Q2 2021 Eve Holding Inc Earnings Call

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Readings. Welcome to East holding. Second quarter 2022: earnings fell.

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question-of-answer session will follow the formal presentation.

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At this time. I'll now turn the conference over to busicio alworth head room- invest Relations.

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Thank your operator. Good afternoon and everyone. This is luci alth, the Director of Investor Relations at eveves, and I wanted to welcome everyone to our second quarter of 2022 earnings conference call. I have here with me Co CEOs Jerry, demoro and drystein, as well as our CFO - a lot of the cold.

We also have lizalini, our Chief technology Officer, who's responsible for the development of our EBITA. After the initial remarks, we're going to open the call for questions.

We have prepared the back with a few slides and additional information. This is available at our Investor Relations website at IR evve air mobility com, So please download it for your reference.

Let me first start by mentioning that this presentation includes forward-looking statements or statements about events or circumstanance that have not yet occurred. We have based these forward-looking statements largely on our current expectations and projections about future events in financial trends affecting our business and our future financial performance.

These forward-looking statements are subject to risks, uncertainties and assumptions including, among other things, general economic, political and business conditions, both in Brazil and in our markets. The words believe may will estimate continues anticipates, intense expects in similar words are intended to identify forward-looking statements when, take no obligations to what they publicly or revise any forward-looking statements because of new reinformation, future events or other factors.

In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation may not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements. With that, I will now turn the presentation over to Jerry gry.

Thank you, luciield. I'm delighted to be here today on the occasion of our first quarterly release following elifting on the New York Stock Exchange. This is an exciting time for you and I'm proud to be part of the team that is achieved this important milestone.

For those not familiar about our recent merger with zanide acquisition Corporation, the transaction included a number of strategic and financial investors that raised a combineed $377 million, as shown on Slide two.

We believe this funding provides an excellent foundation for the development and certification of our ebitto and other elements of the urban air mobility ecosystem that we expect to launch in 2020. -six and.

Our most notable and relevant strategic investor is imperared, the third largest aircraft manufacturer and a leader in the regional and Executive jet markets.

Ema is a unique partner that brings significant competitive advantages to eat. We are leveraging its long history and deep expertise in aircraft design and production with royalty-free access to its more than 50 years of intellectual property.

We also have access to skilled engineers on a flexible and first priority basis.

In simvple terms. We have access to a pool of some of the most accomplished and talented aerospace engineers in the world. Our long-term agreement with emair yield E and unmatched posysition ofes, development capabilities and cost advantages. It means we do not have to create this workforce from scratch and then shape it into cohesive team. It already exists and we can scale up or down as needed.

This arrangement means we do not have to carry these engineers on our pno when not required.

Which makes for a lean and highly efficient organization.

When coupled with attractive labor costs in Brazil, this arrangement will substantially reduce our development costs.

Lastly, our partnership with ambreer also gives us access to its global infrastructure.

This is critical not only to our development and certification efforts, but also to service and support of aircraft on a global basis.

embrair has more than 80 service centers around the world. That can be an important platform for our maintenance business in the future.

There can be no ebittoall operation without a reliable.

An efficient customer support capability.

The combination of embrary's partnership and our holistic approached urban air mobility, along with superior aircraft design.

Have translated into what we believe to be the largest and most diversified orderbook for evt's gwn.

We have signed letters in intent for more than 2000 aircraft from two thousand P two different launch customers.

These were operators from around the globe with different aviation backgrounds, including fixed wing and helicopter operators, rideesshare providers and, more recently, a defense player with a potential to expand the applications of our uam solutions.

one last point it is important to note is that no customer represents more than 10% of our orderbook.

This serves a de risk.

Our business plan and brings confidence to our ebitto program.

Now I would like to invite my colleague in Co CEO , Andre Stein, to give us a bit more color on the development program and the aircraft itself, Stein.

Thanks Terry. I'm also very excited to be here is a historic moment for it. We have come a long way and there is a lot more ground to cover, but you are clearly moving in the right direction.

We have a erctic started to the fisification process of our ebitto with Brazil's aviation autoric anac, and initiate conversations with the FA inuus, as in Europe , and other our major fisification autors as well. It is important to highlight that we will receive and dived attention for anac, while the fisificational autors in the U's in Europe will be busi deal multiple problems at the same time.

The Brazilian TTS had a long history of collaboration and bilateral agreements with ffe, whereby the sets and validates they were done by anx, requiring only a few additional tests.

We believe this must E on a clear path to certification.

Especially when combined with our simpler design with fixed wings and leadft plus creus configuration.

And we suppor is going to be vital in this regard as well.

ember brings quite a bit up to the table by having certified over todaccraft just in the last 25 years. They cheue, for example, received the simmmeanous certification approval in Brazil. The West and Europe owned scattal with specs and budget.

And it also took important steps to optimize the plans for our manufacturing facilities and supply chain strategy by partnering with portional shoos. They will bring expertise that will help us plan for future productions, supply chainlogists and to scalr facilures.

Now on to Slide three.

In parallel we are performing several tests in our proof of const.

Win to newommodels rigs, flight similularators and markup.

All of these, of course, offer important input for our aircraft development.

We have also run simulations with conventional helicopters- should validate, and thust that our concept of corporations for ebits in a real urbanary environment.

The most recent experience to CRE Rio genaneo, over 30 days.

We collect important information to better address the news ofpt passengers, partners and the community when it comes to the use of avy toils for Ruben mobility.

Now on to the next slide, Slide four.

We hosted last month our first advisor Board in Europe where we brought several of our customers to discussed the whole spectrum of our portfolio of ubanamobility solutions.

Including our coaf characterists such as performance and user experience, in that sense, when they are fifth generation of our evbitto cabin mokup.

This cabino was later shown for the first time to the public at the fario air show, and it showcas our approach to a human centse design and reflects market needs such as a sustitability and safety perception, as well as our own emphasis on sustainability.

Flat but not least, we also disclosed at the fronburgers show the current design of a that you can see on the LAP of this slide featuring information on we entao. It's important to highlight that as a part of our development process and based in all the background the work that has been done so far, we have been evaluating variations of our ly plus CRU' configuration. Now we believe that the current configurations, material and options close to the markets.

De customing peopleam in design with eight lasers and pushers, allowing for reliable and safe platform design and for virtical take out and land and avoiding moving BOS.

The cibo design is the differentiator in our certification networks.

Next on to Slide five here we talk about our partners and how important they are doingwe.

Thanks time.

We currently enjoy an extensive list of strategic partners that continues to grow.

They will all be importantly in developing the best-in-class products and services we plan to offer to the uum market. A number of these partners are also investors in our pipe, So they do have skin in the game.

And their participation reflects the fact that they share our belief and vision for the udum industry.

These partners cover the full spectrum of the UA ecosystem, offering operational support, infrastructure design and build-out, where technical expertise in the design and critical components of our aircraft, such as Motors, Avionics and propulsion systems.

The list of aviation partners includes meing aircraft operators across the globe, such as skywest and Republic, as well as important leasing companies like azora and falco. There are also several leading helicopter operators from different parts of the world.

And righthairing platforms that connect operators with the wring public in somem.

We have partners involved in every aspect of uum markets.

This is a holistic approach that will help define the standards for the entire urban air mobility market.

The order book shown on Slide six demonstrates that the market recognizes our qualities and strength.

As I noted earlier, we have already received more than 2009 binding orders.

From 22 different customers, which we believe to be the largest and most diversified order bookat for ebittos in the world today.

We have orders from 10 countries across six continents.

Not only do these customers include helicopter fixing operators and leasing companies, as well as ridhare platforms. More recently, we signed an agreement with BA systems and everyair, which will jointly pursue defense applications as well.

While eve can remain focused on urban air mobility.

This new partnership begins to pave the way for different East cases for our aircraft.

Our nonbinding backlog is valued at almost $6 billion and we expect progress. Down payments will add significantly to our cash flow as we begin to convert those letters of intent into firm orders in the years to come.

Now I will turn it over to EU to talk a bit about our financial position.

Thanks Jerry. I'm glad you'll be here today to present eve's second quarter results after the recent conclusion of our capital raise and public listing on the New York' stock exchange may.

This is a very exciting moment for us, as we were able to secure significant funding for our program while bringking strong partners to join our project.

Turning to our financials on Slide 7, I would like to start with the income statement highlights. We spent nine point eight million during the second quarter 2022 and almost two million in the first half of this year on research and development.

The bulk was invested in our ebitah development in portion was used for the development of our servicice and support solutions and the development of our urban air traffic management system.

We are the only EBITA company with a complete solution including the vehicle serves and support and air traffic control.

In addition to the rnd expenses, we also had six point five million in SGNA expenses during the second quarter 22 and seven point three million in the first six months this year.

Gi those expenses and considering we are still a nonoperational company, we reported a net loss of 11.8 million in the second quarter 2022 and 21.3 million in the first half of the year.

I would like to call your attention to some of our competitive cost advantages.

Especially first, our full access to embriers engineers, on a first priority basis and only as needed.

That means we don't need to bring hundreds of engineers to our PL, which makes our develop and much more cost efficient.

Second our ability to use embryers's 50 -year intellectual property on a relative-free basis.

That's another important source of cost savings.

Entered access jouring brass facilities with minor investments and only the sharing of facility fees.

That also saves us significant infrastructure CapEx at this stage.

That said, moving to cash flow, I would like to highlight our cash burn of 13.2 millum in the first six months of 2020. -two.

The cash consumption was positbly impacted by accounts payable of approximately one million related to anbrier's development services.

Eve has 45 days to pay embrrier for engineering services for any given period.

With that, we ended the second quarter with approximately 33 million in cash falling our net capital raise of 329 million inmay.

Given the cost advantages I just mentioned, we feel extremely comfortable with our current cash position as it gives E plant of resources to maintain our EBITDA development for multiple years.

At this point in time eve has no doubt on its balance sheet which provides another avenue for financing operations as well as cash from customer progress. Payments. Once loys are definiteitized as for orders.

Now on the balance sheet. I want to emphasize again total accounts payable of 12.6 million at the end of the second quarter. That reduced our cash burn. At the same time, we have no doubt on our balance sheet and a cash or net cash position of more than $33 million.

That concludes our financial highlights, and now we would like to open for questions. Operator, Please go ahead.

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My first question comes from the line of sheila kayig with efrees.

Please receive with your questions.

Hi good afternoon guys and thank you to win Congratulations on the ongoing public. So maybe I wanted to just ask a first stps in terms of you announce the formalization of your EB T certificate with anac during Q2, what's sort of the next step in the process and if you could you know sort of talk about what testing is involved from here, maybe for Andre or Jerry.

surethanks chila. It's an excellent question. The quick answer is that there are multiple steps and, as we have done in the past, we expect to move to a common structure with the faa later this year. Stein, you want to talk to that a little bit further?

Sure So our strategy overall as jimation something that we done in other programs which used anac as our primary certification organization.

So we have their undvided attention But at the same time engage with all the other major regulatoryatorics, including in particular ffaa, where anac has bilateral agreement. Will we used that in previous problevms to assure that there is not a new certification process in the Bay, but rather evalidation with anac has done?

So we are quite confident of moving towards that I'm not sure if valentin you want to comment more on that but the.

That covers it.

Sha I little.

Okay I just have one more question, actually this one's, ferd warddo, that's possible. And where do you guys raised a little bit of debt? I believe on August first with a loan agreement with embryer for eighty one million at about a 5% rate. I guess what drove you to take on that debt and how do you think about the use of funds there? And do you have you know, would you like to pursue any leverage? And your thought on any debt raises?

Yes hishe. Now just to clarify. It's really the other way around. We didn't raise any debt with embrer. We invested part of our cash with embrer at the arms length rate right of almost 5% an year. So thatb $8 million will give us almost five million dollars in interest rates per year. So a very good investment for eve. It's a one year. We can prepay thatbt low one and get the money back any time we want. We get an independent assessment for an auditor regarding the interest rate of 5%. We also get our independent Board approval. So it's really the other way around. We don't have any debt. We are always looking right ways to leverage the company and may be bring additional cash and maybe raise some thatb at the future. We are approached by a lot of potential lenders But at this time we have no leverage in our balance sheet which gives us flexibility to raise future de brea given more cash for for E ok.

Yes Thank you so much for clarifying a Congratulation, because Thank you.

Thank you.

The next question is from the line of saabvi safe with Raymond James. Please you your question.

Y good afternoon and conrat. If I might ask, like the design changes that you announced that farboro could you talk about? You know some of the rational rationale behind the changes and you know what kind of benefits they provide versus the prior design? Just the understanding, a little bit more, of what was finalized here at farbroough.

That's an excellent question. There are a number of benefits and valenttee. You're probably in the best position to talk about some of the specific trade offs and what they resulted in. Sure jry So would, after to all. I think the two important points to highlight with respect to the the changing configuration. one is that the displacement of the rotor, the placement of the rotors that we made, allows us for tizing of the Motors with less power, the Motors of the lifters with less power, thinking of the controllability in case of the failure of one of them in flight.

So we maintain controllability of the vehicle, but we can do that- and we did maintain also in the previous configuration that we can maintain it in this updated configuration with less power in each of the motor. So this is helpful with respect to the sizing and the weight of the vehicle, allows us to reduce the weight, which of course brings benefit in terms of energy efficiency and noise and other aspects.

In addition to this, we find that this configuration with the conventional placement of wing and tail, gives us a little bit more flexibility to adjust the stability and controlability of the vehicle in the future and make minor adjustments if we have to. So gives us a little bit of more of leeway to refine the flying qualities as we refine the project and go along. So those are the two main reasons for updating the configuration in this way.

I really appreciate, does night?

Yes it does, Thank you.

ok ay, sorry. I guess the kind of follow up on that would be just the kind of the parts in the aircraft design and suppliers like when do you expect that to be firmed up and when can we kind of expect a full demonstrativeor vehicle here?

Yes So I mean you know that happens as as the design matures, as you sort saw here, or as valentining you talked about. These modifications give us an enhanced controllability with reduced power and wait. They also provide a little bit of design margin as we further refine this design. So the best answer I can give your question is: you know we're flying a variety of vehicles now doing extensive simulation and modeling to test variations of key elements So that we can understand and verify the effects those variations have. And with respect to suppliers you'll probably see is start on three of the key areas, really on the motor, propellers and batteries. Starting at the end of this year through the first half of next year we will probably lock down each of those three categories is valentining. Anything you want to add to that?

Jerry just that that timeline supports the development of the vehicle as we had planned originally. So that timeline of bring.

The locking in with the suppliers as you mentioned is part and Ana is as we had originally planned for the project. This.

And just want to remind that we are talking about signing the contracts of supply of these parts and these system that you mentioned. But before that we have some very significant engagement with several potential suppliers to for them to participate and us even to learn about their products from, you know, from the beginning of this year on. So we mature the participation with them and then sign with that schedule, as you mentioned and se. I would just add one more point. We believe we will continue to mature this design as we gave closer to what we call a production representative model. So it depends how one defined prototype commercial production representative models, but we expect to refine details on this all the way until we head towards that production representative model roughly two years in advance of certification.

That's. That's super helpful. I appreciate all that background's. Final question: just I thought that B a E announcement was interesting. It kind of gives you a new, maybe a vertical defense kind of vertical to go into. Was curious. As you know, this is still very early days, but any, I thought you know what.

Type of mission these will probably start launch on first, as you kind of start to produce and how big that defense angle can get. Could it be as meaningful as it is for ember?

Now's turn that over this time. But you know, in terms of the specific applications that will be up to the to inventure between emberor and B? A to determine where we E will remain focused on, on the core urban marketts Stein, we want to talk a little bit about where maybe some of the early adoption might be. On the defense sure, and actually the BW of the deal of B? A and ember is exactly that, even will remain focused on the mobility marketts and we provide then we our baselline aircraft So we can optimize our account for anour mobility and and at the same time access the defense market and particular applications where could deploy technoledlogy for Autonomous, for example, that are the regulatory environment, theseer in the defense applications. Then it is for the civilian applications, things as Jerry, saidad. The final use will depend on that market development from both and ember defense. But some of the applications heard the discussions are things like search, generrich Q, disaster relief, sh to shore, things that will take advantage of both the different quality we have on our vehicle being a the fact that the laterric and the shipps to shore. For example, there is an access of lectricity in the ship So we Don' need to car few that clear benefit of electical vehicle for that type of application. There are pretularly quite a few Co potential customers that have been excited about it.

All very helpful, Thank you.

Our next question is from line of marvin fong with BT I G. please just use your question.

Afternoon Thank you for taking my questions and I may alsoful say Congratulations on your first quarter as a public company.

I appreciate that the color you provide on the redign, that was one of my questions. So I' move on to a couple of finance questions. Perhaps your press release referenced you know that you'll be able to kind of leverage additional capital from down payments, you know as as orders perm up and I know that predelivery payments is very common in the aircraft industry. But since up potentially a lot of investors on the call are actually not familiar, you know, being tech investors, maybe the helpful you guys just kind of doesoug a little deeper into how much capital you think you know or working capital you can you can raise from predelivery payments and the timing relative to final delivery those payments will come in. And then I have a couple of additional questions.

Sure I'll turn that over to E in a moment. But, as heto said, we've got substantial cash on the balance sheet, So we we've got quite a bit of runway in front of us that allows us to determine what's the most that advantageous way to strengthen the balance sheet, if and when we decide to do that- and certainly you know the predelivery payments are vehicle to do that. In terms of timing, we expect to start definitizing those LOIs over the next 24 months period. Either you want to talk a little bit about the timing of and the magnitude of what that cash flow could be?

Yes sure sure, jry. Thanks marving for the question. It depends from a product to product but you know, down payments or advances could be as as big as 50% of the value of the vehicle. So if you look our non buinding backlog rightite, it's over 2000 vehicles, over $6 billion. If you assume that some of the advances could be as high as 50%, you can figure out that you know a lot of cashing flow may come to the company as, as we you know, transition those and the orders- four orders in general. That happens, as as Gerry mation, twenty 4, 18 months prior to the delivers. So there is a scaddal but it depends a lot and burise from customer to customer.

Okay great thanks for that color. And one other question on finances. You know you do. Maybe could I'll share your thoughts on how we should be thinking about. You know, OpEx and CapEx for the back half of the year. The second quarter rates a good, a good run rate, or do you expect that to step up?

Yeah we expect that to step up as we advance in the program right, So probably the cash burn or the expenses investments will be higher on on the second half, we have a lot of advantages right, as you mentioned, we only pay the engineers as they work for us. We do not bring them to the balance sheet. We have all the- you know, the engineers or the labour force. Most of that develoapment in Brazil is competitive rates, So you know we have a lot of advantages, but I would say we we may spend around it depends on the year, but throughout the development, around $1 million, maybe some years a little last, some years a little more. So I believe the cash we have today- $33 million, it's it's. It's a robust cash considering the, the pace of cash burn that we expect, and we have a lot of room and a lot of cash to to speed up our development. So So we are feeling very good.

Great Thank you, and maybe just one last question for me, just on the business development you guys have built. The largest unit backlog in the industry as far as I'm aware is because is help investors understand like the process. I mean, how are how our potential customers, you know, are they reaching out to you or are you? Are you reaching out to them and and what sort of the evaluation process are you? Are you, are they considering you against some of the other E tall players or that generally like an exclusive sort of negotiation?

You know that's an excellent question. I think Stein in the best position to answer that. But if you look at the backlog, it really covers the first three or four years of our business plan. So at this point we're not focused as much on numbers. You know the strategic positioning and cent Stein, you want to, and anything to that. Sure to true a question about if you are being, if they're looking for us or you're looking for the customers, the answer is always the both of them. The right you have been approached first from several customers are on the globe. We, as Jerry, who we are very selective on the partners, we we afcept to join us in a way. So it's not just a question of the largest backlog for the sake of faith, but to really find their right partners and the be of it. The way you are doing is that you don't have today no custommer that has more than 10% of our backlog, for example, So that minimize their risk. It quite to spread around who have customers in all parts of the globe, all continents- that also helps minimize the risk- as well as business models with living companies, head ult oparperators, airlines.

Coming on board. So we are being a strategic and going on that direction. And to point about competition: yes, competition is definitely always there.

Terrific. Thanks so much for the commentary. Congratulations again.

Thank you.

The next question is coming from the line of marcella lota with JP Morgan. Please just use your questions.

Thank you very much. There's a question to Ed wardgo regarding cash meat and capture structure. I mean you guys comment about all these like $1 million cash burn per year over the next and two to three years. But just to understand what you guys see as the capture structure- of course it all depends on the speed of development and so on. Also, just to understand how much leverage I thinking that you can add and how we see the caital structure evolving of the years.

Thanks more thanks for the question. We raise, you know, a very good money right in our cap raise almost $4 million. We have these almost $25 million in our balance sheet. Our capcash burn is really you, our view. You know it's under control. We definitely, you know, are always analyzing and looking possibilities to bring more cash to the company. That are ways to do that. Leverage the company is one of them. Right, we could always raise that, but we need to make sure that this is that comes. That you know right. Maturity needs to be long term, it needs maybe some grace period and also it needs to come at at the right cost. We are approaching by different players offering different opportunities, but you know we still don't have any anything secured. But it's one way to go. Another possibities, as we are discussing here: right advances, as we from customers, as we secured the orders, we expect to start to get bigger down payments advances and that could be a meaningful cash flow. So there are different leverage that we can pull to bring more cash to the company and considering, you know, our cash burn running rate with you, we are ready a few comfortable with our cash but know are ways to BR more cash. So So we are feelilling super good.

Perfect the second question is regarding the start of deliver. There were those change on design and everything is very fluid at this point in time as you guys are perfecting the model and get to the most efficient solutution. So just wanted to double check if 2020 six's continue to be kind of the base case if no changed in design, supply chain or certification for the process. Any of those things over the past six month has changed and could lead to an anticipation or delay on this base case for 2020 -six.

You know, actuallycellentin question, turn this over to valentini inste. But the short answer is: you know we're still looking at 2026 but, as you know, things can happen like, for instance, you mention the certification process and and major agencies, whether it's a notac F, a or are still working their way through that. I think that's not so much a a an each specific issue, but that affects the industry as a whole. That's one of the macro things that could affect entry into service, as well as the other you know, community acceptance and and the other regulatory factors associated with operation, not just certification. I think they could be as much or more of an impact on 2026 for the industry than than the internal factors. Stein valenttini, you want to add anything to that? Sure, just on that. On the configuration, it's important to highlight that it is part of the development process, kind of lecting. The configuration was a planet part of it. So we have been focus in the late's crude solution, perceiving that as the baps action should go with, the dalers should take call.

That's what you have been evaluated and we've selected the direction should go now. So wasn't a change in of course was part of the development, the natural development and evolution of the product. So we are. That was the way was planned and that there is no change on when our target for engine service for the first delivers.

Perfect Thank you very much.

The next question comes from the line of Christine lag with Morgan family. Please just see your questions.

Had to suggest. On onfoous team. Good afternoon. gradsi wanted to ask about plans for autonomy, appreciating that it's still a waysis out, but maybe you could speak to the road map here and maybe near-term milestones to watch forloor with regard to autonomy.

Or I think.

That's an excellent question, Stein. You already alluded to that with the defense application maybe given us in the earlyer adopctor there. But some things that we were already doing in in the connots and realo and to advance the Autonomous capabilities, Stein government absolutely earlier this year of announce our tasks in real where have been carrying a pack of sensors in a headicauter in a real open environment and the idea for that was actually choose, start the machine learning, a very littleital sense, So starting acquiring the data in a real open environment So we can apply that for for future. That is autonomousounce. We are in tracked for that. We believe that we start operations with toloperator on board.

And from there there are even more data in reoperations moved towards Autonomous future. So we have been investing on that.

Investment the development of the technology, but not counting on that as part of the critical by for engine service. volentue if you're to add anything else to it.

sureso in addition to what ste described we have in the near term advances that directions really that we are establishing for the vehicle still while piloted that we believe will set the base for introducing them. The Autonomous flight So. one for example is having a modular architecture for the Avionics in a way that we can evolve it to an Autonomous flight taken advantage on what we will have already built in terms of flight by wireflight controls in terms of sensors and integration. So that also is connected to our vision of developing a simplified.

Human machine interface for the pilot while the pilot is on board the vehicle, and that also creates automation in the system, in the flight control system, for example. That will be already a step ahead when receiving the Autonomous functions of the vehicle. So at the same time that we are executing these works that Stein alluded to, with embrer, for example, we are also taking measures on the vehicle architecture and definitions that will pave the way for receiving the Autonomous functions in the future.

Thanks very helpful. No, take goodbyeone.

ok well, my next questionition comes from the line of Josh millberg with Morgan sanley. Please just use us your question.

Good afternoon everyone and thanks for the event, and let me also congratulate you on you're now being a public company. You, you guys, covered a a number of of our doubts, but I wanted to ask if you could elaborate a little further on the topic of proof of concept flight testing, just on the latest developments there. What, what you have planned for the remainder of the year?

Thanks Josh. Good question. As I said, we're flying a number of different kinds of aircraft. You know you can define them as grouof of concepts prototyp, ES etc. But more importantly, we think is is evolving the final design for the simulation, bundling and testing, valentteing. You want to talk about that?

Sure So we we talked about, for example, the update, the configuration recently, and so we we believe that this, at this stage, we need to make sure that we understand all of these variations that are possible for the vehicle and make sure that, whatever that's the improvements or changes we want to make to the vehicle, we do it now when we still have flexibility to do it right. So the later you apply any modification, then the harder it is, the more expensive it is, the more rework that you have right for ING the vehicle as you go along the project. So, with this in mind, these tests that we are perform, ing- which include flying vehicles but also include, for example, wins on tests or rigs and things like that, they help us understand these characteristics, the different effects of different system architectures and things like that, and with that, then with the modeling that we do, which then receive data from these tests, we are able to make sure that the choices that we are making for the vehicle are the right choices for us to move on. So that's how the tests being know, proof of concept again, or not, that's how they contribute to, to the stage of the development that we are in right now.

So John , the short ance is we generally don't publish a schedule. We let the engineering team move through this entire process of model, as embra has proven is very effective in the past, and we expect to decline more and more mature aircraft all the way up to the time that I said, about two years out from entry into service, where we think we have a production ready or production representative specimen.

No John going.

ok that,'s. That's very helpful color. Thank you for that.

Thank you. At this time of preciend of a question-and-answer session, I'll turn the call over jlucio alers for closing remarks.

Thanks Rob, and thank you everyone for joining us today. We do look forward to updating you on our continued progress throughout the year and please don't hesitate to reach out to us in case have any additional questions. Thanks, and have a good day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.