JTAI 10-K & 10-Q changes, risk factors and insider trading

We depend on funds from our operations, proceeds from our financing arrangements and additional fundraising in order to sustain our ongoing operations. To date, we have suffered recurring losses from operations and have a significant accumulated deficit. As a result of these recurring losses from operations and the need for additional capital, there is substantial doubt about our ability to continue as a going concern. Therefore, our independent registered public accounting firm included an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern in our report on our audited financial statements for the year ended December 31, 2025. Note 2 to the consolidated financial statements included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, included a similar qualification regarding our ability to continue as a going concern. Our financial statements have been prepared in accordance with GAAP, which contemplates that we will continue to operate as a going concern. Our financial statements do not contain any adjustments that might result if we are unable to continue as a going concern.

In addition, even if we are able to obtain additional financing on satisfactory terms, we cannot predict the size of future issuances of shares of our common stock or securities convertible into shares of our common stock or the effect, if any, that future issuances and sales of shares of our common stock will have on the price of our shares of common stock. We may not accurately anticipate how quickly we may use our funds and whether these funds are sufficient to bring the business to profitability. Furthermore, raising additional capital through the issuance of equity securities may reduce the percentage ownership of our existing stockholders and such existing stockholders may experience additional dilution in net book value per share. Any such newly-issued equity securities may also have rights, preferences or privileges senior to those of the holders of shares of our common stock.

We are an early-stage company with a limited operating history.

We have a limited history upon which to evaluate our performance and future prospects. Our current and proposed operations are subject to all business risks associated with newer enterprises. These include likely fluctuations in operating results as we react to developments in our markets, difficulty in managing our growth, and the entry of competitors into our markets. We have incurred net losses to date and anticipate continuing net losses for the foreseeable future. We cannot assure you that we will be profitable in the foreseeable future or generate sufficient profits to pay dividends. If we achieve profitability, we cannot be certain that we will be able to sustain or increase such profitability. We have not consistently generated positive cash flow from operations and cannot be certain that we will be able to generate positive cash flow from operations in the future. To achieve and sustain profitability, we must accomplish numerous objectives, including broadening and stabilizing our sources of revenue. Accomplishing these objectives may require significant capital investments. We cannot assure the achievement of these objectives.

We may not be able to successfully implement our growth strategies.

Our growth strategies include, among other things, expanding our addressable market by opening up private aviation to non-members through our marketplace, expanding into new domestic markets, pursuing new opportunities in the AI sector, and developing adjacent (or complementary) businesses, including, but not limited to, developing and operating AI data centers. We face numerous challenges in implementing our growth strategies, including our ability to execute on market, business, product/service and geographic expansions. Our strategies for growth are dependent on, among other things, our ability to expand existing products and service offerings and launch new products and service offerings. Although we devote significant financial and other resources to the expansion of our products and service offerings, our efforts may not be commercially successful or achieve the desired results. Our financial results and our ability to maintain or improve our competitive position will depend on our ability to effectively gauge the direction of our key marketplaces and successfully identify, develop, market and sell new or improved products and services in these changing marketplaces. Our inability to successfully implement our growth strategies could have a material adverse effect on our business, financial condition and results of operations and any assumptions underlying estimates of expected cost savings or expected revenues may be inaccurate.

Our operating results have been, and are expected to continue to be, difficult to continue to predict based on a number of factors that also will affect our long-term performance.

We expect our operating results to fluctuate significantly in the future based on a variety of factors, many of which are outside our control and difficult to predict. As a result, period-to-period comparisons of our operating results may not be a good indicator of our future or long-term performance. The following factors may affect us from period-to-period and may affect our long-term performance:

Our business is primarily focused on certain targeted geographic regions, making it vulnerable to risks associated with having geographically concentrated operations.

Our historic customer base is primarily concentrated in the southwestern region of the United States. As a result, our business, financial condition and results of operations are susceptible to regional economic downturns and other regional factors, including state regulations and budget constraints and severe weather conditions, catastrophic events or other disruptions. As we seek to expand in our existing markets, opportunities for growth within these regions will become more limited and the geographic concentration of our business may increase.

Our business and reputation rely on, and will continue to rely on, third parties.

We have relied on a third-party app developer to develop the initial versions of our app and we may continue to rely on third parties for future development of portions of any new or revised app. In place of a third-party app developer, we rely both on internal development and freelance contractors supervised by our Chief Technology Officer. We intend to continue to build our internal development team and to gradually decrease our reliance on external contractors for app development. If there were delays or complications in the further development of our app, this might result in difficulties that include, but are not limited to, the following:

We also rely heavily on our existing operating partner, Cirrus, to maintain and operate our aircraft for charter services and we rely on third party operators when our clients book flights through our platform with those operators. The failure of these third parties to perform these roles properly may result in damage to our reputation, loss of clients, potential litigation and other costs. We may also experience delays, defects, errors, or other problems with their work that could have an adverse effect on our results and our ability to achieve profitability.

We rely on third-party Internet, mobile, and other products and services to deliver our mobile and web applications and flight management system offerings to customers, and any disruption of, or interference with, our use of those services could adversely affect our business, financial condition, results of operations, and customers.

Our technology platform’s continuing and uninterrupted performance has been critical to our success. That platform is dependent on the performance and reliability of Internet, mobile, and other infrastructure services that are not under our control. While we have engaged reputable vendors to provide these products or services, we do not have control over the operations of the facilities or systems used by third-party providers. These facilities and systems may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, human error, terrorist attacks, power outages, pandemics, and similar events or acts of misconduct. In addition, any changes in one of our third-party service provider’s service levels may adversely affect our ability to meet the requirements of our customers. While we believe we have implemented reasonable backup and disaster recovery plans, we have experienced, and expect that in the future we will experience, interruptions, delays and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions, capacity constraints, or external factors beyond our control. Sustained or repeated system failures would reduce the attractiveness of our offerings and could disrupt our customers’ businesses. It may become increasingly difficult to maintain and improve our performance, especially during peak usage times, as we expand our products and service offerings. Any negative publicity or user dissatisfaction arising from these disruptions could harm our reputation and brand, may adversely affect the usage of our offerings, and could harm our business, financial condition and results of operation.

We rely on third parties maintaining open marketplaces to distribute our mobile and web applications.

The success of CharterGPT relies in part on third parties maintaining open marketplaces, including the Apple App Store and Google Play, which make our app available for download. We cannot be assured that the marketplaces through which we distribute CharterGPT will maintain their current structures or that such marketplaces will not charge us fees to list CharterGPT for download.

We may be unable to adequately protect our intellectual property interests or may be found infringing on the intellectual property interests of others.

Our intellectual property may include trademarks, domain names, website, mobile and web applications, software (including our proprietary algorithms and data analytics engines), copyrights, trade secrets, and inventions (whether or not patentable). We believe that our intellectual property plays an important role in protecting our brand and the competitiveness of our business. If we do not adequately protect our intellectual property, our brand and reputation may be adversely affected and our ability to compete effectively may be impaired.

We protect our intellectual property through a combination of trademarks, domain names and other measures. We have registered our trademarks and domain names that we currently use in the United States. Our efforts may not be sufficient or effective. Further, we may be unable to prevent competitors from acquiring trademarks or domain names that are similar to or diminish the value of our intellectual property. In addition, it may be possible for other parties to copy or reverse engineer our applications or other technology offerings. Moreover, our proprietary algorithms, data analytics engines, or other software or trade secrets may be compromised by third parties or our employees, which could cause us to lose any competitive advantage we may have from them.

In addition, our business is subject to the risk of third parties infringing our intellectual property. We may not always be successful in securing protection for, or identifying or stopping infringements of, its intellectual property and we may need to resort to litigation in the future to enforce our rights in this regard. Any such litigation could result in significant costs and a diversion of resources. Further, such enforcement efforts may result in a ruling that our intellectual property rights are unenforceable.

Moreover, companies in the aviation and technology industries are frequently subject to litigation based on allegations of intellectual property infringement, misappropriation, or other violations. As we expand and raise our profile, the likelihood of intellectual property claims being asserted against us grows. Further, we may acquire or introduce new technology offerings, which may increase our exposure to patent and other intellectual property claims. Any intellectual property claims asserted against us, whether or not having any merit, could be time-consuming and expensive to settle or litigate. If we are unsuccessful in defending such a claim, we may be required to pay substantial damages or could be subject to an injunction or agree to a settlement that may prevent us from using our intellectual property or making our offerings available to customers. Some intellectual property claims may require us to seek a license to continue our operations, and those licenses may not be available on commercially reasonable terms or may significantly increase our operating expenses. If we are unable to procure a license, we may be required to develop non-infringing technological alternatives, which could require significant time and expense. Any of these events could adversely affect our business, financial condition, or operations.

A delay or failure to identify and devise, invest in and implement certain important technology, business, and other initiatives could have a material impact on our business, financial condition and results of operations.

In order to operate our business, achieve our goals, and remain competitive, we continuously seek to identify and devise, invest in, implement and pursue technology, business and other important initiatives, such as those relating to aircraft fleet structuring, data centers, business processes, information technology, initiatives seeking to ensure high quality service experience, and others.

In 2024 and 2025, we launched CharterGPT, our AI-enhanced booking app, and Ava, our agentic AI model, respectively.

In 2025 the Company began transitioning its primary focus to AI data center operations and assets. As part of that transition, in 2025 the Company acquired an approximately 49.9% ownership interest in AIIA Sponsor Ltd. (as previously defined, “Sponsor”), the sponsor of AI Infrastructure Acquisition Corp. (NYSE: AIIA) (as previously defined, “AI Acquisition”), a special purpose acquisition company that completed its initial public offering in October 2025. See “Investment in AIIA Sponsor” below for further discussion.

On February 13, 2025, the Company, entered into the Original Merger Agreement with flyExclusive, Merger Sub, and SpinCo. On May 6, 2025, the parties entered into an Amended and Restated Agreement and Plan of Merger and Reorganization (as previously defined, the “Merger Agreement”). Pursuant to the Merger Agreement, (i) as a condition to closing on the Merger Agreement, the Company will effect the Distribution, (ii) Merger Sub will merge with and into SpinCo to effect the Merger, with SpinCo surviving the Merger as a wholly owned subsidiary of flyExclusive and (iii) as consideration for the Merger, the Company’s existing stockholders will have the right to receive shares of Class A common stock of flyExclusive. Additionally, the Company’s stockholders will continue to own and hold their existing shares of the Company’s common stock as of closing of the Merger.

The Merger Agreement amends, restates, replaces and supersedes the Original Merger Agreement in its entirety. Except as follows, the material terms of the Transactions were unchanged in the Merger Agreement. The Merger Agreement, among other things, amended the Original Merger Agreement to provide that eighty percent of the merger consideration shares will be issued upon the closing, and twenty percent of the merger consideration shares will be held in reserve by flyExclusive until a final post-closing purchase price is determined. Once the final post-closing purchase price is determined, flyExclusive will only issue additional merger consideration shares from the reserve on a dollar for dollar basis up to the lesser of the final purchase price and the initial purchase price.

On February 11, 2026, the parties entered into an amendment to the Merger Agreement (as previously defined, the “Amendment”), which (i) eliminates the closing condition that would have required the Company to execute a new securities purchase agreement with a third-party investor, pursuant to which the Company would have issued the investor a warrant to purchase up to $50 million worth of shares of a newly-designated series of preferred stock, and (ii) provides the Company with the ability to explore and negotiate potential post-closing strategic transactions, provided that any such transaction must be conditioned upon the closing of the Transactions and consummated after the closing of the Transactions.

In connection with executing the Original Merger Agreement, the Company, SpinCo, and flyExclusive entered into the Separation and Distribution Agreement pursuant to which the Company will effect the Separation by transferring the business, operations, services and activities of the Company’s fractional and jet card business to SpinCo and will no longer operate a fractional and jet card consummate the Distribution. After the Separation and Distribution, the Company will no longer operate a fractional or jet card business. The Company will continue to operate and retain its software and intellectual property assets, but will cease to hold its aircraft fractional, jet card and management assets. The Transactions are subject to various conditions to closing, including the receipt of stockholder approval, and are expected to close during the second quarter of 2026.

Joint Venture

On June 26, 2025, we entered into the JV Agreement with Consensus Core pursuant to which we and Consensus Core agreed to establish a joint venture allowing us to collaborate in developing data centers. In furtherance of this collaboration, we and Consensus Core entered into the Contribution Agreement with Consensus Core and Convergence Compute on July 2, 2025. Pursuant to the Contribution Agreement, we contributed $300,000 to Convergence Compute at the first closing of the transactions contemplated by the JV Agreement and acquired a 0.5% equity interest in Convergence Compute. Ultimately, we have agreed to contribute up to an aggregate $20 million to Convergence Compute in five tranches that are each tied to specific project development milestones.

On November 7, 2025, we announced that the milestones associated with the second closing—including the contribution by Consensus Core of all equity interests of its data center project located in Midwestern Canada (as previously defined, the “Midwest Project”) to Convergence Compute—had been substantially completed and we have since contributed the $1.7 million in connection with the second milestone. As a result, we and Consensus Core each received a 17.5% equity interest in the Midwest Project and we received an additional 0.5% equity interest in Convergence Compute.

In connection with the third closing under the Contribution Agreement, Consensus Core will contribute all equity interests in its data center project located in Maritime Canada (as previously defined, the “Maritime Project”) to Convergence Compute. As a result of this contribution, we and Consensus Core each will receive a 17.5% equity interest in the Maritime Project and we will receive an additional 0.5% equity interest in Convergence Compute. If all five closings contemplated by the Contribution Agreement occur, we will hold an aggregate equity interest of 2.5% of Consensus Core, an equity interest of 17.5% in the Midwest Project, and an equity interest of 17.5% in the Maritime Project.

The Company recognized $3.0 million in revenue related to app-generated services and software revenues related to charter bookings made through its CharterGPT app in 2025, a decrease of $1.2 million, or 29.0%, from $4.2 million in 2024, reflecting reduced brokerage staff for the CharterGPT app and aviation piece(s) that will be retained after the flyExclusive transaction.

The decrease in flight hours sold and flown primarily resulted from the planned sale of the Company’s aviation assets to flyExclusive.

In addition to its software app and jet card revenues, the Company also generates revenue through the direct chartering of its HondaJet aircraft by Cirrus. During 2025, this revenue amounted to approximately $1.8 million, a decrease of $2.1 million, or 53.6%, from $3.9 million in the prior year. The decreased revenue was a result of the decreased chartering of the Company’s HondaJet fleet, as well as reduced pilot availability in 2025 as compared to 2024 resulting from the planned sale of the Company’s aviation assets to flyExclusive.

Management and Other Service revenues totaled $3.3 million in 2025, a decrease of $286,000, or 7.9%, from $3.6 million in 2024. The Company continued to provide aircraft management services throughout 2025.

In 2025, the Company’s operating expenses decreased by approximately $1.8 million from 2024 due to an approximate $2.0 million decrease in selling, general and administrative expenses, offset by a $91,000 increase in sales and marketing expenses and a $82,000 increase in research and development costs. Excluding non-cash stock-based compensation of $1.6 million and $4.3 million in 2025 and 2024, respectively, general and administrative expenses rose by approximately $656,000 primarily due to a $436,000 increase in board of director fees, a $253,000 increase in Directors and Officers insurance costs, an increase in professional legal service expenses of $190,000 with a substantial portion of these expenses during the 2025 period related to the potential flyExclusive transaction, an increase in wages of $160,000, offset by a decrease in consulting fees of $46,000, a decrease in regulatory fees of $88,000, and a decrease in dues and subscriptions of $57,000.

During 2025, the Company recognized approximately $14.7 million in other income, net, compared to $167,000 in other expense for the 2024 fiscal year. Other income in 2025 was driven primarily by a $14.5 million unrealized gain from the change in fair value of the Company’s other investments (see “Investment in AIIA Sponsor” below), $182,000 in other income comprised of interest income and dividend income, and the elimination of interest expense of $167,000 in 2024 related to the Bridge Agreement (defined below) that was fully repaid in March 2024.

The Company recorded net income of $4.6 million for the year ended December 31, 2025, compared to a net loss of $12.7 million for the year ended December 31, 2024, a favorable change of $17.3 million. The swing from net loss to net income was driven by the $14.5 million non-cash unrealized gain on the change in fair value of other investments, together with a $2.5 million improvement in operating loss. Excluding the non-cash fair value gain, the Company would have recorded a net loss of approximately $9.9 million for the year ended December 31, 2025.

There were no deemed dividends or cumulative preferred stock dividends in 2025, compared to a $540,000 deemed dividend from the Company’s warrant exchange offer and $109,000 in cumulative preferred stock dividends in 2024. Accordingly, net income to common stockholders was $4.6 million in 2025 compared to a net loss to common stockholders of $13.4 million in 2024.

Net income per share — basic and diluted was $1.52 and $0.33, respectively for 2025, compared to net loss per share — basic and diluted of $(47.93) for 2024, based on weighted average shares outstanding of 3,026,488, 13,766,617 and 279,201, respectively. The significant increase in weighted average shares outstanding reflects common stock issuances during 2024 and 2025, including shares issued upon conversion of Series B Preferred Stock.

As of December 31, 2025, the Company’s cash and cash equivalents were approximately $1.8 million, compared to $5.9 million at December 31, 2024. There was a liquidity reserve of $500,000 in a separate bank account pledged as security to an aircraft lessor, which the Company records as restricted cash on its balance sheet as of December 31, 2025, as well as a maintenance reserve of approximately $690,000 for this leased aircraft. As of December 31, 2025, current liabilities exceeded current assets by approximately $1.5 million. Of the $3.7 million in current liabilities, approximately $443,000 represents deferred revenue that will be satisfied through delivery of services rather than cash payments.

During the year ended December 31, 2025, the Company raised: (1) $11.0 million from the exercise of the Ionic Warrant for the issuance of shares of Series B Preferred Stock, and (2) approximately $713,000 from sales of common stock under its ATM Sales Agreement and otherwise. These proceeds were partially offset by offering costs of approximately $2.5 million.

The Company also incurred negative cash flows from operating activities and continues to have an accumulated deficit of approximately $48.0 million as of December 31, 2025. While the Company recorded net income of $4.6 million in 2025, this was driven by the non-cash fair value unrealized gain on other investments; as operating cash flows remained negative at $8.2 million.

The Company expects to continue to incur operating losses for at least the next 12 months. To fund its on-going obligations and operations, the Company intends to rely on funds available from potential sales of equity and debt securities, including shares of common stock that are expected to occur from time to time under its at-the-market sales program (further described below) effected in accordance with the Equity Distribution Agreement dated November 21, 2025, as amended in January 2026. The Company also has the ability to reduce cash burn to preserve capital. In the absence of external financing the Company is prepared to cut its cash utilization by ceasing marketing and customer acquisition, suspending software development, streamlining operations, and servicing only existing customers. Such a reduction would allow the Company to continue to operate for a year or more by management’s estimate.

With the Spin-Off having been effected on July 13, 2026, and the closing of the Merger effected shortly thereafter, the Company no longer owns or operates its former fractional and jet card business. As a result, the risk factors identified under the subheading “Risks Related to Our Legacy Charter Business Operating Environment” in Item 1A of the Annual Report are not expected to apply the Company and its business plan on a go-forward basis.

Future business combinations and acquisition transactions, if any, as well as the recently closed Merger with flyExclusive, may not succeed in generating the intended benefits and may adversely affect our business.

Particularly after effecting the Spin-Off in July 2026 and closing the Merger, a component of our strategy is to evaluate strategic transactions or relationships from time to time. The inability of the Company to successfully identify and execute on a strategic transaction, or otherwise integrate acquired businesses or technologies, and any related diversion of management’s attention, could have a material adverse effect on our business, operating results and financial condition. Executing on any acquisitions or strategic transactions may require various closing conditions on the parties and may be subject to regulatory review and approval requirements by governmental entities, or ultimately be prohibited. There is no assurance that we will be able to complete the transactions contemplated by the non-binding LOI we entered into in July 2026, or otherwise execute on other strategic transactions of a similar nature.

Business combinations and other strategic transactions may have a direct adverse effect on our financial condition, results of operations, liquidity or stock price. To complete acquisitions, strategic transactions or other business combinations, we may have to use cash, issue new equity securities with dilutive effects on existing stockholders, take on new debt, assume contingent liabilities or amortize assets or expenses in a manner that might have a material adverse effect on our balance sheet, results of operations or liquidity. These and other potential negative effects of an acquisition transaction could prevent us from realizing the benefits of such transaction and have a material adverse impact on our stock price, financial condition, results of operations and liquidity.

Jet.AI Inc., a Delaware corporation (“Jet.AI”, “Company”, “we” or “us”), was founded in 2018. We are an emerging provider of high-performance GPU infrastructure and artificial intelligence cloud services, and we continue to make available a suite of SaaS software to aircraft owners and operators, as well as software used to charter aircraft.

Recent Developments flyExclusive Transaction.

Pursuant to the Merger Agreement, (i) as a condition to closing on the Merger Agreement, the Company distributed all of the shares of SpinCo, on a pro rata basis, to the Company’s stockholders (the “Distribution”), (ii) Merger Sub merged with and into SpinCo (the “Merger” and, together with the Distribution and all other transactions contemplated under the Merger Agreement, the “Transactions”), with SpinCo surviving the Merger as a wholly owned subsidiary of flyExclusive, and (iii) as consideration for the Merger, the Company’s existing stockholders acquired the right to receive shares of Class A common stock of flyExclusive. At the closing of the Merger, the Company’s stockholders continued to own and hold their existing shares of the Company’s common stock.

Reverse Takeover Letter of Intent.

On July 15, 2026, the Company entered into a non-binding letter of intent (the “LOI”) which sets forth terms by which the Company would effect a reverse takeover transaction with a privately held operating company, under which the Company’s shareholders would receive an aggregate of approximately $20 million in cash and equity of the combined company, and the Company would spin off its data center joint venture interest and its beneficial ownership interest in AI Acquisition into a new company that is intended to be publicly listed. See “Subsequent Events—Reverse Takeover Letter of Intent” below.

Sale of HondaJet Aircraft.

In May 2026, the Company, through its subsidiary Galilee 1 SPV LLC, exercised its purchase option under an aircraft lease dated November 23, 2021 with respect to a 2020 Honda Aircraft Company LLC model HA-420 aircraft (manufacturer’s serial number 42000181, FAA registration number N211PJ) and sold the aircraft, with the sale closing on May 7, 2026 at a sales price of $3,450,000. Consistent with the Company’s revenue recognition policy for aircraft sales, the sale is presented on a gross basis, with aircraft sale revenues of $3,454,913 (including the reimbursement of $2,913 of repositioning costs) and related cost of revenues of $3,358,863 recorded in the Company’s consolidated statements of operations, resulting in a gain of $96,050 on the sale during the three and six months ended June 30, 2026. In connection with the exercise of the purchase option and the sale, the related operating lease was terminated and the associated right-of-use asset and operating lease liability were derecognized, with no lease-termination gain or loss embedded in the gain on the sale.

Reverse Stock Split.

On March 9, 2026, the Company’s Board of Directors approved a 1-for-200 reverse stock split of the Company’s issued and outstanding common stock, which became effective at 12:01 a.m. Eastern Time on April 8, 2026 (the “Reverse Stock Split”). On the effective date, every 200 shares of common stock issued and outstanding were combined into one issued share of common stock, and no fractional shares were issued, with stockholders otherwise entitled to fractional shares receiving a cash payment in lieu thereof. The Company’s common stock began trading on a split-adjusted basis on April 8, with a new CUSIP number. Proportional adjustments were made to the Company’s outstanding employee stock options and the GEM Warrant, which were the only options, warrants or other convertible securities of the Company outstanding, and to the shares issuable under its equity compensation plans. The Company effected the Reverse Stock Split to, among other things, regain compliance with the Nasdaq Stock Market LLC’s continued listing rules requiring a minimum bid price of at least $1.00 per share. All share and per-share amounts in this Quarterly Report have been retroactively adjusted to give effect to the Reverse Stock Split.

During the three months ended March 31, 2026, the second and third project milestones under the Contribution Agreement were met, and the Company acquired an additional 1% equity interest in Convergence Compute, reflecting an incremental 0.5% equity interest upon the achievement of each of the second and third milestones. As a result, as of June 30, 2026, the Company held an aggregate 1.5% equity interest in Convergence Compute, a 17.5% equity interest in the Midwest Project, and a 17.5% equity interest in the Maritime Project.

The Company’s funding of its contribution obligations under the Contribution Agreement is determined on a schedule that is separate from the achievement of the related project milestones. The Company’s contribution obligation associated with the third milestone was $2.0 million, of which $665,000 had been funded as of March 31, 2026, at which date the Company had contributed a total of $2.7 million under the Contribution Agreement. During the three months ended June 30, 2026, the Company funded an additional $1.2 million toward the third-milestone obligation, consisting of $600,000 funded on April 3, 2026, $300,000 funded April 28, 2026, and $300,000 funded on May 29, 2026, bringing the Company’s total contributions under the Contribution Agreement to $3.9 million as of June 30, 2026. The Company funded the remaining $135,000 of the third-milestone obligation on July 17, 2026, thereby fully funding that obligation.

In the second quarter of 2026, the Company operated a reduced fleet as compared to the second quarter of 2025, reflecting the continued wind-down of its aviation operations in anticipation of the sale of its aviation business and the May 2026 sale of the N211PJ HondaJet.

In total, it cost approximately $2.1 million to operate the Company’s aircraft in the second quarter of 2026 (before giving effect to the aircraft sale discussed below), compared to $2.3 million to operate five aircraft in the second quarter of 2025. Cost of revenues for the second quarter of 2026 also included $3.4 million related to the HondaJet aircraft sold, comprising the aircraft’s carrying amount and repositioning costs, resulting in a gain on sale of $96,000.

The Company’s sales and marketing expenses were $289,000 in the second quarter of 2026, compared to $82,000 in the second quarter of 2025, an increase of approximately $208,000 attributable to increased advertising and marketing spend of approximately $165,000 and online advertising spend of approximately $45,000, partially offset by a decrease of approximately $2,000 in conference and event expenses.

The Company recorded a net loss of approximately $2.3 million for the second quarter of 2026, compared to a net loss of approximately $2.4 million for the second quarter of 2025.

Six Months Ended June 30, 2026 and 2025

Revenues

Revenues for the first six months of 2026 totaled approximately $7.0 million, a $1.3 million increase from revenues of approximately $5.7 million in the first six months of 2025, and were comprised of approximately $1.2 million in services revenue from the management of customers’ aircraft, $2.2 million of revenues related to our software app and Cirrus charter services, $143,000 in jet card revenue for hours flown and other charges based on hours flown, and $3.5 million from the sale of a HondaJet aircraft in May 2026.

The increase was primarily attributable to the $3.5 million gross revenue recognized on the May 2026 sale of the N211PJ HondaJet, partially offset by the continued wind-down of the Company’s fractional and jet card business. Excluding the aircraft sale, recurring revenues decreased $2.2 million period-over-period: the Company recognized approximately $1.2 million in service revenue from the management of customers’ aircraft in the first six months of 2026, compared to $1.8 million in the first six months of 2025, and $143,000 in jet card revenue, compared to $765,000 in the first six months of 2025.

The following table sets forth a breakout of revenue components by subcategory for the six months ended June 30, 2026 and 2025.

The Company recognized approximately $1.3 million in revenue related to app-generated services and software revenues related to charter bookings made through its software app in the first six months of 2026, compared to $1.8 million in the first six months of 2025, reflecting reduced charter bookings on the platform.

The Company recognized $1.2 million in service revenue in the first six months of 2026, compared to $1.8 million in the first six months of 2025, relating to reduced flying by the owners of the Company’s managed aircraft.

During the first six months of 2026, the Company recognized approximately $143,000 of revenue for 20.7 flight hours flown or forfeited, as well as additional charges. Prepaid flight hours are recognized as revenue as the flight hours are used or forfeited. At June 30, 2026, the Company had recorded deferred revenue of approximately $143,000 on its consolidated balance sheet representing prepaid flight hours for which the related travel had not yet occurred.

In the first six months of 2025, the Company sold 20 prepaid flight hours for $116,000 and recognized $765,000 of revenue for 127 flight hours flown or forfeited, as well as additional charges.

The decrease in flight hours flown period over period is a direct result of the planned sale of the Company’s aviation assets to flyExclusive.