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Item 7. Management’s Discussion and Analysis

2026-03-12 compared with 2025-03-31 · 135 added, 198 removed, 88 unchanged (79% of the section changed)

2 unchanged sentences

This discussion contains forward-looking statements which involve risks and uncertainties.

Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in “Risk Factors” starting on page 12 and elsewhere in this Annual Report.

Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section to “we,” “us,” “our,” and “the Company” are intended to mean the business and operations of Volato Group, Inc.

Overview of Our Business

Our historical mission has been to provide our customers more time for the rest of their lives by providing convenient and high-quality travel by using the right aircraft for the mission and by developing proprietary technology designed to make the travel experience more seamless.

Our revenue is generated through airplane sales and software-as-a-service subscriptions.

Our aircraft ownership program was an asset-lite model whereby we sell each fleet aircraft to a limited liability company (LLC) and sell LLC membership interests to third-party owners.

The LLC then leased the aircraft back to us for management and charter operation on behalf of the LLC under 14 C.F.R.

In turn, program participants (JetShare owners) invested in those special purpose entities to fund the aircraft purchase.

We operated the aircraft on behalf of the special purpose entity and entered into charter agreements with the individual JetShare owners to provide preferential access and charter pricing for our HondaJet fleet.

In September 2024, we entered into an agreement with flyExclusive, a leading provider of private jet charter services, to transition our aircraft ownership program fleet operations to flyExclusive.

This move is expected to bring substantial cost savings and provide Volato with the opportunity to focus on what it believes to be its high-growth areas, including aircraft sales and products and services utilizing our proprietary software.

Volato expects benefit from the margins on aircraft sales without the burden of operational costs, while also generating revenue from its proprietary software, including the Vaunt platform, Volato’s successful empty leg consumer app.

This move was intended to bring substantial cost savings and provide Volato with the opportunity to focus on what it believes to be its high-growth areas, including aircraft sales and products and services utilizing our proprietary software.

Volato sought to benefit from the margins on aircraft sales without the burden of operational costs, while also generating revenue from its proprietary software, including the Vaunt platform, Volato’s 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 such flight operations.

Items related to our aircraft ownership program fleet operations are now included in discontinued operations.

Financial highlights for the year ended December 31, 2024 include:

• We generated total revenue of $46.3 million an increase of $10.7 million, or 30%, compared to the year ended December 31, 2023, primarily related to an increase in aircraft sales of $16.7 million as we took delivery of our first Gulfstream G280;

• Net loss from continuing operations was $21.9 million compared to $20.6 million in 2023.

The decrease in net loss from continuing operations was the result of higher plane sale revenue mentioned above, and;

• We incurred a net loss of $40.6 million for the year ended December 31, 2024, representing a $12.2 million decrease in loss over the prior year.

Financial highlights for the twelve months ended December 31, 2025 include:

• We generated total revenue of $78.6 million, an increase of $39.5 million, or 101%, compared to the year ended December 31, 2024, primarily related to an increase in aircraft sales as we took delivery of three Gulfstream G280’s in 2025 (whereas we took delivery of one aircraft in 2024).

• Operating income was $4.0 million compared to an operating loss of $8.6 million in 2024.

Operating income was primarily the result of cost reductions implemented during 2024 that continued during 2025 together with the sale of three Gulfstream G280s during 2025.

• Net income was $5.2 million compared to a net loss of $40.6 million in 2024.

Net income in 2025 was primarily the result of settlements of member deposits, insider deposits and liabilities at a gain, that are reflected as “Other income, net” or “Net income from discontinued operations, net of taxes” in the statements of operations.

Recent Developments

On July 28, 2025, the Company entered into the Merger Agreement with Merger Sub and M2i, pursuant to which Merger Sub will merge with and into M2i, with M2i surviving the Merger as a wholly-owned subsidiary of Volato.

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

M2i’s business focuses on providing its partners with access to turnkey solutions, facilitating expanded business opportunities, securing offtake agreements, influencing strategic government policy, and engaging with aligned organizations and laboratories.

M2i specializes in the development and execution of a complete global value supply chain for critical minerals, including the creation of a private critical minerals reserve.

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

In July 2025, the Company began development of an enterprise AI “Artificial Intelligence” platform that deploys autonomous agents within Microsoft 365 environments to automate workflows, synthesize information across systems, and execute multi-step business processes;

the platform includes optional deterministic document processing capabilities for applications requiring enhanced reliability and auditability, such as contract analysis and regulatory filings.

On October 16, 2025, pursuant to the Securities Purchase Agreement the Company issued a fourth tranche Convertible Note in the principal amount of $2.2 million for a purchase price of $2.0 million, representing an original issue discount of ten percent (10%).

The Convertible Note matures on October 16, 2026.

On October 1, 2025, the Company entered into a Fourth Amendment (the “Amendment”) to Aircraft Management Services Agreement (as amended the “Agreement”) with flyExclusive to bring the Agreement in line with Company’s anticipated shift in operations, new business directives, and to better accommodate the proposed Merger with M2i.

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

(ii) grant flyExclusive, subject to certain terms and conditions, the right to purchase certain aviation-related assets from the Company and assume certain obligations of the Company (the “flyExclusive Asset Option”);

(iii) grant the Company, subject to certain terms and conditions, the right to sell certain aviation-related assets to flyExclusive and assign certain obligations of the Company to flyExclusive (the “Company Asset Option,” and collectively with the flyExclusive Asset Option, the “Asset Options”);

(iv) obligate flyExclusive to pay the Company $100,000 upon execution of the Amendment as settlement of net payables owed by flyExclusive to the Company under the terms of the Agreement (the “Net Payables Obligation”);

and (v) modify the material terms of flyExclusive’s right to cause the Company to merge with and into a wholly owned subsidiary of flyExclusive (the “flyExclusive Merger Option”), including that the flyExclusive Merger Option is to be only exercisable in the event that the Company and M2i terminate the Merger Agreement.

The purchase price for the Asset Options and the Net Payables Obligations may be paid by flyExclusive in cash or shares of flyExclusive Class A common stock, at the sole discretion of flyExclusive.

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

As consideration for the execution of the Amendment, flyExclusive agreed to pay $2,000,000 to the Company, in cash or shares of flyExclusive Class A common stock, in exchange for the right to receive either (i) the net proceeds that the Company receives from the sale of a certain G280 aircraft, which is expected to be delivered to the Company pursuant to an existing agreement (the “G280 Agreement”) with Gulfstream Aerospace Corporation (“Gulfstream”), or (ii) if, and only if, Gulfstream provides written consent, assignment of the G280 Agreement from the Company to flyExclusive subject to the execution of an asset purchase agreement relating solely to the transfer of the G280 Agreement.

flyExclusive elected to pay all of the $2,000,000 in shares of its Class A common stock and issued an aggregate of 411,523 shares of its Class A common stock to the Company.

On March 6, 2026, the Company signed amendment number five to the Agreement with flyExclusive, pursuant to which the Company sold certain unused intellectual property assets for $1.3 million payable in cash or shares of flyExclusive’s Class A common stock.

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

Following the sale of the intellectual property assets pursuant to the fifth amendment, there is $700,000 in remaining assets that may be sold to flyExclusive under the terms of the Agreement, as amended.

On December 16, 2025 the Company announced a stock dividend of shares of flyExclusive stock to Volato shareholders of record as of December 26, 2025.

The dividend was effected in January 2026.

Key Factors Affecting Results of Operations

We believe that the following factors have affected our financial condition and results of operations and are expected to continue to have a significant effect:

We believe that the below key factors have affected our financial condition and results of operations and may continue to have a significant effect.

In addition, upon closing the Merger our financial condition and results of operations will be impacted by those of M2i and its industry.

Airplane Sales

Historically, we have taken delivery of HondaJet aircraft, manufactured by Honda Aircraft Company (“Honda”) and Gulfstream G280 aircraft manufacture by Gulfstream Aerospace Corporation (“Gulfstream”) and sold these airplanes to third parties.

Airplane manufacturing is subject to interruptions or supply chain disruption.

The purchase agreement with Honda was terminated on September 10, 2024.

Our revenue is subject to timing of delivery and sale of airplanes.

During 2024, we took delivery of one Gulfstream G280 aircraft, which was delivered and sold to a third party in the third quarter of 2024.

In January 2025, we took delivery of one Gulfstream G280 aircraft, which was delivered and sold to a third party in February 2025.

In April 2025, we took delivery of one Gulfstream G280 aircraft, which was delivered and sold to a third party in June 2025.

We took delivery of the fourth Gulfstream G280 in October 2025 and sold to a third party in December 2025.

We do not expect to take delivery of additional aircraft in 2026.

Costs and Expense Management

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In September 2024, we entered into an agreement with flyExclusive to transition our fleet operations to flyExclusive.

This move has resulted in substantial cost savings and provides us with the opportunity to focus on what we believe to be our high-growth areas, including aircraft sales and proprietary software.

We will continue to take delivery of and sell new aircraft.

We expect to benefit from the margins on aircraft sales without the burden of operational costs, while also generating revenue from its proprietary software, including the Vaunt platform, our successful empty leg consumer app.

This move resulted in substantial cost savings and provided us with the opportunity to focus on what we believe to be our high-growth areas, including aircraft sales and proprietary software.

We have benefited from the margins on aircraft sales without the burden of operational costs, while also generating revenue from our proprietary software, including the Vaunt platform, our empty leg consumer app.

Economic Conditions

The private aviation industry is volatile and affected by economic cycles and trends.

Our financial performance is susceptible to economically driven changes in demand particularly for our discretionary charter and deposit products.

Our cost structure and private aviation demand levels had been greatly impacted by the price of jet fuel, pilot salaries and availability, changes in government regulations, consumer confidence, safety concerns, and other factors.

Our financial performance is susceptible to economically driven changes in demand for our Vaunt platform.

Historically, our cost structure and private aviation demand levels had been greatly impacted by the price of jet fuel, pilot salaries and availability, changes in government regulations, consumer confidence, safety concerns, and other factors.

Results of Operations

Comparison of year ended December 31, 2024 and 2023

The following table sets forth our results of operations for the years ended December 31, 2024 and 2023 (in thousands, except percentages):

For the Years Ended

December 31, Change In

Comparison of twelve months ended December 31, 2025 and 2024

The following table sets forth our results of operations for the twelve months ended December 31, 2025 and 2024 (in thousands, except percentages):

Twelve Months Ended December 31, Change In

2025 2024 $ %

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Total costs and expenses 74,599 47,687 26,912 56 %

Operating Loss (9,365) (4,440) (4,925) 111 %

Operating income (loss) 3,960 (8,623) 12,583 (146) %

Other income (expenses):

Gain from sale of consolidated entity — 387 (387) (100) %

Other income 212 180 32 18 %

Loss from change in fair value forward purchase agreement (2,983) (13,403) 10,420 (78) %

Loss on extinguishment of debt (2,804) — (2,804) 100 %

Other income, net 10,139 212 9,927 N/M

Other expense (6,116) — (6,116) N/M

Loss from change in fair value of financial instruments (2,074) (2,983) 909 (30) %

Loss on extinguishment of debt — (2,804) 2,804 N/M

Interest expense, net (4,848) (7,493) 2,645 (35) %

Other income (expenses) (13,068) (16,194) 3,126 (19) %

Loss before provision for income taxes and discontinued operations (22,433) (20,634) (1,799) 9 %

Provision for incomes taxes (benefit) (507) 2 (509) (25449) %

Net loss from continuing operations (21,926) (20,636) (1,290) 6 %

Net loss from discontinued operations (18,719) (32,186) 13,467 (42) %

Net loss $ (40,645) $ (52,822) $ 12,177 (23) %

Other income (expenses), net (2,899) (13,068) 10,169 (78) %

Income (loss) before provision for income taxes and discontinued operations 1,061 (21,691) 22,752 (105) %

Provision for (benefit from) incomes taxes 207 (507) 714 N/M

Net income (loss) from continuing operations 854 (21,184) 22,038 (104) %

Net income (loss) from discontinued operations, net of taxes 4,319 (19,461) 23,780 (122) %

Net income (loss) $ 5,173 $ (40,645) $ 45,818 (113) %

N/M - the percentage change is not meaningful

Revenue consists of the following (in thousands, except percentages):

Twelve Months Ended December 31, Change In

2025 2024 $ %

Aircraft sales $ 77,100 $ 38,150 $ 38,950 102 %

Managed Aircraft 7,224 14,107 (6,883) (49) %

Subscription 1,459 914 545 60 %

Total $ 78,559 $ 39,064 $ 39,495 101 %

Revenue increased by $10.7 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The increase in revenue was primarily the result of an increase in aircraft sales of $16.7 million during the year ended December 31, 2024 compared to the prior year.

The increase in revenue from aircraft sales was the result of the delivery and sale of our first Gulfstream G280 in 2024.

We have orders for three additional Gulfstream G280s and expect delivery in 2025.

Our subscription based revenues are attributable to our Vaunt platform which began to generate revenue during the 2024 fiscal year.

The increase in aircraft sales and our subscription revenues year over year was partially offset by the approximately 49% decrease in our revenues from our managed aircraft operations.

Revenue increased by $39.5 for the twelve months ended December 31, 2025, compared to the twelve months ended December 31, 2024.

The increase in revenue was the result of an increase in aircraft sales of $39.0 million, as we took delivery of three aircraft during the year, and an increase in subscription based revenue of $0.5 million during the twelve months ended December 31, 2025 compared to the prior year period.

The increase in subscription based revenues is attributable to our Vaunt platform which began to generate revenue during the 2024 fiscal year and continuing throughout 2025.

Cost of Revenue

Cost of revenue comprises expenses tied to the associated 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 we incur related to our proprietary software, the Vaunt platform.

Costs of revenue consists of the following (in thousands, except percentages):

aircraft sales and subscription based revenue.

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

Subscription cost include costs we incur related to our proprietary software, the Vaunt platform.

Cost of revenue consists of the following (in thousands, except percentages):

Twelve Months Ended December 31, Change In

2025 2024 $ %

Aircraft sales $ 63,365 $ 32,037 $ 31,328 98 %

Managed aircraft 6,610 12,900 (6,290) (49) %

Subscription 506 145 361 249 %

Total $ 63,871 $ 32,182 $ 31,689 98 %

Cost of revenue increased by $8.0 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The increase in cost of revenue was a result of an increase in aircraft sales as we took delivery of our first Gulfstream G280 aircraft in the year ended December 31, 2024.

However, offsetting our increased costs attributable to our aircraft sales was the decrease in costs attributable to our managed aircraft which decreased approximately 49% year over year.

Cost of revenue increased by $31.7 million for the twelve months ended December 31, 2025 compared to the twelve months ended December 31, 2024.

The increase in cost of revenue was primarily a result of an increase in aircraft sales as we purchased and took delivery of three aircraft during the twelve months ended December 31, 2025.

Selling, general and administrative

Selling, general and administrative expenses increased by $7.6 million for the year ended December 31, 2024 to $16.9 million, compared to the year ended December 31, 2023.

The increase in selling, general and administrative is primarily related to higher professional fees and other costs associated with the being a public company.

Approximately $2.3 million of our general and administrative costs are attributable to costs to support and administer our public reporting and compliance obligations, such as legal fees, audit fees, fees owed to maintain our NYSE American listing, printing and SEC filing fees, and higher advertising and marketing fees of $1.3 million for our Vaunt platform.

As a result of the transition of our flight operations to flyExclusive, we substantially reduced our projected costs and expect selling, general and administration costs to be approximately $1.9 million per quarter in 2025.

Gain from sale of consolidated entity

Gain on sale of consolidated entity consists of the gain on the sale of Fly Dreams LLC during 2023.

Loss on change in value of forward purchase agreement

As part of the Business Combination, we entered into an agreement for an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Agreement”).

We recorded a fair value adjustment on the Forward Purchase Agreement resulting in a $13.4 million loss on the change in fair value as of December 31, 2023.

Selling, general and administrative expenses decreased by $4.8 million for the twelve months ended December 31, 2025, compared to the twelve months ended December 31, 2024.

The decrease in selling, general and administrative is primarily related to the cost savings initiatives implemented during 2024 and that continued through 2025.

Loss on change in fair value of financial instruments

For the twelve months ended December 31, 2025, the loss on change in fair value of financial instruments relates to the fair value adjustments on the 2024 Convertible Notes resulting in a non-cash loss of $1.5 million.

The loss also includes a loss on the Investment in M2i share exchange of $0.9 million, a loss on the Investment of flyExclusive of $41 thousand offset by a gain on the fair value of the aviation asset of $0.3 million for the twelve months ended December 31, 2025.

For the twelve months ended December 31, 2024, the loss on change in fair value of $3.0 million was the result of the fair value adjustment on the Forward Purchase Agreement (as defined below).

In July 2024, the Forward Purchase Agreement was terminated.

As of December 31, 2024, we recorded a fair value adjustment on the Forward Purchase Agreement resulting a non-cash loss of $3.0 million for the year ended December 31, 2024.

Loss on extinguishment of debt

The loss on extinguishment of debt upon relates to the settlement of certain liabilities by the issuance of shares of common stock at a discount.

Interest Expense

Interest expense primarily consists of interest related to our aircraft purchase and sale agreement with TVPX Aircraft Solutions, Inc., the business loan and security agreement with TVT Capital Source LLC, credit facilities and convertible notes and amortization of debt issuance costs.

Interest expense increased $4.1 million during the year ended December 31, 2024 as compared to the year ended December 31, 2023 primarily as a result of the aircraft purchase agreement and the business loan and security agreement.

Interest Expense, Net

Interest expense, net primarily consists of interest related to our aircraft brokerage and services agreement with OgaraJets LLC and the pre-delivery payment agreement with SAC Leasing G280 LLC.

Both agreements were terminated in 2025.

Interest expense was offset by interest income on the note receivable related to our sale of GC Aviation, Inc.

in March 2025.

Interest expense, net decreased $2.6 million during the twelve months ended December 31, 2025 compared to the twelve months ended December 31, 2024 primarily as a result of the interest related to the pre-delivery payment agreement with SAC Leasing G280 LLC in 2024.

Liquidity and Capital Resources

Our principal sources of liquidity have historically consisted of financing activities, including proceeds from the issuance of stock, borrowings under our credit facilities, and capital raises from convertible debt and preferred stock.

We additionally managed liquidity through the aircraft sales which provides up front deposits from our customers and aircraft usage.

As of December 31, 2024, we had $2.2 million of cash and cash equivalents and $1.8 million in restricted cash which will become available in Q1 2025.

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 has agreed to issue 10% original issue discount senior unsecured convertible promissory notes (“Notes”) in an aggregate original principal amount of up to $36.0 million, which will be convertible into shares of the Company’s Class A common stock.

The closing of the first tranche was consummated on December 4, 2024, and the Company issued the initial Note for an aggregate original principal amount of $4.5 million (the “Initial Tranche”).

The second Note is expected to be an aggregate original principal amount of $1.5 million, and will be issued after the satisfaction of certain conditions precedent, including the Company having an effective registration statement for the resale of the shares of common stock issuable pursuant to the Notes.

Any additional Notes will be aggregate principal amounts agreed to by the parties;

provided, that no additional Note will be in an amount in excess of $4.0 million, unless otherwise mutually agreed to by the Company and the investor.

Further, no additional Notes will be issued at any time when the aggregate principal balance outstanding on all previously issued Notes is greater than $2.0 million.

It is also a condition to closing of any additional Notes that during the twenty (20) trading days immediately preceding the most recent additional closing, a minimum of $500 thousand in shares of common stock has been traded and the daily VWAP (as defined in the Notes) of the common stock is greater than the Conversion Price (as defined in the Notes).

Each Note will mature twelve (12) months after the issuance date.

During 2023, the pre-business combination Company closed a series of preferred stock subscriptions, raising a total of $24.2 million and converted $38.4 million of convertible promissory notes into shares of the Company’s preferred stock.

Our primary needs for liquidity are to fund working capital, acquisitions, debt service requirements, and for general corporate purposes.

We believe factors that could affect our liquidity include the ability of Gulfstream to meet our delivery schedule and our ability to sell those aircraft, our ability to raise additional funds on favorable terms, the timing and extent of spending on software development and other growth initiatives, our ability to manage our expense, and overall economic conditions.

To the extent that our current liquidity is insufficient to fund future activities, we will need to raise additional funds.

We additionally generate revenue through aircraft sales and sales subscriptions to our software application.

As of December 31, 2025, we had $4.7 million of cash and cash equivalents.

Our primary needs for liquidity are to fund working capital, debt service requirements, and for general corporate purposes.

We believe the primary factors that could affect our liquidity include whether the closing conditions under the Securities Purchase Agreement are met (or waived) such that we are able to issue one or more additional convertible notes under that arrangement, our ability to raise additional funds on favorable terms, the timing and extent of spending on software development and other growth initiatives, our ability to manage our expense, and overall economic conditions.

To the extent that our current liquidity is insufficient to fund future activities, we will need to raise additional capital.

We may attempt to raise additional capital through the sale of equity securities, through debt financing arrangements, or both.

Raising additional funds by issuing equity securities will dilute the ownership of existing shareholders.

Raising additional capital by issuing equity securities will dilute the ownership of existing stockholders.

The occurrence of additional debt financing would result in debt service obligations, and any future instruments governing such debt could provide for operating and financing covenants that could restrict our operations.

In the event that additional funds are required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

We have incurred negative cash flows from operating activities and significant losses from operations historically.

We believe our cash on hand, together with our results of operations including our planned sale of aircraft during the year ending December 31, 2025, and any additional capital raise will be sufficient to meet our projected working capital and capital expenditure requirements for a period of at least 12 months from the date of this report.

In the event that additional capital is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

Except for our 2025 fiscal year, we have historically incurred negative cash flows from operating activities and significant losses from operations.

Management believes that its current cash position, along with 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 least one year from the date of this Annual Report.

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 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.

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

The following table summarizes our cash flows for the twelve months ended December 31, 2025, and 2024 (in thousands):

Year Ended December 31,

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

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

Twelve Months Ended December 31,

Net cash provided by (used in) operating activities $ 3,492 $ (16,919)

Net cash used in investing activities (8,076) (115)

Net cash provided by financing activities 5,282 4,311

Net (Decrease) Increase In cash and restricted cash $ (12,723) $ 8,844

Net increase (decrease) in cash and restricted cash $ 698 $ (12,723)

Cash Flow from Operating Activities

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

Net cash used in operating activities for the twelve months ended December 31, 2025 was $3.5 million.

The cash outflow from operating activities consisted of our net income of $5.2 million, non-cash items of $0.4 million, and a change in net operating assets and liabilities of $7.8 million.

The change in net operating assets and liabilities was primarily a result of a decrease in prepaid and other current assets of $0.5 million, a decrease in accounts payable and accrued liabilities of $0.1 million offset by a decrease in deposits of $8.2 million and an increase in contract assets of $0.6 million.

The change in net assets and liabilities for discontinued operations for the twelve months ended December 31, 2025 was $9.1 million.

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

The cash outflow from operating activities consisted of our net loss of $40.6 million, non-cash items of $6.8 million and a change in net operating assets and liabilities of $17.0 million.

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The change in net assets and liabilities for discontinued operations for the twelve months ended December 31, 2024 was $100 thousand.

Net cash used in operating activities for the year ended December 31, 2023 was $30.4 million.

The cash outflow from operating activities consisted of our net loss of $52.8 million and non-cash items of $13.6 million.

The change in net assets and liabilities for discontinued operations for the twelve months ended December 31, 2023 was $9.1 million.

Cash Flow from Investing Activities

Net cash used by investing activities for the year ended December 31, 2024 was $115 thousand.

Net cash used in investing activities for the twelve months ended December 31, 2025 was $8.1 million.

The cash flow from investing activities consisted of the payoff of the G280 liability issued for the flyExclusive investment, the purchase of property and equipment, offset by the sale of property and equipment.

Net cash used in investing activities for the twelve months ended December 31, 2024 was $115 thousand.

The cash flow from investing activities consisted primarily of the purchase of property and equipment.

Net cash provided by investing activities for the year ended December 31, 2023 was $1.8 million.

The cash flow from investing activities of discontinued operations of $2.4 million, offset by $0.6 million for capital expenditures.

Cash Flow from Financing Activities

Net cash from financing activities for the year ended December 31, 2024 was $4.3 million.

Cash flow from financing activities consisted of proceeds of $7.9 million from the issuance of the term loan and convertible notes.

Net cash provided by financing activities for the twelve months ended December 31, 2025 was $5.3 million.

Cash flow provided by financing activities consisted of the proceeds from the issuance of convertible promissory notes totaling $6.0 million (as described in Notes 10) and $0.5 million from the proceeds of common stock issued in our at-the-market offering program, offset by the repayment on loans of $1.1 million.

Net cash used in financing activities for the twelve months ended December 31, 2024 was $4.3 million.

Cash flow from financing activities consisted of proceeds of $8.1 million from the issuance of the term loan described in Note 11 and a convertible note.

This was offset by the payments on debt of $3.9 million.

Net cash provided by financing activities for December 31, 2023 was $37.5 million.

Cash flow from financing activities consisted proceeds of $24.2 million from the sale of preferred stock, $16.7 million from the Business Combination, net of closing costs, $12.7 million from the issuance of convertible notes, $2.5 million in proceeds from the forward purchase agreement and $1 million from our line of credit.

This was offset by the payment for a forward purchase agreement of $18.9 and $0.8 million for the repayment of a loan.

The cash used in financing from discontinued operations was $0.1 million for the twelve months ended December 31, 2024.

Sources of Liquidity

To date, we have financed our operations primarily through the business combination, sale of preferred stock, borrowings of long-term and short-term debt, loans and convertible notes.

As of December 31, 2024, we had a working capital deficit of approximately $18.9 million.

As of December 31, 2024, our primary sources of liquidity were cash totaling approximately $2.2 million.

Based on our recent trends, we expect to fund our operations in 2025 from our cash on hand, cash from operations, one or more sales of Notes (as defined below) and potentially additional sales of equity or debt securities.

The Company believes it has the ability to generate and obtain enough cash to meets its obligations for the next 12 months.

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.

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

As of December 31, 2024, total consideration due on the remaining three Gulfstream G280s was $62.6 million with expected deliveries in 2025.

Deposits on the Gulfstream G280s of $36.0 million were funded and paid through December 31, 2024, through a credit facility from SAC leasing G 280 for $28.5 million and $7.5 million through cash deposits.

The maturity date is the earlier of the delivery date of the aircraft or September 14, 2025, which is thirty-five (35) months from the date of funding.

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

In the third quarter of 2024, $9 million was repaid to SAC G280 LLC as a result of the delivery of the first Gulfstream G280.

In the first quarter of 2025, an addition $18 million was repaid to SAC G280 LLC 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.

After the delivery of the second Gulfstream G280 and the deposit return related to the fourth Gulfstream G280, the outstanding balance of the credit facility from SAC Leasing was $9 million.

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 $3.8 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.

In the first quarter of 2025, the term loan was repaid in full.

On November 4, 2024, the Company entered into a Settlement Agreement and Stipulation (the "Settlement Agreement”) with Sunpeak Holdings Corporation ("SHC”), which became effective on November 6, 2024, to settle outstanding claims owed to SHC.

Pursuant to the Settlement Agreement, SHC agreed to purchase certain outstanding payables between the Company and designated vendors of the Company totaling approximately $4.7 million (the "Claims”) and exchange such Claims for a settlement amount payable in shares of common stock of the Company (the "Settlement Shares”).

The Settlement Shares were priced at the closing price of the Company’s common stock on November 4, 2024, subject to adjustment pursuant to the terms of the Settlement Agreement.

The Company also issued to SHC, 100,000 freely trading shares pursuant to Section 3(a)(10) of the Securities Act in accordance herewith as a Settlement Fee (the "Settlement Fee Shares”).

In December 2024, the Company entered into the Securities Purchase Agreement, described above, and closed on the Initial Tranche.

Interest under the Note issued as the Initial Tranche 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 twelve months ended December 31, 2024.

As described above, subject to the satisfaction of certain conditions, the Company may issue additional Notes during 2025.

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 million which was set to mature on January 1, 2023 (“December 2021 note”).

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

In conjunction with the execution of the revolving note, both parties executed a security agreement, under which the Company granted a continuing security interest in all of the assets of the Company.

During the year ended December 31, 2022, the Company did not remit its interest payments in connection with the December 2021 note to this related party, thus triggering a default and increasing the interest rate to 9% plus an additional 5% on the missed payments.

The agreement stipulated that 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.

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

Events of default include the failure to make principal or interest payments when due, any judgement in excess of $500,000, indebtedness cross default, or bankruptcy proceedings.

On March 15, 2023, the outstanding balance of the December 2021 note and accrued interest was converted into a convertible note with a principal balance of $6.0 million bearing interest at 4%, maturing on March 31, 2024.

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 matures 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.

During the year ended December 31, 2022 and year ended December 31, 2023, we issued a series of convertible notes (“Series CN-001”) with various investors for an aggregate principal amount of $19.1 million.

The notes were due and payable at any time on or after December 31, 2023 upon the written demand of the majority holders, which could be extended at the sole election of the Company to December 31, 2024, should the Company submit or file a prospectus, proxy statement or registration statement with the SEC.

The convertibles notes carried a five percent (5%) interest per annum.

The Company could not prepay the convertible notes prior to maturity without the written consent of a majority of the holders.

During the year ended December 31, 2023, the Company issued a series of convertible notes (“Series CN-002”) in an aggregate principal amount of $16.4 million, of which $10.4 million was funded and $6.0 million was issued pursuant to the conversion of the line of credit with a related party (see above).

The notes (principal and interest) were due and payable at any time on or after March 31, 2024, upon the written demand of the majority holders, which can be extended at the sole election of the Company to September 30, 2024, should the Company submit or file a prospectus, proxy statement or registration statement with the SEC.

The convertibles notes carried a four percent (4%) coupon per annum effective July 1, 2023.

The Company could not prepay the convertible notes prior to maturity without the written consent of a majority of the holders.

On July 21, 2023, Volato entered into a Series A Preferred Stock Purchase Agreement by and among (i) Volato, (ii) the PROOF.vc SPV, (iii) Proof Acquisition Sponsor I, LLC (“PASI”), and (iv) the holders of then-outstanding Series CN-001 and Series CN-0002 convertible promissory notes (the “Convertible Notes”), whereby (a) Volato may issue and sell up to a maximum aggregate of $60.0 million of Series A-1 Preferred Stock (the “Series A-1 Preferred Stock”) at a price of $10 per share, with $10.0 million of Series A-1 Preferred Stock issued and sold at an initial closing to the PROOF Investors, and (b) the Convertible Notes were converted into the amount of Series A-2 Preferred Stock (the “Series A-2 Preferred Stock”) or Series A-3 Preferred Stock (the “Series A-3 Preferred Stock” and together with the Series A-1 Preferred Stock and the Series A-2 Preferred Stock, the “Series A Preferred Stock”) at a conversion price of, in the case of the Series A-2 Preferred Stock, $5.9820 per share and in the case of the Series A-3 Preferred Stock, $9.00 per share (collectively, the “Private Financing”, such agreement, the “Series A Preferred Stock Purchase Agreement”).

During the year ended December 31, 2023, the Company issued Series A-1 Preferred Stock and raised $24.2 million in cash from the issuance of Series A-1 Preferred Stock and converted $38.4 million of convertible promissory notes.

During 2023, PROOF Acquisition Sponsor I, LLC purchased 1,308,398 shares of Series A-1 Preferred Stock (equal to 1,328,132 shares of Common Stock) and the PROOF.vc SPV purchased 1,102,689 shares of Series A-1 Preferred Stock (equal to 1,119,321 shares of Common Stock, respectively), at a purchase price of $10 per share.

For further information on the credit facilities and promissory notes, see Note 12 “Revolving Loan and Promissory Note – Related Party”, Note 13“Unsecured Convertible Notes”, and Note 14 “Credit Facility and Other Loans” of the accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report.

To date, we have financed our operations primarily as a result of the 2023 business combination, sales of preferred stock, borrowings of long-term and short-term debt, loans and convertible notes.

As of December 31, 2025, we had negative working capital of approximately $3.9 million and our primary source of liquidity was cash totaling $4.7 million.

Based on our recent trends, we expect to fund our operations in 2026 from our cash on hand, cash from operations, one or more sales of convertible promissory notes in accordance with the Securities Purchase Agreement described in Note 2 and Note 10 to our unaudited financial statements in this Annual Report and potentially additional sales of equity or debt securities (including potential sales of common stock in our at-the-market sales program described below and elsewhere in this Annual report).

The Company believes it has the ability to generate and obtain enough cash to meet its obligations for the next 12 months.

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.

The maturity date was the earlier of the delivery date of the aircraft or September 14, 2025, which is thirty-five (35) months from the date of funding.

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

In the third quarter of 2024, $9.0 million was repaid to SAC Leasing G280 LLC as a result of the delivery of the first Gulfstream G280.

In the first quarter of 2025, an additional $19.5 million was repaid to SAC Leasing G280 LLC as a result of the delivery of the second Gulfstream G280 and the return of $9.0 million in deposits related to the fourth Gulfstream G280.

After the delivery of the second Gulfstream G280 and the deposit return related to the fourth Gulfstream G280, the outstanding balance of the credit facility from SAC Leasing G280 was $8.5 million, net.

In the second quarter of 2025, with the delivery of the third G280, the remaining outstanding balance of the SAC Leasing G280 credit facility was paid in full.

On December 5, 2025, the Company entered into an Equity Distribution Agreement with Virtu Americas LLC (the “Agent”), pursuant to which the Agent will act as the Company’s sole sales agent or principal with respect to the offer and sale from time-to-time of shares of the Company’s Class A Common Stock, having an aggregate gross sales price of an aggregate of up to $9.3 million.

Contractual Obligations and Commitments

Our principal commitments consist of contractual cash obligations under our credit facilities, operating leases and the Notes.

We have committed to acquire three (3) additional Gulfstream G-280 aircraft for total consideration of $62.6 million with expected deliveries in 2025, of which $36 million was funded and paid through December 31, 2024.

Our obligations under our credit facilities and the Notes are described in “—Sources of Liquidity” above.

For further information on leases see Note 18 “Commitments and Contingencies” of the accompanying Notes to Consolidated Financial Statements included elsewhere in this Annual Report.

On November 28, 2023, the Company and Vellar 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, Vellar purchased 1.7 million shares of the Company’s Class A common stock (the “Number of Shares”) prior to the closing of the Business Combination from third parties through a broker in the open market.

Pursuant to the Forward Purchase Agreement, Vellar was paid $18.9 million by the Company in connection with its purchase of shares of the Company’s Class A common stock on December 1, 2023.

From time to time and on any date following the Business Combination (any such date, an “OET Date”), Vellar may, in its absolute discretion, terminate the Forward Purchase Agreement in whole or in part by providing written notice to the Counterparty (the “OET Notice”) that specifies the quantity by which the Number of Shares shall be reduced (such quantity, the “Terminated Shares”).

The effect of an OET Notice shall be to reduce the Number of Shares by the number of Terminated Shares specified in such OET Notice with effect as of the related OET Date.

As of each OET Date, the Company shall be entitled to an amount from Vellar, and Vellar shall pay to the Company an amount, equal to the product of (x) the number of Terminated Shares and (y) the Reset Price (as that term is defined in the Forward Purchase Agreement) in respect of such OET Date.

The Reset Price is equal to $10.81, but is subject to reduction upon a Dilutive Offering Reset (as that term is defined in the Forward Purchase Agreement).

Vellar delivered an OET Notice on December 29, 2023, reducing the Number of Shares by 233,646.

The Company received a payment of $2.5 million on December 29, 2023 in connection with its delivery of the OET Notice.

In July 2024, Vellar 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, Vellar was not obligated to pay the Company a cash amount.

Our principal contractual commitments consist of obligations under our convertible promissory notes and operating leases.

Critical Accounting Policies and Estimates

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

Recognize revenue when or as the entity satisfies a performance obligation.

The Company generates revenue primarily through:

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

(i) the sale of aircraft and (ii) our Vaunt software-as-a-subscription platform.

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.

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For each revenue stream, we evaluate whether our obligation is to provide the good or service itself, as the principal or to arrange for the good or service to be provided by the other party, as the agent, using the control model.

For certain services provided to the customer, primarily in our aircraft management services revenue stream, the Company directs third-party providers to assist in our fulfillment of the performance obligation in contracts with our customers.

Any cost reimbursements and third-party costs are recognized in revenue on a gross basis as Volato has pre-negotiated these costs and takes a certain amount of risk that it will not fully recover the costs incurred.

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.

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.

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.

Intangible Assets

We record our intangible assets acquired in a business combination at cost in accordance with ASC 350, Intangibles – Goodwill and Other.

Following initial recognition, 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.

We periodically reassess the useful lives of our definite-lived intangible assets when events or circumstances indicate that useful lives have significantly changed from the previous estimate.

We review the intangible assets for impairment on an annual basis or if events or changes in circumstances indicate it is more likely than not that they are impaired.

These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale, or disposition of a significant portion of the business, or other factors.

If the carrying amount of a long-lived asset or asset group is determined not to be recoverable, an impairment loss is recognized and a write-down to fair value is recorded.

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

Goodwill is not amortized and is tested for impairment at least annually or whenever events or

changes in circumstances indicate that the carrying value may not be recoverable.

Events or changes in circumstances that could trigger an impairment review include a significant adverse change in business climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, or significant underperformance relative to expected historical or projected future results of operations.

We have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill.

If, after assessing the totality of events or circumstances, we determine 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.

We test for goodwill impairment annually during the fourth quarter.

Investment - Equity Method

The Company accounts for its equity method investment at cost, adjusted for the Company’s share of the investee’s earnings or losses, which is reflected in the consolidated statement of operations.

The Company periodically reviews the investment for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Stock-Based Compensation

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As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

The Company’s financial statements have not been impacted by the JOBS Act as of December 31, 2025.

We have chosen to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act.

Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404 of SOX, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (United States) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation-related items, such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.

We may remain an emerging growth company until the last day of the fiscal year ending after the fifth anniversary of our IPO, although circumstances could cause us to lose that status earlier, including if we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act or if we have total annual gross revenue of $1.235 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during any three year period before that time, we would cease to be an emerging growth company immediately.

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For further information on recent accounting pronouncements, see Note 2 “Summary of Significant Accounting Policies” of the accompanying consolidated financial statements included elsewhere in this Annual Report.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.

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 7. Management’s Discussion and Analysis