Archer Aviation : Q2'22 Shareholder Letter

SHAREHOLDER LETTER Q2 2022

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SUMMARY OF OPERATIONAL & FINANCIAL HIGHLIGHTS

KEY Q2 AND RECENT '22 HIGHLIGHTS

• We announced earlier today that we have received a $10 million deposit from United Airlines for 100 of the company's initial production eVTOL aircraft.
• We are excited to introduce further details on, and the name of, our production aircraft, Midnight
• We have successfully completed the preliminary design review, or PDR, for for this piloted, four-passenger aircraft
• With the successful completion of Midnight's PDR, we are advancing the commercialization of our business:
• • A majority of the company is now working on Midnight
  • We have validated critical performance metrics for Midnight which is expected to have a payload of over 1,000 pounds and charging turnaround time of approximately 10 minutes
  • We have announced key suppliers: FACC and Honeywell
• We remain focused on achieving our 2022 goals of completing our first transition to wing-borne flight with our Maker aircraft, agreeing to our Means of Compliance with the FAA, and selecting and breaking ground on our manufacturing location

Q2 '22 FINANCIAL HIGHLIGHTS

	Q2 2022 (GAAP)	Q2 2022 (NON-GAAP)1
TOTAL OPERATING EXPENSES	$80.2M	$50.0M
NET LOSS AND COMPREHENSIVE	$(71.7M)	NA
LOSS
ADJUSTED EBITDA	NA	$(49.2M)
CASH AND CASH EQUIVALENTS	$654.8M	NA

• A reconciliation of non-GAAP financial measures to the most comparable GAAP measures is provided below in the section titled "Reconciliation of selected GAAP results to non-GAAP results."

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BUSINESS, TECHNOLOGY AND OPERATIONS

Archer Shareholders,

I am excited to update you on the significant progress that Archer has made over the past few months to advance our technology, certification and commercialization efforts, as well as share with you our financial results for the second quarter of 2022.

This letter augments our earnings conference call, which we will be conducting at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) today. You can access this conference call via a live webcast on our investor relations website at investors.archer.com or by dialing 844-200-6205 (domestic) or [phone] (international) and entering the access code 280293.

We continue to maintain our focus on the most efficient path to commercialization of our business. To that end, we track and communicate progress against the key milestones that will enable us to achieve that goal. Those key milestones span four areas: the development and productization of Midnight, FAA certification of Midnight, building out our manufacturing capability at scale, and establishing airline operations to support our planned Urban Air Mobility (UAM) network. As a reminder, here is a summary of the major milestones that we are tracking to enable commercialization of Archer's business:

KEY MILESTONES

Graphic Summary of our Business Roadmap

In this shareholder letter, I will discuss the progress that we have made since our last earnings call across those four areas.

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BUSINESS, TECHNOLOGY AND OPERATIONS

MAKER FLIGHT TESTING AND SUCCESSFUL PRODUCTION AIRCRAFT DESIGN REVIEW

As we indicated in our last shareholder letter and earnings call, we have ramped up flight testing of our Maker aircraft over the last few months after we successfully upgraded the Tilt Propeller System on the aircraft. We have been flying Maker multiple times per week recently, sometimes more than once per day, and we are extremely pleased with the results and performance demonstrated by the aircraft. We have now successfully completed two of the three required phases of Maker's flight testing program that establish the foundation to allow us to expand Maker's flight envelope from hover to full wing-borne flight (i.e., full transition flight). The first

phase of the process was to complete all of the required tests and performance milestones while in hover. The second phase was critical azimuth testing, which validates the crosswind capabilities of the aircraft configuration and flight control systems. Given the successful completion of these two phases, we remain on-track to complete the first full transition flight with Maker in the second half of 2022.

Silhouette rendering of MidnightTM, our piloted, four-passenger production aircraft

In addition to the progress we have made on Maker, we successfully completed the PDR for our production aircraft, Midnight. Midnight is the piloted, four passenger aircraft that we are working to certify with the FAA and is the aircraft we plan to use for commercial operations. PDR is a critical checkpoint where we evaluate the maturity of the aircraft design, including all subsystems, before making the decision to freeze the key design elements and shift into detailed design and low rate initial manufacturing.

Coming out of PDR, Midnight's design has sufficient maturity to provide us with confidence in the aircraft's key performance metrics. Some of these metrics are key drivers of the operating economics of the business. Some noteworthy examples include:

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Payload: Midnight is expected to be able to carry over 1,000 pounds of payload, making it a true piloted plus four passenger aircraft which is key to enabling our revenue models.

Range & Turnaround Time: Midnight is expected to be able to fly up to 100 miles, but more importantly, it is expected to be able to complete our target mission of successive 20-mile flights with a charging time in between of approximately 10 minutes.

We are now focusing on efforts to bring Midnight to market as efficiently as possible so we can deploy it in our planned UAM network operations and our direct sales line of business.

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BUSINESS, TECHNOLOGY AND OPERATIONS

FAA CERTIFICATION: MEANS OF COMPLIANCE HAS INFORMED MIDNIGHT'S DESIGN

In parallel to advancing the design of Midnight, over the past year the team has made significant progress working with the FAA to finalize our "Means of Compliance" for it. The Means of Compliance is the detailed list of design and testing standards that we will use to demonstrate to the FAA that our aircraft is safe and complies with all of the certification requirements that we established in our G-1 Certification Basis last year. At this point, many of the Means of Compliance for Midnight have been accepted by the FAA, and we are on track to have the remainder of the Means of Compliance agreed to by the end of the year.

A key element of our strategy has been to synchronize the maturation of our production aircraft design with our certification efforts. This strategy allows us to understand the detailed technical requirements specified in the Means of Compliance early enough in the design process so that the aircraft is designed to be FAA compliant, which we believe will translate to a more efficient certification timeline. If the aircraft design is completed before the Means of Compliance and certification plans are complete, we believe there is increased risk that a redesign may be needed to comply with the FAA requirements. By aligning our PDR and our Means of Compliance we are well positioned to optimize our timeline for achieving Type Certification from the FAA of our Midnight aircraft.

In addition to progressing our Means of Compliance over the past several months, our team has been hard at work on the next major step in the certification process: completing our subject specific certification plans (SSCPs). SSCPs provide precise detail on the tests and analysis that will be completed during the implementation phase of the project, which will require that we demonstrate to the FAA that Midnight meets all relevant FAA requirements necessary to receive Type Certification. We expect to have approximately 18 SSCPs, each of which we plan to submit to the FAA for review and acceptance over the coming months. Our goal is to finalize the SSCPs by the time of our next program development milestone for Midnight, the Critical Design Review, which is scheduled to occur during the first half of next year.

MANUFACTURING OPERATIONS AND SUPPLY CHAIN BUILD-OUT

We are in the process of developing the infrastructure necessary to manufacture Midnight reliably, at scale, and in a cost effective manner. We continue to expand our portfolio of foundational suppliers that will provide us with critical components for Midnight. We now have more than 50% of our suppliers for our bill-of-materials selected, based on cost, with that being made up of global leaders in the design, development and manufacturing of aircraft components.

We recently announced two of those: FACC and Honeywell.

FACC will supply key fuselage and wing elements for Midnight. We believe that the high-techexpertise of aerospace specialist FACC in the field of lightweight construction, as well as its many years of experience in the production of high-qualityaerostructures will help ensure that Midnight can achieve its target range and payload capabilities.

Honeywell will supply actuators and climate system technology for Midnight. Given that our UAM network will operate in congested urban environments, it is critical that we achieve precision from the aircraft's flight controls and actuators. Honeywell's actuators can accept hundreds of micro adjustments and commands

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