What changed in this filing

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Item 1. Business

2024-02-29 compared with 2023-03-15 · 73 added, 74 removed, 124 unchanged (54% of the section changed)

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This means that it has 12 propellers attached to 6 booms on a fixed wing with all 12 propellers providing vertical lift during take-off and landing and the forward 6 propellers tilting forward to cruise position to provide propulsion during forward flight with the wing providing aerodynamic lift like a conventional airplane.

Midnight is designed to carry 4 passengers plus a pilot up to 100 miles at speeds up to 150 miles per hour, but is optimized for back-to-back short distance trips of around 20-miles, with a charging time of approximately 10 minutes between trips.

We are working to certify Midnight with the FAA in late 2024 so that we can then enter into commercial service in 2025.

Midnight is designed to carry 4 passengers plus a pilot optimized for back-to-back short distance trips of around 20-miles, with minimal charging time between trips.

We are working to certify Midnight with the Federal Aviation Administration (“FAA”) so that we can then enter into commercial service as soon as possible.

In August 2023, we received the Special Airworthiness Certificate from the FAA for our first Midnight aircraft and began its flight testing program in October 2023.

Midnight is the evolution of our demonstrator eVTOL aircraft, Maker, which through its flight test program has helped validate our proprietary 12-tilt-6 aircraft configuration and certain key enabling technologies.

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Archer is committed to sourcing renewable energy wherever possible to power its aircraft.

Archer’s design and engineering teams have worked to integrate materials into this aircraft that have their own unique sustainability stories.

For example, Midnight’s seats are constructed out of “flax” fiber, a natural plant which requires very little irrigation and is highly absorbent of CO2.

In addition, Archer’s design uses fabric made from recycled contents like plastic bottles.

Archer’s design and engineering teams are working to integrate materials into this aircraft that have their own unique sustainability stories.

We continue to work to optimize our eVTOL aircraft design for both manufacturing and certification.

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 eVTOL, traditional commercial aerospace, as well as electric propulsion backgrounds, we have built a team that enables 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 efficiently as possible.

We believe that by bringing together a mix of talent with eVTOL, traditional commercial aerospace, as well as electric propulsion backgrounds, we have built a team that enables us to move through the design, development, and certification of our eVTOL aircraft with the FAA in an efficient manner, thus allowing us to achieve our end goal of bringing to market our eVTOL aircraft as efficiently 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 to operate a direct-to-consumer aerial ride share service (“Archer UAM”) with our secondary focus being the sale of our aircraft to other operators (“Archer Direct”).

a direct-to-consumer aerial ride share service (“Archer UAM”) and the sale of our aircraft to other operators (“Archer Direct”).

• Archer UAM.

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

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

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

Consumers will be able to book rides directly through our service through an app-based platform.

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

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based on, among other things, estimated demand, readiness of the required infrastructure, and our ability to scale our aircraft fleet.

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

• Archer Direct.

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

We also plan to selectively sell our aircraft to third parties.

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

(“United”) for the conditional purchase of up to $1.0 billion worth of aircraft, with an option for another $500.0 million worth of aircraft (as amended, the “United Purchase Agreement”).

As we get closer to commercialization, 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 for our eVTOL aircraft to enter into service.

In August 2023, we entered into two new contracts with the U.S.

Air Force worth up to $142.0 million, which includes the purchase of aircraft, as well as the sharing of additional flight test data and certification related test reports, pilot training, and the development of maintenance and repair operations.

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

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.

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Throughout 2023, we continued to expand our portfolio of suppliers that will provide us with components for Midnight.

We have also matured the design, development and manufacturing capabilities for our proprietary electric propulsion system.

With regards to our manufacturing operations, we are currently in the final stages of building out a production facility in San Jose, California, which we will utilize to produce the initial Midnight aircraft we will use as part of our FAA certification program, as well as a higher volume production facility in Covington, Georgia.

In November 2022, we announced our plans to locate our high volume production facility in Covington, Georgia at a site adjacent to the Covington Municipal Airport.

At this site, we have begun construction on our initial build out a 350,000 square-foot facility on a 96-acre site.

This initial facility is expected to be capable of producing up to 650 aircraft per year.

We are targeting to complete construction in the second half of 2023 or early 2024 with initial production expected to begin in the second half of 2024.

The facility will be capable of being expanded by an additional 550,000 square feet, which is estimated to support production of up to 2,300 aircraft per year.

In selecting the location for this high volume manufacturing facility, we completed a comprehensive survey of potential sites across the United States.

Key considerations included the availability of talent in the local labor market, utility availability, ability to conduct seamless flight test operations, construction costs, and logistics.

In connection with the project, we agreed on an incentive package with the State of Georgia, Newton County and City of Covington, which includes land conveyance, tax incentives and Georgia REBA grant.

We also anticipate that financing for this project will be provided by Synovus, the largest bank headquartered in the State of Georgia.

As discussed in more detail below, we plan to work alongside Stellantis N.V.

We have also matured the design, development and manufacturing capabilities for our aircraft and proprietary electric propulsion system.

With regards to our manufacturing operations, we completed the build out of a production facility in San Jose, California, which we will utilize to produce the initial Midnight aircraft used as part of our FAA certification program, as well as a high-volume production facility in Covington, Georgia.

We have begun our Covington facility build-out and target substantial completion of the first phase in 2024, which is a 350,000 square-foot facility that is designed to be capable of supporting production of up to 650 aircraft per year.

We are designing that facility so that it can be expanded to approximately 900,000 square feet to support our long-term production targets of over 2,000 aircraft per year.

In connection with our Covington facility, we received an incentive package with the State of Georgia, Newton County and City of Covington, which included land conveyance, tax incentives and Georgia REBA grant.

In October 2023, we entered into a credit agreement (the “Credit Agreement”) with Synovus Bank, the largest bank headquartered in the State of Georgia, for up to $65.0 million, which represents a substantial majority of the estimated total cost of construction for the first phase.

For additional information regarding the Synovus credit agreement, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” As discussed in more detail below, we plan to work alongside Stellantis N.V.

(“Stellantis”) on the build out and stand up this facility and our operations there.

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Archer was founded with a focus on commercializing the eVTOL aircraft industry.

We identified early on that partnering with established players in adjacent industries was key to that commercialization strategy.

In 2020, we established a key strategic relationship with Stellantis, one of the world’s leading automakers including of brands Jeep®, Ram, Maserati, Dodge, and Chrysler.

The goal was to allow us to leverage Stellantis’ deep manufacturing,

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supply chain, and design expertise in connection with our efforts to design, develop, and commercialize our eVTOL aircraft.

In 2021, Stellantis invested in Archer as part of the Business Combination (as defined below).

Then, in January 2023, we announced a significant expansion of our partnership.

As a result, Stellantis will work with us to stand up our manufacturing facility in Covington, Georgia.

As we prepare for commercialization, we continue to deepen our partnerships with our long-standing partners and develop new relationships with industry leaders in urban centers around the world.

In 2020, we established a key strategic relationship with Stellantis, one of the world’s leading automakers including brands Jeep®, Ram, Maserati, Dodge, and Chrysler.

The goal was to allow us to leverage Stellantis’ deep manufacturing, supply chain,

and design expertise in connection with our efforts to design, develop, and commercialize our eVTOL aircraft.

In January 2023, we announced a significant expansion of our partnership by entering into a manufacturing collaboration arrangement and strategic funding agreement.

As a result, Stellantis is working with us to stand up our manufacturing facility in Covington.

This unique approach will continue to leverage each company’s respective strengths and competencies in an effort to bring our Midnight aircraft to market at scale to support our commercialization plans.

The goal over the long term is for Stellantis to mass produce our eVTOL aircraft as our contract manufacturer.

As a further sign of its commitment, Stellantis has agreed to provide up to $150 million in equity capital for potential draw by Archer at its discretion in 2023 and 2024, subject to achievement of certain business milestones which Archer expects to occur in 2023.

The two companies are taking these important steps together as we share the goal of redefining urban transportation.

In 2021, Stellantis invested in Archer as part of the Business Combination (as defined below) and has continued to increase its investment in Archer through its strategic funding agreement and open market purchases.

In 2023, we drew down on $95.0 million of funding available under our strategic funding agreement and currently have $55.0 million available to draw down at our discretion, subject to achievement of a business milestone which we expect to occur in the first half of 2024.

In 2021, we established a key strategic relationship with United as part of the airline's broader effort to invest in emerging technologies that decarbonize air travel.

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United has indicated its plans to acquire a fleet of our eVTOL aircraft that would be deployed in a manner to give their customers a quick, economical and low-carbon way to get to and from United's hub airports and commute in dense urban environments.

United also invested in Archer as part of the Business Combination.

United also invested in Archer as part of the Business Combination, as well as our private placement completed in August 2023.

Since 2021, we have also been working closely with United on commercialization efforts.

In April of 2022, we formed a joint eVTOL Advisory Committee to support operations of our eVTOL aircraft, including maintenance and operational standards.

In August of 2022, United paid us $10 million in pre-delivery payments for 100 aircraft covered under our purchase agreement.

Then, in November of 2022, we jointly announced the first specific UAM route in the US:

Downtown Manhattan Heliport to Newark Liberty International Airport.

In April 2022, we formed a joint eVTOL Advisory Committee to support operations of our eVTOL aircraft, including maintenance and operational standards and in August 2022, United paid us $10.0 million in pre-delivery payments for 100 aircraft covered under our purchase agreement.

We’ve jointly announced two domestic UAM routes:

Downtown Manhattan Heliport to Newark Liberty International Airport and O’Hare International Airport to Vertiport Chicago.

Our shared purpose is connecting people, and we continue to work closely to ensure our eVTOL aircraft will amplify their broader efforts to do that in a sustainable way.

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.

In 2023, 56% of the world’s population lived in urban areas according to the World Bank, and their projection is that the urban population will double its current size by 2050 where nearly 7 of 10 people will live in cities.

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

A 2021 study by researchers from MIT concluded that ground-based ride share has intensified urban transport challenges since their debut in the U.S.

2 According to a 2021 report by Morgan Stanley, the urban air mobility sector’s total addressable market is projected to reach $1 trillion globally by 2040 and then $9 trillion by 2050.

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

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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 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 ongoing 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 Part I, Item 1A of this Annual Report.

1 “Urban Development Overview,” by the World Bank, dated April 3, 2023, available at:

https://www.worldbank.org/en/topic/urbandevelopment/overview.

2 “Impacts of transportation network companies on urban mobility,” by Nature Sustainability, dated February 1, 2021, available at:

https://www.nature.com/articles/s41893-020-00678-z.

3 “eVTOL/Urban Air Mobility TAM Update,” by Morgan Stanley, dated May 6, 2021, available at:

https://advisor.morganstanley.com/the-busot-group/documents/field/b/bu/busot-group/Electric%20Vehicles.pdf.

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

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• existing incumbent aircraft and helicopter charter services.

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

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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.

We continue to focus our efforts on obtaining certification from the FAA of our aircraft in the U.S.

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

cities in which we plan to initially operate our aircraft.

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”).

Additionally, in 2023 we began exploring international opportunities for commercializing our aircraft with a focus on the United Arab Emirates and India.

We will continue to mature those opportunities as we get closer to production.

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

In the U.S., the regulations are 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.

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• 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 through its “special class” process under Part 21.17(b).

Type Certification in the United States is the FAA’s approval process for new aircraft designs and covers the design of the aircraft and all required components and parts.

Our initial aircraft type certification will be required to meet the criteria set forth by the FAA through a “special class” definition under 14 CFR Part 21.17(b).

The first step is agreeing to the certification basis.

In November of 2022, we finalized our agreement to that certification basis with the FAA through a G-1 Issue Paper.

As part of the FAA’s Type Certification process for a special class aircraft, the Airworthiness Criteria (i.e., the certification requirements for the particular aircraft) must then be published in the Federal Register for public comment.

In November of 2022, we finalized our agreement to that certification basis with the FAA through an approved Stage 4 G-1 Issue Paper.

As part of the FAA’s Type Certification process for a special class aircraft, the Airworthiness Criteria (i.e., the certification requirements or rules for the particular aircraft) must then be published in the Federal Register for public comment.

In December of 2022, the proposed Airworthiness Criteria for our Midnight aircraft were published in the Federal Register by the FAA.

Following the comment period, the FAA will finalize those Airworthiness Criteria.

The next step is to agree on the Means of Compliance with the FAA.

As a reminder, the Means of Compliance is the detailed list of design, analysis and testing standards that will be used to demonstrate that the aircraft is safe and complies with the Airworthiness Criteria.

We submitted a comprehensive proposal for Midnight’s Means of Compliance to the FAA back in December of 2021.

Since our last update, many more of our Means of Compliance have been agreed to with the FAA resulting in a majority having now been agreed to.

Based on our technical discussions with the subject matter experts at the FAA, we don’t see any significant design risks with the remaining Means of Compliance areas that have not yet been agreed to.

Over the coming weeks and months, we will continue to work with the FAA to close out our remaining Means of Compliance.

As we’ve discussed previously, we are working in parallel with the FAA to review and agree on our subject specific certification plans (“SSCPs”).

SSCPs provide precise detail on each of the specific tests and analyses that will be completed during the implementation phase of the project, in which we actually demonstrate to the FAA that Midnight meets all relevant FAA requirements necessary to receive Type Certification.

We have now submitted a number of our SSCPs to the FAA and are targeting to submit the remaining SSCPs on a rolling basis between now and the end of April.

This Federal Register notice was then open for a period of time for review and public comment.

Following the comment period, the FAA has been working to review and dispose of those comments will approve the finalized set of Airworthiness Criteria by means of a Final Rule publication.

In parallel, we have been working with the FAA to agree on the Means of Compliance with the FAA, which is the detailed list of design, analysis and testing standards that will be used to demonstrate that the aircraft is safe and complies with the Airworthiness Criteria.

We initially submitted a comprehensive proposal for Midnight’s Means of Compliance to the FAA back in December of 2021.

We are continuing to work with the FAA to close out our remaining Means of Compliance and we do not see any significant design risks with the remaining Means of Compliance areas that have not yet been agreed to.

Lastly, we are also working with the FAA to review and agree on our subject specific certification plans (“SSCPs”).

SSCPs provide precise detail on each of the specific tests

and analyses that will be completed during the implementation phase of our Type Certification program, in which we actually demonstrate to the FAA that Midnight meets all relevant FAA requirements necessary to receive Type Certification.

• 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.

Production certification is the FAA’s approval for us to be able to manufacture our Midnight aircraft as approved by the FAA per its Type Certified 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.

As discussed above, 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 Certification.

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As discussed above, we are working to develop the systems and processes we will need to obtain our FAA production certification with the goal of obtaining such certification shortly following receipt of Midnight’s Type Certification approval.

• 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.

Airworthiness certification from the FAA signifies that an aircraft meets its approved design and is in a condition for safe operation in the U.S.

National Airspace System.

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

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• Operating our UAM service :

The DOT and the FAA have regulatory authority over air transportation operations in the United States.

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.

The FAA and the DOT have regulatory authority over air transportation operations in the United States.

To operate our UAM service, we will be required to hold a Part 135 Air Carrier and Operator Certification and register as an air taxi operator with the DOT.

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

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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 manner.

We received our Part 145 Repair Station Certificate in February 2024, which perform specialized aircraft maintenance and repair services and lays the foundation for us to operate repair stations that perform maintenance, repair, and overhaul services on our Midnight aircraft once it is certified for commercial operations.

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

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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.

We are currently headquartered in San Jose, California with additional offices, research and development facilities, flight test facilities and manufacturing facilities in Palo Alto, Mountain View, San Jose, and Salinas, California, as well as in Covington, Georgia.

See the “Manufacturing Operations & Supply Chain Build-Out” section above for more information on the planned build out of our manufacturing facilities.

We are currently headquartered in San Jose, California with additional offices, research and development facilities, flight test facilities and manufacturing facilities in Santa Clara, Mountain View, and Salinas, California, as well as our facility under construction in Covington, Georgia.

Our Employees and Human Capital

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In general, our issued patents expire between 2040 and 2044.

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

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Raw Materials, Parts and Suppliers

We are dependent on the ability of a number of U.S.

suppliers and service providers to meet performance specifications, quality standards and delivery schedules at our anticipated costs as we work towards developing and manufacturing our aircraft and commercialization.

The most important raw materials required in our production aircraft Midnight include aluminum and composites.

Business Combination

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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 investor relations section of our website (investors.archer.com) and the news portion of our website (www.archer.com/news), which includes our blog posts, as well as on social media, including Facebook (https://www.facebook.com/FlyArcher), Twitter (@ArcherAviation and @adamgoldstein13), LinkedIn (https://www.linkedin.com/company/flyarcher and https://www.linkedin.com/in/adam-goldstein-7b662121/) and YouTube (https://www.youtube.com/c/ArcherAviation).

We also share news and business updates about Archer that may be material or of interest to our investors on the investor relations section of our website (investors.archer.com) and the news portion of our website (www.archer.com/news), which includes our blog posts, as well as on social media, including Facebook (https://www.facebook.com/FlyArcher), X (formerly known as Twitter) (@ArcherAviation and @adamgoldstein13), LinkedIn (https://www.linkedin.com/company/flyarcher and https://www.linkedin.com/in/adam-goldstein-7b662121/) and YouTube (https://www.youtube.com/c/ArcherAviation).

Further, corporate governance information, including our amended and restated certificate of inc orporation, amended and restated bylaws, corpor ate governance guidelines, board committee charters, and code of business conduct and ethics, and other policies, are also available on our investor relations website under the heading “Governance Documents.”

The contents of the websites referred to above 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 website are intended to be inactive textual references only.

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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