What changed in this filing

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Item 1. Financial Statements

2026-08-14 compared with 2026-05-15 · 545 added, 447 removed, 713 unchanged (58% of the section changed)

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Accounts receivable, net

Equity contribution receivable

Contract assets, net

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Note receivable, non-current

LIABILITIES AND SHAREHOLDERS’ DEFICIT

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

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Operating lease liability

Customer deposits and deferred revenue

Deferred revenue and customer deposits

Current liabilities - discontinued operations

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COMMITMENTS AND CONTINGENCIES (Note 13)

Shareholders’ deficit:

Shareholders’ equity (deficit):

Common Stock Class A, $ 0.0001 par value;

200,000,000 authorized;

20,185,249 and 9,510,784 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

53,183,044 and 9,510,784 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital

Accumulated deficit

Total shareholders’ deficit

Total liabilities and shareholders’ deficit

Total shareholders’ equity (deficit)

Total liabilities and shareholders’ equity

accompanying notes are an integral part of these unaudited consolidated financial statements .

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in thousands, except share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Costs and expenses:

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Other income (expenses):

Other income, net

Gain on sale of asset

Other income (loss), net

Gain (loss) on sale of asset

Gain (loss) from change in fair value of financial instruments

Gain from termination of certain Investment shares in M2i

Interest income (expense), net

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$ ( 103,852 )

Stock-based compensation

Issuance of common stock

Balance as of June 30, 2025

$ ( 100,250 )

Class A Common Stock

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$ ( 100,771 )

Stock-based compensation

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Issuance of restricted stock units

Net income (loss)

Cost of common stock issuance

Balance as of March 31, 2026

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$ ( 103,405 )

accompanying n otes are an integral part of these unaudited consolidated financial statements .

Stock-based compensation

Issuance of common stock for debt conversion

Issuance of common stock

Reversal of common stock issuance

( 3,258,886 )

Cost of common stock issuance

Net income (loss)

Balance as of June 30, 2026

$ ( 105,456 )

accompanying notes are an integral part of these unaudited consolidated financial statements .

STATEMENTS OF CASH FLOWS

in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities:

Net income (loss) from continuing operations

Net income (loss) from discontinued operations

Net income from discontinued operations

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:

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Stock compensation expense

Gain from sale of asset

Gain from sale of contract asset

(Gain) loss from disposal property and equipment

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Loss on investment in M2i

Gain on termination of certain investment shares of M2i

Loss on investment in flyExclusive

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Account payable and accrued liabilities

Customers’ deposits and deferred revenue

Deferred revenue and customers’ deposits

Change in assets and liabilities of discontinued operations

Net cash provided by (used in) operating activities from continuing operations

Net cash used in operating activities from discontinued operations

Net cash used in operating activities

Net cash (used in) provided by operating activities from continuing operations

Net cash provided by (used in) operating activities from discontinued operations

Net cash (used in) provided by operating activities

Investing activities:

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Repayment of loans

Costs of share issuance

Net cash used in financing activities

Net decrease in cash

Proceeds from the issuance of convertible notes, net

Proceeds from the issuance of shares under “at the market”

Proceeds from PIPE

Proceeds from Registered Direct offering

Costs of common stock issuance

Net cash provided by financing activities

Net increase in cash

Cash, beginning of period

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Investment in flyExclusive

Issuance of flyExclusive shares as part of PIPE

Financing for aircraft purchase

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1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

(“we”, “us”, “the Company”, or “Volato”) is a holding company for several

wholly owned subsidiaries, including Volato, Inc., Fly Vaunt, LLC, Gulf Coast Aviation, LLC (f/k/a Gulf Coast Aviation, Inc.), Volato

Merger Subsidiary, Inc., and Parslee, LLC.

(“we”, “us”, “the Company”, or “Volato”) is a holding company for

several wholly owned subsidiaries, including Volato, Inc., Fly Vaunt, LLC, Gulf Coast Aviation, LLC (f/k/a Gulf Coast Aviation,

Inc.), Parslee, LLC and Modern Aero Charter, LLC.

The Company’s primary operating subsidiary was founded in 2021.

That year, the

Company entered the private jet charter and fractional ownership market with its Part 135 HondaJet ownership program, taking delivery

of its first jet in August 2021 and completing its first Part 135 charter flight in October of 2021.

In March 2022, the Company acquired

Gulf Coast Aviation, Inc.

(n/k/a Gulf Coast Aviation, LLC), owner of G C Aviation, Inc., a Texas entity and Part 135 air carrier certificate

In March 2022, the Company placed orders for four Gulfstream G280s for delivery in 2024 and 2025.

In September 2022, the Company

started internal development on its full suite Flight Management Software platform Mission Control, in the fourth quarter of 2023 the

Company commercially launched Vaunt, our proprietary consumer facing empty leg platform, and in the fourth quarter of 2025 the Company

commercially launched Parslee, our AI based document intelligence platform.

That year, the Company entered the

private jet charter and fractional ownership market with its Part 135 HondaJet ownership program, taking delivery of its first jet

in August 2021 and completing its first Part 135 charter flight in October of 2021.

In March 2022, the Company acquired Gulf Coast

Aviation, Inc.

(n/k/a Gulf Coast Aviation, LLC), owner of GC Aviation, Inc., a Part 135 air carrier certificate holder.

2022, the Company placed orders for four

Gulfstream G280s for delivery in 2024 and 2025.

In September 2022, the Company started internal development on its full suite Flight

Management Software platform Mission Control, in the fourth quarter of 2023 the Company commercially launched Vaunt, our proprietary

consumer facing empty leg platform, and in the fourth quarter of 2025 the Company commercially launched Parslee, our AI based

document intelligence platform.

September 2024, the Company entered into an agreement with flyExclusive, Inc., (“flyExclusive”) a leading provider of private

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software products.

The Company has continued to take delivery of new aircraft and also generate revenue from its proprietary software,

The Company has continued to generate revenue from its proprietary software,

including the Vaunt platform, its empty leg consumer app.

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The Company has

retained insider card liabilities of $ 0.1 million that is included in discontinued operations as of March 31, 2026.

retained insider card liabilities of $ 0.1 million as of June 30, 2026.

February 24, 2025, the Company effected a reverse stock split of its issued and outstanding Class A common stock (also referred to as

“common stock” in this Quarterly Report), at a ratio of 1-for-25 (the “Reverse Stock Split”) with no change in par

“common stock” in this Quarterly Report), at a ratio of 1-for-25 (the “Reverse Stock Split”) with no change in

All share amounts have been retroactively adjusted to account for the split as if it occurred at inception.

March 20, 2025, the Company sold its former subsidiary GC Aviation, Inc., which held the FAA Part 135 certificate for $ 2.0 million,

of which $ 1.8 million was a note receivable.

28, 2025, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Volato

Merger Subsidiary, Inc., a Nevada corporation and wholly-owned subsidiary of Volato (“Merger Sub”), and M2i Global, Inc.,

a Nevada corporation (“M2i”), pursuant to which Merger Sub will merge with and into M2i, with M2i surviving the merger as

a wholly-owned subsidiary of Volato (together with all other transactions contemplated by the Merger Agreement, the “Merger”).

The Merger is subject to approval by the Company’s stockholders and other customary closing conditions.

Upon consummation of the

Merger, it is currently expected that M2i’s stockholders will own approximately 85 % of the combined company.

March 20, 2025, the Company sold its former subsidiary GC Aviation, Inc., which held the FAA Part 135 certificate for $ 2.0 million, of

which $ 1.8 million is a note receivable.

The Company is currently accruing interest on the note.

July 28, 2025, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with

Volato Merger Subsidiary, Inc., a Nevada corporation and then wholly-owned subsidiary of Volato (“Merger Sub”), and M2i

Global, Inc., a Nevada corporation (“M2i”), pursuant to which Merger Sub was to merge with and into M2i, with M2i

surviving the merger as a wholly-owned subsidiary of Volato (together with all other transactions contemplated by the Merger

Agreement, the “Merger”).

On June 4, 2026, the Company delivered written notice to M2i terminating the Merger Agreement

and abandoning the transactions contemplated thereby.

July 2025, the Company began development of an Artificial Intelligence based software platform designed to enhance the reliability of

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October 1, 2025, the Company entered into a Fourth Amendment (the “Amendment”) to Aircraft Management Services Agreement

(as amended the “Agreement”) with flyExclusive to bring the Agreement in line with Company’s anticipated shift in operations,

new business directives, and to better accommodate the proposed Merger with M2i.

The Amendment served to (i) modify the term of the Agreement;

(ii) grant flyExclusive, subject to certain terms and conditions, the right to purchase certain aviation-related assets from the Company

and assume certain obligations of the Company (the “flyExclusive Asset Option”);

(iii) grant the Company, subject to certain

terms and conditions, the right to sell certain aviation-related assets to flyExclusive and assign certain obligations of the Company

to flyExclusive (the “Company Asset Option,” and collectively with the flyExclusive Asset Option, the “Asset Options”);

(iv) obligate flyExclusive to pay the Company $ 100,000 upon execution of the Amendment as settlement of net payables owed by flyExclusive

to the Company under the terms of the Agreement (the “Net Payables Obligation”);

and (v) modify the material terms of flyExclusive’s

right to cause the Company to merge with and into a wholly owned subsidiary of flyExclusive (the “flyExclusive Merger Option”),

including that the flyExclusive Merger Option is to be only exercisable in the event that the Company and M2i terminate the Merger Agreement.

flyExclusive paid the Net Payables Obligation by issuing the Company 20,576 shares of Class A common stock.

(as amended the “Agreement”) with flyExclusive to bring the Agreement in line with Company’s anticipated shift in

operations, new business directives, and to better accommodate the contemplated Merger with M2i.

The Amendment served to (i) modify

the term of the Agreement;

(ii) grant flyExclusive, subject to certain terms and conditions, the right to purchase certain

aviation-related assets from the Company and assume certain obligations of the Company (the “flyExclusive Asset

(iii) grant the Company, subject to certain terms and conditions, the right to sell certain aviation-related assets

to flyExclusive and assign certain obligations of the Company to flyExclusive (the “Company Asset Option,” and

collectively with the flyExclusive Asset Option, the “Asset Options”);

(iv) obligate flyExclusive to pay the Company

upon execution of the Amendment as settlement of net payables owed by flyExclusive to the Company under the terms of the Agreement

(the “Net Payables Obligation”);

and (v) modify the material terms of flyExclusive’s right to cause the Company to

merge with and into a wholly owned subsidiary of flyExclusive (the “flyExclusive Merger Option”), including that the

flyExclusive Merger Option is to be only exercisable in the event that the Company and M2i terminate the Merger Agreement.

flyExclusive paid the Net Payables Obligation by issuing the Company 20,576

shares of Class A common stock.

consideration for the execution of the Amendment, flyExclusive agreed to pay $ 2,000,000 to the Company, in cash or shares of flyExclusive

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of 411,523 shares of its Class A common stock to the Company, which occurred in the fourth quarter of 2025.

January 2026, the Company issued a dividend of 432,099 shares of Class A common stock of flyExclusive to Volato shareholders.

March 6, 2026, the Company signed amendment number five to the Agreement with flyExclusive, pursuant to which the Company sold

certain unused intellectual property assets for $ 1.3

million payable in cash or shares of flyExclusive’s Class A common stock.

Such assets represent a portion of the total assets

which were anticipated to be sold under one of the Asset Options as described above.

flyExclusive issued an aggregate of 451,901

shares of its Class A common stock to the Company in March 2026 and is recorded as Investment in flyExclusive on the consolidated

balance sheets.

With the sale of the asset, the Company recorded a gain on the sale of the asset of $ 1.1

million and is recorded in Other Income on the Consolidated Statements of Operations.

Following the sale of the intellectual

property assets pursuant to the fifth amendment, there is $ 700,000

in remaining assets that may be sold to flyExclusive under the terms of the Agreement, as amended.

January 2026, the Company paid a dividend of 432,099 shares of Class A common stock of flyExclusive to Volato shareholders.

March 6, 2026, the Company signed amendment number five to the Agreement with flyExclusive, pursuant to which the Company sold certain

unused intellectual property assets for $ 1.3 million payable in cash or shares of flyExclusive’s Class A common stock.

represent a portion of the total assets which were anticipated to be sold under one of the Asset Options as described above.

issued an aggregate of 451,901 shares of its Class A common stock to the Company in March 2026 which is recorded as Investment in flyExclusive

on the consolidated balance sheets.

With the sale of the asset, the Company recorded a gain on the sale of the asset of $ 0.8 million

which is recorded in Other Income on the Consolidated Statements of Operations.

Following the sale of the intellectual property assets

pursuant to the fifth amendment, there is $ 700,000 in remaining assets that may be sold to flyExclusive under the terms of the Agreement,

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

concern, liquidity, and capital resources

Company has limited operating history, the Company realized net loss of approximately $ 2.6 million for the three months ended March 31,

2026, the Company has a working capital deficit of approximately $ 0.3 million and an accumulated deficit of approximately $ 103.4 million

as of March 31, 2026.

Company has limited operating history, the Company realized net loss of approximately $ 4.7

million for the six months ended June 30, 2026 and the Company has an accumulated deficit of approximately $ 105.5 million as of June 30, 2026.

above matters raise substantial doubt about the Company’s ability to continue as a going concern.

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do not include any adjustments that might result from these uncertainties.

March 17, 2026, the Company received a notice (the “notice”) from the NYSE American LLC (the “NYSE American”) advising

the Company that it is not in compliance with the NYSE American continued listing standards set forth in Section 1003(a)(i) of the NYSE

American Company Guide (the “Company Guide”) requiring a company to have stockholders’ equity of at least $ 2.0 million

if it has reported losses from continuing operations and/or net losses in two of its three most recent fiscal years and Section 1003(a)(ii)

of the Company Guide requiring a company to have stockholders’ equity of at least $ 4.0 million if it has reported losses from continuing

operations and/or net losses in three of its four most recent fiscal years.

The Company submitted a plan (the “plan”)

to the NYSE American on April 16, 2026 outlining the actions the Company will take to regain compliance by December 17, 2026.

does not affect the Company’s ongoing business operations or its reporting requirements with the United States Securities and Exchange

Commission (the “SEC”).

of presentation

accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles

generally accepted in the United States of America (“U.S.

GAAP” or “GAAP”) on a going concern basis, which

contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business and

following the requirements of the Securities and Exchange Commission (the “SEC”).

The unaudited interim consolidated financial statements are condensed and should be read in conjunction with the

Company’s latest annual audited 2025 condensed consolidated financial statements, which are included in the Company’s Annual

Report on Form 10-K filed with the SEC on March 12, 2026 (the “Form 10-K”).

The results of operations for interim periods

are not necessarily indicative of results to be expected for the fiscal year ending March 31, 2026 or for any other future annual or interim

accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally

accepted in the United States of America (“U.S.

GAAP” or “GAAP”) on a going concern basis, which contemplates

the realization of assets and the satisfaction of liabilities and commitments in the normal course of business and following the requirements

of the Securities and Exchange Commission (the “SEC”).

The unaudited interim consolidated financial statements are condensed

and should be read in conjunction with the Company’s annual audited 2025 condensed consolidated financial statements, which

are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2026.

results of operations for interim periods are not necessarily indicative of results to be expected for the fiscal year ending December

31, 2026 or for any other future annual or interim period.

Reclassifications

amounts in 2026 have been reclassified to conform with the current period’s presentation to properly reflect discontinued operations.

of consolidatio n

unaudited interim consolidated financial statements include the Company’s accounts and the accounts of its wholly owned

subsidiaries.

unaudited interim consolidated financial statements include the Company’s accounts and the accounts of its wholly owned subsidiaries.

All intercompany transactions and balances have been eliminated.

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used in the aviation asset put/call option.

Accrual and legal estimates

consists primarily of cash on hand and bank deposits.

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when purchased to be cash equivalents.

At March 31, 2026 and December 31, 2025, the Company had no cash equivalents besides what was

in the cash balance as of that date.

The Company had 0 zero restricted cash at March 31, 2026, and December 31, 2025, respectively.

At June 30, 2026 and December 31, 2025, the Company had no cash equivalents besides what was in

the cash balance as of those dates.

The Company had no restricted cash at June 30, 2026, and December 31, 2025, respectively.

receivable are reported on the consolidated balance sheets at the outstanding principal amount adjusted for any allowance for credit

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reviews its allowance for credit losses on a quarterly basis.

the three months ended March 31, 2026 and 2025, the Company recognized $ 6 thousand and $ 24 thousand of bad debt expense, respectively.

the three months ended June 30, 2026 and 2025, the Company recognized $ 6 thousand and $ 123 thousand of bad debt expense, respectively.

During the six months ended June 30, 2026 and 2025, the Company recognized $ 7 thousand and $ 148 thousand of bad debt expense, respectively.

assets are stated at cost, less accumulated depreciation.

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software development

development costs are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards

Codification (“ASC”) 350-40, Internal Use Software .

Internal software development costs are capitalized from the time

the internal use software is considered probable of completion until the software is ready for use.

Business analysis, system evaluation

and software maintenance costs are expensed as incurred.

The capitalized computer software development costs are reported under the section

“Property and equipment, net” in the consolidated balance sheets and are amortized using the straight-line method over the

estimated useful life of the software, generally three years from when the asset is placed in service.

The Company capitalized $ 172 thousand

and 0 zero and of internal software development costs during the three months ended March 31, 2026 and 2025, respectively.

recognized $ 27 thousand and $ 48 of amortization expense related to computer software development during the three months ended March

31, 2026 and 2025, respectively.

The Company also expenses internal costs related to minor upgrades and enhancements, as it is impractical

to separate these costs from normal maintenance activities.

During the three months ended March 31, 2026 and 2025, the Company reduced

the value of software development cost by $ 32 thousand and zero, related to a non-monetary exchange with a third party and their use

of our mission control software.

This software development cost was originally developed for internal use, was licensed to a third party

in a non-monetary transaction and subsequently sold to the same third-party in March 2026.

development costs are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting

Standards Codification (“ASC”) 350-40, Internal Use Software .

Internal software development costs are capitalized

from the time the internal use software is considered probable of completion until the software is ready for use.

Business analysis,

system evaluation and software maintenance costs are expensed as incurred.

The capitalized computer software development costs are

reported under the section “Property and equipment, net” in the consolidated balance sheets and are amortized using the

straight-line method over the estimated useful life of the software, generally three years from when the asset is placed in service.

The Company capitalized $ 346

thousand and 0 zero

of internal software development costs during the six months ended June 30, 2026 and 2025, respectively.

The Company recognized

thousand and $ 48

of amortization expense related to computer software development during the three months ended June 30, 2026 and 2025, respectively.

The Company recognized $ 69

thousand and $ 96

thousand of amortization expense related to computer software development during the six months ended June 30, 2026 and 2025,

respectively.

The Company also expenses internal costs related to minor upgrades and enhancements, as it is impractical to separate

these costs from normal maintenance activities.

During the six months ended June 30, 2026 and 2025, the Company reduced the value of

software development cost by $ 32

thousand and $ 54

thousand, related to a non-monetary exchange with a third party and their use of our mission control software.

This software

development cost was originally related to software developed for internal use, which was licensed to a third party in a

non-monetary transaction and was subsequently sold to the same third-party in March 2026.

development cost

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the guidance on internal-use software in FASB ASC 350-40.

The Company capitalized zero of website development costs during the three

months ended March 31, 2026 and 2025, respectively.

The Company recognized $ 24 thousand of amortization expenses during the three months

ended March 31, 2026 and 2025, respectively.

The Company capitalized no website development costs during the six months

ended June 30, 2026 and 2025, respectively.

The Company recognized $ 24 thousand and $ 24 thousand of amortization expenses during the

three months ended June 30, 2026 and 2025, respectively.

The company recognized $ 40 thousand and $ 48 thousand of amortization expense

during the six months ended June 30, 2026 and 2025, respectively.

of long-lived assets

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down to their estimated fair value.

No impairment was recognized during the three months ended March 31, 2026 and 2025, respectively.

No impairment was recognized during the six months ended June 30, 2026 and 2025, respectively.

value of financial instruments

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Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

December 2024, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) pursuant to which

the Company may issue a series of convertible notes for an aggregate principal amount not to exceed $ 36.0 million.

During the year ended

December 31, 2024, the Company issued a single convertible note in the principal amount of $ 4.5 million, (the “2024 Convertible

Note”), of which $ 4.1 million was funded as of December 31, 2024, representing an original issue discount of ten percent.

elected the fair value guidance under ASC 825-10 and the 2024 Convertible Note was recognized at initial fair value as of the issuance

The value of the 2024 Convertible Note at issuance approximated fair value as of December 31, 2024.

December 2024, the Company entered into a Securities Purchase Agreement (“2024 Securities Purchase Agreement”) pursuant

to which the Company may issue a series of convertible notes for an aggregate principal amount not to exceed $ 36.0

During the year ended December 31, 2024, the Company issued a single convertible note in the principal amount of $ 4.5

million, (the “2024 Convertible Note”), of which $ 4.1

million was funded as of December 31, 2024, representing an original issue discount of ten percent.

The Company elected the fair

value guidance under ASC 825-10 and the 2024 Convertible Note was recognized at initial fair value as of the issuance date.

value of the 2024 Convertible Note at issuance approximated fair value as of December 31, 2024.

Any issuances of additional

convertible notes are subject to the terms and conditions of the 2024 Security Purchase Agreement (see Note 8).

September 30, 2025, Company, entered into Share Exchange Agreements (the “Share Exchange Agreements”), with two investors

(together the “Investors”).

The Investors are shareholders of M2i whose common stock is publicly quoted on the OTCQB Venture

Market of OTC Markets Group, Inc.

September 30, 2025, the Company, entered into Share Exchange Agreements (the “Share Exchange Agreements”), with two

The investors are shareholders of M2i, whose common stock is publicly quoted on the

OTCQB Venture Market of OTC Markets Group, Inc.

under the symbol “MTWO”.

Pursuant to the Share Exchange Agreements, the Company agreed

to issue an aggregate of 1,197,604 shares of the Company’s Class A common stock to the Investors in exchange for an aggregate of

Pursuant to the Share Exchange Agreements, the

Company agreed to issue an aggregate of 1,197,604

shares of the Company’s Class A common stock to the investors in exchange for an aggregate of 16,000,000

shares of M2i common stock (the “Investment in M2i”).

At the date of the exchange, the Company recognized a loss

of $ 115 thousand in “Loss from change in fair value of financial instruments” on the consolidated statement of operations

for the difference between the fair value of the Volato shares issued and the fair value of the Investment in M2i.

At the date of the exchange, the Company recognized a loss of

thousand in “Loss from change in fair value of financial instruments” on the consolidated statement of operations for

the difference between the fair value of the Company’s common stock that were issued and the fair value of the Investment in M2i.

April 16, 2026, the Company entered into two additional Share Exchange Agreements, and on April 17, 2026 the Company entered into a

final Share Exchange Agreement with investors who are M2i shareholders.

Pursuant to the additional Share Exchange Agreements, the

Company agreed to issue an aggregate 5,407,499

shares of the Company’s Class A common stock in exchange for an aggregate of 48,044,912

shares of M2i common stock.

At the date of exchange, the Company recognized a loss of $ 80

thousand for the difference between the fair value of the shares of the Company’s common stock that were issued and the fair value of the Investment in

On June 28, 2026, the Company entered into a mutual termination and release agreement with one of the M2i Investors because the investor

failed to transfer and deliver 27,902,467 M2i shares to the Company as required by the Share Exchange Agreements.

In addition, the Company

filed suite with another of the M2i Investors because the investor failed to transfer and deliver 4,000,000 M2i Shares to the Company

as required by the Share Exchange Agreements.

In conjunction with the mutual termination and release agreement and suite filed, the Company

cancelled 3,258,886 shares of Company common stock that were previously issued to the investors.

During the three and six months ended

June 30, 2026, the Company recorded a gain of $ 959 thousand due to unwind of the terminated agreements.

to ASC 321, the Investment in M2i is measured at fair value each reporting period, with unrealized gain or loss recognized in

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The inputs are obtained from OTC quoted prices for level II.

During the three

months ended March 31, 2026, the Company recorded a loss of $ 821

thousand related to the change in fair value of the Investment in M2i.

During the six months

ended June 30, 2026, the Company recorded a net loss of $ 450 thousand

related to the change in fair value of the remaining Investment in M2i.

October 1, 2025, the Company entered into the Amendment with flyExclusive, as described in Note 1.

As part of the amendment, flyExclusive

agreed to pay $ 2.1 million in cash or shares of common stock to the Company for the net payables option and the proceeds from the sale

of the fourth G280.

flyExclusive issued the Company 432,099 shares of Class A common stock (the “Investment in flyExclusive”)

in the fourth quarter of 2025.

At the date of the exchange, the Company recognized a loss of $ 6.1 million in Other expense in the consolidated

statements of operations.

In January 2026, the Company issued a divided of flyExclusive stock to all Volato shareholders.

With the issuance

of the dividend the company recorded a loss of $ 101 thousand on the loss of the settlement of shares during the three months ended March

March 6, 2026, the Company signed amendment number five to the Agreement with flyExclusive, pursuant to which the Company sold certain

As part of the amendment,

flyExclusive agreed to pay $ 2.1

million in cash or shares of common stock to the Company for the net payables option and the proceeds from the sale of the fourth

flyExclusive issued the Company 432,099

shares of Class A common stock (the “Investment in flyExclusive”) in the fourth quarter of 2025.

At the date of the

exchange, the Company recognized a loss of $ 6.1

million in Other Expense in the consolidated statements of operations.

In January 2026, the Company effected a divided of the shares

of flyExclusive stock it previously held to its shareholders.

With the issuance of the dividend the Company recorded a loss

of $101 thousand on the loss of the settlement of shares during the three months ended March 31, 2026.

March 6, 2026, the Company signed amendment number five to the Agreement with flyExclusive, and sold certain

unused intellectual property assets for $ 1.3 million payable in cash or shares of flyExclusive’s Class A common stock.

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on the consolidated balance sheets.

During the three months ended March 31, 2026, the Company recorded a loss of $ 74 thousand related

During the three months ended June 30, 2026, the Company recorded a loss of $ 54 thousand related

to the change in fair value of the Investment in flyExclusive.

During the six months ended the Company recorded a loss of $ 128 thousand

related to the change in fair value of the Investment in flyExclusive.

to ASC 321, the Investment in flyExclusive is measured at fair value each reporting period, with unrealized gain or loss recognized in

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with the signing of the Amendment with flyExclusive, as described in Note 1, it granted flyExclusive the right to purchase certain

aviation-related assets from the Company and assume certain obligations of the Company (the “Call Option”) and granted

the Company the right to sell certain obligations of the Company to flyExclusive (the “Put Option”).

The fair value of

the Company’s recorded Aviation Asset Option was determined based on unobservable inputs that are not corroborated by market

data, which require a Level 3 classification.

aviation-related assets from the Company and assume certain Company obligations (the “Call Option”) and

granted the Company the right to sell certain obligations of the Company to flyExclusive (the “Put Option”).

value of the Company’s recorded Aviation Asset Option was determined based on unobservable inputs that are not corroborated by

market data, which require a Level 3 classification.

A Black-Scholes model was used to determine the fair value as of December 31,

of December 31, 2025 the Company fair valued the aviation asset and recorded a gain on the asset of $ 324

In March of 2026, the Company determined that the exercise of the Call Option and Put Option prior to the expiration of

the Agreement was not probable and as such the value of the aviation asset was reduced to 0 zero

and a loss of $ 324

thousand was recorded in gain (loss) on change in financial instruments in the consolidated statements of operations.

following table presents balances of the fair value instruments as of March 31, 2026 and December 31, 2025, in thousands:

As of December 31, 2025, the Company fair valued the aviation asset and recorded a gain on the asset of $ 324 thousand.

In March of 2026, the Company determined that the exercise of the Call Option and Put Option prior to the expiration of the

Agreement was not probable and as such the value of the aviation asset was reduced to 0 zero

and a loss of $ 324 thousand

was recorded in gain (loss) on change in financial instruments in the consolidated statements of operations.

On June 7, 2026, under the terms of the Purchase Agreement, the Company delivered to the lead investor 451,901 shares of FlyExclusive, Inc.

common stock, previously held by the Company, which resulted in the Company ceasing to hold any shares of FlyExclusive common stock.

following table presents balances of the fair value instruments as of June 30, 2026 and December 31, 2025, in thousands:

SCHEDULE OF FAIR VALUE ASSETS MEASURED ON RECURRING BASIS

Fair Value Measurements as of March 31, 2026

Quoted Prices in Active Markets for Identical Assets

Fair Value Measurements as of June 30, 2026

Quoted Prices in Active Markets

for Identical Assets (Level 1)

Significant Other

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Inputs (Level 3)

Financial liabilities:

Third Tranche Note

Total financial liabilities

Financial assets:

Investment in M2i

Investment in flyExclusive

Total financial assets

Fair Value Measurements as of December 31, 2025

Quoted Prices in Active Markets for Identical Assets

Significant Other

Observable Inputs (Level 2)

Significant Unobservable

Quoted Prices

Assets (Level 1)

Inputs (Level 2)

Inputs (Level 3)

Financial liabilities:

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Total financial assets

following table presents changes of all convertible notes issued under the Securities Purchase Agreement (see Note 10) with significant

unobservable inputs (Level 3) for the three months ended March 31, 2026, in thousands:

following table presents changes of all convertible notes issued under the 2024 Securities Purchase Agreement (see Note 8) with

significant unobservable inputs (Level 3) for the three and six months ended June 30, 2026, in thousands:

SCHEDULE OF FAIR VALUE LIABILITIES MEASURED UNOBSERVABLE INPUT

2024 Convertible Note

2024 Convertible

Balance at December 31, 2025

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Balance at March 31, 2026

Change in fair value

Balance at June 30, 2026

Company measured the Third Tranche Notes using a Monte Carlo simulation valuation model using the following assumptions:

SCHEDULE OF FAIR VALUE MEASUREMENT INPUTS AND VALUATION TECHNIQUES

Three months ended March 31, 2026

Third Tranche

Three and six

June 30, 2026

Third Tranche Note

Volume Weighted average stock price (“VWAP”)

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Risk-free Rate

following table represents the change in the Aviation asset option for the three months ended, March 31, 2026, in thousands:

following table represents the change in the Aviation asset option for the three and six months ended, June 30, 2026, in thousands:

FAIR VALUE, ASSETS MEASURED ON RECURRING BASIS, UNOBSERVABLE INPUT RECONCILIATION

Aviation asset option

Aviation asset

Balance at December 31, 2025

Change in fair value

Balance at March 31, 2026

Balance at June 30, 2026

were no transfers between fair value levels during the period.

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estimate of interest rates that would be available to the Company for similar financial arrangements and due to the short-term maturity

of these instruments at March 31, 2026 and December 31, 2025.

of these instruments at June 30, 2026 and December 31, 2025.

and contingencies

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Liabilities for loss contingencies arising from

claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred,

and the amount of the assessment can be reasonably estimated.

claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been

incurred, and the amount of the assessment can be reasonably estimated.

Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s

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from aircraft sales is recognized upon the delivery of the aircraft.

Company generated revenue during the three months ended March 31, 2026 and 2025, broken down as follows, in thousands:

Company generated revenue during the three and six months ended June 30, 2026 and 2025, broken down as follows, in thousands:

SCHEDULE OF DISAGGREGATION OF REVENUE

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Aircraft sales

from the sales of our Vaunt Software-as-a-subscription is deferred and recognized over the subscription term of the software and is included

in customer deposits and deferred revenue on the consolidated balance sheets.

Additionally, in the three months ended March 31, 2026

we recognized revenue related to mission control and the third-party non-monetary transaction.

following table provides a rollforward of deferred revenue, recorded in customer deposits and deferred revenue in the consolidated balance

sheets, for the three months ended March 31, 2026, in thousands:

from the sales of our Vaunt Software-as-a-subscription is deferred and recognized over the subscription term of the software and is

included in deferred revenue and customer deposits on the consolidated balance sheets.

Additionally, in the three and six months

ended June 30, 2026 we recognized revenue of $ 152

thousand related to mission control and the third-party non-monetary transaction.

The following table provides a rollforward of

deferred revenue, recorded in deferred revenue and customer deposits in the consolidated balance sheets, for the six months ended

June 30, 2026, in thousands:

SCHEDULE OF CHANGES IN DEFERRED REVENUE

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Revenue deferred

Balance as of March 31, 2026

Balance as of June 30, 2026

Recognized from the Costs to Obtain Revenue Contracts

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assets are capitalized and amortized ratably over the expected period of the benefit, which is currently estimated at 14 months.

after the sale of mission control to flyExclusive, the Company wrote off $264 thousand of the remining amount of the flyExclusive amortization

and is recorded in gain on sale of asset in the consolidated statements of operations as of June 30, 2026.

following tables present the asset balances and related amortization expense for the contract assets:

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Contract assets

As of and for the three months ended March 31, 2026

As of and for the six months ended June 30, 2026

Beginning Balance

Amount Capitalized

Amount Capitalized, net

Ending Balance

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income (loss) per share

Company computes basic and diluted earnings per share amounts pursuant to section 260-10-45 of the FASB ASC.

Basic earnings per share

is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock

outstanding during the period, excluding the effects of any potentially dilutive securities.

Diluted earnings per share is computed by

dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the

The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first

day of the year for any potentially dilutive debt or equity.

In periods in which a net loss has been incurred, all potentially dilutive

common shares are considered anti-dilutive and thus are excluded from the calculation.

Securities that are excluded from the calculation

of weighted average dilutive common shares because their inclusion would have been antidilutive for the three months ended March 31,

2026, include stock options, restricted stock units and warrants.

Company had 17,043 and 18,048 outstanding stock options to purchase an equivalent number of shares of common stock at March 31, 2026,

Company computes basic and diluted earnings per share amounts pursuant to section 260-10-45 of FASB ASC.

Basic earnings per share is

computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding

during the period, excluding the effects of any potentially dilutive securities.

Diluted earnings per share is computed by dividing net

income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period.

diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the

year for any potentially dilutive debt or equity.

In periods in which a net loss has been incurred, all potentially dilutive common shares

are considered anti-dilutive and thus are excluded from the calculation.

Securities that are excluded from the calculation of weighted

average dilutive common shares because their inclusion would have been antidilutive for the six months ended June 30, 2026, include stock

options, restricted stock units and warrants.

Company had 16,509 and 17,857 outstanding stock options to purchase an equivalent number of shares of common stock at June 30, 2026,

and 2025, respectively.

Company had 10,964 and 32,789 outstanding restricted stock units to purchase an equivalent number of shares of common stock at March

Company had 10,964 and 15,706 outstanding restricted stock units to purchase an equivalent number of shares of common stock at June 30,

2026 and 2025, respectively.

Company also had 1,161,195 outstanding warrants to purchase an equivalent number of shares of common stock as of March 31, 2026 and 2025,

Company also had 1,161,195 outstanding warrants to purchase an equivalent number of shares of common stock as of June 30, 2026 and 2025,

respectively at a weighted average strike price of $ 287.50 .

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of the federally insured limits.

As of March 31, 2026 the Company had approximately $ 1.7 million in excess of FDIC-insured limits.

The Company has

not experienced any losses in such accounts and believes it is not exposed to significant credit risk on cash.

As of June 30, 2026 the Company had approximately $ 8.2 million in excess of FDIC-insured limits.

Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk on cash.

assets other than goodwill consisted of acquired finite-lived customer relationships and acquired indefinite-lived Part 135 air carrier

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indicated the impairment, an impairment loss would be recorded for the difference of the value recorded and the fair value.

no impairment loss for the three months ended March 31, 2026 or 2025, respectively.

no impairment loss for the three months ended June 30, 2026 or 2025, respectively.

represents the excess of the aggregate purchase price paid over the fair value of the net assets acquired in our business combinations.

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which held the Part 135 air carrier certificate.

In connection

with that sale, the Company recorded an impairment on goodwill of $ 35 thousand for the three months ended March 31, 2025.

recorded in other income, net in the consolidated statements of operations.

There was no impairment loss recorded for the three months

ended March 31, 2026.

In connection with that sale, the Company recorded an impairment on goodwill of $ 35 thousand for the six months ended June 30, 2025.

The loss is recorded in other income, net in the consolidated statements of operations.

There was no impairment loss recorded for the

six months ended June 30, 2026.

Company identifies operating segments as components of the Company for which discrete financial information is available and is regularly

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the Vaunt platform.

costs are expensed as incurred and included in selling, general and administrative expenses on the statements of operations.

Such advertising

amounted to $ 270 thousand and $ 137 thousand for the three months ended March 31, 2026 and 2025, respectively.

costs are expensed as incurred and included in selling, general and administrative expenses on the consolidated statements of

Such advertising amounted to $ 255

thousand and $ 207

thousand for the three months ended June 30, 2026 and 2025, respectively.

Advertising amounted to $ 525

thousand and $ 344

thousand for the six months ended June 30, 2026 and 2025, respectively.

Topic 842, “Leases” (“ASC 842”) requires lessees to recognize most leases on the balance sheet with a corresponding

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reportable segment.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic

Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation and cash taxes

The Company adopted this standard in its Annual Report on Form 10-K for the year ended December 31, 2025 using the prospective approach.

The adoption affected disclosures only and did not impact the Company’s consolidated financial position, results of operations,

or cash flows.

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which expands disclosures

in an entity’s income tax rate reconciliation and cash taxes paid.

The Company adopted this standard in its Annual Report on Form

10-K for the year ended December 31, 2025 using the prospective approach.

The adoption affected disclosures only and did not impact the

Company’s consolidated financial position, results of operations, or cash flows.

November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement—Reporting Comprehensive Income—Expense

Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”).

ASU 2024-03 is

intended to enhance the disclosures for expenses for all public entities in accordance with ASC Topic 220, Income Statement-Reporting

Comprehensive Income.

ASU 2024-03 addresses investor requests for more detailed information about expenses, specifically cost of sales

and selling, general, and administrative expenses.

ASU 2024-03 requires a public entity to disclose the amounts of (a) purchases of inventory,

(b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized

as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption presented

on the face of the income statement as well as a qualitative description of the amounts remaining in the relevant expense captions that

are not separately disaggregated quantitatively.

ASU 2024-03 also requires a public entity to disclose the total amount of selling expenses

and the entity’s definition of selling expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and

interim periods within fiscal years beginning after December 15, 2027.

Disaggregation of Income Statement Expenses (“ASU 2024-03”) and in January

2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date (“ASU 2025-01”).

ASU 2024-03 is intended to enhance the disclosures for expenses for all public

entities in accordance with ASC Topic 220, Income Statement-Reporting Comprehensive Income.

ASU 2024-03 addresses investor requests for

more detailed information about expenses, specifically cost of sales and selling, general, and administrative expenses.

ASU 2024-03 requires

a public entity to disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset

amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts

of depletion expense) included in each relevant expense caption presented on the face of the income statement as well as a qualitative

description of the amounts remaining in the relevant expense captions that are not separately disaggregated quantitatively.

also requires a public entity to disclose the total amount of selling expenses and the entity’s definition of selling expenses.

ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026, and interim periods within

fiscal years beginning after December 15, 2027.

Early adoption is permitted.

A public entity should apply ASU

2024-03 either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively

to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of ASU 2024-03 on its future

consolidated financial statements and related disclosures.

A public entity should apply ASU 2024-03 either prospectively

to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented

in the financial statements.

The Company is currently evaluating the impact of ASU 2024-03 on its future consolidated financial statements

and related disclosures.

September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Improvements to the Accounting for Internal-Use Software.

The amendments modernize the guidance used to determine when costs incurred

in developing internal-use software should be capitalized.

The amendments are effective for annual reporting periods beginning after

December 15, 2027, including interim periods within those annual periods.

Early adoption is permitted.

The Company is currently evaluating

the effect of the amendments on its consolidated financial statements and related disclosures.

December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements, which clarifies interim disclosure

requirements and the applicability of Topic 270.

This update will be effective beginning after December 15, 2027.

The Company is currently

evaluating the impact that adoption of ASU 2025-11 will have on its consolidated financial statements.

3 – DISCONTINUED OPERATIONS

September 2024, the Company entered into an agreement with flyExclusive to transition our aircraft ownership program fleet

operations to flyExclusive.

During 2024 and 2025 we continued to take delivery of new aircraft, while also generating revenue from

our proprietary software, including the Vaunt platform, Volato’s empty leg consumer app.

In March 2025, the Company sold GC

Aviation, Inc., which held the FAA Part 135 certificate, therefore items related to managed aircraft and GC Aviation Inc.

included in discontinued operations.

March 2025, the Company sold GC Aviation, Inc., which held the FAA Part 135 certificate, therefore items related to GC Aviation, Inc.

are included in discontinued operations.

classes of line items constituting net income (loss) from discontinued operations are as follows:

SCHEDULE OF NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30,

Six Month ended June 30,

Revenue - Aircraft usage

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Total liabilities associated with discontinued operations

NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT

Prepaid expenses and other current

assets totaled $ 1.2 million as of March 31, 2026, consisting primarily of $ 754 thousand of prepaid directors and

officers insurance, $ 163 thousand of prepaid software costs, and $ 48 thousand of prepaid NYSE fees.

The remaining balance

consisted of other miscellaneous prepaid expenses and current assets.

4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

expenses and other current assets was $ 0.8 million as of June 30, 2026, consisting primarily of $ 0.5 million of prepaid directors

and officers insurance and $ 0.1 million of prepaid software costs.

The remaining balance consisted of other miscellaneous prepaid expenses

and current assets.

5 – INTANGIBLES

- Lived Intangible Assets

March 2025, the Company sold GC Aviation, Inc., which held the FAA Part 135 Certificate for $ 2.0 million.

The Company did not recognize any

impairment of the Part 135 certificate during the three months ended March 31, 2025.

As of March 31, 2026 and December 31, 2025, the

value of the FAA Part 135 certificate was 0 zero.

March 2025, the Company sold GC Aviation, Inc., which held the FAA Part 135 Certificate for $ 2.0

The Company did not recognize any impairment of the

Part 135 certificate during the three months ended March 31, 2025.

As of June 30, 2026 and December 31, 2025, the value of the FAA Part

135 certificate was 0 zero.

6– PROPERTY AND EQUIPMENT, NET

and equipment, net consist of the following at March 31, 2026 and December 31, 2025, in thousands:

and equipment, net consist of the following at June 30, 2026 and December 31, 2025, in thousands:

OF PROPERTY AND EQUIPMENT, NET

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Property and equipment, net

the three months ended March 31, 2026 and 2025, the Company recognized $ 58 thousand and $ 85 thousand of depreciation and amortization,

the three months ended June 30, 2026 and 2025, the Company recognized $ 61 thousand and $ 85 thousand of depreciation and amortization,

respectively.

the three months ended March 31, 2026 and 2025, the Company reduced the value of software development cost by $ 32

thousand and 0 zero,

During the six months ended June 30, 2026 and 2025, the Company recognized $ 120 thousand and $ 169 thousand of depreciation

and amortization, respectively.

the six months ended June 30, 2026 and 2025, the Company reduced the value of software development cost by $ 32 thousand and $ 54 thousand,

related to a non-monetary exchange with a third party and their use of our mission control software.

This software development cost

was for software originally developed for internal use and has subsequently been sold to the third party in a non-monetary

consist of the following at March 31, 2026 and December 31, 2025, in thousands:

Other deposits

Less current portion

Total deposits, non-current

This software development cost was

for software originally developed for internal use and has subsequently been sold to the third party in a non-monetary transaction.

7 – NOTE RECEIVABLE

March 20, 2025, the Company sold its former subsidiary GC Aviation, Inc., which held the FAA Part 135 certificate for $ 2.0

million and recorded a $ 1.8

million note receivable.

The note receivable bears interest at a rate of 7% annually amortized over 15 years with a three year

balloon payment.

The first payment was to be the sooner of 120 days from the date of closing or the first business day following the

first charter flight performed by the buyer.

June 17, 2026, the Company entered into an amendment to the agreement, under which it sold GC Aviation, Inc.

The Company elected to

waive certain interest due under the note and extend the first payment date to December 19, 2026.

receivable consisted of the following as of June 30, 2026, and December 31, 2025, in thousands:

OF NOTE RECEIVABLE

Accrued interest receivable

Net carrying value

Note Receivable, short-term

Note receivable, long-term

8 – UNSECURED CONVERTIBLE NOTES

convertible notes consisted of the following at March 31, 2026 and December 31, 2025, in thousands:

convertible notes consisted of the following at June 30, 2026 and December 31, 2025, in thousands:

OF LONG-TERM DEBT INSTRUMENTS

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Total unsecured convertible note, long term

** Represents the

Third Tranche Note (as described in this Note 8)

*** Represents the Fourth

Tranche Note (as described in this Note 8)

During the year ended December 31, 2024, the Company

entered into the Securities Purchase Agreement as described in Note 2 above pursuant to which the Company may issue a series of convertible

notes for an aggregate principal not to exceed $ 36.0 million.

As of March 31, 2026, the company had issued $ 11.22 million in aggregate

principal amount of convertible notes, leaving $ 24.78 million of remaining capacity available for future issuances.

The Company does not

expect to issue additional convertible notes in 2026.

the Third Tranche Note (as described in this Note 8)

the Fourth Tranche Note (as described in this Note 8)

the year ended December 31, 2024, the Company entered into the 2024 Securities Purchase Agreement as described in Note 2 above

pursuant to which the Company may issue a series of convertible notes for an aggregate principal not to exceed $ 36.0

As of June 30, 2026, the Company had issued $ 11.22

million in aggregate principal amount of convertible notes, leaving $ 24.78

million of remaining capacity available for future issuances.

The Company does not expect to issue additional convertible notes in

convertible note due December 2025 - 2024 Convertible Note

the year ended December 31, 2024, the Company issued a single convertible note in a principal amount of $ 4.5

million, (as defined above, the “2024 Convertible Note”)

of which $ 4.1

million was funded as of December 31, 2024, representing an

original issue discount of ten percent.

the year ended December 31, 2024, the Company issued a single convertible note in a principal amount of $ 4.5 million, (as defined above,

the “2024 Convertible Note”) of which $ 4.1 million was funded as of December 31, 2024, representing an original issue discount

of ten percent.

Interest is payable quarterly at the Company’s option and shall either be (i) paid in cash;

(ii) paid-in-kind in shares of common stock;

(ii) paid-in-kind in

shares of common stock;

or (iii) compound and become additional principal outstanding.

The Company recorded $ 14

thousand of accrued interest expense in the year ended December

During the three months ended March 31, 2025 the $ 14

thousand of paid-in-kind interest was rolled into the principal

balance of the 2024 Convertible note.

The Company recorded $ 14 thousand of accrued interest

expense in the year ended December 31, 2024.

During the three months ended March 31, 2025 the $ 14 thousand of paid-in-kind interest was

rolled into the principal balance of the 2024 Convertible note.

2024 Convertible Note is accounted for as a single liability measured at fair value in accordance with ASC 825-10.

At March 31, 2026

and 2025 , the Company valued the 2024 Convertible Note using the Monte-Carlo valuation model.

At June 30, 2026 and

2025, the Company valued the 2024 Convertible Note using the Monte-Carlo valuation model.

June 2025, the outstanding principal and interest of the 2024 Convertible Note was converted into 2,538,939 shares of the Company’s

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convertible note due June 2026 - Second Tranche Note

June 2025, the Company issued a second convertible note (the “Second Tranche Note”) in accordance with the terms of the Securities

Purchase Agreement in the principal amount of $ 1.5

million, for a purchase price of $ 1.4

million, representing an original issue discount of ten 10 percent,

which matures on June 13, 2026.

The Second Tranche Note was recorded at a fair value of $ 1.4 million.

June 2025, the Company issued a second convertible note (the “Second Tranche Note”) in accordance with the terms of the

2024 Securities Purchase Agreement in the principal amount of $ 1.5 million,

for a purchase price of $ 1.4 million,

representing an original issue discount of ten 10

percent, which was scheduled to mature on June 13, 2026.

The Second Tranche Note was recorded at a fair value of $ 1.4

The Company recorded a loss of $ 124

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convertible note due July 2026 - Third Tranche Note

July 2025, the Company issued a third convertible note, (the “Third Tranche Note”), in accordance with the terms of the Securities

Purchase Agreement, in the principal amount of $ 3.0

million, for a purchase price of $ 2.7

million, representing an original issue discount of ten percent 10 ,

which matures on July 21, 2026.

The Third Tranche Note was recorded at an initial fair value of $ 2.9 million.

The Company recorded a

loss of $ 449 thousand on the change in fair value of the Third Tranche Note in the twelve months ended December 31, 2025.

the first quarter of 2026, $ 2.8 million of the outstanding principal and accrued interest of the Third Tranche Note was converted into

July 2025, the Company issued a third convertible note, (the “Third Tranche Note”), in accordance with the terms of the

2024 Securities Purchase Agreement, in the principal amount of $ 3.0 million,

for a purchase price of $ 2.7 million,

representing an original issue discount of ten 10

percent, which matures on July 21, 2026.

The Third Tranche Note was recorded at an initial fair value of $ 2.9

The Company recorded a loss of $ 449

thousand on the change in fair value of the Third Tranche Note in the twelve months ended December 31, 2025.

the first quarter of 2026, $ 2.8

million of the outstanding principal and accrued interest of the Third Tranche Note was converted into 8,677,847

shares of the Company’s common stock.

Immediately prior to the conversions, the Company remeasured the liability to its

fair value as of the conversion date.

The Company recorded a loss of $ 29 thousand related to the change in fair value as of the conversion

The Company recorded a loss of $ 11 thousand on the change in fair value of the Third Tranche Note in the three months ended March

Immediately prior to the conversions, the Company remeasured the liability to its fair

value as of the conversion date.

The Company recorded a loss of $ 29

thousand related to the change in fair value as of the conversion dates.

The Company recorded a loss of $ 11

thousand on the change in fair value of the Third Tranche Note in the three months ended March 31, 2026.

In April 2026, the

remaining $ 231

thousand of outstanding principal and interest was converted into 1,154,915

shares of the Company’s common stock.

Immediately prior to the conversion, the Company remeasured the liability to its fair

value as of the conversion date.

The Company recorded a loss of $ 3

thousand related to the change in fair value as of the conversion dates in the three months ended June 30, 2026.

convertible note due October 2026 - Fourth Tranche Note

October 2025, the Company issued a fourth convertible note, (the “Fourth Tranche Note”) in accordance with the Securities

Purchase Agreement, in the principal amount of $ 2.2

million, for a purchase price of $ 2.0

million, representing an original issue discount of ten percent 10 ,

which matures on October 16, 2026.

The Fourth Tranche Note was recorded at an initial fair value of $ 2.2 million.

The Company recorded

a loss of $ 200 thousand on the change in fair value of the Fourth Tranche Note at issuance.

In December 2025, $ 1.2 million of the outstanding

principal and accrued interest of the Fourth Tranche Note was converted into 1,604,091 shares of the Company’s common stock.

prior to the conversions, the Company remeasured the liability to its fair value as of the conversion date and recorded a gain of $ 10

October 2025, the Company issued a fourth convertible note, (the “Fourth Tranche Note”) in accordance with the 2024

Securities Purchase Agreement, in the principal amount of $ 2.2 million,

for a purchase price of $ 2.0 million,

representing an original issue discount of ten percent

10 , which was scheduled to mature on October 16, 2026.

The Fourth Tranche Note was recorded at an initial fair value of

$ 2.2 million.

The Company recorded a loss of $ 200 thousand

on the change in fair value of the Fourth Tranche Note at issuance.

In December 2025, $ 1.2 million

of the outstanding principal and accrued interest of the Fourth Tranche Note was converted into 1,604,091

shares of the Company’s common stock.

Immediately prior to the conversions, the Company remeasured the liability to its fair

value as of the conversion date and recorded a gain of $ 10

thousand related to the change in fair value as of the conversion date.

The Company recorded a loss of $ 272 thousand on the change in

fair value for the twelve months ended December 31, 2025.

In January 2026, the remaining $ 1.0 million of outstanding principal and accrued

interest was converted into 1,926,618 shares of the Company’s common stock.

Immediately prior to the conversion, the Company remeasured

the liability to its fair value as of the conversion date.

The company recorded a loss of $ 20 thousand related to the change in fair

The Company recorded a loss of $ 272

thousand on the change in fair value for the twelve months ended December 31, 2025.

In January 2026, the remaining $ 1.0

million of outstanding principal and accrued interest was converted into 1,926,618

shares of the Company’s common stock.

Immediately prior to the conversion, the Company remeasured the liability to its fair

value as of the conversion date.

The Company recorded a loss of $ 20

thousand related to the change in fair value as of the conversion date during the six months ended June 30, 2026.

9 – CREDIT FACILITY AND OTHER LOANS

Leasing G280 LLC Line of credit

Company entered into the pre-delivery payment agreement on October 5, 2022, with SAC Leasing G280 LLC to obtain loans in the

aggregate amount of $ 40.5

million for the purchase of four ( 4 )

Gulfstream G280 aircraft that were delivered in 2024 and 2025.

On August 25, 2023, the Company and SAC Leasing G280 LLC entered into

the first amendment to pre-delivery payment agreement.

The maturity date of amounts drawn under the SAC Leasing G280 LLC credit

facility was the earlier of the delivery date of the aircraft or September 14, 2025, which is thirty-five ( 35 )

months from the date of funding.

The purchase agreement contracts were assigned to SAC G280 Leasing LLC as collateral on this credit

the year ended December 31, 2022, the Company executed a series of purchase agreements with Gulfstream Aerospace, LP for the

acquisition of four ( 4 )

Gulfstream G280 aircraft for total consideration of $ 79.0

million with expected deliveries in 2024 and 2025, of which an aggregate amount of $ 48.0

million was funded and paid as of December 31, 2024, partially through a credit facility from SAC Leasing G280 LLC.

During the year

ended December 31, 2024, the Company funded an additional $ 9.0

million through the SAC Leasing G280 LLC credit facility.

the three months ended March 31, 2025, the Company decreased its SAC leasing G280 LLC line of credit by $ 28.0

million which was a combination of a repayment in the amount of $ 10.5

million, with the sale of the second G280 in February 2025 and the deposit release and corresponding pay down of the G280 line of

credit of $ 9.0

million with the delay of the fourth G280 until Q4 2025.

In April 2025, the Company repaid the remaining $ 8.5

million, terminating the credit facility with SAC Leasing G280 LLC.

Company entered into the pre-delivery payment agreement on October 5, 2022, with SAC Leasing G280 LLC to obtain loans in the aggregate

amount of $ 40.5 million for the purchase of four ( 4 ) Gulfstream G280 aircraft that were delivered in 2024 and 2025.

The maturity date of amounts

drawn under the SAC Leasing G280 LLC credit facility was the earlier of the delivery date of the aircraft or September 14, 2025, which

is thirty-five ( 35 ) months from the date of funding.

The purchase agreement contracts were assigned to SAC G280 Leasing LLC as collateral

on this credit facility.

the year ended December 31, 2022, the Company executed a series of purchase agreements with Gulfstream Aerospace, LP for the acquisition

of four ( 4 ) Gulfstream G280 aircraft for total consideration of $ 79.0 million with expected deliveries in 2024 and 2025, of which an

aggregate amount of $ 48.0 million was funded and paid as of December 31, 2024, partially through a credit facility from SAC Leasing G280

During the year ended December 31, 2024, the Company funded an additional $ 9.0 million through the SAC Leasing G280 LLC credit facility.

the six months ended June 30, 2025, the Company decreased its SAC leasing G280 LLC line of credit by $ 28.0 million through a combination

of a repayment in the amount of $ 10.5 million, with the sale of the second G280 in February 2025 and the deposit release and corresponding

pay down of the G280 line of credit of $ 9.0 million with the delay of the fourth G280 until Q4 2025.

In April 2025, the Company repaid

the remaining $ 8.5 million, terminating the credit facility with SAC Leasing G280 LLC.

The line of credit balance was zero as of December

the three months ended March 31, 2026 and 2025, the Company amortized to interest expense zero and $ 62 thousand of debt discount, respectively.

the three months ended March 31, 2026 and 2025, the Company incurred zero and $ 641 thousand of interest, respectively.

the three months ended June 30, 2026 and 2025, the Company amortized to interest expense zero and $ 185 thousand of debt discount, respectively.

During the six months ended June 30, 2026 and 2025, the Company amortized to interest expense zero and $ 247 thousand of debt discount,

respectively.

the three months ended June 30, 2026 and 2025, the Company incurred zero of interest, respectively.

During the six months ended June

30, 2026 and 2025, the Company incurred zero and $ 641 thousand of interest, respectively.

connection with the purchase and sale of the second G280, the Company entered into a financing agreement with OgaraJets.

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Company’s issued and outstanding common stock which represents less than 1 % of the Company’s issued and outstanding common

stock as of March 31, 2026.

stock as of June 30, 2026.

11 – INCOME TAXES

1 unchanged sentence

consolidated financial statements or related disclosures.

effective tax rate was zero and negative 39.00 % percent for the three months ended March 31, 2026 and 2025, respectively.

Our effective

tax rate for the three months ended March 31, 2026 differs from the federal statutory rate of 21 % and was negative as a result of the

valuation allowance on the deferred tax benefit due to the convertible note fair value adjustments.

effective tax rate was zero

percent for the three and six months ended June 30, 2026, respectively.

The effective tax rate was 3.00 %

percent for the three and six months ended June 30, 2025, respectively.

Our effective tax rate for the three and six months ended June 30, 2026 differs from the federal statutory rate of 21 %

and was negative as a result of the valuation allowance on the deferred tax benefit due to the convertible note fair value adjustments.

12 – SHAREHOLDERS’ EQUITY (DEFICIT)

October 28, 2024, the Company filed an amendment to its Amended and Restated Certificate of Incorporation to increase the number of authorized

shares to 201,000,000 shares consisting of 200,000,000 shares of common stock and 1,000,000 shares of preferred stock.

February 24, 2025, the Company effected the Reverse Stock Split described elsewhere in this Quarterly Report.

All share amounts have been

retroactively adjusted to account for the Reverse Stock Split as if it occurred at inception.

The Reverse Stock Split did not have an

effect on the number of authorized shares of common stock.

All share amounts have

been retroactively adjusted to account for the Reverse Stock Split as if it occurred at inception.

The Reverse Stock Split did not have

an effect on the number of authorized shares of common stock.

stock at the market sales agreement

December 5, 2025, the Company entered into an ATM Sales Agreement with Virtu Americas LLC (“Virtu”)

pursuant to which Virtue acted as the Company’s sole sales agent or principal with respect to the offer and sale from time-to-time

of shares of the Company’s Class A Common Stock, par value $ 0.0001 per share, having an aggregate gross sales price of an aggregate

of up to $ 9.3 million.

The Company issued 436,757 shares of common stock for proceeds of $ 463 thousand in the twelve months ended December

December 5, 2025, the Company entered into an ATM Sales Agreement with Virtu Americas LLC (“Virtu”) pursuant to which Virtu

acted as the Company’s sole sales agent or principal with respect to the offer and sale from time-to-time of shares of the Company’s

Class A Common Stock, par value $ 0.0001 per share, having an aggregate gross sales price of an aggregate of up to $ 9.3 million.

issued 436,757 shares of common stock for proceeds of $ 463 thousand in the twelve months ended December 31, 2025.

March 19, 2026, the Company delivered a notice of termination to Virtu terminating the ATM Sales Agreement as of March 22, 2026.

March 27, 2026, the Company entered into an ATM Sales Agreement with Curvature Securities, LLC (“Curvature”) pursuant to

which Curvature will act as the Company’s sole sales agent or principal with respect to the offer and sale from time-to-time of

shares of the Company’s Class A Common Stock, par value $ 0.0001 per share, having an aggregate gross sales price of an aggregate

of up to $ 3,700,000 .

shares of preferred stock have been issued as of March 31, 2026 and December 31, 2025.

which Curvature will act as the Company’s sole sales agent or principal with respect to the offer and sale from time-to-time

of shares of the Company’s Class A Common Stock, par value $ 0.0001

per share, having an aggregate gross sales price of an aggregate of up to $ 3,700,000 .

The Company issued 12,155,500

shares of common stock for gross proceeds of $ 3.6

million in the six months ended June 30, 2026 under this ATM Sales Agreement.

The Company does not currently expect to be able to utilize this ATM program for the remainder of 2026 due to limitations imposed under

Security offerings

On June 7, 2026, the Company

entered into a Securities Purchase Agreement (the “Purchase Agreement”) for the sale by the Company of 6,500,000

shares of the Company’s Class A common stock.

The Company received gross proceeds of $ 2.1

million from the offering.

As part of the Purchase Agreement, the Company transferred 451,901 shares of FlyExclusive, Inc.

common stock, held by the Company.

company recorded a loss of $ 54 thousand as part of the share transfer.

On June 28, 2026, the Company

entered into a securities purchase agreement, dated June 27, 2026, for the sale by the Company of an aggregate of 11,038,767

shares of the Company’s Class A common stock.

The Company received gross proceeds of approximately $ 1.82

As of June 30, 2026, $ 0.2 million of the proceeds were outstanding and recorded as equity contribution receivable on the consolidated

balance sheets.

shares of preferred stock have been issued as of June 30, 2026 and December 31, 2025.

Options - Equity Incentive Plans

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stock appreciation rights, restricted stock, restricted stock units, performance-based awards, and other stock- and cash-based

The Company has reserved a pool of shares of common stock for issuance pursuant to awards under the 2025 Plan equal to 415,584 shares.

As of March 31, 2026 the Company had 39,060 shares

available for issuance.

The Company has reserved a pool of shares of common stock for issuance pursuant to awards under the 2025 Plan equal to 415,584

As of June 30, 2026 the Company had 39,060

shares available for issuance under the 2025 Plan.

of the 2023 Plan

2023 Stock Incentive Plan (the “2023 Plan”) was approved at the special meeting of the shareholders of the Company on November

The 2023 Plan provides for the grant of stock options (both incentive stock options and non-qualified stock options), stock

appreciation rights, restricted stock, restricted stock units, performance-based awards, and other stock- and cash-based awards.

Company has reserved a pool of shares of common stock for issuance pursuant to awards under the 2023 Plan equal to 224,348 shares.

of March 31, 2026 the Company had 22,515 shares available for issuance.

2023 Stock Incentive Plan (the “2023 Plan”) was approved at the special meeting of the shareholders of the Company on

November 28, 2023.

The 2023 Plan provides for the grant of stock options (both incentive stock options and non-qualified stock

options), stock appreciation rights, restricted stock, restricted stock units, performance-based awards, and other stock- and

cash-based awards.

The Company has reserved a pool of shares of common stock for issuance pursuant to awards under the 2023 Plan

equal to 224,348

As of June 30, 2026 the Company had 23,005

shares available for issuance under the 2023 Plan.

option activity for the periods presented is as follows:

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Outstanding as of December 31, 2025

Outstanding as of March 31, 2026

Exercisable as of March 31, 2026

Outstanding as of June 30, 2026

Exercisable as of June 30, 2026

Black-Scholes option pricing model is used by the Company to determine the weighted-average fair value of share-based payments.

recognizes forfeitures as they occur.

There were no stock options granted in the three months ended March 31, 2026 or 2025.

There were no stock options granted in the three and six months ended June 30, 2026 or 2025.

stock unit activity for the period presented is as follows:

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Outstanding as of December 31, 2025

Outstanding as of March 31, 2026

based compensation expense was $ 30

thousand and $ 46

thousand for the three months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026 the unrecognized compensation costs related to non-vested awards was $ 6 thousand is and expected

to be recognized over a weighted average period of 0.06 years.

of March 31, 2026, there were 552,000 public warrants and 609,195 private placement warrants issued and outstanding.

Outstanding as of June 30, 2026

based compensation expense was zero and $ 557 thousand for the three months ended June 30, 2026 and 2025, respectively.

Stock based compensation

expense was $ 30 and $ 603 thousand for the six months ended June 30, 2026 and 2025, respectively.

As of June 30, 2026 the unrecognized

compensation costs related to non-vested awards was $ 5 thousand and is expected to be recognized over a weighted average period of 1.4

of June 30, 2026, there were 552,000 public warrants and 609,195 private placement warrants issued and outstanding.

placement warrants

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holder’s option, and are not redeemable by the Company.

The private placement warrants are all exercisable as of March 31, 2026.

There was no activity during the three months ended March 31, 2026.

The private placement warrants are all exercisable as of June 30, 2026.

There was no activity during the three and six months ended June 30, 2026.

to the initial public offering (“IPO”) by Proof Acquisition Corp I (“PACI”) in 2021, the Company sold 1,104,000

4 unchanged sentences

A majority of the shares were redeemed before the December 2023 merger transaction, but the warrants remain.

there are 552,000 public warrants outstanding as of March 31, 2026.

there are 552,000 public warrants outstanding as of June 30, 2026.

public warrants became exercisable on the later of (a) 30 days after the completion of a business combination and (b) 12 months from

3 unchanged sentences

The public and private warrants expire on December 1, 2028.

The public warrants are all exercisable as of March 31, 2026.

There was no activity during the three months ended March 31, 2026.

The public warrants are all exercisable as of June 30, 2026.

There was no activity during the three and six months ended June 30, 2026.

13 – COMMITMENT AND CONTINGENCIES

7 unchanged sentences

Short term lease costs related to these leases were zero and

$ 3 thousand for the three months ended March 31, 2026 and 2025, respectively.

$ 3 thousand for the six months ended June 30, 2026 and 2025, respectively.

January 2024, the Company began leasing space for aircraft with a term of 5 years with fixed lease payments.

3 unchanged sentences

the marketplace at the inception of the fixed lease payments.

Deposits and Deferred Revenue

deposits and deferred revenue consisted of deposits from customers for the purchase of aircraft of $ 0.1 million as of March 31, 2026

and December 31, 2025, respectively, as well as deferred revenue of $ 3.3 million and $ 2.7 million as of March 31, 2026 and December 31,

2025, respectively.

Contingencies

39 unchanged sentences

Three Months Ended

Six Months Ended

Cost of revenue

Selling, general and administrative (1)

Loss on fair value adjustment of financial instruments

(Gain) loss on fair value adjustment of financial instruments

Gain on reversal of investment in M2i

Interest income (expense), net

1 unchanged sentence

Net income (loss) from continuing operations before income taxes

(1) Includes amounts

for depreciation and amortization expense.

(2) Other includes

gains of $ 1.1 million for the sale of mission control as part of the flyExclusive 5 th amendment and $ 1.5 million for settlements

of deposits and other liabilities at a discount for the three months ended March 31, 2026 and 2025, respectively.

amounts for depreciation and amortization expense.

includes a loss of $ 0.3 and a gain of $ 0.8 million

for the sale of mission control as part of the flyExclusive fifth amendment in the three and six months ended June 30, 2026.

includes gains of $ 3.1 million and $ 4.3 million for settlements of deposits and other liabilities at a discount for the three

and six months ended June 30, 2025.

15 – BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

2 unchanged sentences

SCHEDULE OF EARNINGS PER SHARE, BASIC AND DILUTED

Three Months Ended March 31,

Three Months Ended June 30

Six Months Ended June 30,

Net income (loss) from continuing operations

stock based compensation expense, net of note, net of tax

loss on convertible note, net of tax

Net income (loss) attributable to common stockholders from continuing operations,

(gain) loss on convertible note, net of tax

Net income (loss) attributable to common stockholders from continuing operations, dilutive

Net income (loss) from discontinued operations

6 unchanged sentences

SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

As of March 31,

As of June 30,

Warrants to purchase common stock

2 unchanged sentences

16– SUBSEQUENT EVENTS

April 2026, the Company received $ 3.6 million in net proceeds from the sale of stock under our at-the-market program.

In April 2026, the remaining $ 231 thousand of principal

and interest on the Third Tranche note was converted into 1,154,915 shares of common stock.

April, 2026, the Company entered into a Share exchange Agreement (the “Share Exchange Agreement”), with three investors (together

the “Investors”).

The investors are shareholders of M2i whose common stock is publicly quoted on the OTCQB Venture Market

of OTC Markets Group, Inc.

under the symbol “MTWO”.

Pursuant to the Share Exchange Agreements, the Company agreed

to issue an aggregate of 5,407,499 shares of the Company’s Class A common stock to the Investors in exchange for an aggregate

of 48,044,912 shares of M2i common stock.

On May 7, 2026, the Company held a special meeting

of its shareholders to seek approval of the Merger and related matters and the Company’s shareholders approved all proposals presented

at the meeting, including the adoption of the Merger Agreement and approval of all transactions contemplated by the Merger Agreement.

The Company has evaluated subsequent events that occurred after July 1, 2026 through August 14, 2026, the date of these consolidated financial

statements were available to be issued, and noted no additional events requiring recognition for disclosure, except as identified below.

August 6, 2026, the Company dissolved Volato Merger Subsidiary, Inc., which was an inactive subsidiary that had been formed solely

in connection with the Merger Agreement with M2i.

On August 6, 2026, the Company formed Modern Aero Charter, LLC, a wholly owned

subsidiary of Parslee, LLC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements