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What changed in SURF AIR MOBILITY INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SURF AIR MOBILITY INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+365 added−395 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-21)

Top changes in SURF AIR MOBILITY INC.'s 2025 10-K

365 paragraphs added · 395 removed · 294 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe intend to accelerate the adoption of green flying, bringing electrified aircraft to market at scale in order to substantially reduce the cost and environmental impact of regional flying. In so doing, we believe we can make a meaningful contribution to tackling the dual challenges of congestion and climate change.
Biggest changeCommitment to Environmental, Social and Governance (“ESG”) Leadership We are seeking to build a regional air mobility ecosystem that will sustainably connect communities. We intend to accelerate the adoption of electric flying, bringing electrified aircraft to market at scale in order to substantially reduce the cost and environmental impact of regional flying.
The FAA’s regulations touch on many aspects of civil aviation, such as the design and manufacture of aircraft, engines, propellers, avionics and other components, including applicability of engine noise and other environmental standards; the inspection, maintenance, repair and registration of aircraft; the training, licensing or authorizing and performance of duties by pilots, flight attendants and maintenance technicians; the testing of safety-sensitive personnel for prohibited drug use or alcohol consumption; the design, construction and maintenance of runways and other airport facilities; the operation of air traffic control systems, including the management of complex air traffic at busy airport facilities; the safety certification and oversight of air carriers including their operations and maintenance; the establishment and use of safety management systems by air carriers; the promotion of voluntary systems to encourage the disclosure of data that may aid in enhancing safety; and 11 the oversight and operational control of air carriers by their accountable managers, directors of operations, directors of maintenance and other key personnel.
The FAA’s regulations touch on many aspects of civil aviation, such as the design and manufacture of aircraft, engines, propellers, avionics and other components, including applicability of engine noise and other environmental standards; the inspection, maintenance, repair and registration of aircraft; the training, licensing or authorizing and performance of duties by pilots, flight attendants and maintenance technicians; the testing of safety-sensitive personnel for prohibited drug use or alcohol consumption; the design, construction and maintenance of runways and other airport facilities; the operation of air traffic control systems, including the management of complex air traffic at busy airport facilities; the safety certification and oversight of air carriers including their operations and maintenance; the establishment and use of safety management systems by air carriers; the promotion of voluntary systems to encourage the disclosure of data that may aid in enhancing safety; and 12 the oversight and operational control of air carriers by their accountable managers, directors of operations, directors of maintenance and other key personnel.
We regularly review our technology development efforts and branding strategy to identify and assess the protection of new intellectual property. We own certain trademarks important to our business, such as the “Surf Air” and “Mokulele Airlines” trademarks in the United States. We currently own the “surfair.com” Internet domain-name registration and the “iflysouthern.com” and “mokuleleairlines.com” domain-name registrations.
We regularly review our technology development efforts and branding strategy to identify and assess the protection of new intellectual property. We own certain trademarks important to our business, such as the “Surf Air” and “Mokulele Airlines” trademarks in the United States. 13 We currently own the “surfair.com” Internet domain-name registration and the “iflysouthern.com” and “mokuleleairlines.com” domain-name registrations.
Available Information Our Annual Report on Form 10-K, along with all other reports and amendments filed with or furnished to the SEC, are publicly available free of charge on the Investor Relations section of our website at investor.surfair.com or at 13 www.sec.gov as soon as reasonably practicable after these materials are filed with or furnished to the SEC.
Available Information Our Annual Report on Form 10-K, along with all other reports and amendments filed with or furnished to the SEC, are publicly available free of charge on the Investor Relations section of our website at investor.surfair.com or at www.sec.gov as soon as reasonably practicable after these materials are filed with or furnished to the SEC.
Southern currently has interline agreements with major commercial airlines, including United Airlines, Inc., American Airlines, Inc., Alaska Airlines, Inc. and Hawaiian Airlines, Inc, which help coordinate baggage claim for customers who fly different airlines on various legs of their trip, assisting in a hassle free experience. Pilot Shortage Solution.
Southern currently has interline agreements with major commercial airlines, including United Airlines, Inc., American Airlines, Inc., Alaska Airlines, Inc., Hawaiian Airlines, Inc, and Japan Airlines, which help coordinate baggage claim for customers who fly different airlines on various legs of their trip, assisting in a hassle free experience. Pilot Shortage Solution.
In the future, these charter operators will be ideal customers for our AI-enhanced software operating system, SurfOS, and for hybrid and electric aircraft, all of which we expect to launch, commercialize and/or scale through our relationships with Textron Aviation, Electra, REGENT and others.
In the future, these charter operators will be ideal customers for our AI-enhanced software operating system, SurfOS, and for hybrid and electric aircraft, all of which we expect to launch, commercialize and/or scale through our relationships with Textron Aviation, Electra, REGENT, BETA and others.
Through our combined leverage as suppliers of new electrified aircraft and facilitators of a pilot training pipeline, we believe we can create a program that helps to ensure an adequate supply of pilots for the introduction of electrified flight. 10 We believe that our current and future experience and knowledge, generated by operating our own large scheduled fleet and charter operation, combined with our partnerships and interactions with operators, brokers, lessors and OEMs puts us in a strong position to identify, create and commercialize the best electrification products and services for our evolving industry.
Through our combined leverage as suppliers of new electrified aircraft and facilitators of a pilot training pipeline, we believe we can create a program that helps to ensure an adequate supply of pilots for the introduction of electrified flight. 11 We believe that our current and future experience and knowledge, generated by operating our own large scheduled fleet and charter operation, combined with our partnerships and interactions with operators, brokers, lessors and OEMs puts us in a strong position to identify, create and commercialize the best electrification products and services for our evolving industry.
Aircraft-as-a-Service encapsulates bundling certain aircraft ownership related costs, potentially including leasing, insurance, powertrain maintenance and operating software purchase or rental for both conventional internal combustion and/or electrified aircraft to operators with the goal of creating a recurring revenue stream. 9 Customer Experience We believe that the customer experience that we have developed is a meaningful differentiating advantage.
Aircraft-as-a-Service encapsulates bundling certain aircraft ownership related costs, potentially including leasing, insurance, powertrain maintenance and operating software purchase or rental for both conventional internal combustion and/or electrified aircraft to operators with the goal of creating a recurring revenue stream. 10 Customer Experience We believe that the customer experience that we have developed is a meaningful differentiating advantage.
We believe this will accelerate the demand for green regional flying. By enabling new demand through our digital marketplace operations and catalyzing new supply through new technology and financing solutions, we believe we can create an ongoing cycle of growth. We plan to invest in creating a scheduled network connecting many of the underutilized regional airports in the United States.
We believe this will accelerate the demand for electric regional flying. By enabling new demand through our digital marketplace operations and catalyzing new supply through new technology and financing solutions, we believe we can create an ongoing cycle of growth. We plan to invest in creating a scheduled network connecting many of the underutilized regional airports in the United States.
We currently anticipate that we will begin rolling out SurfOS to launch customers in 2025, before widening distribution to other third-party operators, charter brokers, and owners over time. The regional air mobility industry is expected to grow into a $75 billion to $115 billion global market by 2035.
We currently anticipate that we will begin rolling out SurfOS to launch customers in 2026, before widening distribution to other third-party operators, charter brokers, and owners over time. The regional air mobility industry is expected to grow into a $75 billion to $115 billion global market by 2035.
Our Strategy We have several strategic differentiators which form our competitive advantage in the regional air mobility market. • Scale: we are one of the largest commuter airlines in the U.S. by scheduled departures. • Experience: we have over a decade of experience operating in the highly regulated aviation industry and we have flown millions of passengers millions of miles. 7 • Depth: we have deep – and unique – ties across the industry with exclusive relationships with Textron Aviation – manufacturer of the Cessna Caravan aircraft that we operate, and with Palantir Technologies a global leader in AI, enterprise data analytics, and business intelligence that we have partnered with to power the SurfOS operating system. • Reach: we have expansive reach and relationships with over 400 regional air operators who have operated charter flights via our marketplace and are expected to form the initial customer base of our SurfOS software.
Our Strategy We have several strategic differentiators which form our competitive advantage in the regional air mobility market. • Scale: we are one of the largest commuter airlines in the U.S. by scheduled departures. 8 • Experience: we have over a decade of experience operating in the highly regulated aviation industry and we have flown millions of passengers millions of miles. • Depth: we have deep – and unique – ties across the industry with exclusive relationships with Textron Aviation, manufacturer of the Cessna Caravan aircraft that we operate, and with Palantir Technologies a global leader in AI, enterprise data analytics, and business intelligence with whom we are collaborating to power the SurfOS operating system. • Reach: we have expansive reach and relationships with over 400 regional air operators who have operated charter flights via our marketplace and are expected to form the initial customer base of our SurfOS software.
Southern has multi-year contracts with the U.S. federal government to operate Essential Air Service (“EAS”) routes, which helps small communities in the United States maintain a minimum level of scheduled air services. At the heart of our strategy is our aim of commercializing green regional aviation at scale.
Southern has multi-year contracts with the U.S. federal government to operate Essential Air Service (“EAS”) routes, which helps small communities in the United States maintain a minimum level of scheduled air services. At the heart of our strategy is our aim of commercializing electric aviation at scale.
We believe we are one of the largest commuter air carriers by both size of Cessna Caravan fleet and number of scheduled departures of Cessna Caravans in the United States and we believe that in the future our scale could result in an increase in the number of average daily departures, fares and load factor compared to today.
We believe we are one of the largest commuter air carriers by both size of fleet and number of scheduled departures in the United States and we believe that in the future our scale could result in an increase in the number of average daily departures, fares and load factor compared to today.
The EAS program subsidizes scheduled flights to connect underserved communities with larger airline hubs. These contracts help add predictable stability to Southern’s operations from both a route and revenue planning perspective. As of October, 1 2024, the EAS market size for annual contract subsidy rates was approximately $550 million.
The EAS program subsidizes scheduled flights to connect underserved communities with larger airline hubs. These contracts help add predictable stability to Southern’s operations from both a route and revenue planning perspective. As of October, 1 2025, the EAS market size for annual contract subsidy rates was approximately $627 million.
Being a good steward of the natural environment through the production and development of innovative designs that reduce resource use and energy consumption. • Social. Promoting inclusion, while underpinning all of our activities with a core focus on health and safety. • Governance.
Being a good steward of the natural environment through the production and development of innovative designs that reduce resource use and energy consumption. • Social. Underpinning all of our activities with a core focus on health and safety. • Governance.
In addition, we have interline agreements with United, American, Alaska and Hawaiian Airlines that extend our reach to their combined 430 million annual passengers. • Technology: we are developing AI-enhanced software, in partnership with Palantir, to drive our growth and profitability and, in the future, we plan to offer this technology to other charter brokers, air operators, and aircraft owners. • Execution: we have brought together leaders and experts in aviation, software and electrification to help us synergistically execute our vision, drive profitable growth over time, and create shareholder value.
In addition, we have interline agreements with United, American, Alaska, Hawaiian and Japan Airlines that extend our reach to more than 430 million annual passengers combined. • Technology: we are developing AI-enhanced software, in collaboration with Palantir, to drive our growth and profitability and, in the future, we plan to offer this technology to other charter brokers, air operators, and aircraft owners. • Execution: we have brought together leaders and experts in aviation, software and electrification to help us synergistically execute our vision, drive profitable growth over time, and create shareholder value.
The Company was incorporated in 2021 and became the ultimate parent of both Surf Air Global Limited (“Surf Air”) and Southern Airways Corporation (“Southern”) in July of 2023 following the Company’s public listing on the NYSE. For 2024, the Company served over 370,000 passengers with approximately 72,000 scheduled departures.
The Company was incorporated in 2021 and became the ultimate parent of both Surf Air Global Limited (“Surf Air”) and Southern Airways Corporation (“Southern”) in July of 2023 following the Company’s public listing on the NYSE. For 2025, the Company served over 300,000 passengers with approximately 62,000 scheduled departures.
Given our leadership position in the regional air mobility sector, we believe we are uniquely qualified to understand the needs of industry participants and to develop software and hardware solutions to enhance efficiency, productivity, and profitability. Today, through our exclusive partnership with Palantir, we are developing an AI-enhanced software operating system, SurfOS.
Given our leadership position in the regional air mobility sector, we believe we are uniquely qualified to understand the needs of industry participants and to develop software and hardware solutions to enhance efficiency, productivity, and profitability. Today, in collaboration with third parties, including our exclusive relationship with Palantir, we are developing an AI-enhanced software operating system, SurfOS.
Sources of Air Mobility Revenue We generate revenue from two categories of air mobility services: Scheduled Air Service - We generate revenue from operating scheduled commercial air service flights which are sold to the public primarily on a per seat basis, as well as through membership subscriptions. 8 Of our combined fleet of 57 aircraft, 46 are Cessna Caravans as of December 31, 2024.
Sources of Air Mobility Revenue We generate revenue from two categories of air mobility services: Scheduled Air Service - We generate revenue from operating scheduled commercial air service flights which are sold to the public primarily on a per seat basis, as well as through membership subscriptions. 9 Of our combined fleet of 41 aircraft, 39 are Cessna Caravans as of December 31, 2025.
A small number of the on-demand flights are operated on our fleet; the majority are delivered on third-party turboprops or small jets. For the year ended December 31, 2024, we generated revenue of $28.7 million from on-demand operations.
A small number of the on-demand flights are operated on our fleet; the majority are delivered on third-party turboprops or small jets. For the year ended December 31, 2025, we generated revenue of $29.6 million from on-demand operations.
For the year ended December 31, 2024, our total fleet averaged approximately 190 daily departures.
For the year ended December 31, 2025, our total fleet averaged approximately 170 daily departures.
We are working to build a dedicated, and inclusive workforce to achieve this goal while striving to adhere to best practices in risk assessment, mitigation and corporate governance. Our ESG efforts consist of focusing on the following: • Environmental.
In so doing, we believe we can make a meaningful contribution to tackling the dual challenges of congestion and climate change. We are working to build a dedicated workforce to achieve this goal while striving to adhere to best practices in risk assessment, mitigation and corporate governance. Our ESG efforts consist of focusing on the following: • Environmental.
With our EP1 fully-electric powertrain expected to enter service shortly after we receive certification, which we anticipate to occur early in 2027, we believe we can be the first to operate an electrified fleet of aircraft in commuter operations. We generate revenue from EAS revenue awards from the Department of Transportation (“ DOT ”).
Through our EP1 fully-electric powertrain certification and collaborations with third parties on other technologies we believe we can be the first to operate an electrified fleet of aircraft in commuter operations. We generate revenue from EAS revenue awards from the Department of Transportation (“ DOT ”).
Upholding our commitment to ethical business conduct, integrity and corporate responsibility, and integrating strong governance and enterprise risk management oversight across all aspects of our business. Inclusion We work diligently to create an inclusive work environment.
Upholding our commitment to ethical business conduct, integrity and corporate responsibility, and integrating strong governance and enterprise risk management oversight across all aspects of our business. Intellectual Property Our ability to protect our material intellectual property is important to our business.
Human Capital/Team As of December 31, 2024, we had 703 employees, of which 556 were full-time and 147 were part-time. We have not experienced any work stoppages and consider our relationship with our employees to be good. Our employees are divided across various core business functions, including operations, sales and marketing, research and development, customer service and finance and administration.
We have not experienced any work stoppages and consider our relationship with our employees to be good. Our employees are divided across various core business functions, including operations, sales and marketing, research and development, customer service and finance and administration. None of our employees are subject to a collective bargaining agreement or represented by a labor union.
The lease of this facility expires in August 2026. Southern’s headquarters is located in a leased workspace in Palm Beach, Florida. The lease of this facility expires in April 2025. In February 2025, the Company relocated its air operations center to Addison, Texas. The lease of this facility expires in January 2028.
The lease of this facility expires in August 2026. In February 2025, the Company relocated our air operations center to Addison, Texas. The lease of this facility expires in January 2028. Human Capital/Team As of December 31, 2025, we had 573 employees, of which 467 were full-time and 106 were part-time.
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ITEM 1: BUSINESS Overview Surf Air Mobility Inc. (“Surf Air Mobility”, the “Company”, “us”, “we” or “our”) is a regional air mobility platform that aims to transform regional flying. The Company is currently comprised of its Air Mobility business, and has a goal of further developing and enhancing its service and technology offerings through its Air Technology business.
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ITEM 1: BUSINESS Overview Surf Air Mobility Inc. (the “Company”), a Delaware corporation, is a regional air mobility platform that aims to transform regional flying. The Company currently operates one of the largest commuter airlines in the United States by scheduled departures as well as an expanding on-demand charter marketplace for passengers in the U.S. and globally.
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None of our employees are subject to a collective bargaining agreement or represented by a labor union. Commitment to Environmental, Social and Governance (“ESG”) Leadership We are seeking to build a regional air mobility ecosystem that will sustainably connect communities.
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The Company’s operations provide scale, distribution and real-world operating data to validate and, eventually, deploy the software and technology offerings it is currently developing to support the modernization of air operations and the adoption of next-generation aircraft.
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We strive to provide equal opportunities for growth, success, promotion, learning and development, and aim to achieve parity in the way we organize, assign and manage projects in a way that provides equal opportunities for all.
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We are focused on building support across all teams and individuals, with the aim that everyone has a voice, and treats each other with respect. 12 Intellectual Property Our ability to protect our material intellectual property is important to our business.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs of December 31, 2024, material weaknesses continued to exist in our internal control over financial reporting, as discussed further in Item 9A, “Controls and Procedures - Material Weaknesses in Internal Control Over Financial Reporting.” A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. 44 Our management has developed a plan to remediate these material weaknesses, as discussed in Item 9A, “Controls and Procedures - Material Weaknesses in Internal Control Over Financial Reporting.” We have begun to implement aspects of this remediation plan, however, the remediation measures will be ongoing and it is expected that these will result in future costs for us.
Biggest changeOur management has developed a plan to remediate these material weaknesses, as discussed in Item 9A, “Controls and Procedures - Material Weaknesses in Internal Control Over Financial Reporting.” We have begun to implement aspects of this remediation plan; however, the remediation measures will be ongoing and it is expected that these will result in future costs for us.
GEM will not be obligated to (but may, at its option, choose to) purchase shares of our common stock to the extent such purchase would result in 16 beneficial ownership (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) by GEM, together with its affiliates, of more than 9.99% of our issued and outstanding common stock.
GEM will not be obligated to 16 (but may, at its option, choose to) purchase shares of our common stock to the extent such purchase would result in beneficial ownership (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) by GEM, together with its affiliates, of more than 9.99% of our issued and outstanding common stock.
The global economy has in the past, and may in the future, experience recessionary periods and periods of economic instability, such as uncertainty in the banking system, rising fuel costs and ongoing business disruptions and related financial impacts resulting from public health crises such as pandemics, including changes in inflation and interest rates, and disruptions in manufacturing, delivery and overall supply chain.
The global economy has in the past, and may in the future, experience recessionary periods and periods of economic instability, such as uncertainty in the banking system, rising fuel costs and ongoing business disruptions and related financial impacts, including resulting from public health crises such as pandemics, changes in inflation and interest rates, and disruptions in manufacturing, delivery and overall supply chain.
Any acquisition, partnership or joint venture may not result in anticipated synergies or cost savings over time, may reduce our cash reserves, may negatively affect our earnings and financial performance, to the extent financed with the proceeds of debt, may increase our indebtedness and to the extent financed with the proceeds of equity, and may result in dilution to our existing equity holders.
Any acquisition, partnership or joint venture may not result in anticipated synergies or cost savings over time, may reduce our cash reserves, may negatively affect our earnings and financial performance, to the extent financed with the proceeds of debt, may increase our indebtedness and to the extent financed with the proceeds of equity, may result in dilution to our existing equity holders.
These material weaknesses could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
These material weaknesses could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.
We cannot predict whether investors will find our securities less attractive because we rely on these exemptions.
Our Amended and Restated Bylaws and our Amended and Restated Certificate of Incorporation provide that the persons or entities who are not citizens of the United States (“Non-Citizens”), shall not, in the aggregate, own and or control more than 25.0% of our total voting interest.
Our Amended and Restated Bylaws and our Amended and Restated Certificate of Incorporation provide that persons or entities who are not citizens of the United States (“Non-Citizens”), shall not, in the aggregate, own and or control more than 25.0% of our total voting interest.
Negative perception of our business or platform may have a material adverse effect on our reputation and brands, including as a result of: • complaints or negative publicity or reviews about us, our third-party aircraft operators or customers, our air mobility services, certain other brands or events we associate with or our flight operations policies ( e.g. , cancellation or baggage fee policies), even if factually incorrect or based on isolated incidents; • general safety concerns or specific perceptions of the safety and performance of certain types of aircraft, such as single-engine versus twin-engine aircraft or propeller-powered aircraft versus jet-powered aircraft, or if companies have policies that prevent them from utilizing our services due to the aircraft we operate; • changes to our flight operations, safety and security, data privacy or other policies that users or others perceive as overly restrictive, unclear or inconsistent with our values; • a failure to enforce our flight operations policies in a manner that users perceive as effective, fair and transparent; • illegal, negligent, reckless or otherwise inappropriate behavior by our customers, our third-party aircraft operators or other third parties involved in the operation of our business or by our management team or other employees; • flight delays or a failure to provide routes and flight schedules sought by customers; • actual or perceived disruptions or defects in our platform or other technology development, such as data privacy or security incidents, platform outages, payment processing disruptions or other incidents that impact the availability, reliability or security of our offerings; • litigation over, or investigations by regulators into, our operations or those of our third-party aircraft operators; • inadequate or unsatisfactory customer support service experiences; • negative responses by third-party aircraft operators or customers to new mobility offerings on our platform; • perception of our treatment of employees, contractors or third-party aircraft operators and our response to their sentiment related to political or social causes or actions of management; • disputes with any of our strategic partners; • problems in engagement with aircraft certification bodies or other regulators, communities, target demographics or other positioning in the market; or 22 • any of the foregoing with respect to our competitors, to the extent such resulting negative perception affects the public’s perception of us or the aviation industry as a whole, and particularly if we are unable to adequately differentiate our brand, services and aircraft from others in the market.
Negative perception of our business, platform, or products may have a material adverse effect on our reputation and brands, including as a result of: • complaints or negative publicity or reviews about us, our third-party aircraft operators or customers, our air mobility services, certain other brands or events we associate with or our flight operations policies ( e.g. , cancellation or baggage fee policies), even if factually incorrect or based on isolated incidents; • general safety concerns or specific perceptions of the safety and performance of certain types of aircraft, such as single-engine versus twin-engine aircraft or propeller-powered aircraft versus jet-powered aircraft, or if companies have policies that prevent them from utilizing our services due to the aircraft we operate; • changes to our flight operations, safety and security, data privacy or other policies that users or others perceive as overly restrictive, unclear or inconsistent with our values; • a failure to enforce our flight operations policies in a manner that users perceive as effective, fair and transparent; • illegal, negligent, reckless or otherwise inappropriate behavior by our customers, our third-party aircraft operators or other third parties involved in the operation of our business or by our management team or other employees; • flight delays or a failure to provide routes and flight schedules sought by customers; • actual or perceived disruptions or defects in our platform or other technology development, such as data privacy or security incidents, platform outages, payment processing disruptions or other incidents that impact the availability, reliability or security of our offerings; • litigation over, or investigations by regulators into, our operations or those of our third-party aircraft operators; • inadequate or unsatisfactory customer support service experiences; • negative responses by third-party aircraft operators or customers to new mobility offerings on our platform; • perception of our treatment of employees, contractors or third-party aircraft operators and our response to their sentiment related to political or social causes or actions of management; • disputes with any of our strategic partners; • problems in engagement with aircraft certification bodies or other regulators, communities, target demographics or other positioning in the market; or 22 • any of the foregoing with respect to our competitors, to the extent such resulting negative perception affects the public’s perception of us or the aviation industry as a whole, and particularly if we are unable to adequately differentiate our brand, services and aircraft from others in the market.
Among other things, the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws include provisions: • establishing a classified board of directors with staggered, three-year terms; • authorizing our Board to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • prohibiting cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • limiting the liability of, and providing for the indemnification of, our directors and officers; 46 • authorizing our Board to amend the bylaws, which may allow our Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and • establishing advance notice procedures with which stockholders must comply to nominate candidates to our Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Among other things, the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws include provisions: • establishing a classified board of directors with staggered, three-year terms; • authorizing our Board to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • prohibiting cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • limiting the liability of, and providing for the indemnification of, our directors and officers; • authorizing our Board to amend the bylaws, which may allow our Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and • establishing advance notice procedures with which stockholders must comply to nominate candidates to our Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
As a new entrant into the nascent market of hybrid-electric and battery electric aircraft, we anticipate that we will face risks and significant challenges that would impact our ability to, among other things: • design and produce safe, reliable and quality fully-electric and hybrid-electric powertrains on an ongoing basis; • obtain necessary regulatory approvals in a timely manner, or at all; • build a well-recognized and respected brand; • attract and maintain core commercial partnerships; • establish and expand our customer base; • successfully service our aircraft after sales and maintain a good flow of spare parts and customer goodwill; • improve and maintain our operational efficiency; • predict our future revenues and appropriately budget for our expenses; • attract, retain and motivate talented employees; • anticipate trends that may emerge and affect our business; • anticipate and adapt to changing market conditions, including technological developments and changes in our competitive landscape; and • navigate an evolving and complex regulatory environment.
As a new entrant into the nascent market of hybrid-electric and battery electric aircraft, we anticipate that we will face risks and significant challenges that would impact our ability to, among other things: • design, produce and source safe, reliable and quality fully-electric and hybrid-electric powertrains on an ongoing basis; • obtain necessary regulatory approvals in a timely manner, or at all; • build a well-recognized and respected brand; • attract and maintain core commercial partnerships; • establish and expand our customer base; • successfully service our aircraft after sales and maintain a good flow of spare parts and customer goodwill; • improve and maintain our operational efficiency; • predict our future revenues and appropriately budget for our expenses; • attract, retain and motivate talented employees; • anticipate trends that may emerge and affect our business; • anticipate and adapt to changing market conditions, including technological developments and changes in our competitive landscape; and • navigate an evolving and complex regulatory environment.
Our business depends on consumer demand for our services and, consequently, is sensitive to a number of factors that influence consumer confidence and spending, such as general economic conditions, consumer disposable income, energy and fuel prices, recession and fears of recession, 50 unemployment, legislative and regulatory changes, minimum wages, availability of consumer credit, consumer debt levels, conditions in the housing market, interest rates, tax rates and policies, inflation, consumer confidence in future economic conditions and political conditions, war and fears of war, inclement weather and climate change, natural disasters, terrorism, uncertainty in the banking system, outbreak of viruses or widespread illness, and consumer perceptions of personal well-being and security.
Our business depends on consumer demand for our services and, consequently, is sensitive to a number of factors that influence consumer confidence and spending, such as general economic conditions, consumer disposable income, energy and fuel prices, recession and fears of recession, unemployment, legislative and regulatory changes, minimum wages, availability of consumer credit, consumer debt levels, conditions in the housing market, interest rates, tax rates and policies, inflation, consumer confidence in future economic conditions and political conditions, war and fears of war, inclement weather and climate change, natural disasters, terrorism, uncertainty in the banking system, outbreak of viruses or widespread illness, and consumer perceptions of personal well-being and security.
In response to a determination that we have infringed upon or misappropriated a third-party’s intellectual property rights, we may be required to do one or more of the following: • cease development, sales or use of its or our products or services; • trade under a different name or rebrand our services; • pay substantial damages; 37 • obtain a license from the owner of the asserted intellectual property right, which license may not be available on reasonable terms or available at all; or • re-design one or more aspects or systems of its or our aircraft or other offerings.
In response to a determination that we have infringed upon or misappropriated a third-party’s intellectual property rights, we may be required to do one or more of the following: • cease development, sales or use of its or our products or services; • trade under a different name or rebrand our services; • pay substantial damages; • obtain a license from the owner of the asserted intellectual property right, which license may not be available on reasonable terms or available at all; or • re-design one or more aspects or systems of its or our aircraft or other offerings.
The failure to obtain any of the required authorizations or certificates, or do so in a timely manner, or if any of these authorizations or certificates are modified, suspended or revoked after we obtain them, may render us unable to develop our powertrains 41 and implement our plans to install them in aircraft on the timelines we project, which, in turn, could have a material adverse effect on our business, financial condition and results of operations.
The failure to obtain any of the required authorizations or certificates, or do so in a timely manner, or if any of these authorizations or certificates are modified, suspended or revoked after we obtain them, may render us unable to develop our powertrains and implement our plans to install them in aircraft on the timelines we project, which, in turn, could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to conclude that our internal control over financial reporting is effective as a result of a material weakness(es) in our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the NYSE, the SEC or other regulatory authorities.
If we 44 are unable to conclude that our internal control over financial reporting is effective as a result of a material weakness(es) in our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the NYSE, the SEC or other regulatory authorities.
Depending on the nature of the information compromised, we may also have obligations to notify users, law enforcement, government authorities, payment companies, consumer reporting agencies or the media about the incident and may be required to expend additional resources in connection with investigating and remediating such an incident, and otherwise complying with applicable privacy and data security laws.
Depending on the nature of the information compromised, we may also have obligations to notify users, law enforcement, government authorities, payment companies, consumer reporting agencies or the media about the incident and may be 38 required to expend additional resources in connection with investigating and remediating such an incident, and otherwise complying with applicable privacy and data security laws.
For example, in June 2018 we terminated a charter and aircraft sublease agreement we had with a key third-party scheduled aircraft operator in California because the operator had been providing increasingly unreliable and substandard service quality, resulting in frequent and last minute flight cancellations, while overcharging us and refusing to provide the requisite financial and operating data transparency.
For example, in June 2018 we terminated a charter and aircraft sublease agreement we had with a key third-party scheduled aircraft operator in California because the operator had been providing increasingly unreliable and 35 substandard service quality, resulting in frequent and last minute flight cancellations, while overcharging us and refusing to provide the requisite financial and operating data transparency.
We have invested, and will continue to invest, significant time, effort, and financial resources into the development and implementation of SurfOS, our AI-enhanced software operating system. The success of SurfOS is critical to our strategy of enhancing operational efficiency and providing advanced technological solutions to our customers. However, there are several risks associated with this initiative.
We have invested, and will continue to invest, significant time, effort, and financial resources into the development, implementation and commercialization of SurfOS, our AI-enhanced software operating system. The success of SurfOS is critical to our strategy of enhancing operational efficiency and providing advanced technological solutions to our customers. However, there are several risks associated with this initiative.
Significant new initiatives have in the past resulted in similar operational challenges, and our growth strategy contemplates scaling our business rapidly, such as through acquisitions. In addition, developing and launching new routes and enhancements to our existing routes may involve significant upfront investment, such as additional marketing and terminal build-out, and such investments may not generate a return.
Significant new initiatives have in the past resulted in similar operational challenges, and our growth strategy contemplates scaling our business rapidly, 21 such as through acquisitions. In addition, developing and launching new routes and enhancements to our existing routes may involve significant upfront investment, such as additional marketing and terminal build-out, and such investments may not generate a return.
The impact of such events may limit our third-party aircraft 31 operators’ ability to perform our flights, which could result in loss of revenue and adversely affect our ability to provide our services. Additionally, high fuel prices or significant disruptions in the supply of aircraft fuel could have an adverse effect on our financial condition and results of operations.
The impact of such events may limit our third-party aircraft operators’ ability to perform our flights, which could result in loss of revenue and adversely affect our ability to provide our services. Additionally, high fuel prices or significant disruptions in the supply of aircraft fuel could have an adverse effect on our financial condition and results of operations.
The timing of our production ramp is dependent upon finalizing certain aspects of the design, engineering, component procurement, testing, build out and manufacturing plans in a timely manner, and our ability to execute these plans within the current timeline and upon regulatory approval by the FAA, which can be a lengthy and unpredictable process.
The timing of our production ramp is dependent upon finalizing certain aspects of the design, engineering, component procurement, testing, build out and manufacturing plans in a timely manner, upon our 27 ability to execute these plans within the current timeline and upon regulatory approval by the FAA, which can be a lengthy and unpredictable process.
If we experience harm to our reputation and brands, our business, financial condition and results of operations could be adversely affected. We must continue to increase the strength of our reputation and brands as reliable, experience-driven and cost-effective air mobility providers in order to attract and retain qualified third-party aircraft operators and customers.
If we experience harm to our reputation and brands, our business, financial condition and results of operations could be adversely affected. We must continue to increase the strength of our reputation and brands as reliable, experience-driven and cost-effective air mobility solutions providers in order to attract and retain qualified third-party aircraft operators and customers.
Failure to comply with legal and regulatory requirements, such as obtaining and maintaining licenses, certificates, authorizations and permits critical for the operation of our business, may result in civil penalties or private lawsuits, or the suspension or revocation of licenses, certificates, authorizations or permits, which would prevent us from operating all or significant portions of our business.
Failure to comply with legal and regulatory requirements, such as obtaining and maintaining licenses, certificates, authorizations and permits critical for the operation of our business, may result in civil penalties or private lawsuits, or the suspension 41 or revocation of licenses, certificates, authorizations or permits, which would prevent us from operating all or significant portions of our business.
If a work stoppage occurs, it could delay the manufacture and sale of our performance hybrid-electric vehicles and could have a material adverse effect on our business, financial condition or results of operations. Our or our third-party aircraft operators’ insurance may become too difficult or expensive to obtain.
If a work stoppage occurs, it could delay the manufacture and sale of our performance hybrid-electric vehicles and could have a material adverse effect on our business, financial condition or results of operations. 30 Our or our third-party aircraft operators’ insurance may become too difficult or expensive to obtain.
For example, in January 2024, a Southern flight was forced to make an emergency landing following take-off in severe weather from Dulles International Airport in Virginia. Substantial claims resulting from an accident in excess of our related insurance coverage would harm our operational and financial results.
For example, in January 2024, a Southern flight was forced to make an emergency landing following take-off in severe 32 weather from Dulles International Airport in Virginia. Substantial claims resulting from an accident in excess of our related insurance coverage would harm our operational and financial results.
Further, obtaining and maintaining patent and trademark protection can be costly, and we may choose not to, or may fail to, pursue or maintain such forms of protection for our technology, products or services in the United States or foreign jurisdictions, which could harm our ability to obtain or maintain a competitive advantage in such jurisdictions.
Further, obtaining and maintaining patent, copyright, and trademark protection can be costly, and we may choose not to, or may fail to, pursue or maintain such forms of protection for our technology, products or services in the United States or foreign jurisdictions, which could harm our ability to obtain or maintain a competitive advantage in such jurisdictions.
The United States has recently experienced historically high levels of inflation. Additionally, recent trade disputes between the United States and other countries resulting in the imposition of increased tariffs on products imported into the U.S., and the ongoing conflicts between Russia and Ukraine and in the Middle East, have contributed to higher inflation.
The United States has recently experienced historically high levels of inflation. Additionally, recent trade disputes between the United States and other countries resulting in the imposition of increased tariffs on products imported into the U.S., and the ongoing conflicts between Russia and Ukraine and in the Middle East, have contributed to higher inflation in recent years.
We plan to outsource the majority of the production, assembly and installation of our fully-electric and hybrid-electric powertrain solutions. As such, our suppliers, including single source suppliers for certain components, are a key 33 part of our business model in order to manufacture our planned fully-electric and hybrid-electric powertrains for the Cessna Caravan.
We plan to outsource the majority of the production, assembly and installation of our fully-electric and hybrid-electric powertrain solutions. As such, our suppliers, including single source suppliers for certain components, are a key part of our business model in order to manufacture our planned fully-electric and hybrid-electric powertrains for the Cessna Caravan.
Further, the need to establish the corporate infrastructure demanded of a public company may divert management’s attention from implementing our growth strategy, which could prevent us from improving our business, results of operations and financial condition. Our management has limited prior experience in operating a public company.
Further, the need to establish and maintain the corporate infrastructure demanded of a public company may divert management’s attention from implementing our growth strategy, which could prevent us from improving our business, results of operations and financial condition. Our management has limited prior experience in operating a public company.
Accordingly, it is not possible for us to predict prior to any such sales, the number of shares of our 48 common stock that we will sell pursuant to the Share Subscription Facility, and such sales could result in substantial dilution to the interests of other holders of our common stock.
Accordingly, it is not possible for us to predict prior to any such sales, the number of shares of our common stock that we will sell pursuant to the Share Subscription Facility, and such sales could result in substantial dilution to the interests of other holders of our common stock.
The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including 30 premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business.
The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business.
Failure to comply with such requirements in the future may result in fines and other enforcement actions by the regulators. For example, the TSA is responsible for civil aviation security matters, including passenger and baggage screening at U.S. airports.
Failure to comply with such requirements in the future 40 may result in fines and other enforcement actions by the regulators. For example, the TSA is responsible for civil aviation security matters, including passenger and baggage screening at U.S. airports.
A reduction of EAS revenue, a loss of EAS 42 revenue awards either due to termination or failure to renew at the end of the two-year term or a change to or termination of the EAS program could have a material adverse effect on our business, financial condition and results of operation.
A reduction of EAS revenue, a loss of EAS revenue awards either due to termination or failure to renew at the end of the two-year term or a change to or termination of the EAS program could have a material adverse effect on our business, financial condition and results of operation.
Additionally, in connection with their prior experience, certain of our directors have been named defendants in litigation or other legal proceedings, we cannot provide assurance that these prior legal proceedings or future legal proceedings involving our directors will not cause reputational harm for us.
Additionally, in connection with their prior experience, certain of our directors have been named defendants in litigation or other legal proceedings, and we cannot provide assurance that these prior legal proceedings or future legal proceedings involving our directors will not cause reputational harm for us.
Our business is concentrated on air mobility, which is vulnerable to changes in consumer preferences, discretionary spending and other market changes impacting luxury goods and discretionary purchases (including as a result of concerns regarding the impact of a global recession).
Our business is concentrated on regional air mobility, which is vulnerable to changes in consumer preferences, discretionary spending and other market changes impacting luxury goods and discretionary purchases (including as a result of concerns regarding the impact of a global recession).
Errors, defects and vulnerabilities could also prevent customers from booking flights, which would adversely affect our flyer utilization rates, or disrupt communications within the company ( e.g. , flight schedules or passenger manifests), which could affect our on-time 38 performance.
Errors, defects and vulnerabilities could also prevent customers from booking flights, which would adversely affect our flyer utilization rates, or disrupt communications within the Company ( e.g. , flight schedules or passenger manifests), which could affect our on-time performance.
If these events occur, our ability to attract new clients may be impaired or we may be subjected to damages or penalties. We will continue to rely on mobile operating systems and application marketplaces to make our app available to users of our platform.
If these events occur, our ability to attract new clients may be impaired or we may be subjected to damages or penalties. 39 We will continue to rely on mobile operating systems and application marketplaces to make our app available to users of our platform.
In addition to state and federal regulation, airports and municipalities enact rules and regulations that affect our operations. From time to time, various airports throughout the country have considered limiting the use of smaller aircraft, 40 such as the aircraft used in our operations, at such airports.
In addition to state and federal regulation, airports and municipalities enact rules and regulations that affect our operations. From time to time, various airports throughout the country have considered limiting the use of smaller aircraft, such as the aircraft used in our operations, at such airports.
New and changing laws, regulations, and standards relating to corporate governance and public disclosure have created uncertainty for public companies and will increase the costs and the time that our board for directors and management must devote to complying with these rules and regulations.
New and changing laws, regulations, and standards relating to corporate governance and public disclosure have created uncertainty for public companies and will increase the costs and the time that our Board of Directors and management must devote to complying with these rules and regulations.
Even if we and our third-party partners are successful in developing our fully-electric and hybrid-electric powertrains and reliably sourcing our component supply, we do not know whether we will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond our control such as problems with suppliers and vendors, force majeure events, delays in meeting commercialization schedules, or failure to satisfy the requirements of customers and potential customers.
Even if we and our third-party collaborators are successful in developing fully-electric and hybrid-electric powertrains and reliably sourcing component supply, we do not know whether we will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond our control such as problems with suppliers and vendors, force majeure events, delays in meeting commercialization schedules, or failure to satisfy the requirements of customers and potential customers.
If our operations continue to grow as planned, of which there can be no assurance, we will need to expand our sales, marketing, operations and the number of aircraft operators with whom we do business.
If our operations continue to grow as planned, of which there can be no assurance, we will need to expand our sales, marketing and operations departments and the number of aircraft operators with whom we do business.
We may not have adequate personnel with the appropriate level of knowledge, experience 43 and training in the accounting policies, practices or internal control over financial reporting required of public companies in the United States.
We may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal control over financial reporting required of public companies in the United States.
We will be dependent on our senior management team and other highly skilled personnel, and if we are not successful in attracting and/or retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
We are dependent on our senior management team and other highly skilled personnel, and if we are not successful in attracting and/or retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
There are a number of factors that may limit our ability to raise financing or access capital markets in the future, including current and future debt and contractual obligations, our liquidity and credit status, our operating cash flows, market conditions in the aviation industry, U.S. and global economic conditions, the financial impact of global events such as wars and pandemics, the general state of the banking system and capital markets and the financial position of the major providers of aircraft and other aviation industry financing.
There are a number of factors that may limit our ability to raise financing or access capital markets in the future, including current and future debt and contractual obligations, our cash position and credit status, our operating cash flows, a lack of liquidity in our stock, market conditions in the aviation industry, U.S. and global economic conditions, the financial impact of global events such as wars and pandemics, the general state of the banking system and capital markets and the financial position of the major providers of aircraft and other aviation industry financing.
In the event that we fail to pay these fees when due, the Data License Agreement 34 may be terminated by TAI, which could, in turn result in the termination of the other TAI Agreements.
In the event that we fail to pay these fees when due, the Data License Agreement may be terminated by TAI, which could, in turn result in the termination of the other TAI Agreements.
A protracted failure to address any DOT concerns might result in the suspension or revocation of licenses, certificates, authorizations or permits, which would prevent us from operating our business.
A protracted failure to address any DOT concerns 43 might result in the suspension or revocation of licenses, certificates, authorizations or permits, which would prevent us from operating our business.
Risks and uncertainties that could materially and adversely affect our business, results of operations or financial condition include, but are not limited to the ability to: (i) raise additional capital (or financing) to fund operating losses, (ii) refinance our current outstanding debt, (iii) maintain efficient aircraft utilization, primarily through the proper utilization of pilots and managing market shortages of maintenance personnel and critical aircraft components, (iv) sustain ongoing operations, attract and maintain customers, (vi) integrate, manage and grow recent acquisitions and new business initiatives, (vii) obtain and maintain relevant regulatory approvals, and (viii) measure and manage risks inherent to our business model. 15 Moreover, some of our vendors and suppliers likewise rely on capital raising activities to fund their operations and capital expenditures, which may be more difficult or expensive in the event of downturns in the economy or disruptions in the financial and credit markets (including as a result of the aforementioned factors that have impacted our operations).
Risks and uncertainties that could materially and adversely affect our business, results of operations or financial condition include, but are not limited to the ability to: (i) raise additional capital (or financing) to fund operating losses, (ii) refinance our current outstanding debt, (iii) maintain efficient aircraft utilization, primarily through the proper utilization of pilots and managing market shortages of maintenance personnel and critical aircraft components, (iv) sustain ongoing operations, (v) attract and maintain customers, (vi) integrate, manage and grow recent acquisitions and new business initiatives, (vii) obtain and maintain relevant regulatory approvals, and (viii) measure and manage risks inherent to our business model. 15 Moreover, some of our vendors and suppliers likewise rely on capital raising activities to fund their operations and capital expenditures, which may be more difficult or expensive in the event of downturns in the economy or disruptions in the financial and credit markets (including as a result of the aforementioned factors and those mentioned below that have impacted our operations).
Delays or difficulties in selecting and entering agreements with such manufacturers and suppliers may impact the timelines we envisage for developing the powertrain, and adversely affect the results of our operations.
Delays or difficulties in selecting and entering agreements with such manufacturers 34 and suppliers may impact the timelines we envisage for developing the powertrain, and adversely affect the results of our operations.
If any of these service providers cease operations, there is no guarantee that we could replace these providers on 35 a timely basis with comparably priced providers, or at all.
If any of these service providers cease operations, there is no guarantee that we could replace these providers on a timely basis with comparably priced providers, or at all.
To comply with this legally-required provision, if Non-Citizens own (beneficially or of record) more than 25.0% of the total voting power of our common stock, only permitted Non-Citizens holders consisting of Kuzari Investor 94647 LLC and our co-founders, Sudhin Shahani and Liam Fayed, and their respective affiliates will be entitled to vote.
To comply with this legally-required provision, if Non-Citizens own (beneficially or of record) more than 25.0% of the total voting power of our common stock, only permitted Non-Citizens holders consisting of Kuzari Investor 94647 LLC and our co-founders, Sudhin Shahani and Liam Fayed, and their respective affiliates (“the Permitted Holders”) will be entitled to vote.
As a result, the training of our pilots may not be accomplished in a cost-efficient manner or in a manner timely enough to support our operational needs. 29 We are subject to legal, regulatory and physical risks associated with climate change, including the potential increased impacts of severe weather events on our operations and infrastructure.
As a result, the training of our pilots may not be accomplished in a cost-efficient manner or in a manner timely enough to support our operational needs. We are subject to legal, regulatory and physical risks associated with the environment and climate change, including the potential increased impacts of severe weather events on our operations and infrastructure.
Further, we expect our insurance needs and costs to increase as we grow our commercial operations, add routes, increase flight and passenger volumes and expand into new markets. It is too early to determine what impact, if any, the commercial operation of our future hybrid-electric aircraft will have on our insurance costs. Accordingly, we may not have adequate insurance coverage.
Further, we expect our insurance needs and costs to increase as we grow our commercial operations, add routes, increase flight and passenger volumes and expand into new markets. It is too early to determine what impact, if any, the commercial operation of electric aircraft will have on our insurance costs. Accordingly, we may not have adequate insurance coverage.
Third parties, including our competitors, may own or obtain patents, trademarks or other proprietary rights that could prevent or limit our ability to operate under our current branding, provide air mobility services or to make, use, develop or deploy our aircraft, the powertrain we are developing with our commercial partners or other aircraft components, which could harm our business.
Third parties, including our competitors, may own or obtain patents, trademarks or other proprietary rights that could prevent or limit our ability to operate under our current branding, provide air mobility services or to make, use, develop or deploy our software solutions, aircraft, the powertrain we are developing with our commercial partners or other aircraft components, which could harm our business.
Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings guidance it may provide.
Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings guidance we may provide.
Historically, we have financed our operations and capital expenditures primarily through private financing rounds and the issuance of debt and equity. A significant amount of our funding to date has been provided by entities affiliated with a co-founder of the Company. We may utilize the GEM Advances, as necessary, in 2025 to address our capital needs.
Historically, we have financed our operations and capital expenditures primarily through private financing rounds and the issuance of debt and equity. A significant amount of our funding to date has been provided by entities affiliated with a co-founder of the Company. We may utilize the GEM Advances, as necessary, in 2026 to address our capital needs.
We are in the process of upgrading our finance and accounting systems to an enterprise system suitable for a public company, and a delay could impact our ability or prevent it from timely reporting our results of operations, timely filing required reports with the SEC and complying with Section 404 of the Sarbanes-Oxley Act (“ Section 404 ”).
We are in the process of upgrading our finance and accounting systems to an enterprise system suitable for a public company, and a delay could impact our ability or prevent us from timely reporting our results of operations, timely filing required reports with the SEC and complying with Section 404 of the Sarbanes-Oxley Act (“ Section 404 ”).
We have drawn upon the GEM Advances in 2024 and may continue to draw upon the GEM Advances in 2025 to augment our capital resources to address our capital needs.
We have drawn upon the GEM Advances in 2024 and 2025 and may continue to draw upon the GEM Advances in 2026 to augment our capital resources to address our capital needs.
Any reference to “our proprietary powertrain technology” or similar phrases herein refer to our anticipated rights in one or more STCs relating to such technology, and not to any intellectual property rights in such technology. 36 We expect that in the future we will rely on patents and trade secrets to protect any proprietary technology we develop.
Any reference to “our proprietary powertrain technology” or similar phrases herein refer to our anticipated rights in one or more STCs relating to such technology, and not to any intellectual property rights in such technology. We expect that in the future we will rely on patents, copyrights, and trade secrets to protect any proprietary technology we develop.
Furthermore, the FAA may determine that the modification requested by the STC is so complex that a new (rather than supplemental) aircraft type certification process must be undertaken instead. The process to obtain a TC is typically longer, more complex and more capital intensive than the process to obtain an STC.
Furthermore, the FAA may determine that the modification requested by the STC is so complex that a new (rather than supplemental) aircraft type certification process must be undertaken instead. The process to obtain a TCB is typically longer, more complex and more capital intensive than the process to obtain an STC.
Any actual or perceived safety issues may result in significant reputational harm to our business, in addition to tort liability, maintenance, increased safety infrastructure and other costs that may arise. Such issues could result in delaying or cancelling planned flights, increased regulation or other systemic consequences.
Any actual or perceived safety issues may result in significant reputational harm to our business, in addition to tort liability, maintenance, increased safety infrastructure and other costs that may arise. Such issues could result in delaying or canceling planned flights, increased regulation or other systemic consequences.
Our inability to operate in these conditions in the future will reduce our aircraft utilization and cause delays and disruptions in our services. We intend to maintain a high daily aircraft utilization rate which is the amount of time our aircraft spend in the air carrying passengers.
Our inability to operate in these conditions in the future may reduce our aircraft utilization and cause delays and disruptions in our services. We intend to maintain a high daily aircraft utilization rate which is the amount of time our aircraft spend in the air carrying passengers.
Such requirements also impact pilot scheduling, work hours and the number of pilots required to be employed for our operations, all of which could have a material adverse effect our business, results of operation and financial condition.
Such requirements also impact pilot scheduling, work hours and the 29 number of pilots required to be employed for our operations, all of which could have a material adverse effect on our business, results of operation and financial condition.
A cyber-attack of these systems could disrupt our ability to deliver services to our customers and could lead to increased overhead costs, decreased sales and harm to our reputation. We will rely on information technology networks and systems to operate and manage our business.
We will rely on our information technology systems to manage numerous aspects of our business. A cyber-attack of these systems could disrupt our ability to deliver services to our customers and could lead to increased overhead costs, decreased sales and harm to our reputation. We will rely on information technology networks and systems to operate and manage our business.
We will remain a smaller reporting company until the last day of the fiscal year in which (a) (1) the market value of our ordinary shares held by non-affiliates equals or exceeds $250 million as of the end of that year’s second fiscal quarter, and (2) our annual revenues equal or exceeded $100 million during such completed fiscal year or (b) the market value of our ordinary shares held by non-affiliates equals or exceeds 45 $700 million as of the end of that year’s second fiscal quarter.
We will remain a smaller reporting company until the last day of the fiscal year in which (a) (1) the market value of our ordinary shares held by non-affiliates equals or exceeds $250 million as of the end of that year’s second fiscal quarter, and (2) our annual revenues equal or exceed $100 million during such completed fiscal year or (b) the market value of our ordinary shares held by non-affiliates equals or exceeds $700 million as of the end of that year’s second fiscal quarter.
Unfavorable economic conditions can lead consumers to forgo our services and consumer demand for our services may not grow as we expect. We believe perceived recessionary risks will continue to impact our results of operation in 2025.
Unfavorable economic conditions can lead consumers to forgo our services and consumer demand for our services may not grow as we expect. We believe perceived recessionary risks will continue to impact our results of operation in 2026.
Even if we are first to market with fully-electric or hybrid-electric aircraft, we may not fully realize the benefits we anticipate, and we may not receive any competitive advantage or may be overcome by other competitors.
Even if we or our collaborators are first to market with fully-electric or hybrid-electric aircraft, we may not fully realize the benefits we anticipate, and we may not receive any competitive advantage or may be overcome by other competitors.
We are also continuing to improve our internal control over financial reporting. See the sections entitled “ - Risks Related to Our Operating as a Public Company - Our management has identified material weaknesses in our internal control over financial reporting.
We are also continuing to improve our internal control over financial reporting. See the section entitled “- Risks Related to Our Operating as a Public Company - Our management has identified material weaknesses in our internal control over financial reporting.
We have funded our operations and capital needs primarily through the net proceeds received from the issuance of various debt instruments, convertible securities and preferred and common share financing arrangements. A significant amount of funding to date has been provided by entities affiliated with a co-founder of the Company.
We have funded our operations and capital needs primarily through the net proceeds received from the issuance of various debt instruments, convertible securities and preferred and common share financing arrangements. A significant amount of funding to date has been provided by a small number of entities, including entities affiliated with a co-founder of the Company.
The regional air mobility industry is still developing and evolving, but we expect it to be highly competitive. We have a number of competitors in the regional air mobility market. For example, we compete against existing on-demand mobility air travel services, as well as ground transportation alternatives.
We expect to face intense competition in the regional air mobility industry. The regional air mobility industry is still developing and evolving, but we expect it to be highly competitive. We have a number of competitors in the regional air mobility market. For example, we compete against existing on-demand mobility air travel services, as well as ground transportation alternatives.
Additionally, our competitors may benefit from our efforts in developing consumer and community acceptance for hybrid-electric aircraft and air mobility, making it easier for them to obtain the permits and authorizations required to operate an air mobility service in the markets in which we intend to launch or in other markets.
Additionally, our competitors may benefit from our efforts in developing consumer and community acceptance for electrified aircraft and air mobility, making it easier for them to obtain the permits and authorizations required to operate an air mobility service in the markets in which we intend to launch or in other markets.
We will need to raise capital in the future to fund our operations and to execute on our anticipated growth strategy, including the development of our planned electrification technology. For example, the cost of aircraft is a significant portion of our operating costs and is subject to change.
We will need to raise capital in the future to fund our operations and to execute on our anticipated growth strategy, including development and commercialization of SurfOS and the development of aircraft electrification technology. For example, the cost of aircraft is a significant portion of our operating costs and is subject to change.
Investors’ expectations of our performance relating to ESG factors may impose additional costs and expose us to new risks. There is an increasing focus from investors, employees, customers and other stakeholders concerning corporate responsibility, specifically related to ESG matters.
Investors’ expectations of our performance relating to ESG factors may impose additional costs and expose us to new risks. There is an increasing focus, both positive and negative, from investors, employees, customers and other stakeholders concerning corporate responsibility, specifically related to ESG matters.
If we fail to balance the interests of third-party aircraft operators and customers or make changes that they view negatively, third-party aircraft operators and customers may stop using our platform or take fewer flights, any of which could have a material adverse effect on our reputation, brands, business, financial condition and results of operations.
If we fail to balance the interests of third-party aircraft operators and customers or make changes that they view negatively, third-party aircraft operators and customers may stop using our platform or take fewer flights, or not adopt our software solutions, any of which could have a material adverse effect on our reputation, brands, business, financial condition and results of operations.
Our success will depend, in significant part, on the continued services of our senior management team and on our ability to attract, motivate, develop and retain a sufficient number of other highly skilled personnel, including finance, marketing, sales and technology and support personnel.
Our success depends, in significant part, on the continued services of our senior management team and on our ability to attract, motivate, develop and retain a sufficient number of other highly skilled personnel, including finance, marketing, sales and technology and support personnel.
If we fail to adequately address any or all of these risks and challenges, our business, financial condition and results of operations may be materially and adversely affected. Our competitors may commercialize their technology before us, either in general or in specific markets, or we may otherwise not be able to fully capture the first mover advantage that we anticipate.
If we fail to adequately address any or all of these risks and challenges, our business, financial condition and results of operations may be materially and adversely affected. Our competitors may commercialize their technology before us, either in general or in specific markets, or we may otherwise not be able to fully capture a first mover advantage.
In the event that we do not regain compliance with the NYSE continued listing standards, we and our stockholders could face significant material adverse consequences, including: • being delisted from the NYSE; • a limited availability of market quotations for our common stock; • an adverse effect on the market price of our common stock; • loss of confidence from stakeholders, employees and potential business partners; • reduced liquidity with respect to our common stock; • a determination that our shares are a “penny stock,” which will require brokers trading in our shares to adhere to more stringent rules, and which may limit demand for our common stock among certain investors; • a limited amount, or complete absence, of news and analyst coverage for our company; and • a decreased ability, or inability, to issue additional securities or obtain additional financing in the future.
In the event that we do not maintain compliance with the NYSE continued listing standards, we and our stockholders could face significant material adverse consequences, including: • being delisted from the NYSE; • being in violation of restrictive covenants in the Company’s debt agreements; • a limited availability of market quotations for our common stock; • an adverse effect on the market price of our common stock; • loss of confidence from stakeholders, employees and potential business partners; • reduced liquidity with respect to our common stock; • a determination that our shares are a “penny stock,” which will require brokers trading in our shares to adhere to more stringent rules, and which may limit demand for our common stock among certain investors; • a limited amount, or complete absence, of news and analyst coverage for our company; and • a decreased ability, or inability, to issue additional securities or obtain additional financing in the future.
In addition, our transition of our workforce to a hybrid work environment, where our employees are often working remotely, could also increase our vulnerability to risks related to our hardware and software systems, including risks of phishing and other cybersecurity attacks. Our systems may be subject to additional risk introduced by software that we license from third parties.
In addition, we have a hybrid work environment, where our employees are often working remotely, which could also increase our vulnerability to risks related to our hardware and software systems, including risks of phishing and other cybersecurity attacks. Our systems may be subject to additional risk introduced by software that we license from third parties.
For example, on March 7, 2023, the TSA issued a new cybersecurity amendment on an emergency basis to the security programs of aircraft operators, consistent with the efforts of the U.S. Department of Homeland Security to increase cybersecurity resilience of U.S. critical infrastructure.
For example, in March 2023, the TSA issued a cybersecurity amendment on an emergency basis to the security programs of aircraft operators, consistent with the efforts of the U.S. Department of Homeland Security to increase cybersecurity resilience of U.S. critical infrastructure.
In particular, as a result of the current international trade environment (including uncertainties in global trade policies, 20 potential escalation of tensions under the new U.S. administration, and the unpredictable impact of tariffs and trade restrictions), the conflict between Russia and Ukraine and any potential increase in hostilities in the Middle East and rising prices and interest rates, many market observers anticipate that the global economy could face a recession in the foreseeable future.
In particular, as a result of the current international trade environment (including uncertainties in global trade policies, potential escalation of tensions under the current U.S. administration, and the unpredictable impact of tariffs and trade restrictions), the conflict between Russia and Ukraine and hostilities in the Middle East and South America and rising prices and interest rates, many market observers anticipate that the global economy could face a recession in 20 the foreseeable future.
The trading price of our common stock, may fluctuate due to a variety of factors, including: • changes in the industries in which we and our customers operate; • developments involving our competitors; • changes in laws and regulations affecting our business; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual results of operations; • publication of research reports by securities analysts about us or our competitors or our industry; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • actions by stockholders, including the sale by the third-party investors of any of their shares of common stock; • additions and departures of key personnel; • commencement of, or involvement in, litigation involving the combined company; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of common stock available for public sale; and • general economic and political conditions, such as the effects of public health threats, recessions, interest rates, local and national elections, fuel prices, international currency fluctuations, corruption, political instability and acts of war or terrorism.
The trading price of our common stock, may fluctuate due to a variety of factors, including: • changes in the industries in which we and our customers operate; • developments involving our competitors; • changes in laws and regulations affecting our business; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual results of operations; • publication of research reports by securities analysts about us or our competitors or our industry; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • actions by stockholders, including the sale by the third-party investors of any of their shares of common stock; • additions and departures of key personnel; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of shares of common stock available for public sale; and • general economic and political conditions, such as the effects of public health threats, recessions, interest rates, inflation, government shutdowns, local and national elections, fuel prices, international currency fluctuations, corruption, political instability and acts of war or terrorism. 48 These market and industry factors may materially reduce the market price of our common stock regardless of our operating performance.
We are able to regain compliance at any time within the six-month period following receipt of the notice if, on the last trading day of any calendar month during this cure period (or the last trading day of this cure period), we have a closing share price of at least $1.00 and an average closing share price of at least $1.00 over the prior 30 trading-day period.
We were able to regain compliance at any time within the six-month period following receipt of the notice if, on the last trading day of any calendar month during this cure period (or the last trading day of this cure period), we had a closing share price of at least $1.00 and an average closing share price of at least $1.00 over the prior 30 trading-day period.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have implemented and planned several cybersecurity processes, technologies, and controls to aid in our efforts to assess, identify, and manage such material risks. 51 As part of our overall approach to managing risks, we have implemented the following: • Cybersecurity incident response plan and procedures • Change management and software development life cycle (“SDLC”) workflow across the Engineering release team • Role-based access controls across enterprise systems • Work with partners that have SOC1/SOC2 compliance standards around the management and processing of payment card industry (“PCI”) and personally identifiable information (“PII”) data • Use of multi-factor authentication for accessing digital content across important roles in the enterprise • Implementation of security frameworks to guard against business email compromise and device security to protect against malware, ransomware, and other risks across employees’ devices • Device management tools to centrally manage and update company-owned hardware assets • Implementation of vulnerability scanning frameworks across digital and hardware assets across the enterprise Also on our planned roadmap are the below-listed activities: • Undertake regular reviews of our consumer-facing policies and statements related to cybersecurity • Implement cybersecurity management and incident training for employees • Conduct regular phishing email simulations for all employees and contractors with access to corporate email systems to enhance awareness and responsiveness to such possible threats • Iterate our internal processes and response plans to calibrate with emerging threats/trends As part of our overall approach to enhance our cybersecurity posture, we plan to regularly engage with assessors, consultants, and other third parties to assess and review our program to help identify areas for continued focus, improvement, and/or compliance.
Biggest changeCybersecurity Risk Management and Strategy As part of our overall risk management framework, we have implemented the following cybersecurity measures: • Cybersecurity incident response plan and procedures • Change management and software development life cycle (“SDLC”) workflow across the Engineering release team • Role-based access controls across enterprise systems • Work with partners that have SOC1/SOC2 compliance standards around the management and processing of payment card industry (“PCI”) and personally identifiable information (“PII”) data • Use of multi-factor authentication for accessing digital content across important roles in the enterprise • Security controls designed to mitigate risks related to business email compromise, malware, ransomware, and other cybersecurity threats across employee devices • Centralized device management tools to centrally manage and update company-owned hardware assets • Vulnerability scanning frameworks across digital and hardware assets across the enterprise In addition, our cybersecurity roadmap includes the following planned initiatives: • Periodic reviews of our consumer-facing policies and statements related to cybersecurity • Cybersecurity management and incident training for employees • Regular phishing email simulations for all employees and contractors with access to corporate email systems to enhance awareness and responsiveness • Ongoing evaluation and refinement of internal processes and response plans to address evolving cybersecurity threats and trends To further enhance our cybersecurity posture, we engage , and plan to continue engaging, external assessors, consultants, and other third parties to review elements of our cybersecurity program and identify areas for improvement or enhanced compliance.
A cyber-attack of these systems could disrupt our ability to deliver services to our customers and could lead to increased overhead costs, decreased sales and harm to our reputation” and “System failures, defects, errors or vulnerabilities in our website, applications, backend systems or other technology systems or those of third-party technology providers could harm our reputation and brand and adversely affect our business, financial condition and results of operations,” which should be read in conjunction with the foregoing information.
A cyber-attack of these systems could disrupt our ability to deliver services to our customers and could lead to increased overhead costs, decreased sales and harm to our reputation” and “System failures, defects, errors or vulnerabilities in our website, applications, backend systems or other technology systems or those of third-party technology providers could harm our reputation and brand and adversely affect our business, financial condition and results of operations,” which should be read in conjunction with the foregoing information. 53 Governance and Oversight Cybersecurity is an integral part of the Company’s enterprise risk management processes and an area of increasing focus for our Board of Directors.
As of December 31, 2024, we have not experienced any material cybersecurity incidents and risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have no t materially affected the Company, including its business strategy, results of operations or financial condition.
As of December 31, 2025 , we have not experienced any material cybersecurity incidents. Risks from cybersecurity threats, including any prior incidents, have no t materially affected the Company’s business strategy, results of operations or financial condition.
ITEM 1C: CYBERSECURITY We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K.
ITEM 1C: CYBERSECURITY 52 We recognize the importance of assessing, identifying, and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K. We have implemented and planned several cybersecurity processes, technologies, and controls to aid in our efforts to assess, identify, and manage such material risks.
Cybersecurity is an integral part of our risk management processes and an area of increasing focus for our Board and management. Our Board oversees the Company’s enterprise risk management process, including the management of risks arising from cybersecurity threats. Our Technology Steering Committee comprising executive leadership, business leaders, and IT is responsible for the oversight of risks from cybersecurity threats.
The Board oversees the Company’s enterprise risk management process, including the management of risks arising from cybersecurity threats. Management oversight of cybersecurity risk is supported by the Information Technology Steering Committee, which includes executive leadership, business leaders, and information technology leadership. The Information Technology Steering Committee meets regularly to review cybersecurity risks, mitigation strategies, and related initiatives.
Additionally, we are working towards a comprehensive cybersecurity-specific risk assessment process, which helps identify our cybersecurity threat risks by mapping our processes to standards set by the National Institute of Standards and Technology (“NIST”) and plan to align our digital assets to Center for Internet Security (“CIS”) standards, as well as planned engagement with external entities to penetration test our information systems.
We are also working toward a more comprehensive cybersecurity risk assessment process aligned to standards published by the National Institute of Standards and Technology (NIST) and plan to align certain controls with the Center for Internet Security (CIS) benchmarks. In addition, we anticipate engaging third-party providers to perform penetration testing of our information systems.
Members of the Board and the Technology Steering Committee are also encouraged to regularly engage in ad hoc conversations with management on cybersecurity-related news events and discuss any updates to our cybersecurity risk management and strategy programs.
Management provides updates regarding any such incident until it has been addressed . Members of the Board and the Information Technology Steering Committee also engage in periodic discussions with management regarding cybersecurity-related developments and risk management activities. The Company’s cybersecurity risk management and strategy processes are led by the Director of IT, in coordination with executive leadership.
Pursuant to our cybersecurity incident response framework, we have protocols by which certain cybersecurity incidents that meet established reporting thresholds are escalated within the Company and, where appropriate, reported promptly to the Board, as well as ongoing updates regarding any such incident until it has been addressed.
Management provides the Board with periodic updates regarding cybersecurity risk management and strategy, including the Company’s security posture, progress toward risk-mitigation initiatives, and emerging threat developments. Pursuant to the Company’s cybersecurity incident response framework, certain cybersecurity incidents that meet established escalation thresholds are reported internally and, where appropriate, escalated to the Board.
Removed
The expenses incurred from cybersecurity incidents, in which our SaaS infrastructure providers were targeted in larger attacks, were immaterial. This includes penalties and settlements, of which there were none.
Added
Certain third-party SaaS infrastructure providers used by the Company have experienced cybersecurity events as part of broader industry-wide incidents; however, the impact to the Company was immaterial, and no penalties or settlements were incurred.
Removed
The Technology Steering Committee meets regularly to discuss the risk management measures implemented by the Company to identify and mitigate data protection and cybersecurity risks.
Added
Collectively, management has over 25 years of experience across roles involving information security management, cybersecurity strategy development, and the implementation of information security programs. In addition, the Company’s Chief Executive Officer, who holds CISSP certification, provides executive oversight and strategic guidance related to cybersecurity risk management and mitigation. 54
Removed
We have instituted a quarterly update to our Board members with an overview of the management of our cybersecurity threat risk and strategy processes covering topics such as security posture, progress towards risk-mitigation-related goals, 52 and emerging threat risks or incidents and developments, as well as the steps management has taken to respond to such risks, if any .
Removed
Our cybersecurity risk management and strategy processes are managed in collaboration between Technology and IT teams in close association with business team leads and the executive team. The global IT team is led by our VP of IT at the Company in collaboration with the VP of Technology at Southern.
Removed
Such individuals collectively have 25 years of prior work experience in various roles involving managing information security, developing cybersecurity strategies, and implementing effective information and cybersecurity programs. We also work very closely with a Senior Advisor to the Board who has a CISSP certification for collaborating on strategies regarding cybersecurity risk management and mitigation.
Removed
We have a regular cadence between IT and Tech teams to collaborate on cybersecurity topics. In addition, we encourage communication and participation across the enterprise on cybersecurity-related topics and observations/recommendations. The cybersecurity incident response framework is updated as needed for alignment with current processes and communications. 53

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeCrenshaw Blvd, Hawthorne, CA 90250. The lease of this facility expires in August 2026. Southern’s headquarters is located in a leased workspace in Palm Beach, Florida. The lease of this facility expires in April 2025. In February 2025, the Company relocated its air operations center to Addison, Texas. The lease of this facility expires in January 2028.
Biggest changeCrenshaw Blvd, Hawthorne, CA 90250. The lease of this facility expires in August 2026. In February 2025, the Company relocated its air operations center to Addison, Texas. The lease of this facility expires in January 2028.
ITEM 2: PROPERTIES As of December 31, 2024, we leased aircraft, airport passenger terminal space, portions of and full aircraft hangars and other airport facilities in 45 U.S. airports. We lease our main office and all of the properties on which we operate air mobility services. Our main office is located in a 5,500 square foot facility at 12111 S.
ITEM 2: PROPERTIES As of December 31, 2025, we leased aircraft, airport passenger terminal space, portions of and full aircraft hangars and other airport facilities in 45 U.S. airports. We lease our main office and all of the properties on which we operate air mobility services. Our main office is located in a 5,500 square foot facility at 12111 S.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOther than as set out in Item 8 of Part II, “Financial Statements and Supplementary Data - Note 15 - Commitments and Contingencies - Legal Contingencies,” we are not currently a party to any legal proceedings, the outcome of which, if determined adversely, we believe would individually or in the aggregate have a material adverse effect on our business, financial condition or results of operations.
Biggest changeOther than as set out in Item 8 of Part II, “Financial Statements and Supplementary Data - Note 13 - Commitments and Contingencies - Legal Contingencies ,” we are not currently a party to any legal proceedings, the outcome of which, if determined adversely, we believe would individually or in the aggregate have a material adverse effect on our business, financial condition or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 54 PART II
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 55 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange under the symbol “SRFM.” Holders of Record As of March 14, 2025, there were approximately 228 stockholders of record of our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange under the symbol “SRFM.” Holders of Record As of March 6, 2026, there were approximately 207 stockholders of record of our common stock.
Stock Performance Graph The following performance graph shows a comparison from July 27, 2023 (the date our common stock commenced trading on the New York Stock Exchange) through December 31, 2024, of the cumulative total return for our common stock, the NYSE Composite Index and the S&P 500 Airlines Industry Index. ITEM 6. [RESERVED] 55
Stock Performance Graph The following performance graph shows a comparison from July 27, 2023 (the date our common stock commenced trading on the New York Stock Exchange) through December 31, 2025, of the cumulative total return for our common stock, the NYSE Composite Index and the S&P 500 Airlines Industry Index. ITEM 6. [RESERVED] 56

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations Results of the Company’s Operations for the Years Ended December 31, 2024 and 2023 The following table sets forth our consolidated statements of operations data for the years ended December 31, 2024 and 2023 ( in thousands, except percentages ): Year Ended December 31, Change 2024 2023 $ % Revenue $ 119,425 $ 60,505 $ 58,920 97 % Operating expenses: Cost of revenue, exclusive of depreciation and amortization 109,934 61,918 48,016 78 % Technology and development 24,041 20,850 3,191 15 % Sales and marketing 7,514 10,028 (2,514 ) (25 )% General and administrative 29,851 100,669 (70,818 ) (70 )% Depreciation and amortization 8,341 3,762 4,579 122 % Impairment of goodwill — 60,045 (60,045 ) (100 )% Total operating expenses 179,681 257,272 (77,591 ) (30 )% Operating loss (60,256 ) (196,767 ) 136,511 (69 )% Other income (expense): Changes in fair value of financial instruments carried at fair value, net (11,732 ) (50,230 ) 38,498 (77 )% Interest expense (8,617 ) (2,969 ) (5,648 ) (190 )% Gain (loss) on extinguishment of debt 5,398 (326 ) 5,724 (1,756 )% Other income (expense) 12 (3,708 ) 3,720 (100 )% Total other income (expense), net (14,939 ) (57,233 ) 42,294 (74 )% Loss before income taxes (75,195 ) (254,000 ) 178,805 (70 )% Income tax benefit 287 3,304 (3,017 ) (91 )% Net loss $ (74,908 ) $ (250,696 ) $ 175,788 (70 )% 58 Revenue Revenue increased by $58.9 million, 97%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Biggest changeResults of Operations Results of the Company’s Operations for the Years Ended December 31, 2025 and 2024 The following table sets forth our consolidated statements of operations data for the years ended December 31, 2025 and 2024 ( in thousands, except percentages ): Year Ended December 31, Change 2025 2024 $ % Revenue $ 106,557 $ 119,425 $ (12,868 ) (11 )% Operating expenses: Cost of revenue, exclusive of depreciation and amortization 102,376 109,934 (7,558 ) (7 )% Technology and development 10,299 24,041 (13,742 ) (57 )% Sales and marketing 8,177 7,514 663 9 % General and administrative 53,285 29,851 23,434 79 % Depreciation and amortization 9,294 8,341 953 11 % Total operating expenses 183,431 179,681 3,750 2 % Operating loss (76,874 ) (60,256 ) (16,618 ) 28 % Other income (expense): Changes in fair value of financial instruments carried at fair value, net (8,574 ) (11,732 ) 3,158 (27 )% Interest expense (13,205 ) (8,617 ) (4,588 ) 53 % Gain (loss) on extinguishment of debt (3,904 ) 5,398 (9,302 ) (172 )% Other income (expense) (8,379 ) 12 (8,391 ) n/m Total other expense, net (34,062 ) (14,939 ) (19,123 ) 128 % Loss before income taxes (110,936 ) (75,195 ) (35,741 ) 48 % Income tax benefit 380 287 93 32 % Net loss $ (110,556 ) $ (74,908 ) $ (35,648 ) 48 % n/m - not meaningful 59 Revenue Revenue decreased by $12.9 million, or 11%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
As discussed in Note 15, Commitments and Contingencies , on May 15, 2018, the Company received a notice of a tax lien filing from the Internal Revenue Service (“IRS”) for unpaid federal excise taxes for the quarterly periods from October 2016 through September 2017 in the amount of $1.9 million, including penalties and interest as of the date of the notice.
As discussed in Note 13, Commitments and Contingencies , on May 15, 2018, the Company received a notice of a tax lien filing from the Internal Revenue Service (“IRS”) for unpaid federal excise taxes for the quarterly periods from October 2016 through September 2017 in the amount of $1.9 million, including penalties and interest as of the date of the notice.
The Company continues to actively 57 monitor its financial condition, liquidity, operations, suppliers, industry and workforce. As the Company does not currently, and does not intend in the foreseeable future to, enter into any transactions to hedge fuel costs, or otherwise fix labor costs, the Company will continue to be fully exposed to fluctuations in prices of material operating costs.
The Company continues to actively monitor its financial condition, liquidity, operations, suppliers, industry and workforce. As the Company does not currently, and does not intend in the foreseeable future to, enter into any transactions to hedge fuel costs, or otherwise fix labor costs, the Company will continue to be fully exposed to fluctuations in prices of material operating costs.
For historical financial information of Southern prior to the Acquisition Date, refer to the sections entitled “Unaudited Condensed Consolidated Financial Statements for Southern Airways Corporation” and “Audited Financial Statements for Southern Airways Corporation as of December 31, 2022 and 2021 and for the Years Ended December 31, 2022 and 2021” in the Form 8-K/A filed August 29, 2023. 2024 Operating Environment Since 2020, the Company has been incurring expenses to support the development of the technology of its digital platform with the aim of enabling the regional air mobility market to operate at scale and to enhance the user’s ability to make informed decisions based on multiple first and third party data sources as well as connected aircraft, and the Company expects these development expenses to continue to be incurred.
For historical financial information of Southern prior to the Acquisition Date, refer to the sections entitled “Unaudited Condensed Consolidated Financial Statements for Southern Airways Corporation” and “Audited Financial Statements for Southern Airways Corporation as of December 31, 2022 and 2021 and for the Years Ended December 31, 2022 and 2021” in the Form 8-K/A filed August 29, 2023. 2025 Operating Environment Since 2020, the Company has been incurring expenses to support the development of the technology of its digital platform with the aim of enabling the regional air mobility market to operate at scale and to enhance the user’s ability to make informed decisions based on multiple first and third party data sources as well as connected aircraft, and the Company expects these development expenses to continue to be incurred.
Southern Acquisition On July 27, 2023 (the “Acquisition Date”), immediately prior to the Company’s listing on the NYSE and after the consummation of the Internal Reorganization, the Company effected the acquisition of all equity interests of Southern Airways Corporation (“Southern”), whereby a wholly-owned subsidiary of the Company merged with and into Southern, after which Southern became a wholly-owned subsidiary of the Company (the “Southern Acquisition”).
Southern Acquisition On July 27, 2023 (the “Acquisition Date”), immediately prior to the Company’s listing on the NYSE and after the consummation of the Internal Reorganization, the Company effected the acquisition of all equity interests of Southern Airways Corporation (“Southern”), whereby a wholly-owned subsidiary of the Company merged with and into Southern, after which Southern became a 57 wholly-owned subsidiary of the Company (the “Southern Acquisition”).
Key Operating Measures In addition to the data presented in our consolidated financial statements, we use the following key operating measures commonly used throughout the air transport industry to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions. The following table summarizes key operating measures for each period presented below, which are unaudited.
Key Operating Measures 58 In addition to the data presented in our consolidated financial statements, we use the following key operating measures commonly used throughout the air transport industry to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions. The following table summarizes key operating measures for each period presented below, which are unaudited.
A Monte Carlo simulation model requires the use of various assumptions, including the 65 underlying stock price, volatility, expiration term, and the risk-free interest rate as of the valuation date, corresponding to the length of time remaining in the performance period, and expected dividend yield.
A Monte Carlo simulation model requires the use of various assumptions, including the underlying stock price, volatility, expiration term, and the risk-free interest rate as of the valuation date, corresponding to the length of time remaining in the performance period, and expected dividend yield.
These strategies may include, but are not limited to, obtaining additional equity financing, issuing additional debt or entering into other financing arrangements, forming joint venture and other partnerships, and restructuring of operations to grow revenues and decrease expenses.
These strategies may include, but are not limited to, obtaining additional equity financing, issuing additional debt or entering into other financing arrangements, forming joint venture and other partnerships, and restructuring operations to grow revenues and decrease expenses.
In addition, the Company incurred greater than expected losses and negative cash flows from operating activities during 2024 due to inefficient aircraft utilization, primarily caused by an underutilization of pilots and a shortage of maintenance personnel and critical aircraft components, which, in aggregate, have challenged the Company’s ability to serve its customers as desired and, in turn, cover expenses, specifically related to its scheduled service offerings.
In addition, the Company incurred greater than expected losses and negative cash flows from operating activities during 2025 due to inefficient aircraft utilization, primarily caused by an underutilization of pilots and a shortage of maintenance personnel and critical aircraft components, which, in aggregate, have challenged the Company’s ability to serve its customers as desired and, in turn, cover expenses, specifically related to its scheduled service offerings.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Deferred tax assets and liabilities are measured using enacted tax rates expected to 66 apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Following the Southern Acquisition, the Company operates a combined regional airline network servicing U.S. cities across the Mid-Atlantic, Gulf South, Midwest, Rocky Mountains, West Coast, New England and Hawaii. The results of operations of Southern are included in the Company’s consolidated financial statements from the date of acquisition, July 27, 2023, through December 31, 2024.
Following the Southern Acquisition, the Company operates a combined regional airline network servicing U.S. cities across the Mid-Atlantic, Gulf South, Midwest, Rocky Mountains, West Coast, New England and Hawaii. The results of operations of Southern are included in the Company’s consolidated financial statements from the date of acquisition, July 27, 2023, through December 31, 2025.
In addition to incremental costs incurred in the execution of the Company’s near and long-term business strategy, the Company has experienced inflationary pressures, which have materially increased the Company’s costs for aircraft fuel, wages and benefits and other goods and services critical to its operations during 2023 and 2024 and believes perceived recessionary risks have impacted the 2024 results.
In addition to incremental costs incurred in the execution of the Company’s near and long-term business strategy, the Company has experienced inflationary pressures, which have materially increased the Company’s costs for aircraft fuel, wages and benefits and other goods and services critical to its operations during 2024 and 2025 and believes perceived recessionary risks have impacted the 2025 results.
These factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments 62 to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
The Company’s utilization of these transition periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act. 68
The Company’s utilization of these transition periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act. 67
If the Company is unable to raise sufficient financing when needed or events or circumstances occur such that the Company does not meet its strategic plans or, the Company will be required to take additional measures to conserve liquidity, which could include, but not necessarily limited to, reducing certain spending, altering or scaling back development plans, including plans to equip regional airline operations with fully-electric or hybrid-electric aircraft, or reducing funding of capital expenditures, which could have a material adverse effect on the Company’s financial position, results of operations, cash flows, and ability to achieve its intended business objectives.
If the Company is unable to raise sufficient financing when needed or events or circumstances occur such that the Company does not meet its strategic plans, the Company will be required to take additional measures to conserve liquidity, which could include, but are not necessarily limited to, reducing certain spending, altering or scaling back development plans, including plans to further develop our software technology platforms and to further develop our software technology platforms and to equip our regional airline operations with fully-electric or hybrid-electric aircraft, or reducing funding of capital expenditures, which could have a material adverse effect on the Company’s financial position, results of operations, cash flows, and ability to achieve its intended business objectives.
The Company was incorporated in 2021 and became the ultimate parent of both Surf Air Global Limited (“Surf Air”) and Southern Airways Corporation (“Southern”) in July of 2023 following the Company’s public listing on the New York Stock Exchange (“NYSE”). For 2024, the Company’s combined network served over 370,000 passengers with approximately 72,000 scheduled departures.
The Company was incorporated in 2021 and became the ultimate parent of both Surf Air Global Limited (“Surf Air”) and Southern Airways Corporation (“Southern”) in July of 2023 following the Company’s public listing on the New York Stock Exchange (“NYSE”). For 2025, the Company’s combined network served over 300,000 passengers with approximately 62,000 scheduled departures.
The Company has also defaulted on its property tax obligations in various California counties in relation to fixed assets, plane usage and aircraft leases. The Company’s total outstanding property tax liability including penalties and interest is approximately $1.6 million as of December 31, 2024.
The Company has also defaulted on its property tax obligations in various California counties in relation to fixed assets, plane usage and aircraft leases. The Company’s total outstanding property tax liability including penalties and interest is approximately $0.9 million as of December 31, 2025.
Additionally, the Company has the ability to draw an additional $298.6 million under the Share Purchase Agreement, subject to daily volume limitations and GEM’s requirement to hold less than 10% of the fully-diluted shares of the Company. As of December 31, 2024, GEM held 0% of the then fully-diluted shares of the Company.
Additionally, the Company has the ability to draw an additional $251.4 million under the Share Purchase Agreement, subject to daily volume limitations and GEM’s requirement to hold less than 10% of the fully-diluted shares of the Company. As of December 31, 2025, GEM held 0% of the then fully-diluted shares of the Company.
Options, and other like awards, to purchase the Company’s common stock were also adjusted in accordance with their terms to reflect the reverse stock split. Adjustments resulting from the reverse stock split have been retroactively reflected as of all periods presented herein.
Fractional shares resulting from the reverse stock split were settled by cash payment. Options, and other like awards, to purchase the Company’s common stock were also adjusted in accordance with their terms to reflect the reverse stock split. Adjustments resulting from the reverse stock split have been retroactively reflected as of all periods presented herein.
The airline industry and the Company’s operations are cyclical and highly competitive. The Company’s success is largely dependent on the ability to raise debt and equity capital, achieve a high level of aircraft and crew utilization, increase flight services and the number of passengers flown, and continue to expand into regions profitably throughout the United States.
The Company’s success is largely dependent on the ability to raise debt and equity capital, achieve a high level of aircraft and crew utilization, increase flight services and the number of passengers flown, and continue to expand into regions profitably throughout the United States.
At December 31, 2024, the daily volume limitations under the Share Purchase Agreement significantly restricted our ability to take additional draws under the Share Purchase Agreement to approximately 293 thousand shares per draw. Additionally, the Company’s ability to draw upon the Share Purchase Agreement is contingent on the Company’s common stock being listed on a national exchange.
At December 31, 2025, the daily volume limitations under the Share Purchase Agreement significantly restricted our ability to take additional draws under the Share Purchase Agreement to approximately 13.9 million shares per draw. Additionally, the Company’s ability to draw upon the Share Purchase Agreement is contingent on the Company’s common stock being listed on a national exchange.
These arrangements include commitments for payments pursuant to licensing agreements, which routinely contain provisions for guarantees or minimum expenditures during the terms of the contracts. The Company also enters into long-term debt arrangements that include periodic interest and principal payments. Additionally, the Company routinely enters into noncancelable lease agreements for aircraft and operating locations, which contain minimum rental payments.
These arrangements include commitments for payments pursuant to licensing agreements, which routinely contain provisions for guarantees or minimum expenditures during the terms of the contracts. The Company also enters into long-term debt arrangements that include periodic interest and principal payments.
Such fair values are classified within Level 3 of the fair value hierarchy, as the valuations contain significant unobservable inputs, including assumptions of the present value of future cash flows, the use of these assets, as well as estimated disposition value. The Company’s convertible securities and Simple Agreements for Future Equity (“SAFE”) notes are carried at fair value .
Such fair values are classified within Level 3 of the fair value hierarchy, as the valuations contain significant unobservable inputs, including assumptions of the present value of future cash flows, the use of these assets, as well as estimated disposition value. The Company’s convertible notes are carried at fair value .
The Company’s capital expenditures in 2024 and in 2023 were limited to payments made for aircraft purchases under the TAI Aircraft Supply Agreement, aircraft supply deposits, aircraft parts, engines, immaterial purchases and internally developed software. The Company intends to invest significantly in expansion of its network footprint and in development of electrified powertrain technology and its commercial platform.
The Company’s capital expenditures in 2025 and in 2024 were limited to payments made for aircraft parts, engines, and internally developed software. The Company intends to invest significantly in expansion of its network footprint and in development of electrified powertrain technology and its commercial platform.
We will recognize total stock-based compensation expense of $0.1 million over the derived service period. If the stock price goals are met sooner than the derived service period, we will adjust our stock-based compensation expense to reflect the cumulative expense associated with the vested award.
If the stock price goals are met sooner than the derived service period, we will adjust our stock-based compensation expense to reflect the cumulative expense associated with the vested award.
The Company is currently in default of these obligations, with a total outstanding federal excise tax liability, including accrued penalties and interest, of $7.7 million included in accrued expenses and other current liabilities on the Consolidated Balance Sheet as of December 31, 2024.
The Company is currently in default of these obligations, with a total outstanding federal excise tax liability, including accrued penalties and interest, of $9.9 million included in accrued expenses and other current liabilities on the Consolidated Balance Sheet as of December 31, 2025. The Company is currently considering available options regarding settlement of its federal excise tax liability.
Operating Expenses Cost of Revenue, exclusive of depreciation and amortization Cost of revenue increased by $48 million, or 78%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Operating Expenses Cost of Revenue, exclusive of depreciation and amortization Cost of revenue decreased by $7.6 million, or 7%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Cash Flow from Investing Activities For the year ended December 31, 2024, net cash used in investing activities was $3.6 million, a decrease of $3.5 million compared to the year ended December 31, 2023, driven by an increase of $10.5 million in cash from sales of fixed assets and partially offset by an increase in fixed asset purchases of $4.2 million and $2.2 million in internal use software development costs.
Cash Flow from Investing Activities For the year ended December 31, 2025, net cash used in investing activities was $5.7 million, an increase of $2.1 million compared to the year ended December 31, 2024, driven by a decrease of $7.8 million in cash from sales of fixed assets and partially offset by an increase in fixed asset purchases of $5.8 million.
For example, perceived recessionary risks may cause companies and individuals to reduce travel for either professional or personal reasons, and drive higher prices in the supply chain the Company relies upon.
For example, perceived recessionary risks, as a result of tariff or trade uncertainty or otherwise, as well as shifting travel patterns, may cause companies and individuals to reduce travel for either professional or personal reasons, and drive higher prices in the supply chain the Company relies upon.
Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards.
Income taxes are accounted for under the asset and liability method in accordance with U.S. GAAP. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carryforwards.
Cash Flow Analysis The following table presents a summary of our cash flows ( in thousands ): Year Ended December 31, 2024 2023 Net cash provided by (used in): Operating activities $ (54,322 ) $ (64,371 ) Investing activities (3,609 ) (7,100 ) Financing activities 77,175 72,990 Net change in cash and cash equivalents $ 19,244 $ 1,519 Cash Flow from Operating Activities For the year ended December 31, 2024, net cash used in operating activities was $54.3 million, driven by a net loss of $74.9 million, net reversals of $6.0 million in non-cash stock-based compensation, and a $4.3 million reduction in deferred revenue.
Cash Flow Analysis The following table presents a summary of our cash flows ( in thousands ): Year Ended December 31, 2025 2024 Net cash provided by (used in): Operating activities $ (64,160 ) $ (54,322 ) Investing activities (5,711 ) (3,609 ) Financing activities 70,959 77,175 Net change in cash, cash equivalents and restricted cash $ 1,088 $ 19,244 Cash Flow from Operating Activities For the year ended December 31, 2025, net cash used in operating activities was $64.2 million, driven by a net loss of $110.6 million and net reversals of $10.1 million in non-cash stock-based compensation.
Cash Flow from Financing Activities For the year ended December 31, 2024, net cash provided by financing activities was $77.2 million due to proceeds from borrowings under long term debt agreements, net of repayments, of $36.2 million, borrowings from related parties of $34.5 million, net proceeds of $2.8 million from collateralized borrowings, and proceeds from the GEM share purchase agreement of $3.9 million.
For the year ended December 31, 2024, net cash provided by financing activities was $77.2 million primarily due to proceeds from borrowings under long term debt agreements, net of repayments, of $36.2 million, borrowings from related parties of $34.5 million, net proceeds of $2.8 million from collateralized borrowings, and proceeds from the GEM share purchase agreement of $3.9 million. 61 Net cash provided by financing activities decreased period over period by $6.2 million, primarily driven by a $121 million decrease in borrowings under long-term debt and related party lending agreements, compounded by $38.6 million of repayments under the GEM Mandatory Convertible Security, and $4 million of repayments under convertible note agreements.
In total, 2,321,423 shares of Company common stock were issued to former Southern shareholders while the remaining amount was paid out in cash in lieu of fractional shares to those shareholders on a pro rata basis.
In total, 2,321,423 shares of Company common stock were issued to former Southern shareholders while the remaining amount was paid out in cash in lieu of fractional shares to those shareholders on a pro rata basis. Southern is a scheduled service commuter airline serving cities across the United States and commenced flight operations in June 2013.
The Company may finance these aircraft through Jetstream Aviation Capital, with which the Company currently has a sale-leaseback financing arrangement of up to $450 million, and additional debt facilities that it intends to obtain.
As of December 31, 2025, the Company had made deposits of $2.0 million for aircraft that are scheduled to be delivered in 2026. The Company may finance these aircraft through Jetstream Aviation Capital, with which the Company currently has a sale-leaseback financing arrangement of up to $450 million, and additional debt facilities that it intends to obtain.
The grant date is deemed to be the appropriate measurement date for stock options issued to employees and non-employees. We have elected to account for forfeitures as they occur.
Stock Options and Warrants We use the Black-Scholes option pricing model to estimate the fair value of the stock options and warrants at the measurement date. The grant date is deemed to be the appropriate measurement date for stock options issued to employees and non-employees. We have elected to account for forfeitures as they occur.
If factors change and different assumptions are used, the Company’s results could reflect material fluctuation in Changes in fair value of financial instruments carried at fair value, net on the Consolidated Statements of Operations.
The Company elected the fair value option for certain convertible notes, which requires them to be remeasured to fair value each period. If factors change and different assumptions are used, the Company’s results could reflect material fluctuation in Changes in fair value of financial instruments carried at fair value, net on the Consolidated Statements of Operations.
For valuations completed subsequent to the direct listing, the fair value of each share of underlying common stock is based on the closing price of our common stock as reported on the date immediately preceding the date of grant. • Risk-Free Interest Rate —The yield on actively traded non-inflation indexed U.S.
The use of the Black-Scholes option pricing model requires the use of subjective assumptions, including the following: • Fair Value of Common Stock —the fair value of each share of underlying common stock is based on the closing price of our common stock as reported on the date immediately preceding the date of grant. • Risk-Free Interest Rate —The yield on actively traded non-inflation indexed U.S.
Level 2 Inputs other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.
Fair value measurements are based on a fair value hierarchy, based on three levels of inputs, of which the first two are considered observable and the last unobservable, which are the following: Level 1 Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. 65 Level 2 Inputs other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, such as quoted market prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis reflects the historical results of operations and financial position of Surf Air Mobility Inc., and its consolidated subsidiaries.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis reflects the historical results of operations and financial position of Surf Air Mobility Inc., and its consolidated subsidiaries. References in this section to the “Company”, “we” or “our” refer to Surf Air Mobility Inc. and its consolidated subsidiaries, including Southern Airways Corporation.
Other Income/(Expense) Other expense, net decreased by $42.3 million, or -74%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Other Income/(Expense) Other expense, net increased by $19.1 million, or 128%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.
GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of income and expense during the reported period. 63 Our management believes that the accounting estimates listed below are those that are most critical to the portrayal of our financial condition and results of operations, and that require management’s most difficult, subjective and complex judgments in estimating the effect of inherent uncertainties.
Our management believes that the accounting estimates listed below are those that are most critical to the portrayal of our financial condition and results of operations, and that require management’s most difficult, subjective and complex judgments in estimating the effect of inherent uncertainties.
The Company is in the process of remediating the late filing and payment of the property taxes due to Los Angeles County. As of December 31, 2024, the Company was also in default of the Simple Agreements for Future Equity with Token allocation (“SAFE-T”) note, where the note matured in July 2019 (see Note 11, Financing Arrangements ).
As of December 31, 2025, the Company was also in default of the Simple Agreements for Future Equity with Token allocation (“SAFE-T”) note, where the note matured in July 2019 (see Note 9, Financing Arrangements ).
These tax and debt obligations are classified as current liabilities on the Company’s Consolidated Balance Sheets as of December 31, 2024 and December 31, 2023.
In addition, the Company is currently in default of certain excise and property taxes as well as certain debt obligations. These tax and debt obligations are classified as current liabilities on the Company’s Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024.
Overview of the Business Surf Air Mobility Inc. (“Surf Air Mobility”, the “Company”, “us”, “we” or “our”) is a regional air mobility platform that aims to transform regional flying. The Company is currently comprised of its Air Mobility business, with the goal of further developing and enhancing its service and technology offerings through its Air Technology business.
Overview of the Business Surf Air Mobility Inc. (“Surf Air Mobility”, the “Company”, “us”, “we” or “our”), a Delaware corporation, is a regional air mobility platform that aims to transform regional flying.
Year Ended December 31, Change 2024 2023 Increase/ Decrease % Scheduled Flight Hours (1) 67,918 34,388 33,530 98 % On-Demand Flights (2) 3,515 2,831 684 24 % Scheduled Passengers (3) 353,077 176,131 176,946 100 % Headcount (4) 703 833 (130 ) (16 )% Scheduled Departures (5) 69,000 31,476 37,524 119 % (1) Scheduled Flight Hours represent actual flight time from takeoff through landing that were flown in the period and excludes departures for maintenance or repositioning events.
Year Ended December 31, Change 2025 2024 Increase/ Decrease % Scheduled Flight Hours (1) 56,022 67,918 (11,896 ) (18 )% On-Demand Flights (2) 2,929 3,515 (586 ) (17 )% Scheduled Passengers (3) 299,639 353,077 (53,438 ) (15 )% Headcount (4) 573 703 (130 ) (18 )% Scheduled Departures (5) 60,117 69,000 (8,883 ) (13 )% (1) Scheduled Flight Hours represent actual flight time from takeoff through landing that were flown in the period and excludes departures for maintenance or repositioning events.
For the year ended December 31, 2023, net cash provided by financing activities was $73.0 million from proceeds from the issuance of preferred shares, common stock, and exercise of share options of $30.2 million, proceeds from borrowings of SAFE and convertible notes of $11.7 million, proceeds from borrowings due to related parties of $22.4 million, and proceeds from the GEM share purchase agreement of $10.2 million.
Cash Flow from Financing Activities For the year ended December 31, 2025, net cash provided by financing activities was $71.0 million primarily due to proceeds from borrowings under convertible note agreements of $65 million, proceeds from the issuance of common stock of $51.4 million, and proceeds of $47.2 million under the GEM Share Purchase Agreement.
Southern is a scheduled service commuter airline serving cities across the United States that is headquartered in Palm Beach, Florida and commenced flight operations in June 2013. It is a certified Part 135 operator that operates a fleet of over 50 aircraft, including the Cessna Caravan, the Cessna Grand Caravan, the Pilatus PC-12, and the Tecnam Traveller.
It is a certified Part 135 operator that operates a fleet of over 50 aircraft, including the Cessna Caravan, the Cessna Grand Caravan, the Pilatus PC-12, and the Tecnam Traveller.
Expansion of the network will require acquisition of aircraft over the next five years with an expected cost of approximately $0.3 billion. The Company has an order in place with TAI for 90 Cessna Grand Caravan aircraft with an option for an additional 26 Cessna Grand Caravan aircraft, with expected delivery taken over the next five years.
Expansion of the network will require acquisition of aircraft over the next five years with an expected cost of approximately $0.3 billion.
Under the market approach, the principal assumption included an estimate of a control premium. 64 Stock-Based Compensation We grant stock options, warrants, restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”) to certain employees, as well as non-employees (including directors and others who provide services to us) under our stock plans.
Stock-Based Compensation We grant stock options, warrants, restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”) to certain employees, as well as non-employees (including directors and others who provide services to us) under our stock plans. We recognize compensation expense resulting from stock-based payments over the period for which the requisite services are provided.
The SAFE-T note had an outstanding principal amount of $0.5 million as of December 31, 2024 and December 31, 2023. 61 The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The airline industry and the Company’s operations are cyclical and highly competitive.
Depreciation and Amortization Depreciation and amortization expenses increased by $4.6 million, or 122%, for the year ended December 31, 2024, compared to the year ended December 31, 2023 primarily due to depreciation of engines and aircraft, as well as amortization of intangibles acquired in the Southern Acquisition for the full twelve months during year ended December 31, 2024.
Depreciation and Amortization Depreciation and amortization expenses increased by $1.0 million, or 11%, for the year ended December 31, 2025, compared to the year ended December 31, 2024 primarily due to depreciation of engines and aircraft.
As a result of the reverse stock split, every seven shares of the Company’s old common stock were converted into one share of the Company’s new common stock. Fractional shares resulting from the reverse stock split were settled by cash payment.
Reverse Stock Split On August 16, 2024, the Company effected a seven-for-one reverse stock split for all shares of the Company’s common stock issued and outstanding. As a result of the reverse stock split, every seven shares of the Company’s old common stock were converted into one share of the Company’s new common stock.
The increase in revenue was attributable to the following changes in on-demand and scheduled revenues (in thousands, except percentages): Year Ended December 31, Change 2024 2023 $ % Scheduled $ 90,735 $ 39,397 $ 51,338 130 % On-Demand 28,690 21,108 7,582 36 % Total revenue $ 119,425 $ 60,505 $ 58,920 97 % Scheduled revenue increased by $51.3 million, or 130%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
The decrease in revenue was attributable to the following changes in on-demand and scheduled revenues (in thousands, except percentages): Year Ended December 31, Change 2025 2024 $ % Scheduled $ 76,989 $ 90,735 $ (13,746 ) (15 )% On-Demand 29,568 28,690 878 3 % Total revenue $ 106,557 $ 119,425 $ (12,868 ) (11 )% Scheduled revenue decreased by $13.7 million, or 15%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Net Loss The total decrease in net loss of $175.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023 is primarily due to a reduction of expenses as described above, including reductions in goodwill impairment of $60.0 million, decreases in general and administrative expenses of $70.8 million, and decreases in other expenses of $42.3 million.
Net Loss The total increase in net loss of $36.0 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 is primarily due to the $12.9 million decrease in revenues and $19.1 million increase in other expenses, as described above.
These and the Founder PRSUs will vest upon the satisfaction of a service condition and the achievement of certain stock price goals.
In October 2023, we granted 28,571 additional PRSUs as part of a hiring grant to an executive under the 2023 Plan. These and the Founder PRSUs will vest upon the satisfaction of a service condition and the achievement of certain stock price goals.
Additionally, Los Angeles County has imposed a tax lien on four of the Company’s aircraft due to the late filing of the Company’s 2022 property tax return. As of December 31, 2024, the amount of property tax, interest and penalties related to the Los Angeles County tax lien for all unpaid tax years was approximately $1.1 million.
Additionally, Los Angeles County had previously imposed a tax lien on four of the Company’s aircraft due to the late filing of the Company’s 2022 property tax return.
Sales and Marketing Sales and marketing expenses decreased by $2.5 million, or -25%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a decrease in brand awareness and strategic digital marketing expenses of $0.5 million and a $2.0 million decrease in management incentive plan expenses. 59 General and Administrative General and administrative expenses decreased by $70.8 million, or -70%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Sales and Marketing Sales and marketing expenses increased by $0.7 million, or 9%, for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to an increase in brand awareness and strategic digital marketing expenses during the year ended December 31, 2025.
The Company has historically funded its operations and capital needs primarily through the net proceeds received from the issuance of various debt instruments, convertible securities, related party funding, and preferred and common share financing arrangements. During the year ended December 31, 2023, the Company received $8 million under a convertible note purchase agreement with Partners for Growth V, L.P.
The Company historically has funded its operations and capital needs primarily through the net proceeds received from the issuance of various debt instruments, convertible securities, related party funding, and preferred and common stock financing arrangements and expects to continue to do so, as available.
These operating outflows were partially offset by non-cash changes in fair value of financial instruments of $50.2 million, non-cash impairment of goodwill of $60.0 million, non-cash stock-based compensation expenses of $48.3 million, increases in accounts payable and other liabilities of $28.6 million, increases in depreciation and amortization of $1.1 million, and increases in prepaid expenses and other current assets of $0.7 million. 60 In 2023, the Southern Acquisition resulted in net cash outflows from operating activities of $3.9 million.
These operating outflows were partially offset by $10.1 million in non-cash stock-based compensation, non-cash lease expense of $10.4 million, loss on extinguishment of debt of $3.9 million, changes in fair value of financial instruments of $8.6 million, increases in accrued expenses and other current liabilities of $3.4 million, and depreciation and amortization expenses of $9.3 million.
For the year ended December 31, 2023, net cash used in operating activities was $64.4 million, driven by a net loss of $250.7 million and a $2.1 million reduction in operating lease liabilities.
For the year ended December 31, 2024, net cash used in operating activities was $54.3 million, driven by a net loss of $74.9 million, net reversals of $6.0 million in non-cash stock-based compensation, and a $4.3 million reduction in deferred revenue.
The following table summarizes the Company’s contractual commitments and obligations (in thousands) : Total 2025 2026 2027 2028 2029 Thereafter Long-term debt $ 64,593 $ 2,543 $ 2,676 $ 12,032 $ 45,669 $ 421 $ 1,252 Operating leases 20,690 6,561 4,603 3,158 2,219 2,218 1,931 Finance leases 1,537 389 372 336 264 176 — Repayment of related party term loans 50,000 — — — 50,000 — — Repayment of convertible notes 8,034 — — — 8,034 — — Minimum payments under aircraft supply agreements 283,800 3,000 13,200 13,200 13,200 62,700 178,500 Minimum payments under data license agreements 9,500 9,500 — — — — — Minimum payments under sales and marketing agreements 40,000 15,000 10,000 10,000 5,000 — — Minimum payments under technology development agreements 27,400 8,400 8,000 8,000 3,000 — — Total $ 505,554 $ 45,393 $ 38,851 $ 46,726 $ 127,386 $ 65,515 $ 181,683 Critical Accounting Policies and Estimates The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
Additionally, the Company routinely enters into noncancelable lease agreements for aircraft and operating locations, which contain minimum rental payments. 63 The following table summarizes the Company’s contractual commitments and obligations (in thousands) : Total 2026 2027 2028 2029 2030 Thereafter Long-term debt $ 17,101 $ 2,712 $ 12,029 $ 685 $ 157 $ 450 $ 1,068 Operating leases 15,041 5,011 3,524 2,358 2,219 1,929 — Finance leases 1,147 371 336 264 176 — — Repayment of related party term loans 100 — — — 100 — — Repayment of convertible notes 79,909 50,034 28,000 — 1,875 — — Minimum payments under aircraft supply agreements 283,800 13,200 13,200 13,200 13,200 62,700 168,300 Minimum payments under data license agreements 9,500 9,500 — — — — — Minimum payments under sales and marketing agreements 40,000 15,000 10,000 10,000 5,000 — — Minimum payments under technology development agreements 12,583 4,083 2,250 2,500 2,500 1,250 — Total $ 459,181 $ 99,911 $ 69,339 $ 29,007 $ 25,227 $ 66,329 $ 169,368 Critical Accounting Policies and Estimates The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
The primary drivers of the decrease in general and administrative expenses were a decrease in stock-based compensation expense of $54.3 million and decreases in transaction related costs associated with the Company’s public listing, of $22.0 million.
The primary drivers of the increase in general and administrative expenses were an increase in stock-based compensation expense of $16.0 million, an increase in transaction-related costs, associated with the Company’s convertible note financing in November 2025, of $6.4 million, and an increase in incentive bonus plan accruals of $4.2 million.
The SAFE-T note is subordinate to the Company’s Convertible Note Purchase Agreement (see Note 11, Financing Arrangements ); therefore, the Company cannot pay the outstanding balance prior to paying amounts due under the Convertible Note Purchase Agreement.
The SAFE-T note is subordinate to most of the Company’s debt obligations (see Note 9, Financing Arrangements ); therefore, the Company cannot pay the outstanding balance prior to paying amounts due under more senior debt obligations. The SAFE-T note had an outstanding principal amount of $0.5 million as of December 31, 2025 and December 31, 2024.
The most significant financial impacts of these cancellations have been lost revenues, lost operating income, decreased operating cash flows, and unplanned maintenance costs.
The most significant financial impacts of these cancellations were lost revenues, lost operating income, decreased operating cash flows, and unplanned maintenance costs. Following the passage of the FAA Reauthorization Act of 2024, and resulting changes to the administration of the Essential Air Service Program, we have been subject to increased competition for certain subsidized routes.
Subsequent to the direct listing, the fair market value of our common stock is based on its closing price as reported on the date of grant on the NYSE. 66 Fair Value Measurements The Company has a significant number of debt and equity transactions that are recorded at fair value.
Fair Value Measurements The Company has a significant number of debt and equity transactions that are recorded at fair value.
Net cash used in operating activities decreased period over period by $10.1 million, driven by a $175.8 million decrease in net loss.
Net cash used in operating activities increased period over period by $9.8 million, driven by a $36.0 million increase in net loss and a decrease of $6.0 million in changes in accrued expenses and other liabilities.
On-demand revenue increased by $7.6 million, or 36%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
General and Administrative General and administrative expenses increased by $23.4 million, or 79%, for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Performance-Based Restricted Stock Units In July 2023, we granted PRSUs to each of our three founders (“Founder PRSUs”). In October 2023, we granted 28,571 additional PRSUs as part of a hiring grant to an executive under the 2023 Plan.
Restricted Stock Units The fair value of RSUs is estimated based on the fair value of our common stock on the grant date, which is based on the stock price on the day immediately preceding the date of grant. Performance-Based Restricted Stock Units In July 2023, we granted PRSUs to each of our three founders (“Founder PRSUs”).
Significant inputs in determining period end fair values of the Mandatory Convertible Security are as follows: • Remaining par amount; • Entity specific probability of default; • Implied volatility • Applicable discount rate • Share price at the measurement date Income Taxes The determination of tax strategies and positions, along with accounting for related income taxes requires interpretation of various federal and state tax policies and assessment of the likelihood of various outcomes.
Significant inputs in determining period end fair values of the Mandatory Convertible Security are as follows: • Remaining par amount; • Entity specific probability of default; • Implied volatility • Applicable discount rate • Share price at the measurement date The fair value of liability classified warrants has been estimated using a Monte Carlo simulation model due to the Company’s ability to force exercise when the price exceeds 150% of the exercise for 20 consecutive trading days.
Technology and Development Technology and development expenses increased by $3.2 million, or 15%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase was driven primarily by an increase in expenses related to software development work with Palantir of $4.1 million.
The decrease was driven primarily by a decrease of $12.5 million in expenses associated with the Textron data license agreement and a reduction in expenses related to software development work with Palantir of $1.3 million.
GAAP”). Use of Estimates The preparation of the consolidated financial statements in conformity with U.S.
GAAP”). Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of income and expense during the reported period.
These decreases were partially offset by an increase in professional fees not associated with the Company’s public listing of $3.5 million due to a higher volume of corporate transactions during the year ended December 31, 2024.
These increases were partially offset by a decrease in non-transaction professional fees of $2.1 million and decreases in other general expenses of $1.1 million during the year ended December 31, 2025.
Where appropriate, we calculated the expected term using the simplified method for “plain vanilla” stock option awards. • Expected Volatility —Given our limited trading history subsequent to the direct listing, there is limited substantive share price history to calculate volatility and, as such, we have elected to use an approximation based on the volatility of other comparable public companies, which compete directly with us, over the expected term of the options. • Dividend Yield —We have not issued regular dividends on common shares in the past nor do we expect to issue dividends in the future.
Historical volatility is calculated based on the daily closing prices of the Company’s common stock over a period commensurate with the expected term of the related instrument. 64 • Dividend Yield —We have not issued regular dividends on common shares in the past nor do we expect to issue dividends in the future.
Management believes that accounting for income taxes requires difficult, subjective and complex judgments and defenses. Income taxes are accounted for under the asset and liability 67 method in accordance with U.S. GAAP.
Income Taxes The determination of tax strategies and positions, along with accounting for related income taxes requires interpretation of various federal and state tax policies and assessment of the likelihood of various outcomes. Management believes that accounting for income taxes requires difficult, subjective and complex judgments and defenses.
This was largely offset by a decrease of $38.5 million in non-cash changes in fair value of financial instruments, a decrease of $60.0 million in impairment of goodwill charges, decreases of $54.2 million in non-cash stock-based compensation expenses, and a decrease of $10.5 million in changes in accrued expenses and other liabilities.
This was largely offset by an increase of $16.0 million in non-cash stock-based compensation expenses, a $9.3 million increase in loss on extinguishment of debt, and a $5.4 million increase in non-cash contract settlement expense.
Liquidity and Capital Resources The Company has incurred losses from operations, negative cash flows from operating activities and has a working capital deficit. In addition, the Company is currently in default of certain excise and property taxes as well as certain debt obligations.
These outflows were partially offset by $65 million in borrowings under convertible note agreements, proceeds from the issuance of common stock of $51.4 million, and proceeds of $47.2 million under the GEM Share Purchase Agreement. Liquidity and Capital Resources The Company has incurred losses from operations, negative cash flows from operating activities and has a working capital deficit.
Removed
Prior to the Internal Reorganization (as defined below) on July 21, 2023, these results comprised the operations of Surf Air Global Limited, the predecessor to Surf Air Mobility Inc. References in this section to the “Company”, “we” or “our” refer to Surf Air Mobility Inc. and its consolidated subsidiaries, including Southern Airways Corporation.
Added
The Company currently operates one of the largest commuter airlines in the United States by scheduled departures as well as an expanding on-demand charter marketplace for passengers in the U.S. and globally.
Removed
Internal Reorganization On July 21, 2023, SAGL Merger Sub Inc., a wholly-owned subsidiary of the Company, was merged with and into Surf Air, after which Surf Air became a wholly-owned subsidiary of the Company (the “Internal Reorganization”).
Added
The Company’s operations provide scale, distribution and real-world operating data to validate and, eventually, deploy the software and technology offerings it is currently developing to support the modernization of air operations and the adoption of next-generation aircraft.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe continue to assess the current environment, work with our suppliers and maintenance providers and create certain contingency plans to mitigate any negative impact. Macroeconomic Risks and the Impact of the COVID-19 Pandemic Current macroeconomic conditions, such as inflation and increasing interest rates, increase the risk of an economic downturn.
Biggest changeWe continue to assess the current environment, work with our suppliers and maintenance providers and create certain contingency plans to mitigate any negative impact. Macroeconomic Risks Current macroeconomic conditions, such as inflation and increasing interest rates, increase the risk of an economic downturn.
These macroeconomic conditions also negatively impact consumer discretionary spend and coupled with slower than expected increases in business and leisure travel, including as a result of many workplaces adopting remote or hybrid models, led to slowed revenue growth during 2024.
These macroeconomic conditions also negatively impact consumer discretionary spend and coupled with slower than expected increases in business and leisure travel, including as a result of many workplaces adopting remote or hybrid models, led to slowed revenue growth during 2025.
In order to mitigate these risks, we have implemented and may in the future have to implement additional cost cutting measures, as described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting our Business.” 69
In order to mitigate these risks, we have implemented and may in the future have to implement additional cost cutting measures, as described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting our Business.” 68
ITEM 7A. QUANTITATIVE AND QUALITITATIVE DISCLOSURES ABOUT MARKET RISK We have operations solely within the United States, and we are exposed to market risks in the ordinary course of our business. The primary risks we face are commodity price risks and macroeconomic risks. Commodity Price Risks We are exposed to commodity price risks.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have operations solely within the United States, and we are exposed to market risks in the ordinary course of our business. The primary risks we face are commodity price risks and macroeconomic risks. Commodity Price Risks We are exposed to commodity price risks.
Additionally, as a result of continued inflation, we have seen an increase in wage rates and costs of revenue during fiscal year 2024, which has had a negative impact on our financial results.
Additionally, as a result of continued inflation, we have seen continued increases in wage rates and costs of revenue during fiscal year 2025, which has had a negative impact on our financial results.

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