Archer Aviation (NYSE: ACHR) inks Boeing deal and reports Q2 2026 cash burn, EBITDA loss
Rhea-AI Filing Summary
Archer Aviation reported second quarter 2026 results and outlined a major strategic expansion with Boeing. Archer entered into agreements to acquire Boeing’s Wisk Aero, Insitu and SkyGrid in an all‑stock deal that would give Boeing a strategic equity stake and ongoing collaboration. Insitu is described as profitable with over $200M in annual revenue and operations in 35 countries, while Wisk and SkyGrid add advanced autonomy and airspace‑management technology to support Archer’s Halo/Thunder VTOL platform and its aviation AI model, ZEE.
For the quarter ended June 30, 2026, Archer generated $5.0M in revenue, up from $1.6M in Q1 2026, and incurred total operating expenses of $284.2M, resulting in a net loss of $263.2M. Non‑GAAP total operating expenses were $192.2M, and Adjusted EBITDA was a loss of $177.1M, near the low end of guidance. Archer ended Q2 with $1,560.6M in cash, cash equivalents and short‑term investments plus $7.3M in restricted cash, a decline of $215.3M from Q1 largely driven by operating cash outflows, capex and a Hawthorne Airport FBO acquisition. For Q3 2026, Archer forecasts an Adjusted EBITDA loss between $170M and $200M.
Positive
- Strategic Boeing transaction to acquire Wisk, Insitu and SkyGrid adds advanced autonomy and airspace technologies and over $200M in profitable annual revenue through Insitu, supporting a diversified aerospace and defense platform.
- Revenue growth to $5.0M in Q2 2026 from $1.6M in Q1 2026 as Archer expands operations at Hawthorne Airport, indicating early commercial traction.
Negative
- Large and rising losses with Q2 2026 net loss at $263.2M, up from $217.7M in Q1, driven by higher operating expenses and lower warrant‑related gains.
- Significant cash burn as cash, cash equivalents and short‑term investments fell by $215.3M in Q2 to $1,560.6M, reflecting heavy operating, capex and acquisition outflows.
Insights
Analyzing...
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Q2 2026 Revenue: $5.0M
Q2 2026 Net Loss: $263.2M
Q2 2026 Total Operating Expenses: $284.2M
+5 more
8 metrics
Q2 2026 Revenue
$5.0M
Revenue for the quarter ended June 30, 2026, up from $1.6M in Q1 2026
Q2 2026 Net Loss
$263.2M
Net loss for the quarter ended June 30, 2026
Q2 2026 Total Operating Expenses
$284.2M
GAAP operating expenses including R&D and G&A in Q2 2026
Q2 2026 Adjusted EBITDA
($177.1M)
Non-GAAP Adjusted EBITDA loss for the quarter ended June 30, 2026
Cash & Short-Term Investments
$1,560.6M
Cash, cash equivalents and short-term investments at June 30, 2026
Restricted Cash
$7.3M
Restricted cash balance at June 30, 2026
Insitu Annual Revenue
Over $200M
Insitu’s annualized revenue based on current financials and estimates
Q3 2026 Adjusted EBITDA Guidance
($170M) to ($200M)
Projected Adjusted EBITDA loss range for the third quarter of 2026
Key Terms
eVTOL Integration Pilot Program (eIPP), Adjusted EBITDA, foundation model, warrant liabilities, +2 more
6 terms
eVTOL Integration Pilot Program (eIPP) regulatory
"operations later this year under the White House’s eVTOL Integration Pilot Program (eIPP)"
A eVTOL Integration Pilot Program (EIPP) is a government-backed testing initiative that stages real-world trials of electric vertical takeoff and landing aircraft and their supporting systems to prove they can fly safely and coexist with other air traffic. Like a city running a controlled trial of a new transit service before full rollout, it helps clarify rules, operational limits, and infrastructure needs; for investors, participation or favorable results can lower regulatory risk, speed commercialization, and signal which business models and technologies are more likely to succeed.
Adjusted EBITDA financial
"Q2 2026 Adjusted EBITDA was a loss of $177.1 million"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
foundation model technical
"ZEE, Archer’s AI foundation model purpose-built for aviation"
A foundation model is a large artificial intelligence system trained on vast, diverse data so it can be adapted to many tasks—like a universal engine that can be tuned to drive different products or services. Investors care because these models can lower the cost and time to build new AI-enabled offerings, create competitive advantages or concentration risks, and drive capital needs for compute, talent and regulation that affect company value.
warrant liabilities financial
"Amounts primarily include changes in fair value of the public and private warrants, which are classified as warrant liabilities"
Warrant liabilities are the financial obligations a company records when it grants warrants—special rights allowing someone to buy shares at a set price in the future. If the warrants are expected to be exercised, they are treated as a liability because the company might need to deliver shares or cash later. This matters to investors because it affects the company’s reported financial health and the potential dilution of existing shares.
Group 3 ISR technical
"Integrator: Expeditionary multi-payload Group 3 ISR, built for U.S. Navy and Marine Corps"
non-GAAP total operating expenses financial
"NON-GAAP TOTAL OPERATING EXPENSES $ 192.2"
Earnings Snapshot
Revenue: $5.0M · Guidance included
quarter ended June 30, 2026
Revenue
$5.0M
Increased from $1.6M in the quarter ended March 31, 2026
Net Loss
$263.2M
Increased from $217.7M in the quarter ended March 31, 2026
Adjusted EBITDA
($177.1M)
Loss widened from $172.5M in the quarter ended March 31, 2026
Cash, Cash Equivalents & Short-Term Investments
$1,560.6M
Decreased by $215.3M from $1,775.9M at March 31, 2026
Guidance
For Q3 2026, Archer expects Adjusted EBITDA to be a loss between $170M and $200M.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What major deal did Archer Aviation (ACHR) announce with Boeing in Q2 2026?
Archer entered agreements to acquire Wisk Aero, Insitu and SkyGrid from Boeing, with Boeing taking a strategic equity stake and establishing a long‑term collaboration to build an end‑to‑end physical AI platform for aerospace and defense.
How did Archer Aviation’s (ACHR) revenue perform in the second quarter of 2026?
Archer reported $5.0M in Q2 2026 revenue, up from $1.6M in Q1 2026. Management attributes the increase primarily to expanded operations at the Hawthorne Airport in Los Angeles as the company ramps its air mobility activities.
What was Archer Aviation’s (ACHR) net loss and operating expenses in Q2 2026?
For Q2 2026, Archer posted a net loss of $263.2M on total operating expenses of $284.2M. The company cites continued investment in Midnight flight testing, certification, hybrid aircraft development and its aviation AI model ZEE as key cost drivers.
What is Archer Aviation’s (ACHR) liquidity position after Q2 2026?
At June 30, 2026 Archer held $1,560.6M in cash, cash equivalents and short‑term investments plus $7.3M in restricted cash. These balances declined mainly due to operating cash use, $37.1M of capital spending and a $25.0M Hawthorne Airport FBO acquisition.
What Adjusted EBITDA guidance did Archer Aviation (ACHR) provide for Q3 2026?
Archer expects Q3 2026 Adjusted EBITDA to be a loss of $170M to $200M. Management did not provide a GAAP reconciliation, citing uncertainty in items such as stock‑based compensation and changes in warrant fair values that materially affect reported results.
How did Archer Aviation’s (ACHR) non-GAAP metrics trend in Q2 2026?
Non‑GAAP total operating expenses were $192.2M in Q2 2026 versus $181.9M in Q1, and Adjusted EBITDA loss was $177.1M compared with $172.5M. These non‑GAAP measures exclude stock‑based compensation, warrant, litigation and acquisition‑related expenses.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 10, 2026
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code: 650 -272-3233
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition.
On August 10, 2026, Archer Aviation Inc. (“Archer” or the “Company”) will hold a conference call regarding its operating and financial results for the second quarter ended June 30, 2026. The Company also issued a letter to its stockholders (the “Shareholder Letter”) and a press release (the “Press Release”) announcing its operating and financial results for the second quarter ended June 30, 2026. Copies of the Shareholder Letter and the Press Release are furnished herewith as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K.
The Company makes or will make reference to non-GAAP financial information in the Press Release and on the conference call. A reconciliation of GAAP to non-GAAP results is provided in the Press Release, as attached to this Current Report on Form 8-K.
The information furnished with this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section, nor shall it be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number | Description | |||||||
| 99.1 | Letter to Shareholders, dated August 10, 2026 | |||||||
| 99.2 | Press Release issued by Archer Aviation Inc., dated August 10, 2026 | |||||||
| 104 | Cover Page Interactive Data File (formatted in the Inline XBRL and contained in Exhibit 101) | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ARCHER AVIATION INC. | ||||||||
| Date: August 10, 2026 | By: | /s/ Priya Gupta | ||||||
| Name: | Priya Gupta | |||||||
| Title: | Acting Chief Financial Officer | |||||||
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 1 Q2 2026 BUILDING THE PHYSICAL AI FUTURE OF AEROSPACE & DEFENSE
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 2 Signed deal to acquire Boeing’s Wisk Aero, Insitu and SkyGrid in a highly strategic transaction with Boeing to invest in Archer and collaborate* Unveiled Halo/Thunder, a jointly-developed autonomous, hybrid, VTOL platform designed to serve both defense and commercial applications with Anduril Launched ACES: America’s Consortium for Electric Skyways to bring interoperable charging to 250+ sites across US by 2030 with BETA Technologies & Macquarie Capital Completed piloted city-to-city Midnight flights as we prepare to begin operations later this year under the White House’s eIPP Strong liquidity with Q2 ending with ~$1.6B of cash and cash equivalents** *Transaction is subject to agreed-upon closing conditions, including regulatory approvals. **Includes short-term investments. Announced ZEE, Archer’s AI foundation model purpose-built for aviation and its frontier breakthrough for aviation safety
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 3 Dear Shareholders, Today, we announced that we entered into agreements to acquire Wisk Aero, Insitu, and SkyGrid, three highly innovative Boeing-owned companies, in exchange for Boeing taking a strategic equity stake in Archer1. We anticipate closing the transaction by year end. This transaction will help accelerate our evolution into becoming a diversified aerospace and defense platform. After closing, our product portfolio will span piloted air taxis, unmanned aircraft systems (UAS) in Groups 2 through 5, purpose-built AI for aviation, and the vertical technology stack for autonomous flight. Let me walk you through the transaction rationale in more detail. Archer got its start by standing up a world-class team to find the most efficient path to commercializing the air taxi industry. That will always be core to our mission, and Midnight is well on its way to achieving that. We went from an unknown in 2018, to today leading the air taxi industry in certification progress with the FAA. As I've talked about over the last 18 months, defense is becoming an increasingly large near-term market for autonomous VTOL. Last month, with our partner Anduril, we revealed our Group 5 Halo/Thunder platform, a clean-sheet, autonomous, hybrid-electric VTOL aircraft for both commercial and defense. Thunder, Anduril’s missionized defense version of Halo, aims to serve as a loyal wingman for reconnaissance attack helicopters, like the Apache, targeting multi-decade programs of record across allied forces. It's become increasingly clear that the combined market for this Group 5 platform is massive. And in addition to the revenue, deploying nascent tech early in defense can deliver value across Archer’s entire business, with benefits like autonomy and lower costs flowing back into our air taxi products. Over the past year, we have been assembling a focused team for Halo/Thunder to build the autonomy, flight controls, sensor integration, and flight test capabilities. Wisk will help us round out this team. We are acquiring Wisk to accelerate the Halo/Thunder platform, which I believe will be a generational vertical lift program. Wisk has developed some of the most advanced autonomy, flight controls, and sensor technologies in the industry. We plan to deploy that technology on Halo first, so that we can harden it and then bring it back to the air taxi platform when the FAA is ready to certify autonomy for passenger air taxis. I am confident that our planned acquisition of Wisk can accelerate Halo/Thunder R&D at a fraction of the time it would have taken us to achieve the same results organically. 1 Transaction is subject to agreed-upon closing conditions, including regulatory approvals.
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 4 2 Based on Insitu’s current financials and financial estimates. As part of this transaction, we are also set to acquire Insitu, one of the most trusted and reputable intelligence, surveillance, and reconnaissance (ISR) drone manufacturers, operating profitably with over $200M in annual revenue across 35 countries2. Insitu, which has manufactured over 4,000 Group 2 and Group 3 UAS to date, will give Archer an immediate, sizeable revenue base to grow in the near term. Its fleet has flown nearly 2 million autonomous flight hours, building one of the largest datasets of its kind, key to our autonomy development. This transaction with Boeing would not have been possible without the relationship we have cultivated with Boeing over the last couple of years. Boeing is synonymous with American aviation, and our deal structure demonstrates how leaned in they are on our future together: taking all stock with a lockup, planned collaboration with us across many fronts, and commitment to future equity investment in Archer. A core value proposition for us both is the opportunity to jointly drive innovation in aerospace, defense, and autonomy and deliver long-term value for shareholders. I want to thank Kelly Ortberg and the Boeing leadership for their trust and belief in Archer as the right long-term partner. Last quarter, I called Archer a “dual-threat” company because we are commercializing both an air taxi and our dual-use autonomous VTOL aircraft platform. Over the last couple months, we've shared more on our strategy for purpose-built AI for aerospace and defense. We introduced ZEE, the world's leading aviation-specific foundation model, a unified intelligence platform built on ADS-B, ATC communication, maps and charts, aircraft movements, terrain, and weather data, designed to run on-device across environments from air taxis and UAS to commercial airlines and air traffic management. And just last week, we announced that the model delivered a frontier breakthrough in aviation safety: highly accurate real-time airport surface trajectory prediction. To safely adapt this technology into the aviation ecosystem, our teams are working with government agencies and customers to rigorously validate ZEE in the real world. In fact, we've already begun testing ZEE at Hawthorne Airport, our future LA air taxi hub. SkyGrid is highly complementary to ZEE as it has been developing next-generation airspace management solutions since 2018. That tech is in use today, and I believe SkyGrid plus ZEE can become a ”must have” air traffic management product that helps modernize airspaces around the world. I see a clear path to significant AI revenue, and the team is heads-down building toward that.
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 5 I am confident that the other side of this transaction with Boeing is a stronger Archer with a groundbreaking end-to-end physical AI platform for aerospace and defense. I’ve tasked my team with integrating these companies to do so in a thoughtful and synergistic way that will not structurally increase our overall cash burn. Through it all, our commercial Midnight program continues to accelerate and remain a top priority at Archer. Recently, we flew our first intercity flights in California, and over the next few months, we plan to begin flying in the Los Angeles area based out of Hawthorne Airport, and subsequently commence operations under the White House’s eIPP later this year in Texas. Beyond flight test, our team has also been hard at work on the infrastructure front. This quarter we jointly launched an industry-first consortium with BETA and Macquarie to scale charging infrastructure across the U.S and unify a single approach for OEMs and vertiport developers. I’m proud to do that arm in arm with Kyle and the team at BETA. I started Archer to change the way the world moves. Nearly a decade in, I've never been more confident, or more all in. Adam Goldstein Founder & Chief Executive Officer
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 6 BUILDING THE PHYSICAL AI FUTURE OF AEROSPACE & DEFENSE
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 7 6 generations of aircraft over nearly 20 years End-to-end flight autonomy stack – designed to achieve the highest commercial aviation safety standards 1,700+ hours of autonomous test flights – across six aircraft generations since its 2010 founding by Larry Page Critical enabling tech – multi-sensor detect and avoid suite, precision landing technology, and in-house simulation solution with advanced software verification and validation capabilities Synergies from 12-tilt-6 aircraft design – with focus on vertical innovation in avionics, flight controls, and structures Leading IP Portfolio – 700+ patent assets in key areas AUTONOMY TECHNOLOGY & TOP TALENT TO ACCELERATE OUR AIRCRAFT PROGRAMS
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 8 Pioneer in the design, development, production, and operation of high-performance, cost-effective, tactical Group 2 / 3 uncrewed aircraft systems (UAS) $200M+ annualized revenue and profitable with customers across 35 countries Nearly 2M uncrewed flight hours across 175,000+ flights in active combat zones, shipboard maritime missions, and harsh environment operations ~4,100 aircraft produced; 500+ active patents Product portfolio spans two leading UAS platforms: ScanEagle: Long-endurance Group 2 tactical ISR, small-footprint workhorse with 18+ hours of flight time and up to 17 lbs of AI-enabled payloads. Integrator: Expeditionary multi-payload Group 3 ISR, built for U.S. Navy and Marine Corps; can fly up to 27.5 hours with 2,000 nmi range and up to 50lbs of payload across 10 bays. ONE OF THE MOST TRUSTED & REPUTABLE ISR DRONE COMPANIES IN THE INDUSTRY
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 9 AI solution enabling safe integration of autonomous aircraft into shared airspace via next generation technology Fuses critical datasets to form a high-fidelity digital model of the airspace for air traffic controllers Delivers advanced automation and decision support tools: flight plan validation plus automated traffic surveillance, synchronization, deconfliction, and rerouting High assurance technology backed by robust safety cases, cybersecurity controls, and rigorous engineering Spatial pathfinding algorithms have calculated collision-free trajectories for 10,000+ simultaneous aircraft in large metropolitan area simulation NEXT-GENERATION AIRSPACE MANAGEMENT SOLUTION HIGHLY COMPLEMENTARY TO ARCHER’S ZEE
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 10 OTHER HIGHLIGHTS FROM THE QUARTER Unveiled Halo/Thunder: Archer’s Dual-Use Autonomous, Hybrid VTOL Platform With Anduril In July, Archer and Anduril unveiled their jointly-developed autonomous, hybrid VTOL aircraft platform at the Farnborough International Airshow, introduced as Thunder for defense missions and Halo for commercial applications. The two variants share the same airframe, hybrid powertrain and core systems, with configurable payload depending on mission requirements. Announced ZEE, Archer’s AI Foundation Model Purpose-Built For Aviation Archer announced ZEE, its AI foundation model purpose-built for aviation, delivering a unified aviation intelligence platform built on ADS-B, ATC communication, maps and charts, aircraft state, terrain and weather data. The foundation model is designed to work both offline, on-device and as a server-hosted solution, critical for use in a wide range of aviation environments from air taxis and UASs to commercial airlines and air traffic management. Completed City-to-City Midnight Flights In Preparation for eIPP Operations In July, Archer's Midnight aircraft completed a piloted round trip journey between Salinas Municipal Airport and Monterey Regional Airport, with each leg completed in approximately nine minutes compared to over 35 minutes by car. The flight was executed in close coordination with the FAA and marks a critical step toward Archer launching Midnight operations later this year under the eIPP.
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 11
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 12 Archer Halo Anduril Thunder
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 13 Archer Halo Anduril Thunder unveil presentation at Farnborough International Airshow Archer Halo Archer Halo
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 14 Farnborough International Airshow, Archer Chalet
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 15 Farnborough International Airshow
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 16 Recent Midnight flight test
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 17 Archer Zee predicting real-time aircraft trajectories Archer x BETA | ACES Infrastructure Consortium
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 18 Archer’s ZEE showcasing real-time aircraft trajectories prediction capabilities
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 19 Forward-Looking Statements & Disclaimers This shareholder letter contains forward-looking statements under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements include those regarding the design, safety, target specifications, and use cases of its aircraft and technologies; pace of design and regulatory progress; the timing, phasing, geographic scope and planned operations under the eIPP; its ability to timely develop, certify, test, manufacture and commercialize its aircraft and technologies, or its ability to do so at all; infrastructure development; the expected timing and structure of the proposed acquisition and transactions with Boeing (the “Transactions”); the ability of the parties to complete the Transactions; the expected benefits of the Transactions, including future financial and operating results and strategic benefits; development of its hybrid aircraft and defense programs; timing and ability to win a defense program award; expansion of its planned business lines and development of new business opportunities; and plans and anticipated benefits of acquisitions, strategic investments, partnerships and collaborations with third parties. In addition, this document refers to agreements that remain conditional, subject to the future execution of definitive agreements and the satisfaction of certain conditions. Such agreements may not be completed or may contain different terms than those currently contemplated. In some cases, forward-looking statements can be identified by terms such as "may," "will," "appears," “should," "expects,”plans," "anticipates," "could," "intends," "target," "projects,” contemplates," "believes," "estimates,” “predicts,” ”potential,ˮ or “continue,” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Such statements are subject to a number of known and unknown risks, uncertainties, assumptions, and other factors that may cause the Companyʼs actual results, performance, or achievements to differ materially from results expressed or implied in this letter. Investors are cautioned not to place undue reliance on these statements, and reported results should not be considered as an indication of future performance. Some statements relate to agreements that are conditional on execution of definitive agreements and satisfaction of certain requirements. These agreements may not be completed or could differ materially from current expectations. Forward-looking statements are based upon various estimates and assumptions, as well as information known to us as of the date hereof, and are subject to risks and uncertainties. Accordingly, actual results could differ materially due to a variety of factors, including: the early stage nature of our business and our past and projected future losses; our ability to design, manufacture, and commercialize our aircraft; risks associated with indicative orders from certain third parties for our aircraft, which are subject to the satisfaction of certain conditions and/or further negotiation and reaching mutual agreement on certain material terms, and the risk that such parties cancel such orders or never place them; the early nature of our defense program and our ability to win bids to develop defense aircraft and technologies; government spend for the air traffic control system; our ability to market eVTOL aircraft, attract customers and compete with existing and new competitors in existing and new markets; risks related to infrastructure development, vertiport availability, airspace integration, and municipal permits; ability to obtain any required certifications, licenses, approvals, or authorizations from governmental authorities; ability to timely achieve business milestones, or at all, such as scaling manufacturing while maintaining quality, reliability, safety and regulatory compliance; our dependence on suppliers for aircraft parts and components; tariffs, export controls or other trade restrictions; natural disasters, public health outbreaks, economic, social, weather, growth constraints or other circumstances affecting metropolitan areas; the potential for losses and adverse publicity stemming from any aircraft accidents, especially those involving electric aircraft or lithium-ion batteries, or our test flights; risks associated with indexed price escalation clauses in aircraft contracts; ability to hire, train, and retain key and highly specialized technical and operational personnel litigation, including intellectual property claims; capital market volatility and access to financing on acceptable terms; federal government shutdown; and cybersecurity risks. Forward-looking statements are based upon various estimates and assumptions, as well as information known to us as of the date hereof, and are subject to risks and uncertainties. Accordingly, actual results could differ materially due to a variety of factors, including: the early stage nature of our business and our past and projected future losses; our ability to design, manufacture, and commercialize our aircraft; risks associated with indicative orders from certain third parties for our aircraft, which are subject to the satisfaction of certain conditions and/or further negotiation and reaching mutual agreement on certain material terms, and the risk that such parties cancel such orders or never place them; the early nature of our defense program and our ability to win bids to develop defense aircraft and technologies;
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 20 Forward-Looking Statements & Disclaimers (continued) government spend for the air traffic control system; our ability to market eVTOL aircraft, attract customers and compete with existing and new competitors in existing and new markets; risks related to infrastructure development, vertiport availability, airspace integration, and municipal permits; ability to obtain any required certifications, licenses, approvals, or authorizations from governmental authorities; ability to timely achieve business milestones, or at all, such as scaling manufacturing while maintaining quality, reliability, safety and regulatory compliance; our dependence on suppliers for aircraft parts and components; tariffs, export controls or other trade restrictions; natural disasters, public health outbreaks, economic, social, weather, growth constraints or other circumstances affecting metropolitan areas; the potential for losses and adverse publicity stemming from any aircraft accidents, especially those involving electric aircraft or lithium-ion batteries, or our test flights; risks associated with indexed price escalation clauses in aircraft contracts; ability to hire, train, and retain key and highly specialized technical and operational personnel; litigation, including intellectual property claims; capital market volatility and access to financing on acceptable terms; federal government shutdown; and cybersecurity risks. Additional risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed in our filings with the Securities and Exchange Commission ("SEC"), including our most recent Annual Report on Form 10-K, which is or will be available on our investor relations website at http://investors.archer.com and on the SEC website at www.sec.gov. In addition, please note that any forward-looking statements contained herein are based on current expectations and assumptions that Archer believes to be reasonable as of the date of this shareholder letter. Archer undertakes no obligation to update these statements as a result of new information or future events.
UNLOCK THE SKIES Q2 2026 SHAREHOLDER LETTER | 21
Archer Announces Second Quarter 2026 Results; Announces Deal with Boeing to Shape Physical AI Future of Aerospace and Defense Halo, the commercial variant of Archer’s autonomous, dual-use platform ● Announced deal to acquire Boeing’s Wisk Aero, Insitu and SkyGrid to create an end-to-end physical AI platform for aerospace and defense and adding over $200M in annual revenue to Archer’s business with Boeing to invest in and collaborate with Archer. ● Unveiled Halo/Thunder, the commercial and defense variants of Archer’s jointly-developed autonomous, hybrid VTOL platform with Anduril. ● Announced ZEE, Archer’s AI foundation model purpose-built for aviation and its frontier breakthrough for aviation safety. ● Completed piloted city-to-city Midnight flights in preparation for operations later this year under the White House’s eVTOL Integration Pilot Program (eIPP). SANTA CLARA, CA, August 10, 2026 - Archer Aviation Inc. (“Archer” or the “Company”) (NYSE: ACHR) today announced operating and financial results for the second quarter ended June 30, 2026. The Company issued a shareholder letter from founder and CEO, Adam Goldstein, discussing highlights from the quarter.
Commenting on second quarter 2026 results, Adam Goldstein said: “Today is an important inflection point for Archer. With the planned acquisitions of Wisk, Insitu, and SkyGrid from Boeing, coupled with our recent unveiling of Halo, ZEE, and ACES, we are rapidly advancing our diversified, multi-platform strategy across air taxis, UAS and AI to lead the next generation of aerospace and defense.” Live Webcast Details Archer will host a live webcast to discuss its results at 2:00 p.m. Pacific Time today. The live webcast and replay are accessible via Archer’s investor relations website at investors.archer.com or conference call by visiting https://events.q4inc.com/attendee/810358512 Recent Highlights Archer to Acquire Boeing’s Wisk Aero, Insitu and SkyGrid Transaction1 to create an end-to-end physical AI platform for aerospace and defense, combining Wisk, Insitu and SkyGrid’s pioneering autonomy and airspace intelligence technologies with Archer’s leading purpose-built AI foundation model, ZEE. Insitu alone will add over $200M in annual revenue2 to Archer’s business with operations across 35 countries. As part of the transaction, Boeing is set to take a strategic stake in, and become a strategic partner to, Archer, establishing an ongoing Archer and Boeing collaboration and technology sharing arrangement. Unveiled Dual-Use Autonomous, Hybrid VTOL Platform With Anduril In July, Archer and Anduril unveiled their jointly-developed autonomous, hybrid VTOL aircraft platform at the Farnborough International Airshow, introduced as Thunder for defense missions and Halo for commercial applications. The two variants share the same airframe, hybrid powertrain and core systems, with configurable payload depending on mission requirements. Designed for low-cost, high-volume production using commercial supply chains, the platform behind Halo and Thunder is built to support broad deployment, rapid production and the scale commercial and defense markets require. Announced ZEE, Archer’s AI Foundation Model Purpose-Built for Aviation Archer announced ZEE, its AI foundation model purpose-built for aviation, delivering a unified aviation intelligence platform built on ADS-B, ATC communication, maps and charts, aircraft state, terrain and weather data. The foundation model is designed to work both offline, on-device and as a server-hosted solution, critical for use in a wide range of aviation environments from air taxis and UAVs to commercial airlines and air traffic management. ZEE recently achieved a technical breakthrough demonstrating the capability to accurately predict real-time aircraft trajectories on the airport surface minutes into the future, giving the humans in the loop the most critical asset in aviation safety: time to react. 2 Based on Insitu’s current financials and financial estimates. 1 The transaction remains subject to the satisfaction of certain agreed-upon closing conditions.
Completed City-to-City Midnight flights In Preparation for eIPP Operations In July, Archer's Midnight aircraft completed a piloted round trip journey between Salinas Municipal Airport and Monterey Regional Airport, with each leg completed in approximately nine minutes compared to over 35 minutes by car. The flight was executed in close coordination with the FAA and marks a critical step toward Archer launching Midnight operations later this year under the eIPP.
Second Quarter 2026 Financial Results We reference several non-GAAP metrics in the financial discussion that follows. Unless otherwise noted or defined, our non-GAAP metrics are calculated by starting with the equivalent GAAP metric. A reconciliation of non-GAAP financial measures to the most comparable GAAP measures is provided below in the section titled “GAAP to Non-GAAP Reconciliation”. SUMMARY FINANCIALS (In millions; unaudited) QUARTER ENDED JUN 30, 2026 MAR 31, 2026 JUN 30, 2025 REVENUE $ 5.0 $ 1.6 $ - TOTAL OPERATING EXPENSES 284.2 256.2 176.1 NET LOSS (263.2) (217.7) (206.0) NON-GAAP TOTAL OPERATING EXPENSES 192.2 181.9 123.5 ADJUSTED EBITDA (177.1) (172.5) (118.7) CASH, CASH EQUIVALENTS & SHORT-TERM INVESTMENTS 1,560.6 1,775.9 1,724.0 Key Financial Highlights Liquidity & Cash Flows ● We ended Q2 2026 with $1,560.6 million of cash, cash equivalents, and short-term investments on our balance sheet and an additional $7.3 million of restricted cash. ● Our Q2 2026 cash, cash equivalents, and short-term investments decreased by $215.3 million from Q1 2026, primarily due to the $156.4 million cash used in operating activities, $37.1 million used in the purchase of property and equipment and $25.0 million used in acquisition of the fixed based operator business at the Hawthorne Airport. Revenue ● Our Q2 2026 Revenue increased by $3.4 million from Q1 2026 to $5.0 million as we expanded operations at the Hawthorne Airport in LA.
Operating Expenses & Net Loss ● Q2 2026 Operating Expenses increased by $28.0 million from Q1 2026 as we continued to invest in expanding flight testing, certification efforts, and production activities for our Midnight aircraft, along with the investment in the design and development efforts for our hybrid aircraft, and the development of ZEE, our AI foundation model. ● Q2 2026 Net Loss increased by $45.5 million from Q1 2026 primarily driven by $28.0 million increase in operating expenses, $18.8 million decrease primarily in non-cash gain for change in fair value of private and public warrants within other income (expense), net, and a $2.2 million decrease in interest income, net, offset by $3.4 million increase in revenue generated. Adjusted EBITDA ● Q2 2026 Adjusted EBITDA was a loss of $177.1 million, which is on the lower end of the guidance range of $170 million - $200 million. The loss was a planned increase of $4.6 million over Q1 2026, mainly due to the reasons mentioned above for the increase in operating expenses. Q3 2026 Financial Estimates ● Archer’s financial estimates for the third quarter of 2026 are as follows: ○ Adjusted EBITDA expected to be a loss of $170 million to $200 million. We have not reconciled our Adjusted EBITDA estimates because certain items that impact non-GAAP metrics are uncertain or out of our control and cannot be reasonably predicted. In particular, stock-based compensation expense and change in fair value of warrants is impacted by the future fair market value of our common stock and warrants along with other factors, all of which are difficult to predict, subject to frequent change, or not within our control. The actual amount of these expenses during the third quarter of 2026 will have a significant impact on our future GAAP financial results. Accordingly, a reconciliation of non-GAAP metrics is not available without unreasonable effort.
About Archer Archer builds the aircraft and core technologies that will define the next era of flight for aerospace and defense. To learn more, visit www.archer.com. For Investors investors@archer.com For Media The Brand Amp Archer@TheBrandAmp.com Source: Archer Text: ArcherIR Forward-Looking Statements and Disclaimers This press release contains forward-looking statements regarding Archer's future business plans, expectations, and opportunities. These statements include those regarding its expected financial results for the third quarter of 2026; the design, safety, target specifications and use cases of its aircraft and technologies; pace of design and regulatory progress; the timing, phasing, geographic scope and planned operations under the eIPP; infrastructure development; its ability to timely develop, certify, test, manufacture and commercialize its eVTOL aircraft and technologies and develop vertiport infrastructure, or its ability to do so at all; development of its hybrid aircraft and defense programs; the expected timing and structure of the transaction; the ability of the parties to complete the contemplated transactions; the expected benefits of the transactions, including future financial and operating results and strategic benefits; and plans, objectives, and anticipated benefits of future acquisitions, strategic investments, partnerships, and collaborations with third parties. These forward-looking statements are based on Archer's current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from Archer's current expectations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (i) that one or more closing conditions to the transaction, including certain regulatory approvals, may not be satisfied or waived, on a timely basis or otherwise, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction, or may require conditions, limitations or restrictions in connection with such approvals; (ii) the risk that the transaction may not be completed on the terms or in the time frame expected by Archer, or at all; (iii) unexpected costs, charges or expenses resulting from the transaction; (iv) uncertainty of the expected financial performance of Archer following completion of the transaction; (v) failure to realize the anticipated benefits of the transaction, including as a result of delay in completing the transaction or integrating the
businesses, on the expected timeframe or at all; (vi) the occurrence of any event that could give rise to termination of the transaction; (vii) the risk that stockholder litigation in connection with the transaction or other litigation, settlements or investigations may affect the timing or occurrence of the transaction or result in significant costs of defense, indemnification and liability; (viii) risks related to the disruption of management time from ongoing business operations due to the pendency of the transaction, or other effects of the pendency of the transaction on the relationship of any of the parties to the transaction with their employees, customers, suppliers or other counterparties; and (ix) other risk factors detailed from time to time in Archer's reports filed with the Securities and Exchange Commission (the "SEC"), including documents that will be filed with the SEC in connection with the transaction. Any forward-looking statements contained herein are based on assumptions that Archer believes to be reasonable as of the date of this press release. Archer undertakes no obligation to update these statements as a result of new information or future events.
ARCHER AVIATION INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions; except par value; unaudited) As of Jun 30, 2026 Dec 31, 2025 Assets Current assets Cash and cash equivalents $ 852.7 $ 1,021.5 Restricted cash 7.3 7.3 Short-term investments 707.9 943.2 Prepaid expenses 55.7 47.3 Other current assets 23.7 56.8 Total current assets 1,647.3 2,076.1 Property and equipment, net 326.7 253.6 Intangible assets, net 94.5 80.2 Right-of-use assets 43.8 40.8 Goodwill 80.5 0.1 Other long-term assets 21.5 15.1 Total assets $ 2,214.3 $ 2,465.9 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 32.1 $ 30.2 Current portion of lease liabilities 6.8 5.3 Accrued expenses and other current liabilities 120.3 68.1 Current portion of debt 2.1 0.8 Total current liabilities 161.3 104.4 Debt, net of current liabilities 78.0 79.5 Lease liabilities, net of current portion 38.7 36.3 Warrant liabilities 3.0 29.9 Other long-term liabilities 17.7 13.0 Total liabilities 298.7 263.1 Stockholders’ equity Class A common stock, $0.0001 par value 0.1 0.1 Additional paid-in capital 4,680.5 4,507.9 Accumulated deficit (2,784.7) (2,303.8) Accumulated other comprehensive loss (3.6) (1.4) Total stockholders’ equity 1,892.3 2,202.8 Noncontrolling interest 23.3 - Total liabilities and stockholders’ equity $ 2,214.3 $ 2,465.9
ARCHER AVIATION INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data; unaudited) QUARTER ENDED JUN 30, 2026 MAR 31, 2026 JUN 30, 2025 Revenue $ 5.0 $ 1.6 $ - Operating expenses: Cost of revenue 4.3 1.3 - Research and development 186.0 171.7 122.4 General and administrative 93.9 83.2 53.7 Total operating expenses 284.2 256.2 176.1 Loss from operations (279.2) (254.6) (176.1) Other income (expense), net 1.8 20.6 (40.0) Interest income, net 14.2 16.4 10.2 Loss before income taxes (263.2) (217.6) (205.9) Income tax expense - (0.1) (0.1) Net loss (263.2) (217.7) (206.0) Net income (loss) attributable to noncontrolling interest - - - Net loss attributable to common stockholders $ (263.2) $ (217.7) $ (206.0) Net loss per share attributable to common stockholders, basic and diluted $ (0.34) $ (0.28) $ (0.36) Weighted-average shares outstanding, basic and diluted 781.7 766.9 579.2
ARCHER AVIATION INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions; unaudited) SIX MONTHS ENDED JUN 30, 2026 JUN 30, 2025 Cash flows from operating activities Net loss $ (480.9) $ (299.4) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization expense 17.9 8.9 Stock-based compensation expense 156.0 81.9 Change in fair value of warrant liabilities (26.9) (1.7) Non-cash lease expense 3.7 1.8 Research and development warrant expense - 1.6 General and administrative warrant expense 1.1 - Loss on disposal of property and equipment, net 0.6 - Amortization of short-term investments purchased at a premium 3.0 - Others 0.6 - Changes in operating assets and liabilities: Prepaid expenses 3.3 0.5 Other current assets (7.6) 0.9 Other long-term assets (7.9) (1.3) Accounts payable 0.9 5.4 Accrued expenses and other current liabilities 39.1 4.0 Operating lease right-of-use assets and lease liabilities, net (2.8) (2.2) Other long-term liabilities (5.6) 1.6 Net cash used in operating activities (305.5) (198.0) Cash flows from investing activities Purchase of property and equipment (69.7) (28.9) Proceeds from maturities of short-term investments 230.0 - Acquisition of intangible assets - (5.2) Business acquisition, net of cash acquired (28.7) - Net cash provided by (used in) investing activities 131.6 (34.1) Cash flows from financing activities Repayment of long-term debt (0.2) - Proceeds from PIPE financing - 10.0 Proceeds from issuance of common stock - 1,151.8 Proceeds from exercise of stock options 0.1 - Proceeds from shares issued under employee stock purchase plan 5.2 3.8 Payment of offering costs in connection with financing activities - (44.3) Net cash provided by financing activities 5.1 1,121.3 Net change in cash, cash equivalents, and restricted cash (168.8) 889.2 Cash, cash equivalents, and restricted cash, beginning of period 1,028.8 841.3 Cash, cash equivalents, and restricted cash, end of period $ 860.0 $ 1,730.5
Reconciliation of Selected GAAP To Non-GAAP Results A reconciliation of total operating expenses to non-GAAP total operating expenses for the quarters ended June 30, 2026, March 31, 2026, and June 30, 2025, respectively, are set forth below. RECONCILIATION OF OPERATING EXPENSES (In millions; unaudited) QUARTER ENDED JUN 30, 2026 MAR 31, 2026 JUN 30, 2025 TOTAL OPERATING EXPENSES $ 284.2 $ 256.2 $ 176.1 Adjusted to exclude the following: Stellantis warrant expense (1) - - (0.8) General and administrative warrant expense - (1.1) - Stock-based compensation expense (2) (85.6) (70.4) (51.8) Litigation-related expense (3) (6.0) - - Acquisition-related expenses (4) (0.4) (2.8) - NON-GAAP TOTAL OPERATING EXPENSES $ 192.2 $ 181.9 $ 123.5 1. Amounts include non-cash warrant costs, classified as research and development expenses, for the warrants issued to Stellantis in connection with certain services they are providing to the Company 2. Amounts primarily include stock-based compensation expense for options and restricted stock units issued to employees, non-employees, including the grants issued to our founder and shares issued to vendors 3. Amount reflects an accrued one-time litigation settlement-related cash expenses 4. Amount reflect acquisition-related cash expenses
Reconciliation of Selected GAAP To Non-GAAP Results A reconciliation of net loss to Adjusted EBITDA for the quarters ended June 30, 2026, March 31, 2026, and June 30, 2025, respectively, are set forth below. RECONCILIATION OF ADJUSTED EBITDA (In millions; unaudited) QUARTER ENDED JUN 30, 2026 MAR 31, 2026 JUN 30, 2025 NET LOSS $ (263.2) $ (217.7) $ (206.0) Adjusted to exclude the following: Other (income) expense, net (1) (1.8) (20.6) 40.0 Interest income, net (14.2) (16.4) (10.2) Income tax expense - 0.1 0.1 Depreciation and amortization expense 10.1 7.8 4.8 Stellantis warrant expense (2) - - 0.8 General and administrative warrant expense - 1.1 - Stock-based compensation expense (3) 85.6 70.4 51.8 Litigation-related expense (4) 6.0 - - Acquisition-related expenses (5) 0.4 2.8 - ADJUSTED EBITDA $ (177.1) $ (172.5) $ (118.7) 1. Amounts primarily include changes in fair value of the public and private warrants, which are classified as warrant liabilities 2. Amounts include non-cash warrant costs, classified as research and development expenses, for the warrants issued to Stellantis in connection with certain services they are providing to the Company 3. Amounts primarily include stock-based compensation expense for options and restricted stock units issued to employees, non-employees, including the grants issued to our founder and shares issued to vendors 4. Amount reflects an accrued one-time litigation settlement-related cash expenses 5. Amounts reflect acquisition-related cash expenses
Non-GAAP Financial Measures To supplement our consolidated financial results prepared in accordance with GAAP, we use the following non-GAAP financial measures: Non-GAAP total operating expenses and Adjusted EBITDA. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures have no standardized meaning prescribed by GAAP and are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and may be reflected in our financial results for the foreseeable future. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures. We believe that the use of non-GAAP financial measures help us evaluate our business and financial performance, identify trends impacting our business, formulate business plans and financial projections, and make strategic decisions. We believe that disclosing non-GAAP financial measures to the readers of our financial statements provides useful supplemental data that, while not a substitute for GAAP financial measures, can offer insight in the review of our operating and financial results and enables investors to more fully understand our performance and cash trends by removing the effects of certain non-cash expenses and non-recurring items. We excluded items in the following general categories from one or more of our non-GAAP financial measures, certain of which are described below: STOCK-BASED COMPENSATION EXPENSE We exclude stock-based compensation expense, which is a non-cash expense, from these non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information on our operating results and enhances our ability and the ability of the investors to understand the impact of non-cash stock-based compensation expense on our operating results. WARRANT EXPENSE & GAINS OR LOSSES FROM REVALUATION OF WARRANTS Expense from our common stock warrants issued to Stellantis, which is recurring (but non-cash), expense from one-time issuance of warrant and gains or losses from change in fair value of public and private warrants from revaluation will be reflected in our financial results for the foreseeable future. We exclude warrant expense and gains or losses from change in fair value for similar reasons to our stock-based compensation expense.
LITIGATION-RELATED EXPENSE We exclude one-time accrued cash expenses incurred related to litigation settlement, from these non-GAAP financial measures because we believe these transaction-specific expenses are inconsistent in amount and frequency and do not correlate to the operation of our business and excluding these provides meaningful supplemental information on our operating results and enhances our ability and the ability of the investors to understand the impact of non-recurring litigation-related expense on our operating results. ACQUISITION-RELATED EXPENSE We exclude cash expenses, including diligence, legal, advisory and other costs incurred with acquisitions, from these non-GAAP financial measures because we believe these transaction-specific expenses are inconsistent in amount and frequency and do not correlate to the operation of our business and excluding these provides meaningful supplemental information on our operating results and enhances our ability and the ability of the investors to understand the impact of non-recurring acquisition-related expense on our operating results. ###