What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-31 compared with 2024-03-26 · 321 added, 379 removed, 689 unchanged (50% of the section changed)

8 unchanged sentences

Consolidated Statements of Cash Flows for the years ended December 31, 202 4 and 202 3

Notes to the consolidated audited Financial Statements

Notes to the Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

7 unchanged sentences

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the Company has incurred significant operating losses and negative cash flows from operations, during the year ended December 31, 2023, and has limited positive working capital at December 31, 2023.

As discussed in Note 2 to the consolidated financial statements, the Company has incurred significant operating losses and negative cash flows from operations, and has limited positive working capital.

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

16 unchanged sentences

We have served as the Company’s auditor since 2022.

Rose, Snyder & Jacobs LLP

Encino, California

6 unchanged sentences

Cash $ 2,161 $ 14,486

Restricted cash 1,839 —

Accounts receivable, net 2 442

1 unchanged sentence

Prepaid expenses and other current assets 1,070 1,873

Current assets - discontinued operations 2,242 4,572

Total current assets 43,314 46,498

1 unchanged sentence

Operating lease, right-of-use assets 167 —

Equity-method investment 154 1,159

Deposits 300 15,250

3 unchanged sentences

Goodwill 635 635

Non-current assets - discontinued operations — 1,873

Total assets $ 46,299 $ 71,712

8 unchanged sentences

Customer deposits and deferred revenue 11,538 2,831

Current liabilities - discontinued operations 12,008 15,194

Total current liabilities 62,200 47,637

2 unchanged sentences

Credit facility, non-current — 8,054

Non-current liabilities - discontinued operations — 965

Total liabilities $ 62,633 $ 56,961

7 unchanged sentences

Accumulated deficit ( 104,307 ) ( 63,662 )

Total shareholders’ equity (deficit) attributable to Volato Group, Inc.

14,751 ( 5,669 )

Total shareholders’ equity (deficit) ( 16,334 ) 14,751

9 unchanged sentences

Total costs and expenses 55,653 40,014

Loss from operations ( 37,509 ) ( 9,185 )

Operating Loss ( 9,365 ) ( 4,440 )

Other income (expenses):

Gain from deconsolidation of investments — 581

Gain from sale of consolidated entity — 387

Gain from sale of equity-method investment 883 —

Other income 212 180

Loss from change in fair value forward purchase agreement ( 2,983 ) ( 13,403 )

Loss on extinguishment of debt ( 2,804 ) —

Interest expense, net ( 7,493 ) ( 3,358 )

Other expenses ( 15,311 ) ( 270 )

Loss before provision for income taxes ( 52,820 ) ( 9,455 )

Other income (expenses) ( 13,068 ) ( 16,194 )

Loss before provision for income taxes and discontinued operations ( 22,433 ) ( 20,634 )

Provision for incomes taxes (benefit) ( 507 ) 2

Net Loss before non-controlling interest ( 52,822 ) ( 9,400 )

Net Loss attributable to non-controlling interest — ( 33 )

Net Loss attributable to Volato Group, Inc.

$ ( 52,822 ) $ ( 9,367 )

Net loss from continuing operations ( 21,926 ) ( 20,636 )

Net loss from discontinued operations ( 18,719 ) ( 32,186 )

Net loss $ ( 40,645 ) $ ( 52,822 )

Basic and diluted net loss per share

Net loss per share from continuing operations, basic and diluted

$ ( 13.17 ) $ ( 33.84 )

Net loss per share from discontinued operations, basic and diluted $ ( 11.25 ) $ ( 52.78 )

Net loss per share, basic and diluted $ ( 24.42 ) $ ( 86.62 )

Weighted average common share outstanding:

5 unchanged sentences

(Amounts in thousands, except shares)

Preferred Stock

Class A Common Stock

Shareholders’

Shares Amount Shares Amount

Balance December 31, 2021 3,981,236 $ 4 7,120,208 $ 7 $ 5,124 $ ( 50 ) $ ( 1,473 ) $ 4,298 $ 7,910

Retroactive application of conversion of Series Seed to Class A Common Stock - 3,981 ( 4 ) 4,041,282 — 4 — — — —

Retroactive application of recapitalization (note 1) — — 107,387 ( 6 ) 6 — — — —

Shares Amount

Balance as of December 31, 2022, As adjusted 450,755 1 5,185 ( 15 ) ( 10,840 ) ( 5,669 )

1 unchanged sentence

Stock-based compensation — — 82 — — 82

Change in ownership interest in former subsidiary — — — — 34 — — — 34

Deconsolidation of former subsidiaries — ( 4,265 ) ( 4,265 )

Issuance of common stock to employees 378 — 94 — — 94

Reverse capitalization, net of transaction costs 346,039 1 10,461 — — 10,462

Exercise of stock options 8,294 — 23 — — 23

Issuance of Preferred series A-1 shares, converted to Class A common stock following business combination 97,898 — 24,204 — — 24,204

Issuance of Preferred series A-2 and A-3 shares from conversion of notes payable, converted to Class A common stock following business combination 218,375 1 38,361 — — 38,362

Net loss — — — — ( 52,822 ) ( 52,822 )

Balance December 31, 2022 — $ — 11,268,877 $ 1 $ 5,185 $ ( 15 ) $ ( 10,840 ) $ — $ ( 5,669 )

Preferred Stock

Balance as of December 31, 2023, As Adjusted 1,121,738 $ 3 $ 78,410 $ — $ ( 63,662 ) $ 14,751

Class A Common Stock

Shareholders’

Shares Amount Shares Amount

Balance December 31, 2022 0 $ — 11,268,877 $ 1 $ 5,185 $ ( 15 ) $ ( 10,840 ) $ — $ ( 5,669 )

Cash collected from subscription receivable 0 — 0 — — 15 — — 15

Shares Amount

Balance at December 31, 2023, as Adjusted 1,121,738 $ 3 $ 78,410 $ ( 63,662 ) $ 14,751

Stock-based compensation — — 211 — 211

Issuance of common stock to employees 0 — 9,441 — 94 — — — 94

Reverse recapitalization, net of transaction costs 0 — 8,650,969 1 10,461 — — — 10,462

Exercise of stock options 34,052 — 94 — $ 94

Issuance of preferred Series A-1 shares, converted to Class A common stock following business combination — — 2,447,453 0 24,204 — — — 24,204

Issuance of preferred Series A-2 and A-3 shares from conversion of notes payable, converted to Class A common stock following business combination — — 5,459,368 1 38,361 — — — 38,362

Issuance of common stock 639,720 2 5,003 — 5,005

Common stock and warrant reclass from in-kind liability to APIC 48,342 — 4,250 — 4,250

Net loss — — — ( 40,645 ) ( 40,645 )

Balance December 31, 2023 0 — 28,043,449 3 78,410 — ( 63,662 ) — 14,751

Balance at December 31, 2024, as Adjusted 1,843,852 $ 5 $ 87,968 $ ( 104,307 ) $ ( 16,334 )

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

4 unchanged sentences

Operating activities:

Net Loss $ ( 52,822 ) $ ( 9,367 )

Net loss from continuing operations ( 21,926 ) ( 20,636 )

Net loss from discontinued operations ( 18,719 ) ( 32,186 )

Adjustments to reconcile net loss to cash used in operating activities:

2 unchanged sentences

Fair value of common stock issued to employees — 94

Gain from sale of equity-method investments ( 883 ) ( 581 )

Gain from sale of property and equipment ( 2 ) —

Loss on extinguishment of debt 2,804 —

Loss on impairment of intangible assets 130 —

Gain from sale of consolidated entity — ( 387 )

Gain (loss) from equity-method investments ( 22 ) 45

Deferred income tax benefit — ( 80 )

Amortization right-of-use asset 34 —

8 unchanged sentences

Customers’ deposits and deferred revenue 8,707 1,733

Change in assets and liabilities of discontinued operations 52 9,067

Net cash used in operating activities ( 16,919 ) ( 30,393 )

1 unchanged sentence

Cash payment for property and equipment ( 145 ) ( 637 )

Proceeds from sale of interest in equity-method investment 4,235 6,575

Payment for acquisition of GCA — ( 1,850 )

Payment for the purchase of equity-method investments ( 2,328 ) —

Proceeds from the sale of consolidated entity 506 —

Cash obtained from acquisition of GCA — 679

Net cash provided by investing activities 1,776 5,145

Proceeds from the sale of property and equipment 30 —

Cash from investing activities - discontinued operations — 2,413

Net cash (used in) provided by investing activities ( 115 ) 1,776

Financing activities:

2 unchanged sentences

Collection on subscription receivable — 15

Proceeds from issuance of convertible notes 12,670 18,879

Proceeds from issuance of term loan 3,884 —

Proceeds from issuance of convertible notes, net 4,050 12,670

Purchase of forward purchase agreement — ( 18,911 )

Proceeds from forward purchase agreement — 2,525

Proceeds from other loans — 4,500

Repayment on loans ( 2,717 ) ( 787 )

4 unchanged sentences

Net cash provided by financing activities 4,311 37,461

Net increase in cash 8,843 6,271

Net (decrease) increase in cash ( 12,723 ) 8,844

Cash and restricted cash, beginning of year 16,723 7,879

2 unchanged sentences

Cash paid for interest $ 5,640 $ 2,268

Cash paid for income taxes — —

Non-Cash Investing and Financing Activities:

5 unchanged sentences

Liabilities assumed in merger transaction unpaid at 12/31/2023 — 1,722

Initial recognition of right-of-use asset — 1,612

Fair value adjustment to equity-method investment upon deconsolidation — 34

Acquisition of vehicle – direct finance — 63

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

4 unchanged sentences

Volato Group, Inc.

(“we”, “us”, “the Company”, or “Volato”) is a private aviation company founded in January 2021.

That year, we entered the private jet charter and fractional ownership market with our Part 135 HondaJet ownership program, taking delivery of our first jet in August 2021 and completing our first Part 135 charter flight in October of 2021.

The HondaJet is manufactured by Honda Aircraft Company (“Honda”).

We took delivery of three HondaJets in 2021.

In 2022, we continued to build our fleet of HondaJets.

In March 2022, we acquired Gulf Coast Aviation, Inc., owner of G C Aviation, Inc., a Texas entity and Part 135 air carrier certificate holder.

This acquisition added personnel and facilities to support managed aircraft, sales, maintenance, and other operational functions.

Also in March 2022, we placed orders for four Gulfstream G280s for delivery in 2024 and 2025.

In August of 2022, we launched the Volato Stretch jet card, a differentiated jet card product that provides flight credits for customer itinerary flexibility.

In December of 2022, we signed a letter of intent for a multi-year fleet purchase of HondaJets with Honda.

In January 2023, we launched our automated dynamic pricing tool for the general charter market.

In March of 2023, we introduced the Insider Program, a deposit program for our charter services featuring HondaJet pricing caps in certain geographical areas.

In May 2023, we and Honda executed a firm order for 23 HondaJets to be delivered in 2023 through 2025.

(“we”, “us”, “the Company”, or “Volato”) is a holding company for several wholly owned subsidiaries, including Volato, Inc., Fly Vaunt, LLC, Gulf Coast Aviation, Inc.

and GC Aviation.

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., owner of G C Aviation, Inc., a Texas entity and Part 135 air carrier certificate holder.

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, and on October 4, 2023 the Company announced the commercial launch of Vaunt, our proprietary consumer facing empty leg platform.

On December 1, 2023, Volato, Inc.

(“Legacy Volato”), a Georgia corporation, PROOF Acquisition Corp I, a Delaware corporation (“PACI”) and PACI Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of PACI (“Merger Sub”), consummated the previously announced Business Combination Agreement, dated August 1, 2023 (the “Business Combination Agreement”).

Pursuant to the terms of the Business Combination Agreement, a business combination between PACI and Legacy Volato was effected through the merger of Merger Sub with and into Legacy Volato, with Legacy Volato surviving the merger as a wholly-owned subsidiary of PACI (the “Business Combination,” and together with the other transactions contemplated by the Business Combination Agreement and the other agreements contemplated thereby, the “Transactions”).

(“Legacy Volato”), a Georgia corporation, PROOF Acquisition Corp I, a Delaware corporation (“PACI”) and PACI Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of PACI (“Merger Sub”), consummated the business combination pursuant to the Business Combination Agreement, dated August 1, 2023 (the “Business Combination Agreement”).

Pursuant to the Business Combination Agreement, a business combination between PACI and Legacy Volato was effected through the merger of Merger Sub with and into Legacy Volato, with Legacy Volato surviving the merger as a wholly-owned subsidiary of PACI (the “Business Combination,” and together with the other transactions contemplated by the Business Combination Agreement and the other agreements contemplated thereby, the “Transactions”).

In connection with the consummation of the Business Combination (the “Closing”), PACI changed its name to “Volato Group, Inc.”

7 unchanged sentences

Legacy Convertible Preferred Stock was retroactively adjusted, converted into Common Stock, and reclassified to permanent as a result of the reverse recapitalization.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(CONTINUED)

In September 2024, the Company entered into an agreement with flyExclusive, Inc., a leading provider of private jet charter services, to transition the management of its aircraft ownership fleet operations to flyExclusive.

This move is expected to bring substantial cost savings and provide Volato with the opportunity to focus on its high-growth areas, including aircraft sales and proprietary software.

The Company will continue to take delivery of new aircraft while also generating revenue from its proprietary software, including the Vaunt platform, its empty leg consumer app.

In the fourth quarter of 2024, we transferred the aircraft lease agreements to flyExclusive and have no further obligations under the aircraft lease agreements or control over flight operations.

On February 12, 2025, the Board unanimously approved a reverse stock split of the Company’s Common Stock, at a ratio of 1-for-25 (the “Reverse Stock Split”).

The Reverse Stock Split became effective on February 24, 2025, with no change in par value.

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

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going concern, liquidity, and capital resources

The Company has only recently been formed, has limited operating history, has recorded a net loss of approximately $ 53 million for the year ended December 31, 2023, has a limited positive working capital of approximately $ 3 million, and has an accumulated deficit of approximately $ 64 million as of December 31, 2023.

The Company has only recently been formed, has limited operating history, has recorded a net loss of approximately $ 40.6 million for the year ended December 31, 2024, has a negative working capital of approximately $ 18.8 million, and has an accumulated deficit of approximately $ 104.3 million as of December 31, 2024.

Net cash used in operating activities for the year ended December 31, 2024, was approximately $ 16.9 million.

1 unchanged sentence

During the next twelve months, the Company intends to fund its operations through the issuance of financial instruments including debts or equity, extend the use of its line of credit and the sale of aircraft at a premium to cost.

The Company also has the ability to reduce cash burn to preserve capital.

Accordingly, management believes that its current cash position, along with its anticipated revenue growth and proceeds from future debt and/or equity financings, when combined with greater fleet utilization and prudent expense management, will allow the Company to continue as a going concern and to fund its operations for at least one year from the date these financials are available.

Accordingly, management believes that its current cash position, along with its anticipated margin from aircraft sales and proceeds from future debt and/or equity financings, when combined with prudent expense management, will allow the Company to continue as a going concern and to fund its operations for at lease one year from the date of issuance of these financial statements.

There are no assurances, however, that management will be able to raise capital or debt on terms acceptable to the Company.

If the Company is unable to obtain sufficient 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.

If the Company is unable to obtain sufficient additional capital or debt on terms acceptable to the Company, 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 balance sheet does not include any adjustments that might result from these uncertainties.

3 unchanged sentences

Reclassifications

Certain amounts in 2022 have been reclassified to conform with the current year’s presentation.

Certain amounts in 2023 have been reclassified to conform with the current year’s presentation, primarily to reflect discontinued operations.

Principles of Consolidation

9 unchanged sentences

(Legacy Volato) Georgia 100 %

Gulf Coast Aviation, Inc., renamed Volato Aircraft Management Service Texas 100 %

Gulf Coast Aviation, Inc.

G C Aviation, Inc.

1 unchanged sentence

Fly Dreams, LLC (until March 3, 2023) Georgia 100 %

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(CONTINUED)

One of the components of the Company’s business model includes the sale of aircraft and ownership program.

The aircraft ownership program is a model whereby the Company sells each fleet aircraft to a limited liability company, which was previously referred to as “Plane Co”.

The Plane Co, which is owned by third-party owners, leases the aircraft back to the Company for management and charter operations on behalf of the LLC under 14 C.F.R.

One of the components of the Company’s business model included the sale of aircraft and ownership program.

The aircraft ownership program was a model whereby the Company sold each fleet aircraft to a limited liability company, which was previously referred to as “Plane Co”.

The Plane Co, which is owned by third-party owners, leased the aircraft back to the Company for management and charter operations on behalf of the LLC under 14 C.F.R.

Part 135 certificate.

The Company does not hold any controlling interest in any Plane Co as of December 31, 2023, and 2022.

Each Plane Co is set up to acquire and own one aircraft pursuant to the HondaJet aircraft purchase agreement executed with the Company.

Each Plane Co is managed by PDK Management LLC until June 2023, an entity whose sole member is the Company’s Chief Executive Officer, through an operating agreement, and by Volato, Inc starting in July 2023.

On March 11, 2022, the Company executed a stock purchase agreement pursuant to which the Company acquired all of the issued and outstanding equity shares of Gulf Coast Aviation, Inc.

for a total cash consideration of $ 1.85 million.

Gulf Coast Aviation, Inc., is the owner of G C Aviation, Inc., a Texas entity and Part 135 air carrier certificate holder.

Fly Dreams holds the Federal Aviation Agency (“FAA”) certificate and conducts air carrier operations through an aircraft charter Management and Dry Lease Agreement with each of the Plane Co’s.

On March 3, 2023, Legacy Volato transferred its Fly Dreams LLC operation to GCA and sold all of its membership interest in Fly Dreams LLC, including Fly Dreams FAA part 135 Certificate.

The Company does not hold any controlling interest in any Plane Co as of December 31, 2024, or 2023.

In October 2024, as part of the agreement with flyExclusive, the Company sold its interest in the Plane Co’s to flyExclusive.

Fly Dreams held the Federal Aviation Agency (“FAA”) certificate and conducts air carrier operations through an aircraft charter Management and Dry Lease Agreement with each of the Plane Co’s.

On March 3, 2023, Legacy Volato transferred its Fly Dreams LLC operation to its wholly owned subsidiary Gulf Coast Aviation (“GCA”) and sold all of its membership interest in Fly Dreams LLC, including Fly Dreams FAA part 135 Certificate.

Legacy Volato now conducts its operations under GCA FAA Part 135 Certificate.

1 unchanged sentence

The Company does not hold any controlling interest in any limited liability companies as of December 31, 2024 and 2023.

The Company only holds de minimis interest in one and two Plane Cos as of December 31, 2023 and 2022, respectively.

Use of estimates

18 unchanged sentences

As of December 31, 2023, the only equity-method investment was Volato 158 LLC with a 3.13 % equity interest.

As of December 31, 2022, the only equity-method investments were Volato 239 LLC with a 18.75 % equity interest and Volato

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(CONTINUED)

158 LLC with a 3.13 % equity interest.

As of December 31, 2023 and 2022, management believes the carrying value of its equity method investments was recoverable in all material respects.

As of December 31, 2023, management believes the carrying value of its equity method investments was recoverable in all material respects.

In October 2024, the Company sold the interest in Volato 158 LLC to flyExclusive and recorded a loss of $ 162 thousand in the year ended December 31, 2024.

Accounts Receivable

5 unchanged sentences

The Company reviews its allowance for credit losses on a quarterly basis

The Company recognized approximately $ 106 thousand and $ 5 thousand of bad debt expense during the years ended December 31, 2023 and 2022, respectively.

The Company recognized approximately zero and $ 106 thousand of bad debt expense during the years ended December 31, 2024 and 2023, respectively.

Fixed assets are stated at cost, less accumulated depreciation.

10 unchanged sentences

The capitalized computer software development costs are reported under the section fixed assets, net in the consolidated balance sheet 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 determined that there were approximately $ 323 thousand and $ 114 thousand of internal software development costs incurred during the year ended December 31, 2023 and 2022, respectively.

The Company capitalized $ 142 thousand and $ 323 thousand of internal software development costs incurred during the year ended December 31, 2024 and 2023, respectively.

The Company recognized $ 132 thousand and $ 25 thousand of amortization expense during the year ended December 31, 2024 and December 31, 2023, 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.

1 unchanged sentence

The costs incurred for activities during the website application and infrastructure development stage are capitalized in accordance with the guidance on internal-use software in ASC 350-40.

The Company capitalized approximately $ 241 thousand and $ 114 thousand of website development costs during the year ended December 31, 2023 and December 31, 2022, respectively.

The Company capitalized approximately zero and $ 241 thousand of website development costs during the year ended December 31, 2024 and December 31, 2023, respectively.

The Company recognized approximately $ 97 thousand and $ 56 thousand of amortization expense during the year ended December 31, 2024 and December 31, 2023, respectively.

3 unchanged sentences

If there are indications of impairment, the Company uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are recoverable.

In the event such cash flows are not expected to be sufficient to recover

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(CONTINUED)

the recorded asset values, the assets are written down to their estimated fair value.

In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written down to their estimated fair value.

No impairment was recognized during the years ended December 31, 2024 and 2023.

14 unchanged sentences

The fair value of the Company’s recorded forward purchase agreement (“FPA”) is determined based on unobservable inputs that are not corroborated by market data, which require a Level 3 classification.

A Monte Carlo simulation model was used to determine the fair value .

A Monte Carlo simulation model was used to determine the fair value as of December 31, 2023 .

The Company records the forward purchase agreement at fair value on the consolidated balance sheets with changes in fair value recorded in the consolidated statements of operation.

The following table presents balances of the forward purchase agreement with significant unobservable inputs (Level 3) as of December 31, 2023, in thousand:

Fair Value Measurements as of December 31, 2023 Using

On July 23, 2024, the Company received notice of termination of the Forward Purchase Agreement and recognized an impairment in the value of the Forward purchase Agreement in the second quarter of 2024 due to receipt of the termination notice.

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

Under the Securities Purchase Agreement, the Company may issue a series of convertible notes the “2024 Convertible note” for an aggregate principal not to exceed $ 36.0 million.

During the year ended December 31, 2024, the Company issued a single convertible note in an aggregate principal amount of $ 4.5 million, 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 initial note was recognized at initial fair value as of the issuance date.

The value of the convertible note issued in December 2024 at issuance approximated fair value as of December 31, 2024.

The following table presents balances of the fair value instruments as of December 31, 2024, in thousands:

Fair Value Measurements as of December 31, 2024

Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other

2 unchanged sentences

Forward Purchase Agreement $ — $ — $ — $ —

2024 Convertible Notes — — 4,050 4,050

Total $ — $ — $ 4,050 $ 4,050

The following table presents changes of the forward purchase agreement with significant unobservable inputs (Level 3) for the year ended December 31, 2023, in thousand:

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(CONTINUED)

The following table presents changes of the forward purchase agreement with significant unobservable inputs (Level 3) for the year ended December 31, 2024 and 2023, in thousand:

Forward Purchase

Balance December 31, 2022 $ —

Balance at December 31, 2022 $ —

Cash funded 18,911

2 unchanged sentences

Balance December 31, 2023 $ 2,983

The Company measures the forward purchase agreement using a Monte Carlo simulation valuation model using the following assumptions:

Cash funded —

Change in fair value ( 2,983 )

Balance December 31, 2024 $ —

The Company measured the forward purchase agreement using a Monte Carlo simulation valuation model using the following assumptions:

For the Year Ended

4 unchanged sentences

Risk-free Rate 4.2 %

The following table presents changes of the Convertible Notes with significant unobservable inputs (Level 3) for the year ended December 31, 2024, in thousand:

Convertible Notes

Balance at December 31, 2023 $ —

Fair value at issuance 4,050

Change in fair value —

Balance at December 31, 2024 $ 4,050

The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid and other assets, accounts payable and accrued expenses, deposits, and members’ deposit approximate their fair value because of the short maturity of those instruments.

The Company’s line of credit, convertible notes and other promissory notes approximate the fair value of such liabilities based upon management’s best 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 December 31, 2023 and 2022.

The Company’s credit facility, convertible notes and other loans approximate the fair value of such liabilities based upon management’s best 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 December 31, 2024 and 2023.

Commitments and contingencies

9 unchanged sentences

Therefore, the Company does not estimate variable consideration or perform a constraint analysis for our contracts.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(CONTINUED)

The Company determines revenue recognition pursuant to Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, through the following steps:

3 unchanged sentences

Allocation of the transaction to the performance obligation(s) in the contract.

The Company generates revenue primarily through three sources:

(i) the sale of aircraft, (ii) charter flights which include deposit products, retail and wholesale charter flights and owner flights, and (iii) aircraft management services.

The Company generates revenue primarily through:

(i) the sale of aircraft, (ii) aircraft management services, and (iii) our Vaunt software-as-a-subscription product.

Revenue is recognized when control of the promised service is transferred to a customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

5 unchanged sentences

In such circumstances, the Company is primarily responsible for satisfying the overall performance obligation with the customer and is considered the principal in the relationship because the Company has the ability to direct the third parties to provide services to our customers

Aircraft sales only requires the delivery of the aircraft.

Volato also generates revenues from charter flights for owners, deposit products, retail customers and wholesale charter brokers.

Deposit products are a complementary set of products available to retail charter customers whereby the customer makes a deposit in exchange for certain charter product offerings of the Company to be provided in the future.

Charter flights are flights offered to retail and non-retail charter customers in exchange for a fee.

The contracts generally consist of one performance obligation and revenue is recognized upon transfer of control of our promised services, which generally occurs upon the flight hours being used during the period which the chartered flights were operated.

The Company’s contract for charter services outlines the transaction price in advance.

Non-owner flights typically require payment in advance.

Other charter services are due upon completion of the services.

The contracts include cancellation penalty charges as a percentage of the original flight based on the time of cancellation and the type of flight.

Itinerary changes may result in a price change prior to the occurrence of the flight.

If the total flight itinerary cannot be completed due to any reason (other than customer cancellation or no show), the charter customer is responsible for only the portion of the itinerary that can be completed, and any advance payment is refunded.

The Company’s aircraft management services are a full-service management and charter operator including dry leasing airplanes from owners, placing aircrafts on our FAA Air Carrier Certificate, operating the aircraft for owner flights and chartering the aircraft to customers.

Under the aircraft management services revenues stream, aircraft owners pay management fees to the Company plus all operating expenses for the aircraft, maintenance, crew hiring and management, flight operations, dispatch, hangar, fuel, cleaning, insurance, and aircraft charter marketing.

Revenues from aircraft management services consist of one performance obligation to provide management airplane management services.

Revenue is partially recognized overtime for the administrative portion of the service, and partially recognized at a point in time, generally upon the transfer of control of the promised services included as part of the management services.

Revenue recognized over time was $ 5.0 million and $ 2.3 million for the year ended December 31, 2023 and 2022, respectively.

All other revenue was recognized upon the transfer of control of the promised services.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(CONTINUED)

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

The Company’s contracts for managing aircraft provide for fixed monthly management fees and reimbursement of operating expenses at a predetermined margin.

Generally, contracts require two months advance deposit of estimated expenses.

In accordance with ASC 606, contract assets are to be recognized when an entity has the right to receive consideration in exchange for goods or services that have been transferred to a customer.

Also, in accordance with ASC 606, contract liabilities are to be recognized when an entity is obligated to transfer goods or services for which consideration has already been received.

The Company recognizes contract liabilities for any advance payments from customers primarily associated with its deposit products and charter flights as well as aircraft management services revenue streams.

Deposits that are provided under the Company’s Insider Membership program or the Company’s Stretch Card agreements are treated as contract liabilities when the funds are received and are reduced as the flights are utilized.

Any deposits that are not utilized over the 24-month term of the agreements, which end upon being forfeited if the agreements are not renewed, would be recognized as revenues at the time they are forfeited.

Occasionally, we offer credits to customers of the Company’s Insider and Stretch Card agreements in excess of the cash deposit received as an incentive offering.

These credits are non-refundable and are recorded as a contract liability until they are either used or expired.

The Company does not offer their customer a significant financing component as part of the arrangement because the period between the transfer of service to a customer and when the customer pays for the service is one year or less or the timing and the transfer of the services is at the discretion of the customer.

Contract liabilities consist of customer prepayments and the aircraft deposits referred to above.

Total contract liabilities were $ 11.5 million and $ 2.8 million as of December 31, 2024 and 2023, respectively.

The Company has generated $ 73.3 million of revenue during the year ended December 31, 2023.

The revenue is broken down as follows for the year ended December 31, 2023 in thousands:

Aircraft sales $ 21,443

Charter flight revenue $ 37,787

Aircraft Management revenue $ 14,108

Total $ 73,338

The Company has generated $ 96.7 million of revenue during the year ended December 31, 2022.

The revenue is broken down as follows for the year ended December 31, 2022 in thousands:

The Company has generated revenue during the year ended December 31, 2024 and December 31, 2023, broken down as follows, in thousands:

Year ended December 31,

Aircraft sales $ 38,150 $ 21,443

Charter flight revenue $ 14,417

Aircraft management revenue $ 14,594

Managed Aircraft 7,224 14,107

Subscription 914 23

Total $ 46,288 $ 35,573

7 unchanged sentences

The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement.

Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(CONTINUED)

Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

The Company had no material adjustments to its assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

24 unchanged sentences

The Company has 18,614 and 94,767 outstanding stock options to purchase an equivalent number of common stock at December 31, 2024, and 2023, respectively.

The Company also has 29,026,000 outstanding warrants to purchase an equivalent number of shares of common stock as of December 31, 2023 at a weighted average strike price of $ 11.50 .

No warrants were issued and outstanding as of December 31, 2022.

The Company also has 1,161,195 outstanding warrants to purchase an equivalent number of shares of common stock as of December 31, 2024 and 2023 at a weighted average strike price of $ 287.50 .

Concentration of Credit Risk

4 unchanged sentences

Intangible assets other than goodwill consists of acquired finite-lived customer relationships and acquired indefinite-lived Part 135 air carrier certificate.

At initial recognition, intangible assets acquired in a business combination are recognized at

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(CONTINUED)

their fair value as of the date of acquisition.

At initial recognition, intangible assets acquired in a business combination are recognized at their fair value as of the date of acquisition.

Following initial recognition, finite-lived intangible assets are carried at cost less accumulated amortization and impairment losses, if any, and are amortized on a straight-line basis over the estimated useful life of the asset, which was determined based on management’s estimate of the period over which the asset will contribute to our future cash flows.

2 unchanged sentences

If the review indicates the impairment, an impairment loss would be recorded for the difference of the value recorded and the new value.

For the years ended December 31, 2023 and 2022, there was no impairment loss recognized for the intangible assets.

For the years ended December 31, 2024 and 2023, there was no material impairment loss recognized for the intangible assets.

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

3 unchanged sentences

If, after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, additional impairment testing is not required.

The Company tests for goodwill impairment annually during its fourth quarter on October 1.

The Company tests for goodwill impairment annually during its fourth quarter.

There was no impairment of goodwill for the year ended December 31, 2024 and 2023.

Segment Reporting

The Company identifies operating segments as components of the Company.

for which discrete financial information is available and is regularly reviewed by the chief operating decision maker, or decision-making group, in making decisions regarding resource allocation and performance assessment.

The Company identifies operating segments as components of the Company for which discrete financial information is available and is regularly reviewed by the chief operating decision maker, or decision-making group, in making decisions regarding resource allocation and performance assessment.

The chief operating decision maker is the chief executive officer.

3 unchanged sentences

Cost of revenue

Cost of revenue includes costs that are directly related to the related revenue streams – charter flights, aircraft management, aircraft sales.

Cost of revenue includes expenses incurred to provide flight services and facilitate operations, including aircraft lease costs, fuel, crew travel, maintenance, compensation expenses and related benefits for employees that directly facilitate flight operations including crew and pilots and certain aircraft operating costs such as landing fees and parking.

Cost of revenue for the aircraft sales revenue includes cost of the aircraft.

Cost of revenue includes costs that are directly related to the related revenue streams – aircraft sales, managed aircraft, and subscription based revenue.

Aircraft sales cost of revenue is our purchase price of the aircraft.

Managed aircraft cost of revenue includes all costs incurred in our managed aircraft including the cost of flight crews, fuel, maintenance, and landing and other airport fees.

Subscription costs includes costs of our proprietary software, the Vaunt platform..

Advertising Costs

Advertising costs are expensed as incurred and included in management and general expenses on the statements of operations.

Such advertising amounted to $ 2.85 million and $ 405 thousand for the years ended December 31, 2023 and 2022, respectively.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(CONTINUED)

Such advertising amounted to $ 4.5 million and $ 2.8 million for the years ended December 31, 2024 and 2023, respectively.

Variable Interest Entity (VIE) Accounting

2 unchanged sentences

Based on these evaluations, if the Company determines that it is the primary beneficiary of a VIE, this VIE entity is consolidated into the consolidated financial statements.

Each Plane Co is managed by PDK Management LLC, an entity whose sole member is the Company’s Chief Executive Officer, through an operating agreement until July 2023.

The Company does not have the obligation to absorb losses that could be significant to the VIE or the right to receive significant benefits when it holds a minority ownership in each PlaneCo.

The Company did not consolidate any variable interest entities as of December 31, 2023 and 2022.

ASC Topic 842, “Leases” (“ASC 842”) requires lessees to recognize most leases on the balance sheet with a corresponding right-to-use asset (“ROU asset”).

12 unchanged sentences

ASU 2016-13 was originally effective for public companies for fiscal years beginning after December 15, 2019.

In November of 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

November of 2019, the FASB issued ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies.

8 unchanged sentences

In 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 table and disclosures regarding cash taxes paid both

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(CONTINUED)

Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S.

and foreign jurisdictions.

8 unchanged sentences

Upon the closing, holders of Legacy Volato common stock received shares of Common Stock of Volato Group, Inc.

in an amount determined by application of the exchange ratio of approximately 1.01508 (the “exchange ratio”).

in an amount determined by application of the exchange ratio of approximately 1.01508 (the “exchange ratio”), prior to the effect of the 1-25 Reverse Stock Split.

For periods prior to the business combination, the reported share and per share amounts have been retroactively converted by applying the exchange ratio.

1 unchanged sentence

In connection with the business combination, approximately $ 5.7 million of transaction related expenses and other costs were incurred.

NOTE 3 – BUSINESS COMBINATION – (CONTINUED)

The following table reconciles the elements of the business combination to the consolidated statement of cash flows and the consolidated statement of changes in equity:

7 unchanged sentences

The number of shares of Common Stock outstanding immediately following the closing was as follows:

NOTE 3 – BUSINESS COMBINATION – (CONTINUED)

PACI public shareholders 70,696

5 unchanged sentences

(1) The number of Legacy Volato shares was determined from the shares of Legacy Volato shares outstanding immediately prior to the closing converted at the exchange ratio of approximately 1.01508 .

NOTE 4 – BUSINESS ACQUISITION

On March 11, 2022, the Company executed a stock purchase agreement with Stephen and Deborah Holmes for the purchase of all of the issued and outstanding equity shares of Gulf Coast Aviation, Inc.

for a total cash consideration of $ 1.85 million.

GCA was originally formed in the State of Texas on April 18, 1997.

GCA, through its wholly owned subsidiary, holds an air carrier operation certificate issued by the Federal Aviation Administration (“FAA”) under 14 C.F.R parts 119 and 135 of the Federal Aviation Regulations (“FAR”).

GCA provides ad-hoc charter flights and manages aircraft for owners in the private aviation industry.

GCA generates revenue from the management and chartering of aircraft.

Legacy Volato accounted for this transaction as a business combination under ASC 805.

Accordingly, the assets acquired, and the liabilities assumed were recorded at their estimated fair value as of the closing date of the acquisition.

Goodwill from the acquisition principally relates to the qualified workforce and potential synergy, as well as the excess value of identified net assets over the fair value of assumed liabilities.

Since this transaction was a stock acquisition, the goodwill is not tax deductible.

Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions.

The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives and the expected future cash flows and related discount rates, can impact the Company’s consolidated financial statements.

Significant inputs used for the model included the amount of cash flows, the expected period of the cash flows, the discount rates, and the customer attrition rate.

The acquisition-date fair value of the consideration transferred is as follows, in thousand:

March 11, 2022

Other consideration transferred —

Purchase price $ 1,850

NOTE 3 – BUSINESS COMBINATION – (CONTINUED)

The following is a purchase price allocation as of the March 11, 2022, acquisition date, in thousands:

March 11, 2022

Accounts receivable 247

Other current assets 45

Fixed Assets 5

Certificate 1,200

Customer Relationships 301

Deferred tax liability ( 385 )

Accounts Payable and Accrued Expenses ( 877 )

Net Assets Acquired $ 1,215

Total consideration $ 1,850

Acquired tangible net assets were valued at estimates of their current fair values.

Acquired intangible assets consisted of a Part 135 aircraft certificate valued at $ 1.20 million and customer relationships valued at $ 301 thousand (note 6).

Customer relationship fair value was determined based on management’s estimates of projected after tax net operating profit from existing customers discounted to present value based on expected attrition rate of existing customers.

The fair value of the certificate was estimated by management based on selling price of comparable certificates, adjusted as deemed appropriate.

The Company did not recognize any impairment to the acquired goodwill for the years ended December 31, 2023, and 2022.

NOTE 4 – INITIAL PUBLIC OFFERING AND PRIVATE PLACEMENT

6 unchanged sentences

Each private placement warrant is exercisable to purchase one share of Class A common stock at a price of $ 287.50 per share, subject to adjustment.

These warrants are outstanding as of December 31, 2023.

These warrants are outstanding as of December 31, 2024 and 2023.

NOTE 5 – DISCONTINUED OPERATIONS

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

This move is expected to provide Volato with the opportunity to focus on what it believes to be its high-growth areas, including aircraft sales and proprietary software.

We will continue to take delivery of new aircraft, while also generating revenue from our proprietary software, including the Vaunt platform, Volato’s successful empty leg consumer app.

Major classes of line items constituting loss from discontinued operations is as follows:

Year Ended December 31,

Revenue - Aircraft usage $ 32,546 $ 37,765

Costs of Revenue - Aircraft usage 43,488 51,245

Selling, general and administrative 17,679 19,592

Gain (loss) from sale of equity method investment — 886

Other Income from discontinued operations 9,902 —

Loss from discontinued operations $ ( 18,719 ) $ ( 32,186 )

As part of the agreement with flyExclusive they assumed liabilities for insider cards generating a gain of $ 10.0 million for the Company that is included in discontinued operations.

Carrying amounts and major classes of assets included as part of discontinued operations is as follows:

2024 December 31,

Accounts receivable $ 1,027 $ 2,548

Prepaid and other assets 1,215 2,024

Operating lease, right-of-use assets — 1,278

Equity-method investment — 154

Deposits — 441

Total assets associated with discontinued operations $ 2,242 $ 6,445

Carrying amounts and major classes of liabilities included as part of discontinued operations is a follows:

2024 December 31,

Accounts payable and accrued liabilities $ 6,086 $ 4,333

Operating lease liability — 1,291

Credit facility and other loans 918 509

Customer deposits and deferred revenue 5,004 10,026

Total liabilities associated with discontinued operations $ 12,008 $ 16,159

NOTE 6– INTANGIBLES

Finite-Lived Intangible Assets

The following is a summary of finite-lived intangible assets as of December 31, 2023 and 2022, in thousand:

The following is a summary of finite-lived intangible assets as of December 31, 2024 and 2023, in thousands:

December 31, 2024

2 unchanged sentences

Customer relationships $ — $ — $ —

$ 301 $ ( 110 ) $ 191

December 31, 2023

3 unchanged sentences

$ 301 $ ( 110 ) $ 191

Intangible asset amortization expense was $ 61 thousand and $ 49 thousand for the year ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, future amortization expense is expected to be as follows, in thousand:

Fiscal years ending December 31, Amount

As of December 31, 2024, the Company impaired the value of the customer relationships asset and recorded a loss on the impairment of $ 130 thousand which is recorded in selling, general and administrative expenses .

Intangible asset amortization expense was $ 61 thousand and $ 61 thousand for the years ended December 31, 2024 and 2023, respectively.

Indefinite - Lived Intangible Assets

6 unchanged sentences

NOTE 7 - MERGER TRANSACTION COSTS PAYABLE

Merger transaction cost payable consist of the following as of December 31, 2024 and 2023, in thousand:

2 unchanged sentences

Total $ — $ 4,250

In connection with the business combination, the Company entered into three agreements (the “Agreements”) with financial institutions, in which a success fee in the aggregate amount of $ 4.25 million will be paid by the Company to the financial institutions in case the Company consummates the acquisition.

The success fees, or portion thereof, are to be paid in the Company’s shares of common stock.

In connection with the business combination, the Company entered into three agreements (the “Agreements”) with financial institutions, in which the Company agreed to pay a success fee in the aggregate amount of $ 4.25 million to the financial institutions in case the Company consummates the acquisition.

The success fees were to be paid in shares of the Company’s common stock and warrants during the 2024 fiscal year.

ASC 480 Distinguishing Liabilities From Equity requires liability classification for all instruments that embodies an unconditional obligation that the Company must or may settle by issuing a variable number of its equity shares, if, at inception, the monetary value of the obligation is based solely on a fixed monetary amount know at inception.

As a result, the Company classified such liability in current liabilities as of December 31, 2023.

Subsequent to December 31, 2023, the Company issued an aggregate number of 1,208,543 shares of Class A common stock in full settlement of such liability (see note 20).

In January 2024, the Company issued an aggregate number of 48,342 shares of common stock and 4,000 warrants in full settlement of the merger transactions costs of $ 4.25 million which was payable to three financial institutions.

Such liability was accrued for and reported under merger transaction costs payable in shares in the consolidated balance sheet at December 31, 2023.

NOTE 8 – FORWARD PURCHASE AGREEMENT

On November 28, 2023, PACI, the Company (PACI is referred to as the counterparty prior to the closing while the Company is referred to as the counterparty after the closing) and Vellar Opportunities Fund Master, Ltd.

On November 28, 2023, the Company Legacy Volato Vellar Opportunities Fund Master, Ltd.

(“Seller”), entered into an agreement (the “Forward Purchase Agreement”) for an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Transaction”).

Pursuant to the terms of the Forward Purchase Agreement, the Seller intends, but is not obligated, to purchase prior to the closing up to 2.0 million shares (the “Maximum Number of Shares”) of the Company from third parties through a broker in the open market.

The Number of Shares subject to a Forward Purchase Agreement is subject to reduction following a termination of the Forward Purchase Agreement with respect to such shares as described under “Optional Early Termination” in the respective Forward Purchase Agreement.

The Forward Purchase Agreement provides that the Seller will be paid directly an aggregate cash amount (the “Prepayment Amount”) equal to the product of (i) the number of shares as set forth in the pricing date notice and (ii) the redemption price paid by the Company on the closing date to holders of its common stock who exercised their redemption rights in connection with the business combination (the “Initial Price”).

From time to time and on any date following the business combination, the seller may, in its absolute discretion, terminate the Forward Purchase Agreement in whole or in part by providing written notice to the Counterparty that specifies the quantity by which the number of shares shall be reduced.

The valuation date (the “Valuation Date”) for the Forward Purchase Agreement will be the earliest to occur of (a) the date that is 24 months after the closing date, (b) the date specified by seller in a written notice to be delivered to the counterparty at seller’s discretion (which Valuation Date shall not be earlier than the day such notice is effective) after the occurrence of any of (w) a VWAP (“Volume Weighted Average Price”) trigger event (defined when the VWAP price, for any twenty trading days during a thirty consecutive trading-day period, is below $1.00 per share) (x) a delisting event, or (y) a registration failure and (c) the date specified by Seller in a written notice to be delivered to Counterparty at Seller’s sole discretion.

On the Cash Settlement Payment Date, which is the 70 th trading day immediately following the Maturity Date, Seller shall pay the Company a cash amount equal to (1) the number of shares as of the valuation date multiplied by (2) the closing price of the Shares on the business day immediately preceding the valuation date.

In all other cases, the Seller shall pay the Company a cash amount equal to (1) the number of shares as of the valuation date multiplied by the VWAP Price over the valuation period less (2) the settlement amount adjustment.

The settlement amount adjustment is equal to the product of (1) (a) the maximum number of Shares less (b) any terminated shares as of the valuation date, multiplied by (2) $ 1.50 .

Pursuant to the terms of the Forward Purchase Agreement, the Seller could purchase, prior to the closing, up to 2.0 million shares (the “Maximum Number of Shares”) of the Company from third parties through a broker in the open market.

The Number of Shares (as defined in the Forward Purchase Agreement) subject to the Forward Purchase Agreement could be reduction following a termination of the Forward Purchase Agreement with respect to such shares as described under “Optional Early Termination” in the respective Forward Purchase Agreement.

Under the Forward Purchase Agreement the Seller was paid directly an aggregate cash amount equal to the product of (i) the number of shares as set forth in the pricing date notice and (ii) the redemption price paid by the Company on the Closing date to holders of its common stock who exercised their redemption rights in connection with the Business Combination.

During the year ended December 31, 2023, the Company paid an aggregate amount of approximately $ 18.9 million.

The Company collected $ 2.4 million in December 2023, and recognized a loss on the change in fair value of the forward purchase agreement in the aggregated amount of $ 13.4 million, which was reported in other expenses in the consolidated statement of operations for the year ended December 31, 2023.

In July 2024, Seller notified the Company of the termination of the Forward Purchase Agreement, following a delivery of a notice establishing the Valuation Date (as defined in the Forward Purchase Agreement);

upon termination, Seller was not obligated to pay the Company a cash amount.

The Company recorded the impact of the notice in the second quarter of 2024.

In the nine months ended September 30, 2024, the Company recognized a loss on the change in fair value of $ 3.0 million reported in other expenses in the consolidated statement of operations.

NOTE 9– FIXED ASSETS

7 unchanged sentences

Less accumulated depreciation ( 454 ) ( 185 )

During the years ended December 31, 2023 and 2022, the Company recognized $ 140 thousand and $ 112 thousand of depreciation, respectively.

During the years ended December 31, 2024 and 2023, the Company recognized $ 193 thousand and $ 140 thousand of depreciation and amortization, respectively.

NOTE 10 – DEPOSITS

14 unchanged sentences

Gulfstream Aerospace, LP

During 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 G 280 aircraft for total consideration of $ 79 million with expected delivery throughout fiscal year 2025.

During the year ended December 31, 2023, the Company funded an additional amount of $ 27 million, of which $ 24 million was funded through the SAC Leasing G 280 line of credit and $ 3 million paid directly by the Company.

During the year ended December 31, 2022, the Company funded $ 12 million pursuant to the terms of the executed purchase agreements, of which $ 4.5 million was funded through SAC leasing G 280 Line of credit.

The Company funded an aggregate amount of $ 39 million and $ 12 million towards the acquisition price of the four Gulfstream G 280 aircraft in accordance with the scheduled payment terms of the agreements as of December 31, 2023, and December 31, 2022, respectively.

The Company entered into aircraft purchase agreements with Honda Aircraft Company LLC, under which it paid $ 1.3 million and $ 0.8 million of deposits for aircraft not yet delivered at December 31, 2023 and December 31, 2022, respectively.

In 2022, the Company executed a series of purchase agreements with Gulfstream Aerospace, LP for the acquisition of four ( 4 ) Gulfstream G 280 aircraft for total consideration of $ 79 million with expected delivery throughout fiscal year 2025.

The first Gulfstream G280 was delivered in the third quarter of 2024.

The second Gulfstream G280 was delivered in January 2025.

The remaining two Gulfstream G280’s are expected to be delivered throughout fiscal year 2025.

The Company has funded an aggregate amount of $ 48.0 million and $ 39.0 million in deposits towards the acquisition price of the four Gulfstream G 280 aircraft in accordance with the scheduled payment terms of the agreements as of December 31, 2024, and December 31, 2023, respectively.

Upon delivery of the first Gulfstream G280 in the third quarter of 2024, $ 12 million of the deposits were applied toward the purchase price of the airplane.

During the year ended December 31, 2024, the Company funded $ 9.0 million, which was funded through the SAC Leasing G 280 line of credit.

During the year ended December 31, 2023, the Company funded $ 27.0 million pursuant to the terms of the executed purchase agreements, of which $ 24.0 million was funded through SAC leasing G 280 Line of credit and $ 3.0 million was paid directly by the Company.

In 2022, the Company entered into aircraft purchase agreements with Honda Aircraft Company LLC, under which it paid $ 1.3 million of deposits for aircraft not yet delivered at December 31, 2023.

During the year ended December 31, 2023, the Company took delivery of three aircraft for a purchase price of $ 17.9 million.

In May 2023, the Company and Honda Aircraft Company, LLC entered into a HondaJet Fleet Purchase Agreement for the acquisition of twenty-three ( 23 ) HondaJet HA-420 Aircraft for a total aggregate purchase price of $ 161.1 million for delivery between the fourth fiscal quarter of 2024 and the fourth fiscal quarter of 2025.

The Company took delivery of two aircraft related to this agreement.

On September 10, 2024 the Company received notice from Honda Aircraft that the Honda FPA was terminated.

Pursuant to the terms of the agreement, Honda Aircraft will retain the deposits that have previously been paid by the Company and the Company has to enter into individual purchase agreements for each aircraft for which a deposit had previously been paid.

During the year ended December 31, 2024 the Company wrote-off the remaining deposit balance of $ 1.0 million and is recorded in selling, general, and administrative expenses.

NOTE 11 – EQUITY-METHOD INVESTMENT

The Company has the following equity method investments at December 31, 2023 and December 31, 2022, in thousand:

2023 December 31,

Investment in Volato 158 LLC $ 154 $ 152

The Company has the following equity method investments at December 31, 2023, in thousand:

Investment in Volato 158 LLC $ 154

$ 154 $ 1,159

The Company has one equity-method investment as of December 31, 2023:

The Company had one equity-method investment as of December 31, 2023:

Volato 158 LLC, with a membership interest of 3.125 %.

The Company had the following two equity-method investments as of December 31, 2022:

Volato 158 LLC, Volato 239 LLC, with a membership interest of 3.125 % and 18.75 %, respectively.

Volato 158 LLC

In August 2021, the Company executed an aircraft purchase agreement with Volato 158 LLC (“158 LLC”) and contributed an aircraft with a carrying amount of $ 4.2 million to 158 LLC for a 100 % membership interest in 158 LLC.

The investment in 158 LLC was initially consolidated as the Company had a controlling financial interest in 158 LLC.

The investment in 158 LLC was initially consolidated as the Company had a controlling financial interest in 158 LLC until 2022 when the Company’s interest was reduced to 3.125 %.

As of December 31, 2023, the Company had a remaining 3.125 % interest in 158 LLC.

Based on its equity investment, the Company recorded a loss from its equity-method investment of $ 3 thousand for the year ended December 31, 2023, which decreased the carrying value of its equity-method investment as of December 31, 2023, to $ 154 thousand..

As of December 31, 2022, the Company has a remaining 3.125 % interest in 158 LLC.

Based on its equity investment, the Company recorded a gain from its equity-method investment of $ 11 thousand for the year ended December 31, 2022, which increased the carrying value of its equity-method investment as of December 31, 2022 to $ 152 thousand.

Volato 239 LLC

During the year ended December 31, 2022, the Company formed Volato 239 LLC (“239 LLC”) in which third-party investors invested an aggregate amount of $ 6.37 million for 81.25 % interest in 239 LLC.

The Company retained 0.01 % and 18.75 % interest in 239 LLC as of December 31, 2023, and December 31, 2022, respectively.

The Company elected to account for its investment under the equity method as the Company exercised significant influence through a management agreement with an affiliate of the Company.

Based on its equity investment, the Company has recorded a loss from its equity-method investment of $ 6 thousand for the year ended December 31, 2022.

Based on its equity investment, the Company recorded a gain from its equity-method investment of $ 20 thousand for the year ended December 31, 2023, which is reported as other income in the Company’s consolidated statement of operations for the year ended December 31, 2023.

During the year ended December 31, 2023, the Company sold to third-party investors an aggregate amount of $ 1.47 million for the remaining 18.75 % interest in 239 LLC, resulting in the recognition of a profit of $ 443 thousand, which had been deferred at December 31, 2022.

This profit is presented in other income in the consolidated statement of operations for the year ended December 31, 2023.

During the year ended December 31, 2023, the Company also purchased membership interest in two LLC’s for an aggregate amount of $ 2.3 million, which it resold to third party investors for a total consideration of $ 2.7 million, recognizing a gain of $ 0.4 million, which is presented in other income in the consolidated statement of operations for the year ended December 31, 2023.

In October 2024, the Company sold the interest in 158 LLC to flyExclusive.

Based on its equity investment, the Company recorded a loss from its equity-method investment of $ 162 thousand and $ 3 thousand for the year ended December 31, 2024 and 2023, respectively.

NOTE 12 – REVOLVING LOAN AND PROMISSORY NOTE- RELATED PARTY

1 unchanged sentence

2024 December 31,

Dennis Liotta, December 2021 – 4 % interest – secured revolving loan, due January 2023

Dennis Liotta, March 2023 – 10 % interest – promissory note due March 2024

Total notes from related party - current $ — $ 1,000

Dennis Liotta (father of the Company’s Chief Executive Officer) – December 2021 Secured revolving note:

Dennis Liotta - December 2021 Note

On December 9, 2021, the Company entered into a revolving loan agreement with Dennis Liotta, an affiliate of the Company, for a total amount of $ 8.0 million that matured on January 1, 2023 (“December 2022 note”).

The Company is required to make monthly payments of interest at a fixed rate of 4.0 % per annum.

The Company is required to make principal repayments at fixed scheduled dates.

In the event of default, the entire unpaid principal balance together with all accrued but unpaid interest shall be due and payable regardless of the maturity date.

The Company was required to make principal repayments at fixed scheduled dates.

In the event of default, the entire unpaid principal balance together with all accrued but unpaid interest would become due and payable regardless of the maturity date.

If the default occurs and remains uncured beyond the applicable grace period, then the entire unpaid principal balance shall bear interest at a default interest of 500 basis points ( 5 %) over the regular interest or nine percent ( 9 %).

2 unchanged sentences

The Company did not make its interest payments, thus triggering a default and increasing the interest rate to 9 % plus an additional 5 % on the missed payments.

The Company incurred approximately $ 370 thousand and $ 480 thousand of interest and penalties during the years ended December 31, 2023, and 2022, respectively.

During the Company’s first fiscal quarter, the Company converted the unpaid principal balance of this revolving note and accrued interest into a convertible note for total principal balance of $ 6.0 million.

The balance of the December 2021 note was $ 0 and $ 5.15 million as of December 31, 2023, and December 31, 2022, respectively.

Accrued interest, relating to this line of credit, was approximately $ 0 and $ 495 thousand as of December 31, 2023, and December 31, 2022, respectively, which are presented in accrued interest in the consolidated balance sheets.

Dennis Liotta (father of the Company’s Chief Executive Officer) – March 2023 promissory note

On March 15, 2023, the Company entered into a promissory note agreement with Dennis Liotta, an affiliate of the Company, for a total amount of $ 1 million, with an effective date of February 27, 2023, which matures on March 31, 2024 (“March 2023 note”).

The Company incurred approximately $ 370 thousand of interest and penalties during the three months ended March 31, 2023.

In the first quarter of 2023, the Company converted the unpaid principal balance of this revolving note and accrued interest into a convertible note for total principal balance of $ 6.0 million bearing interest at 4 % and maturing on March 31, 2024.

The notes were converted as part of the business combination.

Dennis Liotta - March 2023 note

On March 15, 2023, the Company entered into a promissory note agreement with Dennis Liotta, an affiliate of the Company, for a total amount of $ 1.0 million, with an effective date of February 27, 2023, which matured on March 31, 2024 (“March 2023 note”).

The entire outstanding principal balance together with accrued but unpaid interest are due at the maturity date.

The March 2023 note includes a ten percent ( 10 %) interest rate per annum, which will be increased to twenty percent ( 20 %) upon an event of default.

Events of default include the failure to make any principal and accrued interest when due, any legal proceedings against the Company or a voluntary federal bankruptcy.

The March 2023 note may be prepaid at any time without penalties.

Promissory note from related party was $ 1.0 million and $ 0 as of December 31, 2023, and December 31, 2022, respectively.

The Company incurred $ 86 thousand of interest during the year ended December 31, 2023.

Accrued interest was $ 86 thousand as of December 31, 2023, which is presented in accounts payable and accrued liabilities in the consolidated balance sheet as of December 31, 2023.

The March 2023 note included a ten percent ( 10 %) interest rate per annum.

On April 1, 2024, the March 2023 note was paid in full.

Promissory note from related party was zero and $ 1.0 million as of December 31, 2024, and December 31, 2023, respectively.

The Company incurred $ 23 thousand and $ 25 thousand of interest during the year ended December 31, 2024 and 2023, respectively.

NOTE 13 – UNSECURED CONVERTIBLE NOTES

2 unchanged sentences

2024 unsecured convertible notes, 4 % coupon, due December 2025

2023 unsecured convertible notes, 4 % coupon, due March 2024

Total unsecured convertible notes, gross — 18,879

Less unamortized debt discounts ( 450 ) —

2 unchanged sentences

Total unsecured convertible notes, net of discount non-current $ — $ —

2022 unsecured convertible notes due December 2023 (“2022 notes”)

During the year ended December 31, 2022, the Company entered into a series of convertible notes with various investors in a series of multiple closings (the “2022 unsecured convertible notes”) for an aggregate principal not to exceed $ 20.0 million.

During the year ended December 31, 2022, the Company issued convertible notes in an aggregate principal amount of $ 18.9 million, of which $ 18.9 million was funded as of December 31, 2022.

During the year ended December 31, 2023, the Company secured one additional convertible note for principal amount of $ 250 thousand, of which $ 250 thousand was funded for an aggregate amount of $ 19.13 million.

In conjunction with the issuance of the notes, the Company incurred $ 87 thousand of closing financing costs to this date, which were presented as an offset to the convertible notes in the consolidated balance sheets as of December 31, 2022.

The 2022 unsecured convertible notes included a conversion feature that failed the derivative accounting pursuant to ASC 815 Derivatives and Hedging as the conversion feature failed the net settlement criterion for derivative accounting, as the common shares underlying the conversion feature are not readily convertible to cash.

The 2022 convertible notes are contingently convertible into equity securities upon a future contingent event outside of the Company’s control.

On January 1, 2023, the Company elected to adopt ASU 2020-06 Debt- Debt with Conversion and Other Options (Subtopic 470-20 ) , which eliminated, among other things, the beneficial conversion model, and as such the 2022 convertible notes was accounted for as a single liability measured at its amortized costs.

On July 21, 2023, the Company secured qualifying financing for cash, which triggered the automatic conversion of the carrying balance of the 2022 convertible notes into series A-2 of preferred stock in Legacy Volato.

During the year ended December 31, 2023, the Company converted the carrying balance of the 2022 unsecured convertible notes, which includes principal balance of $ 19.13 million, accrued but unpaid interest in the amount of $ 813 thousand and $ 36 thousand of unamortized debt discount, into 3,327,624 shares of Series A-2 preferred stock based on an agreed upon conversion price of $ 5.9820 in accordance with the original terms of the 2022 unsecured convertible notes agreements.

On December 1, 2023, following the closing of the business combination agreement, the Company converted the 3,327,624 shares of Series A-2 preferred stock into 3,377,812 shares of Class A Common Stock of Volato Group, Inc.

During the year ended December 31, 2023, the Company amortized $ 38 thousand of closing financing costs through interest expense, bringing the unamortized financing costs balance at approximately $ 36 thousand before conversion.

During the year ended December 31, 2022, the Company amortized $ 15 thousand of closing financing costs through interest expense, bringing the unamortized financing costs balance at approximately $ 35 thousand.

During the year ended December 31, 2023 and 2022, the Company recognized $ 552 thousand and $ 249 thousand of interest expense, respectively.

2023 unsecured convertible notes

The Company entered into a series of convertible notes (the “2023 unsecured convertible notes”) issued in a series of multiple closings for an aggregate principal not to exceed $ 25.0 million.

During the year ended December 31, 2023, the Company issued a series of notes in an aggregate principal amount of $ 18.42 million, of which $ 12.42 million was funded and $ 6.0 million was issued pursuant to the conversion of the line of credit with a related party (see note 12).

On July 21, 2023, Legacy Volato secured a qualifying financing for cash, which triggered the automatic conversion of the 2023 convertible notes into a newly issued series of preferred stock, namely the Series A-3 preferred stock.

During the years ended December 31, 2023 and 2022, the Company recognized approximately $ 34 thousand and $ 0 of interest expense, respectively.

During the year ended December 31, 2023, the Company converted the carrying balance of the 2023 unsecured convertible notes, which includes principal balance of $ 18.42 million, accrued but unpaid interest in the amount of $ 34 thousand, into 2,050,628 shares of Series A-3 preferred stock in Legacy Volato, based on an agreed upon conversion price of $ 9.00 in accordance with the original terms of the 2023 unsecured convertible notes agreements.

On December 1, 2023, following the closing of the business combination agreement, the Company converted the 2,050,628 shares of Series A-3 preferred stock into 2,081,556 shares of Class A Common Stock of Volato Group, Inc.

2024 unsecured convertible notes due December 2025 - 2024 Convertible note

During the year ended December 31, 2024, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”).

Under the Securities Purchase Agreement, the Company may issue a series of convertible notes the “2024 Convertible note” for an aggregate principal not to exceed $ 36.0 million.

During the year ended December 31, 2024, the Company issued convertible notes in an aggregate principal amount of $ 4.5 million, 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 shall either be (i) paid in cash;

(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 31, 2024.

In conjunction with the issuance of the notes, the Company incurred $ 450 thousand of closing financing costs, which are presented as an offset to the convertible notes in the consolidated balance sheets as of December 31, 2024.

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

NOTE 14 – CREDIT FACILITY AND OTHER LOANS

4 unchanged sentences

Less discounts ( 247 ) ( 376 )

Total credit facility, net of discount $ 27,374 4,170

Total credit facility, net of discount and deposits $ 27,753 27,374

SAC Leasing G280 LLC Line of credit

During 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 G-280 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 G 280.

During the year ended December 31, 2023, the Company paid an additional $ 3.0 million towards the purchase agreements and funded an additional $ 24.0 million through the SAC Leasing G280 credit facility.

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

During the year ended December 31, 2023, the Company funded an aggregate amount of $ 27.0 million, of which $ 24.0 million was funded through a credit facility from SAC leasing and $ 3.0 million was paid in cash.

During the year ended December 31, 2023, the Company increased its SAC leasing G280 line of credit by $ 24.0 million offset by a deposit funded in the amount of $ 750 thousand, which brings the carrying balance at $ 27.75 million as of December 31, 2023.

During the year ended December 31, 2024, the Company increased its SAC leasing G280 line of credit by $ 9.0 million offset by a repayment in the amount of $ 9.0 million, which brings the carrying balance at $ 28.0 million as of December 31, 2024.

The Company incurred $ 68 thousand and $ 548 thousand of incremental closing costs, which are reported as debt discount against the liability in the consolidated balance sheets as of December 31, 2024, and December 31, 2023, respectively.

2 unchanged sentences

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

During the year ended December 31, 2023 and 2022, the Company incurred approximately $ 2.17 million and $ 65 thousand of interest under this facility, respectively.

During the year ended December 31, 2024 and 2023, the Company incurred approximately $ 4.2 million and $ 2.2 million of interest under this facility, respectively.

The 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 to be delivered in 2024 and 2025.

1 unchanged sentence

On August 25, 2023, the Company and SAC Leasing V280, LLC entered into the first amendment to pre-delivery payment agreement.

As of December 31, 2023, the Company had an aggregate amount of $ 28.5 million in promissory notes, of which 60 % was sole to Coastal States Bank pursuant to the first amendment.

As of December 31, 2024, the Company had an aggregate amount of $ 28.5 million in promissory notes, of which 60 % was solely to Coastal States Bank pursuant to the first amendment.

In July 2024, the Company entered into a business loan and security agreement (the “Loan”) with TVT Capital Sources LLC (the “Lender”), which provides for a term loan in the amount of $ 4.0 million.

Net proceeds of $ 3.9 million were

received by the Company and used to fund operations.

The Loan bears interest at an annual percentage rate of 165 % and matures on January 28, 2025, with principal and interest payments made weekly.

The Loan provides for events of default customary for term loans.

As of December 31, 2024, the Company was in compliance with all covenants.

The Loan is collateralized by all assets of the Company with the exception of the purchase agreements of G280 aircraft or any collateral pledged to SAC Leasing G280.

The Company incurred financing fees of $ 200 thousand, which were recorded as a direct discount to the debt and are being amortized over the term of the Loan.

The Company amortized $ 164 thousand of financing fees in the year ended December 31, 2024.

The Company recorded $ 1.7 million of interest expense related to the Loan in the year ended December 31, 2024.

In November 2024, the Company entered into an agreement with a third party to settle outstanding payables owed by the Company to designated vendors in exchange for a settlement amount in shares of common stock.

As of December 31, 2024 in accordance with the agreement, the Company issued 639,720 shares for the payment of $ 1.475 million of principal and interest due to the Lender under the Loan and $ 725 thousand of payables related to a separate vendor.

The Company recorded a $ 2.8 million loss on extinguishment of debt upon the settlement of each issuance equal to the fair value of the shares less the value of the shares calculated as of the closing stock price on the date of settlement.

NOTE 15 – RELATED PARTIES

Argand Group LLC (jointly owned by the Chief Executive Officer and his wife as Vice President of Legal)

As of December 31, 2023, Argand Group LLC owns an aggregate of 3,414,661 shares of Common stock in Legacy Volato.

Following the business combination, these shares were converted into 3,466,154 shares of Class A common stock of Volato Group, Inc.

representing approximately 12.4 % of the issued and outstanding shares of Class A common stock.

The Company leases two ( 2 ) aircraft from Argand up until July 31, 2023.

The total lease expense incurred by the Company was $ 0 and $ 56 thousand during the year ended December 31, 2023 and 2022, respectively.

There is no balance owed to Argand Group LLC as of December 31, 2023.

PDK Management LLC (Chief Executive Officer is the sole member)

The Company facilitates the formation of limited liability plane companies (earlier defined as “Plane Co”), which are then funded by third party members prior to the sale and delivery of an aircraft purchased from Honda Aircraft Company that will enter into the Company’s fractional program.

Each Plane Co is governed by an operating agreement and managed by PDK Management LLC, an entity whose sole member is the Company’s Chief Executive Officer until June 2023.

The aggregate amount of revenue generated from Plane Cos totaled $ 5.1 million and $ 2.2 million for the years ended December 31, 2023 and 2022, respectively.

Expenses charged to the Company by Plane Co’s totaled $ 3.9 million and $ 2.0 million for the year ended December 31, 2023 and 2022, respectively.

Balance due to Plane Cos amounted to $ 0.2 million and $ 0.2 million as of December 31, 2023 and 2022, respectively.

Liotta Family Office, LLC ( 60 % owned by the father of the Company’s Chief Executive Officer, 20 % owned by the brother of the Company’s Chief Executive Officer and 20 % owned by the Company’s Chief Executive Officer)

During the year ended December 31, 2023, Liotta Family Office, LLC entered into an unsecured promissory note for a total amount of $ 1.0 million (note 12).

Liotta Family Office, LLC

Liotta Family Office, LLC (“LFO”) is owned 20 % by the Company’s Chief Executive officer, 60 % owned by the father of the Company’s Chief Executive Officer, and 20 % owned by the brother of the Company’s Chief Executive Officer.

LFO currently owns, 74,372 Shares of Common Stock which represents 4 % of the Company’s issued and outstanding Common Stock as of December 31, 2024.

During the year ended December 31, 2023, Liotta Family Office, LLC (“LFO”) entered into an unsecured promissory note for a total amount of $ 1.0 million (Note 12).

The Company incurred approximately $ 23 thousand of interest during the year ended December 31, 2024.

Accrued interest was approximately $ 86 thousand as of December 31, 2023.

During the year ended December 31, 2023, the Company converted the remaining principal, accrued interest and penalties of its line of credit into a convertible note for a total principal of $ 6.0 million.

During the year ended December 31, 2023, the Company converted the principal of $ 6.0 million into 668,065 shares of Series A-3 preferred stock in Legacy Volato.

Following the business combination, the 668,065 shares of Series A-3 preferred stock were converted into 678,139 shares of Class A common stock of Volato Group, Inc.

During the year ended December 31, 2023, the Company converted $ 3.0 million principal and $ 166 thousand of accrued interest owed to Liotta Family Office, LLC, into 529,190 shares of Series A-2 preferred stock in Legacy Volato, which were converted into 537,170 shares of Class A common stock of Volato Group, Inc.

following the business combination.

Liotta Family Office, LLC currently owns 1,322,118 shares of Class A common stock, which represents approximately 4.7 % of the issued and outstanding Class A common stock as of December 31, 2023.

Aircraft Lease and Charter Services

As part of Volato’s aircraft ownership program, Volato leases a HondaJet HA-420 aircraft from Volato 158, LLC (“158LLC”), the Company’s equity-method investment, which is 25 % owned by DCL H&I, LLC (“DCL”).

Dennis Liotta (The Company’s Chief Executive Officer’s father) and his spouse own 100 % of DCL.

Under the terms of an aircraft dry lease, 158 LLC pays Volato a monthly management fee of $ 38 thousand, and Volato AMS pays 158 LLC an hourly rental rate of $ 1 thousand per revenue flight hour.

The lease expires on August 20, 2026.

Hangar Sublease and Personnel Services

The Company leases hangar and office space from Modern Aero, LLC (“Modern Aero”), a Florida limited liability company that operates a flight school at the Northeast Florida Regional Airport in St.

Augustine, Florida.

The Company’s Chief Executive Officer and his spouse hold a majority interest in Modern Aero.

Legacy Volato pays $ 4 thousand per month in rent under a month-to-month lease arrangement.

Hoop Capital, LLC (Controlled by the Company’s Chief Commercial Officer and a director)

As of December 31, 2023, Hoop Capital LLC owned an aggregate of 3,414,660 shares of Common stock in Legacy Volato, which were converted into 3,466,153 shares of Class A common stock in Volato Group, Inc.

following the business combination.

Matthew Liotta 2021 Trust (the “Liotta Trust”)

On December 30, 2022, Legacy Volato issued an unsecured convertible note to Matthew Liotta in the amount of $ 1 million.

During the year ended December 31, 2023, Legacy Volato incurred approximately $ 29 thousand of interest.

Following the qualifying financing, Legacy Volato converted the principal and accrued interest of the note in the aggregate amount of $ 1 million into 171,748 shares of Series A-2 preferred stock, which were converted into 174,338 shares of Class A common stock of Volato Group, Inc., following the business combination.

In April 2024, the promissory note and interest was paid in full.

The Company facilitated the formation of limited liability Plane Co’s, which are then funded by third party members prior to the sale and delivery of an aircraft purchased from Honda Aircraft that entered into the Company’s fractional program.

In October 2024, as part of the agreement with flyExclusive, Volato sold all of its interest in the Plane Co’s to flyExclusive.

The aggregate amount of revenue included in loss from discontinued operations generated from Plane Co’s totaled $ 3.1 million and $ 4.5 million for the year ended December 31, 2024 and 2023, respectively.

Expenses charged to the Company by Plane Co’s and included in loss from discontinued operations, totaled $ 2.8 million and $ 3.9 million for the year ended December 31, 2024 and 2023, respectively.

Balance due to Plane Co’s amounted to $ 4 thousand and $ 202 thousand as of December 31, 2024 and 2023, respectively.

NOTE 16 – INCOME TAXES

1 unchanged sentence

Deferred income tax assets and liabilities are computed annually for differences between financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.

Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Valuation allowances are

established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company operated at a loss and the deferred tax asset is offset by a corresponding valuation allowance.

24 unchanged sentences

On December 1, 2023, the Company filed its Second Amended and Restated Articles of Incorporation with the State of Delaware.

Our Certificate of Incorporation authorizes the issuance of 81,000,000 shares, consisting of 80,000,000 shares of Class A Common Stock, $ 0.0001 par value per share, and 1,000,000 shares of Preferred Stock, $ 0.0001 par value per share.

The outstanding shares of Common Stock are duly authorized, validly issued, fully paid and non-assessable.

Our Certificate of Incorporation initially authorized the issuance of 81,000,000 shares, consisting of 80,000,000 shares of Class A Common Stock, $ 0.0001 par value per share, and 1,000,000 shares of Preferred Stock, $ 0.0001 par value per share.

On October 28, 2024, the Company filed an amendment to the 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.

On February 12, 2025, the Board unanimously approved the Reverse Stock Split of the Company’s Common Stock, at a ratio of 1-for-25.

The Reverse Stock Split became effective on February 24, 2025, with no change in par value.

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 affect on the Authorized Common Stock.

The Company has authorized stock which have been designated as follows:

Number of Shares

Number of Shares Outstanding As of December 31, 2023 Par

Number of Shares Outstanding As of December 31, 2024

Class A Common Stock 200,000,000 1,843,852 $ 0.0001

4 unchanged sentences

Conversion of preferred stock shares (Series Seed, Series A-1, Series A-2 and Series A-3) into the Company’s Class A Common Stock.

Series Seed Preferred Stock (Legacy Volato)

Legacy Volato issued an aggregate of 3,981,236 series seed shares of preferred stock for total purchase price of $ 4.585 million, of which $ 4.585 million was funded up to the business combination.

During the year ended December 31, 2023, the Company collected the remaining $ 15 thousand owed towards the purchase price, which was reported as stock subscription receivable as of December 31, 2022.

Following the effective date of the business combination, Legacy Volato converted the 3,981,236 shares of Series Seed Preferred into 4,041,282 shares of Class A Common Stock of Volato Group, Inc.

There was no other activity during the years ended December 31, 2023 and 2022.

Series A-1 Preferred Stock (Legacy Volato)

3 unchanged sentences

Series A-2 Preferred Stock (Legacy Volato)

During the year ended December 31, 2023, the Company issued 3,327,624 Series A-2 shares of preferred stock from the conversion of the 2022 convertible notes (note 14) in the aggregate principal amount of $ 19.1 million and $ 0.8 million of accrued but unpaid interest based on an effective conversion price of $ 5.9820 .

During the year ended December 31, 2023, the Company issued 133,105 Series A-2 shares of preferred stock from the conversion of the 2022 convertible notes in the aggregate principal amount of $ 19.1 million and $ 0.8 million of accrued but unpaid interest based on an effective conversion price of $ 149.55 .

Following the business combination, the Company converted the 133,105 shares of Series A-2 preferred stock issued and outstanding into 135,112 shares of Class A Common Stock of Volato Group, Inc.

1 unchanged sentence

Series A-3 Preferred Stock (Legacy Volato)

During the year ended December 31, 2023, the Company issued 2,050,628 Series A-3 shares of preferred stock from the conversion of the 2023 convertible notes (note 14) in the aggregate principal amount of $ 18.4 million and $ 0.1 million of accrued but unpaid interest based on an effective conversion price of $ 9.00 .

During the year ended December 31, 2023, the Company issued 82,025 Series A-3 shares of preferred stock from the conversion of the 2023 convertible notes in the aggregate principal amount of $ 18.4 million and $ 0.1 million of accrued but unpaid interest based on an effective conversion price of $ 225.00 .

Following the business combination, the Company converted the 82,025 shares of Series A-3 preferred stock into 83,262 shares of Class A Common Stock of Volato Group, Inc.

5 unchanged sentences

The Company converted 70,696 shares of non-redeemed PACI public shares into an equivalent number of Shares of Class A Common Stock of the Company following the business combination.

Issuance of Class A common Stock

As of December 31, 2024 in accordance with the agreement, the Company issued 639,720 shares for the payment of $ 2.2 million of outstanding payables.

Stock Options - Equity Incentive Plans

Summary of the 2021 Plan (“2021 Plan”)

Summary of the 2023 Plan

The 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 shares.

As of December 31, 2024 the Company had 192,053 shares a vailable for issuance.

Summary of the 2021 Plan

As of the effective date of the business combination, each then-outstanding unexercised option (whether vested or unvested) to purchase shares of Legacy Volato Common Stock granted under the 2021 Plan was assumed by Volato Group and shall be converted into a stock option (a “Volato Group option”) to acquire shares of Class A Common Stock of Volato Group, par value $ 0.0001 per share, in accordance with the business combination agreement.

The 2021 Plan became effective on August 13, 2021, and will remain in effect until August 12, 2031, unless terminated earlier by the Board.

The 2021 Plan was amended and restated in connection with the assumption by PACI to reflect the effect of the business combination agreement by modifying eligibility (employees and consultants of Volato Group, Inc.), to reflect PACI’s assumption of the 2021 Plan, to clarify that Common Stock will be issued under the 2021 Plan, and to adjust the number of shares issuable under the 2021 Plan by the exchange ratio of 1.01508 .

No awards were granted or will be granted under the 2021 Plan after the 2023 Plan Effective Date.

The 2021 Plan became effective on August 13, 2021, and was in effect until November 20, 2023.

No awards were granted under the 2021 Plan after the 2023 Plan Effective Date.

Awards granted under the 2021 Plan that will be outstanding on the 2023 Plan Effective Date will be accelerated or continued in accordance with their terms subject to vesting schedules pursuant to the applicable restricted stock award agreement or option agreement.

The 2021 Plan authorizes the issuance of 2,724,347 shares (subject to adjustment for anti-dilution purposes), all of which may be issued under the 2021 Plan pursuant to incentive stock options.

As of the date of the business combination agreement on December 1, 2023, 2,369,169 shares were subject to outstanding awards, and no shares remained available for the grant of awards.

The balance and activity of all stock options outstanding under the 2021 Plan as of December 31, 2023, and 2022, is as follows:

The balance and activity of all stock options outstanding as of December 31, 2024, and 2023, is as follows:

Options Weighted

1 unchanged sentence

Per Share Weighted

Outstanding at January 1, 2022 613,463 $ 0.12 9.6

Outstanding at December 31, 2022 100,305 $ 3.50 9.4

Granted 15,309 $ 205.25

14 unchanged sentences

$ 210.00 15 5.4

$ 8.52 200,078 9.9

2,369,169 8.8

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

The weighted average grant date fair value of stock options issued during the year ended December 31, 2023, was $ 3.81 per share.

The weighted average grant date fair value of stock options issued during the year ended December 31, 2024 and 2023, was $ 6.57 and $ 95.25 per share, respectively.

The Company’s recognizes forfeitures as they occur.

1 unchanged sentence

For The Year Ending

Expected term 2 - 6

Expected term 5.8 - 6.25 years

Expected volatility 68 % 30 % - 71 %

2 unchanged sentences

Forfeitures None None

As of December 31, 2023, the unrecognized compensation cost related to non-vested awards was $ 1.4 million.

Summary of the 2023 Plan (“2023 Plan”)

The 2023 plan was approved at the special meeting of the shareholders of the Company on November 28, 2023.

The Company has reserved a pool of shares of Common Stock for issuance pursuant to awards under the 2023 Plan equal to 5,608,690 shares.

As of December 31, 2023 and 2022, there were 13,800,000 public warrants (note 4) and 15,226,000 private placement warrants (note 5) issued and outstanding.

As of December 31, 2024, the unrecognized compensation cost related to non-vested awards was $ 0.2 million and is expected to be recognized over a weighted average period of 1.9 years.

Restricted Stock

In June, 2024 the Company issued time-based restricted stock units and performance-based restricted stock units with market conditions that vest upon the Company’s Common Stock achieving a specific price per share.

Restricted stock unit activity for the period presented is as follows:

Restricted Stock Units Weighted Average Grant Date Fair Value

Outstanding at December 31, 2023 — $ —

Granted 65,171 16.47

Vested ( 7,355 ) 18.75

Forfeited ( 28,736 ) 18.75

Outstanding at December 31, 2024 29,080 $ 13.64

The performance-based restricted stock units with market conditions was determined using a Monte Carlo simulation model.

As of December 31, 2024, unrecognized compensation expense for time based restricted stock units was $ 241 thousand and is expected to be recognized over the next 2.45 years.

Stock based compensation expense was $ 211 thousand and $ 82 thousand for the year ended December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023, there were 552,000 public warrants (note 4) and 609,195 private placement warrants issued and outstanding.

Private placement warrants

14 unchanged sentences

There was no activity during the years ended December 31, 2023 and 2022.

The following table is a summary of the Company’s warrant activity during the years ended December 31, 2023 and 2022:

The following table is a summary of the Company’s warrant activity during the years ended December 31, 2024:

Warrants Weighted

1 unchanged sentence

Outstanding as of January 1, 2023 1,161,195 $ 287.50 5

Outstanding as of December 31, 2022 29,026,000 $ 11.50 5

Outstanding as of December 31, 2023 29,026,000 $ 11.50 5

Outstanding as of December 31, 2024 1,161,195 $ 287.50 3.92 years

Exercisable as of December 31, 2024 1,161,195

3 unchanged sentences

LLC, for the purchase and delivery of twenty-three ( 23 ) HondaJet HA-420 Aircraft for a total estimated purchase price of $ 161.1 million with expected delivery between the fourth fiscal quarter of 2024 and the fourth fiscal quarter of 2025.

Company should make a $ 150 thousand deposit for each aircraft twelve months prior to the expected delivery date.

As of December 31, 2023, the Company took delivery and sold one aircraft related to this agreement, which brings the balance of aircraft to be delivered at twenty-two ( 22 ) as of December 31, 2023.

As of December 31, 2023, the Company has funded an aggregated amount of $ 1.3 million towards the purchase agreement, which is presented under Deposits on Aircraft non-current in the consolidated financial statements.

Pursuant to the terms of the agreement, the Company is required to fund an additional $ 1.5 million in deposits in the next twelve months.

The Company took delivery and sold two aircraft related to this agreement.

On September 10, 2024, the Company received notice from Honda Aircraft that the Honda FPA was terminated.

Pursuant to the terms of the agreement, Honda Aircraft will retain the deposits that have been previously paid by the Company and the Company has to enter into individual purchase agreements for each aircraft for which a deposit had previously been paid.

During the year ended December 31, 2024, the Company recorded a charge for the remaining deposit balance of $ 1.0 million which is recorded in selling general and administrative expenses.

Gulfstream Aerospace, LP

1 unchanged sentence

The $ 48.0 million is non-refundable, except in some specific circumstances, and would serve as consideration for liquidated damages of $ 3.0 million per aircraft should the purchase agreement be terminated by the Company.

During the year ended December 31, 2023, the Company made additional payments of $ 27.0 million towards these agreements, of which $ 24.0 million was funded through the SAC Leasing G280 LLC credit facility (note 15) and $ 3.0 million was paid by the Company.

During the year ended December 31, 2024, the Company made additional payments of $ 9.0 million towards these agreements, of which $ 9.0 million was funded through the SAC Leasing G280 LLC credit facility.

In September 2024, the Company took delivery of one Gulfstream G280 and received $ 12.0 million in deposits related to the aircraft, of which $ 9.0 million paid down the SAC Leasing G280 line of credit and $ 3.0 million was retained by the Company.

In the first quarter of 2025, an addition $ 12 million in deposits was received as a result of the delivery of the second Gulfstream G280 and the return of $ 9 million in deposits related to the fourth Gulfstream G280.

The $ 9 million in returned deposits were used to pay down the SAC Leasing G280 line of credit.

Future minimum payments under the purchase agreements with Gulfstream Aerospace, LP at December 31, 2024, are as follows, in thousands:

For the twelve months ended December 31, Gulfstream

2024 $ 24,500

Total expected contractual payments $ 26,270

The Company has a credit facility in place with SAC Leasing G280 LLC to fund $ 40.5 million of the original $ 79.0 million due under these purchase agreements with Gulfstream Aerospace LP.

The remaining balance to be funded by SAC Leasing G280 LLC is $ 12.0 million as of December 31, 2023.

The remaining balance to be funded by SAC Leasing G280 LLC is zero as of December 31, 2024.

Operating Leases

8 unchanged sentences

The discount rate used for this lease was 12 %, which was determined to be the incremental borrowing rate based on comparative secured financing in the marketplace at the inception of the fixed lease payments.

The remaining term of this lease was 3.33 years and 4.33 years as of December 31, 2023, and 2022, respectively.

Lease expense is recognized on a straight-line basis over the lease term.

2 unchanged sentences

These leases require lease payments that are variable and are dependent on flight hours that generate charter revenues, with no minimum lease payment commitments.

Because of the variable nature of the lease payments, these leases

are not recorded on our consolidated balance sheets as ROU assets and lease liabilities.

Because of the variable nature of the lease payments, these leases are not recorded on our consolidated balance sheets as ROU assets and lease liabilities.

Certain leases have renewal options to extend lease terms for additional periods ranging from three to twelve months .

5 unchanged sentences

Short-term lease costs on the aircraft leases were $ 196 thousand and $ 617 thousand for the years ended December 31, 2024, and 2023, respectively.

As of December 31, 2024, the Company had terminated all the aircraft leases as part of the flyExclusive agreement.

Airport Facilities

5 unchanged sentences

Short-term lease costs related to these leases were $ 70 thousand and $ 71 thousand for the years ended December 31, 2024, and 2023, respectively.

Future estimated minimum lease payments by year and in aggregate, under the Company’s fixed payment operating lease consisted of the following at December 31, 2023, in thousand:

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

The Company recognized an operating lease liability in the amount of the net present value of the future minimum lease payments, and a right-of-use asset.

Future estimated minimum lease payments by year and in aggregate, under the Company’s fixed payment operating lease consisted of the following at December 31, 2024:

For the years ended December 31, Operating

Less amount representing interest ( 284 )

Present value of net minimum payments (inc.

$ 326 classified as current operating lease liability)

2025 $ 56,533

TOTAL 207,288

Sale-Leaseback Transactions

The Company entered into $ 15.7 million and $ 42.0 million of sales-leaseback transactions related to aircraft during the years ended December 31, 2023, and 2022, respectively.

The Company recorded gains of $ 3.4 million and $ 7.9 million associated with these transactions, for the years ended December 31, 2023, and 2022, respectively.

The Company entered into $ 15.7 million of sales-leaseback transactions related to aircraft during the years ended December 31, 2023.

No sales-leaseback transactions occurred in 2024.

The Company recorded gains of $ 3.4 million associated with these transactions, for the years ended December 31, 2023.

Gains are recorded in gross profit in the consolidated statements of operations.

The leases of the aircraft assets are operating leases which incur variable lease costs based upon usage as described above.

These lease costs are expensed as occurred.

These lease costs are expensed as incurred.

Legal Contingencies

The Company is currently not involved with or know of any pending or threatening litigation and material claims against the Company or any of its officers.

From time to time, the Company receives claims of and becomes subject to consumer protection, employment, intellectual property and other commercial litigation related to the conduct and operation of the Company’s business.

In connection with such litigation, the Company may be subject to significant damages.

We may also be subject to equitable remedies and penalties.

Such litigation could be costly and time consuming and could divert or distract Company management and key personnel from its business operations.

The Company is currently the defendant in suits brought by vendors, customers and suits related to the transfer of the flight operations and leases to flyExclusive and does not currently believe that any of its outstanding litigation will have a material adverse effect on its financial statements or business.

However, due to the uncertainty of litigation and depending on the amount and the timing, an unfavorable resolution of some or all of these matters could materially affect the Company’s business, results of operations, financial position, or cash flows.

In the Tampa Division of the U.S.

District Court, in and for the Middle District of Florida on September 12, 2024, Joshua G.

Newsteder, LouAnn Gray, and those similarly situated (the “Plaintiffs”) filed suit against the Volato Group, Inc.

and Volato, Inc.(the “Defendants”) citing various allegations including that the termination of employment of 230 employees that occurred on August 30, 2024 violated requirements of the Worker Adjustment and Retraining Notification Act of 1988, 29 U.S.C.

(“WARN Act”) (collectively, the “Dispute”).

Plaintiffs are seeking unpaid wages or salary, benefits and other relief deemed by the court as just and proper.

Volato Group, Inc.

and Volato, Inc.

deny all allegations.

Current range of loss can not be estimated.

NOTE 20 – SUBSEQUENT EVENTS

Management has evaluated events that have occurred subsequent to the date of these consolidated financial statements and has determined that, other than those listed below, no such reportable subsequent events exist through March 31, 2025, the date the consolidated audited financial statements were issued in accordance with FASB ASC Topic 855, “Subsequent Events.”

Subsequent to December 31, 2023, the Company issued 1,208,543 shares of Class A common stock and 100,000 warrants in full settlement of the merger transaction costs in the amount of $ 4.25 million which was payable to three ( 3 ) financial institutions.

Such liability was accrued for and reported under merger transaction costs payable in shares in the consolidated balance sheet as of December 31, 2023.

On February 12, 2025, the Board unanimously approved the Reverse Stock Split of the Company’s Common Stock, at a ratio of 1-for-25.

The Reverse Stock Split became effective on February 24, 2025, with no change in par value.

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 affect on the Authorized Common Stock.

On March 20, 2025 the Company sold GC Aviation, Inc., which holds the FAA Part 135 certificate for $ 2.0 million, of which $ 1.8 million is a note receivable.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data