Company: SRFM
Filing Date: 2025-03-21
Form Type: 10-K
Source: 0000950170-25-043326
Chunk: 182

Company: SURF AIR MOBILITY INC.
Filing Date: 2025-03-21
Form: 10-K
Item: Item 1B
Chunk 182
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 beneficially owned by GEM (together with its affiliates and any entity managed by GEM, the “GEM Entities”), the GEM Entities will limit the daily volume of sales of shares of the Company’s common stock then beneficially owned by the GEM Entities to no more than 1/10th of the daily trading volume of shares of the Company’s common stock on the NYSE on the trading day immediately preceding the applicable date of such sales. During the year ended December 31, 2024, GEM converted $1.6 million of the par amount of the Mandatory Convertible Security, through the issuance of 1,142,857 shares of the Company’s common stock. Following the conversion of the maximum number of shares allowed under the terms of the Mandatory Convertible Security, the Company informed GEM of its intention to increase the remaining par amount by 15% of the amount outstanding immediately after issuance of the maximum conversion amount,A liability of $16.4 million associated with the Mandatory Convertible Security was recorded as of the Closing Date. The fair value of the liability was estimated using a model based on multiple stock price paths developed through the use of a Monte Carlo simulation that incorporates into the valuation the possibility that the Company will not be able to satisfy the liability through the issuance of shares of common stock and taking into account the value of the consideration transferred to the Company upon closing of the MCSPA.  This was inclusive of the value of the shares returned to the Company and the cancellation of the share transfers due in settlement of the GEM derivative liability (see Note 13. Fair Value Measurements). For the year ended December 31, 2024, the Company recorded a change in fair value of $11.7  million related to the Mandatory Convertible Security, resulting in a liability of $23.2 million as of December 31, 2024, which was included as part of other long-term liabilities within the Consolidated Balance Sheets. Significant inputs in determining period end fair values of the Mandatory Convertible Security are as follows: 

        August 7, 2024

        December 31, 2024

        Par amount

        35,200

        38,615

        Probability of default

        15.8
        %

        —
        %

        Expected volatility

        130.6
        %

        155.7
        %

        Discount rate

        3.8
        %

        4.3
        %