Archer Aviation Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This annual filing covers the full year, not Q4 alone. Archer became a public company through its September 2021 business combination with Atlas, accounted for as a reverse recapitalization.
Business context and financial performance
Archer is a pre-revenue aerospace company developing electric vertical takeoff and landing (eVTOL) aircraft. It plans to operate urban air mobility services and selectively sell aircraft, subject to aircraft development, FAA certification, manufacturing readiness, and other approvals. It had 209 full-time employees at year-end.
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $64.3 million | $21.1 million |
| General and administrative expense | $176.7 million | $3.5 million |
| Total operating expenses | $358.3 million | $24.6 million |
| Operating loss | $358.3 million | $24.6 million |
| Net loss | $347.8 million | $24.8 million |
| Net loss per share, basic and diluted | $3.14 | $0.49 |
| Net cash used in operating activities | $108.4 million | $22.8 million |
| Net cash used in investing activities | $3.5 million | $1.9 million |
| Net cash provided by financing activities | $822.2 million | $51.2 million |
Year-end liquidity and debt: Cash and cash equivalents were $746.9 million, versus $36.6 million a year earlier. Total assets were $768.4 million and total liabilities were $69.5 million. Notes payable had $20.0 million principal outstanding ($18.8 million net of issuance costs), with $10.0 million scheduled in each of 2022 and 2023. Archer said existing cash was expected to fund its current operating plan for at least 12 months from the financial statements’ issuance date. No operating margin is meaningful while the company has no revenue.
Changes versus prior comparable year
- Net loss widened by $323.0 million, primarily as operating expenses increased with workforce growth, public-company and transaction costs, founder equity awards, and United-related warrants.
- General and administrative expense included $118.1 million of founder restricted-stock-unit expense; total stock-based compensation was $123.6 million.
- Other warrant expense was $117.3 million, a non-cash charge for United warrant milestones. A $10.4 million non-cash gain from changes in warrant-liability fair value and a $0.9 million gain from forgiveness of the PPP loan partly offset losses.
- Operating cash use rose to $108.4 million. Financing cash flow included $600.0 million from the PIPE financing and $257.6 million released from Atlas’s trust account, partly offset by transaction costs.
Outlook, risks, and unusual items
- Management expects significant expenses and losses to continue; significant revenue was not expected until late 2024 or 2025, and could occur later or not at all. R&D and public-company costs were expected to rise.
- FAA certification remained pending. Archer had agreed with the FAA on a certification basis (G-1 Issue Paper) in September 2021 and was working toward finalizing the G-2 Issue Paper. The filing warns that certification or regulatory changes could delay commercialization.
- United’s conditional purchase agreement covers up to $1 billion of aircraft, with an option for another $500 million. It was Archer’s only aircraft order; material terms remained subject to agreement and the order depended on certification and other conditions.
- Archer was defending Wisk Aero litigation alleging trade-secret misappropriation and patent infringement; trial was scheduled for January 2023. Archer said it could not predict the outcome, had not accrued damages or settlement amounts, and expected further legal costs. The U.S. Attorney’s Office said in January 2022 it would not bring charges and did not intend to continue its related investigation.
- Management identified material weaknesses in financial-reporting controls that remained unremediated at year-end. Disclosure controls and procedures were deemed ineffective; remediation work was ongoing. The auditor issued an unqualified opinion on the financial statements.
- Post-year-end, Archer signed San Jose facility agreements, including a headquarters sublease with approximately $12 million in aggregate base rent and a lab/low-rate production lease with approximately $15 million in aggregate base rent, before other costs.
- Other material uncertainties include execution and funding needs, aircraft safety and market adoption, supplier dependence, COVID-19 and supply-chain effects, and possible non-cash earnings volatility from liability-classified warrants.
Important facts for investors to verify
- Progress against FAA certification milestones and whether timing, aircraft design, or regulatory requirements change.
- United agreement conditions, final commercial terms, delivery schedule, and whether additional orders or customers emerge.
- Cash burn, forecast funding needs, manufacturing and facility spending, and whether management’s stated 12-month liquidity expectation remains valid.
- Remediation and independent testing of the disclosed material weaknesses in internal controls.
- Developments, potential costs, and any financial or operational effects of the Wisk litigation.
- Future warrant-related non-cash gains or losses and equity compensation charges, which can materially affect reported results.