0.46) | $(0.68) | $(0.08) | [Consolidated Statements of Comprehensive Loss](index=78&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss) Total comprehensive loss for 2023 was **$127.7 million**, consistent with net loss, with no other comprehensive income/loss items in 2023 or 2022 - Consolidated Statements of Comprehensive Loss (in thousands USD) | Metric | 2023 | 2022 | 2021 | | :----- | :------- | :------- | :------- | | Net loss | $(127,658) | $(174,030) | $(18,256) | | Derivative financial instruments - cash flow hedge | $- | $- | $(78) | | Total comprehensive loss | $(127,658) | $(174,030) | $(18,334) | [Consolidated Statements of Equity](index=79&type=section&id=Consolidated%20Statements%20of%20Equity) Total equity decreased from **$286.9 million at December 31, 2022**, to **$165.1 million at December 31, 2023**, primarily due to the net loss, with accumulated deficit growing significantly - Consolidated Statements of Equity Highlights (in thousands USD) | Metric | Dec 31, 2023 | Dec 31, 2022 | | :-------------------------- | :----------- | :----------- | | Common Stock (Shares) | 269,359 | 269,094 | | Common Stock (Amount) | $269 | $269 | | Additional Paid-In Capital | $509,448 | $503,662 | | Accumulated Deficit | $(344,667) | $(217,008) | | Total Equity | $165,051 | $286,922 | - Net loss of **$127.7 million** contributed to the decrease in total equity[431](index=431&type=chunk) - Additional paid-in capital increased by **$5.8 million**, reflecting warrant issuances and share-based compensation[431](index=431&type=chunk) - Accumulated deficit increased by **$127.7 million**, from **$(217.0) million** to **$(344.7) million**[431](index=431&type=chunk) [Consolidated Statements of Cash Flows](index=80&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to **$94.5 million in 2023**, investing activities provided **$66.8 million**, and financing activities provided **$24.9 million** - Consolidated Statements of Cash Flows Highlights (in thousands USD) | Cash Flow Category | 2023 | 2022 | 2021 | | :----------------- | :------- | :------- | :------- | | Net cash used by operating activities | $(94,509) | $(59,458) | $(14,886) | | Net cash provided (used) by investing activities | $66,832 | $(258,476) | $- | | Net cash provided by financing activities | $24,926 | $352,704 | $29,263 | | Net (decrease) increase in cash and cash equivalents | $(2,264) | $34,770 | $14,377 | | Cash and cash equivalents at end of period | $46,882 | $49,146 | $14,377 | - Operating cash outflow increased by **$35.1 million YoY**, mainly due to increased R&D expenses[387](index=387&type=chunk) - Investing cash flow shifted from a significant outflow to an inflow, driven by net redemptions of financial investments[388](index=388&type=chunk) - Financing cash inflow decreased by **$327.8 million YoY**, primarily due to the one-time proceeds from the business combination and PIPE Investment in 2022[389](index=389&type=chunk) [Notes to Consolidated Financial Statements](index=81&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes detail Eve Holding, Inc.'s organization, accounting policies, and financial statement components, including cash, investments, related party transactions, debt, equity, warrants, and segment information [Note 1 – Organization and Nature of Business](index=81&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Nature%20of%20Business) Eve Holding, Inc., a Delaware aerospace company focused on UAM, formed via a May 9, 2022, reverse recapitalization, secured **$357.3 million** from the PIPE Investment - Company is an aerospace company dedicated to accelerating the UAM ecosystem, with operations in Melbourne, Florida, and São Paulo, Brazil[436](index=436&type=chunk) - Business Combination: Consummated on May 9, 2022, as a reverse recapitalization, with Eve Sub's financial statements continuing as the Company's historical statements[438](index=438&type=chunk) - Financing: PIPE Investment provided **$357.3 million** through the issuance of **35.7 million shares** of Class A common stock at **$10.00 per share**[439](index=439&type=chunk) [Note 2 – Significant Accounting Policies](index=82&type=section&id=Note%202%20%E2%80%93%20Significant%20Accounting%20Policies) This note details significant accounting policies, including a change in carve-out methodology, US Dollar functional currency, and policies for property, debt, R&D, stock plans, and income taxes - Change in Carve-Out Methodology: Shifted from management approach to legal entity approach effective January 1, 2022, due to direct charges under MSAs/SSAs and asset/liability transfers[449](index=449&type=chunk) - Functional and Reporting Currency: US Dollar (USD)[450](index=450&type=chunk) - Research and Development Expenses: Expensed as incurred, primarily for eVTOL design, Service and Operations Solutions, and UATM software development[452](index=452&type=chunk) - Stock Incentive Plans: Embraer Plan (cash-settled phantom shares) and Eve's 2022 Stock Incentive Plan (equity-classified RSUs with service, performance, and/or market conditions)[458](index=458&type=chunk)[459](index=459&type=chunk)[460](index=460&type=chunk) - Income Taxes: Calculated using a separate return methodology; valuation allowance applied if deferred tax assets are unlikely to be realized. Unrecognized tax benefits are assessed using a two-step process[461](index=461&type=chunk)[462](index=462&type=chunk)[463](index=463&type=chunk) [Note 3 – Cash and Cash Equivalents](index=86&type=section&id=Note%203%20%E2%80%93%20Cash%20and%20Cash%20Equivalents) Cash and cash equivalents, including CDBs and fixed deposits, decreased from **$49.1 million in 2022** to **$46.9 million in 2023** - Cash and Cash Equivalents (in thousands USD) | Category | Dec 31, 2023 | Dec 31, 2022 | | :--------- | :----------- | :----------- | | Cash | $9,173 | $14,447 | | CDBs | $4,385 | $4,483 | | Fixed deposits | $33,325 | $30,216 | | **Total** | **$46,882** | **$49,146** | [Note 4 – Financial Investments](index=86&type=section&id=Note%204%20%E2%80%93%20Financial%20Investments) Financial investments, classified as held-to-maturity (HTM) securities, decreased from **$178.8 million in 2022** to **$111.2 million in 2023** - Financial Investments (HTM securities, at cost, in thousands USD) | Metric | Dec 31, 2023 | Dec 31, 2022 | | :---------------- | :----------- | :----------- | | Amortized Cost | $111,218 | $178,782 | | Unrealized Gains | $106 | $- | | Unrealized Losses | $- | $(1,128) | | Fair Value | $111,324 | $177,654 | [Note 5 – Related Party Transactions](index=87&type=section&id=Note%205%20%E2%80%93%20Related%20Party%20Transactions) Eve has significant related party transactions with Embraer, including MSAs, SSAs, a royalty-free IP license, and a related party loan, with R&D and SG&A expenses totaling **$75.8 million in 2023** - Master Service Agreement (MSA) and Shared Service Agreement (SSA) with Embraer and Atech provide R&D, engineering, manufacturing, and administrative services[474](index=474&type=chunk) - Royalty-Free Licenses: Access to Embraer's intellectual property for UAM market use[477](index=477&type=chunk) - Related Party Loan: Loan agreement with EAH (Embraer subsidiary) for up to **$81 million**, extended to August 1, 2024, with a fixed interest rate of **5.97% per annum**[479](index=479&type=chunk) - Related Party Expenses (in thousands USD): R&D increased from **$39.3 million in 2022** to **$72.8 million in 2023**; SG&A decreased from **$8.5 million in 2022** to **$3.0 million in 2023**[480](index=480&type=chunk) [Note 6 – Other Balance Sheet Components](index=88&type=section&id=Note%206%20%E2%80%93%20Other%20Balance%20Sheet%20Components) This note details property, plant and equipment totaling **$0.5 million net in 2023**, with other current payables increasing to **$13.2 million** and non-current payables to **$2.5 million** - Property, Plant and Equipment, Net (in thousands USD) | Category | Dec 31, 2023 | Dec 31, 2022 | | :-------------------------- | :----------- | :----------- | | Development mockups | $516 | $419 | | Total property, plant and equipment, net | $547 | $452 | - Other Current Payables (in thousands USD) | Category | Dec 31, 2023 | Dec 31, 2022 | | :--------------- | :----------- | :----------- | | Accrued expenses | $7,075 | $2,492 | | Payroll accruals | $4,737 | $4,034 | | Total | $13,245 | $6,648 | - Other Non-Current Payables (in thousands USD) | Category | Dec 31, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Advances from customers | $1,284 | $800 | | Payroll accruals | $867 | $42 | | Total | $2,535 | $1,020 | [Note 7 – Debt](index=89&type=section&id=Note%207%20%E2%80%93%20Debt) In January 2023, Eve Brazil secured two BNDES loans totaling R$490 million (approximately **$101.2 million**); as of December 31, 2023, **$25.8 million** was outstanding, with **$75.1 million** available - Eve Brazil secured two BNDES loans totaling R$490 million (~**$101.2 million**) in January 2023 to support eVTOL project development[485](index=485&type=chunk) - Long-Term Debt Outstanding (as of Dec 31, 2023, in thousands USD) | Loan Type | Interest Rate | Carrying Amount | | :---------- | :------------ | :-------------- | | Sub-credit A | 4.55% | $13,132 | | Sub-c

PART I FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Net loss improved to **$88.4 million**, total assets decreased, liabilities increased, and operating cash flow usage rose Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | Sep 30, 2023 ($) | Dec 31, 2022 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 10,097,318 | 49,146,063 | | Financial investments | 164,448,485 | 178,781,549 | | Total current assets | 259,562,244 | 312,207,206 | | **Total assets** | **261,551,372** | **312,875,428** | | **Liabilities & Equity** | | | | Total current liabilities | 46,159,081 | 24,933,011 | | Long-term debt | 11,319,690 | - | | **Total liabilities** | **59,506,557** | **25,953,085** | | **Total equity** | **202,044,815** | **286,922,343** | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Account | Nine Months Ended Sep 30, 2023 ($) | Nine Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | | Research and development | 71,991,658 | 33,830,890 | | Selling, general and administrative | 17,822,207 | 23,892,011 | | New Warrants expenses | - | 104,776,230 | | Loss from operations | (89,813,865) | (162,499,131) | | **Net loss** | **(88,391,854)** | **(153,976,295)** | | **Net loss per share basic and diluted** | **(0.32)** | **(0.62)** | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Account | Nine Months Ended Sep 30, 2023 ($) | Nine Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | | Net cash used by operating activities | (69,996,532) | (38,702,719) | | Net cash provided (used) by investing activities | 19,831,944 | (250,418,721) | | Net cash provided by financing activities | 10,714,180 | 352,703,551 | | (Decrease) increase in cash and cash equivalents | (39,048,745) | 63,564,848 | [Note 1 – Organization and Nature of Business](index=10&type=section&id=Note%201%20%E2%80%93%20Organization%20and%20Nature%20of%20Business) Eve Holding, Inc. accelerates Urban Air Mobility with eVTOL aircraft and services, formed via a May 2022 reverse recapitalization - The company is dedicated to accelerating the **urban air mobility** ("UAM") ecosystem through a holistic approach involving an advanced **eVTOL** project, a global services and support network, and a unique air traffic management solution[26](index=26&type=chunk) - On **May 9, 2022**, the company completed its business combination with Zanite Acquisition Corp., becoming Eve Holding, Inc. The transaction was accounted for as a **reverse recapitalization**[28](index=28&type=chunk)[30](index=30&type=chunk) [Note 5 – Related Party Transactions](index=14&type=section&id=Note%205%20%E2%80%93%20Related%20Party%20Transactions) Eve maintains significant related-party agreements with Embraer for R&D and services, with **$55.5 million** in expenses and an **$81 million** loan extended - Eve has **Master Service** and **Shared Service Agreements** with Embraer for R&D, engineering, manufacturing access, and administrative services, also holding a **royalty-free license** to Embraer's intellectual property for the UAM market[57](index=57&type=chunk)[59](index=59&type=chunk) Related Party Expenses (Nine Months Ended Sep 30) | Expense Category | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Research and development | 53,363,778 | 27,555,717 | | Selling, general and administrative | 2,157,575 | 7,707,429 | | **Total** | **55,521,353** | **35,263,146** | - On **August 1, 2023**, the Company amended its loan agreement with EAH (an Embraer subsidiary), extending the term for an additional 12 months to **August 1, 2024**, and increasing the interest rate to **5.97%** per annum on the principal amount of up to **$81,000,000**[62](index=62&type=chunk) [Note 7 – Debt](index=17&type=section&id=Note%207%20%E2%80%93%20Debt) Eve Brazil secured a **R$490 million** (approx. **$98 million**) BNDES loan for eVTOL development, with **$11.3 million** outstanding as of September 30, 2023 - Eve Brazil secured a loan agreement with BNDES for **R$490 million** (approx. **$98 million**) to fund eVTOL development, split into two sub-credits with maturities from **2026** through **2035**[68](index=68&type=chunk) Long-Term Debt Outstanding as of September 30, 2023 | Description | Carrying Amount ($) | | :--- | :--- | | Long-term debt principal | 11,723,724 | | Unamortized debt issuance costs | (404,034) | | **Long-term debt** | **11,319,690** | [Note 11 – Common Stock Warrants](index=20&type=section&id=Note%2011%20%E2%80%93%20Common%20Stock%20Warrants) Private Placement Warrants, classified as liabilities, increased to **$13.4 million** from **$3.6 million**, resulting in a **$9.8 million** loss, with Public and New Warrants also outstanding - Private Placement Warrants are **liability-classified**, with their fair value increasing from **$3,562,500** at **Dec 31, 2022**, to **$13,395,000** at **Sep 30, 2023**, resulting in a **loss** from the change in fair value[74](index=74&type=chunk)[78](index=78&type=chunk)[100](index=100&type=chunk) - Public Warrants are **equity-classified** and became exercisable on **June 8, 2022**, at a price of **$11.50 per share**[87](index=87&type=chunk)[88](index=88&type=chunk) - The company has issued or agreed to issue New Warrants to **strategic partners**, including potential customers, lenders, and suppliers, with exercise prices ranging from **$0.01 to $15.00 per share**[89](index=89&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) [Note 18 – Segments](index=25&type=section&id=Note%2018%20%E2%80%93%20Segments) Eve operates in three R&D segments: eVTOL, UATM, and Service and Support, with eVTOL accounting for the majority of R&D expenses at **$65.6 million** - The company operates in three segments: **eVTOL** (design and certification), **UATM** (next-gen air traffic management system), and **Service and Support** (maintenance, training, data services)[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) Research and Development Expenses by Segment (Nine Months Ended Sep 30) | Segment | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | eVTOL | 65,601,417 | 28,183,054 | | UATM | 3,120,002 | 4,299,873 | | Service and Support | 3,270,239 | 1,347,963 | | **Total** | **71,991,658** | **33,830,890** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Eve, a pre-revenue company, improved its net loss to **$88.4 million** due to non-recurring expenses, despite increased R&D, with **$342.5 million** liquidity expected to fund operations for the next twelve months - Eve has **not yet generated any revenue** and will require **substantial additional capital** to develop its products and fund operations, planning to finance through existing cash, offerings, and debt[129](index=129&type=chunk) - The company has signed non-binding letters of intent for the sale of over **2,850 eVTOL aircraft** and has established **partnerships** for ecosystem development in markets like Australia, the UK, Rio de Janeiro, and Miami[142](index=142&type=chunk)[143](index=143&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Net loss decreased to **$88.4 million** due to the absence of **$104.8 million** in New Warrant expenses, despite a **113%** increase in R&D to **$72.0 million**, while SG&A decreased and investment income grew Year-over-Year Changes in Operations (Nine Months Ended Sep 30, 2023 vs 2022) | Account | Change ($) | Change (%) | | :--- | :--- | :--- | | Research and development | 38,160,768 | 113% | | Selling, general and administrative | (6,069,804) | (25)% | | New Warrants expenses | (104,776,230) | (100)% | | Loss from operations | 72,685,266 | (45)% | | Net loss | 65,584,441 | (43)% | - R&D expenses for the nine months ended Sep 30, 2023 increased by **$38.2 million** (**113%**) year-over-year, primarily due to increased headcount and higher engineering expenses for prototype development, including batteries, motors, and propellers[153](index=153&type=chunk) - SG&A expenses for the nine months ended Sep 30, 2023 decreased by **$6.1 million** (**25%**) year-over-year, largely due to non-recurring legal, consulting, and marketing expenses related to the May 2022 NYSE listing[154](index=154&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Eve's total liquidity of approximately **$342.5 million** is sufficient for the next twelve months but not for eVTOL commercial launch, necessitating future financing - As of **September 30, 2023**, the company had total liquidity of approximately **$342.5 million**, which is expected to be sufficient to fund the operating plan for at least the **next twelve months**[162](index=162&type=chunk) - **Future capital** will be required to complete **eVTOL development** and **commercial launch**, with the company exploring various funding opportunities including debt finance, customer advances, and equity or convertible lines[164](index=164&type=chunk) Cash Flow Summary (Nine Months Ended Sep 30) | Activity | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net cash used by operating activities | (69,996,532) | (38,702,719) | | Net cash provided (used) by investing activities | 19,831,944 | (250,418,721) | | Net cash provided by financing activities | 10,714,180 | 352,703,551 | [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk from Brazilian CDI and foreign currency risk from BRL-denominated assets and liabilities, with **5%** of assets and **38%** of liabilities in Reais - The company is exposed to **interest rate risk** from the **Brazilian CDI rate** on its cash equivalents in Brazil[181](index=181&type=chunk) - The company faces **foreign currency risk** from its Brazilian operations, with assets and liabilities denominated in Reais; as of September 30, 2023, **5% of total assets** and **38% of total liabilities** are in **Reais**[184](index=184&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of September 30, 2023, due to unremediated material weaknesses in internal control over financial reporting, with a remediation plan underway - Management concluded that disclosure controls and procedures were **not effective** as of **September 30, 2023**, due to unremediated **material weaknesses** in internal control over financial reporting[187](index=187&type=chunk) - The identified material weaknesses include **ineffective controls** over complex transactions, **inadequate risk assessment** and communication processes, and **insufficient personnel** with experience in complex accounting matters[190](index=190&type=chunk)[191](index=191&type=chunk) - A **remediation plan** is underway, involving **engaging outside consultants**, **hiring qualified resources**, **enhancing risk assessment**, and providing training to personnel[192](index=192&type=chunk)[194](index=194&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings that would adversely affect its business or financial condition - As of the filing date, the company is **not involved** in any **material legal proceedings**[197](index=197&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) For a detailed discussion of potential risks, the company refers to its most recent Annual Report on Form 10-K - For a **detailed discussion** of risk factors, the company refers investors to its **most recent Annual Report on Form 10-K**[198](index=198&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) There were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the period - None[199](index=199&type=chunk)

Financial Data and Key Metrics Changes - The company reported a net loss of $31 million in Q2 2023, compared to a loss of $22 million in the same period last year, reflecting increased R&D efforts [61] - Cash consumption in the first half of 2023 was $48 million, more than double the $22 million from the first half of 2022, indicating higher R&D expenditures [43] - The company ended Q2 2023 with $269 million in cash, and with additional credit lines, total liquidity exceeds $370 million, sufficient to fund operations into 2025 [44][138] Business Line Data and Key Metrics Changes - The company invested approximately $22 million in program development during Q2 2023, up from $10 million a year ago, primarily for eVTOL development [59] - SG&A expenses were $7 million in Q2 2023, down from $16 million last year, with the previous year's figures including nonrecurring IPO expenses [60] Market Data and Key Metrics Changes - The company has announced Letters of Intent (LOIs) for 850 aircraft from 28 different customers across 14 countries, indicating a diversified customer base [39] - The company is focusing on key cities for urban air mobility, including San Francisco and Rio de Janeiro, to accelerate its market presence [41] Company Strategy and Development Direction - The company aims to develop a sustainable urban air mobility ecosystem, transforming urban transportation globally [21] - The initial factory will be located in Taubate, Brazil, to optimize production processes and leverage Embraer's resources [45][46] - The company is committed to maintaining a competitive edge by focusing on operational costs and efficiency through a simple design and strategic supplier agreements [75][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the development timeline and operational costs, with expectations to begin assembling the first prototype by the end of the year [19][50] - The FAA has agreed to recognize the primary certification process through ANAC, which is critical for the company's development program [26] - Management emphasized the importance of supplier agreements in reducing operational costs and enhancing aircraft performance [119][147] Other Important Information - Johann Bordais will join as CEO effective September 1, bringing extensive experience from Embraer Services and Support [30] - The company has begun manufacturing components for its first prototype and plans to initiate a test campaign next year [50] Q&A Session Summary Question: What are the aircraft performance specifications and production costs? - Management reiterated that they are targeting the same high-level performance metrics, including a range of approximately 100 kilometers and capacity for four passengers [66][67] Question: How are supplier agreements structured? - Supplier agreements are comprehensive, covering development and production phases, with payments linked to eVTOL development milestones [72][74] Question: What are the expected operational costs compared to competitors? - Management indicated a clear advantage in operational costs, estimating a double-digit percentage advantage over competitors due to their design and maintenance strategies [90][94] Question: How will the company manage service and support as it enters the market? - The company plans to leverage Embraer's existing infrastructure and expertise to build a robust service and support network, minimizing initial capital expenditures [82][108] Question: When can the company expect to convert LOIs into firm orders? - The conversion of LOIs into firm agreements is expected to begin approximately 18 months before aircraft delivery, contingent on certification milestones [108][125]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION 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) 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 June 30, 2023 (State or other jurisdiction of incorporation or orga ...

Eve Holding, Inc. (NYSE:EVEX) Q1 2023 Earnings Call May 9, 2023 8:00 AM ET Company Participants Lucio Aldworth - Director, Investor Relations Gerard J. DeMuro - Co-Chief Executive Officer André Duarte Stein - Co-Chief Executive Officer Eduardo Couto - Chief Financial Officer Conference Call Participants Savanthi Syth - Raymond James Cai von Rumohr - Cowen Sheila Kahyaoglu - Jefferies Andres Sheppard - Cantor Fitzgerald Marvin Fong - BTIG Operator Good morning, and welcome to the Eve Air Mobility First Quart ...

PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited statements show a net loss increase to $25.8 million, driven by higher operating expenses and resulting in decreased total assets [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $296.3 million while total liabilities increased, leading to a reduction in stockholders' equity Condensed Consolidated Balance Sheet Data (as of March 31, 2023 vs. December 31, 2022) | Balance Sheet Item | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $295,536,648 | $312,207,206 | | Cash and cash equivalents | $11,837,193 | $49,146,063 | | Financial investments | $199,119,647 | $178,781,549 | | **Total Assets** | **$296,338,106** | **$312,875,428** | | **Total Current Liabilities** | $32,863,549 | $24,933,011 | | Related party payables | $16,222,416 | $12,625,243 | | **Total Liabilities** | **$33,839,852** | **$25,953,085** | | **Total Stockholders' Equity** | **$262,498,254** | **$286,922,343** | [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Net loss widened to $25.8 million from $10.0 million year-over-year due to significantly higher R&D and SG&A expenses Condensed Consolidated Statements of Operations (For the Three Months Ended March 31) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Research and development | $(21,528,338) | $(9,114,687) | | Selling, general and administrative | $(6,154,319) | $(1,318,033) | | **Loss from operations** | **$(27,682,657)** | **$(10,432,720)** | | Financial investment income | $3,254,400 | $63,381 | | **Net loss** | **$(25,771,982)** | **$(10,010,008)** | | Net loss per share basic and diluted | $(0.09) | $(0.05) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations increased substantially to $19.9 million, contributing to a $37.3 million decrease in cash Condensed Consolidated Statements of Cash Flows (For the Three Months Ended March 31) | Cash Flow Item | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(19,891,123) | $(1,868,950) | | Net cash used in investing activities | $(17,543,699) | - | | **Decrease in cash and cash equivalents** | **$(37,308,870)** | **$(1,868,950)** | | Cash and cash equivalents at end of period | $11,837,193 | $12,507,573 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the reverse recapitalization, accounting policy changes, related-party transactions, and a new R$490 million loan facility - The business combination with Zanite Acquisition Corp on May 9, 2022, was accounted for as a **reverse recapitalization**, with Eve Sub's historical financial statements continuing as the Company's financial statements[33](index=33&type=chunk)[36](index=36&type=chunk) - Effective January 1, 2022, the company switched from a 'management approach' carve-out methodology to a **'legal entity approach'** for its financial statements, resulting in a separation-related adjustment to the opening balance sheet[49](index=49&type=chunk)[52](index=52&type=chunk) - On January 23, 2023, Eve Brazil entered into a loan agreement with BNDES for two lines of credit totaling **R$490 million (approx. $96 million)** to support eVTOL development, though no amount has been drawn as of March 31, 2023[91](index=91&type=chunk)[94](index=94&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses its pre-revenue status, rising Q1 net loss driven by R&D and SG&A, and confirms liquidity for the next year [Overview and Business Model](index=25&type=section&id=Overview%20and%20Business%20Model) The company is a development-stage UAM leader with a holistic ecosystem model requiring substantial future capital - Eve's business model is built on four pillars: **eVTOL Production and Design, Service and Support, Fleet Operations, and Urban Air Traffic Management (UATM)**[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - The company has **not generated any revenue to date** and expects to finance its operations through existing cash, offerings, and debt until its products are commercialized[143](index=143&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q1 net loss grew 157% to $25.8 million, driven by a 136% rise in R&D and a 367% increase in SG&A expenses Comparison of Operating Results (Q1 2023 vs. Q1 2022) | Line Item | Q1 2023 | Q1 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $(21,528,338) | $(9,114,687) | $(12,413,651) | 136% | | Selling, general and administrative | $(6,154,319) | $(1,318,033) | $(4,836,286) | 367% | | **Loss from operations** | **$(27,682,657)** | **$(10,432,720)** | **$(17,249,937)** | **165%** | | **Net loss** | **$(25,771,982)** | **$(10,010,008)** | **$(15,761,974)** | **157%** | - The increase in R&D expenses was primarily due to **higher headcount and engineering expenses** related to prototype development, including costs for batteries, motors, and thermal management systems[175](index=175&type=chunk) - The rise in SG&A expenses was largely driven by an **increase in team size, consulting services, marketing expenses**, and charges under the Shared Service Agreement[176](index=176&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company has $294.6 million in liquidity, sufficient for the next twelve months but not for full commercial launch - Total liquidity as of March 31, 2023, was **$294.6 million**, comprising $11.84 million in cash, $199.12 million in marketable securities, and an $83.64 million related party loan receivable[182](index=182&type=chunk) - Current funds are expected to cover operating plans for the next 12 months but are **likely insufficient for the full development and commercial launch** of the eVTOL aircraft[185](index=185&type=chunk) - The company secured credit lines with BNDES for approximately **$96 million**, adding to total liquidity once drawn[182](index=182&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk from Brazilian cash equivalents and foreign currency risk from its BRL-denominated operations - The company faces **interest rate risk** from cash equivalents in Brazil indexed to the CDI rate[200](index=200&type=chunk) - Eve is exposed to **foreign currency risk** from its Brazilian operations, with 2% of total assets and 15% of total liabilities denominated in Brazilian Reais as of March 31, 2023[203](index=203&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were deemed ineffective due to unremediated material weaknesses in internal control over financial reporting - Management concluded that disclosure controls and procedures were **not effective** as of March 31, 2023, due to unremediated material weaknesses[207](index=207&type=chunk) - Identified material weaknesses include **ineffective controls for non-routine/complex transactions**, inadequate risk assessment processes, and a lack of sufficient personnel with qualifications for complex accounting[210](index=210&type=chunk) - A **remediation plan is in progress**, involving engaging outside consultants, hiring additional qualified personnel, and enhancing risk assessment and communication processes[211](index=211&type=chunk)[214](index=214&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently party to any material legal proceedings - As of the report date, Eve is **not involved in any material legal proceedings**[216](index=216&type=chunk) [Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) The report refers to the company's Annual Report on Form 10-K/A for a comprehensive discussion of risk factors - For a detailed discussion of risk factors, the report refers to the **Company's Annual Report on Form 10-K/A** for the year ended December 31, 2022[217](index=217&type=chunk) [Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including corporate documents, a loan agreement, and required officer certifications - The exhibits filed include corporate governance documents, the **BNDES Loan Agreement**, and required CEO/CFO certifications[224](index=224&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 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. Delaware 85-2549808 (State or other jurisdiction of incorporation or organization) 1400 General Aviation Drive M ...

Financial Data and Key Metrics Changes - The company reported a net loss of $20 million for Q4 2022 and a total loss of $174 million for the year, with nonrecurring costs related to warrants and IPO expenses amounting to $111 million, resulting in a recurring loss of $63 million for 2022 [21][97][102] - Total liquidity at the end of Q4 2022 was $311 million, down from $330 million in Q3 2022, but with additional credit lines, total liquidity exceeds $400 million, sufficient to fund operations through 2025 [82][116] Business Line Data and Key Metrics Changes - The company has a diversified backlog with nonbinding letters of intent (LOIs) for 2,770 aircraft from 26 customers across 12 countries, indicating strong long-term revenue visibility [9] - R&D investments totaled $18 million in Q4 2022 and $52 million for the full year, primarily focused on eVTOL development and Urban Air Traffic Management systems [97] Market Data and Key Metrics Changes - The company is leveraging Embraer's existing infrastructure and skilled workforce, which helps reduce development costs and enhances operational efficiency [98] - The eVTOL market is evolving, with a shift from hype to a more mature phase, leading to potential consolidations and a focus on a smaller number of viable projects [54] Company Strategy and Development Direction - The company aims to enter service in 2026, with a focus on optimizing aircraft design and reducing development costs through rigorous testing and supplier engagement [7][92] - The strategy includes developing a complete solution encompassing aircraft, maintenance, and air traffic control, addressing the broader Urban Air Mobility ecosystem [81][98] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the liquidity position and the ability to fund R&D and certification efforts through 2025, emphasizing a strategic approach to customer engagement and market readiness [63][102] - The company is actively engaged with existing customers to refine operational concepts and ensure market readiness for eVTOL deployment [43] Other Important Information - The company has initiated its Type Certification process with ANAC and plans to follow with FAA certification, which is expected to be more efficient due to a bilateral agreement [93] - The Urban Air Traffic Management software is being developed concurrently, with early versions already deployed for testing with potential customers [79][48] Q&A Session Summary Question: What is the current demand environment for new orders? - The company continues its sales campaign and is actively engaging with existing customers to understand operational needs, while also exploring new customer opportunities [43] Question: When can the company start collecting predelivery payments (PDPs)? - The company anticipates starting to see PDPs in 2024, with expectations for increased collections in 2025 and 2026 as the certification milestones are achieved [65][66] Question: How is the supplier selection process progressing? - The company is in the process of finalizing supplier selections for critical components, which will provide clearer visibility on costs and enable the firming of orders [106][112] Question: What is the expected timeline for certification testing? - The certification flight test campaign is expected to take around 18 months, with the company not disclosing specific dates to ensure safety and compliance [127] Question: How does the company view the competitive landscape in the eVTOL market? - Management noted that the industry is moving beyond the initial hype phase, with a focus on a smaller number of viable projects and potential consolidations [54]

Financial Data and Key Metrics Changes - The company reported a net loss of $36.7 million for Q3 2022 and $154 million for the first nine months of the year [36] - Total liquidity increased to approximately $400 million, providing multiple years of cash for eVTOL development [38][39] - The company invested $14 million in R&D during Q3 2022, totaling almost $34 million for the first nine months [35] Business Line Data and Key Metrics Changes - The backlog grew significantly, with letters of intent for almost 2,800 vehicles, equating to over $8 billion [12][14] - The company has diversified its order book with over 25 clients, ensuring no single client represents more than 15% of the backlog [15] Market Data and Key Metrics Changes - The largest exposure is in North America, accounting for less than 50% of the company's business [16] - The company is expanding its global footprint with partnerships in various regions, including India and Europe [13][30] Company Strategy and Development Direction - The company aims to enhance its balance sheet through a financing agreement with the Brazilian National Development Bank, focusing on sustainable transportation [8][17] - The strategy includes a holistic approach to urban air mobility (UAM), integrating vehicle development, service support, and air traffic management [35][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the certification process, targeting 2026 for primary certification with ANAC and FAA [42][88] - The company is focused on developing a modular production facility to scale operations economically [52][81] Other Important Information - The company restated previous financials due to non-cash costs associated with warrants, impacting 2021 and the first half of 2022 [33][34] - The company is the only eVTOL firm with a complete solution, including vehicle, service, and air traffic control [35] Q&A Session Summary Question: Update on certification process with ANAC and expected timeline - Management confirmed that the certification process is on track for 2026, with ongoing discussions with ANAC and FAA [42][88] Question: Details on BNDES credit line - The BNDES financing includes two credit lines totaling $92.5 million, with a 12-year maturity and grace periods of three to four years [43][44] Question: Expected cash burn for 2023 and major milestones - The company anticipates cash burn to remain between $100 million and $150 million in 2023, with significant milestones in vehicle development and certification [46][47] Question: Production facility timeline - Initial development of the production facility is expected to begin by the end of 2023, with major construction in 2024 [51][52] Question: Comparison of Chicago CONOPS results to previous expectations - The Chicago simulation indicated a need for approximately 240 eVTOLs by 2035, demonstrating the potential for urban mobility in congested areas [20][21] Question: Details on LOI with Bluenest for UATM - The partnership aims to develop urban air traffic management infrastructure, enhancing efficiency for vertiport operators [60][63] Question: Status of the United Airlines relationship - The $15 million investment from United was reflected in Q3, offsetting cash burn, and discussions are ongoing for further commitments [66][70]