Archer Aviation Inc

Previous wording

The following discussion should be read in conjunction with our consolidated condensed financial statements and related accompanying notes included elsewhere in this Quarterly Report and the audited consolidated financial statements as of and for the year ended December 31, 2023 set forth in our Annual Report. The following discussion includes forward-looking statements. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. See the section titled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those set forth in Part I, Item 1A, “Risk Factors” in our Annual Report and those set forth in Part II, Item 1A, “Risk Factors” in this Quarterly Report.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated condensed financial statements and related accompanying notes included elsewhere in this Quarterly Report and the audited consolidated financial statements as of and for the year ended December 31, 2024 set forth in our Annual Report. The following discussion includes forward-looking statements, which are based on our current expectations and beliefs concerning future developments and the potential effects of such developments on us. There can be no assurance that future developments affecting us will be those that we have anticipated. See the section titled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those set forth in Part I, Item 1A, “Risk Factors” in our Annual Report.

Previous wording

To date, we have not generated revenue from either of these planned categories, as we continue to design, develop, and seek the governmental approvals necessary for our eVTOL aircraft to enter into service. We will use our cash and cash equivalents for the foreseeable future to continue to fund our efforts to bring our eVTOL aircraft to market. The amount and timing of any future capital requirements will depend on many factors, including the pace and results of the design and development of our aircraft and manufacturing operations, as well as our progress in obtaining necessary FAA certifications and other government approvals. For example, any significant delays in obtaining such FAA certifications and other government approvals will likely require us to raise additional capital above our existing cash on hand and delay our generation of revenues.

Current wording

To date, we have not generated significant revenue from either of these planned areas. We will use our cash and cash equivalents for the foreseeable future as we continue to develop our commercial aircraft, defense aircraft, related technologies, manufacturing operations and work to commercialize our commercial and defense aircraft. The amount and timing of any future capital requirements will depend on many factors, including the pace and results of the design and development of our aircraft and manufacturing operations, as well as our progress in obtaining necessary aircraft certifications and other government approvals to begin commercial operations. For example, any significant delays in obtaining such certifications and other government approvals may require us to raise additional capital above our existing cash on hand and delay our generation of significant revenues.

Previous wording

We are still working to design, develop, certify, and bring up manufacturing of our eVTOL aircraft and thus have not generated revenue from either of our planned lines of business. We do not expect to begin generating significant revenues until we are able to complete the design, development, certification, and manufacturing bring up of our eVTOL aircraft.

Current wording

We are still working to design, develop, certify, and bring up manufacturing of our aircraft and thus have not generated revenue from either of our planned lines of business. We do not expect to begin generating significant revenues until we are able to complete the design, development, certification, and manufacturing bring up of our aircraft and development of related technologies and services.

Previous wording

Research and development activities represent a significant part of our business. Our research and development efforts focus on the design and development of our eVTOL aircraft, including certain of the systems that are used in it. As part of those activities, we continue to work closely with the FAA towards our goal of achieving certification of our eVTOL aircraft on an efficient timeline. Research and development expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for employees focused on research and development activities, costs associated with developing and building prototype aircraft, associated facilities costs, and depreciation. We expect research and development expenses to increase significantly as we progress towards the certification and manufacturing of our eVTOL aircraft.

Current wording

Research and development activities represent a significant part of our business. Our research and development efforts focus on the design and development of our eVTOL aircraft, including certain of the systems that are used in it. As part of those activities, we continue to work closely with the Federal Aviation Administration towards our goal of achieving certification of our eVTOL aircraft on an efficient timeline. Research and development expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for employees focused on research and development activities, costs associated with developing and building prototype aircraft, associated facilities costs, and depreciation. We expect research and development expenses to increase significantly as we progress towards the certification and manufacturing of our eVTOL aircraft.

Previous wording

General and administrative expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for employees associated with administrative services such as finance, legal, human resources, information technology, associated facilities costs, depreciation, and non-cash technology and dispute resolution agreements expense. We expect our general and administrative expenses to increase as we hire additional personnel and consultants to support our operations and comply with applicable regulations, including the Sarbanes-Oxley Act and other SEC rules and regulations.

Current wording

General and administrative expenses consist primarily of personnel-related costs (including salaries, bonuses, benefits, and stock-based compensation) for employees associated with administrative services such as finance, legal, human resources, information technology, associated facilities costs, depreciation, and technology and dispute resolution agreements expense. We expect our general and administrative expenses to increase as we hire additional personnel and consultants to support our operations and comply with applicable regulations.

Previous wording

Other income (expense), net consists of miscellaneous income and expense items, including the change in fair value of our warrant liabilities.

Current wording

Other income, net consists of miscellaneous income and expense items, including the change in fair value of our warrant liabilities.

Previous wording

Interest income, net primarily consists of interest income from our cash and cash equivalents and short-term investments in marketable securities, net of interest on notes payable.

Current wording

Interest income, net primarily consists of interest income from our cash and cash equivalents, net of interest on notes payable.

Previous wording

The following table set forth our consolidated condensed statements of operations for the periods indicated:

Current wording

The following table sets forth our consolidated condensed statements of operations for the periods indicated:

Previous wording

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Current wording

Comparison of the Three Months Ended March 31, 2025 and 2024

Previous wording

Research and development expenses increased by $22.0 million, or 32.4%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, as we invested in people and materials to advance our technology development. The increase was primarily due to an increase of $10.1 million in personnel-related expenses due to a significant increase in our workforce from the prior year period, an increase of $6.9 million in costs related to professional services and tools and materials to support our increased research and development activities, and an increase of $3.6 million in stock-based compensation expenses. The remainder of the increase was made up of other incidental items.

Current wording

Research and development expenses increased by $20.2 million, or 24.2%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, as we invested in people and materials to advance our technology development. The increase was primarily due to an increase of $9.6 million in personnel-related expenses due to a significant increase in our workforce from the prior year period, and an increase of $9.1 million in costs related to professional services and tools and materials to support our increased research and development activities. The remainder of the increase was made up of other incidental items.

Previous wording

Other income (expense), net increased by $11.8 million and $51.0 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods ended September 30, 2023. The increase was primarily due to changes in fair value of our warrant liabilities. See Note 3 - Summary of Significant Accounting Policies to our consolidated condensed financial statements for further details.

Current wording

Other income, net increased by $21.4 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase was primarily due to changes in fair value of our warrant liabilities. See Note 3 - Summary of Significant Accounting Policies to our consolidated condensed financial statements for further details.

Previous wording

Interest income, net increased by $0.4 million, or 7.8%, and $5.1 million, or 47.2%, for the three and nine months ended September 30, 2024, respectively, compared to the same periods ended September 30, 2023. The increase was primarily due to interest income from our cash and cash equivalents.

Current wording

Interest income, net increased by $3.4 million, or 64.2%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase was primarily due to interest income from increased balance in our cash and cash equivalents.

Previous wording

As of September 30, 2024, our principal sources of liquidity were cash and cash equivalents of $501.7 million. We have incurred net losses since our inception and to date have not generated any revenues. We expect to incur additional losses and higher operating expenses for the foreseeable future. We believe that our existing cash and cash equivalents will be sufficient for at least the next 12 months to meet our requirements and plans for cash, including meeting our working capital requirements and capital expenditure requirements.

Current wording

As of March 31, 2025, our principal sources of liquidity were cash and cash equivalents of $1,030.4 million. We have incurred net losses since our inception and to date have not generated any revenues. We expect to incur additional losses and higher operating expenses for the foreseeable future. We believe that our existing cash and cash equivalents will be sufficient for at least the next 12 months to meet our requirements and plans for cash, including meeting our working capital requirements and capital expenditure requirements.

Previous wording

On October 5, 2023, we entered into the Credit Agreement with Synovus Bank, as administrative agent and lender, and the additional lenders (the “Lenders”) from time to time. We may request the Lenders to provide multiple delayed term loan advances (together, the “Loan”) in an aggregate principal amount of up to $65.0 million for the construction and development of our manufacturing facility in Covington, Georgia. The Loan under the Credit Agreement shall accrue interest from and including the date the applicable advance is made but excluding the repayment date at a rate of the secured overnight financing rate (“SOFR”), plus 2.0% subject to a SOFR floor of 0.0%. We are required to make interest-only payments for 36 months on the Loan starting on November 14, 2023, followed by monthly interest and principal payments for the remaining maturity, with any outstanding principal, interest and other then outstanding indebtedness due at maturity. The Credit Agreement matures on the earlier of October 5, 2033 or the date on which the outstanding Loan has been declared or automatically becomes due and payable pursuant to the terms of the Credit Agreement. Our obligations under the Credit Agreement are jointly and severally guaranteed by our current and future wholly-owned domestic subsidiaries, and are secured by cash, general intangibles, instruments, securities, financial assets, security entitlements and other property maintained in a money market account at Synovus Bank.

Current wording

On October 5, 2023, we entered into a credit agreement (the “Credit Agreement”) with Synovus Bank, as administrative agent and lender, and the additional lenders (the “Lenders”) from time to time, in an aggregate principal amount of up to $65.0 million for the construction and development of our manufacturing facility in Covington, Georgia (the “Loan”). The Loan under the Credit Agreement shall accrue interest from and including the date the applicable advance is made but excluding the repayment date at a rate of the secured overnight financing rate (“SOFR”), plus 2.0% subject to a SOFR floor of 0.0%. We are required to make interest-only payments for 36 months on the Loan starting on November 14, 2023, followed by monthly interest and principal payments for the remaining maturity, with any outstanding principal, interest and other then outstanding indebtedness due at maturity. The Credit Agreement matures on the earlier of October 5, 2033 or the date on which the outstanding Loan has been declared or automatically becomes due and payable pursuant to the terms of the Credit Agreement. Our obligations under the Credit Agreement are secured by funds in a collateral account and the Credit Agreement is guaranteed by our domestic subsidiaries. We had drawn down the full $65.0 million of the Loan as of March 31, 2025.

Previous wording

In November 2023, we filed a shelf registration statement on Form S-3 with the SEC and a related prospectus supplement pursuant to which we may, from time to time, sell shares of our Class A common stock, having an aggregate value of up to $70.0 million pursuant to a Controlled Equity Offering SM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), as the sales agent (the “First ATM Program”). The First ATM Program was fully utilized in May 2024. We did not sell any shares of Class A common stock under the First ATM Program during the three months ended September 30, 2024. During the nine months ended September 30, 2024, we sold 10,275,033 shares of Class A common stock for net proceeds of $48.1 million.

Current wording

In November 2024, we filed a shelf registration statement on Form S-3ASR with the Securities and Exchange Commission (“SEC”) and a related prospectus for the sale under a Controlled Equity Offering SM Sales Agreement (the “ATM Sales Agreement”) of shares of our Class A common stock, having an aggregate value of up to $70.0 million (the “ATM Program”). We pay the placement agent a commission rate of up to 3.0% of the gross proceeds from any shares of Class A common stock sold through the ATM Sales Agreement. During the three months ended March 31, 2025, we did not sell any shares of Class A common stock under the ATM Program. As of March 31, 2025, we had $47.5 million remaining eligible for sales under the ATM Program.

Previous wording

On August 8, 2024, we entered into subscription agreements with certain investors providing for the private placement of our Class A common stock at a purchase price of $3.35 per share (the “PIPE Financing”). A portion of the PIPE Financing closed on August 12, 2024 for 49,283,582 shares of our Class A common stock for net proceeds of approximately $158.0 million, after deducting offering costs. The remaining portion of the PIPE Financing covering an aggregate of 2,982,089 shares of our Class A common stock to be issued and sold to Stellantis for gross proceeds of approximately $10.0 million is subject to the satisfaction of certain closing conditions, including approval by our stockholders.

Current wording

On December 11, 2024, we entered into subscription agreements with certain investors providing for the private placement of our Class A common stock at a purchase price of $6.65 per share (the “Second 2024 PIPE Financing”), pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. A portion of the Second 2024 PIPE Financing closed on December 13, 2024 for 63,909,776 shares of our Class A common stock for net proceeds of approximately $407.7 million, after deducting offering costs. The remaining portion of the Second 2024 PIPE Financing covering an aggregate of 751,879 shares of our Class A common stock to be issued and sold to Stellantis for anticipated gross proceeds of approximately $5.0 million is subject to the satisfaction of certain closing conditions, including approval by our stockholders.

Previous wording

•the level of research and development expenses we incur as we continue to develop our eVTOL aircraft;

Current wording

•the level of research and development expenses we incur as we continue to develop our eVTOL aircraft and other products and services to be provided in our planned business lines;

Previous wording

•capital expenditures needed to bring up our aircraft manufacturing capabilities, including for both the build out of our manufacturing facilities and component purchases necessary to build our aircraft;

Current wording

•capital expenditures needed to bring up our aircraft manufacturing capabilities, including for both the build out of our manufacturing facilities, component purchases necessary to build our aircraft and support the development of our airline operations;

Previous wording

•sales, marketing and distribution expenses as we build, brand and market our eVTOL aircraft and UAM network.

Current wording

•sales, marketing and distribution expenses as we build, brand and market our business lines, products and services.

Previous wording

We lease office, lab, hangar, and storage facilities in the normal course of business. Under our operating leases as noted in Note 7 - Commitments and Contingencies to our consolidated condensed financial statements, we have current obligations of $5.9 million and long-term obligations of $15.1 million.

Current wording

We lease office, lab, hangar, and storage facilities in the normal course of business. Under our operating leases as noted in Note 7 - Commitments and Contingencies to our consolidated condensed financial statements, we have current obligations of $6.3 million and long-term obligations of $13.4 million.

Previous wording

We continue to experience negative cash flows from operations as we are still working to design, develop, certify, and bring up manufacturing of our eVTOL aircraft and thus have not generated any revenues from either of our planned lines of business. Our cash flows from operating activities are significantly affected by our cash investments to support the growth of our research and development activities related to our eVTOL aircraft, as well as the general and administrative functions necessary to support those activities and operations as a publicly traded company. Our operating cash flows are also impacted by the working capital requirements to support growth and fluctuations in personnel-related expenditures, accounts payable, accrued interest and other current liabilities, and other current assets.

Current wording

We continue to experience negative cash flows from operations as we are still working to design, develop, certify, and bring up manufacturing of our eVTOL aircraft and thus have not generated any revenues from any of our planned lines of business. Our cash flows from operating activities are significantly affected by our cash investments to support the growth of our research and development activities related to our eVTOL aircraft, as well as the general and administrative functions necessary to support those activities and operations as a publicly traded company. Our operating cash flows are also impacted by the working capital requirements to support growth and fluctuations in personnel-related expenditures, accounts payable, accrued interest and other current liabilities, and other current assets.

Previous wording

Net cash used in operating activities during the nine months ended September 30, 2024 was $264.2 million, resulting from a net loss of $338.7 million, adjusted for non-cash items consisting primarily of $84.9 million in stock-based compensation, a gain of $30.3 million due to a change in fair value of our warrant liabilities, $8.2 million in depreciation, amortization and other, $6.1 million of research and development warrant expenses related to the warrants issued to Stellantis (see Note 9 - Stock-Based Compensation to our consolidated condensed financial statements for further details), and a $5.6 million non-cash charge for the Wisk Warrant. The net cash provided by changes in our net operating assets and liabilities was $0.9 million.

Current wording

Net cash used in operating activities during the three months ended March 31, 2024 was $86.5 million, resulting from a net loss of $116.5 million, adjusted for non-cash items consisting primarily of $40.7 million in stock-based compensation, a gain of $20.8 million due to a change in fair value of our warrant liabilities, and a $5.6 million non-cash charge for the Wisk Warrant. The net cash used in changes in our net operating assets and liabilities was $0.6 million.

Previous wording

Cash Flows Provided by (Used in) Investing Activities

Current wording

Cash Flows Used in Investing Activities

Previous wording

Net cash used in investing activities during the nine months ended September 30, 2024 was $57.8 million, driven by purchases of property and equipment within the period.

Current wording

Net cash used in investing activities during the three months ended March 31, 2025 was $10.0 million, driven by purchases of property and equipment within the period.

Previous wording

Net cash provided byinvesting activities during the nine months ended September 30, 2023 was $429.7 million, driven by proceeds from maturities of short-term investments of $465.0 million, partially offset by purchases of property and equipment of $35.3 million within the period.

Current wording

Net cash used ininvesting activities during the three months ended March 31, 2024 was $17.3 million, driven by purchases of property and equipment within the period.

Previous wording

Net cash provided by financing activities during the nine months ended September 30, 2023 was $154.3 million, driven by gross proceeds from the PIPE financing of $145.0 million, proceeds from issuance of Class A common stock to Stellantis with an aggregate value of $25.0 million, partially offset by the repayment of term loans to Silicon Valley Bank, a division of First-Citizens Bank, for $7.5 million and payments of offering costs in connection with the PIPE financing for $6.0 million.

Current wording

Net cash provided by financing activities during the three months ended March 31, 2025 was $300.2 million, driven by gross proceeds from the registered direct offering of $301.8 million, gross proceeds from the First 2024 PIPE Financing of $10.0 million, partially offset by payments of offering costs in connection with financing activities for $11.6 million.

Previous wording

Net cash provided by financing activities during the nine months ended September 30, 2024 was $358.9 million, driven by gross proceeds from the PIPE Financing of $165.1 million, proceeds from shares issued under the First ATM Program and Second ATM Program of $87.0 million, proceeds from issuance of debt of $57.5 million, proceeds from issuance of Class A common stock to Stellantis with an aggregate value of $55.0 million, partially offset by payments of offering costs in connection with the PIPE Financing for $7.1 million .

Current wording

Net cash provided by financing activities during the three months ended March 31, 2024 was $44.8 million, driven by proceeds from shares issued under the ATM Program of $33.9 million, and proceeds from issuance of debt of $11.0 million.

Previous wording

Our audited consolidated financial statements and accompanying notes set forth in our Annual Report on Form 10-K filed with the SEC on February 29, 2024 have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of these consolidated condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.

Current wording

Our condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.