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Item 8. Financial Statements and Supplementary Data

2026-03-02 compared with 2025-02-28 · 574 added, 421 removed, 680 unchanged (59% of the section changed)

39 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Research and Development Costs

As described in Note 3 to the consolidated financial statements, research and development (“R&D”) costs are expensed as incurred and are primarily comprised of personnel-related costs including salaries, bonuses, benefits, and stock-based compensation for employees focused on R&D activities, costs associated with building prototype aircraft, other related costs, depreciation, and an allocation of general overhead.

R&D efforts focus on the design and development of the Company’s eVTOL aircraft, including certain of the systems that are used in it.

The Company’s research and development expense for the year ended December 31, 2024 was $357.7 million.

The principal consideration for our determination that performing procedures relating to research and development costs is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s research and development costs.

Acquisition of Hawthorne Airport – Valuation of Option to Acquire the FBO Business

As described in Note 4 to the consolidated financial statements, on December 8, 2025, the Company completed the acquisition of certain lease agreements, operating rights, and development rights related to Hawthorne Airport in Hawthorne, California for total purchase consideration of $ 127.1 million.

As part of the acquisition, the Company acquired an option to purchase seventy-five percent (75.0%) of the fixed base operator (“FBO”) business operating at Hawthorne Airport for a fixed exercise price of $25.0 million, exercisable at any time prior to December 31, 2026.

The option represents a contractual right and was recorded at its estimated fair value of $44.8 million as of the acquisition date.

The fair value of the FBO purchase option was estimated using an income-based valuation approach, which considers the expected future cash flows based on projected revenues, operating margins, and the discount rate.

The principal considerations for our determination that performing procedures relating to the valuation of the option to acquire the FBO business in the acquisition of Hawthorne Airport is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the option to acquire the FBO business;

(ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to projected revenues, operating margin, and the discount rate;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to research and development costs.

These procedures also included, among others, testing, on a sample basis, the completeness and accuracy of research and development costs by obtaining and inspecting source documents, such as underlying contracts, purchase orders, invoices received, and information received from certain third-party service providers, where applicable.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the option to acquire the FBO business.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for developing the fair value estimate of the option to acquire the FBO business;

(iii) evaluating the appropriateness of the income-based valuation approach used by management;

(iv) testing the completeness and accuracy of the underlying data used in the income-based valuation approach;

and (v) evaluating the reasonableness of the significant assumptions used by management related to projected revenues, operating margins, and the discount rate.

Evaluating management’s assumptions related to projected revenues and operating margins involved considering (i) the current and past performance of the FBO business;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the income-based valuation approach and (ii) the reasonableness of the discount rate assumption.

/s/ PricewaterhouseCoopers LLP

Irvine, California

February 27, 2025

San Jose, California

March 2, 2026

We have served as the Company’s auditor since 2020.

6 unchanged sentences

Restricted cash 7.3 6.8

Short-term investments 943.2 —

Prepaid expenses 47.3 12.5

11 unchanged sentences

Accrued expenses and other current liabilities 68.1 52.8

Current portion of debt 0.8 —

Total current liabilities 104.4 71.1

Notes payable

Debt, net of current portion 79.5 64.0

Lease liabilities, net of current portion 36.3 11.3

4 unchanged sentences

Stockholders’ equity

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized;

no shares issued and outstanding as of December 31, 2024 and 2023

Class A common stock, $ 0.0001 par value;

1 unchanged sentence

744,046,194 and 503,777,464 shares issued and outstanding as of December 31, 2025 and 2024, respectively

Class B common stock, $ 0.0001 par value;

300,000,000 shares authorized;

0 and 38,165,615 shares issued and outstanding as of December 31, 2024 and 2023, respectively

Additional paid-in capital 4,507.9 2,438.4

10 unchanged sentences

2025 2024 2023

$ 0.3 $ — $ —

Operating expenses

Cost of revenue

Research and development 493.9 357.7 276.4

17 unchanged sentences

Net loss $ ( 618.2 ) $ ( 536.8 ) $ ( 457.9 )

Other comprehensive income (loss):

Other comprehensive loss:

Unrealized gain (loss) on available-for-sale securities, net of tax

( 1.3 ) — 0.8

Foreign currency translation loss ( 0.3 ) — —

Total other comprehensive income (loss) ( 0.3 ) 0.8 ( 0.8 )

Comprehensive loss $ ( 537.1 ) $ ( 457.1 ) $ ( 318.1 )

Foreign currency translation gain (loss)

0.2 ( 0.3 ) —

Total other comprehensive loss

( 1.1 ) ( 0.3 ) 0.8

Comprehensive loss, net of tax

$ ( 619.3 ) $ ( 537.1 ) $ ( 457.1 )

See accompanying notes to consolidated financial statements.

4 unchanged sentences

Comprehensive

Class A Class B

Shares Amount Shares Amount

1 unchanged sentence

Conversion of Class B common stock to Class A common stock 26,449,869 — ( 26,449,869 ) — — — — —

Issuance of Class A common stock 1,985,559 — — — 11.6 — — 11.6

Issuance of restricted stock units and restricted stock expense 7,405,542 — — — ( 6.6 ) — — ( 6.6 )

1 unchanged sentence

Issuance of warrants and warrant expense — — — — 46.0 — — 46.0

Cancellation of Class B common stock (Note 9) — — ( 5,002,306 ) — — — — —

Exercise of warrants 2,942,778 — — — — — — —

Common stock withheld related to net share settlement of equity awards ( 1,378,367 ) — — — ( 3.5 ) — — ( 3.5 )

Common stock issued under employee stock purchase plan 1,228,632 — — — 2.9 — — 2.9

Common stock issued under stock purchase agreement 18,650,273 — — — 89.6 — — 89.6

Common stock issued under at-the-market program 3,109,097 — — — 19.5 — — 19.5

PIPE financing 26,173,286 — — — 139.0 — — 139.0

Stock-based compensation — — — — 32.2 — — 32.2

Net loss — — — — — ( 457.9 ) — ( 457.9 )

Other comprehensive loss — — — — — — ( 0.8 ) ( 0.8 )

Other comprehensive income — — — — — — 0.8 0.8

Balance as of December 31, 2023 265,617,341 — 38,165,615 — 1,515.9 ( 1,148.8 ) — 367.1

177,900,738 — 63,738,197 — 1,185.0 ( 690.9 ) ( 0.8 ) 493.3

Conversion of Class B common stock to Class A common stock 43,434,962 — ( 43,434,962 ) — — — — —

3 unchanged sentences

Issuance of warrants and warrant expense — — — — 55.2 — — 55.2

Common Stock Additional

Comprehensive

Shares Amount Shares Amount

Exercise of warrants 13,242,767 — — — — — — —

Common stock withheld related to net share settlement of equity awards ( 1,378,367 ) — — — ( 3.5 ) — — ( 3.5 )

Common stock issued under employee stock purchase plan 1,723,996 — — — 4.8 — — 4.8

4 unchanged sentences

Net loss — — — — — ( 536.8 ) — ( 536.8 )

Other comprehensive income — — — — — — 0.8 0.8

Other comprehensive loss — — — — — — ( 0.3 ) ( 0.3 )

Balance as of December 31, 2024 503,777,464 $ 0.1 — $ — $ 2,438.4 $ ( 1,685.6 ) $ ( 0.3 ) $ 752.6

265,617,341 — 38,165,615 — 1,515.9 ( 1,148.8 ) — 367.1

Common Stock Additional

Comprehensive

Class A Class B

Shares Amount Shares Amount

Conversion of Class B common stock to Class A common stock 43,434,962 — ( 43,434,962 ) — — — — —

Issuance of Class A common stock 15,045,913 — — — 126.8 — — 126.8

4 unchanged sentences

Common stock issued under employee stock purchase plan 1,154,358 — — — 7.4 — — 7.4

Common stock issued under stock purchase agreement 17,401,153 — — — 53.5 — — 53.5

Common Stock issued under at-the-market program 3,921,875 — — — 46.4 — — 46.4

PIPE financing 2,982,089 — — — 9.6 — — 9.6

Registered direct offerings 201,750,000 — — — 1,731.2 — — 1,731.2

Stock-based compensation — — — — 121.3 — — 121.3

11 unchanged sentences

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

Depreciation, amortization and other 11.7 6.5 4.4

Depreciation and amortization

20.0 11.7 6.5

Debt discount and issuance cost amortization 0.1 — 0.7

Stock-based compensation 108.8 45.2 102.8

Stock-based compensation expense 223.5 108.8 45.2

Change in fair value of warrant liabilities and other warrant costs ( 59.5 ) 49.5 32.9

6 unchanged sentences

Technology and dispute resolution agreements expense

Interest income on short-term investments — — ( 0.5 )

Accretion and amortization income of short-term investments — ( 2.3 ) ( 4.9 )

Amortization (accretion) of short-term investments purchased at a premium (discount) 0.6 — ( 2.3 )

Changes in operating assets and liabilities:

8 unchanged sentences

Cash flows from investing activities

Purchase of property and equipment ( 78.8 ) ( 82.0 ) ( 44.3 )

Purchase of short-term investments ( 1,048.1 ) — —

Proceeds from maturities of short-term investments 103.0 — 465.0

Purchase of property and equipment ( 82.0 ) ( 44.3 ) ( 6.9 )

Acquisition of intangible assets ( 26.2 ) — —

Business acquisition, net ( 125.9 ) — —

Net cash provided by (used in) investing activities

3 unchanged sentences

Repayment of long-term debt

— ( 10.0 ) ( 10.0 )

Payment of debt issuance costs — ( 0.7 ) ( 0.3 )

1 unchanged sentence

Proceeds from PIPE financing 10.0 590.1 145.0

Payment of offering costs in connection with PIPE financing

( 24.3 ) ( 6.0 ) —

Proceeds from shares issued under at-the-market program 46.3 138.3 20.7

Payment of offering costs in connection with at-the-market program

( 0.3 ) ( 1.2 ) —

Proceeds from exercise of stock options — — 0.1

Proceeds from shares issued under employee stock purchase plan

Proceeds from issuance of common stock 1,801.8 55.0 95.0

Net cash provided by (used in) financing activities

Payment of offering costs in connection with financing activities

( 69.1 ) ( 24.6 ) ( 7.2 )

Net increase (decrease) in cash, cash equivalents, and restricted cash

Net cash provided by financing activities

1,796.4 820.4 250.1

Net increase in cash, cash equivalents, and restricted cash

187.5 369.8 399.2

Cash, cash equivalents, and restricted cash, beginning of period 841.3 471.5 72.3

4 unchanged sentences

Purchases of property and equipment included in accounts payable and accrued expenses $ 12.4 $ 7.8 $ 10.8

Year Ended December 31,

2025 2024 2023

Purchases of property and equipment in common stock $ 7.4 $ — $ —

Purchases of intangible assets in common stock

$ 9.8 $ — $ —

Payment of offering costs in connection with financing activities in common stock $ 1.9 $ — $ —

See accompanying notes to consolidated financial statements.

1 unchanged sentence

Notes to Consolidated Financial Statements

Note 1 - Organization and Nature of Business

Organization and Nature of Business

Note 1 - Description of Business and Basis of Presentation

Description of Business

Archer Aviation Inc.

(the “Company”), a Delaware corporation, with its headquarters located in San Jose, California, is an aerospace company.

The Company is developing technologies and aircraft that will power the future of advanced aviation.

(the “Company”), a Delaware corporation headquartered in Silicon Valley, California, is an aerospace company focused on the development of advanced aviation technologies and aircraft.

The Company’s primary product is an electric vertical take-off and landing (“eVTOL”) aircraft.

The Company’s Planned Lines of Business

The Company intends to operate the following lines of business:

This is planned to consist of the sale of the Company’s commercial aircraft and related technologies and services (“Archer Direct”) and direct-to-consumer aerial ride share services in select metropolitan areas around the world (“Archer UAM”).

This is planned to consist of the sale of aircraft and related technologies for defense applications.

The Company plans to operate two primary lines of business:

(i) a commercial business, which is expected to include the sale of commercial aircraft and related technologies and services, a direct-to-consumer air taxi services in select metropolitan areas worldwide, and aviation hangar leases at Hawthorne Municipal Airport, California (“Hawthorne Airport”);

and (ii) a defense business, which is expected to include the sale of aircraft and related technologies for defense applications.

Business Combination

The Company went public through a de-SPAC transaction in September 2021 as a result of the merger agreement that was entered into in February 2021 (the “Business Combination Agreement”) by Archer Aviation Inc., a Delaware corporation (that existed prior to the closing of the Business Combination (as defined below), “Legacy Archer”), Atlas Crest Investment Corp., a Delaware Corporation (“Atlas”) and Artemis Acquisition Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Atlas (“Merger Sub”).

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 as a wholly-owned subsidiary of Atlas (collectively with the other transactions described in the Business Combination Agreement, the “Business Combination”).

Following the consummation of the Business Combination on September 16, 2021, Legacy Archer changed its name to Archer Aviation Operating Corp., and Atlas changed its name to Archer Aviation Inc.

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 as a wholly-owned subsidiary of Atlas (collectively with the other transactions described in the Business Combination Agreement, the “Business Combination”).

Following the Business Combination on September 16, 2021, Legacy Archer changed its name to Archer Aviation Operating Corp., and Atlas changed its name to Archer Aviation Inc.

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

The Company’s Class A common stock and public warrants are listed on the NYSE under the symbols “ACHR” and “ACHR WS,” respectively.

The financial statements included in this report reflect (i) the historical operating results of Legacy Archer prior to the Business Combination;

(ii) the combined results of Atlas and Legacy Archer following the closing of the Business Combination;

(iii) the assets and liabilities of Legacy Archer at their historical cost;

and (iv) the Company’s equity structure for all periods presented.

Note 2 - Liquidity and Going Concern

Since the Company’s formation, the Company has devoted substantial effort and capital resources to the design and development of its planned aircraft, UAM network and business lines.

Funding of these activities has primarily been through the net proceeds received from the issuance of related and third-party debt (Note 6 - Notes Payable), and the sale of preferred and common stock to related and third parties (Note 8 - Preferred and Common Stock).

Through December 31, 2024, the Company has incurred cumulative losses from operations, negative cash flows from operating activities, and has an accumulated deficit of $ 1,685.6 million.

As of December 31, 2024, the Company had cash and cash equivalents of $ 834.5 million, which management believes will be sufficient to fund the Company’s current operating plan for at least the next 12 months from the date these consolidated financial statements were issued.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S.

GAAP”) on a going concern basis.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

Liquidity and Going Concern

Since inception, the Company has devoted substantial capital resources to the design and development of its planned aircraft, urban air mobility networks and business lines.

These activities have been funded primarily through the net proceeds received from the sale of preferred and common stock to related and third parties (Note 8 - Preferred and Common Stock), and issuance of debt (Note 6 - Debt).

Through December 31, 2025, the Company has incurred cumulative operating losses, generated negative cash flows from operating activities, and accumulated a deficit of $ 2,303.8 million.

As of December 31, 2025, the Company had cash, cash equivalents and short-term investments of $ 1,964.7 million, which management believes will be sufficient to fund the Company’s current operating plan for at least the next 12 months from the date these consolidated financial statements were issued.

There can be no assurance that the Company will be successful in achieving its business plans, that the Company’s current capital will be sufficient to support its ongoing business plans, or that any additional financing will be available in a timely manner or on acceptable terms, if at all.

1 unchanged sentence

Any such events would have a material adverse effect on the Company’s financial position, results of operations, cash flows, and ability to achieve the Company’s intended business plans.

Note 3 - Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S.

GAAP”) and include the accounts of the Company.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period.

On an ongoing basis, management evaluates its estimates, including those related to the:

(i) realization of deferred tax assets and estimates of tax liabilities, (ii) fair value of debt, (iii) fair value of share-based payments, (iv) valuation of leased assets and liabilities, and (v) estimated useful lives of long-lived assets.

GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes.

Actual results could differ from these estimates and assumptions due to risks and uncertainties.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

estimates include, but are not limited to (i) realization of deferred tax assets and estimates of tax liabilities, (ii) fair value and useful life of acquired intangible assets, (iii) fair value of assets acquired and liabilities assumed in business combinations, (iv) fair value of share-based payments, (v) fair value and useful lives of long-lived assets, and (vi) incremental borrowing rate used for right-of-use assets and lease liabilities.

These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Such estimates often require the selection of appropriate valuation methodologies and models and may involve significant judgment in evaluating ranges of assumptions and financial inputs.

Actual results may differ from those estimates under different assumptions, financial inputs, or circumstances.

Actual results could materially differ from those estimates due to risks and uncertainties.

Note 2 - Summary of Significant Accounting Policies

Cash, Cash Equivalents, and Restricted Cash

4 unchanged sentences

Refer to Note 7 - Commitments and Contingencies for additional information.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets that sum to amounts reported on the consolidated statements of cash flows (in millions):

As of December 31,

(in millions)

Cash and cash equivalents $ 1,021.5 $ 834.5

1 unchanged sentence

Total cash, cash equivalents, and restricted cash $ 1,028.8 $ 841.3

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Short-term Investments

The Company had short-term investments in marketable securities with original maturities of less than one year, including United States Treasury securities, corporate debt securities and commercial paper.

The Company classifies its marketable securities as available-for-sale at the time of purchase and reevaluates such classification at each balance sheet date.

These marketable securities are carried at fair value, and unrealized gains and losses are recorded in other comprehensive loss in the consolidated statements of comprehensive loss, which is reflected as a component of stockholders’ equity.

These marketable securities are assessed as to whether those with unrealized loss positions are other than temporarily impaired.

The Company considers impairments to be other than temporary if they are related to deterioration in credit risk or if it is likely the securities will be sold before the recovery of their cost basis.

If the impairment is deemed other than temporary, the security is written down to its fair value and a loss is recognized in other income (expense), net.

Realized gains and losses from the sale of marketable securities and from declines in value deemed to be other than temporary are determined based on the specific identification method and recognized in other income (expense), net in the consolidated statements of operations.

As of December 31, 2024 and 2023, the Company had no short-term investments.

The Company classifies investments in marketable securities as available-for-sale investments and records these marketable securities at fair value.

The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation at each balance sheet date.

All highly liquid investments with original maturities of 90 days or less from the date of purchase are classified as cash equivalents, while all others are presented within current assets since these investments represent funds available for current operations and the Company has the ability and intent, if necessary, to liquidate any of these investments within one year.

Short-term investments are recorded at fair value, with the unrealized gains or losses unrelated to credit loss factors included in accumulated other comprehensive loss, net of tax.

Realized gains and losses and declines in value determined to be other than temporary based on the specific identification method are reported in other income (expense), net in the consolidated statements of operations.

The Company periodically reviews whether the securities may be other-than-temporarily impaired, including whether or not (i) the Company has the intent to sell the security or (ii) it is more likely than not that the Company will be required to sell the security before its anticipated recovery.

If one of these factors is met, the Company records an impairment loss associated with the impaired investment.

The impairment loss will be recorded as a write-down of investments in the consolidated balance sheets and a realized loss within other income (expense), net in the consolidated statements of operations.

There were no credit-related impairments recognized on the Company’s short-term investments during the periods presented.

For purposes of identifying and measuring impairment, the policy election was made to exclude the applicable accrued interest from both the fair value and amortized cost basis.

Applicable interest receivable of $ 6.7 million, net of the allowance for credit losses, if any, is recorded in other current assets on the consolidated balance sheet as of December 31, 2025.

Fair Value Measurements

The Company applies the provisions of Accounting Standards Codification (“ASC”) 820, Fair Value Measurement, which defines a single authoritative definition of fair value, sets out a framework for measuring fair value and expands on required disclosures about fair value measurements.

The provisions of ASC 820 relate to financial assets and liabilities as well as other assets and liabilities carried at fair value on a recurring and nonrecurring basis.

The provisions of ASC 820 relate to financial assets and liabilities as well as other

Archer Aviation Inc.

Notes to Consolidated Financial Statements

assets and liabilities carried at fair value on a recurring and nonrecurring basis.

The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

7 unchanged sentences

As of December 31, 2025

Description Level 1 Level 2 Level 3 Total

Cash equivalents:

As of December 31, 2024

Description Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Cash and cash equivalents:

Money market funds $ 883.3 $ — $ — $ 729.9 $ — $ —

Warrant liability – public warrants

Short-term investments:

703.8 — — — — —

Warrant liability – private placement warrants

Corporate debt securities

— 239.4 — — — —

Archer Aviation Inc.

Notes to Consolidated Financial Statements

As of December 31, 2023

Description Level 1 Level 2 Level 3 Total

Cash equivalents:

Money market funds $ 339.6 $ — $ — $ 339.6

Warrant liability – public warrants

Other current assets

Option to acquire FBO

— — 44.8 — — —

Warrant liability – private placement warrants

Total assets measured at fair value

$ 1,587.1 $ 239.4 $ 44.8 $ 729.9 $ — $ —

Accrued technology and dispute resolutions agreements liability

Warrant liabilities

Public warrants

$ 19.9 $ — $ — $ 56.0 $ — $ —

Cash Equivalents

The Company’s cash equivalents consist of short-term, highly liquid financial instruments that are readily convertible to cash and have maturities of three months or less from the date of purchase.

Private placement warrants

— — 10.0 — — 33.4

Total liabilities measured at fair value

$ 19.9 $ — $ 10.0 $ 56.0 $ — $ 33.4

Cash and Cash Equivalents

The Company classifies its money market funds as Level 1 because they are valued based on quoted market prices in active markets.

The following tables present a summary of the Company’s cash equivalents as of December 31, 2024 and 2023 (in millions):

Short-term Investments

The Company’s short-term investments consist of high quality investment grade marketable securities and are classified as available-for-sale.

The Company classifies its investments in U.S.

Treasury securities as Level 1 because they are valued using quoted market prices in active markets.

The Company classifies its investments in corporate debt securities as Level 2 because they are valued using inputs other than quoted prices which are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

The following tables present a summary of the Company’s cash equivalents and short-term investments as of December 31, 2025 (in millions):

As of December 31, 2025

Description Amortized Cost Unrealized Gains Unrealized Losses Fair Value

Cash equivalents:

Cash and cash equivalents:

Money market funds $ 883.3 $ — $ — $ 883.3

Short-term investment

704.6 — ( 0.8 ) 703.8

Corporate debt securities

239.9 — ( 0.5 ) 239.4

Total $ 1,827.8 $ — $ ( 1.3 ) $ 1,826.5

The following tables present a summary of the Company’s cash equivalents and short-term investments as of December 31, 2024 (in millions):

As of December 31, 2024

3 unchanged sentences

Total $ 729.9 $ — $ — $ 729.9

The unrealized losses related to the Company’s short-term investments were primarily due to changes in interest rates and not due to increased credit risk or other valuation concerns.

The Company had no other-than-temporary impairments for the year ended December 31, 2025.

Public Warrants

4 unchanged sentences

The estimated fair value of the private placement warrant liability is determined using Level 3 inputs.

Inherent in a Monte Carlo simulation model are assumptions related to expected share-price volatility, expected life, risk-free interest rate, and dividend yield.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Inherent in a Monte Carlo simulation model are assumptions related to expected volatility, expected exercise term, risk-free interest rate, and dividend yield.

The key inputs into the Monte Carlo simulation model for the private placement warrants are as follows:

7 unchanged sentences

Dividend yield 0.0 % 0.0 %

Accrued Technology and Dispute Resolution Agreements Liability

Under the Technology and Dispute Resolution Agreements, the Company recognized an accrued technology and dispute resolution agreements liability related to the Wisk Warrant (as defined below).

See Note 7 - Commitments and Contingencies for additional information.

The Company utilizes a Monte Carlo simulation model for the accrued technology and dispute resolution agreements liability at each reporting period, with changes in fair value recognized in the consolidated statements of operations.

The estimated fair value of the accrued technology and dispute resolution agreements liability is determined using Level 3 inputs.

Inherent in a Monte Carlo simulation model are assumptions related to expected share-price volatility, expected life, risk-free interest rate, and dividend yield.

The key inputs into the Monte Carlo simulation model for the accrued technology and dispute resolution agreements liability are as follows:

Input December 31,

Stock price $ 6.14

Strike price $ 0.01

Term (in years) 0.1

Risk-free rate 5.4 %

Volatility 60.0 %

Dividend yield 0.0 %

The following table presents the change in fair value of the Company’s Level 3 private placement warrants and accrued technology and dispute resolution agreements liability during the years ended December 31, 2024 and 2023 (in millions):

Archer Aviation Inc.

Notes to Consolidated Financial Statements

The following table presents the change in fair value of the Company’s Level 3 private placement warrants liability during the years ended December 31, 2025 and 2024 (in millions):

Balance as of December 31, 2023

accrued technology and dispute resolution agreements liability

Change in fair value 18.9

Balance as of December 31, 2024

settlement of accrued technology and dispute resolution agreements liability ( 54.3 )

Change in fair value ( 23.4 )

Balance as of December 31, 2025

(1) As of December 31, 2023, $ 14.5 million and $ 44.0 million were recorded within warrant liabilities and accrued expenses and other current liabilities, respectively, in the consolidated balance sheets.

In connection with the change in fair value of the Company’s private placement warrants, the Company recognized a loss of $ 18.9 million and $ 12.0 million during the years ended December 31, 2024 and 2023, respectively, and a gain of $ 7.6 million during the year ended December 31, 2022, within other income (expense), net in the consolidated statements of operations.

Refer to Note 11 - Liability Classified Warrants for additional information about the private placement warrants.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

In connection with the change in fair value of the accrued technology and dispute resolution agreements liability, the Company recognized a loss of $ 10.3 million and a gain of $ 4.0 million within general and administrative expenses in the consolidated statements of operations during the years ended December 31, 2024 and 2023, respectively.

Refer to Note 7 - Commitments and Contingencies for additional information about the accrued technology and dispute resolution agreements liability.

In connection with the change in fair value of the Company’s private placement warrants liability, the Company recognized a gain of $ 23.4 million and a loss of $ 18.9 million and a loss $ 12.0 million during the years ended December 31, 2025, 2024 and 2023, respectively, within other income (expense), net in the consolidated statements of operations.

Refer to Note 11 - Warrants for additional information about the private placement warrants.

Option to Acquire FBO

In connection with the acquisition of Hawthorne Airport on December 8, 2025, the Company recorded an option to acquire a 75 % ownership interest in the fixed-base operator (“FBO”) business operating at the airport for an exercise price of $ 25.0 million.

The Company utilizes a Black-Scholes model for the valuation of the option at each reporting period, with changes in fair value recognized in the other income (expense), net in the consolidated statements of operations.

The estimated fair value of the option is determined using Level 3 inputs.

Inherent in a Black-Scholes model are assumptions related to projected future cash flows of the underlying FBO business, expected volatility, expected life, risk-free interest rate, and dividend yield.

As the option was initially recorded near year-end, changes in fair value subsequent to initial recognition were not material as of December 31, 2025.

The option is exercisable through December 31, 2026 and is therefore classified within other current assets in the consolidated balance sheet.

The key inputs into the Black-Scholes model for the option to acquire FBO business are as follows:

Input December 8,

Strike price (in millions)

Term (in years) 0.2

Risk-free rate 3.8 %

Volatility 50.0 %

Dividend yield 0.0 %

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

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The fair value of debt as of December 31, 2025 approximates its carrying value (Level 2).

Refer to Note 6 - Notes Payable for additional information.

Refer to Note 6 - Debt for additional information.

Assets and Liabilities Recorded at Fair Value on a Non-Recurring Basis

Certain assets and liabilities are subject to measurement at fair value on a non-recurring basis if there are indicators of impairment or if they are deemed to be impaired as a result of an impairment review.

Intangible Assets, Net

Intangible assets consist solely of domain names and are recorded at cost, net of accumulated amortization, and if applicable, impairment charges.

Amortization of domain names is provided over a 15 -year estimated useful life on a straight-line basis or based on the pattern in which economic benefits are consumed, if reliably determinable.

The Company reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company has analyzed a variety of factors to determine if any circumstance could trigger an impairment loss, and, at this time and based on the information presently known, no event has occurred and indicated that it is more likely than not that an impairment loss has been incurred.

Therefore, the Company did no t record any impairment charges for its intangible assets for the years ended December 31, 2024, 2023 and 2022.

As of December 31, 2024 and 2023, the net carrying amounts for domain names were $ 0.3 million and $ 0.4 million, respectively, and were recorded in the Company’s consolidated balance sheets.

Property and Equipment, Net

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Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets as follows:

Furniture, fixtures, and equipment 5

Computer hardware 3

Computer software 3

Website design 2

Building and leasehold improvements Shorter of building useful life / lease term or the asset standard life

Building 30 - 40

Computer hardware and software

Leasehold improvements

Shorter of lease term or the asset standard life

Impairment of Long-Lived Assets

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As of December 31, 2025 and 2024, the net carrying amounts of the Company’s capitalized cloud computing implementation costs were $ 5.3 million and $ 5.9 million, respectively.

Intangible Assets, Net

Intangible assets consist solely of domain names, acquired patents and other purchased intangible assets, and are recorded at cost, net of accumulated amortization, and if applicable, impairment charges.

The intangible assets are amortized over their useful lives ranging from 10 to 30 years on a straight-line basis or based on the pattern in which economic benefits are consumed, if reliably determinable.

The Company reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Therefore, the Company did no t record any impairment charges for its intangible assets for the years ended December 31, 2025, 2024 and 2023.

As of December 31, 2025 and 2024, the net carrying amounts for intangible assets were $ 80.2 million and $ 0.3 million, respectively, and were recorded in the Company’s consolidated balance sheets.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

The Company’s purchased intangible assets of December 31, 2025 and 2024 were as follows (in millions):

December 31, 2025 December 31, 2024

Accumulated Amortization

Accumulated Amortization Net

Intangible assets:

$ 0.5 $ — $ ( 0.2 ) $ 0.3 $ 0.5 $ ( 0.2 ) $ 0.3

— 36.0 ( 0.8 ) 35.2 — — —

Operating rights

44.8 ( 0.1 ) 44.7

Total purchased intangible assets

0.5 80.8 ( 1.1 ) 80.2 0.5 ( 0.2 ) 0.3

The weighted-average useful life of the acquired patents and operating rights for the year ended December 31, 2025 was approximately 10 years and 30 years, respectively.

The weighted-average useful life of intangible assets in total for the year ended December 31, 2025 was approximately 21 years.

Amortization expense related to intangible assets are as follows:

Year Ended December 31,

Domain name (1)

Operating rights

Total amortization expense

(1) The amortization related to domain name is less than $ 0.1 million for the year ended December 31, 2025.

The expected future annual amortization expense of intangible assets as of December 31, 2025 is presented below (in millions):

Thereafter 54.2

Business Combinations

The Company allocates the acquisition purchase price to the tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values.

The excess of the purchase price over the fair value of these assets acquired and liabilities assumed is recorded as goodwill.

Allocation of the purchase price requires significant estimates in determining the fair value of acquired assets and assumed liabilities, especially with respect to intangible assets.

Critical estimates include, but are not limited to, future expected cash flows, discount rates and expenses associated with an asset.

These estimates are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

During the measurement period, which may not be later than one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Goodwill results from the purchase consideration paid in excess of the fair value of the net assets recorded in connection with business acquisitions.

Goodwill is not amortized but is assessed for potential impairment at least annually during the fourth quarter of each fiscal year or between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired.

Goodwill is tested at the reporting unit level, which the Company has determined to be the same as the entity as a whole (entity level).

The Company first performs qualitative assessment to determine whether it is more likely than not that the fair value of the Company’s reporting unit is less than its carrying value.

If, after assessing the qualitative factors, the Company determines that it is more likely than not that the fair value of its reporting unit is less than its carrying value, an impairment analysis will be performed.

Contract Liabilities

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As of December 31, 2025 and 2024, the Company’s contract liabilities included a $ 10.0 million pre-delivery payment received from United Airlines, Inc.

(“United”) under the terms of the Amended United Purchase Agreement (defined below) (see Note 9 - Stock-Based Compensation), and installment payments received under a contract order with the United States Air Force for the design, development, and ground test of the Company’s production aircraft, Midnight, of $ 1.8 million and $ 0.8 million, respectively.

No revenues were recognized during the years ended December 31, 2024, 2023 and 2022.

(“United”) under the terms of the Amended United Purchase Agreement (defined below) (see Note 11 - Warrants), and installment payments received under a contract order with the United States Air Force (the “USAF”) for the design, development, and ground test of the Company’s production aircraft, Midnight, of $ 0.0 million and $ 1.8 million, respectively.

No revenue related to these contract liabilities were recognized during the years ended December 31, 2025, 2024 and 2023.

Lease Revenue

The Company accounts for lease arrangements in accordance with ASC 842, Leases.

Lease revenue is recognized for arrangements in which the Company is the lessor.

The Company’s lease arrangements primarily consist of the lease of hangar space at Hawthorne Airport and are classified as operating leases with lease income recognized as earned over each monthly lease period beginning on the lease commencement date as most the leases are month-to-month.

Lease revenue excludes amounts collected from lessees for taxes and other amounts assessed by governmental authorities.

The Company does not have lease arrangements classified as sales-type or direct financing leases.

Operating Expenses

Cost of Revenue

Cost of revenue related to sublease revenue is included within operating expenses and primarily consists of master ground lease payments, utilities, property taxes, and insurance associated with the leased hangar space.

Master ground lease payments are accounted for in accordance with ASC 842, Leases, while utilities, property taxes, and insurance are recognized as incurred.

These costs are directly attributable to the operation and maintenance of the underlying leased asset used to generate lease revenue.

Research and Development

Research and development (“R&D”) costs are expensed as incurred and are primarily comprised of personnel-related costs including salaries, bonuses, benefits, and stock-based compensation for employees focused on R&D activities, costs associated with building prototype aircraft, other related costs, depreciation, and an allocation of general overhead.

Research and development (“R&D”) costs are expensed as incurred and are primarily comprised of personnel-related costs including salaries, bonuses, benefits, and stock-based compensation expense for employees focused on R&D activities, costs associated with building prototype aircraft, other related costs, depreciation, and an allocation of general overhead.

R&D efforts focus on the design and development of the Company’s eVTOL aircraft, including certain of the systems that are used in it.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

General and Administrative

General and administrative expenses are primarily comprised of personnel-related costs including salaries, bonuses, benefits, and stock-based compensation for employees associated with the Company’s administrative services such as finance, legal, human resources, and information technology, other related costs, depreciation, and an allocation of general overhead.

General and administrative expenses include charges relating to the Technology and Dispute Resolution Agreements (defined below) for the years ended December 31, 2024 and 2023, and stock-based compensation expense related to restricted stock units (“RSUs”) granted to the Company’s founders pursuant to the terms and conditions of the Business Combination Agreement immediately prior to closing (each, a “Founder Grant” and collectively, the “Founder Grants”) for the years ended December 31, 2024, 2023 and 2022.

General and administrative expenses are primarily comprised of personnel-related costs including salaries, bonuses, benefits, and stock-based compensation expense for employees associated with the Company’s administrative services such as finance, legal, human resources, and information technology, other related costs, depreciation, and an allocation of general overhead.

General and administrative expenses include charges relating to the Technology and Dispute Resolution Agreements (as defined in Note 7 - Commitments and Contingencies) expense for the years ended December 31, 2025 and 2024, and stock-based compensation expense related to restricted stock units (“RSUs”) granted to the Company’s founders pursuant to the terms and conditions of the Business Combination Agreement immediately prior to closing (each, a “Founder Grant” and collectively, the “Founder Grants”) for the years ended December 31, 2025, 2024 and 2023.

Refer to Note 7 - Commitments and Contingencies and Note 9 - Stock-Based Compensation for additional information.

Other Warrant Expense

Other warrant expense consists entirely of non-cash expense related to the warrants issued in conjunction with the execution of the purchase agreement (“United Purchase Agreement”), collaboration agreement (“United Collaboration Agreement”), and warrant agreement (“United Warrant Agreement”) with United.

Refer to Note 9 - Stock-Based Compensation for additional information.

Other warrant expense consists entirely of non-cash expense related to the warrants issued in conjunction with the execution of the United Purchase Agreement, United Collaboration Agreement, and United Warrant Agreement with United.

Refer to Note 11 - Warrants for additional information.

Stock-Based Compensation

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ASC 718 requires the measurement and recognition of compensation expense for all stock-based compensation awards made to employees, directors, and non-employees to be based on the grant date fair values of the awards.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Fair Value of Common Stock

13 unchanged sentences

A valuation allowance is provided for deferred tax assets if it is more-likely-than-not that the Company will not realize those tax assets through future operations.

Significant judgment is applied when assessing the need for valuation allowances and includes the evaluation of historical income (loss) adjusted for the effects of non-recurring items.

Significant judgment is applied when assessing the need for valuation allowances and includes the evaluation of historical loss adjusted for the effects of non-recurring items.

Areas of estimation include consideration of future taxable income.

The Company has placed a full valuation allowance against its federal and state deferred tax assets since the recovery of the assets is uncertain.

Should a change in circumstances lead to a change in judgment about the utilization of deferred tax assets in future years, the adjustment related to valuation allowances would be reported as an increase to income.

Should a change in circumstances lead to a change in judgment

Archer Aviation Inc.

Notes to Consolidated Financial Statements

about the utilization of deferred tax assets in future years, the adjustment related to valuation allowances would be reported as an increase to income.

The Company utilizes the guidance in ASC 740-10, Income Taxes , to account for uncertain tax positions.

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The Company also excludes unvested shares subject to repurchase in the number of shares outstanding in the consolidated balance sheets and statements of stockholders’ equity.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Because the Company reported net losses for all periods presented, diluted loss per share is the same as basic loss per share.

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The CODM uses net loss for purposes of making operating decisions, allocating resources, and evaluating financial performance.

Given the Company’s pre-revenue operating stage, it currently has no concentration exposure to products, services, or customers.

Segment asset information is not used by the CODM to allocate resources.

Given the Company’s pre-commercialization operating stage, it currently has no concentration exposure to products, services, or customers.

Segment asset information is not regularly provided to the CODM to allocate resources.

Archer Aviation Inc.

3 unchanged sentences

2025 2024 2023

$ 0.3 $ — $ —

Operating expenses

Cost of revenue

Depreciation and amortization expense

1 unchanged sentence

Research and development warrant expense

Stock-based compensation

Stock-based compensation expense

223.5 108.8 45.2

Technology and dispute resolution agreements

Technology and dispute resolution agreements expense

General and administrative warrant expense

16 unchanged sentences

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which expands reportable segment disclosure requirements through enhanced disclosures about significant segment expenses, interim segment profit or loss and assets, and how the CODM uses reported segment profit or loss information in assessing segment performance and allocating resources.

The Company adopted ASU 2023-07 effective January 1, 2024.

Refer to Note 3 - Summary of Significant Accounting Policies for additional information.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires disclosure of incremental income tax information related to the income tax rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements.

The update is effective for annual periods beginning after December 15, 2024 on a prospective basis, and retrospective application is permitted.

The Company is currently evaluating the impact of ASU 2023-09 on its disclosures within its consolidated financial statements.

The Company adopted this standard effective for its Annual Report on Form 10-K for the year ended December 31, 2025 using a prospective approach.

Refer to Note 10 - Income Taxes for further information.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

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The Company is currently evaluating the impact of ASU 2024-03 on its disclosures within its consolidated financial statements.

In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), which eliminated the use of software project development stages to align with modern software development methods.

Under the ASU, software capitalization for internal-use software will begin when (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform its intended function.

The update is

Archer Aviation Inc.

Notes to Consolidated Financial Statements

effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.

The update can be applied either (1) retrospectively, (2) prospectively, or (3) on a modified prospective basis.

The Company is currently evaluating the impact of ASU 2025-06 on its disclosures within its consolidated financial statements.

In December 2025, the FASB issued ASU No.

2025-10, Accounting for Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities (ASU 2025-10) to establish authoritative guidance on the recognition, measurement, and presentation of government grants received by business entities.

The guidance will be effective for the annual periods beginning with the year ending December 31, 2028 and for interim periods beginning January 1, 2029.

Early adoption is permitted.

Upon adoption, the guidance can be applied using a modified prospective, modified retrospective, or under a retrospective approach.

The Company is currently evaluating the impact of ASU 2025-10 on its disclosures within its consolidated financial statements.

In December 2025, the FASB issued ASU No.

2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements (ASU 2025-11),which clarifies the applicability of interim reporting guidance and reorganizes and clarifies interim disclosure requirements under ASC Topic 270, including the addition of a disclosure principle requiring disclosure of material events occurring since the most recent annual reporting period.

The guidance will be effective for interim periods beginning January 1, 2028.

Early adoption is permitted.

Upon adoption, the guidance can be applied prospectively or retrospectively.

The Company is currently evaluating the impact of ASU 2025-11 on its disclosures consolidated financial statements.

Note 3 - Property and Equipment, Net

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Building $ 118.4 $ 64.4

Furniture, fixtures, and equipment 24.7 7.9

Computer hardware 5.8 5.3

Computer software 1.9 1.5

Website design 0.8 0.8

Building and leasehold improvements 34.2 33.0

Computer hardware and software

Leasehold improvements

Construction in progress 60.0 13.3

5 unchanged sentences

2025 2024 2023

Cost of revenue

$ 0.1 $ — $ —

Research and development 16.5 9.8 5.3

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Total depreciation expense $ 17.0 $ 10.3 $ 5.8

Note 4 - Business Combination

Acquisition of Hawthorne Airport

On December 8, 2025, the Company completed the acquisition of certain lease agreements, operating rights, and development rights related to Hawthorne Airport in Hawthorne, California.

The acquisition included (i) the master ground lease agreement between Hawthorne Airport, LLC (“HAL”) and the City of Hawthorne covering the lease of the Hawthorne Airport;

(ii) certain subleases agreements held by HAL;

(iii) certain sublease held by 395 Park Place, LLC (“395 Park Place”) with third parties;

(iv) an option to purchase seventy-five per cent ( 75.0 %) of the fixed base operator (“FBO") business operating at Hawthorne Airport from Advanced Air, LLC (“Advanced Air”) prior to December 31, 2026 for $ 25.0 million;

and (v) rights to have 395 Park Place develop additional hangar space at the Hawthorne Airport for $ 20.4 million with payments to be made in

Archer Aviation Inc.

Notes to Consolidated Financial Statements

installments based on construction progress.

HAL, 395 Park Place and Advanced Air, are referred to herein collectively as the “Sellers”.

The acquisition was completed to establish an operational hub to support the Company’s planned Los Angeles air taxi operations and aviation technology development.

The acquisition has been accounted for as a business combination under the acquisition method in accordance with ASC 805, as the acquired assets and activities included inputs and substantive processes capable of producing outputs.

Accordingly, the purchase consideration was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values as of the acquisition date.

The total purchase consideration for the acquisition was $ 127.1 million, which consisted of the following (in millions):

Fair value of contingent consideration liability on the acquisition date

Total purchase consideration

Further, the Company may be obligated to issue up to approximately $ 21.4 million in earn-out shares of the Company’s Class A common stock to certain Seller employees and 395 Park Place upon the achievement of certain performance milestones to be achieved within three years of the acquisition date.

Of this amount, approximately $ 3.75 million was accounted for as contingent consideration and included in the above table as part of total purchase consideration at its estimated fair value of $ 1.2 million as of the acquisition date.

The remaining earn-out amounts are accounted for as post-combination expense, as the related earn-out targets are expected to be achieved through the ongoing efforts of the Sellers and such amounts will be recognized ratably over the various estimated completion date presuming earn-out targets will be met.

The assumed loan bears interest at a rate of 6.3 % per annum and has an initial maturity date of April 2030, with an option to extend the maturity for an additional five years to April 2035 at an adjusted interest rate equal to the five-year U.S.

Treasury rate plus 2.7 %.

The loan agreement contains provisions, representations, warranties, covenants, and indemnities that are customary for secured commercial real estate debt.

See Note 6 - Debt for more details.

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in millions):

Current assets

Option to purchase FBO (other current assets)

Property and equipment, net

ROU asset 15.6

Intangible assets 44.8

Current liabilities

Lease liabilities ( 11.1 )

Other long-term liabilities

Loan assumed (debt) ( 16.1 )

The acquired goodwill is tax deductible and represents the excess of the purchase consideration over the aggregate fair value of identifiable net assets acquired at the acquisition date.

The goodwill is primarily attributable to the assembled workforce.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

The following table shows the fair value of the separately identifiable intangible assets at the time of acquisition and the period over which each intangible asset will be amortized:

Preliminary Fair Value Useful Life

(in millions) (Years)

Operating rights $ 44.8 30

Total identified intangible assets

Identifiable intangible assets recognized consist of operating rights, which represent contractual rights to operate and conduct aviation-related activities, including lease of hangar space at the Hawthorne Airport facilities.

The operating rights are amortized on a straight-line basis over their estimated useful lives, which generally correspond to the remaining contractual terms of the master ground lease.

As part of the acquisition, as described above, the Company acquired an option to purchase seventy-five percent ( 75.0 %) of the FBO business operating at Hawthorne Airport for a fixed exercise price of $ 25.0 million, exercisable at any time prior to December 31, 2026.

The option represents a contractual right and was recorded at its estimated fair value of $ 44.8 million as of the acquisition date.

The fair value of the FBO business was estimated using an income-based valuation approach, which considers the expected future cash flows based on projected revenues, operating margins and discount rate.

See Note 2 - Summary of Significant Accounting Policies for fair value determination of the option to purchase FBO business.

Unaudited pro forma financial information has not been presented, as the impact to the Company’s consolidated financial statements was not material.

The Company incurred immaterial acquisition-related costs, which were expensed as incurred and recorded within general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2025.

Note 5 - Accrued Expenses and Other Current Liabilities

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As of December 31,

Accrued professional fees $ 6.5 $ 9.5

Accrued engineering services, parts and materials

$ 13.1 $ 12.5

Accrued employee costs 29.7 22.2

Accrued parts and materials 12.5 12.1

Taxes payable 1.1 1.4

Accrued capital expenditures 5.6 9.2

Accrued cloud computing implementation costs 0.1 0.3

Accrued technology and dispute resolution agreements liability (Note 7 )

Current portion of contract liabilities

Accrued professional services

Contract liabilities - current

Other current liabilities 9.2 10.7

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Notes to Consolidated Financial Statements

Note 6 - Notes Payable

Notes payable consisted of the following (in millions):

Note 6 - Debt

The following table provides information regarding the Company’s debt (in millions):

As of December 31,

Synovus Bank loan

Loan unamortized discount and loan issuance costs

$ 65.0 $ 65.0

Total debt, net of discount and loan issuance costs 64.0 7.2

Less current portion, net of discount and loan issuance costs — —

Total long-term notes payable, net of discount and loan issuance costs $ 64.0 $ 7.2

unamortized discount and loan issuance costs ( 0.8 ) ( 1.0 )

Carrying amount of Synovus loan

Banc of California

unamortized discount and loan issuance costs — —

Carrying amount of Banc of California loan

Total carrying amount of debt

Current portion of Debt

Debt, net of current portion

$ 79.5 $ 64.0

Synovus Bank Loan

On October 5, 2023, the Company 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.

The Company may request the Lenders to provide multiple term loan advances (together, the “Loan”) in an aggregate principal amount of up to $ 65.0 million for the construction and development of the Company’s manufacturing facility in Covington, Georgia.

On October 5, 2023, the Company entered into a credit agreement (the “Credit Agreement”) with Synovus Bank, as administrative agent and lender, and the additional lenders from time to time (collectively, the “Lenders”).

Pursuant to the Credit Agreement, the Company may borrow up to an aggregate principal amount of up to $ 65.0 million through multiple term loan advances (together, the “Synovus Loan”) to fund the construction and development of the Company’s manufacturing facility in Covington, Georgia.

The Company is required to make 120 monthly interest payments from November 14, 2023 until maturity, and 84 equal monthly principal installments from November 14, 2026 until 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.

The interest rate on the Loan is a floating rate per annum equal to secured overnight financing rate (as defined in the Credit Agreement) plus the applicable margin of 2.0 %, which increases by 5.0 % per annum upon the occurrence of an event of default.

The Company’s obligations under the Credit Agreement are secured by funds in a collateral account and the Credit Agreement is guaranteed by the Company’s domestic subsidiaries.

The Credit Agreement matures on the earlier of October 5, 2033 or the date on which the outstanding Synovus Loan has been declared or automatically becomes due and payable pursuant to the terms of the Credit Agreement.

The interest rate on the Synovus Loan is a floating rate per annum equal to secured overnight financing rate (as defined in the Credit Agreement) plus the applicable margin of 2.0 %, which increases by 5.0 % per annum upon the occurrence of an event of default.

The Company’s obligations under the Credit Agreement are secured by funds in a collateral account and the Credit Agreement is guaranteed by certain domestic subsidiaries of the Company.

The Company may prepay with certain premium that links to the passage of time, and in certain circumstances would be required to prepay the Loan under the Credit Agreement without payment of a premium.

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As of December 31, 2025, the Company was in compliance with all the covenants of the Credit Agreement.

The Company has drawn down $ 65.0 million of the Loan as of December 31, 2024.

The Company has drawn down full $ 65.0 million of the Synovus Loan as of December 31, 2025.

The effective interest rate for the draw downs ranged from 6.0 % to 6.5 % and 6.7 % to 7.2 % as of December 31, 2025 and 2024, respectively.

The Company incurred issuance costs of $ 1.0 million related to the loan outstanding as of December 31, 2025.

The loan issuance costs will be amortized to interest expense over the contractual term of the Loan.

The loan issuance costs will be amortized to interest expense over the contractual term of the Synovus Loan.

During the years ended December 31, 2025 and 2024, the Company recognized interest expense of $ 4.2 million and $ 0.1 million, respectively, including an immaterial amount related to the amortization of issuance costs within interest income, net in the consolidated statements of operations.

The carrying value of the Loan, net of unamortized issuance costs of $ 0.8 million was $ 64.2 million as of December 31, 2025.

Banc of California Loan

In connection with the acquisition of Hawthorne Airport acquisition, the Company assumed the sellers’ outstanding loan with a principal balance of $ 16.1 million with Banc of California (the “Banc of California Loan”).

The Banc of California Loan bears a fixed interest rate of 6.3 % per annum and has an initial maturity date of April 2030, with an option to extend the maturity for an additional five years to April 2035 at an adjusted interest rate equal to the five-year U.S.

Treasury rate plus

Archer Aviation Inc.

Notes to Consolidated Financial Statements

The future scheduled principal maturities of the Loan as of December 31, 2024 are as follows (in millions):

The Banc of California Loan is secured by a leasehold deed of trust on the properties and contains representations, warranties, covenants, and indemnities customary for secured commercial real estate debt.

The future scheduled principal maturities of the Debt as of December 31, 2025 are as follows (in millions):

Thereafter 54.1

Silicon Valley Bank (“SVB”) Loan

On July 9, 2021, the Company, as the borrower, entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with SVB and SVB Innovation Credit Fund VIII, L.P.

(“SVB Innovation”) as the lenders, and SVB as the collateral agent.

The total principal amount of the loans is $ 20.0 million (the “Term Loans”), and all obligations due under the Term Loans are collateralized by all of the Company’s right, title, and interest in and to its specified personal property in favor of the collateral agent.

The Term Loans include events of default and covenant provisions, whereby accelerated repayment may result if the Company were to default.

On January 1, 2022, the Company began repaying the Term Loans, which are payable in 24 equal monthly installments, including principal and interest.

The interest rate on the loans is a floating rate per annum equal to the greater of (i) 8.5 % and (ii) the Prime Rate plus the Prime Rate Margin (each as defined in the Loan and Security Agreement), which increases by 2.0 % per annum upon the occurrence of an event of default.

The effective interest rate as of December 31, 2023 and 2022 were 10.2 % and 9.4 %, respectively.

For the years ended December 31, 2023 and 2022, the Company recognized interest expense of $ 0.6 million and $ 1.5 million, respectively.

Additionally, in conjunction with the issuance of the Term Loans, the Company issued 366,140 warrants to SVB and 366,140 warrants to SVB Innovation, totaling 732,280 warrants.

The Company issued the warrants to the lenders as consideration for entering into the Term Loans, representing a loan issuance fee.

Each warrant provides SVB and SVB Innovation with the right to purchase one share of the Company’s Class A common stock.

The Company recorded the warrants as liabilities at their fair value and adjusts the warrants to fair value at each reporting period.

This liability is subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized as a gain or loss in the Company’s consolidated statements of operations.

The initial offsetting entry to the warrant liability was a debt discount recorded to reflect the loan issuance fee.

See Note 11 - Liability Classified Warrants for further details.

Effective March 27, 2023, the Term Loans and warrants were assigned to and assumed by First-Citizens Bank & Trust Company on the original terms and conditions of the financial instruments.

Upon the closing of the Business Combination, the SVB warrants became public warrants.

The subsequent measurement of the SVB warrants is classified as Level 1 due to the use of an observable market quote in an active market under the ticker “ACHR WS”.

The quoted price of the public warrants was $ 3.22 as of December 31, 2024.

During the years ended December 31, 2023 and 2022, the Company recognized interest expense of $ 0.7 million and $ 0.5 million related to the amortization of the discount and loan issuance costs, respectively.

As of December 31, 2023, the Term Loans were fully repaid and the discount and loan issuance costs were fully amortized.

Total debt payable

Note 7 - Commitments and Contingencies

1 unchanged sentence

The Company leases office, lab, hangar, and storage facilities under various operating lease agreements with lease periods expiring between 2025 and 2030 and generally containing periodic rent increases and various renewal and termination options.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

The Company’s lease costs were as follows (in millions):

14 unchanged sentences

Present value of future lease payments $ 41.6

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Supplemental cash flow information and non-cash activities related to right-of-use assets and lease liabilities were as follows (in millions):

Year Ended December 31,

2024 2023 2022

Cash paid for amounts included in the measurement of lease liabilities

Operating cash outflows from operating leases $ 8.1 $ 5.2

Non-cash investing activities

Operating lease liabilities from obtaining right-of-use assets $ 31.9 $ 2.1

7 unchanged sentences

The standby letter of credit expires on March 31, 2035.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

As of December 31, 2025, the Company had standby letters of credit in the aggregate outstanding amount of $ 6.3 million, secured with restricted cash.

10 unchanged sentences

The initial offsetting entry to the warrant liability was technology and dispute resolution agreements expense.

Upon the issuance of shares underlying the the Second Tranche, the warrant liability was reclassed to equity at fair value.

Upon the issuance of shares underlying the Second Tranche, the warrant liability was reclassed to equity at fair value.

During the years ended December 31, 2024 and 2023, the Company recorded $ 10.3 million and $ 70.3 million, respectively, in general and administrative expenses.

On June 7, 2024, Wisk filed a motion in the United States District Court for the Northern District of California to enforce the Technology and Dispute Resolution Agreements in regards to a dispute between the parties with respect to the Second Tranche.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

The Company filed its opposition on July 10, 2024 and a hearing on Wisk’s motion occurred on August 14, 2024.

4 unchanged sentences

On May 17, 2024, two putative stockholders of the Company (and formerly, Atlas) filed class action lawsuits, on behalf of themselves and other similarly-situated stockholders, in the Delaware Court of Chancery against the directors and officers of Atlas, the Company, the Company’s co-founders, Moelis & Company Group LP and Moelis & Company LLC.

The complaint asserts claims against the defendants for breaches of fiduciary duties, aiding and abetting breaches of fiduciary duties, and unjust enrichment, in connection with the merger between Atlas and the Company.

The plaintiffs request damages in an amount to be determined at trial, as well as attorneys’ and experts’ fees.

Relatedly, on June 19, 2024, another putative stockholder of the Company filed a class action lawsuit, on behalf of himself and other similarly-situated stockholders, in the Delaware Court of Chancery asserting similar claims as the aforementioned May 17, 2024 complaint against the same defendants named in that May complaint.

The Delaware Court of Chancery subsequently consolidated the related class actions and appointed a lead plaintiff.

The Company along with the other defendants filed a motion to dismiss on October 3, 2024.

The plaintiffs filed an answer on January 13, 2025.

The hearing on the motion to dismiss is scheduled for April 17, 2025.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

On June 28, 2024, a stockholder of the Company filed a class action complaint in the Delaware Court of Chancery regarding the vote at the annual meeting of stockholders held on June 21, 2024 to approve the amendment to the Company’s Amended and Restated Certificate of Incorporation filed on September 16, 2021 (the “Amended and Restated Certificate of Incorporation”) to include a provision exculpating officers of the Company from certain types of duty of care claims.

On July 5, 2024, the Company filed a Certificate of Correction to clarify that its Amended and Restated Certificate of Incorporation remains unchanged and the Delaware Court of Chancery subsequently dismissed the class action.

On October 28, 2024, the parties entered into a settlement that releases all claims by the plaintiff and on November 7, 2024, the Company paid an immaterial amount as required under the settlement agreement.

The complaint asserted claims for breaches of fiduciary duties, aiding and abetting breaches of fiduciary duties, and unjust enrichment, in connection with the merger between Atlas and the Company.

The plaintiffs requested damages in an amount to be determined at trial, as well as attorneys’ and experts’ fees.

Relatedly, on June 19, 2024, another putative stockholder of the Company filed a class action lawsuit, on behalf of himself and other similarly-situated stockholders, in the Court asserting similar claims as the aforementioned May 17, 2024 complaint against the same defendants named in that May complaint.

The Court subsequently consolidated the related class actions and appointed a lead plaintiff.

All defendants filed motions to dismiss the complaint.

In response to such motions to dismiss, the plaintiffs voluntarily dismissed their claims against two Atlas directors.

Oral argument on the remaining defendants’ motions to dismiss was held on April 17, 2025 and the Court issued a bench ruling on July 21, 2025, granting in part and denying in part the motions to dismiss.

The Court dismissed all claims asserted against certain defendants, including among others, the Company’s co-founders, an Atlas director, Legacy Archer, Moelis & Company Group LP and Moelis & Company LLC.

The Court also addressed the sufficiency of the plaintiffs’ allegations concerning the pre-merger disclosures that underlie the plaintiffs’ fiduciary duty and unjust enrichment claims, ruling that certain allegations were not adequately pleaded, thereby narrowing the scope of the fiduciary duty and unjust enrichment claims against the remaining defendants, which the Company believes that it has substantial defenses against.

Trial is scheduled to begin on May 17, 2027.

Joby Litigation

On November 18, 2025 Joby Aero, Inc.

(“Joby”) filed a complaint in the Superior Court of California in Santa Cruz County against the Company and one of its employees asserting claims of trade-secret misappropriation, breach of contract, interference with Joby’s contracts and prospective economic advantage, and related claims around the Company’s recent hiring of a former Joby employee.

On December 18, 2025, the Company removed this action to the United States District Court for the Northern District of California.

On January 23, 2026, the Company moved to dismiss the complaint.

A hearing on this motion has been scheduled for March 24, 2026.

Vertical Litigation

On February 23, 2026, the Company filed a patent infringement lawsuit against Vertical Aerospace Ltd.

and Vertical Aerospace Group Ltd.

(collectively, “Vertical”) in the United States District Court for the Eastern District of Texas.

The lawsuit alleges that Vertical’s eVTOL Valo aircraft infringes multiple patents owned by Archer relating to its Midnight eVTOL aircraft.

The Company seeks, among other things, an injunction to prevent Vertical from continuing its infringing activities, as well as monetary damages for past infringement.

Note 8 - Preferred and Common Stock

On December 26, 2024, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the total number of authorized shares of capital stock from 1,010,000,000 to 1,710,000,000 , consisting of 1,400,000,000 shares of Class A common stock, 300,000,000 shares of Class B common stock and 10,000,000 shares of preferred stock.

Effective December 31, 2024 (the “Final Conversion Date”), pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation providing for the automatic conversion of the Company’s Class B common stock on the last trading day of the year during which the number of outstanding shares of Class B common stock represents less than 10.0 % of the total number of outstanding shares of the Company’s Class A common stock and Class B common stock, each outstanding share of Class B common stock automatically converted into the same number of shares of Class A common stock (the “Conversion”).

Archer Aviation Inc.

Notes to Consolidated Financial Statements

(the “Conversion”).

No additional shares of Class B common stock have been or will be issued following the Final Conversion Date.

Preferred Stock

As of December 31, 2024, no shares of preferred stock were outstanding, and the Company has no present plans to issue any shares of preferred stock.

Holders of the Company’s Class A common stock are entitled to one vote per share on all matters to be voted upon by the stockholders and prior to the Conversion, holders of Class B common stock were entitled to ten votes per share on all matters to be voted upon by the stockholders.

As a result of the Conversion during the year, all former holders of Class B common stock received an equal number of shares of Class A common stock.

In addition, the provisions of the Certificate of Incorporation and DGCL that entitled the holders of shares of Class A common stock and Class B common stock, in certain circumstances, to separate class voting rights, are no longer applicable as a result of the Conversion.

As of December 31, 2025, no shares of preferred stock were outstanding, and the Company currently has no plans to issue any shares of preferred stock.

Holders of the Company’s Class A common stock are entitled to one vote per share on all matters to be voted upon by the stockholders.

Holders of Class A common stock are entitled to receive such dividends, if any, as may be declared from time to time by the Company’s Board of Directors in its discretion out of funds legally available therefor.

2 unchanged sentences

Stockholders have no preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to Class A common stock.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

The Company’s Class B common stock was subject to “sunset” provisions of the Company’s Amended and Restated Certificate of Incorporation, pursuant to which all shares of Class B common stock would automatically convert into an equal number of shares of Class A common stock upon the earliest to occur of (i) the ten-year anniversary of the closing of the Business Combination, (ii) the date specified by the holders of two-thirds of the then outstanding Class B common stock, voting as a separate class, and (iii) when the number of Class B common stock represents less than 10 % of the aggregate number of Class A common stock and Class B common stock then outstanding.

During the year ended December 31, 2024, shares of the Company’s Class B common stock represented less than 10 % of all outstanding shares of the Company’s common stock, and as such pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, each outstanding share of Class B common stock automatically converted into an equal number of Class A common stock on December 31, 2024.

Following the Final Conversion Date, the Company may no longer issue any additional shares of Class B common stock.

During the years ended December 31, 2024, 2023 and 2022, 43,434,962 , 26,449,869 and 8,406,170 shares of Class B common stock were converted into Class A common stock, respectively.

In the event of the Company’s voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up, subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of the Company’s common stock will be entitled to receive an equal amount per share of all of the Company’s assets of whatever kind available for distribution to stockholders, after the rights of the holders of any preferred stock have been satisfied.

7 unchanged sentences

A portion of the Second 2024 PIPE Financing closed on December 13, 2024 for 63,909,776 shares of the Company’s 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 the Company’s 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 the Company’s stockholders.

The remaining portion of the Second 2024 PIPE Financing covering an aggregate of 751,879 shares of the Company’s Class A common stock to be issued and sold to Stellantis

Archer Aviation Inc.

Notes to Consolidated Financial Statements

for anticipated gross proceeds of approximately $ 5.0 million, which remains subject to the satisfaction of certain closing conditions.

At-The-Market Program

2 unchanged sentences

During the years ended December 31, 2024 and 2023, the Company sold 10,275,033 and 3,109,097 shares of Class A common stock, respectively, under the First ATM Program, for net proceeds of $ 48.1 million and $ 19.5 million, respectively.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

In May 2024, the Company filed a shelf registration statement on Form S-3 with the SEC that permits the offering of an aggregate of up to $ 95.0 million of shares of the Company’s Class A common stock or preferred stock, debt securities, warrants, and units (the “2024 Shelf Registration Statement”), including a prospectus for the sale under the Sales Agreement of shares of its Class A common stock, having an aggregate value of up to $ 70.0 million (the “Second ATM Program”).

The Second ATM Program was fully utilized in November 2024.

During the year ended December 31, 2024, the Company sold 20,644,100 shares of Class A common stock under the Second ATM Program for net proceeds of $ 68.0 million.

The Second ATM Program was fully utilized in November 2024, resulting in the sale of 20,644,100 shares of Class A common stock for net proceeds of $ 68.0 million during the year ended December 31, 2024.

In November 2024, the Company filed a shelf registration statement on Form S-3ASR with the SEC and a related prospectus for the sale under the Sales Agreement of shares of its Class A common stock, having an aggregate value of up to $ 70.0 million (the “Third ATM Program”).

During the year ended December 31, 2024, the Company sold 2,052,484 shares of Class A common stock under the Third ATM Program for net proceeds of $ 21.7 million.

As of December 31, 2024, the Company had $ 47.5 million remaining eligible for sales under the Third ATM Program.

During the year ended December 31, 2025, the Third ATM program was fully utilized, resulting in the sale of 3,921,875 shares for net proceeds of $ 46.3 million.

The Company pays 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 Sales Agreement.

Vendor Share Issuances

During the years ended December 31, 2025, and 2024, the Company issued 15,045,913 and 1,685,994 shares of Class A common stock to certain vendors to satisfy $ 126.8 million and $ 5.8 million of the Company’s current and/or future obligations to those vendors, respectively.

Registered Direct Offerings

On February 12, 2025, the Company closed a registered direct offering in which pursuant to the securities purchase agreement dated February 11, 2025, by and between the Company and certain institutional investors, the Company issued and sold 35,500,000 shares of the Company’s Class A common stock for gross proceeds of $ 301.8 million, after deducting offering costs.

On June 16, 2025, the Company closed a registered direct offering in which pursuant to the securities purchase agreement dated June 12, 2025, by and between the Company and certain institutional investors, the Company issued and sold 85,000,000 shares of the Company’s Class A common stock for gross proceeds of $ 850.0 million, after deducting offering costs.

On November 10, 2025, the Company closed a registered direct offering in which pursuant to the securities purchase agreement dated November 6, 2025, by and between the Company and certain institutional investors, the Company issued and sold 81,250,000 shares of the Company’s Class A common stock for gross proceeds of $ 650.0 million, after deducting offering costs.

Note 9 - Stock-Based Compensation

3 unchanged sentences

The aggregate number of shares of Class A common stock that may be issued under the plan increased to 34,175,708 .

In addition, the number of shares of Class A common stock reserved for issuance under the Amended and Restated 2021 Plan will automatically increase on January 1st of each year following this amendment, starting on January 1, 2023 and ending on (and including) January 1, 2031, in an amount equal to the lesser of (i) 5.0 % of the total number of shares of Class A and Class B common stock outstanding on December 31 of the preceding year, or (ii) a lesser number of shares of Class A common stock determined by the Board of Directors prior to the date of the increase (the “EIP Evergreen Provision”).

Archer Aviation Inc.

Notes to Consolidated Financial Statements

the lesser of (i) 5.0 % of the total number of shares of Class A and Class B common stock outstanding on December 31 of the preceding year, or (ii) a lesser number of shares of Class A common stock determined by the Board of Directors prior to the date of the increase (the “EIP Evergreen Provision”).

The EIP Evergreen Provision is calculated using the number of legally outstanding shares of common stock and includes shares, such as unvested shares pursuant to early exercised stock options, that are not considered outstanding for accounting purposes.

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Such stock options will continue to be governed by the terms of the 2019 Plan and the stock option agreements thereunder, until such outstanding options are exercised or until they terminate or expire.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Employee Stock Purchase Plan

In August 2021, the Company adopted the 2021 Employee Stock Purchase Plan (the “ESPP”), which became effective immediately upon the closing of the Business Combination.

The ESPP permits eligible employees to purchase shares of Class A common stock at a price equal to 85.0 % of the lower of the fair market value of Class A common stock on the first day of an offering or on the date of purchase.

Additionally, the number of shares of Class A common stock reserved for issuance under the ESPP will automatically increase on January 1st of each year, beginning on January 1, 2022 and continuing through and including January 1, 2031, by the lesser of (i) 1.0 % of the total number of shares of Class A common stock outstanding on December 31 of the preceding year;

(ii) 9,938,118 shares of Class A common stock;

or (iii) a lesser number of shares of Class A common stock determined by the Board of Directors prior to the date of increase (the “ESPP Evergreen Provision”).

The ESPP Evergreen Provision is calculated using the number of legally outstanding shares of common stock and includes shares, such as unvested shares pursuant to early exercised stock options, that are not considered outstanding for accounting purposes.

In accordance therewith, the number of shares of Class A common stock reserved for issuance under the ESPP increased by 2,679,473 on January 1, 2024.

As of December 31, 2024, the maximum number of shares authorized for issuance under the ESPP was 11,085,810 , of which 8,133,182 shares remained available under the ESPP.

The Company currently offers six-month offering periods, and at the end of each offering period, which occurs every six months on May 31 and November 30, employees can elect to purchase shares of the Company’s Class A common stock with contributions of up to 15.0 % of their base pay, accumulated via payroll deductions, subject to certain limitations.

During the year ended December 31, 2024, for the six-month ESPP offering periods that ended on May 31, 2024 and November 30, 2024, employees purchased 812,544 shares at a price of $ 2.78 per share and 911,452 shares at a price of $ 2.78 per share, respectively.

The Company uses the Black-Scholes option pricing model to calculate the grant date fair value of each award granted under the ESPP.

The following table sets forth the key assumptions and fair value results for each award granted in the Company’s six-month offering period that started on December 1, 2024:

Input December 1, 2024

Stock price $ 9.57

Term (in years) 0.5

Risk-free interest rate 4.4 %

Volatility 85.0 %

Dividend yield 0.0 %

Grant date fair value per share $ 3.67

During the years ended December 31, 2024, 2023 and 2022, the Company recognized stock-based compensation expense of $ 2.6 million, $ 1.2 million and $ 0.1 million for the ESPP, respectively.

As of December 31, 2024, the total remaining stock-based compensation expense was $ 1.6 million for the ESPP, which is expected to be recognized over the current six-month offering period until May 31, 2025.

Annual Equity Awards

2 unchanged sentences

During the years ended December 31, 2025, 2024 and 2023, the Company recognized stock-based compensation expense of $ 21.1 million, $ 17.8 million and $ 11.5 million, respectively, related to these annual equity awards.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Stock Options

7 unchanged sentences

2,118,011 $ 0.13 5.8 $ 20.4

Exercised ( 416,394 ) 0.11 3.7

Expired/forfeited ( 77,865 ) 0.15

Outstanding as of December 31, 2025

1,623,752 0.14 4.8 12.0

Exercisable as of December 31, 2025

4 unchanged sentences

The Company recognized stock-based compensation expense of $ 2.2 million, $ 2.5 million and $ 2.8 million for stock options for the years ended December 31, 2025, 2024 and 2023, respectively.

As of December 31, 2024, the total remaining stock-based compensation expense for unvested stock options was $ 2.2 million, which is expected to be recognized over a weighted-average period of 0.4 years.

As of December 31, 2025, there was less than $ 0.1 million unrecognized stock-based compensation expense related to unvested stock options.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Restricted Stock Units

3 unchanged sentences

31,522,483 $ 4.99

18,608,964 $ 4.78

( 18,837,707 ) $ 4.87

( 2,635,494 ) $ 4.06

Outstanding as of December 31, 2024

28,658,246 $ 5.02

Granted 23,226,161 9.22

Performance based adjustment (1)

Vested ( 15,418,517 ) 5.94

2 unchanged sentences

34,166,124 7.36

(1) Represents units adjusted for the vesting of the first tranche of PSUs (defined below) granted in 2024.

During the year ended December 31, 2025, the Company granted 2,425,322 RSUs under the Amended and Restated 2021 Plan, representing the annual equity awards for 2024.

The RSUs were fully vested on the date of grant and settled in Class A common stock on a one -for-one basis.

In addition, the Company granted 14,254,746 RSUs under the Amended and Restated 2021 Plan, which generally vest over a three - or four-year period with a one-year cliff and remain subject to forfeiture if vesting conditions are not met.

In addition, the Company granted 19,918,683 RSUs under the Amended and Restated 2021 Plan, which generally vest over a three - or four-year period with a one-year cliff and remains subject to forfeiture if vesting conditions are not met.

Upon vesting, RSUs are settled in Class A common stock on a one -for-one basis.

5 unchanged sentences

In all other cases, the award will not vest and all rights to the PSUs will terminate.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

The Company also granted 295,858 RSUs under the Amended and Restated 2021 Plan to an employee that pays out based on attainment of predefined performance goals so long as the employee remains employed by the Company over the ten-year performance period.

The award payout can range from 0.0 % to 100.0 % of the initial grant.

The Company determined the fair value of the PSUs using a Monte Carlo simulation model on the grant date.

1 unchanged sentence

The following assumptions were used to estimate the fair value, using the Monte Carlo simulation, of the PSUs:

December 18, 2024 March 26, 2024

Stock price $ 10.35 $ 11.21

4 unchanged sentences

Immediately prior to closing of the Business Combination, each of the Company’s founders was granted 20,009,224 RSUs under the 2019 Plan pursuant to the terms and conditions of the Business Combination Agreement.

One-quarter of each of the Founder Grants was intended to vest upon the achievement of the earlier to occur of (i) a price-based milestone or (ii) a performance-based milestone, with a different set of such price and performance-based milestones applying to each quarter of each of the Founder Grants and so long as the achievement occurs within seven years following the closing of the Business Combination.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

each of the Founder Grants and so long as the achievement occurs within seven years following the closing of the Business Combination.

The Company accounts for the Founder Grants as four separate tranches, with each tranche consisting of two award conditions, a performance award condition and market award condition.

12 unchanged sentences

As of December 31, 2025, there were 10,004,612 RSUs outstanding, representing the remaining two tranches of the outstanding Founder Grant.

For the years ended December 31, 2024, 2023 and 2022, the Company recorded $ 33.1 million, $ 49.7 million and $ 64.9 million of stock-based compensation expense, respectively, for the remaining three tranches of the outstanding Founder Grant in general and administrative expenses in the consolidated statements of operations.

For the years ended December 31, 2025, 2024 and 2023, the Company recorded $ 22.6 million, $ 33.1 million and $ 49.7 million of stock-based compensation expense, respectively, for the remaining two tranches of the outstanding Founder Grant in general and administrative expenses in the consolidated statements of operations.

Of the amounts recorded during the years ended December 31, 2023 and 2022, approximately $ 17.3 million and $ 32.4 million of stock-based compensation expense, respectively, associated with the forfeiture were reversed in July 2023 and recorded during the year ended December 31, 2023.

For the years ended December 31, 2025, 2024 and 2023, the Company recorded $ 99.1 million, $ 47.4 million and $ 27.0 million of stock-based compensation expense, respectively, related to RSUs (excluding the Founder Grants).

As of December 31, 2025, the total remaining stock-based compensation expense for unvested RSUs (including the remaining Founder Grant) was $ 177.1 million, which is expected to be recognized over a weighted-average period of 1.0 year.

Employee Stock Purchase Plan

In August 2021, the Company adopted the 2021 Employee Stock Purchase Plan (the “ESPP”), which became effective immediately upon the closing of the Business Combination.

(ii) 9,938,118 shares of Class A common stock;

or (iii) a lesser number of shares of Class A common stock determined by the Board of Directors prior to the date of increase (the “ESPP Evergreen Provision”).

In accordance therewith, the number of shares of Class A common stock reserved for issuance under the ESPP increased by 4,677,185 on January 1, 2025.

As of December 31, 2025, the maximum number of shares authorized for issuance under the ESPP was 15,762,995 , of which 11,656,009 shares remained available under the ESPP.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

As of December 31, 2024, the total remaining stock-based compensation expense for unvested RSUs (including the remaining Founder Grant) was $ 114.5 million, which is expected to be recognized over a weighted-average period of 0.9 years.

Restricted Stock

In August 2023, the Company issued 1,985,559 shares of Class A common stock to an outside vendor to satisfy $ 11.0 million of the Company’s outstanding payable to that vendor.

Accordingly, the Company reclassified $ 11.6 million, representing the grant date fair value of the award, of legal expense to stock-based compensation expense within general and administrative expenses in the consolidated statements of operations during the year ended December 31, 2023.

Issuance of Class A Common Stock

During the year ended December 31, 2024, the Company issued 1,685,994 shares of Class A common stock pursuant to its 2024 Shelf Registration Statement to certain service providers to satisfy $ 5.8 million of the Company’s outstanding amounts payable to those service providers.

During the year ended December 31, 2025, for the six-month ESPP offering periods that ended on May 31, 2025 and November 30, 2025, employees purchased 618,173 shares at a price of $ 6.21 per share and 536,185 shares at a price of $ 6.62 per share, respectively.

The Company uses the Black-Scholes option pricing model to calculate the grant date fair value of each award granted under the ESPP.

The following table sets forth the key assumptions and fair value results for each award granted in the Company’s six-month offering period that started on December 1, 2025:

Input December 1,

Stock price $ 7.46 $ 10.09

Term (in years) 0.5 0.5

Risk-free interest rate 3.7 % 4.3 %

Volatility 89.0 % 122.0 %

Dividend yield 0.0 % 0.0 %

Grant date fair value per share $ 2.94 $ 4.83

During the years ended December 31, 2025, 2024 and 2023, the Company recognized stock-based compensation expense of $ 4.5 million, $ 2.6 million and $ 1.2 million for the ESPP, respectively.

As of December 31, 2025, the total remaining stock-based compensation expense was $ 2.3 million for the ESPP, which is expected to be recognized over the current six-month offering period until May 31, 2026.

Vendor Share Issuances

From time to time, the Company issues shares of Class A common stock to certain vendors in exchange for services rendered and/or goods purchased (collectively, the “Vendor Share Issuances”).

The Vendor Share Issuances are being consummated by the Company pursuant to the Company’s shelf registration statements filed with the SEC and accompanying prospectuses.

During the years ended December 31, 2025, and 2024, the Company recognized stock-based compensation expense of $ 73.3 million and $ 5.5 million for the Vendor Share Issuances, respectively.

Acquisition-related earn-out stock-based compensation expense

In connection with the acquisition of Hawthorne Airport, during the year ended December 31, 2025, the Company recognized $ 0.7 million of stock-based compensation expense related to earn-out shares payable in the Company’s Class A common stock.

The related performance targets are expected to be achieved through the ongoing efforts of the Sellers;

therefore, the earn-out is accounted for as post-combination expense.

The expense is recognized over the expected achievement period based on the estimated grant-date fair value of the awards, assuming the performance targets will be met.

The expense is included within general and administrative expense in the consolidated statements of operations for the year ended December 31, 2025.

Additional Stock-based Compensation information

The Company records stock-based compensation expense for stock-based compensation awards based on the fair value on the date of grant.

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If an employee forfeits an award because they fail to complete the requisite service period, the Company will reverse stock-based compensation expense previously recognized in the period the award is forfeited.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

The following table presents stock-based compensation expense included in each respective expense category in the consolidated statements of operations (in millions):

4 unchanged sentences

Total stock-based compensation expense $ 223.5 $ 108.8 $ 45.2

A summary of the Company’s warrant activity is as follows:

(In millions)

Outstanding as of January 1, 2024

20,788,247 $ 0.01 4.5 $ 127.4

Issued 57,050 0.01

Exercised ( 91,667 ) 0.01 0.8

Outstanding as of December 31, 2024

20,753,630 0.01 3.5 202.1

Vested and exercisable as of December 31, 2024

7,805,276 $ 0.01 2.4 $ 76.0

Archer Aviation Inc.

Notes to Consolidated Financial Statements

United Airlines

On January 29, 2021, the Company entered into the United Purchase Agreement, United Collaboration Agreement, and United Warrant Agreement.

Under the terms of the United Purchase Agreement, United has a conditional purchase order for up to 200 of the Company’s aircraft, with an option to purchase an additional 100 aircraft.

Those purchases are conditioned upon the Company meeting certain conditions that include, but are not limited to, the certification of the Company’s aircraft by the Federal Aviation Administration (“FAA”) and further negotiation and reaching of mutual agreement on certain material terms related to the purchases.

The Company issued 14,741,764 warrants to United to purchase shares of the Company’s Class A common stock.

Each warrant provides United with the right to purchase one share of the Company’s Class A common stock at an exercise price of $ 0.01 per share.

The warrants were initially expected to vest in four installments in accordance with the following milestones:

the execution of the United Purchase Agreement and the United Collaboration Agreement, the completion of the Business Combination, the certification of the aircraft by the FAA, and the sale of aircraft to United.

On August 9, 2022, the Company entered into Amendment No.

1 to the United Purchase Agreement (the “Amended United Purchase Agreement”) and Amendment No.

1 to the United Warrant Agreement (the “Amended United Warrant Agreement”).

In association with the Amended United Purchase Agreement, the Company received a $ 10.0 million pre-delivery payment from United for 100 of the Company’s aircraft (the “Pre-Delivery Payment”), which was recognized as a contract liability in other long-term liabilities in the Company’s consolidated balance sheets.

Pursuant to the Amended United Warrant Agreement, the vesting condition of the fourth milestone of the United Warrant Agreement was modified, and the warrants now vest in four installments in accordance with the following sub-milestones:

(i) 737,088 warrants vested upon receipt by the Company of the Pre-Delivery Payment on August 9, 2022;

(ii) 2,211,264 warrants vested on February 9, 2023 upon the six-month anniversary of the amendment date;

(iii) 3,685.45 warrants shall vest upon the acceptance and delivery of each of the Company’s 160 aircraft;

and (iv) 22,112.65 warrants shall vest upon the acceptance and delivery of each of the Company’s 40 aircraft.

The Company accounts for the Amended United Purchase Agreement and the United Collaboration Agreement under ASC 606, Revenue from Contracts with Customers .

The Company identified the sale of each aircraft ordered by United as a separate performance obligation in the contract.

As the performance obligations have not been satisfied, the Company has not recognized any revenue as of December 31, 2024.

With respect to the warrant vesting milestones outlined above, the Company accounts for them as consideration payable to a customer under ASC 606 related to the future purchase of aircraft by United.

The Company determined that the warrants are classified as equity awards based on the criteria of ASC 480, Distinguishing Liabilities from Equity and ASC 718.

Pursuant to ASC 718, the Company measured the grant date fair value of the warrants to be recognized upon the achievement of each of the original four milestones and the vesting of the related warrants, which was determined to be $ 13.35 , based on a valuation of the Company’s Class A common stock on January 29, 2021.

For the first milestone, issuance of warrants in conjunction with the execution of the United Purchase Agreement and the United Collaboration Agreement, the Company recorded the grant date fair value of the respective warrant tranche at the vesting date upon satisfaction of the milestone, and the related costs were recorded in other warrant expense due to the absence of historical or probable future revenue.

For the second milestone, the completion of the Business Combination transaction, the related costs were also recorded in other warrant expense due to the absence of historical or probable future revenue.

A total of 8,845,058 warrants vested from achievement of the first two milestones and were exercised.

For the third milestone, the certification of the aircraft by the FAA, the Company will assess whether it is probable that the award will vest at the end of every reporting period.

If and when the award is deemed probable of vesting, the Company will begin capitalizing the grant date fair value of the associated warrants as an asset through the vesting date and subsequently amortize the asset as a reduction to revenue as it sells the new aircraft to United.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

For the original fourth milestone, the sale of aircraft to United, the Company was initially expected to record the cost associated with the vesting of each portion of warrants within this milestone as a reduction of the transaction price as revenue is recognized for each sale of the aircraft.

In connection with the Amended United Warrant Agreement, the Company evaluated the accounting implications associated with the amendment to the fourth milestone in accordance with ASC 606 and ASC 718.

For the first sub-milestone, the receipt of the Pre-Delivery Payment, the Company accounted for it as a modification under ASC 718 and recorded the modification date fair value of the associated warrants in other warrant expense upon satisfaction of the sub-milestone on August 9, 2022.

For the second sub-milestone, the vesting of warrants on February 9, 2023, the Company accounted for it as a modification under ASC 718 and recorded the modification date fair value of the associated warrants in other warrant expense on a straight-line basis over six months following the amendment date.

The modification date fair value of each warrant associated with the first and second sub-milestones was determined to be $ 4.37 , which was the closing price of the Company’s Class A common stock on the modification date.

For the third and fourth sub-milestones, the sale of 160 aircraft and 40 aircraft, respectively, the Company determined that the amendment does not represent a modification under ASC 718.

The Company will record the cost associated with the vesting of each portion of the associated warrants as a reduction of the transaction price based on the original grant date fair value as revenue is recognized for each sale of the aircraft.

There was no other warrant expense recognized for the year ended December 31, 2024.

For the year ended December 31, 2023, the Company recorded $ 2.1 million in other warrant expense in the consolidated statements of operations related to the second sub-milestone under the fourth milestone, and a total of 2,211,264 warrants vested from achievement of this milestone.

For the year ended December 31, 2022, the Company recorded $ 10.8 million in other warrant expense in the consolidated statements of operations related to the first two sub-milestones under the fourth milestone, and a total of 737,088 warrants vested from achievement of the first sub-milestone under the fourth milestone.

In August 2023, the Company issued 2,942,778 shares of Class A common stock to United, who cashless net exercised 2,948,352 warrants related to the achievement of the first two sub-milestones under the fourth milestone.

Stellantis N.V.

On January 3, 2023, the Company entered into a manufacturing and collaboration agreement with Stellantis, pursuant to which the Company and Stellantis will collaborate on the development and implementation of the Company’s manufacturing operations for the production of its eVTOL aircraft products (the “Stellantis Collaboration Agreement”).

In connection with the Stellantis Collaboration Agreement, the Company entered into a forward purchase agreement (as amended, the “Stellantis Forward Purchase Agreement”) and a warrant agreement (the “Stellantis Warrant Agreement”) with Stellantis on January 3, 2023.

Under the terms of the Stellantis Forward Purchase Agreement, the Company agreed to issue and sell to Stellantis up to $ 150.0 million of shares of the Company’s Class A common stock pursuant to terms and conditions of the Stellantis Forward Purchase Agreement.

As further described below, the shares pursuant to the Stellantis Forward Purchase Agreement were fully issued in July 2024.

Under the terms of the Stellantis Warrant Agreement, Stellantis is entitled to purchase up to 15.0 million shares of the Company’s Class A common stock, at an exercise price of $ 0.01 per share (the “Stellantis Warrant”).

The Stellantis Warrant will vest and become exercisable in three equal tranches upon 12 , 24 and 36 months of the grant date, provided that (i) Stellantis has performed certain undertakings set forth in the Stellantis Collaboration Agreement and/or (ii) the VWAP (as defined in the Stellantis Warrant Agreement) for the Class A common stock exceeding certain specified amounts.

Pursuant to the terms and conditions of the Stellantis Collaboration Agreement, Stellantis is deemed to have performed the undertakings if the Stellantis Collaboration Agreement has not been terminated by the Company as of the specified vesting date for each tranche.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

As the Company is currently in pre-revenue stage and is not generating any revenue from the Stellantis Collaboration Agreement, all costs incurred with third parties are recorded based on the nature of the costs incurred.

The Company accounts for the warrant in accordance with the provisions of ASC 718.

The grant date fair value of each warrant was determined to be $ 1.93 , which was the closing price of the Company’s Class A common stock on January 3, 2023.

For each tranche of the warrant, the Company will recognize compensation costs as the related services are received from Stellantis on a straight-line basis over the associated service period.

During the years ended December 31, 2024 and 2023, the Company recorded $ 8.1 million and $ 17.5 million of R&D expense, respectively, in the consolidated statements of operations in connection with the Stellantis Collaboration Agreement.

On June 23, 2023, the Company issued 6,337,039 shares of Class A common stock to Stellantis in connection with the first milestone under the Stellantis Forward Purchase Agreement and received approximately $ 25.0 million in gross proceeds.

On August 10, 2023, Stellantis waived certain conditions provided for in the Stellantis Forward Purchase Agreement relating to the Company’s actual achievement pursuant to Milestone 2 (as defined in the Stellantis Forward Purchase Agreement).

In connection with this waiver, the Company submitted an election notice to draw down upon the $ 70.0 million applicable to Milestone 2, which equals 12,313,234 shares of the Company’s Class A common stock.

This drawdown was completed on October 16, 2023.

On June 27, 2024, the Company elected to draw down the $ 55.0 million remaining available under the Stellantis Forward Purchase Agreement associated with Milestone 3 (as defined in the Stellantis Forward Purchase Agreement).

In accordance therewith, on July 1, 2024, the Company issued 17,401,153 shares of Class A common stock to Stellantis for gross proceeds of approximately $ 55.0 million.

On November 6, 2020, the Company entered into a collaboration agreement with FCA US LLC (“FCA”) (the “FCA Collaboration Agreement”), in which both parties agreed to work together to complete a series of fixed duration collaboration projects related to the Company’s ongoing efforts to design, develop, and bring up production capabilities for its aircraft.

In conjunction with the FCA Collaboration Agreement, the Company issued a warrant to FCA on November 6, 2020, in which FCA has the right to purchase up to 1,671,202 shares of the Company’s Class A common stock at an exercise price of $ 0.01 per share.

The Company performed a valuation and determined each warrant had a fair value of $ 0.15 per share at the grant date.

Shares under the warrant vest based on the completion of specific aircraft development milestones identified under the FCA Collaboration Agreement.

As the Company is currently in pre-revenue stage and is not generating any revenue from the FCA Collaboration Agreement, all costs incurred with third parties are recorded based on the nature of the cost incurred.

The Company accounts for the warrant in accordance with ASC 718.

The Company assessed whether it was probable that the award vested for each of the seven milestones at the end of every reporting period.

If and when the award was deemed probable of vesting, the Company recognized compensation expense for the portion of the grant determined probable of vesting on a straight-line basis over the duration of each milestone.

If services had been provided by FCA prior to management determining the milestone was probable of being achieved, a cumulative catch-up adjustment was recorded for services performed in prior periods.

During the year ended December 31, 2022, the Company recorded $ 0.1 million of R&D expense in the consolidated statements of operations related to the completion of certain milestones.

As of December 31, 2022, all seven milestones have been completed, amounting to 1,671,202 shares that have vested.

FCA Italy S.p.A.

On July 19, 2021, the Company entered into a manufacturing consulting agreement with an affiliate of FCA, FCA Italy S.p.A.

(“FCA Italy”) (the “Manufacturing Consulting Agreement”), in which both parties agreed to work together to complete a series of fixed duration projects to develop manufacturing and production processes in connection with the Company’s ongoing efforts to bring up production capabilities for its aircraft.

In conjunction with the Manufacturing Consulting Agreement, the Company issued a warrant to FCA Italy, in which FCA Italy has the right to purchase up to 1,077,024 shares of the Company’s Class A common stock at an exercise price of $ 0.01 per share.

The Company performed a valuation and determined each warrant had a fair value of $ 8.98 per share at the grant date.

The shares underlying the warrant vest in two equal installments in accordance with two time-based milestones.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

The Company accounts for the warrant in accordance with ASC 718.

The Company recognized compensation cost for half of the shares that were fully vested upon execution of the Manufacturing Consulting Agreement.

The Company recognized compensation cost for the remaining half of the warrant as the related services were received from FCA Italy on a straight-line basis over the service period of 12 months.

During the year ended December 31, 2022, the Company recorded $ 2.8 million of R&D expense in the consolidated statements of operations related to services received for the second milestone.

As of December 31, 2022, both of the milestones have been completed, amounting to 1,077,024 shares that have vested.

Note 10 - Income Taxes

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$ ( 617.9 ) $ ( 536.6 ) $ ( 457.4 )

The Company recognized foreign current income tax provision of $ 0.2 million and $ 0.5 million during the years ended December 31, 2024 and 2023, respectively.

The Company did no t recognize any current income tax provision during the year ended December 31, 2022.

The Company recognized foreign current income tax provision of $ 0.3 million, $ 0.2 million, and $ 0.5 million during the years ended December 31, 2025, 2024 and 2023, respectively.

The Company did no t record any deferred income tax provision for the years ended December 31, 2025, 2024 and 2023.

The related increase in the deferred tax assets was offset by the increase in valuation allowance.

A reconciliation of the Company’s effective income tax rate to the expected income tax rate, computed by applying the federal statutory income tax rate of 21.0% to the Company’s loss before income taxes, is as follows:

As further described in Note 2, Summary of Significant Accounting Policies, the Company has elected to prospectively adopt the guidance in ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Taxes Disclosures (“ASU 2023-09”).

In accordance with the guidance in ASU No.

2023-09 the effective income tax rate for the year ended December 31, 2025, differs from the statutory federal income tax rate as follows (in millions, except percentages):

Year Ended December 31,

Federal income tax at statutory tax rate

$ ( 129.8 ) 21.0 %

Research and development tax credit

Change in valuation allowance 163.2 ( 26.5 )

Nontaxable or nondeductible items

Warrant expense ( 12.2 ) 2.0

Nondeductible officers’ compensation 12.3 ( 2.0 )

Stock-based compensation expense ( 12.2 ) 2.0

Other 1.8 ( 0.2 )

Provision for income taxes and Effective tax rate

Archer Aviation Inc.

Notes to Consolidated Financial Statements

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

Year Ended December 31,

Federal income tax (benefit) at statutory tax rate

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Nondeductible officers’ compensation ( 0.7 ) % 0.1 %

Other 0.0 % 0.0 % ( 0.7 ) %

Credits 5.4 % 4.4 %

1 unchanged sentence

Effective tax rate 0.0 % ( 0.1 ) %

Differences between the state statutory rate and state effective tax rate for the years ended December 31, 2024 and 2023 primarily relate to the limitations imposed on certain share-based compensation under Section 162(m), R&D tax credits and an increase in the valuation allowance.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Differences between the state statutory rate and state effective tax rate for the years ended December 31, 2025 and 2024 primarily relate to the limitations imposed on certain share-based compensation under Section 162(m), research and development expenses tax credits and an increase in the valuation allowance.

The Company’s significant components of its deferred tax assets and liabilities are as follows (in millions):

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Operating lease liabilities 9.3 3.3

Stock-based compensation 2.1 1.9

Stock-based compensation expense 5.4 2.1

Warrants 8.6 7.8

Capitalized R&D expenses 132.3 77.8

Capitalized research and development expenses

Credits 107.1 71.5

Start-up costs 3.7 3.8

Depreciation and amortization

Other 0.7 0.3

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The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible.

Based upon the analysis of federal and state deferred tax balances and future tax projections and the Company’s lack of taxable income in the carryback period, the Company did not believe it is more-likely-than-not that the net deferred tax assets will be realizable.

Accordingly, the Company had provided a full valuation allowance against the entire domestic and the majority of the foreign net deferred tax assets as of December 31, 2024 and 2023.

Based upon the analysis of federal and state deferred tax balances and future tax projections and the Company’s lack of taxable income in the carryback period, the Company recorded a valuation allowance of $ 541.8 million against the federal and state deferred tax assets.

The valuation allowance increased by $ 188.5 million, $ 127.0 million, and $ 96.6 million during the years ended December 31, 2025, 2024 and 2023, respectively.

On August 16, 2022, the U.S.

government enacted the Inflation Reduction Act of 2022.

The Company does not currently expect the Inflation Reduction Act to impact its estimated effective tax rate due to a full valuation allowance against deferred tax assets.

As of December 31, 2025 and 2024, the Company has U.S.

federal net operating loss (“NOL”) carryforwards of $ 1,372.4 million and $ 616.5 million, respectively, which can be carried forward indefinitely.

As of December 31, 2024 and 2023, the Company has state NOL carryforwards of $ 58.2 million and $ 40.5 million, respectively, which will both begin to expire in 2038.

As of December 31, 2025 and 2024, the

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Company has state NOL carryforwards of $ 146.8 million and $ 58.2 million, respectively, which will both begin to expire in 2038.

In the ordinary course of its business, the Company incurs costs that, for tax purposes, are determined to be qualified R&D expenditures within the meaning of Section 41 of the Internal Revenue Code of 1986, as amended (the “Code”) and are, therefore, eligible for the Increasing Research Activities credit under Section 41 of the Code.

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The state R&D tax credit carryforward is $ 45.0 million and $ 27.9 million for December 31, 2025 and 2024, respectively, which can be carried forward indefinitely.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

The following table shows the changes in the gross amount of unrecognized tax benefits (in millions):

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During the years ended December 31, 2025, 2024 and 2023, the Company recognized no interest and penalties related to uncertain tax positions.

It is not expected that there will be a significant change in uncertain tax positions in the next 12 months.

In accordance with Section 382 and Section 383 of the Code, a corporation that undergoes an “ownership change” (generally defined as a cumulative change of more than 50.0% in the equity ownership of certain stockholders over a rolling three-year period) is subject to limitations on its ability to utilize its pre-change NOLs and R&D tax credits to offset post-change taxable income and post-change tax liabilities, respectively.

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federal government and various state jurisdictions.

The tax years ended December 31, 2018 through December 31, 2024 remain open to examination for federal and state purposes.

In addition, the utilization of NOL and R&D credit carryforwards is subject to federal and state review for the periods in which those net losses were incurred.

As a result of the Company’s net operating loss and credit carryforwards all of its years are subject to federal and state examination.

The Company is not under audit by any tax jurisdictions at this time.

Note 11 - Liability Classified Warrants

As of December 31, 2024, there were 17,398,947 public warrants outstanding.

During the year ended December 31, 2025, the Company did not have any significant income tax payments made or refunds received from any jurisdiction.

Archer Aviation Inc.

Notes to Consolidated Financial Statements

Note 11 - Warrants

Equity Classified Warrants

A summary of the Company’s warrant activity is as follows:

(In millions)

Outstanding as of January 1, 2025

20,753,630 $ 0.01 3.5 $ 202.1

Issued 314,760 0.01 2.4

Exercised ( 57,050 ) 0.01 0.4

( 1,671,202 )

Outstanding as of December 31, 2025

19,340,138 0.01 2.7 145.2

Vested and exercisable as of December 31, 2025

11,139,976 $ 0.01 1.9 $ 83.7

United Airlines, Inc.

On January 29, 2021, the Company entered into the United Purchase Agreement, the United Collaboration Agreement, and the United Warrant Agreement with United.