Jet.AI Inc.

Previous wording

The following discussion and analysis provides information which Jet.AI’s management believes is relevant to an assessment and understanding of its consolidated results of operations and financial condition. You should read the following discussion and analysis of Jet.AI’s financial condition and results of operations together with the historical unaudited consolidated financial statements as of March 31, 2026 and December 31, 2025, and the three months ended March 31, 2026 and 2025, and the related notes that are included elsewhere in this report.

Current wording

The following discussion and analysis provides information which Jet.AI’s management believes is relevant to an assessment and understanding of its consolidated results of operations and financial condition. You should read the following discussion and analysis of Jet.AI’s financial condition and results of operations together with the historical unaudited consolidated financial statements as of June 30, 2026 and December 31, 2025, and the three and six months ended June 30, 2026 and 2025, and the related notes that are included elsewhere in this Quarterly Report.

Previous wording

Percentage amounts included in this report have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. Certain other amounts that appear in this report may not sum due to rounding.

Current wording

Percentage amounts included in this report have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. Certain other amounts that appear in this Quarterly Report may not sum due to rounding.

Previous wording

Unless otherwise indicated, all share and per-share amounts in this Quarterly Report on Form 10-Q, including share and per-share amounts for prior periods, have been retroactively adjusted to give effect to the 1-for-200 reverse stock split of the Company’s common stock that became effective on April 8, 2026 (the “Reverse Stock Split”). See “Subsequent Events—Reverse Stock Split” below.

Current wording

Unless otherwise indicated, all share and per-share amounts in this Quarterly Report, including share and per-share amounts for prior periods, have been retroactively adjusted to give effect to the 1-for-200 reverse stock split of the Company’s common stock that became effective on April 8, 2026 (the “Reverse Stock Split”).

Previous wording

Jet.AI Inc., a Delaware corporation (“Jet.AI”, “Company”, “we” or “us”), was founded in 2018. The Company, directly and indirectly through its subsidiaries, historically has been principally involved in (i) the sale of fractional and whole interests in aircraft, (ii) the sale of jet cards, which enable holders to use certain of the Company’s and other’s aircraft at agreed-upon rates, (iii) the operation of a proprietary booking platform, which functions as a prospecting and quoting platform to arrange private jet travel with third-party carriers as well as via the Company’s leased and managed aircraft, (iv) direct chartering of its HondaJet Elite aircraft by Cirrus Aviation Services, (v) aircraft brokerage and (vi) monthly management and hourly operation of customer aircraft.

Current wording

The Company, directly and indirectly through its subsidiaries, historically was principally involved in (i) the sale of fractional and whole interests in aircraft, (ii) the sale of jet cards, which enable holders to use certain of the Company’s and other’s aircraft at agreed-upon rates, (iii) the operation of a proprietary booking platform, which functions as a prospecting and quoting platform to arrange private jet travel with third-party carriers as well as via the Company’s leased and managed aircraft, (iv) direct chartering of its HondaJet Elite aircraft by Cirrus Aviation Services, (v) aircraft brokerage and (vi) monthly management and hourly operation of customer aircraft.

Previous wording

On February 13, 2025, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Original Merger Agreement”) with flyExclusive, Inc. (“flyExclusive”), FlyX Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of flyExclusive (“Merger Sub”), and Jet.AI SpinCo, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“SpinCo”). On May 6, 2025, the parties entered into an Amended and Restated Agreement and Plan of Merger and Reorganization (as subsequently amended, the “Merger Agreement”). Pursuant to the Merger Agreement, (i) as a condition to closing on the Merger Agreement, the Company will distribute all of the shares of SpinCo, on a pro rata basis, to the Company’s stockholders (the “Distribution”), (ii) Merger Sub will merge 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 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.

Current wording

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.

Previous wording

In connection with executing the Merger Agreement, the Company, SpinCo, and flyExclusive entered into a Separation and Distribution Agreement (the “Separation and Distribution Agreement”) pursuant to which the Company will transfer 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 business (the “Separation”). Upon the terms and subject to the conditions set forth in the Separation and Distribution Agreement, the Company will consummate the Distribution and at that time cease to operate a fractional or jet card business. There will be no change expected to the Company’s board of directors or executive officers as a result of the Merger, Separation, Distribution, or other Transactions. 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.

Current wording

In connection with executing the Merger Agreement, the Company, SpinCo, and flyExclusive entered into a Separation and Distribution Agreement (the “Separation and Distribution Agreement”) pursuant to which, in connection with the closing, the Company transferred the business, operations, services and activities of the Company’s fractional and jet card business to SpinCo (the “Separation”). Upon the terms and subject to the conditions set forth in the Separation and Distribution Agreement, the Company consummated the Distribution and at that time ceased to operate a fractional or jet card business. The Company will continue to operate and retain its software and intellectual property assets, but ceased to hold its aircraft fractional, jet card and management assets. The Transactions were subject to various conditions to closing, including the receipt of stockholder approval.

Previous wording

On the effective date, every 200 shares of common stock issued and outstanding were combined into one issued share of common stock. No fractional shares were issued in connection with the Reverse Stock Split; stockholders of record otherwise entitled to receive fractional shares as a result of the Reverse Stock Split received a cash payment in lieu of such fractional shares. All options, warrants and other convertible securities of the Company outstanding immediately prior to the Reverse Stock Split were adjusted by dividing the number of shares of common stock into which such options, warrants and other convertible securities are exercisable or convertible by 200, and multiplying the exercise or conversion price thereof by 200, all in accordance with the terms of the plans, agreements or arrangements governing such instruments. Proportional adjustments were also made to securities issued and issuable under the Company’s equity compensation plans. The Reverse Stock Split affected all stockholders uniformly, and each stockholder’s percentage ownership interest in the Company and proportional voting power remained virtually unchanged except for any immaterial changes and adjustments that resulted from the treatment of fractional shares. The Reverse Stock Split did not alter the par value of the common stock and did not change the total number of authorized shares of common stock. The Company effected the Reverse Stock Split to, among other things, regain compliance with the Nasdaq Stock Market LLC’s continued listing rules, which require that the minimum bid price of the Company’s common stock be at least $1.00 per share. In accordance with ASC 260-10-55-12, the Company has retroactively adjusted the number of shares, per-share computations and the computations of basic and diluted loss per share for all periods presented in the consolidated financial statements and related notes to give effect to the Reverse Stock Split.

Current wording

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.

Previous wording

On July 2, 2025, the Company entered into the Contribution Agreement with Consensus Core and Convergence Compute LLC, a Delaware limited liability company (“Convergence Compute”), pursuant to which Jet.AI contributed $300,000 to Convergence Compute in the first closing of the transactions contemplated by the JV Agreement. As consideration for its contribution, Jet.AI acquired a 0.5% equity interest in Convergence Compute. Upon the completion of certain data center project milestones, each of Jet.AI and Consensus Core will make additional contributions to Convergence Compute and will receive additional equity interests in Convergence Compute and its subsidiaries. The Company will contribute up to an aggregate $20 million to Convergence Compute in five tranches, which are each tied to specific project development milestones.

Current wording

On July 2, 2025, the Company entered into the Contribution Agreement with Consensus Core and Convergence Compute LLC, a Delaware limited liability company (“Convergence Compute”), pursuant to which the Company contributed $300,000 to Convergence Compute in the first closing of the transactions contemplated by the JV Agreement and acquired a 0.5% equity interest in Convergence Compute. Upon the completion of certain data center project milestones, each of the Company and Consensus Core will make additional contributions to Convergence Compute and will receive additional equity interests in Convergence Compute and its subsidiaries.

Previous wording

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 (the “Maritime Project”) to Convergence Compute. As a result of this contribution, the Company and Consensus Core each will receive a 17.5% equity interest in the Maritime Project and the Company will receive an additional 0.5% equity interest in Convergence Compute. If all five closings contemplated by the Contribution Agreement occur, the Company 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.

Current wording

Pursuant to the Contribution Agreement, the Company will contribute up to an aggregate $20 million to Convergence Compute in five tranches, with the obligation to deliver each tranche tied to specific project development milestones identified in the Contribution Agreement. Consensus Core contributed 100% of the equity interests of its data center project located in Midwestern Canada (the “Midwest Project”) to Convergence Compute at the second closing under the Contribution Agreement and contributed 100% of the equity interests of its data center project located in Maritime Canada (the “Maritime Project”) to Convergence Compute at the third closing under the Contribution Agreement. In consideration for such contributions, the Company and Consensus Core each received a 17.5% equity interest in the Midwest Project upon the second closing and a 17.5% equity interest in the Maritime Project upon the third closing. The Company will also receive an additional 0.5% equity interest in Convergence Compute upon each additional closing, for an aggregate equity interest of up to 2.5% if all five tranches are consummated.

Previous wording

The Company recognized approximately $362,000 in revenue related to app-generated services and software revenues related to charter bookings made through its CharterGPT app in the first quarter of 2026, a decrease of approximately $665,000 compared to $1.0 million in the first quarter of 2025, reflecting reduced charter bookings on the platform.

Current wording

The Company recognized approximately $1.0 million in revenue related to app-generated services and software revenues related to charter bookings made through its software app in the second quarter of 2026, compared to $806,000 in the second quarter of 2025, reflecting increased charter bookings on the platform.

Previous wording

The Company recognized $661,000 in service revenue in the first quarter of 2026, a decrease of approximately $620,000, relating to reduced flying by the owners of the Company’s managed aircraft. There was $1.3 million in service revenues in the first quarter of 2025.

Current wording

The Company recognized $506,000 in service revenue in the second quarter of 2026, compared to $532,899 in the second quarter of 2025, relating to reduced flying by the owners of the Company’s managed aircraft.

Previous wording

During the first quarter of 2026, the Company recognized approximately $59,000 of revenue for 8 flight hours flown or forfeited, as well as additional charges. These additional charges represent primarily charges for cost reimbursements such as a fuel component adjustment to adjust for changes in fuel prices relative to the jet card and fractional contracts’ base fuel price and reimbursement of federal excise taxes. Prepaid flight hours are recognized as revenue as the flight hours are used or forfeited. At March 31, 2026, the Company had recorded deferred revenue of approximately $214,000 on its consolidated balance sheet representing prepaid flight hours for which the related travel had not yet occurred.

Current wording

During the second quarter of 2026, the Company recognized approximately $84,000 of revenue for 12.7 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.

Previous wording

The following table details the flight hours sold and flown or forfeited, as well as the associated deferred revenues and recognized revenues, respectively, and additional charges for the first quarter of 2026 and 2025:

Current wording

The following table details the flight hours sold and flown or forfeited, as well as the associated deferred revenues and recognized revenues, respectively, and additional charges for the three months ended June 30, 2026 and 2025:

Previous wording

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 the first quarter of 2026 this revenue amounted to approximately $599,000, a decrease of $223,000, or 27.2% from the prior year period. The decreased revenue was a direct result of the decreased chartering of the Company’s HondaJet fleet, as well as decreased software app bookings in the first quarter of 2026 as compared to the first quarter of 2025.

Current wording

In addition to its software app and jet card revenues, the Company also historically has generated revenue through the direct chartering of its HondaJet aircraft by Cirrus, which contributed Cirrus charter revenue of approximately $289,000 in the second quarter of 2026, compared to $465,000 in the second quarter of 2025, reflecting the continued wind-down of the Company’s flight operations and the May 2026 sale of the N211PJ HondaJet.

Previous wording

As a result of the decrease in Cirrus charter flight activity, costs related to the operation of these aircraft and payments to Cirrus for their management decreased $1.5 million from $2.4 million in the first quarter of 2025 to $1.0 million in 2026, and aircraft lease payments were $321,000 and $325,000 in the first quarter of 2026 and 2025, respectively. The Company also incurred third-party charter costs of approximately $625,000 in the first quarter of 2026, a $137,000 decrease over 2025, reflecting the reduced number of app-generated charter bookings, and a reduction in subcharters used for covering jet card flights when our HondaJets were unavailable. Merchant fees and federal excise tax relating to charter flights of $34,000 in the first quarter of 2026 were a $54,000 decrease as compared to $88,000 in the first quarter of 2025.

Current wording

As a result of the decrease in Cirrus charter flight activity, costs related to the operation of these aircraft and payments to Cirrus for their management and maintenance of our fleet decreased to approximately $959,000 in the second quarter of 2026, from approximately $1.6 million in the second quarter of 2025, of which aircraft lease payments were approximately $181,000 and $323,000, respectively. The Company also incurred third-party charter costs (including subcharter costs) of approximately $1.1 million in the second quarter of 2026, compared to approximately $624,000 in the second quarter of 2025, reflecting both increased reliance on third-party operators as the Company’s owned fleet wound down and increased app-generated services. Merchant fees and federal excise tax relating to charter flights were approximately $80,000 and $71,000 in the second quarter of 2026 and 2025, respectively.

Previous wording

In the first quarter of 2026, the Company’s operating expenses decreased by approximately $424,000 over the prior year comparable period due to an approximate $427,000 decrease in general and administrative expenses, a $12,000 increase in sales and marketing expenses and a $10,000 decrease in research and development costs. Excluding non-cash stock-based compensation of $64,000 and $551,000 in the first quarter of 2026 and 2025, respectively, general and administrative expenses increased by approximately $60,000 primarily due to an increase in professional service expenses of $224,000 with a substantial portion of these expenses during the 2026 period related to the potential flyExclusive transaction, and an increase in regulatory fees of $67,000 partially offset by decreased wages of $185,000, primarily due to decreased commissions compensation payable on software app revenue.

Current wording

In the second quarter of 2026, the Company’s total operating expenses increased by approximately $129,000 over the prior year comparable period. Excluding non-cash stock-based compensation of $64,000 and $763,000 in the second quarter of 2026 and 2025, respectively, general and administrative expenses increased by approximately $606,000, primarily due to increases of approximately $220,000 in payroll costs, $101,000 in legal fees, $175,000 in consulting fees, $99,000 in Delaware franchise tax, and $52,000 in regulatory fees, a significant portion of the increases related to the flyExclusive transaction and the Company’s strategic transition, partially offset by a decrease of approximately $43,000 in director and officer insurance expense and lower accounting expenses of $29,000.

Previous wording

As a result of all of the above, in the first quarter of 2026 the Company recognized an operating loss of approximately $2.9 million, compared to an operating loss of $3.2 million in the first quarter of 2025.

Current wording

As a result of all of the above, in the second quarter of 2026 the Company recognized an operating loss of approximately $2.7 million, compared to an operating loss of approximately $2.5 million in the second quarter of 2025.

Previous wording

During the first quarter of 2026, the Company recognized approximately $184,000 in other income as compared to $1,000 in the first quarter of 2025. Other income in the first quarter of 2026 was driven primarily by a $94,000 unrealized gain from the change in fair value of the Company’s other investments (see “Investment in AIIA Sponsor” below) and $90,000 in other income comprised of Sponsor fees, interest income and dividend income.

Current wording

During the second quarter of 2026, the Company recognized approximately $0.4 million in other income, as compared to other income of approximately $95,000 in the second quarter of 2025. Other income, for the second quarter of 2026, included an unrealized gain of $399,000 from the change in fair value of the Company’s beneficial interest in AI Acquisition (see “Investment in AIIA Sponsor” below).

Previous wording

The Company recorded a net loss of $2.7 million for the first quarter of 2026, compared to a net loss of $3.2 million for the first quarter of 2025, a favorable change of $0.5 million. The reduction in net loss was primarily driven by reduced operating expenses and the $184,000 in other income. Excluding the non-cash fair value gain, the Company would have recorded a net loss of approximately $2.7 million for the first quarter of 2026.

Current wording

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.

Previous wording

Net loss per share — basic and diluted was $(6.68) and $(370.43), respectively for first quarter of 2026 and 2025, based on weighted average shares outstanding of 401,302 and 8,557, respectively.

Current wording

Net loss per share — basic and diluted was $(1.72) and $(184.63), respectively, for the second quarter of 2026 and 2025, based on weighted average shares outstanding of 1,326,189 and 12,918, respectively, in each case as adjusted to give effect to the Reverse Stock Split.

Previous wording

Revenues for the first quarter of 2026 totaled $1.7 million, a $1.8 million decrease from first quarter of 2025 revenues of $3.5 million, and were comprised of $661,000 in services revenue from the management of customers’ aircraft, $1.0 million of revenues related to our CharterGPT software app and Cirrus charter services (being approximately $362,000 in software-related revenue and $599,000 in revenue from the chartering of our HondaJets by our operating partner Cirrus), and $59,000 in Jet Card revenue for hours flown and other charges based on hours flown.

Current wording

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.

Previous wording

In the first quarter of 2025, the Company sold 20 prepaid flight hours, amounting to $116,000, and recognized $343,000 of revenue for 52 flight hours flown or forfeited, as well as additional charges. At March 31, 2025, the Company had recorded deferred revenue of approximately $1.3 million.

Current wording

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.

Previous wording

As of March 31, 2026, our cash and cash equivalents totaled $13.0 million, and we held an additional $500,000 in restricted cash representing the liquidity reserve required under our aircraft lease. Current assets exceeded current liabilities by approximately $10.6 million, including approximately $465,000 in deferred revenue, which will be recognized as revenue upon the utilization or forfeiture of prepaid flight hours.

Current wording

As of June 30, 2026, our cash and cash equivalents totaled approximately $10.6 million. Current assets exceeded current liabilities by approximately $8.8 million, including approximately $270,000 in deferred revenue, which will be recognized as revenue upon the utilization or forfeiture of prepaid flight hours. Deferred revenue of approximately $143,000 relating to prepaid flight hours under the jet card program was transferred to SpinCo on July 13, 2026.

Previous wording

During the three months ended March 31, 2026, the Company raised $19.8 million from sales of common stock under its at-the-market sales agreement, partially offset by offering costs of approximately $597,000 in placement agent commissions and approximately $2.6 million of other offering costs.

Current wording

During the six months ended June 30, 2026, the Company raised approximately $27.7 million in gross proceeds from sales of common stock under its at-the-market sales agreement.

Previous wording

We have historically incurred negative cash flows from operations and significant operating losses, resulting in an accumulated deficit of approximately $50.6 million as of March 31, 2026. We anticipate revenue and operating profit growth from strategic initiatives, including increased Jet Card pricing, enhanced charter activity through CharterGPT, Ava, and Reroute AI, and SaaS revenue from DynoFlight. However, we expect to incur operating losses for at least the next 12 months, depending on the success and timing of these initiatives. To fund operations, we plan to utilize cash on hand and funds from potential sales of equity or debt securities. Contractual limitations may restrict certain funding options, and further equity issuances may adversely affect our stock price and ability to raise capital.

Current wording

We have historically incurred negative cash flows from operations and significant operating losses, resulting in an accumulated deficit of approximately $52.9 million as of June 30, 2026. Following the closing of the flyExclusive transaction in July 2026, our continuing focus is on high-performance GPU infrastructure and AI cloud services, our data center joint venture, and matters related to our beneficial interest in AI Acquisition. We expect to incur operating losses for at least the next 12 months. To fund operations, we plan to utilize cash generated by our remaining operations together with cash on hand and funds from potential sales of equity or debt securities. Contractual limitations may restrict certain funding options, and further equity issuances may adversely affect our stock price and ability to raise capital.

Previous wording

Subsequent to March 31, 2026, on April 8, 2026, the Company completed a subscription for 8,347 equity certificates in VERSO Capital 2 SCSP for an aggregate subscription price of $5,250,000, inclusive of a 5% subscription fee of $250,000. The subscription was funded from the Company’s cash on hand and reduced our available liquidity by a corresponding amount. The equity certificates track shares of SpaceX preferred stock and are not expected to generate operating cash flows prior to a Redemption Event (as defined in the Subscription Agreement). See “Subsequent Events — VERSO Capital / SpaceX Economic Interest” below for additional information.

Current wording

During the six months ended June 30, 2026, on April 8, 2026, the Company completed a subscription for 8,347 equity certificates in VERSO Capital 2 SCSP for an aggregate subscription price of $5.3 million, inclusive of a 5% subscription fee of $250,000. The subscription was funded from the Company’s cash on hand and reduced our available liquidity by a corresponding amount.

Previous wording

Starting in October 2024, and through the date of this Report, Ionic converted in full the 150 shares of Series B Preferred Stock issued at the initial closing, the 50 additional shares of Series B Preferred Stock issued in connection with a letter agreement entered into in September 2024, and all 1,500 shares of Series B Preferred Stock issued pursuant to the full exercise of the Ionic Warrant. Those conversions, in total, resulted in the issuance of 218,979 shares of Common Stock (as adjusted to give effect to the reverse stock split).

Current wording

Starting in October 2024, and through the first quarter of 2026, Ionic converted in full the 150 shares of Series B Preferred Stock issued at the initial closing, the 50 additional shares of Series B Preferred Stock issued in connection with a letter agreement entered into in September 2024, and all 1,500 shares of Series B Preferred Stock issued pursuant to the full exercise of the Ionic Warrant. Those conversions, in total, resulted in the issuance of 218,979 shares of Common Stock (as adjusted to give effect to the reverse stock split).

Previous wording

During the first quarter of 2026, Ionic sold an additional 50,647 shares pursuant to Rule 144. Ionic no longer holds any shares of our Series B Preferred Stock or common stock.

Current wording

During the six months ended June 30, 2026, Ionic sold an additional 50,647 shares pursuant to Rule 144. Ionic no longer holds any shares of our Series B Preferred Stock or common stock.

Previous wording

During the first quarter of 2026, Hexstone Capital, LLC (who was assigned certain rights or shares by Ionic) sold an aggregate of 150,206 shares of our common stock, comprised of: (i) 9,000 shares sold under our registration statement on Form S-3 (Reg. No. 333-289982); and (ii) 141,206 shares sold pursuant to Rule 144. As December 31, 2025, Hexstone held 450 shares of our Series B Preferred Stock. Hexstone no longer holds any shares of our Series B Preferred Stock or common stock.

Current wording

During the six months ended June 30, 2026, Hexstone Capital, LLC (who was assigned certain rights or shares by Ionic) sold an aggregate of 150,206 shares of our common stock, comprised of: (i) 9,000 shares sold under our registration statement on Form S-3 (Reg. No. 333-289982); and (ii) 141,206 shares sold pursuant to Rule 144. As of December 31, 2025, Hexstone held 450 shares of our Series B Preferred Stock. Hexstone no longer holds any shares of our Series B Preferred Stock.

Previous wording

As of March 31, 2026, the fair value of the Sponsor Equity Interest was 17,231,000, as determined using a probability weighted expected return method as described in Note 4 to the consolidated financial statements in this report. During the three months ended March 31, 2026, the Company recognized an unrealized gain of $94,000 in other income related to the change in fair value of this investment.

Current wording

As of June 30, 2026, the fair value of the Sponsor Equity Interest was $17,630,000, as determined using a probability weighted expected return method as described in Note 4 to the consolidated financial statements in this Report. During the three and six months ended June 30, 2026, the Company recognized an unrealized gain of $399,000 and $493,000, respectively, in other income related to the change in fair value of this investment.

Previous wording

On November 21, 2025, we put an ATM (“At the Market”) program, in place to allow us to sell shares of our common stock under that program from time to time through Maxim Group LLC (“Maxim”) as agent in an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $10.0 million (the “ATM Program”). The ATM Program was amended twice in January 2026 to increase the amount that may be sold under the ATM Program by an additional $7.9 million and an additional $35.1 million, respectively (subject to any limitations imposed under SEC rules). The common stock is distributed at the market prices prevailing at the time of sale. As a result, prices of the common stock sold under the ATM Program may vary between purchasers and during the period of distribution. The Equity Distribution Agreement provides that Maxim is entitled to compensation for its services at a commission rate of 3.0% of the gross sales price per share of common stock sold. During the quarter ended March 31, 2026, we sold 409,347 shares of our common stock under the ATM Program at an average price of $48.40 per share for net proceeds of $19.2 million after commissions and sale expenses (all as adjusted to give effect to the reverse stock split). We expect to continue to utilize the ATM Program to fund a portion of our obligations and working capital needs.

Current wording

On November 21, 2025, we put an ATM (“At the Market”) program in place to allow us to sell shares of our common stock under that program from time to time through Maxim Group LLC (“Maxim”) as agent in an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $10.0 million (the “ATM Program”). The ATM Program was amended in January 2026 to increase the amount that may be sold under the ATM Program to $50.0 million (subject to any limitations imposed under SEC rules). The Equity Distribution Agreement provides that Maxim is entitled to compensation for its services at a commission rate of 3.0% of the gross sales price per share of common stock sold. During the six months ended June 30, 2026, we sold shares of our common stock under the ATM Program for aggregate gross proceeds of approximately $27.7 million and net proceeds of approximately $26.9 million after commissions and sale expenses. Sales under the ATM Program were a principal source of the increase in the Company’s shares of common stock outstanding during the period. See Note 10 (Subsequent Events) for additional shares issued after June 30, 2026. We expect to continue to utilize the ATM Program to fund a portion of our obligations and working capital needs.

Previous wording

On August 10, 2023, the Company issued GEM a warrant (as subsequently amended, the “GEM Warrant”) granting it the right to purchase up to 6% of the outstanding common stock of the Company on a fully diluted basis as of the date of listing of our common stock on Nasdaq. Accordingly, the warrant exercise price was $102.00 per share as of March 31, 2026. The warrant may be exercised by payment of the per share amount in cash or through a cashless exercise.

Current wording

On August 10, 2023, the Company issued GEM a warrant (as subsequently amended, the “GEM Warrant”) granting it the right to purchase up to 6% of the outstanding common stock of the Company on a fully diluted basis as of the date of listing of our common stock on Nasdaq. Accordingly, the warrant exercise price was $42.23 per share as of June 30, 2026. The warrant may be exercised by payment of the per share amount in cash or through a cashless exercise.

Previous wording

The Company did not effect any draw downs under this agreement in 2025 or in the quarter ended March 31, 2026, and does not expect to effect any drawdowns in the remainder of 2026.

Current wording

The Company did not effect any draw downs under this agreement in 2025 or in the six months ended June 30, 2026, and does not expect to effect any drawdowns in the remainder of 2026.

Previous wording

Cash Flows for the Three Months Ended March 31, 2026 and 2025

Current wording

Cash Flows for the Six Months Ended June 30, 2026 and 2025

Previous wording

As of March 31, 2026, the Company’s cash and equivalents were approximately $13.0 million, with an additional $500,000 of restricted cash held as a liquidity reserve.

Current wording

As of June 30, 2026, the Company’s cash and equivalents were approximately $10.6 million.

Previous wording

The following table summarizes our cash flows for the three months ended March 31, 2026 and 2025:

Current wording

The following table summarizes our cash flows for the six months ended June 30, 2026 and 2025:

Previous wording

Net cash used in operating activities for the three months ended March 31, 2026 was $3.0 million compared to $2.2 million for the three months ended March 31, 2025. The cash outflow from operating activities in the 2026 period primarily consisted of our net loss, net of non-cash charges, of $2.6 million, a $134,000 reduction in lease liability, a $166,000 decrease in operating liabilities and a $188,000 increase in accounts receivables and other current assets. The decrease in operating liabilities was partially offset by a $22,000 increase in deferred revenue, and primarily driven by a $166,000 decrease in the Company’s accounts payable and accrued liabilities relating to the operation of the Company’s aircraft.

Current wording

Net cash used in operating activities for the six months ended June 30, 2026 was approximately $5.7 million compared to approximately $5.0 million for the six months ended June 30, 2025. The cash outflow from operating activities in the 2026 period primarily consisted of our net loss, net of non-cash charges, and changes in operating assets and liabilities associated with the wind-down of the Company’s aviation operations.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2026 was $16.6 million. Cash provided by financing activities was primarily driven by the sale of common stock, partially offset by offering costs. Net cash provided by financing activities for the three months ended March 31, 2025 was $9.7 million. Cash provided by financing activities was primarily driven by $11.0 million in proceeds from exercise of Series B Preferred Stock warrants, partially offset by $1.3 million in offering costs.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2026 was approximately $22.8 million, primarily driven by gross proceeds of approximately $27.7 million from the sale of common stock under the At the Market Program, partially offset by offering costs of $4.9 million. Net cash provided by financing activities for the six months ended June 30, 2025 was approximately $9.1 million.

Previous wording

In November 2021 and April 2022, the Company entered into two separate five-year leasing arrangements for the acquisition of two of its HondaJet Elite aircraft. At any time during their term, the Company has the option to purchase either aircraft from the lessor at the aircraft’s fair market value at that time. The leasing arrangements also require the Company to hold a combined liquidity reserve of $500,000 in a separate bank account pledged as security to the lessor, which the Company records as restricted cash on its balance sheet, as well as a maintenance reserve of approximately $690,000 for each leased aircraft, which is held by the lessor in the event the lessor determines that the relevant aircraft is not being maintained in accordance with the lease requirements or to prevent deterioration of the aircraft. Events of default under the leasing arrangements include, among other things, failure to make the monthly payments (with a 10-day cure period), default on other indebtedness, breaches of covenants related to insurance and maintenance requirements, change of control or merger, insolvency and a material adverse change in the Company’s business, operations or financial condition. Please see Note 5 to the Company’s financial statements for the three months ended March 31, 2026 for a further description of these leasing arrangements.

Current wording

In November 2021 and April 2022, the Company entered into two separate five-year leasing arrangements for the acquisition of two of its HondaJet Elite aircraft. At any time during their term, the Company had the option to purchase either aircraft from the lessor at the aircraft’s fair market value at that time. The leasing arrangements also required the Company to hold a combined liquidity reserve of $500,000 in a separate bank account pledged as security to the lessor, which the Company recorded as restricted cash on its balance sheet, as well as a maintenance reserve of approximately $690,000 for each leased aircraft, which was held by the lessor in the event the lessor determines that the relevant aircraft is not being maintained in accordance with the lease requirements or to prevent deterioration of the aircraft. Events of default under the leasing arrangements included, among other things, failure to make the monthly payments (with a 10-day cure period), default on other indebtedness, breaches of covenants related to insurance and maintenance requirements, change of control or merger, insolvency and a material adverse change in the Company’s business, operations or financial condition. Please see Note 5 to the Company’s financial statements for the six months ended June 30, 2026 for a further description of these leasing arrangements.

Previous wording

During the next twelve months, the Company intends to fund its operations with funds from its operations, cash on-hand, as well as proceeds from other prospective financing arrangements. The Company also has the ability to reduce cash burn to preserve capital. There are no assurances, however, that management will be able to raise capital on terms acceptable to the Company. If the Company is unable to obtain sufficient amounts of additional capital, the Company may be required to reduce the near-term scope of its planned development and operations, which could delay implementation of the Company’s business plan and harm its business, financial condition and operating results. The consolidated balance sheets do not include any adjustments that might result from these uncertainties.

Current wording

During the next twelve months, the Company intends to fund its operations with funds from its operations that were retained after the Spin-Off, cash on-hand, as well as proceeds from other prospective financing arrangements. The Company also has the ability to reduce cash burn to preserve capital. There are no assurances, however, that management will be able to raise capital on terms acceptable to the Company. If the Company is unable to obtain sufficient amounts of additional capital, the Company may be required to reduce the near-term scope of its planned development and operations, which could delay implementation of the Company’s business plan and harm its business, financial condition and operating results. The consolidated balance sheets do not include any adjustments that might result from these uncertainties.