What changed in this filing

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Item 1. Business

2022-03-14 compared with 2021-03-08 · 136 added, 370 removed, 0 unchanged (100% of the section changed)

Company Overview

We are a blank check company incorporated

in Delaware on August 26, 2020 and formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition,

stock purchase, reorganization or other similar business combination with one or more businesses.

We are an early stage and emerging

growth company and, as such, are subject to all of the risks associated with early stage and emerging growth companies.

On September 4, 2020, the Sponsor paid

$25,000 in consideration for 14,375,000 shares of Class B common stock (the “Founder Shares”).

The Founder Shares included

an aggregate of up to 1,875,000 shares subject to forfeiture by the Sponsor to the extent that the underwriter’s over-allotment

was not exercised in full or in part, so that the Sponsor would collectively own, on an as-converted basis, 20% of our issued and

outstanding shares after the Initial Public Offering (assuming the Sponsor did not purchase any Public Shares in the Initial Public

Upon the expiration of the over-allotment option in December 2020, 1,875,000 shares of Class B common stock were forfeited,

resulting in an aggregate of 12,500,000 Founder Shares outstanding.

The registration statement for our Initial

Public Offering was declared effective on October 27, 2020.

On October 30, 2020, we consummated the Initial Public Offering of

50,000,000 Units, at $10.00 per Unit, generating gross proceeds of $500,000,000.

Each Unit consisted of one share of Class A common

stock, $0.0001 par value, and one-third of one redeemable warrant (“Public Warrant”).

Each Public Warrant entitles

the holder to purchase one share of Class A common stock at an exercise price of $11.50 per whole share.

Simultaneously with the closing of the

Public Offering, we consummated the sale of 8,000,000 warrants at a price of $1.50 per warrant in a private placement (the

“Private Placement Warrants”) to our sponsor, Atlas Crest Investment LLC, generating gross proceeds of $12,000,000.

Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share.

proceeds from the sale of the Private Placement Warrants were added to the net proceeds from the Initial

Public Offering held in

a trust account.

If we do not complete a business combination within 24 months from the consummation of the Initial

Public Offering,

the proceeds from the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject

to the requirements of applicable law).

The outstanding shares of Class B common

stock will automatically convert into shares of Class A common stock upon the consummation of a business combination on a one-for-one

basis, subject to adjustment.

In the case that additional shares of Class A common stock or equity-linked securities are issued

or deemed issued in connection with a business combination, the number of shares of Class A common stock issuable upon conversion

of all Founder Shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common

stock outstanding after such conversion, including the total number of shares of Class A common stock issued, or deemed issued

or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection

with or in relation to the consummation of a Business Combination, excluding any shares of Class A common stock or equity-linked

securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller

in a Business Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working

Capital Loans, provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.

We are an “emerging growth company”

within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various

reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not

limited to, not being required to comply with the auditor internal controls attestation requirements of Section 404 of the Sarbanes-Oxley

Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions

from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute

payments not previously approved.

As a result, our stockholders may not have access to certain information they may deem important.

We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier,

including if the market value of our Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before

that time, in which case we would no longer be an emerging growth company as of the following December 31.

We cannot predict whether

investors will find our securities less attractive because we will rely on these exemptions.

If some investors find our securities

less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise

would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

Further, Section 102(b)(1) of the JOBS

Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private

companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of

securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply

to non-emerging growth companies but any such an election to opt out is irrevocable.

We have elected not to opt out of such extended

transition period which means that when a standard is issued or revised and it has different application dates for public or private

companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new

or revised standard.

This may make comparison of our financial statements with another public company which is neither an emerging

growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible

because of the potential differences in accounting standards used.

Additionally, we are a “smaller reporting

company” as defined in Item 10(f)(1) of Regulation S-K.

Smaller reporting companies may take advantage of certain reduced

disclosure obligations, including, among other things, providing only two years of audited financial statements.

We will remain

a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates

exceeds $250 million as of the prior June 30th, and (2) our annual revenues exceeded $100 million during such completed fiscal

year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th.

To the extent

we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public

companies difficult or impossible.

Business Combination Agreement

On February 10, 2021, we entered into a

Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time, the “Business

Combination Agreement”), by and among Atlas, Artemis Acquisition Sub Inc., a Delaware corporation (“Artemis Merger

Sub”), and Archer Aviation Inc., a Delaware corporation (“Archer”).

Immediately prior to the

consummation of the Merger, Atlas will change its corporate name to “Archer Aviation Inc.”

(“New Archer”).

The Business Combination Agreement and

the transactions contemplated thereby were approved by the boards of directors of each of Atlas and Archer.

The Business Combination

The Business Combination Agreement provides

for, among other things, the following transactions on the date of closing of the Business Combination (the “Closing”):

(i) Atlas will amend and restate its certificate of incorporation (the “Post-Closing Atlas Certificate of Incorporation”),

pursuant to which, among other things, Atlas will have a dual class share structure with (A) shares of Class A common stock that

will carry voting rights in the form of one vote per share (the “New Class A Common Stock”), and (B) shares of Class

B common stock that will carry voting rights in the form of ten votes per share (the “New Class B Common Stock” and,

together with the New Class A Common Stock, the “New Atlas Common Stock”), and (ii) Artemis Merger Sub will merge with

and into Archer, with Archer as the surviving company in the merger and, after giving effect to such merger, continuing as a wholly-owned

subsidiary of Atlas (the “Merger”).

The Merger and the other transactions contemplated

by the Business Combination Agreement are hereinafter referred to as the “Business Combination”.

The Business Combination is expected to close in the second

quarter of 2021, following the receipt of the required approval by Atlas’ stockholders and the fulfillment of other customary

closing conditions.

Business Combination Consideration

In accordance with the terms and subject

to the conditions of the Business Combination Agreement, at the effective time of the Merger, (i) outstanding shares of common

stock and preferred stock of Archer will be converted into a right to receive a number of shares of New Class B Common Stock determined

on the basis of an implied Archer equity value of $2,525,000,000 (the “Implied Equity Value”), (ii) all stock awards

(whether vested or unvested) to purchase Archer common stock will be converted into stock awards to purchase a number of shares

of New Class B Common Stock based on an exchange ratio derived from the Implied Equity Value, and (iii) outstanding warrants (whether

vested or unvested) to purchase Archer common stock will be converted into warrants to purchase a number of shares of New Class

B Common Stock determined on the basis of the Implied Equity Value.

The former Archer equity holders will have the right to convert

their shares of New Class B Common Stock into shares of New Class A Common Stock pursuant to the Post-Closing Atlas Certificate

of Incorporation.

Representations and Warranties;

The Business Combination Agreement contains

representations, warranties and covenants of each of the parties thereto that are customary for transactions of this type.

has also agreed to take all action within its power as may be necessary or appropriate such that, effective immediately after the

Closing, the Atlas board of directors will be divided into three classes and be composed of a total of seven directors, which directors

shall include an individual designated by Atlas, three individuals designated by Archer and three individuals to be identified

by Archer in consultation with Atlas who qualify as “independent directors” under the listing rules of the New York

Stock Exchange.

Conditions to Each Party’s Obligations

The obligations of Atlas and Archer to

consummate the Business Combination are subject to certain closing conditions, including, but not limited to, (i) the expiration

or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii)

the absence of any law or governmental order or other legal restraint or prohibition preventing the consummation of the Business

Combination, (iii) the Registration Statement (as defined below) being declared effective under the Securities Act of 1933, as

amended (the “Securities Act”), (iv) the shares of New Class A Common Stock to be issued in connection with the Business

Combination having been approved for listing on the New York Stock Exchange, (v) the approval of Atlas’ stockholders, (vi)

the approval of Archer’s stockholders and (vii) Atlas having at least $5,000,001 of net tangible assets (as determined in

accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934, as amended) remaining after the Closing.

In addition, the obligation of Archer to

consummate the Business Combination is subject to, among other conditions, the aggregate cash proceeds from Atlas’ trust

account, together with the proceeds from the PIPE Financing (as defined below), equaling no less than $600,000,000 (after deducting

any amounts paid to Atlas shareholders that exercise their redemption rights in connection with the Business Combination).

The Business Combination Agreement may

be terminated under certain circumstances prior to the Closing, including, but not limited to, (i) by mutual written consent of

Atlas and Archer, (ii) by either Atlas or Archer if the other party breaches its representations, warranties or covenants such

that the conditions set forth in the Business Combination Agreement would not be satisfied, and such party fails to cure such breach

(other than for certain limited exceptions), (iii) by either Atlas or Archer if the Business Combination is not consummated by

September 10, 2021, (iv) by either Atlas or Archer if any governmental entity issues an order or taken any other action permanently

enjoining, restraining or otherwise prohibiting the Business Combination and such order or other action has become final and non-appealable,

(v) by either Atlas or Archer if certain required approvals are not obtained from the Atlas stockholders after the conclusion of

a meeting of Atlas’ stockholders held for such purpose at which such shareholders voted on such approvals, and (vi) by Atlas

if (A) the Transaction Support Agreements are not executed and delivered to Atlas within one business day of the signing date of

the Business Combination Agreement, (B) Archer’s stockholders do not deliver, within one business day of the Registration

Statement being declared effective under the Securities Act, to Atlas a written consent approving the Business Combination (the

“Stockholder Written Consent”) or (C) Archer does not deliver, within one business day of the Registration Statement

being declared effective under the Securities Act, to Atlas a written consent approving the conversion of all shares of preferred

stock of Archer into shares of common stock of Archer immediately prior to the Closing (the “Conversion Written Consent”).

If the Business Combination Agreement is

validly terminated, none of the parties to the Business Combination Agreement will have any liability or any further obligation

under the Business Combination Agreement, other than customary confidentiality obligations, except in the case of Willful Breach

or Fraud (each, as defined in the Business Combination Agreement).

PIPE Financing (Private Placement)

Concurrently with the execution of the

Business Combination Agreement, Atlas entered into subscription agreements (the “Subscription Agreements”) with certain

Pursuant to the Subscription Agreements, each

investor agreed to subscribe for and purchase, and Atlas agreed to issue and sell to such investors, on the Closing Date (as defined

in the Business Combination Agreement) immediately following the Closing (as defined in the Business Combination Agreement), an

aggregate of 60,000,000 shares of Atlas’ Class A Common Stock for a purchase price of $10.00 per share, for aggregate gross

proceeds of $600 million (the “PIPE Financing”).

The closing of the PIPE Financing is contingent

upon, among other things, the substantially concurrent consummation of the Business Combination.

The Subscription Agreements provide

that Atlas will grant the investors in the PIPE Financing certain customary registration rights.

A copy of the Business Combination Agreement

is on Form 8-K, filed February 2, 2020, as Exhibit 2.1 and is incorporated herein by reference, and the foregoing description of

the Business Combination Agreement is qualified in its entirety by reference thereto.

The Business Combination Agreement contains

representations, warranties and covenants that the respective parties made to each other as of the date of the Business Combination

Agreement or other specific dates.

The assertions embodied in those representations, warranties and covenants were made for purposes

of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties

in connection with negotiating such agreement.

The representations, warranties and covenants in the Business Combination Agreement

are also modified in important part by the underlying disclosure schedules which are not filed publicly and which are subject to

a contractual standard of materiality different from that generally applicable to stockholders and were used for the purpose of

allocating risk among the parties rather than establishing matters as facts.

Atlas does not believe that these schedules contain

information that is material to an investment decision.

Atlas Crest Investment Corp.

In December 2020, Atlas Crest Investment II LLC, an affiliate of Moelis, founded Atlas Crest Investment

II (“AC II”), a blank check company incorporated for the purposes of effecting a business combination.

II completed its initial public offering in February 2021, in which it sold 34,500,000 units, each unit consisting of one AC

II Class A common share and one-fourth of one redeemable warrant for one AC II Class A common share, for an offering price of

$10.00 per unit, generating aggregate proceeds of $345,000,000.

AC II’s units, Class A common shares and warrants

currently trade on NYSE under the symbols “ACII.U,”

“ACII”

and “ACII WS,”

respectively.

Moelis is the Chairman of the Board of Directors of AC II, and certain of our other officers and directors, are officers or directors, respectively of AC II, and each of the foregoing owe fiduciary duties under Delaware law to AC

AC II has not yet consummated its business combination.

Atlas Crest Investment Corp.

2021, Atlas Crest Investment III LLC, an affiliate of Moelis, founded Atlas Crest Investment Corp.

III (“AC III”), a blank

check company incorporated for the purposes of effecting a business combination.

AC III is conducting its initial public offering concurrently

with our public offering.

AC IV is offering 60,000,000 units, each unit consisting of one AC III Class common share and one-fourth of

one redeemable warrant for one AC IV Class A common share, for an offering price of $10.00 per unit, generating aggregate proceeds of

$400,000,000.

We expect AC III’s units, Class A common shares and warrants will trade on NYSE under the symbols “ACCC.U,”

“ACCC”

and “ACCC.WS,”

respectively.

Moelis is the Chairman of the Board of Directors of AC III, and certain

of our other officers and directors, are or may become officers or directors, respectively of AC III, and each of the foregoing owe fiduciary

duties under Delaware law to AC III.

Atlas Crest Investment Corp.

In February 2021, Atlas Crest Investment IV LLC, an affiliate of

Moelis, founded Atlas Crest Investment Corp.

IV (“AC IV”), a blank check company incorporated for the purposes of effecting

a business combination.

AC IV is conducting its initial public offering concurrently with our public offering.

AC IV is offering 40,000,000

units, each unit consisting of one AC IV Class common share and one-fourth of one redeemable warrant for one AC IV Class A common share,

for an offering price of $10.00 per unit, generating aggregate proceeds of $400,000,000.

We expect AC IV’s units, Class A common

shares and warrants will trade on NYSE under the symbols “ACIV.U,”

“ACIV”

and “ACIV.WS,”

respectively.

Moelis is the Chairman of the Board of Directors of AC IV, and certain of our other officers and directors, are or may become officers

or directors, respectively of AC IV, and each of the foregoing owe fiduciary duties under Delaware law to AC IV.

Atlas Crest Investment Corp.

In February 2021, Atlas Crest Investment V LLC, an affiliate of Moelis, founded Atlas Crest Investment Corp.

V (“AC V”

and together with AC II, AC III, AC IV and AC V, the “AC SPACs”), a blank check company incorporated for the purposes of effecting

a business combination.

AC V is conducting its initial public offering concurrently with our public offering.

AC V is offering 20,000,000

units, each unit consisting of one AC V Class common share and one- fourth of one redeemable warrant for one AC V Class A common share,

for an offering price of $10.00 per unit, generating aggregate proceeds of $200,000,000.

We expect AC V’s units, Class A common shares and warrants will trade on NYSE under

the symbols “ACCV.U,”

“ACCV”

and “ACCV.WS,”

respectively.

Moelis is the Chairman of the Board

of Directors of AC V, and certain of our other officers and directors, are or may become officers or directors, respectively of AC

V, and each of the foregoing owe fiduciary duties under Delaware law to AC V.

Stockholders May Not Have the Ability

to Approve an Initial Business Combination

We may conduct redemptions without a stockholder

vote pursuant to the tender offer rules of the SEC subject to the provisions of our amended and restated certificate of incorporation.

However, we will seek stockholder approval if it is required by law or applicable stock exchange rule, or we may decide to seek

stockholder approval for business or other legal reasons.

Amended and Restated Certificate of

Incorporation

Our amended and restated certificate of

incorporation contains certain requirements and restrictions that will apply to us until the completion of our initial business

These provisions cannot be amended without the approval of the holders of 65% of our common stock.

Our initial stockholders,

who collectively beneficially own 20% of our common stock upon the inception of this company (assuming they do not purchase any

units in the Initial Public Offering), may participate in any vote to amend our amended and restated certificate of incorporation

and will have the discretion to vote in any manner they choose.

Specifically, our amended and restated certificate of incorporation

provides, among other things, that:

• If we are unable to complete our initial business combination within 24 months from the inception

of this company, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible

but no more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate

amount then on deposit in the trust account, including interest earned on the funds held in the trust account (which interest shall

be net of taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding

public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right

to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption,

subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case

to our obligations under Delaware law to provide for claims of creditors and in all cases subject to the requirements of other

applicable law;

• Prior to our initial business combination, we may not issue additional securities that would entitle

the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares (a) on our initial

business combination or (b) to approve an amendment to our amended and restated certificate of incorporation to (x) extend the

time we have to consummate a business combination beyond 24 months from the inception of this company or (y) amend the foregoing

• Although we do not intend to enter into a business combination with a target business that is affiliated

with our sponsor, our directors or our executive officers, we are not prohibited from doing so.

In the event we enter into such

a transaction, we, or a committee of independent directors, may obtain an opinion from an independent investment banking firm which

is a member of FINRA or a valuation or appraisal firm that such a business combination is fair to our company from a financial

point of view;

• If a stockholder vote on our initial business combination is not required by law and we do not

decide to hold a stockholder vote for business or other legal reasons, we will offer to redeem our public shares pursuant to Rule

13e-4 and Regulation 14E of the Exchange Act, and will file tender offer documents with the SEC prior to completing our initial

business combination which contain substantially the same financial and other information about our initial business combination

and the redemption rights as is required under Regulation 14A of the Exchange Act.

Whether or not we maintain our registration

under the Exchange Act or our listing on the NYSE, we will provide our public stockholders with the opportunity to redeem their

public shares by one of the two methods listed above;

• So long as we obtain and maintain a listing for our securities on the NYSE, the NYSE rules require

that we must not consummate an initial business combination with one or more operating businesses or assets with a fair market

value of at least 80% of the assets held in the trust account (excluding taxes payable on the interest earned on the trust account)

at the time of the agreement to enter into the initial business combination;

• If our stockholders approve an amendment to our amended and restated certificate of incorporation

to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business

combination within 24 months from the inception of this company, or with respect to any other material provisions relating to stockholders’

rights or pre-initial business combination activity, we will provide our public stockholders with the opportunity to redeem all

or a portion of their Class A common stock upon such approval at a per-share price, payable in cash, equal to the aggregate amount

then on deposit in the trust account, including interest earned on the funds held in the trust account (which interest shall be

net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations described herein;

• We will not effectuate our initial business combination with another blank check company or a similar

company with nominal operations.

In addition, our amended and restated certificate

of incorporation provides that under no circumstances will we redeem our public shares in an amount that would cause our net tangible

assets to be less than $5,000,001.

If the Business Combination Agreement is

terminated, we may encounter intense competition from other entities having a business objective similar to ours, including other

blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic acquisitions.

Many of these entities are well established and have extensive experience identifying and effecting business combinations directly

or through affiliates.

Moreover, many of these competitors possess greater financial, technical, human and other resources than

Our ability to acquire larger target businesses will be limited by our available financial resources.

This inherent limitation

gives others an advantage in pursuing the acquisition of a target business.

Furthermore, our obligation to pay cash in connection

with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business

combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain

target businesses.

Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business

We currently have 3 executive officers.

These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as much of

their time as they deem necessary to our affairs until we have completed our initial business combination.

The amount of time they

will devote in any time period will vary based on whether a target business has been selected for our initial business combination

and the stage of the business combination process we are in.

We do not intend to have any full time employees prior to the completion

of our initial business combination.

Our website address is www.atlascrestcorp.com.

Information contained on our website is not part of this Annual Report on Form 10-K.

Our Annual Reports on Form 10-K, quarterly

reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to these reports, filed or furnished

pursuant to Section 13(a) or 15(d) of the Exchange Act, are available on our website, free of charge, as soon as reasonably practicable

after such reports are filed with, or furnished to, the SEC.

Alternatively, you may access these reports at the SEC’s website

at www.sec.gov.

Periodic Reporting and Financial Information

We have registered our Units, Class A common

stock and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly

and current reports with the SEC.

In accordance with the requirements of the Exchange Act, this Annual Report contains financial

statements audited and reported on by our independent registered public accountants.

We will provide stockholders with

audited financial statements of the prospective target business as part of the proxy solicitation or tender offer materials

(as applicable) sent to stockholders.

These financial statements may be required to be prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”), or reconciled to, GAAP, or International Financial Reporting

Standards (“IFRS”), depending on the circumstances, and the historical financial statements may be required to be

audited in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”).

expect to receive the required audited financial statements of Archer as set forth in the Business Combination Agreement in

connection with the Business Combination.

If the Business Combination does not occur, these financial statement requirements

may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such

statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial

business combination within the prescribed time frame.

We cannot assure you that any particular target business identified by

us as a potential acquisition candidate will have financial statements prepared in accordance with the requirements outlined

above, or that the potential target business will be able to prepare its financial statements in accordance with the

requirements outlined above.

To the extent that any applicable requirements cannot be met, we may not be able to acquire the

proposed target business.

While this may limit the pool of potential acquisition candidates, we do not believe that this

limitation will be material.

Our mission is to advance the benefits of sustainable air mobility.

Our goal is to move people throughout the world’s cities in a quick, safe, sustainable, and cost-effective manner.

To accomplish this goal, we are designing and developing an electric vertical takeoff and landing (“eVTOL”) aircraft for use in future urban air mobility (“UAM”) networks.

Our eVTOL aircraft will be fully electric and will emit zero emissions during operations.

The goal of our eVTOL aircraft design is to maximize safety while minimizing operating costs and noise.

We look to accomplish that goal through the use of a distributed electric propulsion system with inherent redundancy and far fewer parts than a typical internal combustion propulsion system found in similarly sized aircraft or rotorcraft today.

The reduced number of parts not only translates into fewer critical parts on the aircraft from a safety perspective but will also significantly reduce the maintenance requirements versus internal combustion propulsion systems found in similarly sized aircraft and rotorcraft today.

We continue to work to optimize our eVTOL aircraft design for both manufacturing and certification by using advancements in key enabling technologies such as high-energy batteries, high-performance electric motors, an advanced fly-by-wire flight control system, and a lightweight and efficient aircraft structure.

The development of an eVTOL aircraft that meets our business requirements demands significant design and development efforts on all facets of the aircraft.

We believe that by bringing together a mix of talent with both eVTOL and traditional commercial aerospace backgrounds we are building a team that will allow us to move through the design, development, and certification of our eVTOL aircraft with the Federal Aviation Administration (“FAA”) in an efficient manner, thus allowing us to achieve our end goal of bringing to market our eVTOL aircraft as soon as possible.

Our Planned Lines of Business

Upon receipt of all necessary FAA certifications and any other government approvals necessary for us to manufacture and operate our aircraft, we intend to operate two complementary lines of business.

Our core focus is direct-to-consumer (“Archer UAM”) with our secondary focus being business-to-business (“Archer Direct”).

• Archer UAM :

We plan to operate our own UAM ecosystem initially in select major U.S.

cities, such as Los Angeles and Miami.

Our UAM ecosystem will operate using our eVTOL aircraft, which is currently in development.

We project that the cost to manufacture and operate our eVTOL aircraft will be such that it will be able to enter the UAM ride-sharing market at a price point that is competitive with ground-based ride sharing services today.

We will continue to evaluate our go-to-market strategy based on, among other things, estimated demand, readiness of the required infrastructure, and the scale of our UAM aircraft fleet.

• Archer Direct :

We also plan to selectively sell a certain amount of our eVTOL aircraft to third parties.

We have entered into a purchase agreement with United Airlines Inc.

(“United”) for the conditional purchase of up to $1 billion worth of aircraft, with an option for another $500 million worth of aircraft (the “Purchase Agreement”).

We will look to determine the right mix of selling our eVTOL aircraft versus using them as part of our UAM ecosystem based on, among other factors, our capital needs, our volume of manufacturing, our ability to ramp Archer UAM operations, and the purchase demand from our Archer Direct customers.

To date, we have not generated any revenue from either of these planned categories, as we continue to design, develop, and seek the governmental approvals necessary to operate our eVTOL aircraft and Archer UAM.

We will use the net proceeds from the Business Combination (as defined below) 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.

Market Opportunity

In 2018, 55% of the world’s population lived in urban areas according to the United Nations, a proportion that they projected to increase to 68% by 2050.

This migration has led to unprecedented traffic congestion, with a noticeable struggle to scale ground infrastructure.

UAM offers a potential solution by expanding travel into the air.

To date, the electrification of aircraft has lagged the adoption of electric automobiles in large part because of the greater technical challenges.

However, over the last few years there have been significant advancements in the key enabling technologies for eVTOL aircraft, such as high-energy batteries and high-performance electric motors.

We anticipate that the initial market opportunity will be focused in high-density metropolitan areas where traffic congestion is particularly acute and operating conditions are suitable for early eVTOL aircraft operations.

While we believe the market for eVTOL aircraft and UAM services will be large, it remains undeveloped and there is no guarantee of future demand.

We believe the primary drivers for adoption of UAM network services will be the time savings and value proposition offered by UAM relative to more traditional ground-based transportation options.

We expect that the following additional factors will also impact the pace of adoption of UAM:

regulatory requirements for eVTOL aircraft and UAM network operations, public acceptance of eVTOL aircraft (including perception regarding the safety of eVTOL aircraft) and access to the infrastructure necessary to enable UAM network services.

In addition, macroeconomic factors could impact demand for UAM services, particularly if more permanent work-from-home behaviors persist as a result of the COVID-19 pandemic.

If the market for UAM does not develop as expected, this would impact our ability to generate revenue or grow our business.

For additional information, see “Risk Factors” in Item 1A of this Annual Report.

We believe our main sources of competition fall into three categories:

• ground-based vehicle transportation, including personal vehicles and ride-sharing services;

• other eVTOL manufacturers and UAM service providers;

• existing incumbent aircraft and helicopter charter services.

We believe the primary competitive factors between us and other eVTOL manufacturers and UAM service providers will be the following:

• eVTOL aircraft performance, including quality, reliability and safety;

• integrated business model;

• manufacturing efficiency;

• UAM network service capabilities, including overall customer experience.

While we believe we will be able to compete favorably across these factors, we expect this industry to be dynamic and increasingly competitive and it is possible that our competitors could get to market before us, either generally or in specific markets.

For additional information about competition, see “Risk Factors” in Item 1A of this Annual Report.

Government Regulation and Compliance

In the near-term, we will continue to focus our efforts on obtaining certification of our aircraft in the U.S.

and engaging with key decision makers in the cities in the U.S.

in which we plan to initially operate our UAM network.

Our aircraft will be required to comply with regulations governing aircraft design, production and airworthiness.

In the U.S., this primarily includes regulations put forth by the FAA and Department of Transportation (“DOT”).

Outside the U.S., similar requirements are generally administered by the national civil aviation and transportation authorities of each country.

The following describes the key certifications necessary for us to design, manufacture, sell and operate our eVTOL aircraft in the U.S.:

• Designing our aircraft :

Type certification is the FAA’s approval process for new aircraft designs and covers the design of the aircraft and all component parts.

Our aircraft will be required to meet the criteria set forth by the FAA as defined in Part 23 of the Federal Aviation Regulations (FARs) (14 CFR Part 23) as a normal category piloted aircraft with certain special conditions introduced to address requirements specific to eVTOL aircraft.

In September 2021, we agreed to a certification basis with the FAA covering our planned production aircraft through a G-1 Issue Paper.

We are now focused on finalizing our G-2 Issue Paper with the FAA, which will set forth the means of compliance to meet the requirements set forth in the G-1 Issue Paper.

We have been working on the means of compliance for the G-2 Issue Paper with the FAA since early 2021.

• Producing our aircraft :

Production certification is the FAA’s approval for us to be able to manufacture our aircraft under an FAA-approved type design.

To obtain production certification from the FAA, we must demonstrate that our organization and our personnel, facilities, and quality system can produce our aircraft such that they conform to its approved design.

We are working to develop the systems and processes we will need to obtain FAA production certification with the goal of obtaining such certification shortly following receipt of our type certificate.

• Selling our aircraft :

Airworthiness certification from the FAA signifies that an aircraft meets its approved type design and is in a condition for safe operation in the National Airspace System.

As is the industry standard, each of the aircraft manufactured by us will need to be issued an airworthiness certificate.

We expect that the airworthiness certificates issued to our aircraft will be a Standard Airworthiness certificate in the Normal Category, as defined by the FAA.

• Operating our UAM service :

The DOT and the FAA have regulatory authority over air transportation operations in the U.S.

To operate our UAM service, we believe we will be required to hold an FAA Air Carrier Certificate and operate under Part 135 of the FARs and register as an air taxi operator at DOT.

In addition, takeoff and landing locations (e.g., airports and heliports) typically require state and local approval for zoning and land use and their ongoing use are subject to regulations by local authorities.

Lastly, we will need to ensure we have sufficient commercial pilots available for our planned operations.

We expect that as we build out our UAM service there will be additional federal, state and local laws, regulations and other requirements that will cover our operations.

Therefore, we have already begun, and will continue to grow, our engagement and collaboration with the cities in which we intend to operate our UAM service in an effort to ensure that it operates in a safe and sustainable manner.

We believe we are in material compliance with laws and regulations currently applicable to our business.

We continue to monitor existing and pending laws and regulations and while the impact of regulatory changes cannot be predicted with certainty, we do not expect compliance to have a material adverse effect on our business.

See Part I, Item 1A, “Risk Factors” in this Annual Report for a more comprehensive description of risks related to government regulation affecting our business.

For additional information, see “Risk Factors” in Item 1A of this Annual Report.

We are currently headquartered in Palo Alto, California with additional offices and research and development facilities in Mountain View, California and flight test facilities at Salinas Municipal Airport in Salinas, California.

To support our planned headcount growth and additional needs for lab space and a low rate initial production facility, we entered into two new multi-year leases in San Jose, California in January 2022.

We anticipate the office space portion of these new facilities will be ready to utilize in May 2022, while the lab space and low rate initial production portion of these facilities will be ready to utilize in late 2022 or early 2023.

Additionally, we intend to enter into a long-term arrangement covering our planned manufacturing facility for our production aircraft.

Our Employees and Human Capital

Our strategy has been and continues to be to hire top talent across various disciplines to build the best eVTOL aircraft and UAM network possible.

As a result, we believe we have assembled a world-class team with extensive experience in aerodynamics, electric propulsion, batteries, and aircraft manufacturing, as well as key personnel necessary to help us ensure that we progress efficiently through the certification of our aircraft and towards the launch of our UAM network.

The fabric of this team is that we are curious, talented, and passionate people.

We embrace collaboration and creativity and encourage the iteration of ideas to address the complex challenges our industry faces.

We believe our team and culture differentiates us versus our competitors and will be a key driver of our long-term success.

Because we recognize that our people are critical for our continued success, we work hard to create an environment where employees can have fulfilling careers, and be happy, healthy, and productive.

Furthermore, we are committed to making diversity, equity, and inclusion a part of everything we do and to growing a workforce that is representative of the cities we plan to serve.

As of December 31, 2021, we had 209 employees all of which are full-time.

We have not experienced any work stoppages and generally consider our relationship with our employees to be good.

None of our employees are subject to a collective bargaining agreement or represented by a labor union.

Intellectual Property

We rely on various intellectual property laws, confidentiality procedures and contractual terms to protect our proprietary technology and our brand.

We have registered and applied for the registration of U.S.

and international trademarks, service marks and domain names.

We have also filed patent applications in the U.S.

and foreign countries covering certain of our technology.

For additional information, see “Risk Factors” in Item 1A of this Annual Report.

Business Combination

We are a former blank check company incorporated on August 26, 2020 under the name Atlas Crest Investment Corp.

(“Atlas”) 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.

On September 16, 2021 (the “Closing Date”), Archer Aviation Inc., a Delaware corporation (prior to the closing of the Business Combination (as defined below), “Legacy Archer”), Atlas, and Artemis Acquisition Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Atlas (“Merger Sub”), consummated the closing of the transactions contemplated by the Business Combination Agreement, dated February 10, 2021, as amended and restated on July 29, 2021, by and among Atlas, Legacy Archer and Merger Sub (the “Business Combination Agreement”), following approval at a special meeting of the stockholders of Atlas held on September 14, 2021 (the “Special Meeting”).

Unless otherwise specified or unless the context otherwise requires, references herein to Legacy Archer refer to Archer prior to the Business Combination (as defined below) and references herein to “New Archer” refer to Archer following the Business Combination.

Pursuant to the terms of the Business Combination Agreement, a business combination of Legacy Archer and Atlas was effected by the merger of Merger Sub with and into Legacy Archer, with Legacy Archer surviving the merger (the “Surviving Entity”) as a wholly-owned subsidiary of Atlas (the “Merger,” and, collectively with the other transactions described in the Business Combination Agreement, the “Business Combination”).

Following the consummation of the Merger on the Closing Date, the Surviving Entity changed its name from Archer Aviation Inc.

to Archer Aviation Operating Corp., and Atlas changed its name from Atlas Crest Investment Corp.

to Archer Aviation Inc.

and it became the successor registrant with the Securities and Exchange Commission (the “SEC”).

Prior to the closing of the Business Combination, the Class A common stock and public warrants of Atlas were listed on the New York Stock Exchange (“NYSE”) under the symbols “ACIC” and “ACIC WS,” respectively.

New Archer Class A common stock and public warrants are currently listed on the NYSE under the symbols “ACHR” and “ACHR WS,” respectively.

In connection with the closing of the Merger, certain investors purchased an aggregate of up to $600.0 million of Class A common stock of the combined company (“PIPE Financing”).

The Business Combination generated gross cash proceeds of $857.6 million, including $600.0 million proceeds from the PIPE Financing.

Total direct and incremental transaction costs aggregated $81.8 million, of which $10.9 million were expensed as part of the Business Combination, $55.8 million were recorded to additional paid-in-capital (“APIC”) as equity issuance costs, and the remaining $15.1 million was settled through the issuance of shares of New Archer Class A common stock.

The Merger was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“U.S.

Under this method of accounting, Atlas was treated as the “acquired” company for financial reporting purposes.

Accordingly, the financial statements of Archer represent the continuation of the financial statements of Legacy Archer, with the Merger reflected as the equivalent of Archer issuing common stock for the net assets of Atlas, accompanied by a recapitalization.

The net assets of Atlas were recognized as of the Closing at historical cost, with no goodwill or other intangible assets recorded.

Operations prior to the Merger are those of Legacy Archer and Legacy Archer’s operations are the only ongoing operations of Archer.

Available Information

Our website is located at www.archer.com and our investor relations website is located at investors.archer.com.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and our Proxy Statements, and any amendments to these reports, are and will be available through our investor relations website, free of charge, after we file them with the SEC.

Webcasts of our earnings calls are made available via our investor relations website.

Our investor relations website also provides notifications of news or announcements regarding our financial performance and certain other news and information that may be material or of interest to our investors, including SEC filings, investor events, press and earnings releases.

We also share news and business updates about Archer that may be material or of interest to our investors on the news portion of our website (www.archer.com/news), which includes our blog posts.

Further, corporate governance information, including our certificate of incorporation, bylaws, corporate governance guidelines, board committee charters, and code of conduct, is also available on our investor relations website under the heading “Governance Documents.”

The contents of our websites are not incorporated by reference into this Annual Report or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business