Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information that Eve’s management believes is relevant to an assessment and understanding of Eve’s consolidated results of operations and financial condition. The discussion should be read together with the audited consolidated financial statements for the year ended December 31, 2024 and 2023, and the related notes that are included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this Annual Report on Form 10-K and in our other filings with the SEC. Capitalized terms not defined have the same meaning as in the notes to the consolidated financial statements.
Discussions of results for the year ended December 31, 2022 and year-to-year comparisons between 2022 and 2023 that are not included in this Form 10-K can be found in our 2023 Annual Report on Form 10-K filed with the SEC on March 8, 2024.
Overview
Eve Holding, Inc. (together with its subsidiaries, as applicable, “Eve”, the “Company”, “we”, “us” or “our”), a Delaware corporation, is an aerospace company with operations in Melbourne, Florida and São Paulo, Brazil. The Company is a former blank check company incorporated on November 19, 2020, under the name Zanite Acquisition Corp. (“Zanite”) as a Delaware corporation that was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
Eve’s goal is to be a leading company in the urban air mobility (“UAM”) market by taking a holistic approach to developing a UAM solution that includes: the design and production of electric vertical take-off and landing vehicles (“eVTOLs”), a portfolio of services and support (TechCare) focused on Eve’s and third-party eVTOLs, and a new air traffic management system (Vector) for eVTOLs, otherwise known as Urban Air Traffic Management (“UATM”) system designed to allow eVTOLs to operate safely and efficiently in dense urban airspace alongside conventional aircraft and drones. Eve’s mission is to bring affordable air transportation to all passengers, improve quality of life, unleash economic productivity, save passengers time, and reduce global carbon emissions. Eve plans to leverage its strategic relationship with Embraer to de-risk and accelerate its development plans, while saving costs by utilizing Embraer’s extensive resources.
Fourth Quarter Developments
eVTOL Airworthiness Criteria Published by ANAC. On November 5, 2024, the Company announced ANAC had published the final version of the airworthiness criteria for Eve's eVTOL, representing an important milestone in the certification process.
Citibank Credit Agreement. On October 29, 2024, the Company entered into a credit agreement with Citibank, N.A. (“Citi”) (the “Credit Agreement”), pursuant to which on October 29, 2024, Citi advanced $50 million to support the Company’s production and sale of eVTOL aircraft. The loan is subject to an interest rate of 3.90% per year plus Term Secured Overnight Financing Rate (“SOFR”) and a term of four years, with $25 million due on October 29, 2027 and $25 million due on October 30, 2028.
BNDES Financing Agreement. On October 10, 2024, Eve Brazil and ERJ entered into a financing agreement, dated as of October 7, 2024 (the “Financing Agreement”), with BNDES, pursuant to which BNDES has agreed to grant four lines of credit to Eve Brazil. The credit is intended for the deployment of a manufacturing unit for the production of eVTOLs, in Taubaté, State of São Paulo. The Financing Agreement provides that the availability of such lines of credit is subject to BNDES’s rules and regulations. As of December 31, 2024, the four lines of credit total to approximately $83.4 million.
BNDES Loan Agreement. On November 22, 2024, Eve Brazil entered into a loan agreement, dated as of November 21, 2024 (the “Loan Agreement”), with BNDES, pursuant to which BNDES agreed to grant Eve Brazil, a loan in the amount of R$ 200 million (approximately $32.3 million as of December 31, 2024), to support the second phase of the development of the Company’s eVTOL project. The line of credit will be granted in Brazilian reais by Fundo Nacional Sobre Mudança Climática (“FNMC”), a BNDES fund that supports businesses focused on mitigating climate change and reducing carbon emissions.
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Business Model
Eve plans to grow the UAM ecosystem by providing a complete portfolio of UAM solutions across threeprimary offerings:
eVTOL Production and Design. Eve is designing and certifying an eVTOL purpose-built for UAM missions. Eve plans to market its eVTOLs globally to operators of UAM services, including fixed wing and helicopter operators, as well as lessors that purchase and manage aircraft on behalf of operators.
Service and Operations Solutions - TechCare. Eve plans to offer a full suite of eVTOL service and support capabilities, including material services, maintenance, technical support, training, ground handling and data services. Its services will be offered to UAM fleet operators on an agnostic basis – supporting both its own eVTOL and those produced by third parties.
Urban Air Traffic Management - Vector. Eve is developing a next-generation UATM system to help enable eVTOLs to operate safely and efficiently in dense urban airspace along with conventional fixed wing and rotary aircraft and unmanned drones. Eve expects to offer its UATM software to customers that include air navigation service providers, fleet operators and vertiport operators.
To date, Eve has not generated any revenue, as it continues to develop its eVTOL vehicles and other UAM solutions. As a result, Eve will require substantial additional capital to develop products and fund operations for the foreseeable future. Until Eve can generate any revenue from product sales and services, it expects to finance operations through a combination of existing cash on hand, public offerings, private placements, and debt financings. The amount and timing of future funding requirements will depend on many factors, including the pace and results of development efforts.
ServiceAgreements
Eve Sub has entered into the Master Service Agreement with ERJ and the Atech MSA with Atech (collectively, the “MSAs”), a Service Agreement with Eve Brazil, and the SSA with ERJ, EAH and Eve Brazil. Pursuant to the MSAs with ERJ and Atech, each of ERJ and Atech, either directly or through their respective affiliates, will provide certain services and products to Eve and its subsidiaries, including, among others, product development of eVTOL, services development, parts planning, technical support, AOG (Aircraft on Ground) support, MRO (Maintenance, Repaid and Overhaul) planning, training, special programs, technical publications development, technical publications management and distribution, operation, engineering, designing and administrative services and, at Eve’s option, future eVTOL manufacturing services. Eve expects to collaborate with ERJ and leverage ERJ’s expertise as an aircraft producer, which will help it design and manufacture eVTOLs with low maintenance and operational costs and design systems and processes for maintenance, develop pilot training programs, and establish operations. The services provided under the SSA include, among others, corporate and administrative services to Eve. In addition, Eve Sub has also entered into the Data Access Agreement with ERJ and Eve Brazil, pursuant to which, among other things, ERJ has agreed to provide Eve Brazil with access to certain of its intellectual property and proprietary information in order to facilitate the execution of the specific activities that are set out in certain of the statements of work entered into pursuant to the Services Agreements.
The aforementioned Services Agreements continue to be in full force and effect. Further information about such agreements is set forth in our prospectus, dated January 18, 2023, filed on January 20, 2023, pursuant to Rule 424(b) under the Securities Act, relating to the Registration Statement on Form S-1/A, as amended (File No.333-265337) (the “Prospectus”), in the section entitled “Material Agreements”.
Key Factors Affecting Operating Results
For further discussion on the risks attendant to the Key Factors Affecting Operating Results, see the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this Annual Report on Form 10-K.
Brazilian Economic Environment
The Brazilian government has frequently intervened in the Brazilian economy and occasionally made drastic changes in policy and regulations. The Brazilian government’s actions to control inflation and affect other policies and regulations have often involved, among other measures, increases in interest rates, changes in tax policies and incentives, price controls, currency devaluations, capital controls, and limits on imports. Changes in Brazil’s monetary, credit, tariff and other policies could adversely affect our business, as could inflation, currency and interest-rate fluctuations, social instability and other political, economic or diplomatic developments in Brazil, as well as the Brazilian government’s response to these developments.
Rapid changes in Brazilian political and economic conditions that have occurred and may occur require continued assessment of the risks associated with our activities and the adjustment of our business and operating strategy accordingly. Developments in Brazilian government policies, including changes in the current policy and incentives adopted for financing exports of Brazilian goods, or in the Brazilian economy, over which we have no control, may have a material adverse effect on our business.
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Inflation and exchange rate variations have had and may continue to have substantial effects on our financial condition and results of operations.
Inflation and exchange rate variations affect our monetary assets and liabilities denominated in Brazilian reais. The value of these assets and liabilities as expressed in US Dollars declines when the real devalues against the US Dollar and increases when the real appreciates. In periods of devaluation of the real, we report (i) a remeasurement loss on real-denominated monetary assets and (ii) a remeasurement gain on real-denominated monetary liabilities. For additional information on the effects of exchange rate variations on our financial condition and results of operations, see the section entitled “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.”
Development of the UAM Market
Our revenue will be directly tied to the continued development and sale of eVTOL and related services. While we believe the market for UAM will be large, it remains undeveloped and there is no guarantee of future demand. We currently anticipate commercialization of our eVTOL services-and-support business beginning in 2026, followed by the commercialization and initial revenue generation from the sale of our eVTOLs beginning in 2027, and our business will require significant investment leading up to launching passenger services, including, but not limited to, final engineering designs, prototyping and testing, manufacturing, software development, certification, pilot training, and commercialization.
We believe one of the primary drivers for adoption of our UAM services is the value proposition and time savings offered by aerial mobility relative to traditional ground-based transportation. Additional factors impacting the pace of adoption of our UAM services include but are not limited to: perceptions about eVTOL quality, safety, performance and cost; perceptions about the limited range over which eVTOL may be flown on a single battery charge, volatility in the cost of oil and gasoline, availability of competing forms of transportation, such as ground or air taxi or ride-hailing services, the development of adequate infrastructure, consumers’ perception about the convenience and cost of transportation using eVTOL relative to ground-based alternatives, and increases in fuel efficiency, autonomy, or electrification of cars. In addition, macroeconomic factors could impact demand for UAM services, particularly if end-user pricing is at a premium to ground-based transportation alternatives or more permanent work-from-home behaviors persist. We anticipate initial operations in selected high-density metropolitan areas where traffic congestion is particularly acute and operating conditions are suitable for early eVTOL operations. If the market for UAM does not develop as expected, this will impact our ability to generate revenue or grow our business.
Competition
We believe that our primary sources of competition are focused UAM developers and established aerospace and automotive conglomerates developing UAM businesses. We expect the UAM industry to be dynamic and increasingly competitive. Our competitors could get to market before us, either generally or in specific markets. Even if we are first to market, we may not fully realize the benefits we anticipate and we may not receive any competitive advantage or may be overcome by other competitors. If new companies or existing aerospace or automotive conglomerates launch competing solutions in the markets in which we intend to operate and obtain large-scale capital investment, we may face increased competition. Additionally, our competitors may benefit from our efforts in developing consumer and community acceptance for UAM products and services, making it easier for them to obtain the permits and authorizations required to operate UAM services. In the event our project experiences substantial delays, or our current or future competitors overcome our advantages, our business, financial condition, operating results and prospects would be harmed.
Government Certification
We plan to obtain authorizations and certifications for our eVTOL with the Agência Nacional de Aviação Civil (“ANAC”), Federal Aviation Administration (“FAA”), and European Union Aviation Safety Agency (“EASA”) initially and will seek certifications from other aviation authorities as necessary. We will also need to obtain authorizations and certifications related to the production of our aircraft and the deployment of our related services. While we anticipate being able to meet the requirements of such authorizations and certifications, we may be unable to obtain such authorizations and certifications, or to do so on the timeline we project. Should we fail to obtain any of the required authorizations or certifications, or do so in a timely manner, or any of these authorizations or certifications are modified, suspended or revoked after we obtain them, we may be unable to launch our commercial service or do so on the timelines we project, which would have adverse effects on our business, prospects, financial condition and/or results of operations.
Initial Business Development Engagement
Since its founding, Eve has been engaged in multiple market and business development projects around the world. Examples of this include two concepts of operation (“CONOPS”) with Airservices Australia as well as with the United Kingdom Civil Aviation Authority. Both of these market and business development initiatives demonstrate Eve’s ability to create new procedures and frameworks designed to enable the safe scalability of UAM together with our partners. Using these initiatives as a guide, Eve has launched CONOPS in Rio de Janeiro, São Paulo, Miami, Japan, and Chicago, and hopes to launch additional concepts of operation in the United States, Brazil and around the world.
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In addition to our market development initiatives, Eve has signed non-binding letters of intent to sell approximately 2,900 of our eVTOL aircraft and we continue to seek additional opportunities for sales partnerships. In addition to these deals, Eve has been actively involved in the UAM ecosystem development by signing Memorandums of Understanding (“MOUs”) with about 30 market-leading partners in segments spanning infrastructure, operations, platforms, utilities, and others. In the future, we plan to focus on implementation and ecosystem readiness with our existing partners while continuing to seek UATM and support-services partnerships in order to complement our business model and drive growth.
Fully-IntegratedBusiness Model
Eve’s business model to serve as a fully-integrated eVTOL transportation solution provider is uncertain. Present projections indicate that payback periods on eVTOL aircraft will result in a viable business model over the long-term as production volumes scale and unit economics improve to support sufficient market adoption. As with any new industry and business model, numerous risks and uncertainties exist. Our financial results are dependent on certifying and delivering eVTOL on time and at a cost that supports returns at prices that sufficient numbers of customers are willing to pay based on value arising from time and efficiency savings from utilizing eVTOL services. Our aircraft include numerous parts and manufacturing processes unique to eVTOL aircraft, in general and our product design, in particular. Best efforts have been made to estimate costs in our planning projections; however, the variable cost associated with assembling our aircraft at scale remains uncertain at this stage of development. The success of our business also is dependent, in part, on the utilization rate of our aircraft and reductions in utilization will adversely impact our financial performance. Our aircraft may not be able to fly safely in poor weather conditions, including snowstorms, thunderstorms, lightning, hail, known icing conditions and/or fog. Inability to operate safely in these conditions would reduce our aircraft utilization and cause delays and disruptions in our services. We intend to maintain a high daily aircraft utilization rate which is the amount of time our aircraft spend in the air carrying passengers. High daily aircraft utilization is achieved in part by reducing turnaround times at vertiports so we can fly more hours on average in a day. Aircraft utilization is reduced by delays and cancellations from various factors, many of which are beyond our control, including adverse weather conditions, security requirements, air traffic congestion and unscheduled maintenance events.
Results of Operations
The following tables set forth statement of operations information (in thousands):
Operating expenses
n.m. = not meaningful
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Research and development expenses
Research and development activities represent a significant part of the Company’s expenses. Research and development efforts focus on the design and development of the eVTOL, development of service and operations solutions for our aircraft and those manufactured by third parties, and the development of Vector, a UATM software platform. Research and development expenses consist of personnel-related costs (including salaries, bonuses, benefits and share-based compensation) for employees focused on research and development activities, fees incurred under the Master Service Agreements, equipment and materials, and an allocation of overhead, including rent, information technology costs and utilities. Research and development expenses are expected to continue to increase as the Company adds staffing to supporteVTOLaircraft engineering and software development, builds aircraft prototypes, progresses towards the launch of the firsteVTOLaircraft, and continues to explore and develop next generation aircraft and technologies.
Research and development expenses increased $24.3 million for the year ended December 31, 2024. The increase was primarily driven by the activities contemplated in the MSA agreements with Embraer, who perform several development activities for the Company. These efforts continue to intensify with the continuation of the eVTOL development, including increased engagement of the engineering team who, following the roll-out of a prototype in July 2024, is in the process of performing a series of system and integration ground tests on the aircraft that must be conducted before its debut flight.
Selling, general and administrative expenses
Selling, general and administrative expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits and share-based compensation) for employees associated with administrative services such as executive management, legal, human resources, information technology, accounting and finance. These expenses also include certain third-party consulting services, contractor and professional services, audit and compliance expenses, insurance, corporate overhead, depreciation, rent, and utilities.
Selling, general and administrative expensesincreased $3.4 million for the year ended December 31, 2024, primarilyrelated to an increase in Eve’s direct workforce, as well as increased spend on outsourced legal and consulting services. Lastly, Eve started to incur warehouse-related costs in 2024, related to our eVTOL production site in Taubaté, Brazil.
Gain/(loss) from derivative liabilities
Derivative liabilities relate to the Private Warrants which are valued using the trading price of the Company's Public Warrants. The $17.4 million favorable change due to the fair value adjustment of derivative liabilities for the year ended December 31, 2024 was due to a $0.48 decrease in the Public Warrant trading price, whereas the trading price increased $0.73 for the year ended December 31, 2023.
Related party loan interest income
Related party loan interest income decreased $1.5 million in the year ended December 31, 2024, primarily due to seven months of interest income in 2024 compared to 12 months in 2023.
Interest expense
Interest expense increased $3.4 million for the year endedDecember 31, 2024, primarily related to the larger principal balance and a full year of interest expense as compared to2023where the initial debt draw was made in September 2023.
Other gain/(loss), net
Other gain, net increased $1.2 million in the year ended December 31, 2024, primarily related to foreign exchange rate gains of $2.7 million due to a net decrease in the BRL to USD exchange rate during the year ended December 31, 2024 as compared to a net increase for the year ended December 31, 2023, offset by an increase in fees and taxes associated with the debt issuances of $1.5 million.
Income tax expense
Income tax expense decreased $1.1 million in the year ended December 31, 2024, primarily due to lower net income at Eve Brazil on a standalone basis. Intercompany transactions with Eve Brazil are eliminated upon consolidation.
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Liquidity and Capital Resources
The Company has incurred net losses since its inception and to date has not generated any revenue. We expect to continue to incur losses and negative operating cash flows for the foreseeable future until we successfully commence sustainable commercial operations.
As of December 31, 2024, the Company has cash and cash equivalents of $56.4 million, financial investments of $247.0 million and available debt to be drawn of $125.2 million, which totals to approximately $428.6 million of liquidity. Total liquidity is expected to be sufficient to fund our operating plan for at least the next twelve months.
Future capital requirements include:
• capital expenditures for the expansion of manufacturing capacities;
• additional operating costs and expenses for raw material procurement costs;
• general and administrative expenses as we scale operations;
• interest expense from debt financing; and
The Company intends to continue to use its liquidity primarily to fund research and development activities and other personnel costs, which are our principal uses of cash. In light of the significant number of redemptions that occurred during the business combination, the current trading price for shares of our common stock and the unlikelihood that we will receive significant proceeds from exercises of the warrants because of the disparity between the exercise price of the warrants and the current trading price of the common stock, these funds will likely not be sufficient to enable the Company to complete all necessary development and commercially launch the eVTOL aircraft. Our future capital requirements will depend on many factors, including our revenue growth rate, the timing and the amount of cash received from our customers, the expansion of sales and marketing activities and the timing and extent of spending to support development efforts. Until the Company generates sufficient operating cash flow to cover its operating expenses, working capital needs and planned capital expenditures, or if circumstances evolve differently than anticipated, the Company expects to utilize a combination of equity and debt financing to fund future capital needs. Currently, no decision has been made as to specific sources of additional funding. The Company may explore different funding opportunities including long-term or convertible debt with private and public banks, advances and pre-delivery down payments from customers, or equity issuances. The Company may be unable to raise additional funds when needed on favorable terms or at all. The sale of securities by selling securityholders pursuant to the Prospectus could result in a significant decline in the public trading price of the common stock and could further decrease the likelihood of raising additional funds successfully. If the Company raises funds by issuing equity securities, dilution to stockholders may result. Any equity securities issued may also provide for rights, preferences, or privileges senior to those of holders of common stock. If the Company raises funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of preferred and common stockholders. The terms of debt securities or borrowings could impose significant restrictions on our operations. The capital markets have in the past, and may in the future, experience periods of upheaval that could impact the availability and cost of equity and debt financing.
In the event the Company requires additional financing but is unable to raise additional capital or generate cash flows necessary to continue its research and development and invest in continued innovation, the Company may not be able to compete successfully, which would harm our business, results of operations and financial condition. If adequate funds are not available, the Company may need to reconsider its expansion plans or limit its research and development activities, which could have a material adverse impact on our business prospects and results of operations.
Cash Flows
The following table summarizes cash flows for the periods indicated (in thousands):
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2024Compared with 2023
Net Cash Used by Operating Activities
Net cash used by operating activities increased $41.5 million for the year ended December 31, 2024, primarily as a result of increased net losses due to advancement of the R&D programs and increased headcount, adjusted for the impact of change in non-cash activity related to fair value of derivative instruments of $17.4 million and $10.0 million change in operating assets and liabilities.
Net Cash (Used) Provided by Investing Activities
Net cash related to investing activities decreased $123.0 million for the year ended December 31, 2024, primarily related to higher financial investment purchases of $116.5 million, lower financial investment redemptions of $82.5 million and higher capital expenditures of $5.0 million, partially offset by the collection of the related party loan principal of $81.0 million.
Net Cash Provided by Financing Activities
Net cash provided by financing activities increased $178.1 million for the year ended December 31, 2024, primarily related to financing from the 2024 Private Placement equity raise of $93.3 million, an increase in net debt proceeds of $84.5 million, and other activity of $0.3 million.
Available Credit and Debt
As of December 31, 2024, there is approximately $125.2 million available to be drawn under the Company’s debt arrangements.
On January 23, 2023, the Company entered into a loan agreement with BNDES, pursuant to which BNDES granted two lines of credit to the Company, with an aggregate amount of R$490 million (approximately $93.1 million, using the exchange rate on December 31, 2024), to support the development of the eVTOL. For additional information about the Loan Agreement, see the Company’s Current Report on Form 8-K filed with the SEC on January 30, 2023.
On December 21, 2023, the Company announced that Bradesco Bank had concluded that the first line of credit under the loan agreement aligned with the 2023 Green Loans Principles, which is a set of guidelines issued for structuring loan operations for sustainable purposes. As of December 31, 2024, a total of R$360.7 million (approximately $69.6 million) had been issued to the Company pursuant to the loan agreement.
On October 10, 2024, the Company entered into a financing agreement, dated as of October 7, 2024, with BNDES, pursuant to which BNDES agreed to grant four lines of credit totaling approximately $83.4 million as of December 31, 2024.
On October 29, 2024, the Company entered into a credit agreement with Citi, pursuant to which Citi lent $50 million and subject to an interest rate of 3.90% per year plus SOFR. The funds will support the production and sale of eVTOL aircraft.
On November 22, 2024, the Company entered into a loan agreement with BNDES for R$200 million (approximately $32.3 million), to support the second phase of the development of the Company’s eVTOL project.
For additional information, see Note 7 of the accompanying consolidated financial statements.
Private Placement
In July and September 2024, the Company closed on subscription agreements, warrant agreements and warrant exchange agreements with certain investors relating to the 2024 Private Placement for the issuance and sale of 23,900,000 newly issued shares of common stock for cash at a purchase price of $4.00 per share, for a total of $95.6 million in new equity financing, the exchange of certain Public Warrants and Market Warrants for shares of common stock, and the issuance of certain Penny Warrants to certain investors. Refer to Note 8 and Note 9 of the accompanying consolidated financial statements and the Company’s Current Reports on Form 8-K filed with the SEC on July 1, 2024 and July 18, 2024 for additional information.
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CriticalAccounting Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent liabilities and the reported amounts of expenses during the reporting period. Estimates are based on historical experience and on various other factors that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material. While the Company’s significant accounting policies are described in more detail in Note 2 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K, management believes the following accounting policies and estimates to be critical to the preparation of the consolidated financial statements:
Valuation allowance of deferred taxes
The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryforward period provided for in the tax law for each applicable tax jurisdiction. The assessment regarding whether a valuation allowance is required or should be adjusted is based on an evaluation of possible sources of taxable income and also considers all available positive and negative evidence factors. Our accounting for the valuation of deferred tax assets represents our best estimate of future events. Changes in our current estimates, due to unanticipated market conditions, governmental legislative actions or events, could have a material effect on our ability to utilize deferred tax assets. At December 31, 2024, valuation allowances against deferred tax assets were $428.5 million. Refer to Note 16 to our consolidated financial statements for additional information on the composition of these valuation allowances and information on the $2.6 million deferred income tax benefit resulting from deferred tax assets in Brazil.
Credit Risk
Financial instruments, which subjects the Company to concentrations of credit risk, consist primarily of cash, cash equivalents, financial investments, and a related party loan receivable. Cash and cash equivalents and financial investments are held at major financial institutions located in the United States of America and Brazil. At times, cash account balances with any one financial institution may exceed Federal Deposit Insurance Corporation insurance limits ($250,000 per depositor per institution). Management believes the financial institutions that hold the Company’s cash and cash equivalents and financial investments are financially sound and, accordingly, minimal credit risk exists with respect to cash and cash equivalents and financial investments.
The Company also performs an ongoing evaluation of EAH, our counterparty for the related party loan receivable. No allowance for credit loss has been deemed necessary. The loan receivable was collected in August 2024. Refer to Note 5 of the accompanying consolidated financial statements for additional information.
Emerging Growth Company Status
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 107(b) of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period to comply with new or revised accounting standards and to adopt certain of the reduced disclosure requirements available to emerging growth companies. As a result of the accounting standards election, we are not subject to the same implementation timeline for new or revised accounting standards as other public companies that are not emerging growth companies which may make comparison of our financials to those of other public companies more difficult.
We also take advantage of some of the reduced regulatory and reporting requirements of emerging growth companies pursuant to the JOBS Act, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.
We will lose our emerging growth company status and become subject to the SEC’s internal control over financial reporting auditor attestation requirements upon the earlier of (1) December 31, 2025, (2) we have total annual gross revenue of at least $1.2 billion, (3) we are deemed to be a large accelerated filer, or (4) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
We are exposed to market risk for changes in the Brazilian interest rate CDI, related to our cash equivalents in Brazil that are invested in Bank Deposit Certificates (“CDB”), which are issued by financial institutions in Brazil and immediately available for redemption. The CDI rate is an average of interbank overnight rates in Brazil. A risk to interest income arises from rate fluctuations in the Brazilian interest rates.
As of December
31, 2024, approximately $4.5 million, or 1%, of our consolidated cash and cash equivalents and financial investments were indexed to the variation of the CDI rate. A hypothetical 100
basis point change in the CDI rate would increase or decrease
the annual interest income on these instruments by approximately $45 thousand, assuming no change in the
amount or composition of our cash and cash equivalents and financial investments.
Our investment policy is focused on the
preservation of capital and supporting the Company’s liquidity needs. The
Company’s policy for managing the risk of fluctuations in interest rates on
financial investments is to maintain a system to measure market risk, which
consists of an aggregate analysis of variety of risk factors that might affect
the return of those investments.
The interest rates on the lines of credit
made available by BNDES are fixed or fixed upon drawing the debt, which will
reduce unexpected variability of the interest expenses.
The interest rate on the Citibank debt is
calculated as 3.9% per
year plus term SOFR 3M
published by CME Group Benchmark Administration Limited, starting with Term
SOFR on the day on which agreement was signed. Subsequently, the rate is
updated for the Term SOFR published on the date determined by the Bank, that is
no more than two
business days prior the beginning of the next semester and will be fixed for
the next six
months until the next update.
Variable-rate debt
represented 38%, or $50.0 million, of our total long-term debt as of December
31, 2024. A hypothetical 100 basis point increase in interest rates would
increase the annual interest expense on variable-rate debt by
approximately $0.5 million.
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Foreign Currency Risk
The Company’s operations most exposed to foreign exchange gains and losses are those denominated in Brazilian reais (labor costs, tax issues, local expenses and financial investments) arising from the subsidiary located in Brazil. The relationship of the real to the value of the US Dollar may adversely affect us, mainly due to the fact that approximately 1% of total assets and 10% of total liabilities are in reais.
The Brazilian real has experienced frequent and substantial variations in relation to the US Dollar and other foreign currencies. As of December 31, 2024, theclosing exchange rate was 6.1923reais per US Dollar.
As ofDecember 31, 2024, management analyzed the potential gain/(loss) due to foreign currency rate fluctuation and its impact on related instrument carrying value as follows (USD, in thousands):
Assets
Liabilities
Item 8. Financial Statements and Supplementary Data
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of
Directors
Eve Holding, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying
consolidated balance sheets of Eve Holding, Inc. and
subsidiaries (the Company) as of December 31, 2024 and 2023,
the related consolidated statements of operations, comprehensive loss, equity,
and cash flows for each of the years in the three-year period
ended December 31, 2024, and the related notes (collectively, the
consolidated financial statements). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2024 and 2023, and the results of
its operations and its cash flows for each of the years in the three-year
period ended December 31, 2024, in conformity with U.S. generally accepted
accounting principles.
Basis for Opinion
These consolidated financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or
fraud. The Company is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting
but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no
such opinion.
Our audits included
performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in
the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial
statements. We believe that our audits provide a reasonable basis for our
opinion.
/s/ KPMG LLP
We have
served as the Company’s auditor since 2022.
Miami, Florida
March 11, 2025
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EVE HOLDING, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
December 31,
ASSETS
Current assets
Related party receivables 472 191
Related party loan receivable - 83,042
Non-current assets
Property, plant & equipment, net 611 547
LIABILITIES AND EQUITY
Current liabilities
Derivative financial instruments 6,983 13,965
Non-current liabilities
Commitments and contingencies (Note 18)
Equity
The accompanying notes are an integral part of these consolidated financial statements.
Amounts may not add due to rounding.
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EVE HOLDING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Year Ended December 31,
Operating expenses
Net loss per share – basic and diluted $ (0.48 ) $ (0.46 ) $ (0.68 )
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
Year Ended December 31,
The accompanying notes are an integral part of these consolidated financial statements.
Amounts may not add due to rounding.
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EVE HOLDING, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
Common Stock
Separation-related adjustment - - (708 ) - 32 (676 )
Share-based compensation and issuance for vested awards 140 0 3,301 - - 3,301
Reclassification of Public Warrants to equity - - 10,580 - - 10,580
Distribution to Parent, net - - (1,373 ) - - (1,373 )
Warrants exercised 150 0 3 - - 3
Issuance of New Warrants - - 1,863 - - 1,863
Warrant expenses - - 480 - - 480
Share-based compensation and issuance for vested awards 115 0 3,004 - - 3,005
Warrants exercised 900 1 8 - - 9
Share-based compensation and issuance for vested awards 167 0 3,699 - - 3,699
The accompanying notes are an integral part of these consolidated financial statements.
Amounts may not add due to rounding.
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EVE HOLDING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
Cash flows from operating activities
Adjustments to reconcile net loss to net cash used by operating activities
Depreciation, amortization, and loss on disposal 252 184 25
Non-cash lease expenses 520 84 9
Unrealized (gain)/loss on exchange rate changes (2,489 ) (9 ) -
Deferred income taxes (923 ) (1,714 ) -
Non-cash tax expense - 436 -
Changes in operating assets and liabilities
Accrued interest on financial investments, net (3,794 ) 564 (1,782 )
Accrued interest on related party loan receivable, net 2,042 (391 ) (1,650 )
Cash flows from investing activities
Related party loan collected (disbursed) 81,000 - (81,000 )
Expenditures for property, plant and equipment (5,216 ) (168 ) (476 )
Cash flows from financing activities
Proceeds from issuance of common stock, net of fees to investors 94,288 - -
Non-investor equity issuance costs (956 ) - -
Non-creditor debt issuance costs (1,084 ) (243 ) -
Tax withholding on share-based compensation - (287 ) -
Capital contribution net of transaction costs reimbursed to Zanite - - 369,830
Transaction costs reimbursed to parent - - (15,754 )
Distribution to parent, net - - (1,373 )
Proceeds from exercised warrants 9 3 -
Effect of exchange rate changes on cash and cash equivalents (1,354 ) 487 -
Net increase (decrease) in cash and cash equivalents 9,484 (2,264 ) 34,770
Cash and cash equivalents at the beginning of the period 46,882 49,146 14,377
Cash and cash equivalents at the end of the period $ 56,366 $ 46,882 $ 49,146
Supplemental disclosure of cash information
Cash paid for
Supplemental disclosure of other non-cash investing and financing activities
Issuance of common stock for vested restricted stock units $ 878 $ 1,366 $ 1,585
The accompanying notes are an integral part of these consolidated financial statements.
Amounts may not add due to rounding.
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EVE HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, unless otherwise specified or per share amounts)
Note 1– Organization and Nature of Business
Eve Holding, Inc. (together with its subsidiaries, as applicable, “Eve,” “Eve Holding,” the “Company,” “we,” “us,” or “our”), is an aerospace company that is dedicated to accelerating the urban air mobility (“UAM”) ecosystem. The Company is taking a holistic approach to progressing the UAM ecosystem with an advanced electric vertical take-off and landing (“eVTOL”) project, a comprehensive global services and support network, and a unique air traffic management solution. The Company is organized in Delaware with operations in Melbourne, Florida and São Paulo, Brazil.
The Company is a former blank check company incorporated on November 19, 2020, under the name Zanite Acquisition Corp. (“Zanite”) as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.
Business Combination
On December 21, 2021, Zanite entered into a Business Combination Agreement (the “BCA”), with Embraer S.A., a Brazilian corporation (“sociedade anonima”) (“ERJ”), Embraer Aircraft Holding, Inc., a Delaware corporation (“EAH”) wholly owned by ERJ, and EVE UAM, LLC, a Delaware limited liability company (“Eve Sub”), a former subsidiary of EAH, that was formed for purposes of conducting the UAM business. For transactions beyond the Business Combination (as defined below) and initial financing, ERJ and EAH are collectively referred to as “Embraer.”
On May 9, 2022, the closing (the “Closing”) of the transactions contemplated by the BCA occurred (“Business Combination”). Pursuant to the BCA, Zanite issued 220 millionshares of Class A common stock to EAH in exchange for all of the issued and outstanding limited liability company interests of Eve Sub (the “Equity Exchange”). As a result, Eve Sub became a wholly owned subsidiary of Zanite, which changed its name to “Eve Holding, Inc.”
Initial Financing
On December 21, 2021, December 24, 2021, March 9, 2022, March 16, 2022, and April 4, 2022, in connection with the Business Combination, Zanite entered into subscription agreements or amendments thereto (as amended from time to time, the “Subscription Agreements”) with certain investors, including certain strategic investors and/or investors with existing relationships with ERJ (the “Strategic Investors”), Zanite Sponsor LLC, a Delaware limited liability company (the “Sponsor”), and EAH (collectively, the “PIPE Investors”), pursuant to which and on the terms and subject to the conditions of which, Zanite agreed to issue and sell to the PIPE Investors in private placements to close immediately prior to the Closing, an aggregate of 35.7 millionshares of Class A common stock at a purchase price of $10.00 per share, for an aggregate purchase price of $357.3 million, which included the commitment of the Sponsor to purchase 2.5 million shares of Class A common stock for a purchase price of $25 millionand the commitment of EAH to purchase 18.5 millionshares of Class A common stock for a purchase price of $185 million(the “PIPE Investment”). The PIPE Investment was consummated substantially concurrently with the Closing. Upon Closing, all shares of Zanite Class A and Class B common stock were converted into, on a one-for-one basis, shares of common stock of Eve Holding.
Accounting Treatment of the Business Combination
The Business Combination was accounted for as a reverse recapitalization, equivalent to the issuance of shares by Eve Sub for the net monetary assets of Zanite accompanied by a recapitalization. Accordingly, the consolidated assets, liabilities, and results of operations of Eve Sub became the historical financial statements of the Company. The assets, liabilities, and results of operations of Zanite were consolidated with Eve Sub beginning on the Closing date. For accounting purposes, these financial statements of the Company represent a continuation of the financial statements of Eve Sub. The net assets of Zanite were recorded at historical costs with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are presented as those of Eve Sub.
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Both Embraer and Zanite’s sponsors incurred costs in connection with the business combination (“Transaction Costs”). The Transaction Costs that were determined to be directly attributable and incremental to the Company, and as the primary beneficiary of these expenses, were deferred and recorded as other assets in the balance sheet until the Closing. Such costs were subsequently recorded either as an expense of the Business Combination or a reduction of cash contributed with a corresponding reduction of additional paid-in capital if they were attributable to one or multiple sub-transactions of the Business Combination.
After the Closing, EAH did not lose control over Eve Sub as EAH still held approximately 90% of Eve Holding’s shares. Therefore, the transaction did not result in a change in control that would otherwise necessitate business combination accounting.
Use of Estimates
The preparation of consolidated financial statements in accordance with U.S. GAAP requires the Company’s management to make estimates and judgments that affected the reported amounts of assets and liabilities and allocations of expenses. These judgments were based on the historical experience, management’s evaluation of trends in the industry and other factors that were deemed relevant at that time. The estimates and assumptions were reviewed on a regular basis and the changes to accounting estimates were recognized in the period in which the estimates were revised. The Company’s management recognizes that the actual results could be materially different from the estimates.
Prior Period Reclassification
We have reclassified certain prior period amounts to conform to the current period presentation. These reclassifications had no effect on the reported results of operations.
Basis of Presentation
The Company’s consolidated financial statements included in this report reflect (i) the historical operating results of Eve Sub prior to the Business Combination on May 9, 2022, prepared on a carve-out basis, (ii) the combined results of Eve Sub andZanitefollowing the Closing, (iii) the assets and liabilities of Eve Sub at their historical cost, and (iv) the Company’s retroactive recast of the equity structure recapitalization including EPS for all periods presented.
Until the Closing, the consolidated financial statements of Eve Sub reflect the assets, liabilities and expenses that management determined to be specifically attributable to Eve Sub, as well as allocations of certain corporate level assets, liabilities and expenses, deemed necessary to fairly present the financial position, results of operations and cash flows of Eve, as discussed further below. Management believes that the assumptions used as basis for the allocations of expenses, direct and indirect, as well as assets and liabilities in the consolidated financial statements are reasonable. However, these allocations may not be indicative of the actual amounts that would have been recorded had Eve operated as an independent, publicly traded company for the periods presented.
The accompanying consolidated financial statements are presented in US Dollars, unless otherwise noted, and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities Exchange Commission (“SEC”).All intercompany balances and transactions were eliminated in consolidation. Certain columns and rows may not add due to rounding.
Note 2– Significant Accounting Policies
Change in Carve-Out Methodology
Prior to the separation from Embraer, Eve Sub has historically operated as part of Embraer and not as a standalone company. Therefore, a carve-out methodology was necessary to prepare historical financial statements since Eve Sub’s inception in 2017 until the Closing on May 9, 2022. For reporting periods prior to and for the year ended December 31, 2021, the management approach was used as the carve-out methodology. The management approach takes into consideration the assets that were being transferred to determine the most appropriate financial statement presentation. A management approach may also be appropriate when a parent entity needs to prepare financial statements for the sale of a legal entity, but prior to divestiture, certain significant operations of the legal entity are contributed to the parent in a common control transaction.
The Master Service Agreement (“MSA”) and Shared Service Agreement (“SSA”) were executed on December 14, 2021. Beginning January 1, 2022, Embraer started charging Eve Sub for most of the expenses Eve Sub previously carved out. Refer to Note 5 – Related Party Transactions for information regarding these agreements.On the Closing date, Embraer concluded that all relevant assets and liabilities were contributed to Eve Sub.Based on the direct charges under the MSA and SSA and the transfer of assets and liabilities to Eve Sub, the Company determined it to be appropriate to change the carve-out methodology to the legal entity approach.The legal entity approach is often appropriate in circumstances when the transaction structure is aligned with the legal entity structure of the divested entity.The Company applied the legal entity approach beginning January 1, 2022 until the Closing date May 9, 2022. For activity after the Closing date, no carve-out adjustments were necessary in preparation of the consolidated financial statements.
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The Company has recorded the impacts of the change in carve-out methodology from the management approach to the legal entity approachas adjustments (“Separation-Related Adjustments”) to the January 1, 2022 beginning balance sheet and not as a period activity attributable to the year ended December 31, 2022. The January 1, 2022 beginning balance sheet adjustments from the December 31, 2021 balances were as follows:
Separation-Related Adjustments
December 31, Separation-Related January 1,
ASSETS
Current assets
Related party receivables 220 - 220
Capitalized software, net 700 (700 ) -
Total non-current assets 700 (700 ) -
LIABILITIES AND NET PARENT EQUITY
Current liabilities
Derivative financial instruments 32 (32 ) -
Net parent equity
Accumulated other comprehensive loss (32 ) 32 -
Total liabilities and net parent equity $ 21,571 $ (708 ) $ 20,862
Functional and Reporting Currency
The functional and reporting currency is the US Dollar (“US Dollars,” “USD,” or “$”). The balances and transactions of Eve Soluções de Mobilidade Aérea Urbana Ltda. (“Eve Brazil”), a direct wholly owned subsidiary of the Company based in Brazil, that were recorded in a Brazilian reais (“BRL” or “R$”) have been remeasured into the functional currency (USD) before being presented in the consolidated financial statements.
Foreign currency gains and losses are related to transactions with suppliers recognized in USD, but settled in BRL. The financial impact is recognized in “Other gain/(loss), net” within the consolidated statements of operations.
Property, Plant & Equipment, Net
Property, plant & equipment, net are stated at historical cost less accumulated depreciation and depreciated on a straight line basis. Expenditures for major renewals and betterments are capitalized, while minor replacements, maintenance, and repairs, which do not extend the asset lives, are expensed as incurred.
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Valuation of Long-Lived Assets
Long-lived assets, which include property, plant & equipment and right-of-use assets, are reviewed for impairment when events or changes in circumstance indicate that the carrying amount of the long-lived asset group may not be recoverable.
Debt
Debt or borrowings from banks with an original maturity date within twelve months will be classified as a current liability, as well as the current portion of any long-term debt. Debt or borrowings from banks with maturity dates greater than twelve months (long-term debt) will be classified as a non-current liability, net of any current portion.
Debt Issuance Costs
Debt issuance costs include incremental fees and commissions incurred in connection with the issuance of debt. Generally, these costs are recorded as a contra-liability as a direct deduction from the carrying value of the associated debt liability and amortized over the remaining term of the debt instrument.
Research and Development Expenses
Research and development expenses (“R&D”) are focused on design and development of our eVTOL, Service and Operations Solutions, and UATMprojects to achieve manufacturing and commercial stages. R&D costs are expensed as incurred and are primarily comprised of engineering services provided by related parties, personnel-related costs for employees focused on R&D activities, supplies, and materials costs.R&D expenditures for the UATM project are related to the development of software to be sold, leased, or otherwise marketed and are expensed as incurred until technological feasibility is established.
Stock Incentive Plans
The Company established the 2022 Stock Incentive Plan, which grants eligible employees, contractors, and directors restricted stock units (RSUs) for common stock of the Company. Stock-based compensation expense is recognized in accordance with the provisions of ASC 718, Compensation - Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based compensation awards be based on the grant date fair values of the awards. Expense for awards with service and market conditions begins when a grant date has been determined. Expense for awards with performance conditions begins when a grant date has been determined and the performance condition is considered probable. The fair value of RSU awards with market conditions is estimated using a Monte Carlo simulation option-pricing model, which requires management to make certain assumptions and judgments.The fair value of the RSU’s without market conditions equals the share price of the Company's common stock on the grant date. The fair value of awards is recognized as expense over the requisite service period on a straight-line basis. Forfeitures by employees are accounted for when they occur and estimated for non-employees.
Additionally, the Company assumes obligations related to the ERJ long-term incentive plan (“Embraer Plan”) for certain employees that transfer from Embraer to Eve. The plan is a cash-settled phantom shares plan, in which the amounts attributed to the services provided by the participants are converted into virtual share units based on the market value of ERJ’s shares. At the end of the service period the participant receives the quantity of virtual shares converted into BRL, at the current market value of ERJ common stock. The Company recognizes the obligation during the service period (quantity of virtual shares proportional to the period) in the same group as the participant’s normal remuneration. This obligation is presented within either “Other current payables” or “Other non-current payables” dependent upon the remaining vesting term. The fair value is calculated based on the market price of the shares and recorded as “Selling, general and administrative expenses” in the consolidated statements of operations.
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Income Taxes
For the US operations, the operating results and related tax positions are a component of either a legal entity and/or a larger group of entities that file tax returns. The tax loss carryforwards generated by the US operation are based on a hypothetical stand-alone income tax return basis and may not exist in the EAH consolidated financial statements. Eve Brazil files a separate income tax return in Brazil, thus, all income tax related balances are based on enacted Brazilian tax law.
The deferred income taxes are generally recognized, based on enacted tax rates, when assets and liabilities have different values for financial statement and tax purposes. The Company has calculated its income tax amounts using a separate return methodology. Under this method, the Company prepares the financial statements as if it will file separate returns with tax authorities. As a result, the deferred tax balances and effective tax rate as a stand-alone entity will likely differ significantly from those recognized in the actual consolidated return by Embraer. A valuation allowance is appropriate if it is more likely than not all or a portion of deferred tax assets will not be realized. The calculation of income taxes on a separate return basis requires a considerable amount of judgment and use of both estimates and allocations.
The Company accounts for uncertain income tax positions recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to be recognized in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.
Other Accounting Policies
See the following notes for other accounting policies impacting the Company’s consolidated financial statements:
Note Title
3 Cash and Cash Equivalents
4 Financial Investments
9 Common Stock Warrants
11 Fair Value Measurements
13 Earnings Per Share
19 Segments
Recently Adopted Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This guidance is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU is effective for this fiscal year ended December 31, 2024, and for interim periods beginning in 2025. The adoption of this ASU did not have a material impact on the related disclosures.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740). This guidance establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing guidance. Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation. They must also further disaggregate income taxes paid. This ASU is effective for our fiscal year ending December 31, 2025. Early adoption is permitted. The Company is currently evaluating the impact of adopting this new accounting guidance on our consolidated financial statements, but does not expect the adoption of this ASU will have a material impact on the consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40). This guidance requires more detailed disclosure about certain costs and expenses presented in the income statement, including inventory purchases, employee compensation, selling expense and depreciation expense. The guidance is effective for our fiscal year ending December 31, 2027 and our interim periods during the fiscal year ending December 31, 2028. Early adoption is permitted. The Company is currently evaluating the impact of adopting this new accounting guidance on the related disclosures to the consolidated financial statements.
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Note 3 – Cash and Cash Equivalents
Cash and cash equivalents include deposits in Bank Deposit Certificates (“CDBs”) issued by financial institutions in Brazil that are immediately available for redemption and fixed term deposits in US Dollars with original maturities of 90 days or less.Balances consisted of the following:
December 31,
Note 4 – Financial Investments
Held to maturity (“HTM”) investments are recorded in the consolidated balance sheets at amortized cost. These investments include time deposits with original maturities of one year or less, but greater than 90 days.
Amortized Cost Unrealized Gains Unrealized Losses Fair Value
HTM securities, at cost:
Amortized Cost Unrealized Gains Unrealized Losses Fair Value
HTM securities, at cost:
No allowance for credit losses was recognized as of December 31, 2024 and December 31, 2023.
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Note 5 – Related Party Transactions
Relationship with Embraer
As of December 31, 2024,Embraer owns approximately83% of the outstanding common stock of the Company.The expenses from transactions with Embraer reflected in the consolidated financial statements may not be indicative of expenses that would be incurred in arm’s length transactions.
In July and September 2024, the Company closed a private placement, which included investment from, among others, Embraer, pursuant to which the Company received aggregate gross proceeds of $95.6 million. Pursuant to the private placement, Embraer received certain newly issued shares of common stock and warrants. Refer to Note 8 and Note 9 for more information regarding the private placement.
Master Service Agreements and Shared Service AgreementIn December 2021, the Company andEmbraerentered into the Master Service Agreement (“MSA”) and Shared Service Agreement (“SSA”), and as a result,Embraerbegan charging the Company for research and development (“R&D”) and selling, general and administrative (“SG&A”) services, respectively.The initial terms for the MSA and SSA are15 years each. The MSA can be automatically renewed for additional successiveone-year periods. The MSA established a fee so that the Company may have access to Embraer’s R&D and engineering department structure, as well as, at the Company’s option, the ability to access manufacturing facilities in the future. The SSA established a cost overhead pool to be allocated, excluding any margin, so that the Company may be provided with access to certain of Embraer’s administrative services and facilities such as shared service centers. In addition, in December 2021, the Company entered into a MSA with Atech Negócios em Tecnologias S.A., a Brazilian corporation (sociedade anônima) (“Atech”) and wholly owned subsidiary of Embraer, for an initial term of15 years. Fees under the Atech MSA are for services related to air traffic management software development, defense systems, simulation systems, engineering, and consulting services.
Training Services Agreement On October 22, 2024 (the “Effective Date”), the Company and Embraer CAE Training Services, LLC (“ECTS”) entered into a Training Services Agreement, pursuant to which the Company has appointed ECTS as its worldwide training services provider related to aircraft which are or will be designed and manufactured by the Company (“Aircraft”), during the term of the Training Services Agreement. Under the Training Services Agreement, ECTS has agreed to provide certain training services related to the piloting, maintenance and ground handling of the Aircraft to the Company or its customers, and the Company has agreed to purchase certain entitlement training in accordance with the training selected by its customer from ECTS, for the pricing set forth in the Training Services Agreement. The term of the Training Services Agreement is the period starting on the Effective Date of the agreement and ending on the last date ECTS provides training services for the Aircraft.
Corporate Costs Embraer incurs corporate costs for services provided to the Company. These costs include, but are not limited to, expenses for information systems, accounting, treasury, purchasing, human resources, legal, and facilities. These costs benefit the Company, but are not covered under the MSA or SSA, and therefore, are billed to the Company separately. The corporate costs are allocated between the “Research and development expenses” and “Selling, general and administrative expenses” line items of the consolidated statements of operations as appropriate.
Development Costs The Company has entered into supply agreements with Embraer entities and joint ventures that Embraer is a party to for the purchase of components and other materials consumed in development activities.
Related Party Receivables and Payables Certain employees have transferred from Embraer to the Company. On the transfer date of each employee, all payroll related accruals for the employee are transferred to the Company. Embraer is responsible for payroll related costs prior to the transfer date. The Company recognizes a receivable from Embraer for payroll costs incurred prior to the transfer date in the “Related party receivables” line of the consolidated balance sheets. Fees and expenses in connection with the MSA, SSA, and other costs are payable within45 days after receipt of the invoice and are recognized in “Related party payables” within the consolidated balance sheets.
Royalty-Free Licenses Under the MSA and SSA, the Company has a royalty-free license to access Embraer’s intellectual property to be used within the UAM market.
Leases The Company has entered into agreements with Embraer to lease corporate office space and other facilities, including a site expected to be used to develop the Company’s manufacturing facility for eVTOL production. Refer to Note 17 for more information.
Transaction Costs During the year ended December 31, 2022,Embraerpaid for Transaction Costs attributable to Eve Sub. The Transaction Costs comprised, but were not limited to, costs associated with legal, finance, consulting, and auditing services with the objective to effectuate the transaction withZanite, as described in Note1. Expenses directly related to the anticipated closing of the transaction withZanitewere capitalized and the remaining expenses were charged to the statement of operations as SG&A expenses.
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Related Party Loan On August 1, 2022, the Company entered into a loan agreement with EAH in order to efficiently manage the Company’s cash at a rate of return that is favorable to the Company for an initial term of12 months. In August 2023, the initial term of the loan was extended for an additional12 months. On August 1, 2024, the loan matured. Principal and interest collected was $85.9million.Nocredit losses were recognized related to the loan receivable through the loan’s maturity on August 1, 2024.
Related Party Expenses
The following table summarizes the related party expenses for the presented periods:
Year Ended December 31,
Selling, general and administrative expenses 4,612 3,032 8,510
Note 6 – Other Balance Sheet Components
OtherCurrent Assets
Other current assets are comprised ofthefollowingitems:
December 31,
Advances to suppliers (a) $ 6,992 $ 298
Prepaid Directors & Officers insurance 936 467
Advances to employees 72 59
Prepaid income tax 699 -
(a) Includes approximately $5.0 million related to supplier tooling that will ultimately be owned by the Company and used for eVTOL production. Advances for supplier tooling are recorded within the “Expenditures for property, plant and equipment” line item under investing activitiesof the consolidated statements of cash flows.
Property, Plant and Equipment
Property, plant and equipment consisted of the following:
December 31,
Development mockups $ 516 $ 516
Construction in progress (“CIP”) 241 9
Computer hardware 15 15
Total property, plant and equipment $ 939 $ 707
Less: Accumulated depreciation (328 ) (160 )
Total property, plant and equipment, net $ 611 $ 547
Depreciation expense for the year ended December 31, 2024, 2023, and 2022 was $0.2 million, $0.1 million and less than $0.1 million, respectively. Construction in progress includes costs incurred for the Company’s manufacturing facility to be constructed in Taubaté, São Paulo, Brazil, and internal-use software.
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Other Current Payables
Other current payables are comprised of the following items:
December 31,
Income tax payable - 1,141
Note 7 – Debt
The following table summarizes the Company’s outstanding debt:
December 31,
Interest Rate (a) Maturity Date 2024 2023
Unamortized debt issuance costs (c) (1,604 ) (305 )
(a) Weighted-average interest rate as of December 31, 2024
(b) Includes debt denominated in BRL, converted to USD as of December 31, 2024
(c) Excludes $49 thousand and $348 thousand in deferred charges as of December 31, 2024 and 2023, respectively, related to debt issuance costs that will be recognized pro-ratably when additional funds are drawn.
The principal borrowed under the debt arrangements matures as follows:
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The Company has the following loan agreements as of December 31, 2024:
2023 BNDES Phase 1 Loan Agreement
In January 2023, the Company entered into a loan agreement with Banco Nacional de Desenvolvimento Economico e Social (“BNDES”), pursuant to which BNDES extended two loans with an aggregate borrowing availability of R$490 million (approximately $93.1 million), to support the first phase of the development of the Company’s eVTOL project. The first loan (“Sub-credit A”), in the amount of R$80 million (approximately $12.9 million using the exchange rate as of December 31, 2024),was denominated in Brazilian reais by Fundo Nacional Sobre Mudança Climática (“FNMC”), a BNDES fund that supports businesses focused on mitigating climate change and reducing carbon emissions. Sub-credit A has maturity dates on a monthly basis from March 2026 through February 2035. The second loan (“Sub-credit B”), in the amount of R$410 million (approximately $80.2 million), was denominated in US Dollars when the agreement was executed by the US Dollar sale rate published by the Central Bank of Brazil as the “PTAX” rate. Sub-credit B has maturity dates on a quarterly basis from May 2027 through February 2035. As of December 31, 2024, approximately $83.6 million has been drawn from these facilities at a weighted-average interest rate of 5.4%.
2024 BNDES Industrialization Agreement
On October 10, 2024, the Company entered into a financing agreement, dated as of October 7, 2024, with BNDES, pursuant to which BNDES agreed to grant four lines of credit totaling approximately $83.4 million as of December 31, 2024, denominated as follows: Sub-credit A in the amount of R$140 million (approximately $22.6 million), Sub-credit B in the amount of R$60 million (approximately $10.8 million), Sub-credit C in the amount of R$210 million (approximately $33.9 million) and Sub-credit D in the amount of R$90 million (approximately $16.1 million). The principal amount of the debt arising from the Sub-credit A will bear an interest rate of 2.20% per annum, and that arising from the Sub-credit C will bear an interest rate of 2.75% per annum above the Reference Rate (TR) 226, published in the Time Series Management System - SGS of the Central Bank of Brazil, under code no. 226, or any other that may replace it. The principal amount of the debt owed under Sub-credit B will bear interest at the rate of 1.10% per annum and under Sub-credit D will bear interest at the rate of 1.65% per annum plus the fixed rate published by the BNDES System. The financing is intended for the development of the manufacturing facility for the production of eVTOL aircraft in the city of Taubaté, São Paulo, Brazil. The financing will also be secured by the underlying machinery and equipment to be acquired with the funds for the manufacturing facility. The agreement is subject to a one-time commission fee of R$2.5 million (approximately $0.4 million). As of December 31, 2024, the Company has not drawn from these lines of credit.
2024 Citibank Credit Agreement
On October 29, 2024, the Company entered into a credit agreement with Citibank, N.A. (“Citi”) (the “Credit Agreement”), pursuant to which Citi lent $50 million and subject to an interest rate of 3.90% per year plus Term Secured Overnight Financing Rate (“SOFR”). The funds will support the production and sale of eVTOL aircraft. The Credit Agreement requires compliance with a minimum debt service coverage ratio. The ratio is tested on the last day of each fiscal quarter for the trailing four quarter period then ended.
2024 BNDES Phase 2 Loan Agreement
On November 22, 2024, the Company entered into a loan agreement with BNDES, pursuant to which BNDES agreed to grant the Company a loan of R$200 million (approximately $32.3 million as of December 31, 2024) and subject to an interest rate of 7.53%. The loan is intended to support the second phase of the eVTOL project. As of December 31, 2024, the Company has not drawn from this line of credit.
As of December 31, 2024, there is approximately $125.2 million available to be drawn under the Company’s debt arrangements.
The BNDES loan agreements provide that the availability of such loans are subject to BNDES rules and regulations and or funding by the Conselho Monetário Nacional, Brazil’s National Monetary Council. Additionally, the BNDES loan agreements provide that the borrowing of any amount under these loans are subject to certain conditions, including, among others, the promulgation of a new law (which condition only applies to the first line of credit), the receipt by BNDES of a guarantee from an acceptable financial institution, absence of any facts that would have a material adverse effect on the economic or financial condition of the Company, and approval of the project by the applicable environmental entities.
Compliance with Debt Covenants
Our loan facilities require compliance with either a debt service coverage ratio, customary affirmative, negative and operational covenants, customary events of default, prepayment and cure provisions, and regular reporting to lenders including providing certain subsidiary financial statements. Failure to meet certain of these requirements may result in a covenant violation or an event of default depending on the terms of the agreement. An event of default may allow lenders to declare amounts outstanding under these agreements immediately due and payable, to enforce their interests against collateral pledged under these agreements or restrict our ability to obtain additional borrowings. No covenant violations or technical defaults existed at December 31, 2024.
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Note 8 – Equity
The Company’s common stock trades on the New York Stock Exchange (“NYSE”) under the ticker EVEX. Pursuant to the terms of the Amended and Restated Certificate of Incorporation, the Company is authorized to issue the following shares and classes of capital stock, each with a par value of $0.001 per share: (i) 1,000,000,000 shares of common stock; and (ii) 100,000,000 shares of preferred stock. There were 297,644,298 and 269,359,021 shares of common stock issued and outstanding as of December 31, 2024 and December 31, 2023, respectively. Holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders.Holders of common stock are entitled to receive such dividends, if any, as may be declared from time to time by the Company’s Board of Directors in its discretion out of funds legally available. No dividends on common stock have been declared by the Company’s Board of Directors through December 31, 2024, and the Company does not expect to pay dividends in the foreseeable future. The Company has shares of common stock reserved for future issuance related to warrants and share-based compensation, refer to Note 9 and Note 12 for more information, respectively.
Preferred stock may be issued at the discretion of the Company’s Board of Directors, as may be permitted by the General Corporation Law of the State of Delaware and without further stockholder action. The shares of preferred stock would be issuable for any proper corporate purpose, including, among other things, future acquisitions, capital raising transactions consisting of equity or convertible debt, stock dividends, or issuances under current and any future stock incentive plans, pursuant to which the Company may provide equity incentives to employees, officers, and directors and in certain instances may be used as an anti-takeover defense. As of December 31, 2024 and December 31, 2023, there was no preferred stock issued and outstanding.
In the event of a voluntary or involuntary liquidation, dissolution, distribution of assets, or winding-up, subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of the Company’s common stock will be entitled to receive an equal amount per share of all of our assets of whatever kind available for distribution to stockholders, after the rights of the holders of any preferred stock have been satisfied, if any.
2024 Private Placement
On June 28, 2024 and July 12, 2024, the Company entered into subscription agreements, warrant agreements, and warrant exchange agreements with certain investors relating to a private placement (the “2024 Private Placement”) for (i) the issuance and sale of 23,900,000 newly issued shares of common stock of the Company, par value $0.001 per share, for cash at a purchase price of $4.00 per share (of which, 7,500,000 shares were purchased and issued to Embraer), (ii) the issuance of 3,318,588 shares of common stock of the Company in exchange for the surrender and cancellation of certain warrants to acquire an aggregate of 8,296,470 shares of common stock of the Company, and (iii) the issuance of certain Penny Warrants to acquire an aggregate of 2,500,000 shares of common stock of the Company (of which, 1,500,000 were issued to Embraer). The common stock issued has the same rights as the existing common stock issued and outstanding. Refer to Note 9 for more information regarding the warrants related to the 2024 Private Placement. The transactions contemplated by the 2024 Private Placement closed on July 2, 2024, July 5, 2024, July 18, 2024, and September 4, 2024. The Company received aggregate gross proceeds of $95.6 million. A portion of the gross proceeds was allocated to the warrants exchanged for common stock with the residual value being attributable to the newly issued shares of common stock. Issuance costs of approximately $2.3 million were recognized as part of the transaction. The proceeds (net of transaction costs) were recorded to the “Additional paid-in capital” line item of the consolidated balance sheets, with exception of the par value of common stock issued as part of the transaction. The Company intends to use the net proceeds for working capital and general corporate purposes.
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Note 9 – Common Stock Warrants
Warrants Classified as Equity
Public Warrants
The Company has outstanding warrants that are publicly traded on the NYSE (the “Public Warrants”) under the ticker EVEXW. Each Public Warrant entitles its holder to purchase one share of common stock at an exercise price of $11.50 per share, to be exercised only for a whole number of shares of our common stock. The Public Warrants are exercisable provided that we have an effective registration statement under the Securities Act of 1933 (“Securities Act”) covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement) and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. The Public Warrants expire five years after the consummation of the Company's business combination on May 9, 2022 (“Closing”) or earlier upon redemption or liquidation. We may redeem the outstanding Public Warrants at a price of $0.01 per warrant, if the last sale price of our common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading days period ending on the third business day before the Company sends the notice of redemption to the warrant holders.
In connection with the 2024 Private Placement during the third quarter 2024, investors agreed to cancel 3,296,470 Public Warrants in exchange for 1,318,588 shares of common stock of the Company.
As of December 31, 2024, there were 8,203,407 Public Warrants outstanding.
New Warrants
The Companyhas entered into warrant agreements with certain strategic private investment in public equity investors (“Strategic PIPE Investors”), pursuant to which and subject to the terms and conditions of each applicable warrant agreement. The Company has issued or has agreed to issue warrants to the Strategic PIPE Investors(the “New Warrants”) to purchase shares of common stock with an exercise price of either (i) $0.01 per share (“Penny Warrants”) or (ii) $15.00 or $11.50per share (“Market Warrants”). Each warrant entitles the holder to purchase one share of common stock of the Company, if applicable conditions have been met.
Because the cash received for the common stock and New Warrants is significantly different from their fair value, management considers such warrants to have been issued other than at fair market value. Accordingly, such warrants represent units of account separate from the shares of common stock that were issued to the Strategic PIPE Investors in connection with their respective investment and therefore require separate accounting treatment. Terms related to the issuance and exercisability of the New Warrants differ among the Strategic PIPE Investors and each New Warrant is independently exercisable such that the exercise of any individual warrant does not depend on the exercise of another. As such, management has concluded that all New Warrants meet the criteria to be legally detachable and separately exercisable and therefore freestanding.
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Penny Warrants
Penny Warrants issued or issuable to Strategic PIPE Investors were determined to be within the scope of ASC 718, Compensation-Stock Compensation, for classification and measurement and ASC 606, Revenue from Contracts with Customers, for recognition. In accordance with ASC 718, these warrants were determined to be equity-classified.
Certain Penny Warrants have been issued and vested immediately upon Closing. The warrants were accounted for akin to a non-refundable upfront payment to the Strategic PIPE Investor and were recognized in the “New warrants expenses” line of the consolidated statements of operations as the Company had no current revenue or binding contracts when the warrants vested.
Other Penny Warrants were issued or are issuable contingent upon meeting certain future conditions or Company milestones. These warrants are recognized when certain conditions are satisfied or milestones are determined probable. The consideration will be classified as either a reduction of revenue under ASC 606 if there are related revenue transactions in place at vesting or otherwise as expense. The vesting conditions and milestones are as follows: (a) receipt of binding eVTOL purchase commitments from certain Strategic Investors, (b) receipt of the first type certification for eVTOL in compliance with certain airworthiness authorities, (c) the time at whichtenvertiports that have been developed or implemented with the services of a certain Strategic Investor have entered operation or are technically capable of entering operation, (d) receipt of certain services and support agreements and (e) receipt of a binding purchase commitment from a third-party to purchase an eVTOL jointly developed by Embraer and a certain Strategic Investor.
In connection with the 2024 Private Placement during the third quarter of 2024, an additional 2,500,000 Penny Warrants were issued contingent upon the first type certification for the eVTOL in compliance with certain airworthiness authorities.
In October 2024, the Company and a supplier mutually agreed to discontinue their collaboration in advanced air mobility, which terminated 1,000,000 Penny Warrants.
The Penny Warrants were measured at fair value on the grant date. The grant date is either the original grant date or, in cases where there has been a modification to the underlying agreement, the effective date of the modified agreement is used as the new grant date for determining fair value. The grant date fair value of Penny Warrants was calculated by subtracting $0.01from Company’s common stock share price on the grant date.
As of December 31, 2024, there were 21,022,536 Penny Warrants outstanding, of which 6,000,000 were vested and exercisable.
Market Warrants
Market Warrants were issued and vested immediately at Closing and have no contingencies. These warrants were determined to be within the scope of ASC 718, Compensation-Stock Compensation, for classification and measurement and were expensed when vested. The expense was recognized in the “New warrants expenses” line of the consolidated statements of operations. The warrants were determined to be equity-classified.
Market Warrants were measured at fair value on the grant date using a modified Black-Scholes model to value such warrants. The valuation model utilizes management judgment and pricing inputs from observable and unobservable markets with less volume and transaction frequency than active markets. Significant deviations from these estimates and inputs could result in a material change in fair value. Forfeitures of New Warrants within the scope of ASC 718 are estimated by the Company and reviewed when circumstances change.
The following table summarizes the Black-Scholes model inputs and assumptions:
May 9,
Market Warrants with exercise price of $15.00 2022
Term (Years) 3.63
Risk-free Rate 2.85 %
Volatility 7.93 %
Dividend Yield 0.00 %
Warrant Value $ 0.11
In connection with the 2024 Private Placement during the third quarter of 2024, an investor agreed to cancel 5,000,000 Market Warrants with an exercise price of $11.50 in exchange for 2,000,000shares of common stock of the Company.
As of December 31, 2024, the Company had 12,000,000 Market Warrants outstanding with an exercise price of $15.00.
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Warrants Classified as Liabilities
Private Warrants
The Company has outstanding warrants issued from private placements (the “Private Warrants”) prior to the Closing, which are recorded in the “Derivative financial instruments” line of the consolidated balance sheets. Each Private Warrant entitles its holder to purchase one share of common stock at an exercise price of $11.50 per share, subject to conditions as defined in the respective warrant agreement. The Private Warrants have similar terms as the Public Warrants, except for the $0.01 cash redemption feature. However, in the event a Private Warrant is transferred to a third-party not affiliated with the Company (referred to as a non-permitted transferee), the warrant becomes a Public Warrant and is subject to the $0.01 cash redemption feature. If this occurs, the calculation changes for the settlement amount of the Private Warrants. Since the settlement amount depends solely on who holds the instrument, which is not an input to the fair value of a fixed-for-fixed option or forward on equity shares, the Private Warrants are liability classified.
As of December 31, 2024, there were 14,250,000 Private Warrants outstanding.
Note 10 – Derivative Financial Instruments
As a result of the Business Combination in 2022, the Company began to consolidate Zanite’s assets and liabilities, which included derivative financial instruments related to the Private Warrants. The instruments areremeasured using the share price of its Public Warrants as the input for the recurring fair value measurement of Private Warrants as they have similar key terms at the end of each reporting period. The fair value is recognized in the “Derivative financial instruments” line item of the consolidated balance sheets. Refer to Note 9 and 11 for additional information.
For the year ended December 31, 2024, a change in fair value of $7.0 million was recognized as a gain within the “Gain/(loss) from derivative liabilities” line in the consolidated statement of operations. The change in fair value is recorded under operating activities within the consolidated statements of cash flows.
Note 11–Fair Value Measurements
The Company uses a fair value hierarchy, which has three levels based on the reliability of the inputs, to determine fair value. The Company’s assessment of the significance of an input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. Level 1 refers tofair values determined based on unadjusted quoted prices in active markets for identical instruments. Level 2 refers to fair values estimated usingother observable inputs for the instruments, either directly or indirectly, for substantially the full term of the asset or liability.Level 3 includes fair values estimated using unobservable inputs for the instruments used to measure fair value to the extent that observable inputs are not available.The carrying amounts of cash and cash equivalents, financial investments, related party receivables, related party loan receivables, other current assets, accounts payable, related party payables, and other current payables approximate their fair values due to the short-term maturities of the instruments.
The fair value of debt was estimated using a discounted cash flow model and other observable inputs. Therefore, deemed to be Level 2. Refer to Note 10 for the methodology for determining the fair value of Private Warrants.
During the year endedDecember 31, 2024 and 2023,there were no changes in the fair value methodology and no transfers between levelsof the financial instruments.
The following table lists the Company’s financial liabilities by level within the fair value hierarchy.
Carrying Fair Value Carrying Fair Value
Amount Level 1 Level 2 Level 3 Amount Level 1 Level 2 Level 3
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Note 12–Share-Based Compensation
2022 Stock Incentive Plan
In May 2022 (the “Effective Date”), the shareholders of the Company approved the 2022 Stock Incentive Plan (“the Plan”). The Plan will expire on the tenth anniversary of the Effective Date. The number of common stock shares reserved under the Plan automatically increases on January 1st of each calendar year (each, an “Evergreen Date”) prior to the tenth anniversary of the Effective Date, in amount equal to the lesser of (i) 3% of the total number of shares of common stock outstanding on the December 31 immediately preceding the applicable Evergreen Date and (ii) a number of shares of Eve common stock determined by the plan administrator, unless such increase is deemed unnecessary by the plan administrator. As of December 31, 2024, the maximum number of shares of common stock reserved for issuance under the Plan is 16.6 million shares.
The awards that have been granted under the Plan consists of RSUs for the Company’s common stock. The awards contain service, performance, and/or market conditions that generally vest over 1-5 years. The RSU’s are settled by the Company with its own common stock upon achievement of the vesting conditions. There is neither repurchase obligations nor restrictions for the grantees to access the shares. The Company is allowed to net settle the award for statutory tax withholding purposes, but in no case exceeding the maximum statutory tax rates in the employees’ relevant tax jurisdictions. Therefore, the RSU’s are classified as equity.
The following table summarizes the RSU activity for service-based awards for the year ended December 31, 2024:
The weighted-average grant date fair value of service-based awards granted during the years 2024, 2023 and 2022 was $5.38, $7.71 and $9.73, respectively.
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The following table summarizes the RSU activity for awards with market conditions for the year ended December 31, 2024:
Vested -
For awards that are tied to market conditions, the grant date fair value was determined based on a Monte Carlo simulation model, which takes into account certain assumptions. The weighted-average assumptions used to value the awards are expected volatility of 50.8%, 53.5% and 49.3%, a risk-free rate of 4.2%,4.3% and 3.4%, and an expected term of 2.6, 4.8 and 4.8 years for awards with market conditions granted during the years ended December 31, 2024,2023 and 2022, respectively. The expected volatility is based on the average implied volatility of publicly traded peer companies in a similar industry with extensive trading history. The final award is determined by the market value of the Company upon vesting and may equal 0% to 200% of the initial award depending on achievement of the market condition. The weighted-average grant date fair value of awards with market conditions during the years 2024, 2023 and 2022 was $2.75, $10.19 and $16.52, respectively.
Share-based compensation plan expense and tax benefits were as follows:
Year Ended December 31,
During 2023, the service period for four directors was modified from three years to one. The incremental compensation expense related to this modification was $0.3 million. Additionally, one other award was modified for one employee. The modification affected the awards eligibility as the employee transitioned from employee to director. There was no incremental share-based compensation expense associated with this modification.
As of December 31, 2024, the Company had $7.4 million of total unrecognized compensation expense associated with nonvested awards issued under the Plan. The cost is expected to be recognized over a weighted-average period of 2.0 years.
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Note 13– Earnings Per Share
Basic and diluted earnings per share is computed by dividing net loss by the weighted average number of common stock outstanding during the period. Diluted net loss per common stock reflects the potential dilution that would occur if securities were exercised or converted into common stock. The effects of any incremental potential common stock are excluded from the calculation of earnings per share if their effect would be anti-dilutive. Contingently issuable shares, including equity awards with performance conditions, are considered outstanding common shares and included in basic and diluted earnings per share as of the date that all necessary conditions to earn the awards have been satisfied. Public and Private Warrants are considered for the diluted earnings per share calculation to the extent they are “in-the-money” and their effect is dilutive. The Company has retroactively adjusted the shares issued and outstanding prior to May 9, 2022, to give effect to the exchange ratio.
For the years ended 2024, 2023, and 2022, there were no securities outstanding whose effect would be dilutive to earnings per share. Therefore, the number of basic and diluted weighted-average shares outstanding were equal for each period.
Year Ended December 31,
Net loss per share – basic and diluted $ (0.48 ) $ (0.46 ) $ (0.68 )
The following table presents potentially dilutive securities excluded from the calculation of diluted earnings per share as their effect would have been anti-dilutive.
December 31,
Certain Penny Warrants contain contingencies agreed upon with potential customers and suppliers that have not yet been achieved. Warrants that are out of the money include Public, Private, and Market Warrants where the exercise price exceeded the common stock price for the period. Refer to Note 9 for a summary of the terms for all warrants.
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Note 14 –Research and Development Expenses
Research and development expenses consist of the following:
Year Ended December 31,
Note 15 – Selling, General and Administrative Expenses
Selling, general and administrative expenses consist of the following:
Year Ended December 31,
Transaction Costs - - 6,191
Note 16 – Income Taxes
The Company calculates its income tax amounts using a separate return methodology. Under this method, the Company prepares the financial statements as if it will file separate returns with tax authorities. As a result, the Company’s deferred tax balances and effective tax rate as a stand-alone entity will likely differ significantly from those calculated in the actual consolidated return with EAH. The calculation of income taxes on a separate return basis requires a considerable amount of judgment and use of both estimates and allocations. The tax loss carryforwards and valuation allowances reflected in the consolidated financial statements are based on a hypothetical stand-alone income tax return basis and may not exist in the ERJ and EAH consolidated financial statements.
Income before income taxes consisted of the following:
Year Ended December 31,
Income taxes consisted of the following:
Year Ended December 31,
Current income tax expense
U.S. federal $ - $ 436 $ -
U.S. state and local - - -
Deferred income tax expense (benefit)
U.S. federal - - -
U.S. state and local - - -
Total deferred income tax expense (benefit) (923 ) (1,714 ) -
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A reconciliation of the statutory U.S. federal tax rate and our effective tax rate is as follows:
Year Ended December 31,
Statutory U.S. federal tax rate 21.0 % 21.0 % 21.0 %
State and local taxes 3.9 % (5.8 )% (31.1 )%
Permanent differences 0.7 % (2.4 )% (13.7 )%
Foreign rate differential (0.1 )% (0.4 )% (0.1 )%
Effective tax rate (0.4 )% (1.2 )% (0.5 )%
The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consisted of the following:
Year Ended December 31,
Deferred tax assets
Total deferred tax assets before valuation allowances 431,507 397,824
Deferred tax liabilities
Uncertain Tax Position - R&D Reserve (70 ) (70 )
Total deferred tax liabilities (382 ) (202 )
In assessing the realizability of deferred tax assets (“DTA”), management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. For Eve Brazil, based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of its deductible differences. The valuation allowance increased $32.6 million during the year ended December 31, 2024 primarily due to the net operating loss for the year. The net operating losses for2024and2023were generated mainly due to expenditures with R&D projects, administrative expensesand the tax amortization on the step-up.Net operating losses do not expire in both jurisdictions where the Company operates (U.S. and Brazil).
The Company has no history of tax audits, nevertheless the Company believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from federal, state and foreign tax audits. The Company regularly assesses the likely outcomes of these audits in order to determine the appropriateness of the tax provision. Open tax years range from fiscal years 2021 to 2024. However, because we are carrying forward income tax attributes, such as net operating losses and tax credits from earlier tax years, these attributes can still be audited when utilized on returns filed in the future. The Company had approximately $70 thousand of unrecognized tax benefits as of December 31, 2024 and 2023. There were no additions, reductions, or settlements of unrecognized tax benefits during 2024. The Company will recognize interest and penalties, if any, related to uncertain tax positions in income tax expense. As of December 31, 2024 and 2023no interest or penalties have been accrued due to uncertain tax positions.
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In preparation for the Business Combination with Zanite (later renamed Eve Holdings Inc.), ERJ, EAH and Eve Sub entered into a Contribution Agreement under which ERJ contributed the UAM business assets and liabilities into Eve Sub in exchange for Eve Sub’s units and subsequently contributed these units into EAH in exchange for preferred and common stock of EAH. Since immediately after the contribution of the Eve Sub units into EAH, ERJ did not control more than 80% of all classes of stock of EAH, the contribution of assets was treated as a taxable transaction which gave rise to a step-up in the value of such assets.
The step-up of the assets was only recognized for US federal income tax purposes and will not be booked in the Company’s financial statements. Thus, a temporary difference exists and a deferred tax asset was recognized.
In order to deal with the effects of the step-up, EAH and the Company entered into a customary Tax Receivable Agreement (“TRA”) and a Tax Sharing Agreement (“TSA”). The TSAgenerally applies if EAH and the Company are members of the same consolidated group, as defined under the Code. Under the Code, two corporations may form a consolidated tax group and file a consolidated federal income tax return, if one corporation owns stock representing at least 80% of the voting power and value of the outstanding capital stock of the other corporation. The TSA governs certain matters related to the resulting consolidated federal income tax returns, as well as state and local returns filed on a consolidated or combined basis. Generally, the consolidated group’s parent would be liable for the income taxes of the group members (including the Company), rather than the Company being required to pay such income taxes itself. For periods in which the Company has taxable income that contributes to and increases the overall tax liability of the consolidated group of which EAH or an affiliate is the common parent (the “EAH Consolidated Group”), the TSA requires the Company to make payments to EAH equal to the tax liability it would have had had it been outside of the consolidated group. For periods in which the Company’s inclusion in the EAH Consolidated Group decreases the tax liability of the EAH Consolidated Group, tax benefits generated by the Company that are realized by EAH will be recorded in an off-book register and will apply to offset future payments due from the Company to EAH under the TSA. If any tax benefits that have accumulated during the period in which the Company is a member of the EAH Consolidated Group have not been applied to offset payments under the TSA at the time the Company ceases to be a member of the EAH Consolidated Group, such uncompensated tax benefits can be used to offset amounts payable by the Company to EAH under the TRA. For purposes of determining the amount of payments required to be made by the Company pursuant to the foregoing, and for determining the extent to which tax benefits generated by the Company that are realized by the EAH Consolidated Group may offset future payments under the TSA or the TRA, the TSA will generally disregard 75% of the tax benefits arising from tax basis in the assets of the Company created in the Pre-Closing Restructuring, consistent with the agreed sharing percentages for such tax savings under the TRA, if the Company were not a member of the EAH Consolidated Group.
Since EAH beneficially owns, directly and indirectly, more than 80% of the outstanding shares of the Company’s common stock, EAH and the Company are expected to be members of the same consolidated tax group. Under the TSA, EAH will benefit from the anticipated future tax losses generated by the Company but will only credit these amounts against future liabilities owed by the Company. Based on terms of the TSA, no tax benefits would accrue to the Company based on a pro forma calculation of the Company’s stand-alone tax return and therefore no benefit has been assumed in the consolidated financial information under the TSA. As such, no pro forma adjustment related to the TSA is necessary. Once the Company begins to generate taxable profits at the consolidated level, amounts owed by the Company to EAH under the TSA will be offset and reduced by prior losses generated by the Company for which EAH had received a benefit.
The Company concluded that these agreements do not have impacts to the consolidated financial statements as of December 31, 2024.
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Note 17 – Leases
Leases primarily consist of office space and facilities with related parties or equipment with third parties. A lease is deemed to exist when the Company has the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration is paid. The right to control is deemed to occur when the Company has the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets. Right-of-use (“ROU”) assets and a corresponding lease liability are recognized on the lease commencement date (the date in which the asset is available for use). Lease liabilities are recognized in Other current payables and Other non-current payables.
The Company uses its estimated incremental borrowing rate in determining the present values of lease payments. The incremental borrowing rate is the rate of interest the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments for a term similar to the lease term in a similar economic environment as the lease. Lease liabilities are measured at the present value of lease payments to be made during the lease term, which is measured based on the contract term and renewal options. Options to extend or terminate the lease term are considered when it is reasonably certain the options will be exercised.
The following is a summary of balance sheet components of leases as of December 31:
Supplemental balance sheet information 2024 2023
Operating lease ROU assets - related parties $ 359 $ 474
Operating lease ROU assets - third parties 737 34
Total operating lease ROU assets $ 1,096 $ 508
Operating lease liabilities - related parties $ 312 $ 474
Operating lease liabilities - third parties 735 36
Total operating lease liabilities $ 1,047 $ 510
The following is a summary of the total operating lease cost recognized for the years ended December 31:
Operating lease cost $ 588 $ 113 $ 9
The following presents supplemental information for the Company’s leases. For the years ended December 31, 2023 and 2022, leases with third parties were insignificant and are not included in the data below for those years.
Supplemental information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases - related parties $ 141 $ 113 $ 9
Operating cash flows for operating leases - third parties $ 447 n.m. n.m.
Right-of-use assets obtained in exchange for lease obligations
Operating leases - related parties $ - $ 334 $ 224
Operating leases - third parties $ 1,108 n.m. n.m.
Weighted-average remaining lease term (Years) - related parties 2.6 3.6 4.8
Weighted-average remaining lease term (Years) - third parties 1.4 n.m. n.m.
Weighted-average discount rate - related parties 9.9 % 10.2 % 7.4 %
Weighted-average discount rate - third parties 3.8 % n.m. n.m.
n.m. = not meaningful
Table of Contents
Future minimum lease payments at December 31, 2024 were as follows:
Operating Leases
Thereafter -
Total minimum lease payments 1,125
Imputed interest (78 )
Total operating lease liabilities - related parties $ 1,047
As of December 31, 2024, the Company has two lease agreements with Embraer that have not yet commenced. One agreement is for a facility in Gavião Peixoto, São Paulo, Brazil. The lease is expected to commence in 2025. The other lease agreement is for a property in Taubaté, São Paulo, Brazil, which was executed on August 13, 2024. This property is expected to be used to develop the Company’s manufacturing facility for eVTOL production. The lease agreement included a commitment by the Company to invest a minimum of R$15 million (or approximately $2.4 million using the exchange rate as of December 31, 2024) in leasehold improvements. As of December 31, 2024, the Company incurred approximately $1.0 million in prepaid lease costs, which is recognized in the “Other non-current assets” line of the consolidated balance sheets.
Note 18 – Commitments and Contingencies
As of December 31, 2024 and 2023, the Company did not have any accruals for loss contingencies. The Company will make accruals related to loss contingencies in instances where it is probable that a loss has been incurred and the amount can be reasonably estimated. Loss contingencies that are either reasonably possible but not probable or probable but not reasonably estimable, are disclosed in the notes to the consolidated financial statements.