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Form 10-Q/A Eve Holding, Inc. For: Jun 30

December 8, 2022 6:03 AM EST

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

 

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

For the quarterly period ended June 30, 2022

 

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

For the transition period from _____ to ____

Commission File No. 001-39704

EVE HOLDING, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware

 

85-2549808

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

1400 General Aviation Drive,

Melbourne, FL 32935

(Address of Principal Executive Offices, including zip code)

(321) 751-5050

(Registrant’s telephone number, including area code)

 

N/A

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

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

 

 

 

 

 

Title of each class

 

Trading

symbol(s)

 

Name of each exchange

on which registered

Common Stock, par value $0.001 per share

 

EVEX

 

The New York Stock Exchange

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

 

EVEXW

 

The New York Stock Exchange

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

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

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

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

Emerging growth company

 



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

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

 

As of August 3, 2022, there were 264,332,132 shares of common stock, $0.001 par value, issued and outstanding. 


EXPLANATORY NOTE  


This Amendment No. 1 (“Amendment No. 1”) to the Quarterly Report on Form 10-Q/A amends the Quarterly Report on Form 10-Q of Eve Holding, Inc. (the “Company”) as of and for the three and six months ended June 30, 2022, as filed with the Securities and Exchange Commission (“SEC”) on August 4, 2022 (the “Original Form 10-Q”).


As previously disclosed, in September 2022, the Company reviewed its accounting for certain warrants to acquire an aggregate of 24,200,000 shares of common stock that were issued and became exercisable at the closing on May 9, 2022 of the transactions contemplated by the Business Combination Agreement, dated as of December 21, 2021, by and among the Company, Embraer S.A., Embraer Aircraft Holding, Inc. and EVE UAM, LLC (the “Closing”). The Company also reviewed the accounting for certain warrants to acquire an aggregate of 200,000 shares of common stock that are issuable and exercisable pursuant certain future milestones. On September 23, 2022, the Audit Committee of the Board of Directors of the Company (the “Audit Committee”), after considering the recommendations of management regarding the accounting treatment for the warrants described above, concluded that the Company’s condensed consolidated financial statements included in the Company’s Form 10-Q for the three and six months ended June 30, 2022 should be restated and should no longer be relied upon.


On November 10, 2022, in connection with the Company’s previously disclosed continuing assessment of its financial statements, the Audit Committee concluded that additional adjustments should be made to the Company’s historical financial statements, including with respect to the valuation and recognition of certain share-based payments and certain transaction expenses.


Accordingly, the Company is restating its financial statements as of and for the three and six months ended June 30, 2022 and 2021 in this Amendment No. 1. See Note 2, Restatement of Previously Reported Financial Statements herein for additional information regarding these restatements.


In addition, the Company’s management has concluded that in light of the misstatements described above, material weaknesses existed in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective as of June 30, 2022. Additional information related to these material weaknesses and the Company’s remediation plan with respect to such material weaknesses are described in more details in Item 4 of Part I of this Amendment No. 1.


In addition, Item 6 of Part II of this Form 10-Q/A has been amended to contain currently dated certifications from our Co-Chief Executive Officers and Chief Financial Officer, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. This Form 10-Q/A has not been updated for events occurring after the filing of the Original Form 10-Q, except to reflect the foregoing.








CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q/A contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q/A, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “hope,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or similar terms or expressions or the negative thereof. These forward-looking statements include, but are not limited to, statements concerning the following:

 

  • our ability to raise financing in the future;
  • our success in retaining or recruiting, or changes required in, our officers, key employees or directors;
  • the impact of the regulatory environment and complexities with compliance related to such environment;
  • factors relating to our publicly traded securities and our business, operations and financial performance, including:
  • the impact of the COVID-19 pandemic; 
  • our ability to maintain an effective system of internal controls over financial reporting;
  • our ability to grow market share in our existing markets or any new markets we may enter;
  • our ability to respond to general economic conditions;
  • the impact of foreign currency, interest rate, exchange rate and commodity price fluctuations;
  • our ability to manage our growth effectively;
  • our ability to achieve and maintain profitability in the future;
  • our ability to access sources of capital to finance operations and growth; and
  • the success of our strategic relationships with third parties.

 

The list above is not intended to be an exhaustive list of all of our forward-looking statements. Our forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q/A and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. While we believe these expectations, forecasts, assumptions and judgments are reasonable, our forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. Our business, prospects, financial condition, operating results and the price of our common stock may be affected by a number of factors, whether currently known or unknown, including but not limited to those discussed in this Quarterly Report in Part I., Item 1. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the section titled “Risk Factors” in our Form S-1/A filed with the Securities and Exchange Commission on August 25, 2022. Any one or more of these factors could, directly or indirectly, cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.  

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q/A to the “Company,” "Eve" “Eve Holding,” “we,” “us” and “our” refer to Eve Holding, Inc.




 

Eve Holding, Inc.
(FORMERLY EVE UAM, LLC)
(In US Dollars)














June 30,




December 31,




2022


2021


Assets



(as restated)


(as restated)​


Current:

 






 

 


      Cash and cash equivalents

 


$ 176,316,554


$

14,376,523


      Financial investments



154,464,652



-

      Related party receivables

 



256,645


 

220,000


      Other current assets

​​



166,085


 

6,274,397


Total current assets

​​



331,203,936


 

20,870,920


      Capitalized software, net

 



-


 

699,753


Total assets


$ 331,203,936


$

21,570,673


Liabilities and Stockholders' equity






 

 


Current:






 

 


     Accounts payable

 


$ 2,732,214


$

877,641


     Related party payables




10,846,493



8,642,340

     Derivative financial instruments 



7,267,500


 

32,226


     Other payables



2,164,470

 

616,156


Total current liabilities



23,010,677


 

10,168,363


     Other noncurrent payables


542,809



702,921

Total liabilities

 



23,553,486


 

10,871,284


STOCKHOLDERS' EQUITY








Common stock, $0.001 par value; 1,000,000,000 shares authorized; 264,332,132 and 220,000,000 shares issued and outstanding on June 30, 2022 and December 31, 2021, respectively


264,332



220,000

Additional paid-in capital


467,595,655



53,489,579

Accumulated deficit


(160,209,537 )

(42,977,964 )
Accumulated other comprehensive income/(loss)


-



(32,226 )
Total stockholders' equity


307,650,450



10,699,389

Total liabilities and stockholders' equity

 


$ 331,203,936


$

21,570,673


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

F-1


Eve Holding, Inc.


(FORMERLY EVE UAM, LLC)



(In US Dollars)


Three Months Ended June 30,


Six Months Ended June 30,



2022


2021


2022


2021

Operating expenses

 


(as restated)

 

 

(as restated) 




(as restated)


(as restated)

Research and development

 

$ (10,417,278 )

 

$

(1,938,812

)
$ (19,531,965 )
$ (3,830,463 )

Selling, general and administrative

 


(15,728,933 )

 

 

(1,706,259)



(17,046,966 )

(2,326,506 )
New Warrants expenses


(87,352,000 )

-



(87,352,000 )

-

    Loss from operations

 


(113,498,211 )

 

 

(3,645,071

)

(123,930,931 )

(6,156,969 )
Change in fair value of derivative liabilities


5,842,500


-



5,842,500


-

Financial and foreign exchange gain/(loss), net

 


563,854

 

 

(46,347

)

986,566

(43,873 )

    Loss before income taxes

 


(107,091,857 )

 

 

(3,691,418

)

(117,101,865 )

(6,200,842 )

Income tax benefit/(expense)

 


(129,708 )

 

 

-




(129,708 )

-

    Net loss

 

$ (107,221,565 )

 

$

(3,691,418

)
$ (117,231,573 )
$

(6,200,842

)
Net loss per share basic and diluted

(0.43 )

(0.02 )

(0.50 )

(0.03 )
Weighted-average number of shares outstanding – basic and diluted

248,989,790


220,000,000


234,574,977


220,000,000

 

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

F-2


Eve Holding, Inc.

(FORMERLY EVE UAM, LLC)

(In US Dollars)


Three Months Ended June 30,



Six Months Ended June 30,

2022


2021



2022


2021



(as restated)



 (as restated)



 (as restated)


 (as restated)

Net loss

 

$

(107,221,565

)

$

(3,691,418

)
$ (117,231,573 )
$ (6,200,842 )

    Derivative financial instruments - cash flow hedge 

 

 

-



 

50,195



-


(911 )

Total comprehensive loss

 

$

(107,221,565

)

$

(3,641,223

)
$ (117,231,573 )
$ (6,201,753 )

 

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

F-3


Eve Holding, Inc.

(FORMERLY EVE UAM, LLC)
(In US Dollars)


Common Stock





















Shares



Amount


Additional paid-in capital




Accumulated deficit



Accumulated other comprehensive loss



Total Stockholders' equity


Balance as of December 31, 2021 (as restated)


220,000,000

$ 220,000

$ 53,489,579

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

-


-


(707,846 )

-


32,226


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


220,000,000

$ 220,000

$ 52,781,733

$ (42,977,964 )
$ -

$
10,023,769
Net loss (as restated)


-


-


-



(10,010,008
)

-



(10,010,008 )
Contributions from Parent

-


-


732,776


-


-


732,776
Balance as of March 31, 2022 (as restated)


220,000,000

$ 220,000

$ 53,514,509

$ (52,987,972 )
$ -

$ 746,537
Net loss (as restated)


-


-


-


(107,221,565 )

-


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


-


-


10,580,000


-


-


10,580,000
Issuance of fully vested New Warrants (as restated)


-



-



87,352,000



-



-



87,352,000

Issuance of common stock upon reverse recapitalization, net of fees (as restated)


43,392,132


43,392


315,283,325


-


-


315,326,717
Issuance of restricted stock and restricted stock expense (as restated)


140,000


140


1,935,848


-


-


1,935,988
Exercise of warrants held by PIPE investor (as restated)


800,000


800


7,200


-


-


8,000
Share based payment with non-employees (as restated)

-



-



1,028,182



-



-



1,028,182

Net distribution to Parent (as restated)


-



-



(2,105,409
)

-



-



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


264,332,132

$ 264,332

$ 467,595,655

$ (160,209,537 )
$ -

$ 307,650,450














F-4





Common Stock



















Shares



Amount



​Net parent investment




Additional paid-in capital



Accumulated deficit




Accumulated other comprehensive loss




Total Stockholders' equity


Balance as of December 31, 2020  



-

$ -

$ (1,059,291 )
$ -

$ -

$ 45,438

$ (1,013,853 )
Retroactive application of recapitalization

220,000,000


220,000


1,059,291


23,442,803


(24,722,094 )

-


-
Balance as of January 1, 2021

220,000,000

$ 220,000

$ -

$ 23,442,803

$ (24,722,094 )
$ 45,438

$ (1,013,853 )

Net loss (as restated)



-



-



-

-


(2,509,424 )

-


(2,509,424 )

Other comprehensive loss



-


-


-


-

-


(51,106 )

(51,106 )

Contributions from Parent



-


-


-


3,004,907



-


-


3,004,907

Balance as of March 31, 2021 (as restated)



220,000,000

$ 220,000

$ -
$ 26,447,710
$ (27,231,518 )
$ (5,668 )
$ (569,476 )

Net loss (as restated)



-


-


-

-


(3,691,418 )

-


(3,691,418 )

Other comprehensive loss



-


-


-


-

-


50,195

50,195

Contributions from Parent



-


-


-


2,283,398



-


-


2,283,398

Balance as of June 30, 2021 (as restated)



220,000,000

$ 220,000

$ -
$ 28,731,108
$ (30,922,936 )
$ 44,527
$ (1,927,301 )
  

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

F-5


Eve Holding, Inc.
(FORMERLY EVE UAM, LLC)
(In US Dollars)

Six Months Ended June 30,

2022


2021

 

Cash flows from operating activities: 

 


 (as restated)


 

 (as restated) 

 

Net loss

 

$ (117,231,573 )

$

(6,200,842

)

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

 





 

 

 

Amortization of capitalized software

 


-

 

54,063

 

Long-term incentive plan expense

 


(252,728 )

 

96,693


Stock-based compensation

1,935,988


-

Warrants expenses


82,537,682

-

Interest on financial investments

(464,652 )

-

Changes in operating assets and liabilities:

 





 


 

Other assets

 


6,099,745

 

(2,412,298

)

Related party receivables

 


216,083

 

-

Accounts payable

 


2,572,805

 

(680,694

)
Related party payables

1,094,121


3,969,720

Other payables

 


1,729,007

 

117,550

 

Net cash used in operating activities 

 


(21,763,522 )

 

(5,055,808

)
Cash flows from investing activities:







Purchases of investment securities

(154,000,000 )

-
Net cash provided by investing activities:

(154,000,000 )

-

Cash flows from financing activities:

 





 

 

 

Transfer from Parent

 


-

 

5,055,808

 

Gross capital contribution 

354,830,252


-

Transaction Costs reimbursed to Parent


(15,754,066 )

-

Deemed distribution

(1,372,633
)

-

Net cash provided by financing activities

 


337,703,553

 

5,055,808

 

Increase (decrease) in cash and cash equivalents

161,940,031


-

Cash and cash equivalents at the beginning of the period

 


14,376,523

 

-

 

Cash and cash equivalents at the end of the period

 

$ 176,316,554

$

-

 

 

 





 

 

 

Supplemental disclosure of other noncash investing and financing activities

 





 

 

 

Additions to capitalized software transferred by Parent

 

$
-

$

232,496

 



  

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

 

F-6


 

Eve Holding, Inc.

(FORMERLY EVE UAM, LLC)


(in US Dollars)


1.     Organization and Nature of Business


The Company and Nature of Business

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 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. 

Eve is dedicated to accelerating the urban air mobility ("UAM") ecosystem. Benefitting from a startup mindset and with a singular focus, Eve is taking a holistic approach to progressing the UAM ecosystem, with an advanced electrical vertical take-off and landing (“eVTOL”) project, a comprehensive global services and support network and a unique air traffic management solution. 

Business Combination

On December 21, 2021, Zanite entered into a Business Combination Agreement (the “Business Combination Agreement”) with Embraer S.A., a Brazilian corporation (sociedade anônima) (“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 (as defined in the Business Combination Agreement).

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

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

Upon Closing, all shares of Zanite Class A and Class B common stock were converted into, on a one-for-one basis, shares of common stock of Eve Holding.

Both ERJ 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 incurred related to the Business Combination 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.

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 (or the "UAM Business", as applicable) became the historical financial statements of the Company, and the assets, liabilities and results of operations of Zanite were consolidated with Eve Sub beginning on the Closing date. For accounting purposes, the 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 transaction are presented as those of Eve Sub (or the "UAM Business", as applicable) in future reports of the Company.

The financial statements included in this report reflect (i) the historical operating results of Eve Sub prior to the Business Combination; (ii) the combined results of Eve Sub and Zanite following the Closing; (iii) the assets and liabilities of Eve Sub at their historical cost; and (iv) the Company’s equity structure for all periods presented.

F-7



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

Transaction costs incurred during the period from the first quarter of 2021 to the second quarter of 2022 related to the transaction with Zanite (Transaction Costs) were reviewed to conclude if they were direct and incremental to the Business Combination and which entity was the primary beneficiary. Direct and incremental costs were deferred to the extent permitted by the accounting standards by the primary beneficiary entity. Transaction Costs not considered to be direct and incremental were expensed by the primary beneficiary entity.

COVID-19 Pandemic

The World Health Organization declared a global emergency on January 30, 2020 with respect to the outbreak of a novel strain of coronavirus, or COVID-19 pandemic. There are many uncertainties regarding the continuing global COVID-19 pandemic, the full impact of which continues to evolve as of the date hereof. Eve is closely monitoring the COVID-19 pandemic situation and its impacts on its employees, operations, the global economy, the supply and the demand for its products and services, including the UAM Business.

The full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations remains uncertain. Management is actively monitoring the situation on its operations, suppliers, industry, and workforce. 

 

2.    Restatement of Previously Reported Financial Statements

The Company is restating its financial statements for the three and six months ended June 30, 2022 for the following matters:

1.   We identified unrecorded expense accruals with both third parties and related parties as of June 30, 2022 resulting in the need for additional accruals and expense of approximately $2.2 million during the three and six months ended June 30, 2022. See more details in Notes 5, 13 and 14.

2.   We reviewed the accounting regarding Transaction Costs in connection with the transaction with Zanite which include among other things fees for financial, accounting and legal advisors. The Transaction Costs were paid by ERJ and EAH and recognized by these entities without being pushed down to the Company. The Company concluded that the Transaction Costs that were directly related to the Company’s business should follow the guidance in SEC Staff Accounting Bulletin Topic 5.T, Accounting for Expenses or Liabilities Paid By Principal Stockholder(s), and should be pushed down and recorded in the Company’s financial statements in 2022 and 2021. The adjustment related to the Transaction Costs was an additional expense of  $5.7 million and $6.2 million for the three and six months ended June 30, 2022, respectively and $1.3 million and $1.6 million for three and six months ended June 30, 2021, respectively. See more details in Note 14.

3.     We identified unrecorded share-based payment expense for certain employees that should have been recognized during the three and six months ended June 30, 2022 of $0.9 million. See more details in Note 15.

4.     We also identified unrecorded share-based payment expense related to one of the PIPE Investors of $1.0 million for the three and six months ended on June 30, 2022. See more details in Note 14.  

5.     The Company reviewed its accounting for certain warrants to acquire an aggregate of 24,200,000 shares of common stock that were issued and became exercisable at the Closing of the Business Combination. These warrants were issued together with the sale of common stock to certain investors.  These warrants give their holders the option to purchase common stock at exercise prices of $0.01 (the “Penny Warrants”), $11.50 and $15.00 (collectively, the "New Warrants").  The New Warrants and common shares were originally reflected as a component of equity and measured at the value paid by each investor (i.e. $10.00 per common share). Upon further assessment, the Company revised the measurement and accounting for the issued common shares and the New Warrants and concluded that the accounting for the New Warrants should be separate from the accounting for the issuance of the common stock for $10.00 per share as they were issued for no consideration to potential customers, suppliers and financiers.  It was determined that all of the New Warrants should be accounted for within the scope of ASC 718, Share-based Payment, for classification and measurement (and recognition for certain New Warrants), except for warrants issued to financiers which are in the scope of ASC 815, Derivatives and Hedging. For some New Warrants the recognition of the grant date fair value is within the scope of ASC 606, Revenue from Contracts with Customers. For the New Warrants that vested upon the Closing, the grant date fair value of  approximately $87 million has been corrected and recognized as New Warrants expenses at the Closing date with a related increase to additional paid-in capital. For the New Warrants that vest contingent upon certain future milestones, there was no recognition of expense during the three and six months ended June 30, 2022.See more details in Note 10.

6.    The Company incorrectly measured the fair value of the liability-classified Private Placement Warrants during the initial recognition resulting in an understatement of expense and additional paid-in capital of $1.7 million as of and for the three and six months ended June 30, 2022.See more details in Note 8 and Note 16.

7.    The Company identified a classification error between additional paid-in capital and accumulated deficit of $52 million as of June 30, 2022.




F-8



As a result of the errors described above, the unaudited condensed consolidated financial statements as of June 30, 2022 and the three and six months ended June 30, 2022 were restated as follows:

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS




As of June 30, 2022


As Reported



Restatement

Adjustments




As Restated

Assets









Current:

 

 

 

 









      Cash and cash equivalents

 

$

176,316,554

 


$ -


$ 176,316,554

      Financial investments


154,464,652



-



154,464,652

      Related party receivables

 

 

256,645

 



-



256,645

      Other current assets

​​

​​

166,085

 



-



166,085

Total current assets

​​

​​

331,203,936

 



-



331,203,936

Total assets

$

331,203,936

 


$ -


$ 331,203,936

Liabilities and Stockholders' equity

 

 









Current:

 

 









     Accounts payable

 

$

889,594

 


$ 1,842,620
(a)

$ 2,732,214

     Related party payables



9,560,773



1,285,720
(a)


10,846,493

     Derivative financial instruments

 

7,267,500

 



-




7,267,500

     Other payables

2,159,603

 



4,867
(a)


2,164,470

Total current liabilities

19,877,470

 



3,133,207



23,010,677

     Other noncurrent payables

542,809



-



542,809

Total liabilities

 

 

20,420,279

 



3,133,207



23,553,486

STOCKHOLDERS' EQUITY











Common stock, $0.001 par value; 1,000,000,000 shares authorized; 264,332,132 and 220,000,000 shares issued and outstanding on June 30, 2022 and December 31, 2021, respectively

264,332



-



264,332

Additional paid-in capital

320,295,756



147,299,899

(b)



467,595,655

Accumulated deficit

(9,776,431 )

(150,433,106 )(b)


(160,209,537 )
Total stockholders' equity

310,783,657



(3,133,207 )

307,650,450

Total liabilities and stockholders' equity

 

$

331,203,936

 


$ -


$ 331,203,936


Adjustments to Unaudited Condensed Consolidated Balance Sheet:

a) Represents the adjustment described in Item 1 above.

b) Reflects the adjustments described in Items 1, 2, 3, 4, 5, 6 and 7 above.


F-9



UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended June 30, 2022


Six Months Ended June 30, 2022


As Reported


Restatement
Adjustments


As Restated



As Reported

Restatement
Adjustments


As Restated


Operating expenses

 

 

 






















Research and development

 

$

(9,835,736

)
$ (581,542) (c)
$ (10,417,278 )
$ (18,950,423 )
$ (581,542) (c)
$ (19,531,965 )

Selling, general and administrative

 

 

(6,512,553

)

(9,216,380 )(d)

(15,728,933 )

(7,321,319 )

(9,725,647 )(d)

(17,046,966 )
New Warrants expenses


-



(87,352,000 )(e)


(87,352,000 )

-



(87,352,000 )(e)

(87,352,000 )

    Loss from operations

 

 

(16,348,289

)

(97,149,922 )

(113,498,211 )

(26,271,742 )

(97,659,189 )

(123,930,931 )
Change in fair value of derivative liabilities


4,132,525



1,709,975

(f)



5,842,500



4,132,525



1,709,975
(f)


5,842,500

Financial and foreign exchange gain/(loss), net 

 

 

563,854




-



563,854



986,566



-



986,566

    Loss before income taxes

 

 

(11,651,910

)

(95,439,947 )

(107,091,857 )

(21,152,651

)

(95,949,214 )

(117,101,865 )

Income tax benefit/(expense)

 

 

(129,708

)

-



(129,708 )

(129,708 )

-



(129,708 )

    Net loss

 

$

(11,781,618

)
$ (95,439,947 )
$ (107,221,565 )
$

(21,282,359

)
$ (95,949,214 )
$ (117,231,573 )
Net loss per share basic and diluted

(0.05 )

(0.38 )

(0.43 )

(0.09 )

(0.41 )

(0.50 )
Weighted-average number of shares outstanding – basic and diluted

248,989,790



-



248,989,790



234,574,977



-



234,574,977


Adjustments to Unaudited Condensed Consolidated Statements of Operations:


c) Represents the adjustment described in Item 1 above.

d) Includes adjustments described in Items 1, 2, 3 and 4 above.

e) Represents the adjustment described in Item 5 above.

f) This amount is the result of the adjustment described in Item 6 above.


F-10


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


Six Months Ended June 30, 2022



As Reported

Restatement Adjustments

As Restated

Cash flows from operating activities: 

 

 

 

 









Net loss

 

$

(21,282,359

)
$ (95,949,214 )
$ (117,231,573 )

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