# EDGAR Filing Document

**Accession Number:** 0001936224
**File Stem:** 0001193125-26-104468
**Filing Date:** 2026-3
**Character Count:** 617470
**Document Hash:** 6e407620fcccef29263e7d26daac8cb3
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-26-104468.hdr.sgml**: 20260312

**ACCESSION NUMBER**: 0001193125-26-104468

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 135

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260312

**DATE AS OF CHANGE**: 20260312

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SURF AIR MOBILITY INC.
- **CENTRAL INDEX KEY:** 0001936224
- **STANDARD INDUSTRIAL CLASSIFICATION:** AIR TRANSPORTATION, NONSCHEDULED [4522]
- **ORGANIZATION NAME:** 01 Energy & Transportation
- **EIN:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41759
- **FILM NUMBER:** 26749139

**BUSINESS ADDRESS:**
- **STREET 1:** 12111 S. CRENSHAW BLVD.
- **CITY:** HAWTHORNE
- **STATE:** CA
- **ZIP:** 90250
- **BUSINESS PHONE:** 310-365-3675

**MAIL ADDRESS:**
- **STREET 1:** 12111 S. CRENSHAW BLVD.
- **CITY:** HAWTHORNE
- **STATE:** CA
- **ZIP:** 90250

?xml version='1.0' encoding='ASCII'? 10-K

2025

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

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**FORM** 10-K

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**(Mark One)** 

☒ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

**For the fiscal year ended** December 31**,** 2025

**OR**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO** 

**Commission File Number** 001-41759

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Surf Air Mobility Inc.

**(Exact name of Registrant as specified in its Charter)**

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| | |
|:---|:---|
| Delaware | 36-5025592 |
| **(State or other jurisdiction of**<br>**incorporation or organization)** | **(I.R.S. Employer**<br>**Identification No.)** |
| 12111 S. Crenshaw Blvd**.**<br>Hawthorne**,** CA  | 90250 |
| **(Address of principal executive offices)** | **(Zip Code)** |

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**Registrant's telephone number, including area code: (**424**)** 332-5480

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Securities registered pursuant to Section 12(b) of the Act:

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| | | |
|:---|:---|:---|
| **Title of each class** | **Trading**<br>**Symbol(s)** | **Name of each exchange on which registered** |
| Common stock, $0.0001 par value per share | SRFM | New York Stock Exchange |

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Securities registered pursuant to Section 12(g) of the Act: **None**

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☒ |  |  |

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of voting stock held by non-affiliates of the Registrant on the last business day of the Registrant's most recently completed second fiscal quarter, based on the closing price of $3.69 per share of the Registrant's common stock as reported by the New York Stock Exchange, was approximately $114.7 million. This calculation does not reflect a determination that certain persons are affiliates of the Registrant for any other purpose.

The number of shares of Registrant's common stock outstanding as of March 6, 2026 was 76,993,252.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Surf Air Mobility Inc. 2026 Proxy Statement, to be filed with the Securities and Exchange Commission ("SEC") within 120 days after the closing of the

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registrant's fiscal year are incorporated into Part III to the extent stated herein. Except with respect to information specifically incorporated by reference in this Form 10-K, the Proxy Statement is not deemed to be filed as part hereof.

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**Table of Contents**

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| | | |
|:---|:---|:---|
|  |  | **Page** |
| **PART I** |  |  |
| &nbsp;&nbsp;&nbsp;Item 1. | [<u>Business</u>](#item1_business) | 8 |
| &nbsp;&nbsp;&nbsp;Item 1A. | [<u>Risk Factors</u>](#item1a_riskfactors) | 15 |
| &nbsp;&nbsp;&nbsp;Item 1B. | [<u>Unresolved Staff Comments</u>](#item1b_staffcomments) | 52 |
| &nbsp;&nbsp;&nbsp;Item 1C. | [<u>Cybersecurity</u>](#item1c_cybersecurity) | 52 |
| &nbsp;&nbsp;&nbsp;Item 2. | [<u>Properties</u>](#item2_properties) | 55 |
| &nbsp;&nbsp;&nbsp;Item 3. | [<u>Legal Proceedings</u>](#item3_legalproceedings) | 55 |
| &nbsp;&nbsp;&nbsp;Item 4. | [<u>Mine Safety Disclosures</u>](#item4_minesafety) | 55 |
| **PART II** |  |  |
| &nbsp;&nbsp;&nbsp;Item 5. | [<u>Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities</u>](#item5_marketforequity) | 56 |
| &nbsp;&nbsp;&nbsp;Item 6. | [<u>\[Reserved\]</u>](#item6_reserved) | 56 |
| &nbsp;&nbsp;&nbsp;Item 7. | [<u>Management's Discussion and Analysis of Financial Condition and Results of Operations</u>](#item7_mda) | 57 |
| &nbsp;&nbsp;&nbsp;Item 7A. | [<u>Quantitative and Qualitative Disclosures About Market Risk</u>](#item7a_marketrisk) | 68 |
| &nbsp;&nbsp;&nbsp;Item 8. | [<u>Financial Statements and Supplementary Data</u>](#item8_financialdata) | 69 |
| &nbsp;&nbsp;&nbsp;Item 9. | [<u>Changes in and Disagreements With Accountants on Accounting and Financial Disclosure</u>](#item9_disagreements) | 112 |
| &nbsp;&nbsp;&nbsp;Item 9A. | [<u>Controls and Procedures</u>](#item9a_controlsandprocedures) | 112 |
| &nbsp;&nbsp;&nbsp;Item 9B. | [<u>Other Information</u>](#item9b_otherinformation) | &nbsp;&nbsp;&nbsp;114 |
| &nbsp;&nbsp;&nbsp;Item 9C. | [<u>Disclosure Regarding Foreign Jurisdictions that Prevent Inspections</u>](#item9c_foreignjurisdictions) | 114 |
| **PART III** |  |  |
| &nbsp;&nbsp;&nbsp;Item 10. | [<u>Directors, Executive Officers and Corporate Governance</u>](#item10_corporategovern) | 115 |
| &nbsp;&nbsp;&nbsp;Item 11. | [<u>Executive Compensation</u>](#item11_execcomp) | 115 |
| &nbsp;&nbsp;&nbsp;Item 12. | [<u>Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</u>](#item12_securityown) | 115 |
| &nbsp;&nbsp;&nbsp;Item 13. | [<u>Certain Relationships and Related Transactions, and Director Independence</u>](#item13_certain) | 115 |
| &nbsp;&nbsp;&nbsp;Item 14. | [<u>Principal Accountant Fees and Services</u>](#item14_acctfees) | 115 |
| **PART IV** |  |  |
| &nbsp;&nbsp;&nbsp;Item 15. | [<u>Exhibits, Financial Statement Schedules</u>](#item_15) | 116 |
| &nbsp;&nbsp;&nbsp;Item 16. | [<u>Form 10-K Summary</u>](#item16_form_10k_summary) | 121 |
|  | [<u>Signatures</u>](#signatures) | 122 |

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**SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION**

This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), as amended. All statements other than statements of historical facts contained in this Annual Report on Form 10-K may be forward-looking statements. Forward-looking statements may be identified by the use of words such as "estimate", "plan", "project", "forecast", "intend", "will", "expect", "anticipate", "believe", "seek", "target", "designed to" or other similar expressions that predict or indicate future events or trends, although the absence of these words does not mean that a statement is not forward-looking. The Company cautions readers of this Annual Report on Form 10-K that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company's control, that could cause the actual results to differ materially from the expected results. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of financial and performance metrics, projections of market opportunity and market share, potential benefits and the commercial attractiveness to its customers of the Company's products and services and the dependence on third-party partnerships in the development of fully-electric and hybrid-electric powertrains, and the potential success of the Company's marketing and expansion strategies. These statements are based on various assumptions, whether or not identified in this Annual Report on Form 10-K, and on the current expectations of the Company's management and are not predictions of actual results or outcomes. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied upon by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. These forward-looking statements are subject to a number of risks and uncertainties, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Company's future ability to pay contractual obligations, pay excise taxes, including resolving its tax liens, and liquidity, which will depend on operating performance, cash flow and ability to secure adequate financing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Company's ability to meet the requirements of its term loan credit facility or other debt obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Company's limited operating history and the powertrain technology the Company plans to develop or deploy does not yet exist and remains subject to approval by regulators;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the impact of changes in the U.S. or foreign trade policies, including the imposition of tariffs and other protectionist trade measures, and other factors beyond our control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Company's ability to maintain and strengthen the Company's brand and its reputation as a regional airline;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any accidents or incidents involving aircraft including those involving fully-electric or hybrid-electric powertrains;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Company's ability to accurately forecast demand for products and manage product inventory in an effective and efficient manner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the dependence on third-party partners and suppliers for the components and collaboration in the Company's development of software technology platforms, fully-electric and hybrid-electric powertrains, and other products and services, and any interruptions, disagreements or delays with those partners and suppliers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Company's ability to execute business objectives and growth strategies successfully or sustain the Company's growth;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•risks from the integration of business acquisitions that could adversely affect the Company's business, divert the attention of management, and dilute shareholder value;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•increased costs as a result of operating as a public company, and the requirement that management devote substantial time to comply with the Company's public company responsibilities and corporate governance practices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the ability of the Company's customers and potential customers to pay for the Company's services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Company's ability to obtain additional financing or access the capital markets to fund its ongoing operations on acceptable terms and conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•whether EAS funding will continue without interruption or appropriations will be made on a timely basis and also whether the DOT will restore and fund EAS obligations retroactively;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the outcome of any legal proceedings that might be instituted against the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•risks associated with the Company's ability to comply with applicable laws, government regulations and rules and standards of the New York Stock Exchange as well as with changes in applicable laws or regulations, and the impact of the regulatory environment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the risks set forth in "Part I, Item 1A, Risk Factors" of this Annual Report.

All forward-looking statements included herein attributable to the Company or any person acting on any party's behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, the Company undertakes no obligations to update these forward-looking statements to reflect events or circumstances after the date of this Annual Report on Form 10-K or to reflect the occurrence of unanticipated events.

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**SUMMARY RISK FACTORS**

Investing in our common stock involves numerous risks, including the risks described in "Part I, Item 1A. Risk Factors" of this Annual Report. You should carefully consider these risks before making an investment. Below are some of these risks, any one of which could materially adversely affect our business, financial condition, results of operations, and prospects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•There is substantial doubt about our ability to continue as a going concern. We will need additional financing to execute our business plan, to fund our operations and to continue as a going concern.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We have incurred significant losses since our inception and we expect to incur significant expenses and continuing losses for the foreseeable future. We may not be able to achieve or maintain profitability or positive cash flows.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We will need to obtain sufficient financing or other capital to operate successfully. We may not be able to accurately predict our future capital needs, and we may not be able to obtain additional financing or access the capital markets to fund our ongoing operations and execute on our growth strategy on acceptable terms and conditions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•It is not possible to predict the actual number of shares we will need to sell under the Share Subscription Facility to GEM in order to draw down under such facility. Further, we may not have access to the full amount available under the Share Subscription Facility, or may not be able to draw down under the Share Subscription Facility in a timely manner (or at all) in order to meet our existing obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We have previously defaulted on our debt and other obligations and there can be no assurance that we will be able to fulfill our obligations under any current or future indebtedness we may incur.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our ability to utilize our NOLs and other carryforwards may be limited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We may never realize the full value of our intangible assets or our long-lived assets causing us to record impairments that may negatively affect our financial condition and operating results.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our contractual obligations could impair our liquidity and materially adversely affect our business, results of operations and financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our management has identified material weaknesses in our internal controls over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•If we experience harm to our reputation and brands, our business, financial condition and results of operations could be adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We may not realize the expected return on our investment in SurfOS due to development delays, technical challenges, or lack of market acceptance, which could undermine our performance and competitive position.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The success of our business will be highly dependent on our ability to effectively market and sell our air mobility solutions as a substitute for alternative methods of transportation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our prospects and operations may be adversely affected by changes in consumer preferences, discretionary spending and other economic conditions that affect demand for our services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We expect to face intense competition in the regional air mobility industry.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The planned fully-electric and hybrid-electric powertrain solutions may not result in the operating cost savings we anticipate, which could negatively impact the future economics of our network operations as well as our ability to successfully sell and market our planned future Aircraft-as-a-Service strategy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our future fully-electric and hybrid-electric aircraft may require maintenance at frequencies or at costs which are unexpected and could adversely affect our business and operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The supply of pilots to the airline industry is limited and may negatively affect our operations and financial

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condition. Increases in our labor costs, which constitute a substantial portion of our total operating costs, may have a material adverse effect on our business, financial condition and results of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We are exposed to operational disruptions due to maintenance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Crashes, accidents or incidents of aircraft involving us or our competitors could have a material adverse effect on our business, financial condition and results of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We, as well as our development and supply chain partners, have limited experience to date in the development and manufacturing of fully-electric and hybrid-electric powertrains and integrating those newly developed powertrains into existing certified airframes, and we may fail to realize the desired return on our investments with respect to fully-electric and hybrid-electric powertrains.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We are substantially dependent upon our relationships with our strategic partners, and we are or may be subject to risks associated with such strategic alliances. Our reliance on these arrangements, and the loss of any such alliances or arrangements or failure to identify future opportunities could affect our growth plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•If we are unable to obtain and maintain access to adequate facilities and infrastructure in desirable locations, including securing access to key infrastructure such as airports, we may be unable to offer our service in a way that is useful to passengers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our operations are currently concentrated in a small number of metropolitan areas and airports which makes our business particularly susceptible to natural disasters, outbreaks and pandemics, growth constraints, economic, social, weather and regulatory conditions or other circumstances affecting these metropolitan areas.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The profitability of our current operations is dependent on the availability and pricing of aircraft fuel. Periods of significant disruption in the supply of aircraft fuel or elevated pricing could have a significant negative impact on our results of operations and liquidity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•If our third-party aircraft operators are unable to support our operations or the growth of our business, or we are unable to add alternative third-party aircraft operators to meet demand, our costs may increase and our business, financial condition and results of operations could be adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We rely heavily on technology and automated systems to operate our business, and any failure of these technologies or systems could harm our business, results of operations 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•If we fail to adequately protect our intellectual property rights, our competitive position could be impaired and we may lose market share, generate reduced revenue and incur costly litigation to protect our rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our business will be subject to a variety of extensive and evolving laws and regulations, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel and competitive disadvantages.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Continued access to Essential Air Service revenue is of critical importance to us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•The requirements of being a public company may strain our resources, divert management's attention and affect our ability to attract and retain qualified board members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We may fail to qualify for continued listing on the New York Stock Exchange ("NYSE"), which could make it more difficult for our stockholders to sell their shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our management has limited prior experience in operating a public company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Our shareholders may experience dilution from several different sources.

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**<u>PART 1</u>**

**<u>ITEM 1: BUSINESS</u>**

**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. 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.

The Air Mobility business is an established regional air mobility platform providing scheduled service and an on-demand charter marketplace to passengers in the U.S. and globally. Current initiatives surrounding the Air Technology business seek to develop proprietary aviation software, aircraft electrification powertrain technology and services to enable electrification across the regional air mobility sector.

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. We expect the combination of our legacy networks will continue to provide the basis for our expanded, nationwide regional Air Mobility business.

Our predecessor company, Surf Air, was formed in 2016 and prior to its reorganization into Surf Air Mobility, aimed to expand the category of regional air travel, connecting underutilized regional airports and private terminals to create a "shared private" customer experience and a high frequency "commercial-like" air service, using small turboprop aircraft. Surf Air provided both scheduled routes and on-demand charter flights operated by third parties that operate under Part 135 of Title 14 of the U.S. Code of Federal Regulations ("Part 135"). Surf Air drove the early stages of development of our current efforts to develop electrified powertrain technology, including the establishment of relationships with key commercial partners who, as a group, we believe can deliver novel hardware and software solutions that can make electrified flight possible for operators across the Part 135 industry, starting with our owned and operated fleet.

Our acquisition of Southern Airways in July 2023 has resulted in a combined regional airline network servicing U.S. cities across the Mid-Atlantic, Gulf South, Midwest, Rocky Mountains, West Coast, New England and Hawaii. Founded in 2013, Southern is one of the largest commuter airlines in the United States and the largest passenger operator of Cessna Grand Caravan EXs ("Cessna Caravans") in the United States by scheduled departures. 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 firmly believe that regional air mobility can displace driving from its predominant position in 100-500 mile travel. There are approximately 5,000 public use airports in the U.S. creating the possibility of a dense point-to-point air network using regional aircraft. We believe that electrified aircraft, which could boast lower operating costs and emissions could be the key to unlock this electrified air-mobility market.

Surf Air Mobility (through its subsidiary airlines Southern Airways and Mokulele Airlines) is one of the largest commuter airlines in the United States by scheduled departures, serving numerous communities across the U.S. mainland and Hawaii. In addition, we have commercial relationships with over 400 air operators that provide on-demand charter services to our customers. 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.

**Our Strategy**

**We have several strategic differentiators which form our competitive advantage in the regional air mobility market.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Scale: we are one of the largest commuter airlines in the U.S. by scheduled departures.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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. 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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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.

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. SurfOS is currently in the implementation phase across our Company, and we are already seeing improved productivity and efficiency through these tools. SurfOS aims to apply leverage to our commercial initiatives by streamlining our sales, sourcing, and distribution. Additionally, the software impacts critical functions of the airline operation such as crew scheduling, maintenance, and resource planning. We believe revenue management features such as dynamic pricing and flight distribution are key to maximizing revenue. Moreover, SurfOS is designed to empower a "connected aircraft," which is expected to allow for near real-time insight into airplane health, maintenance needs, pilot performance, and flight tracking. 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. This market is expected to undergo massive transformation due to the emergence of new technologies such as electrification that seek to greatly reduce the cost of air travel, particularly for smaller regional planes that serve point-to-point routes from more convenient regional airports. In addition, electric and hybrid aircraft are expected to substantially reduce the carbon emissions of flying.

We believe Surf Air Mobility is uniquely positioned to lead the transformation of the regional air mobility industry. We intend to deploy electrified aircraft, when available, across our scheduled service routes. The Company is also pursuing Supplemental Type Certificates ("STCs") for proprietary powertrain technology for the Cessna Grand Caravan aircraft. The Company has an exclusive sales and marketing relationship with the aircraft manufacturer, Textron Aviation, for distribution of electrified and hybrid powered aircraft, and we have MOU agreements with 7 operators globally with approximately 100 aircraft under management to potentially upgrade to our proprietary powertrains, once certified.

In addition, Surf Air Mobility's platform will also help other electrification technologies go to market with access to the Company's network and distribution potential. The Company is exploring relationships with other industry participants to bring innovative solutions to the regional air mobility market and accelerate the adoption of electrified aircraft potentially through the formation of joint ventures which may be separately capitalized.

*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.

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Of our combined fleet of 41 aircraft, 39 are Cessna Caravans as of December 31, 2025. For the year ended December 31, 2025, our total fleet averaged approximately 170 daily departures. 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. 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*").

The EAS program was put into place in the United States following the Airline Deregulation Act of 1978 to ensure that small communities continued to receive a minimal level of air service. EAS revenue awards are guaranteed revenue contracts issued by the DOT with revenue earned for completed flights. 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.

We are a leader in securing and renewing EAS contracts, which we believe will be a critical differentiator as we work to expand our point-to-point short haul regional air mobility network. We work with key stakeholders in the communities in which we intend to serve as well as the DOT, and we have been able to tailor air travel solutions that are responsive to the key needs of these smaller, underserved communities. We have consistently been able to differentiate ourselves to win contracts by leveraging our large scale and depth of operational expertise to offer a low cost, highly reliable service proposal.

*On-Demand* - We generate revenue from on-demand flights created for customers on an ad-hoc, by request basis. 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.

Today, we offer on-demand flight booking capabilities on our consumer platform enabled by our Surf Air mobile app, which is a capital light source of revenue.

We plan to invest in creating a scheduled network connecting many of the underutilized regional airports in the United States. We have developed a regional air mobility network growth plan based on mobile device and various demographic data layers, which resulted in a network growth plan across approximately 30 U.S. regional networks with approximately 200 "tier 1" routes. We intend to pursue this plan using our own air operations and by leveraging third-party air operators.

We have extensive experience using third-party operators in our scheduled and on-demand operations. As a result, we believe we will have in-depth knowledge of the success factors and key challenges facing independent operators and can facilitate operator relationships by deploying our Aircraft-as-a-Service strategy. Aircraft-as-a-Service is the product we intend to offer operators. 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.

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*Customer Experience*

![img169807290_0.jpg](img169807290_0.jpg)

We believe that the customer experience that we have developed is a meaningful differentiating advantage. We have strived to create an exceptional flying experience solving the greatest pain points of regional commercial flying. Through our large scale, we have a substantial customer service operation to support our travelers. We intend to give our customers a stress-free and time-saving airport and travel experience.

*Seamless Booking.* Our customer journey begins digitally through both our booking app and website, creating a personalized air travel experience. Using the mobile app and website, customers have access to a real-time digital marketplace, which we believe enhances and simplifies the user experience. Customers can conveniently purchase tickets on existing scheduled flights or create private charters. Customers have access to an array of available aircraft to meet various travel needs.

*Local Airports & Private Terminals.* We operate scheduled and on-demand flights in and out of small airports and private terminals. This provides our customers with the convenience of an accessible airport closer to their origin and/or destination and the convenience of a private terminal experience. We believe that local airports can transform into centers for pilot training, community job growth, and growth for local businesses.

*Reduced Travel Times.* Operating in and out of regional airports and private terminals reduces travel time for our customers. On a typical commercial flight, major airlines recommend customers arrive two hours before their departure time. In contrast, our customers typically only need to arrive 30 minutes before their flight, which results in our passengers saving approximately 1.4 to 1.6 hours per departure.

*Hassle Free Experience.* Our customer services and station teams offer all customers a direct touchpoint to help manage any travel related needs leading up to and on the day of the flight. 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.* Recent and longer-term trends in the airline industry have led to a large disruption in the supply of available aircraft pilots. A reliable, predictable and adequate availability of pilots is an integral part of any airline's ability to maintain consistent scheduling of their operations. We believe that our business model, flying under Part 135 regulation and using primarily single-engine aircraft, will enable us to be a solution to the pilot shortage by providing pilots to certify as first officers and captains earlier, and creating a talent pool that does not compete with other airlines that operate multi-engine aircraft. Furthermore, with our pilot partnership with SkyWest, we are able to ensure that hiring and retention costs are offset in part by promoting pilot career flow into the regional airline industry.

As we plan to transition to fully-electric flight, we believe we are well-positioned to manage programs designed for training pilots for any new requirements related to the operation of electrified aircraft. 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.

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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.

**Government Regulation**

The Company is subject to government regulation at local, state, national and international levels. The scope of these regulations is exceedingly broad, covering a wide range of subjects that includes, but is not limited to, those summarized below. Given the dynamic and rapidly evolving nature of the regulatory environment, the conduct of our business will always include a measure of risk and we may not be able to predict or control how new regulations might be written, or predict how existing regulations may be interpreted, or enforced.

Various aspects of our business, including scheduled and on-demand air service and electrification, are all impacted by interrelated but distinct regulatory frameworks.

***Principal Domestic Regulatory Authorities***

*DOT*

The U.S. Department of Transportation (the "DOT") is the principal regulator of economic and consumer protection matters in the U.S. commercial aviation industry. The DOT licenses and oversees the operations of all carriers. This includes economic authority to conduct business as a type of air carrier, as well as consumer protection and insurance requirements that are applied to the conduct of such business. The DOT also oversees the marketing, sale and performance of public charter flights (charter flights which are sold by the seat) that may be arranged by an indirect air carrier (i.e., an entity that does not operate aircraft but contracts as a principal with a direct air carrier to do so on its behalf), for the purpose of offering its chartered flights to the public that will be performed by an identified direct air carrier at a predetermined date and time (in contrast to the on-demand, or as-needed/where-needed, character of certain of our services). The DOT oversees and regulates how airlines advertise and hold out services. The DOT also oversees the sale, holding out and arrangement of single-entity charter air transportation (charter of the entire capacity of an aircraft, in contrast to public charter flights which are sold by the seat). The DOT has authority to enforce laws and regulations against engaging in "unfair" or "deceptive" practices in the sale or provision of air transportation. The DOT promulgates and enforces various other consumer protection laws and regulations to which we are subject, including requirements related to non-discriminatory access to air transportation for disabled passengers, data reporting, recordkeeping, advertising and ticket sales, among others. The DOT is also responsible for monitoring and assuring that U.S. air carriers remain fit, willing and able at all times to provide the services for which they are licensed, and that such carriers qualify continuously as citizens of the United States within the meaning of U.S. aeronautical laws and regulations.

The Company is subject to U.S. laws regarding privacy of passenger and employee data, including as enforced by the DOT, that are not consistent in all jurisdictions where we operate and which are continually evolving, requiring ongoing monitoring and updates to our privacy and information security programs. Although we dedicate resources to manage compliance with privacy and information security obligations, the challenging and uncertain regulatory environment may pose material risks to our business, including increased operational burdens and costs, regulatory enforcement and legal claims or proceedings.

*FAA*

The Federal Aviation Administration ("FAA") is an operating administration of the DOT and the principal regulator of safety matters in the U.S. aviation industry. 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

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the oversight and operational control of air carriers by their accountable managers, directors of operations, directors of maintenance and other key personnel.

*TSA*

The Transportation Security Administration (the "TSA") is an administration within the U.S. Department of Homeland Security which issues security programs to air carriers and ensures that air carriers operate in a manner consistent with any security program and other requirements issued to the carrier.

**Facilities** 

Our headquarters is located in a leased 5,500 square foot facility in Hawthorne, California. 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.

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.

**Commitment 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. 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Environmental.* Being a good steward of the natural environment through the production and development of innovative designs that reduce resource use and energy consumption.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Social.* Underpinning all of our activities with a core focus on health and safety.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*Governance.* 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. We seek to protect our intellectual property (including our technology and confidential information) through a combination of trademarks and trade secret protections, as well as contractual commitments and security procedures. We generally require employees and consultants to enter into confidentiality and assignment of inventions agreements and certain third parties to enter into nondisclosure agreements.

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.

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We currently own the "surfair.com" Internet domain-name registration and the "iflysouthern.com" and "mokuleleairlines.com" domain-name registrations. The regulation of domain names in the United States is subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we may not be able to acquire or maintain all domain names that use the name "Surf Air" or "Southern" or are otherwise relevant to or descriptive of our business.

We have chosen to rely primarily on copyright and trade secret law in order to protect our software and have chosen not to register any copyrights in these works. However, in the United States, copyrights must be registered in order to bring a claim for infringement and to obtain certain types of remedies. Even if we decide to register a copyright in our software to bring an infringement action, the remedies and damages available to us for unauthorized use of our software may be limited.

Intellectual property laws, contractual commitments and security procedures provide only limited protection, and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated. Further, trade secrets, know-how and other materials may be independently developed by our competitors or revealed to the public or our competitors and no longer provide protection. In addition, intellectual property laws vary from country to country. We may therefore be unable to protect certain of our technology, brands or other intellectual property in the U.S. or other jurisdictions.

We regularly review our development efforts to assess the existence and patentability of new inventions, and we are prepared to file patent applications when we determine it would benefit our business to do so.

**Privacy and Data Protection** 

There are many requirements regarding the collection, use, transfer, security, storage, destruction and other processing of personally identifiable information and other data relating to individuals. Because our technology platform is an integral aspect of our business, compliance with laws governing the use, collection and processing of personal data is necessary for us to achieve our objective of continuously enhancing the user experience of our mobile application and marketing site.

We receive collect, store, process, transmit, share and use personal information and other customer data, including passenger data, and we rely in part on third parties that are not directly under our control to manage certain of these operations and to receive, collect, store, process, transmit, share and use such personal information, including payment information. A variety of federal, state, local, municipal and foreign laws and regulations, as well as industry standards (such as the payment card industry standards) govern the collection, storage, processing, sharing, use, retention and security of this information.

**Corporate Information**

We were originally founded in 2011 and incorporated in 2021 in Delaware. Our principal executive offices are located at 12111 S. Crenshaw Blvd., Hawthorne, CA 90250, and our telephone number is (424) 332-5480. Our website address is www.surfair.com. Our common stock is listed on the New York Stock Exchange under the symbol "SRFM".

**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. We also use our website as a tool to disclose important information about the Company and comply with our disclosure obligations under Regulation Fair Disclosure. Our corporate governance guidelines, code of business conduct and ethics and Board committee charters are also posted on the Investor Relations section of our website. The information on our website (or any webpages referenced in this Annual Report on Form 10-K) is not part of this or any other report we file with, or furnish to, the SEC.

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**<u>ITEM 1A: RISK FACTORS</u>**

*You should carefully consider the risks described below in addition to the other information set forth in this Annual Report on Form 10-K, including the Management's Discussion and Analysis of Financial Condition and Results of Operations section and the consolidated financial statements and related notes. If any of the risks and uncertainties described below actually occur or continue to occur, our business, financial condition and results of operations, and the trading price of our common stock could be materially and adversely affected. The risks and uncertainties described below are those that we have identified as material but are not the only risks and uncertainties we face. Our business is also subject to general risks and uncertainties that affect many other companies, including, but not limited to, overall economic and industry conditions and additional risks not currently known to us or that we presently deem immaterial may arise or become material and may negatively impact our business, reputation, financial condition, results of operations or the trading price of our common stock. Moreover, some of the factors, events, and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events or contingencies have occurred in the past, and instead reflect our beliefs and opinions as to the factors, events, or contingencies that could materially and adversely affect us in the future.*

**Risks Related to Our Financial Position and Capital Requirements**

***There is substantial doubt about our ability to continue as a going concern. We will need additional financing to execute our business plan, to fund our operations and to continue as a going concern.*** 

We have incurred losses from operations, negative cash flows from operating activities and have a working capital deficit. We are currently in default of certain excise and property taxes, as well as certain debt, tax and other contractual obligations as further described in "*Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources"* and *"- Risks Related to Our Financial Position and Capital Requirements - We have previously defaulted on our debt and other obligations and there can be no assurance that we will be able to fulfill our obligations under any current or future indebtedness we may incur*". There can be no assurances that we can cure any defaults that remain outstanding, or if cured, that we will not default on future obligations.

Our success is largely dependent on the ability to raise debt and equity capital, increase passenger loads, continue to expand into regions profitably throughout the United States and ultimately, successfully develop our Air Technology business.

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. We will need additional financing to implement our full business plan, including our plans to develop our software technology platforms and to electrify our fleet, which is a core part of our growth strategy, and to service our ongoing operations. We are evaluating, and will continue to evaluate, strategies to obtain additional funding for future operations. These strategies may include, but are not limited to, obtaining additional equity financing, issuing additional debt, entering into other financing arrangements, or restructuring of operations to grow revenues and decrease expenses.

If we are unable to raise sufficient financing when needed or events or circumstances occur such that we do not meet our strategic plans, we will be required to seek other sources of liquidity or to take additional measures to conserve liquidity, which could include, but are not necessarily limited to, restructuring our operations and possibly divesting all or a portion of our business, reducing spending on payroll, marketing, station rent and aircraft purchases necessary for our planned network, altering or scaling back development plans, including plans to equip regional airline operations with fully-electric and hybrid electric aircraft and reducing funding or deferring of capital expenditures, any of which could have a material adverse effect on our financial position, results of operations, cash flows and ability to achieve our business objectives. These factors raise substantial doubt about our ability to continue as a going concern.

Our prospects and ongoing business activities are subject to the risks and uncertainties frequently encountered by companies in new and rapidly evolving markets. 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.

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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). If such vendors or suppliers are unable to raise adequate capital to fund their business plans, they may not be able to comply with their obligations to us, which could have a material adverse effect on our business, financial condition and results of operations.

***We have incurred significant losses since our inception and expect to incur significant expenses and continuing losses for the foreseeable future. We may not be able to achieve or maintain profitability or positive cash flows.*** 

We have incurred significant losses since the Company's inception. We incurred net losses of $110.6 million and $74.9 million for the years ended December 31, 2025 and 2024, respectively. We expect our operating expenses to increase over the next several years as we invest in our Air Mobility and Air Technology businesses, including through increasing our flight cadence and growing our scheduled network, hiring more employees and funding SurfOS development and third-party research and development efforts relating to the development of aircraft electrification technology, as well as due to macroeconomic factors such as inflation. These efforts may be more costly than we expect and may not result in increased revenue or growth in our business. Any failure to increase our revenue sufficiently to keep pace with our investments and other expenses could prevent us from achieving or maintaining profitability or positive cash flow. Furthermore, if our future growth and operating performance fail to meet investor or analyst expectations, or if we continue to have negative cash flow or losses resulting from our investment in increasing our member base and passenger loads or expanding our operations into regions throughout the United States, our business, financial condition and results of operations could be materially adversely affected. Going forward, our future losses may be larger than anticipated, and we may not achieve profitability when expected, or at all. Even if we achieve profitability, we may not be able to maintain or increase profitability.

The continued growth of our business will require significant investments in the development of our SurfOS software platform, fully-electric and hybrid-electric powertrains, our aircraft fleet, ground-based infrastructure, information technology and marketing and sales efforts. Our current cash flow has not been sufficient to support these needs to date. We have historically had negative cash flows and a working capital deficit, and have funded our operations and capital needs to date through the proceeds received from the issuance of various debt and equity instruments. Going forward, our ability to effectively manage growth and expansion of our operations will also require us to enhance various systems, including in relation to research and development, operations and internal controls and reporting. These enhancements will require significant capital expenditures and allocation of valuable management and employee resources. If our business does not generate the level of available cash flow required to support these operations and investments, and we are not able to determine an alternative solution to obtain the funding needed for our future operations, there may be a material adverse effect on our business, financial condition and results of operations.

***It is not possible to predict the actual number of shares we will need to sell under the Share Subscription Facility to GEM in order to draw down under such facility. Further, we may not have access to the full amount available under the Share Subscription Facility, or may not be able to draw down under the Share Subscription Facility in a timely manner (or at all) in order to meet its existing obligations.*** 

Pursuant to the Share Purchase Agreement with GEM Global Yield LLC SCS, as amended, (the "Share Subscription Facility"), upon the terms of and subject to the satisfaction of certain conditions, we have the right from time to time at our option to direct GEM to purchase up to a specified maximum amount of shares of our common stock, up to a maximum aggregate purchase price equal to $400 million over the term of the Share Subscription Facility. We may request advances from GEM ("GEM Advances") at any time in an aggregate amount of up to $100 million, consisting of incremental advances of up to $25 million each provided that the first GEM Advance may not exceed $7.5 million without the consent of GEM. Any GEM Advance will reduce amounts that we can request for future draw downs. 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.

The failure to satisfy the specified conditions under the Share Subscription Facility may result in our inability to request any or all of the GEM Advances or other draw downs pursuant to the Share Subscription Facility. In addition, upon requesting any GEM Advance under the Share Subscription Facility, we have agreed to deposit into escrow an amount of shares of common stock equal to two times the number of shares of common stock set out in the applicable advance request for a GEM Advance. There can be no assurances that we will be able to accurately estimate the number of shares of our common stock to be deposited since we will need to determine this number prior to the trading period of our common stock that will determine the actual purchase price for a GEM Advance. GEM will not be obligated to

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(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. Such beneficial ownership limitation will not apply to the GEM Advances. In addition, the amount requested for each draw down (other than a GEM Advance) available under the Share Subscription Facility may not exceed 400% of the average daily trading volume for the 30 trading days immediately preceding any draw down. There can be no guarantee that we will be able to access any or all of the GEM Advances or other draw downs available under the Share Subscription Facility. Our inability to access a portion or the remaining amounts available under the Share Subscription Facility, in the absence of any other financing sources, will have a material adverse effect on our business and our ability to operate as a going concern.

The purchase price per share to be paid by GEM for the shares of our common stock that we may elect to sell to GEM under the Share Subscription Facility pursuant to the GEM Advances or draw downs, if any, will fluctuate based on the volume weighted average trading price of our common stock during the applicable period for each purchase made pursuant to the Share Subscription Facility. Accordingly, it is not possible to predict, prior to any such sales, the number of shares of our common stock that we will sell to GEM under the Share Subscription Facility, the purchase price per share that GEM will pay for shares purchased from us under the Share Subscription Facility, or the aggregate gross proceeds that we will receive from those purchases by GEM (other than a GEM Advance) under the Share Subscription Facility, if any. Therefore, sales to GEM by us in order to utilize the GEM Advance will, and any future draw downs under the Share Subscription Facility could, result in substantial dilution to the interests of other holders of its shares of our common stock.

Sales of shares of our common stock, if any, to GEM under the Share Subscription Facility will be determined by us from time to time in our sole discretion and will depend on a variety of factors, many of which are outside of our control, including, among other things, market conditions and the terms, conditions and limitations set forth in the Share Subscription Facility (subject to certain limitations on the obligation of GEM to purchase shares including, among other things, beneficial ownership limitations (other than in respect of the GEM Advances)). We may ultimately decide to sell to GEM all, some or none of the remaining shares of our common stock that may be available for us to sell to GEM pursuant to the Share Subscription Facility. Depending on market liquidity at the time, resales of those shares by GEM may cause the public trading price of our common stock to decrease.

As a result of the above factors, it is possible that we may need to issue and sell more than the number of shares that we initially expect to issue to GEM under the Share Subscription Facility in order to receive aggregate gross proceeds equal to GEM's $400 million total aggregate purchase commitment under the Share Subscription Facility, which could cause additional substantial dilution to holders of our common stock. The number of shares of our common stock ultimately offered for sale by GEM is dependent upon the number of shares of our common stock we ultimately sell to GEM under the Share Subscription Facility.

***We have previously defaulted on our debt and other obligations and there can be no assurance that we will be able to fulfill our obligations under any current or future indebtedness we may incur.*** 

As of December 31, 2025, we had $97.1 million in debt outstanding, representing principal related to term loans, related party promissory notes and convertible notes. The incurrence of existing or future indebtedness could have important consequences on our business, including, but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•increasing our vulnerability to general adverse economic and industry conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•requiring us to dedicate a substantial portion of our cash flow from operations to servicing our debt, thereby reducing the availability of cash to fund working capital, capital expenditures, acquisitions and investments and other general corporate purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•limiting our flexibility in planning for, or reacting to, challenges and opportunities, and changes in our businesses and the markets in which we operate; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•leading to the possibility of default on future debt obligations.

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Our ability to service our debt will depend on our future operating performance and financial results, which may be subject to factors beyond our control, including general economic, financial and business conditions. If we do not have sufficient cash flow to service our debt, we may need to refinance all or part of our existing debt, borrow more money or sell securities or assets, some or all of which may not be available at acceptable terms or at all. In addition, we may need to incur additional debt in the future in the ordinary course of business. Our current debt and any future additional debt we may incur may impose significant operating and financial restrictions. A breach of any of these restrictions could result in a default. If a default occurs, the relevant lenders could elect to accelerate payments due. If our operating performance declines, or if we are unable to comply with any restrictions, we may need to obtain amendments to our existing debt documents or waivers from the lenders to avoid default. These factors could have a material adverse effect on our business.

Further, if there were an event of default under our debt instruments or a change of control, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately and may be cross-defaulted to other debt. Our assets or cash flow may not be sufficient to fully repay borrowings under our outstanding debt instruments if accelerated upon an event of default, and there is no guarantee that we would be able to repay, refinance or restructure the payments on those debt securities.

We have previously defaulted on various debt and other obligations. Further, we are currently in default of certain excise and property taxes. See the section titled "Liquidity and Going Concern" in Note 1, Description of Business in the accompanying consolidated financial statements for further information.

***Our past financial results may not be a reliable indicator of our future results. Further, our results of operations may fluctuate significantly, which makes our future results of operations difficult to predict and could cause our results of operations to fall below expectations or any guidance we may provide.*** 

Our past financial results may not be a reliable indicator of our future results, particularly given our development and commercialization of SurfOS and expected move toward fully-electric and hybrid-electric powertrain technology. Further, our quarterly and annual results of operations may fluctuate significantly, which makes it difficult for us to predict our future results of operations. As a result, comparing our results of operations on a period-to-period basis may not be meaningful. Investors should not rely on our past results as an indication of our future performance.

This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our revenue or results of operations fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings guidance we may provide.

***Loss carryforwards and certain other tax attributes to offset future taxable income for U.S. federal income tax purposes may be significantly limited due to various circumstances, including certain possible future transactions involving the sale or issuance of common stock, or if taxable income does not reach sufficient levels.*** 

Our ability to use Net Operating Loss ("*NOL*") carryforwards and certain other tax attributes will depend on the amount of taxable income we generate in future periods and, as a result, certain of our NOL carryforwards and other tax attributes may expire before we can generate sufficient taxable income to use them in full. In addition, our ability to use NOL carryforwards and certain other tax attributes to offset future taxable income may be limited if we experience an "ownership change" as defined in Section 382 of the Internal Revenue Code of 1986, as amended ("Section 382"). Potential future transactions involving the sale or issuance of common stock may increase the possibility that we will experience a future "ownership change" under Section 382. Such transactions may include the exercise of warrants, the issuance of common stock for cash, the conversion of any future convertible debt, the repurchase of any debt with common stock, the acquisition or disposition of any stock by a stockholder owning 5% or more of the outstanding shares of common stock, or a combination of the foregoing.

***We may never realize the full value of our intangible assets or our long-lived assets causing us to record impairments that may negatively affect our financial condition and operating results.*** 

In accordance with applicable accounting standards, we are required to test indefinite-lived intangible assets for impairment on an annual basis, or more frequently where there is an indication of impairment, and certain other assets for impairment where there is any indication that an asset may be impaired. We may be required to recognize losses in

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the future due to, among other factors, extreme fuel price volatility, tight credit markets, government regulatory changes, decline in the fair values of certain tangible or intangible assets.

***Our contractual obligations could impair our liquidity and materially adversely affect our business, results of operations and financial condition.*** 

We have significant long-term lease obligations primarily relating to our aircraft fleet. As of December 31, 2025, we had 21 aircraft under operating leases, with an average remaining lease term of approximately 3.94 years. As of December 31, 2025, future minimum lease payments due under all long-term operating leases were approximately $12.8 million. Our future ability to pay our contractual obligations and our liquidity will depend on our operating performance, cash flow and our ability to secure adequate financing, which will in turn depend on, among other things, the success of our business strategy, U.S. and global economic conditions, the availability and cost of financing, as well as general economic and political conditions and other factors that are beyond our control. If our liquidity is materially diminished, there may be a material adverse effect on our cash flow available to fund working capital requirements, capital expenditures and business development efforts.

***We may not be able to accurately predict our future capital needs, and we may not be able to obtain additional financing or access the capital markets to fund our ongoing operations and execute on our growth strategy on acceptable terms and conditions.*** 

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. As part of our agreement with TAI, we have committed to the purchase of four Cessna Caravans in 2026, which we believe are currently competitively priced, but which may increase in price pursuant to price escalation clauses by the time we execute the purchase. 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 may also seek additional capital through a combination of equity and debt financings.

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. Any additional financing required by us may not be available on terms acceptable to us, or at all. If we are unable to source financing on acceptable terms, or unable to source financing at all, our business could be materially adversely affected. If we are unable to raise sufficient funds, we will have to significantly reduce our spending, delay or cancel our planned activities or substantially change our corporate structure.

If, in the future, we raise additional funds by issuing equity securities (including the GEM Advances), convertible debt or other similar securities, investors may experience significant dilution of their ownership interest, and these newly issued securities may have rights senior to those of the holders of common stock. Our current and any future financing arrangements, that we may enter into from time to time, involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, and currently, and in the future, could impair our operational flexibility, including restricting our ability to pursue our business strategy, increase our expenses, require that our assets secure such debt, or provide for high interest rates, discounted conversion prices, or other unfavorable terms. Higher interest rates could increase debt service requirements on our current variable rate indebtedness, and on any debt we subsequently incur, and could reduce funds available for operations, future business opportunities or other purposes. If we need to repay debt during periods of rising interest rates, we could be required to refinance our then-existing debt on unfavorable terms or liquidate one or more of our assets to repay such debt at times which may not permit realization of the maximum return on such assets and could result in a loss. The occurrence of such events could materially and adversely affect our profitability, cash flows and results of operations. If we are unable to obtain additional financing, including the GEM Advances, when needed or on acceptable terms, we will need to restructure our operations, and possibly divest all or a portion of our business. We may be required to cease operations which could result in our stockholders losing all or most of their investment.

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***Agreements governing our debt obligations include financial and other covenants that provide limitations on our business and operations under certain circumstances, and failure to comply with any of the covenants in such agreements could adversely impact us.***

Our current and any future financing agreements that we may enter into from time to time, contain certain affirmative, negative and financial covenants, and other customary events of default. Under certain circumstances, such covenants require us to maintain minimum liquidity levels, limit our ability to enter into certain strategic transactions, make certain investments, pay dividends and make certain other specified restricted payments. Certain covenants in our financing agreements are subject to important exceptions, qualifications and cure rights, including, under limited circumstances, the requirement to provide additional collateral or prepay or redeem certain obligations. In addition, certain of our financing agreements are cross-collateralized, such that an event of default or acceleration of indebtedness under one agreement could result in an event of default under other financing agreements. If we fail to comply with such covenants, if any other events of default occur for which no waiver or amendment is obtained, or if we are unable to timely refinance the debt obligations subject to such covenants or take other mitigating actions, the holders of our indebtedness could, among other things, declare outstanding amounts immediately due and payable and, subject to the terms of relevant financing agreements, repossess or foreclose on collateral, including certain of our aircraft or other assets used in our business. The acceleration of significant indebtedness or actions to repossess or foreclose on collateral may cause us to renegotiate, repay or refinance the affected obligations, and there is no assurance that such efforts would be successful or on terms we deem attractive. In addition, any acceleration or actions to repossess or foreclose on collateral under our financing agreements could result in a downgrade of any credit ratings then applicable to us, which could result in additional events of default or limit our ability to obtain additional financing.

**Risks Related to Our Business and Industry**

***The market for regional air mobility has not been established with precision, is still emerging and may not achieve the growth potential we expect or may grow more slowly than expected.*** 

The regional air mobility market is still emerging and has not been established with precision. It is uncertain to what extent market acceptance will grow, if at all. We have historically operated in a limited number of regional areas. The success of the regional markets in which we operate and the opportunity for future growth in such markets may not be representative of the potential market for regional air mobility in other regional areas. Our success will depend to a substantial extent on the willingness of commuters and travelers to widely adopt regional air mobility, particularly point-to-point versus the currently predominant hub-and-spoke industry configuration, as an alternative for ground transportation. If we are unable to develop our SurfOS software solutions to meet the needs of our commercial partners, the actual operating efficiencies from using our software are less than anticipated, or charter brokers, air operators and aircraft owners do not adopt our software, then the market for our offerings may not develop, may develop more slowly than we expect or may not achieve the growth potential we expect. In addition, although we believe our ability to develop and integrate hybrid-electric and electric technology with our commercial partners to present a cost-effective solution to address the needs of consumers in this market will also be a key factor to the success of our future growth, if the market that we seek to address does not perceive electrification as beneficial, or chooses not to adopt electrification as a result of concerns regarding safety, affordability, value proposition or for other reasons, then the market for our offerings may not develop, may develop more slowly than we expect or may not achieve the growth potential we expect. As a result, the number of potential customers using our future services and technology cannot be predicted with any degree of certainty, and we cannot provide assurance that we will be able to operate in a profitable manner in any of our current or targeted future markets. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

***Our prospects and operations may be adversely affected by changes in consumer preferences, discretionary spending and other economic conditions that affect demand for our services.*** 

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). 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. 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

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the foreseeable future. During such periods, our customers have chosen not to make discretionary purchases or to reduce overall spending on discretionary purchases. Such changes could result in reduced consumer demand for air transportation, including our air mobility services, or could shift demand from our air mobility services to other methods of air or ground transportation for which we do not offer a competing service. Any reduction in consumer demand for air transportation could also reduce demand for, or revenue from, our SurfOS software. If we are unable to generate demand or there is a future shift in consumer spending away from air mobility, there could be a material adverse effect on our business, financial condition and results of operations.

***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, for certain of our longer routes, we compete against providers, including legacy commercial airlines, which have larger aircraft. We compete against companies that use technology that differs from the technology we intend to deploy in our aircraft in the future. For example, we will likely compete against other companies that utilize and develop fixed-wing electrification aircraft as well as competitors that pursue electric vertical takeoff and landing aircraft. We also face competition for our SurfOS software solutions. Our potential competitors may be able to devote greater resources to the development of their current and future technologies or the promotion and sale of their offerings, or offer lower prices. Our potential competitors also may establish cooperative or strategic relationships among themselves or with third parties, including regional or national airport operations that we rely on to offer our air mobility services, which may further enhance their resources and offerings. It is possible that domestic or foreign companies or governments, some with greater experience in the air mobility industry or greater financial resources than we possess, will seek to provide products or services that compete directly or indirectly with ours in the future. Any such foreign competitor could benefit from subsidies or other protective measures provided by its home country. In addition, our potential customers may build their own software solutions rather than subscribe to our SurfOS software.

In addition, legal and regulatory changes may increase our competition. For example, following the passage of the FAA Reauthorization Act of 2024, and resulting changes to the administration of the EAS program, we have been subject to increased competition for certain subsidized routes. As a result, we expect to face increased and continued competition when bidding for or renewing EAS contracts, which could impact our ability to retain existing routes or the level of subsidy associated with those routes.

We believe our ability to compete successfully as an air mobility service will depend on a number of factors, which may change in the future due to increased competition, including the price of our offerings, consumer confidence in the safety of our offerings, consumer satisfaction for the experiences we offer and the routes, frequency of flights and availability of seats offered through our platform. If we are unable to compete successfully, there could be a material adverse effect on our business, financial condition and results of operations.

***If we are not able to successfully enter into new markets, offer new routes and services and enhance our existing offerings, our business, financial condition and results of operations could be adversely affected.*** 

Our growth will depend in part on our ability to successfully enter into new markets, create and introduce new routes, and expand our existing routes by adding more frequent flights. Significant changes to our existing routes or the introduction of new and unproven routes may require us to obtain and maintain applicable permits, authorizations or other regulatory approvals. If these new or expanded routes are unsuccessful or fail to attract a sufficient number of customers to be profitable, or we are unable to bring new or expanded routes to market efficiently, our business, financial condition and results of operations could be adversely affected. Further, new third-party aircraft operator or flier demands regarding our services, including the availability of superior routes or a deterioration in the quality of our existing routes, could adversely affect the attractiveness of our platform and the economics of our business and require us to make substantial changes to and additional investments in our routes or our business model.

Developing and launching new routes or enhancements to routes historically flown by us involves significant risks and uncertainties, including risks related to the reception of such routes by existing and potential future third-party aircraft operators and customers, increases in operational complexity, unanticipated delays or challenges in implementing such routes or enhancements, increased strain on our operational and internal resources (including an impairment of our ability to accurately forecast flier demand and the number of third-party aircraft operators using our platform) and negative publicity in the event such new or enhanced routes are perceived to be unsuccessful. Significant new initiatives have in the past resulted in similar operational challenges, and our growth strategy contemplates scaling our business rapidly,

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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. Any of the foregoing risks and challenges could have a material adverse effect on our business, financial condition and results of operations.

Our long-term growth strategy includes the transformation of the regional air mobility industry. This includes developing software and hardware solutions to enhance efficiency, productivity, and profitability, creating a scheduled network connecting many underutilized regional airports in the United States, and deploying electrified aircraft, when available. The air mobility industry is complex and each stage of implementation of our strategic goals involves risk. There can be no assurance that we will successfully implement this transformation, or that it will result in the market opportunities we anticipate, and our failure to successfully achieve part or all of this transformation could have a material adverse effect on our business, financial condition and results of operations.

***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. In addition, our growth strategy includes, among other things, exploring complementary strategic mergers and acquisitions, as well as strategic partnerships, to expand our capabilities and market opportunities, all of which benefit from our reputation and brand recognition. The successful development of our reputation and brands will depend on a number of factors, many of which are outside of our control. Negative perception of our business, platform, or products may have a material adverse effect on our reputation and brands, including as a result of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a failure to enforce our flight operations policies in a manner that users perceive as effective, fair and transparent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•flight delays or a failure to provide routes and flight schedules sought by customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•litigation over, or investigations by regulators into, our operations or those of our third-party aircraft operators;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•inadequate or unsatisfactory customer support service experiences;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•negative responses by third-party aircraft operators or customers to new mobility offerings on our platform;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•disputes with any of our strategic partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•problems in engagement with aircraft certification bodies or other regulators, communities, target demographics or other positioning in the market; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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.

In addition, changes we may make to enhance and improve our offerings, and to balance the needs and interests of our third-party aircraft operators and customers may be viewed positively from one group's perspective (such as customers) but negatively from another's perspective (such as third-party aircraft operators), or may be viewed negatively by either third-party aircraft operators or customers. 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. Moreover, we may fail to adequately differentiate our brand, services, and aircraft from others in the market, which could impact our ability to attract customers or engage with other key stakeholders.

***We may be unable to reduce end-user pricing for our air mobility services over time at rates sufficient to stimulate demand and drive expected growth for our air mobility services.*** 

We may not be able to successfully reduce end-user pricing for our air mobility services over time to increase demand, address new market segments and develop a significantly broader customer base. Our end-user pricing may be most applicable to relatively affluent consumers who are willing to purchase our services, and we will need to address additional markets and expand our customer demographic in order to further grow our business. In particular, we intend for our air mobility services to be economically accessible to a broad segment of the population and appeal to the customers of existing on-demand mobility air travel services in addition to ground-based travel services, taxis and other methods of transportation.

Reducing end-user pricing in a timely manner is dependent on management accurately estimating the unit economics of our aircraft and the corresponding service. For example, if management's estimates are inaccurate regarding utilization rates, demand elasticity, operating conditions, production costs, indirect cost of goods sold, landing fees, charging fees, electricity availability and/or other operating expenses, we may be unable to offer our service at end-user pricing that is sufficiently compelling to initiate the local network effects that we are predicting. This could negatively impact our reputation or brand and have a material adverse effect on our business, financial condition and results of operations.

***From time to time, the aircraft industry has experienced periods of oversupply during which lease rates and aircraft values have declined, and any future oversupply could materially adversely affect our financial results and growth prospects.*** 

Historically, the aircraft leasing business has experienced periods of aircraft oversupply. The oversupply of a specific type of aircraft is likely to depress the lease rates for and the value of that type of aircraft. The supply and demand for aircraft is affected by various cyclical and non-cyclical factors that are outside of our control, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•passenger and air cargo demand;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•fuel costs and general economic conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•geopolitical events, including war, prolonged armed conflict and acts of terrorism;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•outbreaks of communicable diseases and natural disasters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•governmental regulation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•interest rates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the availability of credit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•airline restructurings and bankruptcies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•manufacturer production levels and technological innovation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•manufacturers merging or exiting the industry or ceasing to produce aircraft types;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•retirement and obsolescence of aircraft models;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•reintroduction into service of aircraft previously in storage; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•airport and air traffic control infrastructure constraints.

In addition, due to the recent economic downturn and increased financial pressures, a number of operating lessors may be sold or merged with other operating lessors. The sale of any of these operating lessors (which may include a reduction in their aircraft fleets) and, in particular, their aircraft portfolios, could increase supply levels of used and older aircraft in the market.

These factors may produce sharp and prolonged decreases in aircraft lease rates and values and have a material adverse effect on our ability to lease or re-lease the commercial aircraft that we ultimately acquire and on our ability to sell such aircraft and parts at acceptable prices. Any of these factors could materially and adversely affect our financial results and growth prospects.

***Any failure to offer high-quality customer support may harm our relationships with customers and could adversely affect our reputation, brands, business, financial condition and results of operations.*** 

Through our marketing, advertising and communications with customers, we intend to set the tone for our brands as aspirational but also within reach. We strive to create high levels of customer satisfaction through the experience we provide in our terminal lounges and the support provided by our team and representatives. The ease and reliability of our offerings, including our ability to provide high-quality flier support, helps us attract and retain customers. Customers depend on our team to resolve any issues relating to our services, such as lost luggage and personal belongings, flight cancellations or scheduling changes. Our ability to provide effective and timely support is largely dependent on our ability to attract and retain skilled employees who can support customers and are sufficiently knowledgeable about our services. As we grow our business and improve our air mobility service platform, we will face challenges related to providing quality support at scale. Any failure to provide efficient flier support, or a market perception that we do not maintain high-quality support, could have a material adverse effect on our reputation, brands, business, financial condition and results of operations.

***The success of our business will be highly dependent on our ability to effectively market and sell our air mobility solutions as a substitute for alternate methods of transportation.*** 

We currently generate substantially all of our revenue from the sale of air transportation. Our success will depend in part on our ability to cost-effectively attract new customers, retain existing customers and increase utilization of our platform by existing customers. Our growth is highly dependent upon the adoption by charter brokers, air operators and aircraft owners of our SurfOS software solutions, the adoption by consumers of an enhanced form of mobility offered by fully-electric and hybrid-electric aircraft, and the growth of the regional air mobility industry. This market is new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, new aircraft announcements and changing consumer demands and behaviors. If customers do not broadly adopt this new form of mobility or are not willing to pay the prices we anticipate for our air mobility services, our business, including our planned Aircraft-as-a-Service initiative, may never materialize and there could be a material adverse effect on our prospects, financial condition and results of operations.

Passengers have a wide variety of options for transportation, including business aviation, commercial airlines, private aircraft operators, personal vehicles, rental cars, taxis, public transit and ridesharing offerings. To expand our customer base, we must appeal to new customers who have historically used other forms of transportation for regional travel. If customers do not perceive our air mobility services to be reliable, safe and cost-effective, or if we fail to offer new and relevant services and features on our platform, we may not be able to attract or retain customers or increase their utilization of our platform. If we fail to grow our customer base, retain existing customers or increase the overall utilization of our platform, there could be a material adverse effect on our business, financial condition and results of operations.

Our success in a given market will also depend on our ability to maintain and further develop our network of customers and accurately assess and predict customer demand and price sensitivity. Demand and price sensitivity may fluctuate based on a variety of factors, including macroeconomic factors, quality of service, negative publicity, safety incidents, corporate reporting related to safety, quality of customer service and support, perceived political or geopolitical affiliations and dissatisfaction with our products and offerings in general. If we fail to attract new customers or fail to accurately predict demand and price sensitivity, it may harm our financial performance, and our competitors' services and products may achieve greater market adoption and as a result may grow at a faster rate than our service.

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We expect that a large driver of customer demand for our service will be time savings when compared with alternative modes of transportation. If we are unable to deliver a sufficient level of time savings for our customers or if expected time savings are impacted by delays or cancellations, it may reduce demand for our services. If we are unable to generate demand or demand falls, there could be a material adverse effect on our business, financial condition and results of operations.

***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.*** 

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. The loss of any one or more members of our senior management team, for any reason, including resignation or retirement, could impair our ability to execute our business strategy and have an adverse effect on our business, financial condition and results of operations. If we are unable to attract and retain skilled employees to support our operations and growth, there could be a material adverse effect on our financial condition and results of operations.

***As part of our growth strategy, we are engaging in, and may in the future engage in, acquisitions that could disrupt our business and have a material adverse effect on our financial condition.*** 

We intend to explore potential strategic acquisitions of businesses, as well as strategic partnerships, to expand our capabilities and market opportunities, as well as the establishment of a wholly-owned or joint venture aircraft and powertrain financing company. There can be no assurance that any future acquisitions or partnerships will be consummated successfully, if at all. We may also not be successful in identifying appropriate targets for such transactions. In addition, we may not be able to continue the operational success of such businesses or successfully finance or integrate any businesses that we acquire or with which we form a partnership. We may have potential write-offs of acquired assets and/or an impairment of any goodwill recorded as a result of acquisitions. Furthermore, the integration of any acquisition, for example the acquisition of Southern, or the establishment of a partnership or joint venture may divert management's time and resources from our core business and disrupt our operations or may result in conflicts with our business. 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. We cannot ensure that any acquisition or partnership we make will not have a material adverse effect on our business, financial condition and results of operations.

***We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy.*** 

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. Our continued growth could increase the strain on our resources, and we could experience operating difficulties, including difficulties in hiring, training and managing an increasing number of employees. These difficulties may result in the erosion of our brand image, divert the attention of management and key employees and impact our financial condition and results of operations. In addition, in order to continue to increase our presence, we expect to incur substantial expenses as we continue to attempt to increase our route offerings, flight frequency, passenger terminal footprint and employee base. The continued expansion of our business may also require additional space for administrative support. If we are unable to drive commensurate growth, these costs, which include lease commitments, marketing costs and headcount, could result in decreased margins, which could have a material adverse effect on our business, financial condition and results of operations.

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**Risks Related to the Development of the SurfOS Software Platform**

***We may not realize the expected return on our significant investment in SurfOS due to development delays, technical challenges, or lack of market acceptance, which could undermine our financial performance and competitive position.***

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. The development of SurfOS involves complex software engineering and integration with our existing systems and operations. Any delays or technical challenges in the development process could postpone the deployment of SurfOS, potentially leading to increased costs and missed market opportunities. Additionally, unforeseen technical issues could arise, requiring further investment and resources to resolve. Even if SurfOS is successfully developed and deployed, its success depends on market acceptance and adoption by our customers and partners. If SurfOS does not meet the expectations of our customers or fails to deliver the anticipated benefits, we may not achieve the desired return on our investment. Additionally, there are a limited number of customers who may utilize SurfOS, and we may not be able to generate sufficient revenue to achieve the desired return on our investment. The foregoing could adversely affect our financial performance and competitive position.

***Our collaborations to develop SurfOS create risks through technology dependence, potential collaborator misalignment, relationship challenges, and funding uncertainties that could significantly impact the Company's business.***

Our collaborations with third parties to develop SurfOS and other software solutions introduce additional risks that could impact our business. The success of SurfOS is heavily reliant on third-party proprietary software platforms, including Palantir's, and their implementation engineering services. Any disruption in our third-party collaborators' ability to deliver these services, or any deterioration in our relationship with one or more of them, could adversely affect the development and functionality of SurfOS. Additionally, any changes in our collaborators' business strategy or priorities could impact their commitment to our commercial relationships, which requires close collaboration and alignment. Any misalignment in strategic goals, operational processes, or management decisions could hinder the progress of SurfOS development and its subsequent commercialization. Furthermore, disagreements or conflicts between the parties could lead to delays, increased costs, or even the dissolution of the collaboration. If we are unable to secure sufficient funding or if the capital raised is inadequate to support the development and commercialization of SurfOS, the project may face significant setbacks. Additionally, the allocation of resources between SurfOS and other business priorities could strain our financial and operational capabilities. The foregoing risks could materially and adversely affect our business, financial condition, and results of operations.

***Issues raised by the use of AI in SurfOS may result in harm or liability.*** 

As with many developing technologies, AI presents risks and challenges that could affect its further development, adoption, and use, and therefore the further development and commercialization of the AI-enhanced SurfOS. AI algorithms and models may be flawed. Datasets in AI training, development, or operations may be insufficient, of poor quality, or raise other legal concerns (e.g. copyright protections). If the recommendations, forecasts, or analyses that AI applications assist in producing are deficient, unreliable, or inaccurate, whether or not they are incorporated into SurfOS, we could be subject to competitive harm, potential legal liability, and brand or reputational harm. The rapid evolution of AI and its evolving regulatory landscape may also require additional resources to develop, test, and maintain SurfOS to ensure that AI is implemented appropriately to minimize unintended or harmful impacts, and may subject us to additional heightened legal, regulatory, or other challenges, any of which could negatively impact the commercialization of SurfOS and our business. Because much of our AI compatibility is reliant on third-party proprietary software, we may be limited in our ability to mitigate any of the foregoing risks.

**Risks Related to the Development of Electrification Technology** 

***We, as well as our development and supply chain partners, have limited experience to date in the development and manufacturing of fully-electric and hybrid-electric powertrains and integrating those newly developed powertrains*** 

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***into existing certified airframes, and we may fail to realize the desired return on our investments with respect to fully-electric and hybrid-electric powertrains.***

If we fail to execute our plans to develop, produce, assemble, market, sell, install and service our fully-electric and hybrid-electric powertrain solutions then we may not be able to generate sufficient revenue to achieve the desired return on our investment. Our ability, including with development and supply chain collaborators, such as TAI and AeroTec, to develop and produce fully-electric and hybrid-electric powertrain solutions of sufficient quality and appeal to customers on schedule and at scale is unproven. There can be no assurance as to whether we or our current or future third-party collaborators will be able to develop efficient, automated, low-cost production capabilities and processes and/or obtain reliable sources of component supply to allow us to meet the quality, price, engineering, design and production standards and production volumes required to successfully develop, manufacture and market fully-electric and hybrid-electric powertrains. Moreover, unlike the market for electric automobiles, the commercialization of electric and hybrid-electric aircraft remains unproven. Although we believe that the component technology to electrify small aircraft exists today, there is currently no other producer of fully-electric or hybrid-electric aircraft in the industry. Any delay in the development, manufacture and launch of electrification technology could adversely affect our brand, operations and the delivery of our growth strategy, particularly if it results in a failure to expand our market share in the regional air mobility market as anticipated and could require us to incur additional costs. 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. Any such failure could have a material adverse effect on our business, financial condition and results of operations.

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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•design, produce and source safe, reliable and quality fully-electric and hybrid-electric powertrains on an ongoing basis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•obtain necessary regulatory approvals in a timely manner, or at all;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•build a well-recognized and respected brand;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•attract and maintain core commercial partnerships;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•establish and expand our customer base;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•successfully service our aircraft after sales and maintain a good flow of spare parts and customer goodwill;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•improve and maintain our operational efficiency;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•predict our future revenues and appropriately budget for our expenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•attract, retain and motivate talented employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•anticipate trends that may emerge and affect our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•anticipate and adapt to changing market conditions, including technological developments and changes in our competitive landscape; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•navigate an evolving and complex regulatory environment.

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.*** 

While we strive to be the first to market providing air mobility services with electrified aircraft, we expect this industry to be increasingly competitive and it is possible that our competitors could get to market before us, either generally or in specific markets. 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

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ability to execute these plans within the current timeline and upon regulatory approval by the FAA, which can be a lengthy and unpredictable process.

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. New companies or existing aerospace companies may launch competing solutions, including fully-electric and hybrid-electric aircraft in the markets in which we intend to operate, or fully-electric or hybrid-electric aircraft utilizing different technologies such as hydrogen fuel cells, and obtain large scale capital investment, which may result in increased competition.

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. If our competitors get to market before us, or we are overcome by other competitors, it could have a material adverse effect on our business, financial condition, results of operations and prospects.

***The planned fully-electric and hybrid-electric powertrain solutions may not result in the operating cost savings we anticipate, which could negatively impact the future economics of our network operations as well as our ability to successfully sell and market our planned future Aircraft-as-a-Service strategy.*** 

In developing our business strategy for future aircraft electrification and network expansion, we have assumed implementing fully-electric technology will result in operating cost savings of approximately 50% compared to current combustion powertrain technologies, with more limited range and payload characteristics, and hybrid-electric technology will result in operating cost savings of approximately 25% compared to current internal combustion powertrain technologies, while maintaining similar performance characteristics. If these assumptions change by a material amount, our network expansion plans could be negatively impacted and we would be unlikely to be able to develop significant future revenues and earnings from our planned Aircraft-as-a-Service initiative.

***Our future fully-electric and hybrid-electric aircraft may require maintenance at frequencies or at costs which are unexpected and could adversely affect our business and operations.*** 

Our future fully-electric and hybrid-electric aircraft will be highly technical products that will require maintenance and support. We are still developing our understanding of the long-term maintenance profile of the fully-electric and hybrid-electric aircraft, and if useful lifetimes are shorter than expected, this may lead to greater maintenance costs than previously anticipated. If our future fully-electric and hybrid-electric aircraft and related equipment require maintenance more frequently than we plan for or at costs that exceed our estimates, that would disrupt the operation of our service and could have a material adverse effect on our business, financial condition and results of operations.

**Risks Related to Our Operations and Infrastructure** 

***If we are unable to obtain and maintain access to adequate facilities and infrastructure in desirable locations, including securing access to key infrastructure such as airports, we may be unable to offer our service in a way that is useful to passengers.*** 

Our air mobility service will depend on our ability to operate in desirable metropolitan and regional locations. This will require permits and approvals from federal, state and local regulatory authorities and government bodies and our ability to operate our service will depend on such permits and approvals, as well as our ability to lease and license access to passenger terminal infrastructure. We lease and license access to passenger terminal infrastructure, such as hangars, from airport operators in certain of the markets in which they operate. These lease agreements have termination dates ranging from two to three years, and often include the right to extend on a month to month basis. We may face competition for capacity at passenger facilities in our preferred locations, which may impact our ability to service customers effectively. We also cannot predict whether we will receive any such permits and approvals, whether we will receive them for desirable locations or whether we will receive them in a timely manner. If we are prohibited, restricted or delayed from developing and operating desirable locations, there could be a material adverse effect on our business.

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***Our operations are currently concentrated in a small number of metropolitan areas and airports which makes our business particularly susceptible to natural disasters, outbreaks and pandemics, growth constraints, economic, social, weather and regulatory conditions or other circumstances affecting these metropolitan areas.*** 

We currently derive revenues from regional flights operated in Hawaii and the Mid-Atlantic, Gulf South, Rocky Mountains, West Coast and New England regions. As a result of this geographic concentration, our business historically has been particularly susceptible to natural disasters, outbreaks and pandemics, growth constraints, economic, social, weather and regulatory conditions or other circumstances applicable to metropolitan areas. A significant interruption or disruption in service at an airport where we have a significant volume of flights could result in the cancellation or delay of a significant portion of our flights and, as a result, could have an adverse effect on our business, financial condition and results of operations. In addition, any changes to local laws or regulations within key metropolitan areas that affect our ability to operate or increase our operating expenses in these markets could have a material adverse effect on our business, financial condition and results of operations.

Disruption of operations at airports, whether caused by natural disasters including fires, tornados, hurricanes, floods, volcanic eruptions and earthquakes, and severe weather conditions, such as heavy rains, strong winds, dense fog, blizzards or snowstorms, or labor relations, utility or communications issues, government shutdowns or other disruptions at the FAA, power outages, or changes in federal, state and local regulatory requirements could have a material adverse effect on our business.

***Our aircraft utilization may be lower than expected and our aircraft may be limited in performance during certain weather conditions. We are vulnerable to delays, cancellations or flight rescheduling, as we rely on maintaining a high daily aircraft utilization rate.*** 

Our aircraft may not be able to fly safely in poor weather or environmental conditions, including snowstorms, thunderstorms, lightning, hail, known icing conditions or fog or during extreme heat or smoky conditions from fires. The aircraft models that we have flown to date and the smaller airports out of which they operate are more vulnerable to delays of this nature and we have experienced delays and disruptions as a result of extreme weather. 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. High daily aircraft utilization is achieved in part by reducing turnaround times at airports so we can fly more hours on average in a day. Aircraft utilization is reduced by delays and cancellations from various factors, many of which are beyond our control, including adverse weather conditions, security requirements, air traffic congestion and unscheduled maintenance events. The success of our business is dependent, in part, on the utilization rate of our aircraft and reductions in utilization will have a material adverse effect on our financial condition as well as cause passenger dissatisfaction.

Our success also depends on our ability to generate more revenue per flight by maintaining high customer utilization rates (*i.e.*, the number of seats purchased on each flight). Customer utilization rates may be reduced by a variety of factors, including the introduction of new routes or schedules. In some cases, we may choose to offer flights with low customer utilization rates to increase or maintain customer satisfaction, brand recognition, and for marketing or other purposes. We have utilized monthly and annual commuter passes and annual corporate bulk purchasing options to increase our customer utilization rates in the past; however, demand for these products may decline for reasons outside of our control, including economic uncertainty or downturns.

While historically we have maintained daily aircraft and customer utilization rates sufficient to offset the costs we pay to operators, we may be unable maintain and increase utilization rates as our business grows and expands. The risk of delays, cancellations and flight rescheduling, which could negatively impact our utilization rates, may increase as we expand our business to include new markets and destinations, more frequent flights on current routes and expanded facilities.

***The supply of pilots to the airline industry is limited and may negatively affect our operations and financial condition. Increases in our labor costs, which constitute a substantial portion of our total operating costs, may have a material adverse effect on our business, financial condition and results of operations.*** 

Our pilots are subject to stringent pilot qualification and crew member flight training standards ("*FAA Qualification Standards*"), which among other things require minimum flight time for pilots and mandate strict rules to minimize pilot fatigue. The existence of such requirements effectively limits the supply of qualified pilot candidates and increases pilot salaries and related labor costs. Such requirements also impact pilot scheduling, work hours and the

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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.

We have a pilot pipeline agreement with SkyWest to hire, train and provide a pipeline of pilots for our operations and a potential subsequent transition into SkyWest's operations, and we intend to continue this arrangement going forward. However, this potentially exposes us to a number of risks. This arrangement may not be sufficient to offset a significant or prolonged shortage of pilots, and we will be increasingly reliant on this partnership as we look to expand our operations. If this pipeline is unable to provide us with pilots in the expected numbers or at the appropriate times, or if the agreement with SkyWest were to be terminated, we would be required to incur significant labor costs to find replacement or substitute pilots, which would result in a material reduction in our earnings. If we are unable to find a sufficient supply of pilots to fly our routes, we may be forced to cancel flights. In addition, our competitors may seek to use this training program as a way to generate negative publicity about us, which could have a material adverse effect on our reputation, business and results of operation.

In addition, our operations and financial condition may be negatively impacted if we are unable to train pilots in a timely manner. Due to an industry-wide shortage of qualified pilots, driven by the flight hours requirements under the FAA Qualification Standards and attrition resulting from the hiring needs of other industry participants, pilot training timelines have significantly increased and stressed the availability of flight simulators, instructors and related training equipment. 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.*** 

We are subject to federal, state, and local laws and regulations relating to the protection of the environment and noise, including those relating to emissions to the air, discharges (including storm water and de-icing fluid discharges) to surface and subsurface waters, safe drinking water and the use, management, disposal and release of, and exposure to, hazardous substances, oils and waste materials. Federal, state and local laws, regulations, and enforcement priorities related to the environment and climate change continue to evolve and remain inconsistent. Compliance with laws, regulations, and other programs may require us to make capital investments to modify certain aspects of our operations. Future policy, legal, and regulatory developments, including enforcement actions or investigations, relating to the protection of the environment, including modifications to or reversals of such developments, could expose us to additional legal, financial, or reputational risks and unpredictable reporting obligations or business requirements, increase our costs and have a material adverse effect on our operations. Additionally, we may be subject to risks associated with climate change litigation, which may result in considerable expenses being incurred.

Moreover, the potential physical effects of climate change, such as increased frequency and severity of storms, floods, fires, fog, mist, freezing conditions, sea-level rise and other climate-related events, could affect our operations, infrastructure and financial results. Operational impacts, such as the delay or cancellation of flights, could result in loss of revenue. In addition, certain of our terminals are in locations susceptible to the impacts of storm-related flooding and sea-level rise, which could result in costs and loss of revenue. We could incur significant costs to improve the climate resiliency of our infrastructure and otherwise prepare for, respond to, and mitigate such physical effects of climate change. We are not able to accurately predict the materiality of any potential losses or costs associated with the physical effects of climate change.

***Our business may be adversely affected by union activities.*** 

Although none of our employees are currently represented by a labor union, it is common throughout the airline industry generally for many employees to belong to a union, which can result in higher employee costs and increased risk of work stoppages. There can be no assurances that our employees will not join or form a labor union or that we will not be required to become a union signatory. We are also directly or indirectly dependent upon companies with unionized work forces, such as parts suppliers, and work stoppages or strikes organized by such unions could have a material adverse effect on our business, financial condition or results of operations. 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.

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***Our or our third-party aircraft operators' insurance may become too difficult or expensive to obtain. Increases in insurance costs or reductions in insurance coverage may have a material adverse effect on our financial condition and results of operations.*** 

Hazards are inherent in the aviation industry and may result in loss of life and property, potentially exposing us to substantial liability claims arising from the operation of aircraft. Safe operation of aircraft is the responsibility of ourselves and our third-party operators who are held liable for accidents, thus incidents related to aircraft operation are covered by ours and our third-party operators' insurance. We maintain general liability aviation insurance policies. Additionally, we maintain directors and officers insurance, as well as other insurance policies, and we believe our level of coverage is customary in the industry and adequate to protect against claims. A limited number of hull and liability insurance underwriters provide coverage for our third-party aircraft operators. Insurance underwriters are required by various federal and state regulations to maintain minimum levels of reserves for known and expected claims. However, there can be no assurance that our or third-party aircraft operators' insurance policies will be sufficient to cover potential claims or that present levels of coverage will be available in the future at reasonable cost, or that underwriters have established adequate reserves to fund existing and future claims. 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. 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. In addition, we cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim.

The number of air medical or tourism accidents, as well as the number of insured losses within the commercial airline industry, and the impact of general economic conditions on underwriters may result in increases in premiums above the rate of inflation. If our third-party aircraft operators' insurance costs increase, such operators are likely to pass the increased costs to us, which could cause us to increase the prices paid by our customers. Such cost increases could adversely affect demand for our services and harm our business. Additionally, under all aircraft operating agreements, our third-party aircraft operators have agreed to indemnify us against liability arising from the operation of aircraft and to maintain insurance covering such liability. However, there can be no assurance there will be no challenge to the indemnification rights or that the aircraft operator will have sufficient assets or insurance coverage to fulfill its indemnity obligations.

***We may incur substantial maintenance costs as part of our leased aircraft return obligations.*** 

Some of our aircraft lease agreements contain provisions that require us to return aircraft airframes and engines to the lessor in a specified condition or pay an amount to the lessor based on the actual return condition of the equipment. These lease return costs are recorded in the period in which they are incurred. On our financial statements, we estimate the cost of maintenance lease return obligations and accrue such costs over the remaining lease term when the expense is probable and can be reasonably estimated. Any unexpected increase in maintenance return costs may have a material adverse effect on our financial condition and results of operations.

***We are exposed to operational disruptions due to maintenance.*** 

Our fleet requires regular maintenance work, which can cause operational disruption. Our inability to perform timely maintenance and repairs could result in our aircraft being underutilized which could have an adverse effect on our business, financial condition and results of operations. For example, in January 2025, the Company voluntarily cancelled a number of scheduled flights to address maintenance concerns regarding certain aircraft. While flights returned to full schedule in the first quarter of 2025, the cancellations resulted in lost revenues and operating income and additional unplanned maintenance costs. In addition, when flight hours of our aircraft increase we have an increase in maintenance, which results in an increase in maintenance and repairs and corresponding costs. A prolonged period of maintenance or repair work would result in disruptions to our routes, lower revenues and/or increased costs. On occasion, airframe manufacturers or regulatory authorities may require mandatory or recommended modifications to be made across a particular fleet which may mean having to ground a particular type of aircraft. This may cause operational disruption to and impose significant costs on us. Furthermore, our operations in remote locations, where delivery of components and parts could take a significant period of time, could result in delays in our ability to maintain and repair our aircraft. Any such delays may pose a risk to our business, financial condition and results of operations. Moreover, as our aircraft base

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increases, our maintenance costs could potentially increase. We have no historical experience maintaining fully-electric and hybrid-electric powertrains. While we believe the newly developed powertrains will require reduced maintenance activity per flight hour, our operations could be negatively impacted if our assumptions on reliability or cost of maintenance prove incorrect.

***The profitability of our current operations is dependent on the availability and pricing of aircraft fuel. Periods of significant disruption in the supply of aircraft fuel or elevated pricing could have a significant negative impact on our results of operations and liquidity.*** 

Although our current operations and those of third-party aircraft operators, in the limited circumstances, such as operations in Hawaii, where we purchase fuel directly, are currently able to obtain adequate supplies of aircraft fuel, we cannot predict the future availability. Natural disasters (including hurricanes or similar events in the southeast United States and on the Gulf Coast where a significant portion of domestic refining capacity is located), political disruptions or wars involving oil-producing countries, economic sanctions imposed against oil-producing countries or specific industry participants, changes in fuel-related governmental policy, the strength of the U.S. dollar against foreign currencies, changes in the cost to transport or store petroleum products, changes in access to petroleum product pipelines and terminals, speculation in the energy futures markets, changes in aircraft fuel production capacity, environmental concerns and other unpredictable events may result in fuel supply shortages or distribution challenges in the future leading to volatile aircraft fuel pricing. Any of these factors or events could cause a disruption in or increased demands on oil production, refinery operations, pipeline capacity or terminal access and possibly result in diminished availability of aircraft fuel supply for our third-party aircraft operators. 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. During the years ended December 31, 2025 and 2024, our fuel expense was $11.3 million and $14.0 million, respectively. The timely and adequate supply of fuel to meet operational demand depends on the continued availability of reliable fuel supply sources as well as related service and delivery infrastructure. Although we have some ability to cover short-term fuel supply disruptions, we depend significantly on the continued performance of our third-party service providers to maintain supply integrity. Consequently, we can neither predict nor guarantee the continued timely availability of aircraft fuel throughout our operations.

***Unsatisfactory safety performance of our aircraft could have a material adverse effect on our business, financial condition and results of operations.*** 

While we intend to maintain operational processes designed to ensure that the design, testing, manufacture, performance, operation and servicing of our aircraft meet rigorous quality standards, there can be no assurance that we will not experience operational or process failures and other problems, including through flight test accidents or incidents, manufacturing or design defects, pilot error, cyber-attacks or other inadvertent or intentional acts or omissions, that could result in potential safety risks. 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 meet our safety standards or adverse publicity affecting our reputation as a result of accidents, mechanical or operational failures, or other safety incidents could have a material adverse effect on our business, financial condition and results of operation. In addition, our aircraft may be grounded by regulatory authorities due to safety concerns that could have a material adverse effect on our business, financial condition, results of operations and prospects.

***Crashes, accidents or incidents of aircraft involving us or our competitors could have a material adverse effect on our business, financial condition and results of operations.*** 

The operation of aircraft is subject to various risks, and we expect demand for our air mobility services to be impacted by accidents or other safety issues regardless of whether such accidents or issues involve our aircraft.

Crashes, accidents or incidents involving our aircraft, or involving aircraft operating our powertrains, once developed, are possible. Any such occurrence would negatively impact our business, financial condition and results of operations in a number of ways. An accident or incident involving an aircraft operated by us or by a third-party operator on our behalf or using our powertrains, could result in significant potential claims of injured passengers and others, as well as repair or replacement of a damaged aircraft and its consequential temporary or permanent loss from service. For example, in January 2024, a Southern flight was forced to make an emergency landing following take-off in severe

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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. Moreover, any aircraft accident or incident, even if fully insured or due to reasons not attributable to us or our operations or products, could result in negative public perception that our operations are less safe or reliable than other providers and have a material adverse effect on our reputation, business and results of operations. Safety issues experienced by a particular model of aircraft could impact consumer confidence in that particular aircraft type or the air transportation services industry as a whole, or result in a regulatory body grounding that particular aircraft model. If we or other operators experience accidents with aircraft models that we operate, obligating us to take such aircraft out of service until the cause of such accidents is determined and rectified, we might lose revenues and might lose customers. The value of the aircraft model might also be permanently reduced in the secondary market if the model were to be considered less desirable for future service.

Moreover, such accidents or incidents could also have a material impact on our ability to obtain or maintain FAA certification for our aircraft in a timely manner, or at all.

If our personnel, third-party contractors with whom we have arrangements, our aircraft, other types of aircraft or other companies in the industry are involved in a public incident, accident, catastrophe or regulatory enforcement action, we could be exposed to significant reputational harm and/or potential legal liability. The insurance we carry may be inapplicable or inadequate to cover any such incident, accident, catastrophe or action. In the event that our insurance is inapplicable or inadequate, we may be forced to bear substantial losses from an incident or accident.

Further, as we develop and manufacture fully-electric and hybrid-electric powertrains and as these powertrains are implemented in aircraft that we sell to other operators, we may be exposed to additional risks and demand for our newly developed products will be negatively impacted by accidents or incidents involving the powertrains, including during test flights of prototypes. Such events could impact confidence in not just our products, but the development of electrification technology as a whole. This could have a material adverse effect on our future growth, financial condition and results of operations.

**Risks Related to Our Dependence on Third Parties**

***We are substantially dependent upon our relationships with our strategic partners, and we are or may be subject to risks associated with such strategic alliances. Our reliance on these arrangements, and the loss of any such alliances or arrangements or failure to identify future opportunities could affect our growth plans.***

We intend to collaborate with leading aerospace OEMs and industry leading engineering-for-hire firms to develop a set of fully-electric and hybrid-electric aircraft. We have entered into agreements with TAI for, among other things, the purchase of four new Cessna Caravans, as well as the provision of certain services, in anticipation of the development of fully-electric and hybrid-electric aircraft. We have also entered into an agreement with AeroTEC to develop, and to apply for STCs from the FAA for, fully-electric and hybrid-electric variants of the Cessna Caravan, as well as the development and supply of aircraft electric propulsion units ("EPUs") for fully-electric and hybrid-electric powertrains, to be initially designed for the Cessna Caravan.

Some of our current arrangements are contingent upon certain conditions or the entry into definitive documentation in the future. Our agreements with TAI are subject to certain milestones that, if we do not meet, may result in TAI's option to terminate the agreements. See the section titled "Licensing, Exclusivity and Aircraft Purchase Arrangements - Textron Agreement" in Note 13, Commitments and Contingencies in the accompanying consolidated financial statements for further details on our agreements with TAI .

We have entered into collaborations with third parties for the development of SurfOS, as more fully described in "*Risks Related to the Development of the SurfOS Software Platform - Our collaborations to develop SurfOS create risks through technology dependence, potential collaborator misalignment, relationship challenges, and funding uncertainties that could significantly impact the Company's business.*"

Such strategic business relationships will be a critical component in the growth and success of our business and, in particular, our ability to develop and commercialize SurfOS and deploy fully-electric and hybrid-electric powertrains and related aircraft within our fleet. However, there are no assurances that we will be able to timely meet all of the conditions of these agreements, if at all, maintain these relationships or continue to identify or secure suitable business relationship opportunities in the future, or that our competitors will not capitalize on such opportunities before we do. Moreover, identifying such opportunities could require substantial management time and resources, and negotiating and financing relationships involves significant costs and uncertainties.

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If any conflicts arise between our strategic partners and us, the other party may act in a manner adverse to us and could limit our ability to implement our business strategies, which could impact our projected business timelines. Our strategic partners may also develop, either alone or with others, products in related fields that are competitive with our products. Specifically, conflicts with our key strategic partners, including TAI and AeroTEC, could adversely impact our ability to develop and manufacture our planned powertrain and our planned subsequent modification of aircraft, which, in turn could have a material adverse effect on our prospects, business, financial condition and results of operation.

If we are unable to successfully maintain, source and execute on strategic relationship opportunities in the future related to electrification or other technologies relevant to our competitive position, or if any of our agreements with our strategic partners were to be terminated, our overall growth could be impaired, and there could be a material adverse effect on our business, financial condition and results of operations.

***If we are unable to economically outsource the production, assembly and installation of our fully-electric and hybrid-electric powertrain solutions at scale or source the parts and components of these powertrains then we may not realize the benefit of our investment in these technologies.***

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. We have strategically partnered with companies that we believe to be industry leaders in order to supply the highest quality components for, and to help us develop, our fully-electric and hybrid-electric powertrains. Many of the components for our planned fully-electric and hybrid-electric powertrains will be custom made for us, which may expose us to additional risks if one or more components become unavailable. This supply chain exposes us to multiple potential sources of delivery failure or component shortages for our future powertrain, most of which are out of our control, including shortages of, or disruptions in the supply of, the raw materials used by our suppliers in the manufacturing of components, disruptions to our suppliers' workforce (such as strikes or labor shortfalls) and disruptions to, or capacity constraints affecting, shipping and logistics.

Moreover, we anticipate that a significant concentration of the production, assembly and installation of certain components will be performed by a small number of outsourcing partners. While these arrangements can lower operating costs, they also reduce our direct control over production and distribution. Such diminished control may have an adverse effect on the quality or quantity of products or services, or our flexibility to respond to changing conditions. We expect to rely on single-source suppliers to supply and produce many components. Any failure of these suppliers or outsourcing partners to perform could require us to seek alternative suppliers or to expand our production capabilities, which could incur additional costs and have a negative impact on our cost or supply of components or finished goods.

While we believe that we may be able to establish alternative supply relationships and obtain replacement components, we may be unable to do so in the short-term or at all at prices that are acceptable to us or we may need to re-certify components. If we need to find alternative suppliers for any of the key components of our planned fully-electric and hybrid-electric powertrains, then this could increase our costs and adversely affect our ability to receive such components on a timely basis, or at all, which could cause significant delays in our overall projected timelines for the delivery of our powertrain and could have a material adverse effect on our future relationships with our customers.

In addition, production or logistics in supply or production areas or transit to final destinations can be disrupted for a variety of reasons including, but not limited to, natural and man-made disasters, information technology system failures, commercial disputes, military actions, economic, business, labor, environmental, public health or political issues or international trade disputes. Any failure to develop such production processes and capabilities within our projected costs and timelines could have a material adverse effect on our business, financial condition and results of operations.

Further, if we are unable to successfully manage our relationships with our suppliers, the quality and availability of our powertrain and modified aircraft may be harmed. Our suppliers could, under some circumstances, decline to accept new purchase orders from, or otherwise reduce their business, with us. Any disruptions in the supply of components from our suppliers could lead to delays in both prototype and commercial powertrain production and subsequent modification of aircraft, which could have a material adverse effect on our business, financial condition and results of operations.

We have not yet selected manufacturers and suppliers of certain components of the proposed fully-electric and hybrid-electric powertrains for the Cessna Caravan, or entered into any agreements in relation to the development and manufacture of these components. Delays or difficulties in selecting and entering agreements with such manufacturers

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and suppliers may impact the timelines we envisage for developing the powertrain, and adversely affect the results of our operations.

Our collaboration with TAI for our development of hybrid-electric and battery electric powertrains for the Cessna Caravan and our relationship with TAI as its exclusive supplier of certain fully-electric and hybrid-electric powertrains for the Cessna Caravan are subject to a number of conditions and milestones. If the conditions and milestones in the TAI agreements governing our relationship with TAI are not met, or if the agreements or exclusive relationship are canceled, modified or delayed, our prospects, business, financial condition and results of operations will be harmed.

The agreements governing our collaboration with TAI for our development of its proprietary fully-electric and hybrid-electric powertrains to power the Cessna Caravan aircraft are subject to a number of conditions and milestones, including the issuance of an STC for the powertrain by the FAA within 60 months of the initial listing date of our shares of common stock as part of the STC for installation of that powertrain in the Cessna Caravan aircraft and meeting certain design and performance objectives upon the timeline specified in the agreements with TAI. In the event that we are unable to meet these conditions and objectives as verified by TAI, the obligations of TAI to us under the agreements can be terminated by TAI. In addition, our relationship as the exclusive supplier of certain electrified and hybrid-electric powertrains to TAI can be terminated by TAI if the conditions and milestones relating to our agreements with TAI are not met. In connection with the agreements governing our collaboration with TAI, we must pay certain fees, including fees under the Data License Agreement. 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. If either our agreements or our exclusive relationship with TAI are canceled, modified or delayed, or otherwise not consummated, or if we are otherwise unable to convert our strategic relationship with TAI into revenue, our prospects, business, financial condition and results of operations will be adversely affected.

***If our third-party aircraft operators are unable to support our operations or the growth of our business, or we are unable to add alternative third-party aircraft operators to meet demand, our costs may increase and our business, financial condition and results of operations could be adversely affected.***

We are dependent on a finite number of certificated third-party aircraft operators to provide a significant portion of our network services. We have, in the past, experienced delays, cancellations and difficulties engaging third-party operators with sufficient capacity to operate the number of routes necessary to meet demand. This risk is exacerbated when there is a transition between operators, which we experienced from May to August 2022 when transitioning to Southern as our operator for scheduled routes in the West Coast, resulting in a significant number of canceled and delayed flights.

In the event potential competitors establish cooperative or strategic relationships with third-party aircraft operators in the markets we serve, offer to pay third-party aircraft operators more attractive rates or guarantee a higher volume of flights than we offer, we may not have access to the necessary number of aircraft to achieve our planned growth. Though we have successfully incentivized our operators to add aircraft to support our growth in the past, there is no guarantee we will be able to continue doing so without incurring significant additional costs. Increased use of private aircraft has added competitive pressure for access to aircraft, which may make it more difficult or costly for third-party operators to expand to meet our needs. If our third-party aircraft operators are unable or unwilling to add aircraft, or are only able to do so at significantly increased expense, or otherwise do not have capacity or desire to support our growth, or we are unable to add new operators on reasonable terms, or at all, our business and results of operations could be adversely affected. As the air mobility market grows, we expect competition for third-party aircraft operators to increase. Further, we expect that as competition in the air mobility market grows, the use of exclusive contractual arrangements with third-party aircraft operators, sometimes requiring volume guarantees, may increase, as may the cost of securing their services.

***If we encounter problems, such as workforce disruptions, with any of our third-party aircraft operators or third-party service providers, our operations could be adversely affected by a resulting decline in revenue or negative public perception about our services.*** 

Many of our flight operations are conducted by third-party aircraft operators on our behalf and we rely on third-party service providers to support our operations*.* Due to our reliance on third parties to provide these services going forward, we are subject to the risk of disruptions to their operations, such as the impact of adverse economic conditions and the inability of third parties to hire or retain skilled personnel, including pilots and mechanics, as well as any failure to deliver services at the level expected of them. We have, in the past, experienced issues with third-party aircraft operators. 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

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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. This had a negative impact on our results of operations and required approximately eight months to re-establish revenue levels similar to those prior to this event. Several of these third-party operators provide significant capacity that we would be unable to replace in a short period of time should that operator fail to perform its obligations. Disruptions to capital markets, shortages of skilled personnel and adverse economic conditions in general, have subjected certain of these third-party regional operators to significant financial and operational pressures, which have in the past and could in the future result in the temporary or permanent cessation of their operations.

Union strikes or staff shortages among airport workers or certain pilots of third-party aircraft operators may result in disruptions of our air mobility service and thus could have a material adverse effect on our business, financial condition and results of operations. Any significant disruption to our operations as a result of problems with any of our third-party aircraft operators could have a material adverse effect on our business, financial condition and results of operations.

In addition, we have entered into agreements with contractors to provide various facilities and services required for our operations. Because we will rely on others to provide such services, our ability to control the efficiency and timeliness of such services will be limited. Similar agreements may be entered into in any new markets we decide to serve. 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. Any material problems with the efficiency and timeliness of contract services, resulting from financial hardships or otherwise, could have a material adverse effect on our business, financial condition and results of operations.

***We rely on third-party web service providers to deliver our offerings to users on our platform, and any disruption of or interference with our use of third-party web services could adversely affect our business, financial condition and results of operations.*** 

Our platform's continuing and uninterrupted performance is critical to our success. We currently host our platforms and support our operations using third-party providers of cloud infrastructure services. While we have engaged reputable vendors to provide these services, we do not have control over the operations of the facilities used by their third-party providers and their facilities may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, human error, terrorist attacks, power outages and similar events or acts of misconduct. In addition, any changes to the service levels from these third-party cloud infrastructure providers may adversely affect our future ability to meet the requirements of users to search for flights and book travel. While we expect to implement reasonable backup and disaster recovery plans, we have experienced interruptions, delays and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints. Sustained or repeated system failures would reduce the attractiveness of our offerings. It may become increasingly difficult to maintain and improve our performance, especially during peak usage times, as we expand our service offerings. Any negative publicity or user dissatisfaction arising from these disruptions could harm our reputation and brands and could have a material adverse effect on our business, financial condition and results of operation.

***Aircraft purchase agreements are often subject to indexed price escalation clauses which could subject us to unanticipated expenses.*** 

Commercial aircraft sales contracts are often entered into years before the aircraft are delivered. In order to help account for economic fluctuations between the contract date and delivery date, aircraft pricing generally consists of a fixed amount as modified by price escalation formulas derived from labor, commodity and other price indices, the actual escalation amounts of which are outside of the purchaser's control. Escalation factors can fluctuate significantly from period to period and changes in escalation amounts can significantly impact expenses and operating margins. The terms and conditions of the aircraft purchase agreement with TAI do contain price escalation clauses and future purchase orders with other suppliers may also contain price escalation clauses yet to be determined, and there is no assurance that they will be determined in a manner that will mitigate the risks described above.

**Risks Related to Our Intellectual Property and Information Technology**

***If we fail to adequately protect our intellectual property rights, our competitive position could be impaired and we may lose market share, generate reduced revenue and incur costly litigation to protect our rights.*** 

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Our success depends in part on our ability to protect our intellectual property rights, including trademarks and service marks applicable to our operating entities and, in the future once developed, certain technologies and software that we expect to be deployed in our aircraft or that we expect to utilize in arranging air transportation. To date, we have relied primarily on trademarks to distinguish us from our competitors, and trade secrets and other forms of legal protection and contractual agreements to establish and protect our proprietary rights.

Although we plan to control the STC once certified, and may own certain intellectual property rights relating to the powertrain, we do not anticipate owning intellectual property rights in any particular component of the fully-electric and hybrid-electric powertrains to be produced. Under our agreement with AeroTEC, it will provide services for us to obtain one or more STCs that relate to the powertrains. Such an STC would provide us the right to operate and otherwise commercialize Cessna Caravans modified with such a powertrain. However, an STC does not provide an exclusive right to commercialize the component that the STC describes, and other companies may file for and obtain an STC to modify a Cessna Caravan or other light aircraft with a substantially similar or superior powertrain compared to the powertrains we plan to develop with our commercial partners. Moreover, there is no guarantee that we will obtain an STC for our planned fully-electric and hybrid-electric powertrains, through our collaboration with our commercial partners or otherwise. 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. We routinely enter into agreements with employees, consultants, third parties and other relevant persons and take other measures to protect our intellectual property rights, such as limiting access to our trade secrets and other confidential information. However, we cannot guarantee that we have entered into or will enter into such an agreement with each person that has access to such information or that the steps we take to protect our intellectual property will otherwise be adequate. For example, unauthorized parties may attempt to obtain and use information that we regard as proprietary and, if successful, may potentially harm our ability to compete, accelerate the development programs of our competitors, and/or our competitive position in the market. Moreover, our agreements do not prevent our competitors from independently developing technologies that are substantially equivalent or superior to ours, and there can be no assurance that our counterparties will comply with the terms of these agreements, or that we will be able to successfully enforce such agreements or obtain sufficient remedies if they are breached. There can be no assurance that the intellectual property rights we own or license will offer us meaningful protection for our business, provide competitive advantages or will not be challenged or circumvented by our competitors.

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. It is also possible that we will fail to identify patentable aspects of our technology before it is too late to obtain patent protection, that we will be unable to devote the resources needed to file and prosecute patent applications for such technology, or that we will inadvertently abandon them by failing to comply with all procedural, documentary, payment, and similar obligations during the patent prosecution process. Even if we obtain patent protection in future, we cannot assure you that such patents would be sufficiently broad to protect our proprietary technology to prevent competitors or other third parties from using the same or similar technologies. Failure to comply with legal requirements to maintain a patent, copyright, or trademark registration can result in lapse or cancellation of the patent, copyright, or trademark registration, which could result in the loss of patent or trademark rights. If this occurs, we may not be able to exclude our competitors from using patented technology that we have developed or our trademarks. Also, patents, copyrights, and trademark registrations may be challenged in court or administrative proceedings.

The laws of some countries do not protect proprietary rights to the same extent as the laws of the United States, and mechanisms for enforcement of intellectual property rights in some foreign countries may be inadequate to prevent other parties from infringing our proprietary technology. To the extent we expand our international activities, our exposure to unauthorized use of our technologies and proprietary information may increase. We may also fail to detect unauthorized use of our intellectual property, or be required to expend significant resources to monitor and protect our intellectual property rights, including engaging in litigation, which may be costly, time-consuming, and divert the attention of management and resources, and may not ultimately be successful. If we fail to meaningfully establish, maintain, protect and enforce our intellectual property rights, there could be a material adverse effect on our business, financial condition and results of operations.

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***We may need to defend ourselves against intellectual property infringement claims or misappropriation claims, which may be time-consuming and expensive and, if adversely determined, could limit our ability to commercialize our software solutions or our aircraft.*** 

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.

For example, third parties owning patents or other intellectual property rights relating to airline services or aircraft components (e.g., battery packs, electric motors, aircraft configurations, fly-by-wire flight control software, electronic power management systems or other components) may allege infringement or misappropriation of such rights. 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•cease development, sales or use of its or our products or services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•trade under a different name or rebrand our services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•pay substantial damages;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•re-design one or more aspects or systems of its or our aircraft or other offerings.

A successful claim of infringement or misappropriation against us or our commercial partners could adversely affect our business, financial condition and results of operations. Even if we or our commercial partners are successful in defending against these claims, litigation could result in substantial costs, business disruption and demand on management resources.

***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. Our information technology networks and systems process, transmit and store personal and financial information, proprietary information of our business, and also allow us to coordinate our business across our operation bases and allow us to communicate with our employees and externally with customers, suppliers, partners and other third parties. To date, we have not implemented comprehensive security measures to secure these information technology networks and systems and the data processed, transmitted, and stored on them. These networks, systems, and data will be susceptible to cyberattacks, viruses, malware or other unauthorized access or damage (including by environmental, malicious or negligent acts), which could result in unauthorized access to, or the release and public exposure of, our proprietary information or our users' personal information. In addition, cyberattacks, viruses, malware, or other damage or unauthorized access to our information technology networks and systems, would result in damage, disruptions or shutdowns to our platform. Additionally, the prevalence and increasing sophistication of AI may increase the frequency or efficacy of cyberattacks against us, and the use of AI by us or third parties on which we depend to operate our business may create new cybersecurity vulnerabilities, including those which may not be recognized at this time. Any of the foregoing could cause substantial harm to our business, require us to make notifications to our customers, governmental authorities, or the media, and could result in litigation, investigations or inquiries by government authorities, and subject us to penalties, fines, and other losses relating to the investigation and remediation of such an attack or other unauthorized access or damage to our information technology systems and networks.

We may in the future be subject to data breaches. A significant data breach or any failure, or perceived failure, by us to comply with any federal, state or data foreign privacy laws, regulations or other principles or orders to which we may be subject could adversely affect our reputation, brand and business, and may result in claims, investigations, proceedings or actions against us by governmental entities, litigation, including class action litigation, from our customers, fines, penalties, or other liabilities, or require us to change our operations or cease using certain data sets. 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

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required to expend additional resources in connection with investigating and remediating such an incident, and otherwise complying with applicable privacy and data security laws.

***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.*** 

Our systems, or those of third parties upon which we rely, may experience service interruptions, outages or degradation because of hardware and software defects or malfunctions, human error or malfeasance by third parties or our employees, contractors, service providers, earthquakes, hurricanes, floods, fires, natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks, cyberattacks, ransomware attacks or other events. We do not carry cyber insurance, which may expose us to certain potential losses for damages or result in penalization with fines in an amount exceeding our resources. As we do not currently have insurance protection for cybersecurity breaches, we may not have sufficient remedies available to us from our third-party service providers to cover all of our losses that may result from such interruptions, outages or degradations.

Our software and the third-party software that we incorporate into our platform may be subject to errors, defects or vulnerabilities. Any errors, defects or vulnerabilities discovered in our platform, whether in our code or that of third-party software on which our software relies, could result in negative publicity, a loss of customers or loss of revenue, access or other performance issues, security incidents or other liabilities. 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. We may need to expend significant financial and development resources to analyze, correct, eliminate or work around errors or defects or to address and eliminate vulnerabilities. Any failure to timely and effectively resolve any such errors, defects or vulnerabilities could negatively impact our reputation or brand, and could have a material adverse effect on our business, financial condition and results of operations.

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. This licensed software may introduce vulnerabilities within our own operations as it is integrated with our systems, or as we provide services to our customers.

We are subject to cyberattacks, system failures and other events or conditions that can interrupt the availability or reduce or affect the speed or functionality of our technology platform, especially because we are in the process of maturing our security programs and have not yet implemented the expected security controls to prevent such disruptions. These events could result in losses of revenue due to increased difficulty of booking services through our technology platform, impacts to on-time performance and resultant errors in operating our business. A prolonged interruption in the availability or reduction in the availability or other functionality of our platform can adversely affect our business and reputation and could result in the loss of customers. For example, in 2022, Southern experienced a prolonged interruption in its platform functionality as a result of a ransomware attack on a third-party service provider, which caused two flights to be canceled and the need to revert to manual processes. Moreover, to the extent that any system failure or similar event results in harm or losses to the customers using our platform, such as the inability to book or change flights because of a system failure, we may make voluntary payments to compensate for such harm or the affected users could seek monetary recourse or contractual remedies from us for their losses and such claims, even if unsuccessful, would likely be time consuming and costly for us to address.

It is also possible our security controls over personal and other data may not prevent unauthorized access to, or destruction, loss, theft, misappropriation or release of personally identifiable or other proprietary, confidential, sensitive or valuable information of ours or others; this access could lead to potential unauthorized disclosure of confidential personal, Company or customer information that others could use to compete against us or for other disruptive, destructive or harmful purposes and outcomes. Any such disclosure or damage to our networks and systems could subject us to third-party claims against us and reputational harm, including statutory damages under California or other state law, regulatory penalties and significant costs of breach investigation, remediation and notification. If these events occur, our ability to attract new clients may be impaired or we may be subjected to damages or penalties.

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***We will continue to rely on mobile operating systems and application marketplaces to make our app available to users of our platform. If we do not effectively operate with or receive favorable placements within such application marketplaces and maintain high user reviews, our usage or brand recognition could decline and our business, financial results and results of operations could be adversely affected.*** 

We depend in part on mobile operating systems, such as Android and iOS, and their respective application marketplaces to make their respective platforms available to customers. The majority of our flights are booked through our app. In the future, these mobile operating systems or application marketplaces could limit or prohibit us from making our current and future apps available to customers, make changes that degrade their functionality, increase the difficulty of using them, impose terms of use unsatisfactory to us or users, or modify search or ratings algorithms in ways that are detrimental to us. Additionally, if any future competitor's placement in such mobile operating system's application marketplace is more prominent than the placement of our current and future apps, overall growth in our customer base could slow and the usage of our platform could be adversely affected. The Surf Air app has experienced fluctuations in the number of downloads in the past, and we anticipate similar fluctuations in the future. Any of the foregoing risks could have a material adverse effect on our business, financial condition and results of operations.

As new mobile devices and mobile platforms are released, there is no guarantee that certain mobile devices will continue to support our platform or effectively roll out updates to our current and future apps. Additionally, in order to deliver high-quality apps, we need to ensure that our offerings are designed to work effectively with a range of mobile technologies, systems, networks and standards. We may not be successful in developing or maintaining relationships with key participants in the mobile technology industry to make, or continue to make, such technologies, systems, networks or standards available to our customers. If users on our platform encounter any difficulty accessing or using our apps on their mobile devices or if we are unable to adapt to changes in popular mobile operating systems, there could be a material adverse effect on our business, financial condition and results of operations.

***We will need to improve our financial and operational systems to manage our growth effectively and support our business arrangements, and an inability to do so could harm our business, financial condition and results of operations.*** 

To manage our growth and business operations, especially as we expand our network and work with our commercial partners to electrify our fleet, we will need to upgrade our operational and financial systems and procedures, which requires management time and may result in significant additional expense. In particular, we are in the process of replacing our legacy enterprise resource planning ("*ERP*") systems in order to accommodate our expanding operations and address our deficiencies in IT general controls for information systems. We cannot be certain that we will successfully institute, in a timely or efficient manner or at all, our new ERP system or the improvements to our managerial, operational and financial systems and procedures necessary to support our anticipated increased levels of operations. Problems associated with, or disruptions resulting from, any improvement or expansion of our operational and financial systems could adversely affect our relationships with our customers, commercial partners and suppliers, inhibit our ability to expand or take advantage of market opportunities, cause harm to our reputation, result in errors in our financial and other reporting and affect our ability to maintain an effective internal control environment and meet our external reporting obligations, any of which could harm our business, financial condition and results of operations.

**Legal and Regulatory Risks Related to Our Business** 

***Our business will be subject to a variety of extensive and evolving laws and regulations, which may result in increases in our costs, disruptions to our operations, limits on our operating flexibility, reductions in the demand for air travel and competitive disadvantages.*** 

We are subject to a wide variety of laws and regulations relating to various aspects of our business, including employment and labor, health care, tax, securities and exchange laws, data privacy and data security, safety and environmental issues. Laws and regulations at the foreign, federal, state and local levels frequently change, especially in relation to new and emerging industries, and we cannot always reasonably predict the impact from, or the ultimate cost of compliance with, current or future legal or regulatory changes. Moreover, changes in law, the imposition of new or additional regulations or the enactment of any new or more stringent legislation that impacts our business could require us to change the way we operate or limit our ability to expand into certain jurisdictions, which could have a material adverse effect on our business, financial condition and results of operations.

Our operations are highly regulated by several U.S. government agencies, including the DOT, the FAA and the TSA. Requirements imposed by these regulators (and others) may restrict the ways we may conduct our business, as well as the operations of our third-party aircraft operator customers. Failure to comply with such requirements in the future

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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. If the TSA were to impose additional or more burdensome security requirements, demand for our services could decrease and/or the costs required to comply with these requirements could increase. In addition, the FAA can assess civil penalties or seek criminal sanctions for failure to comply with FAA regulations, as well as modify, suspend or revoke licenses granted to us for our operations. In the future, any new regulatory requirements, particularly requirements that limit our third-party aircraft operators' ability to operate or new maintenance directives or mandatory orders related to airworthiness, could have a material adverse effect on us and the industry.

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. The emergency amendment requires operators in the aviation sector to develop approved implementation plans, and to assess the effectiveness of those measures, in addition to current regulatory requirements to report significant cybersecurity incidents to the Cybersecurity and Infrastructure Security Agency, establish a cybersecurity point of contact, develop and adopt a cybersecurity incident response plan and complete a cybersecurity vulnerability assessment.

Other laws, regulations, taxes and airport rates and charges have also been imposed from time to time that significantly increase the cost of airline operations, reduce revenues or otherwise impact our business. The industry is heavily taxed. Additional taxes and fees, if implemented, could negatively impact our results of operations.

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. The imposition of any limits on the use of such aircraft at any airport at which we operate could have a material adverse effect on our operations.

Our results of operations and the manner in which we conduct business each may be affected by changes in law and future actions taken by governmental agencies, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in law or regulation that affect the services that can be offered by us in particular markets or at particular airports, or the types of fares offered or fees that can be charged;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in law or regulation that specifically address hybrid-electric, all-electric or alternative fuel aircraft that could delay our ability to deliver products, implement aircraft modifications or launch service;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the adoption of new passenger security standards or regulations that impact customer processing or service;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•restrictions on airport operations, such as restrictions on the use of particular airports; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the adoption of new or increased aircraft noise restrictions.

We receive, collect, store, process, transmit, share and use personal information, including passenger data, and rely in part on third parties that are not directly under our control to manage certain of these operations and to receive, collect, store, process, transmit, share, and use such personal information, including payment information. Each additional regulation or other form of expanded regulatory oversight increases costs, adds greater complexity to operations and, in some cases, may reduce the demand for air travel. There can be no assurance that the increased costs or greater complexity associated with compliance with new or expanded rules, anticipated rules or other forms of regulatory oversight will not have a material adverse effect on us. Failure to comply with data privacy laws and regulations could have a material adverse effect on our reputation, financial condition or results of operations, or have other adverse consequences.

We and other U.S. carriers are subject to U.S. and foreign laws regarding privacy of passenger and employee data that are not consistent in all countries in which we operate and which are continuously evolving, requiring ongoing monitoring and updates to our privacy and information security programs. Although we dedicate resources to manage compliance with data privacy obligations, this challenging regulatory environment may pose material risks to our business, including increased operational burdens and costs, regulatory enforcement, and legal claims or proceedings.

Even when we believe we are in complete compliance, a regulatory agency may determine that we are not. 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

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or revocation of licenses, certificates, authorizations or permits, which would prevent us from operating all or significant portions of our business.

***We may be unable to obtain or maintain relevant regulatory approvals for the commercialization of our electrification of aircraft.*** 

The development and commercialization of new fully-electric and hybrid-electric powertrains to be used in aircraft and the operation of an air mobility service requires multiple regulatory authorizations and certifications, including STCs, and an air carrier certificate issued by the FAA under Part 119 with Part 135 operations specifications. We are continuing to work on FAA certification of our fully-electric powertrain and hybrid-electric powertrain, followed by the commercialization of the technology, potentially through third party collaborations. The timing of our production ramp is dependent on being able to timely obtain STCs from the FAA. In addition, we will also need to do extensive testing to ensure that the propulsion system is in compliance with applicable FAA safety regulations and other relevant regulations prior to our suppliers beginning mass production. Production approval involves initial FAA manufacturing approval and extensive ongoing oversight of mass produced aircraft components. If we are unable to obtain production approval for the hybrid-electric propulsion system, or the FAA imposes unanticipated restrictions as a condition of approval, our projected costs of production could increase substantially.

We may be unable to obtain or maintain such authorizations and certifications, or to do so on the timeline we project. 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.

An STC will be issued by the FAA only if: (i) the pertinent technical data from the manufacturer has been examined and found satisfactory by the FAA; (ii) all necessary tests and compliance inspections have been completed; and (iii) the alteration has been found to conform with the technical data. There are a number of steps involved in obtaining an STC, including FAA application, preliminary type certification board ("TCB") meetings, development of certification program plans, establishment of certification basis by the FAA, data submission, FAA design evaluation, interim type certification meetings, FAA conformity inspections, pre-flight TCB meeting, ground inspections, ground tests, flight tests, FAA review of in-flight test results, issuance of Type Inspection Authorization, FAA conformity inspections, witnessing of tests and performance of official certification flight tests, flight standards evaluations, functional and reliability testing, FAA approval of flight manual supplement or supplemental flight manual, and final TCB meeting and Aircraft Evaluation Group completion of continuing airworthiness determination. Failure to achieve any of these milestones in a timely manner will delay our ability to attain the requisite STCs on the expected timeline or could result in failure to obtain STC approval at all. 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.

Our agreement with AeroTEC contemplates that it will apply for and obtain STCs for the fully-electric and hybrid-electric powertrains for Cessna Caravan aircraft, and transfer the STCs to us. If the FAA issues AeroTEC such an STC, FAA consent will be required for AeroTEC to transfer the STC to us, and we will still be required to comply with certain requirements in order to maintain that regulatory approval, including obligations to: (i) report failures, malfunctions and defects; (ii) make the type certificate and underlying data available to FAA and National Transportation Safety Board upon request; (iii) make instructions for continued airworthiness available to aircraft owners and operators; (iv) make required design changes to address Airworthiness Directives issued by FAA and make them available to aircraft owners and operators; and (v) make flight manual supplements and supplemental flight manuals available with each alteration. Failure to continue to comply with these and other requirements may result in the suspension or revocation of the STC or other licenses, certificates, authorizations or permits required to operate our business.

***We may be unable to comply with relevant regulations applicable to our on-demand business.*** 

We provide a technology platform to match air passengers with seats on certified aircraft. Depending on how this platform and our business evolves, it is possible that, as a result of our on-demand services, the DOT may view us as operating as either an "air charter broker" and/or a "charter operator". Each of these roles carries with it varying levels of regulatory obligations. To the extent applicable, failure to comply with the regulations applicable to each of these roles could result in the imposition of fines and/or civil penalties, and, in severe cases, the suspension or revocation of licenses, certificates, authorizations or permits, which would prevent us from operating all or a significant portion of our business.

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***Continued access to Essential Air Service revenue is of critical importance to us.*** 

We have historically received EAS subsidies as compensation for providing essential air service to numerous small communities. For the year ended December 31, 2025, EAS revenue was $44.8 million, or approximately 42% of the Company's total revenue. The total amount of EAS revenue ultimately received by us will be determined by, among other things, the number of subsidized flights flown, overall funding levels of the EAS program by the U.S. Congress (which could be reduced) and competitive bids for EAS revenue awards by other carriers (which could cause us to lose EAS revenue to competitors). The EAS program was initially intended to last ten years from 1978 but has been modified and extended in the years since. The EAS program may continue to be modified or changed or may be canceled in the future, or we may be unable to continue to participate successfully in the EAS program. Any such developments could materially adversely affect our business. EAS revenue awards generally have a term of two years, during which time, a carrier is paid a subsidy amount in accordance with the maximum allowances stipulated in the EAS revenue award and is paid monthly in arrears on a per-flight-completed basis. The DOT, which administers the EAS program, has the right to terminate a route for breach of contract or in exceptional circumstances and has the right to cancel EAS revenue awards if it deems that the communities served by such arrangements are no longer eligible.

There can be no assurance that current EAS legislation will remain unchanged, or that Congress will continue to provide funding for the EAS program at any particular level. For example, following the passage of the FAA Reauthorization Act of 2024, and resulting changes to the administration of the EAS program, we have been subject to increased competition for certain subsidized routes. As a result, we expect to face increased and continued competition when bidding for or renewing EAS contracts, which could impact our ability to retain existing routes or the level of subsidy associated with those routes. Additionally, during October 2025, the DOT issued public notices regarding a potential lapse in appropriated funding for the EAS program as a result of the federal government shutdown, followed by an amended notice extending temporary funding authority through November 18, 2025. While the DOT has historically restored and funded EAS obligations retroactively following prior government shutdowns, there can be no assurance that Congress will authorize retroactive reimbursement for service provided during a lapse. Interruptions, reductions, or delays in federal appropriations for the EAS program -- or changes in related legislation, regulations, or administrative practices - could affect the timing and amount of subsidy payments and increase the Company's working capital requirements to the extent it elects to continue operating EAS routes during a funding lapse. 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.

**Essential Air Service Program and Federal Funding Developments**

Interruptions, reductions, or delays in federal appropriations for the EAS program—or changes in related legislation, regulations, or administrative practices—could affect the timing and amount of subsidy payments and increase the Company's working capital requirements to the extent it elects to continue operating EAS routes during a funding lapse. The Company monitors these developments closely and will continue to assess their potential impact on liquidity, operating results, and overall business strategy.

***We may fail to continue to meet the requirements necessary to operate our air services.*** 

Regional airline services are currently regulated by both the DOT, which provides the economic authority to operate as an airline, and the FAA, which provides the safety authority. Southern currently holds a Commuter Air Carrier Authorization issued by the DOT under 14 C.F.R. Part 298 ("Part 298") and an Air Carrier Certificate issued by the FAA under 14 C.F.R. Part 119 with Operations Specifications issued under 14 C.F.R. Part 135 ("Part 135"). The requirements of Part 298 and Part 135 are continuing in nature and we must comply with them at all times, and a failure to meet any relevant requirements could subject us to possible penalties and/or certificate actions.

***We must comply continuously with Fitness and Citizenship requirements administered by the DOT to perform scheduled air transportation*.** 

As a carrier, we must be found to be fit, willing, and able to perform the air transportation for which we are licensed by the DOT. This involves a DOT evaluation of the citizenship, competence and compliance disposition of the airline and its management as well as an evaluation of the financial viability of the carrier and its ability to carry out its operations without putting customers' money at unnecessary risk. In connection with DOT review of our acquisition of Southern, we are undergoing a continuing fitness review by the DOT keyed to these factors. DOT review is ongoing. To the extent the DOT were to raise concerns about any of these matters, we may have to make adjustments to our operating team, management or ownership structure in order to address the concerns. A protracted failure to address any DOT concerns

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might result in the suspension or revocation of licenses, certificates, authorizations or permits, which would prevent us from operating our business.

**Risks Related to Our Operating as a Public Company** 

***The requirements of being a public company may strain our resources, divert management's attention and affect our ability to attract and retain qualified board members.***

As a public company, we are subject to the rules and requirements of the Exchange Act as well as other rules and regulations of the SEC, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), the Dodd Frank Wall Street Reform and Consumer Protection Act and any rules and regulations thereunder, as well as under the Jumpstart Our Business Startups Act of 2012 (the "*JOBS Act*"), and the rules of the NYSE. 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. The requirements of these rules and regulations will increase our legal and accounting compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control for financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight are required, and, as a result, management's attention may be diverted from other business concerns. These rules and regulations can also make it more difficult for us to attract and retain qualified independent members of our Board. The increased costs of compliance with public company reporting requirements and our potential failure to satisfy these requirements could have a material adverse effect on our operations, business, financial condition or results of operations. 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.*** 

Our executive officers have limited prior experience in the management of a publicly traded company. Our management team may not be able to effectively manage our responsibilities as a public company subject to significant regulatory oversight and reporting obligations under federal securities laws. Their lack of experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage, as an increasing amount of their time may be devoted to these activities, resulting in less time being devoted to the management and growth of our business and operations. 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 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*"). The development and implementation of the standards and controls necessary for us to achieve the level of accounting standards required of a public company in the United States may require costs greater than expected. It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company which will increase our operating costs in future periods.

***If we fail to maintain effective disclosure controls and procedures and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.*** 

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulations of the applicable listing standards of the NYSE. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In particular, as a result of the Sarbanes-Oxley Act, we are required to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independent registered public accounting firm potentially to attest to, the effectiveness of our internal control over financial reporting. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business, results of operations and financial condition and could cause a decline in the trading price of our common stock.

As a private company, we had not endeavored to establish and maintain internal control over financial reporting meeting the standards required of public companies. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we

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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.

We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. 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. 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. At this time, we cannot predict whether our efforts to remediate the identified material weaknesses will be successful, and it is expected that some or all of these material weaknesses will continue to persist for an extended period of time". In order to develop, maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related and audit-related costs and significant management oversight.

***Our management has identified material weaknesses in our internal control over financial reporting. 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. At this time, we cannot predict whether our efforts to remediate the identified material weaknesses will be successful, and it is expected that some or all of these material weaknesses will continue to persist for an extended period of time.***

Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. As of December 31, 2025, 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.

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. However, the material weaknesses will not be considered remediated until management completes the design and implementation of the processes and controls described above and the controls operate for a sufficient period of time and we have concluded, through testing, that the newly implemented and enhanced controls are operating effectively. At this time, we cannot predict the success of such efforts or the outcome of future assessments of the remediation efforts. Our efforts may not remediate these material weaknesses in internal control over financial reporting, and may not prevent additional material weaknesses from being identified in the future. Failure to implement and maintain effective internal control over financial reporting could result in errors in our consolidated financial statements that could result in a revision or restatement of our consolidated financial statements, and could cause us to fail to meet our reporting obligations, any of which could diminish investor confidence in us, negatively impact the trading price of our common stock and cause a decline in our equity value. Additionally, ineffective internal control over financial reporting could expose us to an increased risk of financial reporting fraud and the misappropriation of assets, and may further subject us to potential delisting from the stock exchange on which we list, or to other regulatory investigations, litigation and civil or criminal sanctions. Restatements or revisions of our consolidated financial statements could cause our management's attention to be diverted from the operation of the business and could also cause us to incur additional expenses.

***We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.***

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We are an "emerging growth company" within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We could be an emerging growth company until December 31, 2028, although circumstances could cause us to lose that status earlier, including if the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the end of such fiscal year and would become an accelerated filer. We cannot predict whether investors will find our securities less attractive because we rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

Additionally, we are a "smaller reporting company" as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. 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. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.

***We may be subject to securities litigation, which is expensive and could divert management attention.*** 

The market price of our common stock may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert management's attention from other business concerns, which could have a material adverse effect on our business.

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.

***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. Some investors may use these non-financial performance factors, including third-party scores, to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies and actions relating to corporate responsibility are inadequate or inappropriate. The criteria by which our corporate responsibility practices are assessed may change due to the constant evolution of the sustainability landscape, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria.

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Further, in the event that we communicate certain initiatives and goals regarding ESG matters, we could fail, or be perceived to fail, in our achievement or maintenance of such initiatives or goals, or we could be criticized for the pursuit of or scope of such initiatives or goals. We also may be unable to satisfy all stakeholders in light of their varied and sometimes conflicting views regarding sustainability and other corporate responsibility matters. If we fail to satisfy the evolving expectations of investors, customers, employees and other stakeholders our reputation and business, operating results and financial condition could be adversely impacted.

***Delaware law and our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.*** 

Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, and the Delaware General Corporation Law (as amended, the "DGCL") all contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, and therefore depress the trading price of our common stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of our Board or taking other corporate actions, including effecting changes in our management. Among other things, the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws include provisions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•establishing a classified board of directors with staggered, three-year terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•prohibiting cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•limiting the liability of, and providing for the indemnification of, our directors and officers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our Board or management.

***Our Amended and Restated Bylaws and our Amended and Restated Certificate of Incorporation limit voting rights of certain foreign persons.*** 

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. Additionally, our Amended and Restated Bylaws provide that Non-Citizens who are residents of countries that are not party to "open-skies" agreements with the United States ("NOS Non-Citizens") shall not, in the aggregate, own more than 25.0% of the total number of our outstanding equity securities, and that all Non-Citizens (including any NOS Non-Citizens) shall not, in the aggregate, own more than 49.0% of the total number of our outstanding equity securities. 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. Any other Non-Citizens that own (beneficially or of record) or have voting control over any shares of our capital stock, will have their voting rights subject to automatic suspension.

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***The provisions of our Amended and Restated Certificate of Incorporation requiring exclusive forum in the Court of Chancery of the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.*** 

These provisions may have the effect of discouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in other companies' certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our Amended and Restated Certificate of Incorporation to be inapplicable or unenforceable in such action. In this regard, stockholders may not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder, including Section 22 of the Securities Act.

**Risks Related to Ownership of Our Common Stock** 

***The trading price of our common stock may be volatile.*** 

The trading price of our common stock, may fluctuate due to a variety of factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in the industries in which we and our customers operate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•developments involving our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in laws and regulations affecting our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•variations in our operating performance and the performance of our competitors in general;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•actual or anticipated fluctuations in our quarterly or annual results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•publication of research reports by securities analysts about us or our competitors or our industry;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the public's reaction to our press releases, our other public announcements and our filings with the SEC;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•actions by stockholders, including the sale by the third-party investors of any of their shares of common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•additions and departures of key personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•commencement of, or involvement in, litigation involving us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the volume of shares of common stock available for public sale; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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.

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These market and industry factors may materially reduce the market price of our common stock regardless of our operating performance. Furthermore, an active trading market for our securities may never develop, or, if developed, may not be sustained. Holders of our securities may be unable to sell their securities unless a market can be established or sustained.

In addition, stock markets with respect to newly public companies, particularly companies in the mobility and technology industry, have experienced significant price and volume fluctuations that have affected and continue to affect the stock prices of these companies. Stock prices of many companies, including mobility and technology companies, have fluctuated in a manner often unrelated to the operating performance of those companies. These fluctuations may be even more pronounced in the trading market for our common stock given that we are a newly public company. In the past, companies that have experienced volatility in the trading price for their stock have been subject to securities class action litigation. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business, results of operations, and financial condition.

***Our shareholders may experience dilution from several different sources.***

Our shareholders may experience dilution from several sources to varying degrees, namely as shares of our common stock are issued and sold in subsequent offerings.

For example, if, in the future, we raise additional funds by issuing equity securities (including the GEM Advances), convertible debt or other similar securities, investors may experience significant dilution of their ownership interest. In addition, if we issue shares of our common stock for the remainder of the undrawn amounts under the Share Subscription Facility, the purchase price per share to be paid by GEM for the shares of our common stock that we may elect to sell to GEM under the Share Subscription Facility will fluctuate based on the volume weighted average trading price 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.

***We do not intend to pay cash dividends for the foreseeable future.*** 

Our Board currently intends to retain any future earnings to support operations and to finance the growth and development of our business and does not intend to pay cash dividends on our common stock for the foreseeable future. Any future determination to pay dividends will be at the discretion of our Board and will depend on the Company's financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as our Board deems relevant.

***If analysts do not publish research about our business or if they publish inaccurate or unfavorable research, our stock price and trading volume could decline.*** 

The trading market for our common stock will depend in part on the research and reports that analysts publish about our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, the price of our common stock would likely decline. If few analysts cover us, demand for common stock could decrease and our common stock price and trading volume may decline. Similar results may occur if one or more of these analysts stop covering us in the future or fail to publish reports on us regularly.

***Sales of substantial amounts of our common stock in the public markets or the perception that sales might occur, could cause the trading price of our common stock to decline.*** 

In addition to the supply and demand and volatility risk factors discussed above, sales of a substantial number of shares of our common stock into the public market, particularly sales by our directors, executive officers, and principal stockholders, or the perception that these sales might occur in large quantities, could cause the trading price of our common stock to decline.

Further, assuming the continued availability of certain public information about us, (i) non-affiliates who have beneficially owned our common stock for at least six months may rely on Rule 144 to sell their shares of common stock, and (ii) our directors, executive officers, and other affiliates who have beneficially owned our common stock for at least

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six months, are entitled to sell their shares of our common stock subject to volume limitations under Rule 144 and any applicable restrictions under our insider trading policy.

We have filed a registration statement on Form S-8 under the Securities Act to register all shares subject to outstanding stock options or shares reserved for future issuance under our equity compensation plans. As of December 31, 2025, we had 2,332,762 options outstanding that, if fully exercised, would result in the issuance of 2,332,762 shares of common stock. As of December 31, 2025, we had 13,486 unvested RSPAs outstanding that, if fully exercised, would result in the issuance of 13,486 shares of common stock. As of December 31, 2025, we had 2,438,437 RSU and PRSU awards granted prior to December 31, 2025 for which the time-based and/or performance-based vesting condition had not been satisfied as of such date that, upon vesting, would result in the issuance of 2,438,437 shares of common stock. These shares will be able to be freely sold in the public market upon issuance, subject to applicable vesting requirements and compliance by affiliates with Rule 144.

In addition, as of December 31, 2025, we had 11,163,825 warrants outstanding that, if fully exercised, would result in the issuance of 11,163,825 shares of common stock. These shares will be able to be freely sold in the public market upon issuance, subject to applicable vesting requirements and compliance by affiliates with Rule 144.

Moreover, depending on market liquidity at the time, resales by GEM of any shares we sell to GEM under the Share Subscription Facility may cause the public trading price of our common stock to decrease.

***Our business and financial performance may differ from any projections that we disclose or any information that may be attributed to us by third parties.*** 

From time to time, we may provide guidance via public disclosures regarding our projected business or financial performance. However, any such projections involve risks, assumptions, and uncertainties, and our actual results could differ materially from such projections. Factors that could cause or contribute to such differences include, but are not limited to, those identified in these risk factors, some or all of which are not predictable or within our control. Other unknown or unpredictable factors also could adversely impact our performance, and we undertake no obligation to update or revise any projections, whether as a result of new information, future events, or otherwise. In addition, various news sources, bloggers, and other publishers often make statements regarding our historical or projected business or financial performance, and you should not rely on any such information even if it is attributed directly or indirectly to us.

***We may fail to qualify for continued listing on the NYSE, which could make it more difficult for our stockholders to sell their shares.***

Our common stock is listed on the NYSE under the symbol "SRFM." We are required to satisfy the continued listing requirements of the NYSE to maintain such listing, including, among other things, the maintenance of a certain market capitalization and average closing price of our common stock.

On April 2, 2024, we received formal notice from the NYSE indicating that we were not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our common stock was less than $1.00 over a consecutive 30 trading-day period. We subsequently notified the NYSE of our intent to regain compliance with the requirements of Section 802.01C. 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. The Company regained compliance with the requirements of Section 802.01C as of September 30, 2024. However, if the Company were to again fall below the continued listing criteria, the Company would be subject to immediate review under the requirements of Section 802.01C.

Additionally, on May 20, 2024, we received formal notice from the NYSE indicating that we were no longer in compliance with Section 802.01B of the NYSE Listed Company Manual because our average total market capitalization over a consecutive 30 trading-day period was less than $50 million and, at the same time, our stockholders' equity was less than $50 million. We subsequently submitted a plan within 45 days of the notice advising the NYSE of definitive action we have taken or will take to be in compliance with Section 802.01B within 18 months of receipt of the notice. We regained compliance with the requirements of Section 802.01B as of November 20, 2025. However, if the Company were to again fall below the continued listing criteria within 12 months of November 20, 2025, the NYSE may either truncate the compliance procedures or immediately initiate delisting procedures.

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There can be no assurance that we will maintain compliance with the NYSE's continued listing requirements. 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•being delisted from the NYSE;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•being in violation of restrictive covenants in the Company's debt agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a limited availability of market quotations for our common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an adverse effect on the market price of our common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•loss of confidence from stakeholders, employees and potential business partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•reduced liquidity with respect to our common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a limited amount, or complete absence, of news and analyst coverage for our company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a decreased ability, or inability, to issue additional securities or obtain additional financing in the future.

**General Risk Factors** 

***An overall decline in the health of the economy and other factors impacting consumer spending, such as recessionary conditions, governmental instability, inclement weather, and natural disasters, may affect consumer purchases, which could reduce demand for our products and harm our business, financial condition, and results of operations.*** 

Macroeconomic conditions that affect the economy and the economic outlook of the United States and the rest of the world could adversely affect us and our vendors and suppliers, which could have a material adverse effect on our business, financial condition and results of operations. 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. 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. 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 chains we rely upon.

***We are exposed to the impact of rising inflation rates, which could negatively affect our results of operations and our ability to invest and hold our cash.*** 

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.

The general effects of inflation on the global economy can be wide-ranging, evidenced by rising wages and rising costs of consumer goods and necessities. If the inflation rate increases, this will result in, for example, increases in the cost of fuel, labor and other costs, which will adversely affect our expenses, such as employee compensation which accounts for a significant portion of our operating expenses.

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Our fuel purchase, labor and airport operations contracts generally do not provide meaningful price protection against increases in costs. Our current policy is not to enter into transactions to hedge our fuel costs, although we review this policy from time to time based on market conditions and other factors. Accordingly, as of December 31, 2025 and December 31, 2024, we did not have any fuel hedging contracts outstanding to hedge our fuel costs. Additionally, we do not typically enter long-term labor agreements with our pilots or ground service personnel to fix our employee-related costs. We do not intend in the foreseeable future to enter into any future transactions to hedge the cost of fuel, and assuming we do not otherwise fix our labor costs, we will continue to be fully exposed to fluctuations in prices of material operating costs.

***Changes in U.S. or foreign trade policies, including the imposition of tariffs and other protectionist trade measures, and other factors beyond our control may adversely impact our business, financial condition, and results of operations.***

Since January 2025, the United States has announced significant new tariffs on imports from a wide range of countries, including China, which was followed by retaliatory tariffs by China and a number of countries and a cycle of further retaliatory tariff announcements and trade actions. Certain of the tariffs have been and may be delayed, but others have taken or may take effect. Further, tariffs announced or imposed by the United States could be altered or delayed through presidential action, bilateral negotiations, judicial orders or congressional action, and tariffs announced or imposed by other countries can be affected by similar developments. These and future changes in tariffs and trade policies by the United States or China, or trade actions by or directed toward other countries, such as Mexico or Canada, or retaliatory trade measures in response, may continue to result in additional costs and pricing pressures, supply chain disruptions, volatile or unpredictable customer spending patterns, and increased economic or geopolitical risks, any or all of which could adversely impact our business, financial condition, and results of operations, perhaps materially or in ways that we cannot predict. For example, we plan to outsource the majority of the production, assembly and installation of our fully-electric and hybrid-electric solutions, and international trade disputes and tariffs may increase costs of production and/or otherwise disrupt production, supply, or transit of products to their final destination. In addition, macroeconomic uncertainty tends to make consumers and businesses hesitant about discretionary purchases, which could result in reduced customer demand for air transportation, including our air mobility services, or could shift demand from our air mobility services to other methods of air or ground transportation for which we do not offer a competing service.

We are actively monitoring and evaluating these developments and the potential impacts of trade policy and tariffs on our business and results of operations. If tariffs continue to be maintained at current levels, and/or the U.S. government or foreign governments impose further retaliatory tariffs or other trade restrictive measures in response, we expect that such actions could negatively impact our revenue growth and margins in future periods through increased costs, decreased demand and other adverse economic impacts. The net effect of these actions on our business will depend on our ability to successfully mitigate and offset their impact, which efforts may not be effective. If we are unable to mitigate these risks through supply chain adjustments or other measures, our business could be negatively affected.

***If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.*** 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes appearing elsewhere in this prospectus. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the sections entitled "*Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates*". The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses. Significant estimates and judgments involve: valuation of our share-based compensation; fair value measurements of our debt and equity transactions; and income taxes. Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.

**<u>ITEM 1B: UNRESOLVED STAFF COMMENTS</u>**

None.

**<u>ITEM 1C: CYBERSECURITY</u>**

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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 Risk Management and Strategy**

As part of our overall risk management framework, we have implemented the following cybersecurity measures:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Cybersecurity incident response plan and procedures

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Change management and software development life cycle ("SDLC") workflow across the Engineering release team

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Role-based access controls across enterprise systems

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Use of multi-factor authentication for accessing digital content across important roles in the enterprise

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Security controls designed to mitigate risks related to business email compromise, malware, ransomware, and other cybersecurity threats across employee devices

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Centralized device management tools to centrally manage and update company-owned hardware assets

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Vulnerability scanning frameworks across digital and hardware assets across the enterprise

In addition, our cybersecurity roadmap includes the following planned initiatives:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Periodic reviews of our consumer-facing policies and statements related to cybersecurity

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Cybersecurity management and incident training for employees

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Regular phishing email simulations for all employees and contractors with access to corporate email systems to enhance awareness and responsiveness

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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. 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.

As of December 31, 2025, we have not experienced any material cybersecurity incidents. Risks from cybersecurity threats, including any prior incidents, have not materially affected the Company's business strategy, results of operations or financial condition. 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.

Additional information on cybersecurity risks we face can be found in Part I, Item 1A "Risk Factors" of this Report under the headings "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" 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.

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**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. 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. 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. 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. 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.

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**<u>ITEM 2: PROPERTIES</u>**

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. Crenshaw 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.

**<u>ITEM 3: LEGAL PROCEEDINGS</u>**

From time to time, we have in the past and may in the future become subject to legal proceedings or claims arising in the ordinary course of our business. Other 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.

**<u>ITEM 4. MINE SAFETY DISCLOSURES</u>**

Not applicable.

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**PART II**

**<u>ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES</u>**

Our common stock is listed on the New York Stock Exchange under the symbol "SRFM."

**<u>Holders of Record</u>**

As of March 6, 2026, there were approximately 207 stockholders of record of our common stock. The number of record does not include persons who held shares of our common stock in nominee or "street name" accounts through brokers.

**<u>Dividend Policy</u>**

The payment of cash dividends in the future will be dependent upon our revenue and earnings, if any, capital requirements and general financial condition. Our board of directors currently intends to retain any future earnings to support operations and to finance the growth and development of our business and does not intend to pay cash dividends on our common stock for the foreseeable future. The payment of any cash dividends will be within the discretion of our board of directors.

**<u>Stock Performance Graph</u>**

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.

![img169807290_1.gif](img169807290_1.gif)

**<u>ITEM 6. [RESERVED]</u>**

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**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. Unless otherwise indicated, all dollar amounts are set forth in thousands, except share and per share data.*

*The following discussion and analysis is intended to help the reader understand the Company's results of operations and financial condition. This discussion and analysis is provided as a supplement to, and should be read in conjunction with, the information included in Item 8 Financial Statements and Supplementary Data in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to the Company's plans and strategy for its business, includes forward-looking statements that involve risks and uncertainties. The Company's actual results and outcomes, and the timing of its results and outcomes, may differ materially from management's expectations as a result of various factors, including but not limited to those discussed in the sections entitled "Risk Factors" and "Special Note Regarding Forward-Looking Statements" included within this Annual Report on Form 10-K.*

**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. 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. 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.

The Air Mobility business is an established regional air mobility platform providing scheduled service and an on-demand charter marketplace to passengers in the U.S. and globally. Current initiatives surrounding the Air Technology business seek to drive an innovative platform developing a proprietary, AI-enhanced aviation software operating system as well as technology and services to enable electrification across the regional air mobility sector.

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. We expect the combination of our legacy networks will continue to provide the basis for our expanded, nationwide regional air mobility platform.

Our predecessor company, Surf Air, was formed in 2016 and prior to its reorganization into Surf Air Mobility, aimed to expand the category of regional air travel, connecting underutilized regional airports and private terminals to create a "shared private" customer experience and a high frequency "commercial-like" air service, using small turboprop aircraft. Surf Air provided both scheduled routes and on-demand charter flights operated by third parties that operate under Part 135 of Title 14 of the U.S. Code of Federal Regulations ("Part 135"). Surf Air drove the early stages of development of our current efforts to develop electrified powertrain technology, including the establishment of relationships with key commercial partners who, as a group, we believe can deliver novel hardware and software solutions that can make electrified flight possible for operators across the Part 135 industry, starting with our owned and operated fleet.

**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. 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.

**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

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wholly-owned subsidiary of the Company (the "Southern Acquisition"). Pursuant to the agreement to acquire Southern, Southern stockholders were to receive 2,321,428 shares of the Company's common stock, which was based on the aggregate merger consideration of $81.25 million at the $35.00 per share opening price on the first day of trading of the Company's common stock. 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. 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. Southern provides both seasonal and full-year scheduled passenger air transportation service in the Mid-Atlantic and Gulf regions, Rockies and West Coast, and Hawaii, with select routes subsidized by the United States Department of Transportation ("U.S. DOT") under the Essential Air Service ("EAS") program.

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. *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. Additionally, the Company is developing fully-electric and hybrid-electric powertrain technologies with its commercial partners to electrify existing fleets and new aircraft. As a result, the Company expects to incur significant costs in the future to support the development of this technology.

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. 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. 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.

As such, the extent to which global events and market inflationary impacts will affect our financial condition, liquidity and future results of operations is uncertain. Given the uncertainty regarding the length, and intensity, of these factors, the Company cannot reasonably estimate their impact on its future results of operations, cash flows or financial condition. 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.

During January 2025, the Company utilized an abundance of caution and voluntarily cancelled a significant number of scheduled flights due to maintenance concerns. The Company took actions to mitigate these concerns and returned its operations to full schedule during the first quarter of 2025. 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. As a result, we expect to face increased and continued competition when bidding for or renewing Essential Air Service contracts, which could impact our ability to retain existing routes or the level of subsidy associated with those routes.

**Key Operating Measures**

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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.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Change** | **Change** |
|  | **2025** | **2024** | **Increase/<br>Decrease** | **%** |
| Scheduled Flight Hours<sup>(1)</sup> | 56022 | 67918 | (11896) | (18)% |
| On-Demand Flights<sup>(2)</sup> | 2929 | 3515 | (586) | (17)% |
| Scheduled Passengers<sup>(3)</sup> | 299639 | 353077 | (53438) | (15)% |
| Headcount<sup>(4)</sup> | 573 | 703 | (130) | (18)% |
| Scheduled Departures<sup>(5)</sup> | 60117 | 69000 | (8883) | (13)% |
| <sup>(1)</sup>*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. This metric only measures flight hours for flights that generated scheduled revenue and does not include flight hours for flights that generated on-demand revenue.* | <sup>(1)</sup>*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. This metric only measures flight hours for flights that generated scheduled revenue and does not include flight hours for flights that generated on-demand revenue.* | <sup>(1)</sup>*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. This metric only measures flight hours for flights that generated scheduled revenue and does not include flight hours for flights that generated on-demand revenue.* | <sup>(1)</sup>*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. This metric only measures flight hours for flights that generated scheduled revenue and does not include flight hours for flights that generated on-demand revenue.* | <sup>(1)</sup>*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. This metric only measures flight hours for flights that generated scheduled revenue and does not include flight hours for flights that generated on-demand revenue.* |
| <sup>(2)</sup>*On-Demand Flights represent the number of flights that generate on-demand revenue taken by customers on the Company's aircraft or third-party operated aircraft during the period.* | <sup>(2)</sup>*On-Demand Flights represent the number of flights that generate on-demand revenue taken by customers on the Company's aircraft or third-party operated aircraft during the period.* | <sup>(2)</sup>*On-Demand Flights represent the number of flights that generate on-demand revenue taken by customers on the Company's aircraft or third-party operated aircraft during the period.* | <sup>(2)</sup>*On-Demand Flights represent the number of flights that generate on-demand revenue taken by customers on the Company's aircraft or third-party operated aircraft during the period.* | <sup>(2)</sup>*On-Demand Flights represent the number of flights that generate on-demand revenue taken by customers on the Company's aircraft or third-party operated aircraft during the period.* |
| <sup>(3)</sup>*Scheduled Passengers represent the number of passengers flown during the period for scheduled service.* | <sup>(3)</sup>*Scheduled Passengers represent the number of passengers flown during the period for scheduled service.* | <sup>(3)</sup>*Scheduled Passengers represent the number of passengers flown during the period for scheduled service.* | <sup>(3)</sup>*Scheduled Passengers represent the number of passengers flown during the period for scheduled service.* | <sup>(3)</sup>*Scheduled Passengers represent the number of passengers flown during the period for scheduled service.* |
| <sup>(4)</sup>*Headcount represents all full-time and part-time employees at the end of the period.* | <sup>(4)</sup>*Headcount represents all full-time and part-time employees at the end of the period.* | <sup>(4)</sup>*Headcount represents all full-time and part-time employees at the end of the period.* | <sup>(4)</sup>*Headcount represents all full-time and part-time employees at the end of the period.* | <sup>(4)</sup>*Headcount represents all full-time and part-time employees at the end of the period.* |
| <sup>(5)</sup>*Scheduled Departures represent the number of takeoffs in the period, agnostic of operator and excludes departures for maintenance or repositioning events. This metric only measures takeoffs that generated scheduled revenue and does not include takeoffs that generated on-demand revenue.* | <sup>(5)</sup>*Scheduled Departures represent the number of takeoffs in the period, agnostic of operator and excludes departures for maintenance or repositioning events. This metric only measures takeoffs that generated scheduled revenue and does not include takeoffs that generated on-demand revenue.* | <sup>(5)</sup>*Scheduled Departures represent the number of takeoffs in the period, agnostic of operator and excludes departures for maintenance or repositioning events. This metric only measures takeoffs that generated scheduled revenue and does not include takeoffs that generated on-demand revenue.* | <sup>(5)</sup>*Scheduled Departures represent the number of takeoffs in the period, agnostic of operator and excludes departures for maintenance or repositioning events. This metric only measures takeoffs that generated scheduled revenue and does not include takeoffs that generated on-demand revenue.* | <sup>(5)</sup>*Scheduled Departures represent the number of takeoffs in the period, agnostic of operator and excludes departures for maintenance or repositioning events. This metric only measures takeoffs that generated scheduled revenue and does not include takeoffs that generated on-demand revenue.* |

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**Results 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*):

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,**<br>**Change** | **Change** |
|  | **2025** | **2024** | **%** |
| Revenue | $106557 | $119425) | (11)% |
| Operating expenses: |  |  |  |
| Cost of revenue, exclusive of depreciation and amortization | 102376 | 109934) | (7)% |
| Technology and development | 10299 | 24041) | (57)% |
| Sales and marketing | 8177 | 7514 | 9% |
| General and administrative | 53285 | 29851 | 79% |
| Depreciation and amortization | 9294 | 8341 | 11% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 183431 | 179681 | 2% |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating loss | (76874) | (60256) | 28% |
| Other income (expense): |  |  |  |
| Changes in fair value of financial instruments carried at fair value, net | (8574) | (11732) | (27)% |
| Interest expense | (13205) | (8617) | 53% |
| Gain (loss) on extinguishment of debt | (3904) | 5398) | (172)% |
| Other income (expense) | (8379) | 12) | n/m |
| &nbsp;&nbsp;&nbsp;&nbsp;Total other expense, net | (34062) | (14939) | 128% |
| Loss before income taxes | (110936) | (75195) | 48% |
| Income tax benefit | 380 | 287 | 32% |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(110556) | $(74908) | 48% |
| *n/m - not meaningful* |  |  |  |

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***Revenue***

Revenue decreased by $12.9 million, or 11%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The decrease in revenue was attributable to the following changes in on-demand and scheduled revenues (in thousands, except percentages):

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| | | | |
|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,**<br>**Change** | **Change** |
|  | **2025** | **2024** | **%** |
| Scheduled | $76989 | $90735) | (15)% |
| On-Demand | 29568 | 28690 | 3% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total revenue | $106557 | $119425) | (11)% |

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Scheduled revenue decreased by $13.7 million, or 15%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The decrease in scheduled revenue was primarily related to the exiting of unprofitable routes, partially offset by higher completion factors.

On-demand revenue increased by $0.9 million, or 3%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase in on-demand revenue was related to a greater recent focus on larger jet charter sales, partially offset by the exiting of several on-demand products to focus on profitability rather than near-term market penetration.

***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. The decrease of $7.0 million in Scheduled cost of revenue was attributable to lower volume of flying due to the exiting of unprofitable routes, partially offset by higher completion factors, and higher unit cost as a result of investments in operational improvements. The decrease of $0.8 million in on-demand cost of revenue was primarily attributable to exiting several on-demand products to focus on profitability.

*Technology and Development*

Technology and development expenses decreased by $13.7 million, or 57%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. 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.

*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.

*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. 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. 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.

*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.

*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. There are two primary drivers for the increase in other expense:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$9.3 million increase in loss on extinguishment of debt due to a $3.9 million loss recorded on the early repayment of the Comvest Credit Agreement, as compared to a gain of $5.4 million recorded in 2024 associated with the extinguishment of deferred maintenance obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•$8.4 million increase in other expense, primarily due to $5.4 million of contract settlement expense, paid in shares of the Company's common stock, $2.5 million in finance charges associated with past federal excise tax and trade payables, and $0.9 million in losses on disposal of fixed assets.

*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.

**Cash Flow Analysis**

The following table presents a summary of our cash flows (*in thousands*):

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| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Net cash provided by (used in): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Operating activities | $(64160) | $(54322) |
| &nbsp;&nbsp;&nbsp;&nbsp;Investing activities | (5711) | (3609) |
| &nbsp;&nbsp;&nbsp;&nbsp;Financing activities | 70959 | 77175 |
| Net change in cash, cash equivalents and restricted cash | $1088 | $19244 |

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***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. 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, 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. These operating outflows were partially offset by changes in fair value of financial instruments of $11.7 million, increases in accrued expenses and other current liabilities of $8.4 million, and depreciation and amortization expenses of $8.3 million.

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. 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.

***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.

***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. These proceeds were partially off-set by $49.9 million of repayments under long-term debt agreements, net of new borrowings, $38.6 million of repayments under the GEM Mandatory Convertible Security, and $4 million of repayments under convertible note agreements.

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.

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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. 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. 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. 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 agreed to a payment plan (the "Installment Plan") whereby the IRS would take no further action and remove such liens at the time such amounts have been paid. In 2019, the Company defaulted on the Installment Plan. Defaulting on the Installment Plan can result in the IRS nullifying such plan, placing the Company in default and taking collection action against the Company for any unpaid balance. 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. 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, 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. During the year ended December 31, 2025, the Los Angeles County tax liens were released as the Company finalized remediation of the late filing, inclusive of the completion of county audits, and made payments of $1.0 million on all property taxes due to Los Angeles County that were underlying the prior aircraft liens. 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*). 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 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. 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 prospects and ongoing business activities are subject to the risks and uncertainties frequently encountered by companies in new and rapidly evolving markets. Risks and uncertainties that could materially and adversely affect the Company's 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 its 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 the business model.

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. In particular, as market conditions permit, the Company may raise additional funds through sales of equity (including through the second amended and restated Share Purchase Agreement (the "Share Purchase Agreement") with GEM Global Yield LLC SCS ("GEM")) or convertible debt, using proceeds (as available) to strengthen the Company's balance sheet, among other things.

During the year ended December 31, 2025, the Company received net proceeds of $51.4 million through the issuance and sale of 19,640,424 shares of its common stock and warrants through various direct and private offerings (see Note 12, *Shareholders' Deficit*). The Company received net proceeds of $65 million from a convertible note offering in November 2025, of which $50.4 million was used to repay principal and interest due under the 4-year credit agreement with certain affiliates of Comvest Partners, as lenders (the "Credit Agreement") and $4 million was used to repay principal due under a convertible note purchase agreement with Partners for Growth V, L.P. ("PFG"). Additionally, during the year ended December 31, 2025, the Company received $47.2 million from draws

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under the Share Purchase Agreement with GEM, through the issuance of 13,450,000 shares of the Company's common stock. As of December 31, 2025, the contractual terms allow the Company to make further advances of up to $97.5 million under the Share Purchase Agreement. 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. 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.

The Company is currently implementing operational improvements and stringent operating expenses management to improve the profitability of its airline operations. In parallel, the Company is advancing its technology initiatives, including its software technology platform and Caravan electrification programs. In addition, the Company continues to evaluate strategies to obtain additional funding for future operations. 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. There can be no assurance that the Company will be successful in achieving its strategic plans, or that new financing will be available to the Company in a timely manner or on acceptable terms, if at all. 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. 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 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. 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 delivery of four Cessna Grand Caravan aircraft in 2026 with an option for additional purchases, pending the Company placing a deposit and the parties agreement on a delivery schedule. The Company took delivery of four aircraft under this agreement during 2024. 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. See the section entitled "*Risk Factors — Risks Related to Our Financial Position and Capital Requirements — Our past financial results may not be a reliable indicator of our future results.*" The Company has engaged AeroTEC to develop fully-electric and hybrid-electric Supplemental Type Certificates ("STCs") for the Cessna Grand Caravan in partnership with TAI.

**Commitments**

The Company has entered into various contractual arrangements related to the build-out of the Company's air service fleet, the development of its proprietary hybrid and electric aircraft technology, and the build out of its aircraft as a service platform. 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.

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The following table summarizes the Company's contractual commitments and obligations *(in thousands)* :

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Total** | **2026** | **2027** | **2028** | **2029** | **2030** | **Thereafter** |
| Long-term debt | $17101 | $2712 | $12029 | $685 | $157 | $450 | $1068 |
| Operating leases | 15041 | 5011 | 3524 | 2358 | 2219 | 1929 |  |
| Finance leases | 1147 | 371 | 336 | 264 | 176 |  |  |
| Repayment of related party term loans | 100 |  |  |  | 100 |  |  |
| Repayment of convertible notes | 79909 | 50034 | 28000 |  | 1875 |  |  |
| Minimum payments under aircraft supply agreements | 283800 | 13200 | 13200 | 13200 | 13200 | 62700 | 168300 |
| Minimum payments under data license agreements | 9500 | 9500 |  |  |  |  |  |
| Minimum payments under sales and marketing agreements | 40000 | 15000 | 10000 | 10000 | 5000 |  |  |
| Minimum payments under technology development agreements | 12583 | 4083 | 2250 | 2500 | 2500 | 1250 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $459181 | $99911 | $69339 | $29007 | $25227 | $66329 | $169368 |

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**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. 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.

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.

***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.

*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.

The use of the Black-Scholes option pricing model requires the use of subjective assumptions, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•***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.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•***Risk-Free Interest Rate***—The yield on actively traded non-inflation indexed U.S. Treasury notes with the same maturity as the expected term of the underlying options was used as the average risk-free interest rate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•***Expected Term***—The expected term of options granted to employees was determined based on management's expectations of the options granted, which are expected to remain outstanding. Where appropriate, we calculated the expected term using the simplified method for "plain vanilla" stock option awards.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•***Expected Volatility***—The Company estimates the expected volatility of its common stock using historical volatility. 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.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•***Dividend Yield***—We have not issued regular dividends on common shares in the past nor do we expect to issue dividends in the future. As such, the dividend yield has been estimated to be zero.

We will continue to use judgment in evaluating the expected volatility and expected terms utilized in our stock-based compensation expense calculations on a prospective basis. As we continue to accumulate additional data related to our common stock, we may refine our estimates, which could materially impact our future stock-based compensation expense. Additionally, had we arrived at different assumptions of stock price volatility or expected lives of our stock options, our stock-based compensation expense and results of operations may be materially different.

*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"). 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. We estimate the grant date fair value of PRSUs 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 stock price goals may not be satisfied. 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. The derived service period calculation also requires the cost of equity assumption to be used in the Monte Carlo simulation model. Term and volatility are typically the primary drivers of this valuation. The average grant date fair value of the Founder PRSUs were estimated to be $15.82 per share, and we will recognize total stock-based compensation expense of approximately $6.3 million over the derived service period. The weighted-average grant date fair value of the PRSUs granted in October was $5.67 per share for the 7,143 RSUs vesting upon an Average Closing Price equaling or exceeding $35 per share, $3.85 per share for the 10,714 RSUs vesting upon an Average Closing Price equaling or exceeding $70 per share, and $2.73 per share for the 10,714 RSUs vesting upon an Average Closing Price equaling or exceeding $105 per share. 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. Provided that each founder/ employee individually stays employed with the Company, we will recognize stock-based compensation expense over the requisite service period, regardless of whether the stock price goals are achieved. Had we arrived at different assumptions of underlying stock price or volatility our stock-based compensation expense and results of operations may be materially different.

During the year ended December 31, 2025, Company granted PRSUs to employees. The compensation expense associated with such awards is based on the grant date fair value of the awards, which will vest upon the achievement of an adjusted EBITDA metric for the year ending December 31, 2025 as well as a service period of four years from the date of grant. Expense attribution for these awards is based on a probability assessment regarding the achievement of the financial metric and the Company will record cumulative catch-up adjustments to reflect the value of shares expected to vest over the service period of each award.

***Fair Value Measurements***

The Company has a significant number of debt and equity transactions that are recorded at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The assumptions used in the Company's valuation models represent management's best estimates. These estimates involve inherent uncertainties and the application of management's judgment. 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 Statement of Operations.

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.

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| | |
|:---|:---|
| 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. |
| Level 3 | Inputs are unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. |

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Assets and liabilities are classified in the hierarchy based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

The Company measures the fair value of certain long-lived assets including finite-lived intangible assets on a nonrecurring basis, when such assets are required to be written down to fair value if impaired. 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 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. The fair value of the High Trail Convertible Note was estimated using a binomial lattice model which projects the potential future movements of the underlying liability over the remaining term from that point in time. It then calculates the value of the instrument considering the optimal exercise/conversion/redemption/call action at each node, working backward through the lattice to determine the present value at each step and node. In this lattice model, both the Company and the note holder are assumed to act optimally at each decision point. The fair value at a given node represents the expected present value of the convertible note, considering its potential outcomes at the next period. This present value calculation employs a blended discount rate, combining the risk-free rate and the debt discount rate. The weighting of these rates is determined by the respective probabilities of conversion into stock (risk-free rate) and remaining as a potentially default-prone note (debt discount rate).

The Company has accounted for the Mandatory Convertible Security with GEM at fair value. 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. Significant inputs in determining period end fair values of the Mandatory Convertible Security are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Remaining par amount;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Entity specific probability of default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Implied volatility

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Applicable discount rate

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•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. This model is determined to be the appropriate methodology because it captures the path dependent nature of this feature, which standard closed form or binomial models cannot reliably address. The simulation generates numerous share price paths using a stochastic process (e.g., Geometric Brownian Motion) and evaluates the forced exercise condition on each trading day prior to the expiration date. For each simulated path and each trading day, if the applicable forced exercise condition is met, the model calculates the payoff to that series of warrants as the maximum of 0 or the stock price minus the exercise price on the applicable date. If the forced exercise condition is not met, the payoff is instead calculated on the expiration date as the maximum of 0 or the stock price minus the exercise price. In all cases, the resulting payoff is discounted to present value using the risk-free rate.

***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. 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. 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. The likelihood of realizing the tax benefits related to a potential deferred tax asset is evaluated, and a valuation allowance is recognized to reduce that deferred tax asset if it is more likely than not that all or some portion of the deferred tax asset will not be realized.

Deferred tax assets and liabilities are calculated at the beginning and end of the period. The change in the sum of the deferred tax asset, valuation allowance and deferred tax liability during the period generally is recognized as a deferred tax expense or benefit. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

The Company determines whether a tax position taken or expected to be taken in a tax return is to be recognized in the consolidated financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. The amount recognized is subject to estimation and management judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount recognized. For tax positions meeting the more likely than not threshold, the tax amount recognized in the consolidated financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. Surf Air recognizes interest and penalties accrued related to unrecognized tax benefits, if any, in its income tax expense in the accompanying Consolidated Statement of Operations.

**JOBS Act**

The Company currently qualifies as an "emerging growth company" under the JOBS Act. Accordingly, the Company has elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. 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.

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**<u>ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</u>**

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. Our air mobility services require a significant amount of aircraft fuel, critical spare parts, and specialized maintenance that are affected by the price of other commodities, exchange rates, inflation, foreign demand, weather, seasonality, production, availability and other factors outside our control. We work closely with our suppliers to obtain a consistent supply of aircraft fuel and the scheduling of aircraft maintenance. Generally, we do not engage in forward purchase commitments for aircraft fuel, or for the supply of critical spare parts, outside of that held in inventory. Increases in the price of fuel, critical spare parts, and/or maintenance services could adversely affect our results if we choose for competitive or other reasons not to increase passenger ticket prices at the same rate at which operating costs increase, or if passenger ticket increases result in customer resistance. We also could experience shortages of aircraft fuel, critical spare parts, and specialized maintenance if our suppliers need to close or restrict operations due to unforeseen events.

Due to the recent pace of inflation and other global supply chain risks, including extreme weather conditions, suppliers and distributors have, and could continue to, attempt to increase prices, as well as assess certain fuel surcharges. These changes could have a negative impact on our commodity prices. For example, during 2024, as a result of global supply chain issues and extreme weather conditions, we experienced supply chain disruptions for critical spare parts and major maintenance, which resulted in higher prices and delayed delivery for those products. We 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 2025. 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. 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."

------

**<u>ITEM 8. Financial Statements and Supplementary Data</u>**

---

| | |
|:---|:---|
| [<u>Report of Independent Registered Public Accounting Firm (PCAOB ID No.</u> 238<u>)</u>](#report_independent_accounting_firm) | 70 |
| [<u>Consolidated Balance Sheets as of December 31, 2025 and 2024</u>](#balance_sheet_consolidated) | 71 |
| [<u>Consolidated Statements of Operations for the Years Ended December 31, 2025 and 2024</u>](#statements_of_operations_consolidated) | 72 |
| [<u>Consolidated Statement of Changes in Shareholders' Deficit</u>](#equity_statement)[<u>for the Years Ended December 31, 2025 and 2024</u>](#equity_statement) | 73 |
| [<u>Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024</u>](#cash_flows_consolidated) | 74 |
| [<u>Notes to Consolidated Financial Statements</u>](#notes_to_consolidated_financial_statemen) | 75 |

---

------

**Report of Independent Registered Public Accounting Firm**

To the Board of Directors and Shareholders of Surf Air Mobility Inc.

***Opinion on the Financial Statements***

We have audited the accompanying consolidated balance sheets of Surf Air Mobility Inc. and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations, of changes in shareholders' deficit and of cash flows for the years then ended, including the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

*Substantial Doubt About the Company's Ability to Continue as a Going Concern*

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred losses from operations, negative cash flows from operating activities and has a working capital deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

***Basis for Opinion***

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

Los Angeles, California

March 12, 2026

We have served as the Company's auditor since 2021.

------

**Surf Air Mobility Inc.**

**Consolidated Balance Sheets**

**December 31, 2025 and December 31, 2024**

*(in thousands, except share and per share data)*

---

| | | |
|:---|:---|:---|
|  | **December 31,<br>2025** | **December 31,<br>2024** |
| **Assets:** |  |  |
| **Current assets:** |  |  |
| &nbsp;&nbsp;Cash | $12672 | $21107 |
| &nbsp;&nbsp;Accounts receivable, net | 3929 | 4257 |
| &nbsp;&nbsp;Prepaid expenses and other current assets | 14320 | 8511 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 30921 | 33875 |
| &nbsp;&nbsp;Restricted cash | 10091 | 568 |
| &nbsp;&nbsp;Property and equipment, net | 45595 | 42213 |
| &nbsp;&nbsp;Intangible assets, net | 20067 | 23118 |
| &nbsp;&nbsp;Operating lease right-of-use assets | 12510 | 17046 |
| &nbsp;&nbsp;Finance lease right-of-use assets | 809 | 1115 |
| &nbsp;&nbsp;Other assets | 11688 | 6123 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $131681 | $124058 |
| **Liabilities and Shareholders' Deficit:** |  |  |
| **Current liabilities:** |  |  |
| &nbsp;&nbsp;Accounts payable | $18437 | $17976 |
| &nbsp;&nbsp;Accrued expenses and other current liabilities | 47702 | 45496 |
| &nbsp;&nbsp;Deferred revenue | 17924 | 17393 |
| &nbsp;&nbsp;Current maturities of long-term debt | 2712 | 2543 |
| &nbsp;&nbsp;Operating lease liabilities, current | 3636 | 4120 |
| &nbsp;&nbsp;Finance lease liabilities, current | 277 | 265 |
| &nbsp;&nbsp;SAFE notes at fair value, current | 5 | 13 |
| &nbsp;&nbsp;Convertible notes at fair value, current | 42274 |  |
| &nbsp;&nbsp;Due to related parties, current | 643 | 1804 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 133610 | 89610 |
| &nbsp;&nbsp;Long-term debt, net of current maturities | 14389 | 59883 |
| &nbsp;&nbsp;Convertible notes at fair value, long term | 25183 | 7347 |
| &nbsp;&nbsp;Operating lease liabilities, long term | 8714 | 11540 |
| &nbsp;&nbsp;Finance lease liabilities, long term | 670 | 948 |
| &nbsp;&nbsp;Due to related parties, long term | 100 | 50457 |
| &nbsp;&nbsp;Other long-term liabilities | 3872 | 24270 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities** | $186538 | $244055 |
| Commitments and contingencies (Note 13): |  |  |
| **Shareholders' deficit:** |  |  |
| Preferred Stock, $0.0001 par value; 50,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2025 and December 31, 2024 |  |  |
| Common stock, $0.0001 par value; 800,000,000 shares authorized as of both December 31, 2025 and December 31, 2024; 73,082,025 shares issued and outstanding as of December 31, 2025 and 16,933,692 shares issued and outstanding as of December 31, 2024 | 7 | 2 |
| &nbsp;&nbsp;Additional paid-in capital | 733135 | 557444 |
| &nbsp;&nbsp;Accumulated deficit | (787999) | (677443) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Total shareholders' deficit** | $(54857) | $(119997) |
| **Total liabilities and shareholders' deficit** | $131681 | $124058 |

---

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

------

**Surf Air Mobility Inc.**

**Consolidated Statements of Operations**

**Years Ended December 31, 2025 and 2024**

*(in thousands, except share and per share data)*

---

| | | |
|:---|:---|:---|
|  | **Year Ended<br>December 31,** | **Year Ended<br>December 31,** |
|  | **2025** | **2024** |
| **Revenue** | $106557 | $119425 |
| **Operating expenses:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of revenue, exclusive of depreciation and amortization | 102376 | 109934 |
| &nbsp;&nbsp;&nbsp;&nbsp;Technology and development | 10299 | 24041 |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 8177 | 7514 |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 53285 | 29851 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 9294 | 8341 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total operating expenses** | 183431 | 179681 |
| **Operating loss** | $(76874) | $(60256) |
| **Other income (expense):** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Changes in fair value of financial instruments carried at fair value, net | $(8574) | $(11732) |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (13205) | (8617) |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain (loss) on extinguishment of debt | (3904) | 5398 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other income (expense), net | (8379) | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total other income (expense), net** | $(34062) | $(14939) |
| **Loss before income taxes** | (110936) | (75195) |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax benefit | 380 | 287 |
| **Net loss** | $(110556) | $(74908) |
| Net loss per share applicable to common shareholders, basic and diluted | $(3.15) | $(5.80) |
| Weighted-average number of common shares used in net loss per share applicable to common shareholders, basic and diluted | 35101792 | 12910341 |

---

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

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**Surf Air Mobility Inc.**

**Consolidated Statement of Changes in Shareholders**' **Deficit**

**Years Ended December 31, 2025 and 2024**

*(in thousands, except share data)*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common Shares** | **Common Shares** |  |  |  |
|  | **Number of<br>Shares** | **Amount** | **Additional Paid-In Capital** | **Accumulated<br>Deficit** | **Total Shareholders' Deficit** |
| Balance at January 1, 2024 | 10878633 | $1 | $525049 | $(602535) | $(77485) |
| Issuance of common stock related to restricted shares | 430540 |  |  |  |  |
| Issuance of common stock related to stock option exercises | 5379 |  | 20 |  | 20 |
| Issuance of common stock under software license agreement | 2990386 | 1 | 9574 |  | 9575 |
| Issuance of common stock under marketing agreement | 26144 |  | 187 |  | 187 |
| Issuance of common shares under Share Purchase Agreement | 1547770 |  | 4326 |  | 4326 |
| Shares received as consideration for Mandatory Convertible Security | (900000) |  | (1796) |  | (1796) |
| Conversion of Mandatory Convertible Security to common shares | 1142857 |  | 1621 |  | 1621 |
| Conversion of LamVen Note | 750000 |  | 7473 |  | 7473 |
| Issuance of common stock to settle maintenance accruals | 61983 |  | 300 |  | 300 |
| Stock-based compensation expense |  |  | 10690 |  | 10690 |
| Net loss |  |  |  | (74908) | (74908) |
| Balance at December 31, 2024 | 16933692 | 2 | 557444 | (677443) | (119997) |
| Issuance of common stock related to restricted shares | 1329823 |  |  |  |  |
| Issuance of common stock related to performance-based restricted shares | 365625 |  |  |  |  |
| Issuance of common stock related to stock option exercises | 49570 |  | 255 |  | 255 |
| Issuance of common stock related to warrant exercises | 265725 |  | 830 |  | 830 |
| Issuance of common stock in private placements | 2864521 |  | 6834 |  | 6834 |
| Issuance of common shares in direct offerings | 16775903 | 2 | 37274 |  | 37276 |
| Issuance of warrants to placement agents in direct offerings |  |  | 1494 |  | 1494 |
| Issuance of common stock under Share Purchase Agreement | 13450000 | 1 | 47182 |  | 47183 |
| Issuance of common stock for aircraft lease settlements | 1200000 |  | 5376 |  | 5376 |
| Issuance of common stock as consideration for credit support | 2025000 |  | 5954 |  | 5954 |
| Issuance of common stock in settlement of vendor payables | 224364 |  | 760 |  | 760 |
| Issuance of common stock under software license agreement | 3769385 |  | 11789 |  | 11789 |
| Issuance of common stock related to convertible note conversions | 14025167 | 2 | 48262 |  | 48264 |
| Shares repurchased for employee tax withholding | (196750) |  | (380) |  | (380) |
| Stock-based compensation expense |  |  | 10061 |  | 10061 |
| Net loss |  |  |  | (110556) | (110556) |
| Balance at December 31, 2025 | 73082025 | $7 | $733135 | $(787999) | $(54857) |

---

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

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**Surf Air Mobility Inc.**

**Consolidated Statements of Cash Flows**

**Years Ended December 31, 2025 and 2024**

*(in thousands)*

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| **Cash flows from operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(110556) | $(74908) |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 9294 | 8341 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) on sale of fixed assets | 954 | (743) |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-cash operating lease expense | 5054 | 5690 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) on extinguishment of debt | 3904 | (5398) |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 10061 | (5976) |
| &nbsp;&nbsp;&nbsp;&nbsp;Changes in fair value of financial instruments carried at fair value, net | 8574 | 11732 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-cash credit support expense | 265 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-cash lease settlement expense | 5376 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discounts and debt issuance costs | 1727 | 252 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | (380) | (287) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Changes in operating assets and liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 328 | 708 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 191 | 977 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | 124 | (396) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 2487 | 9530 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to a related party | (403) | (3351) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities | 3361 | 9416 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 531 | (4334) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | (5043) | (5554) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | (9) | (21) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Cash flows used in operating activities** | $(64160) | $(54322) |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of property and equipment | (5936) | (11758) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from the sale of fixed assets | 2681 | 10495 |
| &nbsp;&nbsp;&nbsp;&nbsp;Internal-use software development costs | (2456) | (2346) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash used in investing activities** | $(5711) | $(3609) |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowings on convertible notes | 65000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments of borrowings on convertible notes | (4000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowings on long-term debt | 3056 | 44234 |
| &nbsp;&nbsp;&nbsp;&nbsp;Principal payments on long-term debt | (52955) | (6566) |
| &nbsp;&nbsp;&nbsp;&nbsp;Principal payments on Mandatory Convertible Security | (38615) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of common stock | 51387 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common shares repurchases for employee tax withholding | (380) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sales and advances under Share Purchase Agreement | 47183 | 3894 |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from (payments on) collateralized borrowings, net of repayment | (536) | 2793 |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowings from related parties |  | 34522 |
| &nbsp;&nbsp;&nbsp;&nbsp;Payments of debt issuance costs |  | (1488) |
| &nbsp;&nbsp;&nbsp;&nbsp;Payment of finance lease obligations | (266) | (234) |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from exercise of warrants | 830 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from exercise of stock options | 255 | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by financing activities** | $70959 | $77175 |
| Increase in cash, cash equivalents and restricted cash | 1088 | 19244 |
| Cash, cash equivalents and restricted cash at beginning of period | 21675 | 2431 |
| Cash, cash equivalents and restricted cash at end of period | $22763 | $21675 |

---

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

------

**Surf Air Mobility Inc.**

**Notes to Consolidated Financial Statements**

**Note 1. Description of Business** 

**Organization**

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. 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.

Surf Air Global Limited ("Surf Air") is a British Virgin Islands holding company and was formed on August 15, 2016. Surf Air is a technology-enabled regional air travel network, offering on-demand charter flights. Its customers consist of regional business and leisure travelers. Headquartered in Hawthorne, California, Surf Air commenced flight operations in June 2013.

The Company was incorporated in 2021 and became the ultimate parent of both Surf Air and Southern Airways Corporation ("Southern") in July of 2023 following the Company's public listing on the New York Stock Exchange ("NYSE").

**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. 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.

**Liquidity and Going Concern**

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 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. 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 agreed to a payment plan (the "Installment Plan") whereby the IRS would take no further action and remove such liens at the time such amounts have been paid. In 2019, the Company defaulted on the Installment Plan. Defaulting on the Installment Plan can result in the IRS nullifying such plan, placing the Company in default and taking collection action against the Company for any unpaid balance. 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 Company's Consolidated Balance Sheet as of December 31, 2025. 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, 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. During the year ended December 31, 2025, the Los Angeles County tax liens were released as the Company finalized remediation of the late filing, inclusive of the completion of county audits, and made payments of $1.0 million on all property taxes due to Los Angeles County that were underlying the prior aircraft liens. 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*). 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 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.

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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 prospects and ongoing business activities are subject to the risks and uncertainties frequently encountered by companies in new and rapidly evolving markets. Risks and uncertainties that could materially and adversely affect the Company's 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 its 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 the business model.

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. In particular, as market conditions permit, the Company may raise additional funds through sales of equity (including through the Share Purchase Agreement (the "Share Purchase Agreement") with GEM Global Yield LLC SCS ("GEM")) or convertible debt, using proceeds (as available) to strengthen the Company's balance sheet, among other things.

During the year ended December 31, 2025, the Company received net proceeds of $51.4 million through the issuance and sale of 19,640,424 shares of its common stock and warrants through various direct and private offerings (see Note 12, *Shareholders' Deficit*). The Company received net proceeds of $65 million from a convertible note offering in November 2025, of which $50.4 million was used to repay principal, prepayment penalties, and interest due under the 4-year credit agreement with certain affiliates of Comvest Partners, as lenders (the "Credit Agreement") and $4 million was used to repay principal due under a convertible note purchase agreement with Partners for Growth V, L.P. ("PFG"). Additionally, during the year ended December 31, 2025, the Company received $47.2 million from draws under the Share Purchase Agreement with GEM, through the issuance of 13,450,000 shares of the Company's common stock. As of December 31, 2025, the contractual terms allow the Company to make further advances of up to $97.5 million under the Share Purchase Agreement. 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. 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.

The Company is currently implementing operational improvements and stringent operating expenses management to improve the profitability of its airline operations. In parallel, the Company is advancing its technology initiatives, including its software technology platform and electrification programs. In addition, the Company continues to evaluate strategies to obtain additional funding for future operations. 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. There can be no assurance that the Company will be successful in achieving its strategic plans, or that new financing will be available to the Company in a timely manner or on acceptable terms, if at all. 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 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. 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.

**Note 2. Summary of Significant Accounting Policies**

**Basis of Presentation and Principles of Consolidation**

The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The consolidated financial statements include the assets, liabilities and operating results of the Company. All intercompany balances and transactions have been eliminated in consolidation. Other than net loss, the Company does not have any other elements of comprehensive income or loss for the years ended December 31, 2025 and 2024.

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**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 reported 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 reporting period.

On an ongoing basis, the Company evaluates its estimates using historical experience and other factors including the current economic and regulatory environment as well as management's judgment. Items subject to such estimates and assumptions include: revenue recognition and related allowances, valuation allowance on deferred tax assets, certain accrued liabilities, useful lives and recoverability of long-lived assets, fair value of assets acquired and liabilities assumed in acquisitions, legal contingencies, assumptions underlying convertible notes and convertible securities carried at fair value and stock-based compensation. These estimates may change as new events occur and additional information is obtained and such changes are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates, and any such differences may be material to the Company's consolidated financial statements.

**Concentration of Risk**

The financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. All of the Company's cash deposits are held at financial institutions that management believes to be of high credit quality. The Company's cash deposit accounts may exceed federally insured limits at times. The Company has not experienced any losses on cash deposits to date. For the years ended December 31, 2025 and 2024, the United States Department of Transportation ("U.S. DOT") accounted for 38% and 39%, respectively, of the Company's consolidated revenues.

We are dependent on part suppliers to deliver necessary airplane components in a timely manner at prices and quality levels acceptable to us. Our inability to efficiently manage these suppliers could have a material adverse effect on our business, prospects, financial condition and operating results.

**Cash and Restricted Cash**

Cash and restricted cash consists of cash on hand held in commercial bank accounts. The Company classifies all cash with use limited by contractual provisions as restricted cash. As of December 31, 2025 and 2024 the Company had restricted cash of $10.1 million and $0.6 million, respectively, primarily consisting of funds restricted under the terms of the High Trail Convertible Note for the year ended December 31, 2025, (see Note 9, *Financing Agreements*), and collateral against a corporate credit card for the year ended December 31, 2024. The Company has classified the restricted cash as long term, which represents the expected lapse of the restriction.

**Accounts Receivable, net**

Accounts receivable primarily consist of amounts due from the U.S. DOT in relation to certain air routes served by the Company under the Essential Air Service ("EAS") program, amounts due from airline business partners, and pending transactions with credit card processors. Receivables from the U.S. DOT and our business partners are typically settled within 30 days. All accounts receivable are reported net of an allowance for credit losses, which was not material as of December 31, 2025 and December 31, 2024. The Company has considered past and future financial and qualitative factors, including the age of unpaid receivables, payment history and other credit monitoring indicators, when establishing the allowance for credit losses.

**Collateralized Borrowings**

The Company has a revolving accounts receivable financing arrangement that allows the Company to borrow a designated percentage of eligible accounts receivable, as defined, up to a maximum unsettled amount of $5.0 million. The agreement is secured by a first security interest in all assets of Southern Airways Express ("SAE"), a subsidiary of Southern. The financing arrangement is uncommitted, and upon funding does not qualify for sale accounting as the Company does not relinquish control of the receivables based on, among other things, the nature and extent of the Company's continuing involvement.

Accordingly, the accounts receivable remain on the Company's Consolidated Balance Sheets until paid by the customer and cash proceeds from the financing arrangement are recorded as collateralized borrowing in Accrued expenses and other current liabilities on the Company's Consolidated Balance Sheets, with attributable interest expense recognized over the life of the related transactions. Interest expense and contractual fees associated with the collateralized borrowings are included in interest expense and other expense, net, respectively, in the accompanying Consolidated Statements of Operations.

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**Property and Equipment**

Property and equipment are stated at cost less accumulated depreciation. Expenditures for major additions, equipment purchase deposits, renewals, and modifications are capitalized, while minor replacements, maintenance, and repairs, which do not extend the asset's life, are expensed as incurred. The Company capitalizes expenditures for software developed or obtained for internal use. These costs include personnel and related employee benefits expenses for employees who are directly associated with and who devote time to software development projects, and external direct costs of consultants and materials for developing the software. Software development costs that do not qualify for capitalization as well as costs related to minor upgrades and enhancements are expensed as incurred and recorded in the Consolidated Statements of Operations.

Maintenance and repairs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful lives of the related assets, or, in the case of leasehold improvements, over the term of the lease or economic life, whichever is shorter as follows:

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| | |
|:---|:---|
| **Assets** | **Depreciable Life** |
| Aircraft, equipment and rotable spares | 3 to 20 years |
| Leasehold improvements | Shorter of the estimated lease term or 5 years |
| Office, vehicles and ground equipment | 3 years and 5 years |
| Internal-use software | 3 years |

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Depreciation of property and equipment is included within Depreciation and amortization on the Consolidated Statements of Operations. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the Consolidated Statements of Operations.

**Intangible Assets**

Intangible assets consist primarily of EAS contracts, tradenames and trademarks and software acquired in an asset acquisition. The Company capitalizes expenditures for major software purchases.

The Company amortizes finite-lived intangible assets on a straight-line basis over their estimated useful lives, which range from two to ten years. The straight-line recognition method approximates the manner in which the expected benefits will be derived.

**Impairment of Long-Lived Assets**

Long-lived assets such as property and equipment, finite-lived intangible assets, and right of use assets are reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. The Company performs impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The amount of impairment loss, if any, is measured as the difference between the carrying value of the asset and its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as appropriate. No impairment charges were recorded during the years ended December 31, 2025 and 2024.

**Deferred Revenue**

The Company records deferred revenue (contract liabilities) when the Company receives customer payments in advance of the performance obligations being satisfied on the Company's contracts. The Company generally collects payments from customers in advance of services being provided. The Company recognizes the deferred revenue as revenue when it meets the applicable revenue recognition criteria, which is usually either over the contract term, or when services have been provided. The Company generally meets performance obligations associated with all revenues deferred during the succeeding 12-month period. Accordingly, deferred revenue is classified within current liabilities in the accompanying Consolidated Balance Sheets.

**Leases**

The Company leases aircraft, airport passenger terminal space, portions of and full aircraft hangars and other airport facilities, other commercial real estate and office space.

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*Operating Leases*

Operating lease right-of-use assets and liabilities are recognized at the lease commencement date, which is the date the Company takes possession of the asset. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease right-of-use assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates based on the appropriate term and information available at lease commencement in determining the present value of lease payments including reasonably certain renewal periods. The Company recognizes the lease cost for operating leases on a straight-line basis over the lease term. Aggregate lease cost is recorded in Cost of Revenue and General and Administrative expenses on the Consolidated Statements of Operations. Additionally, tenant incentives used to fund leasehold improvements or any rent abatements are recognized when earned and reduce the operating right-of-use asset related to the lease.

*Finance Leases*

The Company measures finance lease right-of-use assets and finance lease liabilities initially at an amount equal to the present value at the beginning of the lease term of minimum lease payments during the lease term, excluding that portion of the payments representing executory costs (such as insurance, maintenance, and taxes to be paid by the lessor) including any profit thereon, with the corresponding liability recorded within the liabilities section of the Company's Consolidated Balance Sheet. During the lease term, each minimum lease payment is allocated by the lessee between a reduction of the liability and interest expense to produce a constant periodic rate of interest on the remaining balance of the liability (the interest method). Finance lease right-of-use assets are depreciated in accordance with the Company's property and equipment policy and is included within Depreciation and amortization on the Consolidated Statements of Operations. The corresponding lease liabilities are reduced as lease payments are made.

**Revenue Recognition**

***Scheduled Revenue***

Scheduled revenue is derived from scheduled passenger flights under the EAS program and through passenger single seat sales.

The Company provides scheduled passenger flight service on certain routes which is subsidized by the U.S. DOT under the EAS program. The EAS program is enacted to ensure that small communities in the U.S. have the ability to maintain a minimum level of scheduled air services. The Company has contracts with the U.S. DOT that are typically in duration of 2-4 years and include commitments for the Company to provide passenger air service to certain locations for a specific number of times annually to each location. The Company generally bills the U.S. DOT on the first of the month following the prior month's completed flights, and typically collects from the U.S. DOT within 12 to 14 days after billing. Revenue is recognized on a per-flight basis when the Company has fulfilled its commitment, generally as the flights are completed.

The Company earns revenue from the passenger for scheduled flight service through sales of tickets for single seats. These sales are generally paid by credit card. The Company also earns revenue generated by third-party travel booking sites or travel agencies. Tickets are refundable within 24 hours of purchase for flights scheduled to take place more than one week out, or when flights or services are changed, interrupted, or otherwise canceled by the Company. The Company recognizes revenue when it meets the applicable recognition criteria, which is at the point in time when a flight is completed or when tickets expire (generally within one year from the date of purchase).

***On-demand Revenue***

The Company earns revenue from the passenger for charter flight services, operated through a combination of its own aircraft and those of third party operators. These sales are generally paid for by credit card or wire transfer. The Company generally does not offer refunds after 24 hours of purchase. The Company recognizes revenue when it meets the applicable recognition criteria, which is at the point in time when a flight is completed or when tickets expire (generally within one year from the date of purchase).

***Other Revenue***

The Company also earns revenue from various ancillary services such as those relating to baggage fees, reservation change fees, package freight fees, and pet-travel (carry-on) fees. These fees are earned when the services are performed, generally at the time of travel.

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***Principal vs Agent***

The Company evaluates whether it is a principal or an agent in contracts involving more than one party by assessing whether it controls the specified flight services before they are transferred to its customers. In transactions where the Company directs third-party air carriers to provide flights service to its customers, the Company determined it acts as the principal as it controls the services provided to the customers. In these instances, the Company is primarily responsible for fulfillment of the obligation in the contract, has pricing discretion, has the authority to direct the key components of the service on behalf of the member or customer regardless of which third-party is used. Therefore, the Company reports revenue and the associated costs on a gross basis in the Consolidated Statements of Operations.

When the Company is not primarily responsible for the fulfillment of the flight services, it acts as an agent and therefore recognized revenue in the Consolidated Statements of Operations is net of amounts paid to third-party air carriers and operators that provide the services.

In transactions where the Company operates aircraft on behalf of a third party, the Company determined it acts as the agent as it solely carries out the services based on the direction of the third party in exchange for a fixed service fee as determined by the related services agreement. In these instances, the Company reports the service fee as fee revenue net of any operating costs incurred by the Company to perform these services.

**Operating Expenses**

***Cost of Revenue***

Cost of revenue consists of costs that are directly related to delivering the Company's services and certain facility costs. Delivery of the Company's services primarily comprise of aircraft maintenance, fuel, airport-related expenses, and fees paid to third-party air carriers for operating aircraft in providing flight services and platform infrastructure costs. Cost of revenue also includes facility costs representing leases expenses and operating costs for stations throughout the service network and personnel related costs, primarily salary and bonus. Cost of revenue excludes depreciation on property and equipment and amortization of finite-lived intangible assets.

***Sales and Marketing***

Sales and marketing expense consists primarily of personnel related and other costs in connection with the Company's sales and marketing efforts. Advertising costs are expensed as incurred and were $3.5 million and $2.2 million for the years ended December 31, 2025 and 2024, respectively. Sales and marketing excludes depreciation on property and equipment and amortization of finite-lived intangible assets.

***Technology and Development***

Technology and development expense consists of personnel and other costs related to technology development and management efforts including costs for third-party development resources, and allocations of overhead and facility costs. Technology cost also includes research and development cost associated with the Company's hybrid electrification strategy. The Company's technology and development efforts are focused on enhancing the ease of use and functionality of its Surf OS platform by adding new core functionality, services and other improvements, as well as the development of new products and services. Technology and development costs are expensed as incurred, except to the extent that such costs are associated with internal-use software development that qualify for capitalization, which are then recorded within Property and Equipment, net on the Company's consolidated balance sheets. Technology and development excludes depreciation on property and equipment and amortization of finite-lived intangible assets.

***General and Administrative***

General and administrative expense consists of personnel related costs including salary, bonus, and share-based compensation for the Company's executive, finance, facilities, and human resource teams and facility costs. General and administrative expenses also include professional fees and other corporate related expenses. General and administrative expenses exclude the depreciation on property and equipment and amortization of finite-lived intangible assets.

**Share-Based Compensation**

*Options, RSPAs, and Warrants*

The Company accounts for the issuance of stock options, restricted share purchase agreements ("RSPAs"), and warrants in the consolidated financial statements based on the grant date fair value of the awards. Issuances of RSPAs with promissory notes are accounted for as share options and are measured based on the grant date fair value of the option. The Company estimates the fair value

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of these awards using the Black-Scholes option pricing model. The grant date fair value of share-based awards with service-only conditions is recognized as expense on a straight-line basis in the Consolidated Statement of Operations over the requisite service period, which is generally the vesting period ranging from 12 to 48 months. Forfeitures are recorded as they occur. For awards with performance conditions, the Company records compensation expense on a graded-vesting basis when it is deemed probable that the performance condition will be met. For awards with market conditions, the effect of the market conditions is reflected in the fair value measurement and expense, using an option pricing model, recognized on a graded-vesting basis, is not reversed to the extent that the market condition is not achieved. Additionally, awards granted to non-employees are accounted for using their grant date fair value, using Black Scholes option pricing model and are accounted for in the same manner as awards granted to employees.

Determining the fair value of share-based awards requires judgment. The Company's use of option pricing models requires the input of subjective assumptions, including the fair value of shares of the Company's common stock underlying the option award, the expected term of the option, the expected volatility of the Company's common stock, risk-free interest rates, and the expected dividend yield of the Company's common stock. The assumptions used in the Company's option pricing model represent management's best estimates. These estimates involve inherent uncertainties and the application of management's judgment. If factors change and different assumptions are used the Company's share-based compensation expense could be materially different in the future.

*Restricted Stock Unit Awards*

The grant date fair value of restricted stock units ("RSUs") is estimated based on the fair value of the Company's common stock on the date of grant. RSUs vest upon the satisfaction of a service-based vesting condition and the compensation expense for these RSUs is recognized on a straight-line basis from the date of grant over the requisite service period.

*Performance-Based Restricted Stock Units*

During the year ended December 31, 2025, Company granted performance-based restricted stock unit ("PRSUs") to employees, which will vest upon the achievement of an adjusted EBITDA metric for the year ending December 31, 2025 as well as a service period of four years from the date of grant. The grant date fair value of these PRSUs was determined based on the Company's stock price the business day immediately preceding the grant date. Expense attribution for these awards is based on a probability assessment regarding the achievement of the financial metric. The Company will record compensation expense on a cumulative basis to reflect the grant date fair value of shares expected to vest over the service period of each award.

The Company granted founder PRSUs ("founder PRSUs") that contain a market condition in the form of future stock price targets. The grant date fair value of the founder PRSUs was determined using a Monte Carlo simulation model and the Company estimates the derived service period of the founder PRSUs. The grant date fair value of founder PRSUs containing a market condition is recorded as stock-based compensation over the derived service period. Provided that each founder continues to be employed by the Company, either directly or as a non-employee consultant, stock-based compensation expense is recognized over the derived service period, regardless of whether the stock price goals are achieved. If the stock price goals are met sooner than the derived service period, any unrecognized compensation expenses related to the founder PRSUs will be expensed during the period in which the stock price targets are achieved.

*Warrants*

The Company assesses whether warrants issued to purchase the Company's common stock are liability or equity-classified based on the terms of the warrants. If the warrants are determined to be liability-classified, then the warrants are remeasured to fair value each period with changes in fair value recorded within Changes in fair value of financial instruments carried at fair value, net on the Consolidated Statements of Operations. The Company recognizes the fair value of liability-classified warrants within Other liabilities in its Consolidated Balance Sheets. If the warrants are determined to be equity-classified, then the initial fair value is recorded in Additional paid-in capital and the warrants are not remeasured thereafter.

The Company estimates the fair value of warrants to purchase its common stock using the Black-Scholes option pricing model. Warrants are principally issued to lenders and non-employees, some of whom are related parties, in connection with debt and equity fundraising and debt restructuring activities.

**Income Taxes**

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. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period

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that includes the enactment date. The likelihood of realizing the tax benefits related to a potential deferred tax asset is evaluated, and a valuation allowance is recognized to reduce that deferred tax asset if it is more likely than not that all or some portion of the deferred tax asset will not be realized.

The Company determines whether a tax position taken or expected to be taken in a tax return is to be recognized in the consolidated financial statements when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. The amount recognized is subject to estimation and management judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount recognized. For tax positions meeting the more likely than not threshold, the tax amount recognized in the consolidated financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties accrued related to unrecognized tax benefits, if any, in its income tax provision in the accompanying Consolidated Statements of Operations.

**Net Loss Per Share Applicable to Common Shareholders, Basic and Diluted**

The Company calculates basic and diluted net loss per share applicable to common shareholders using the two-class method required for companies with participating securities. The Company considers preferred stock to be participating securities as the holders are entitled to receive dividends on a pari passu basis in the event that a dividend is paid on common shares.

Under the two-class method, basic net loss per share applicable to common shareholders was calculated by dividing the net loss available to common shareholders by the weighted-average number of shares of common shares outstanding during the period. For purposes of determining the number of weighted-average common shares outstanding, the Company has included issued and outstanding common shares, penny common share warrants, and vested RSPAs. Diluted net loss per share available to common shareholders was computed by giving effect to all potentially dilutive common share equivalents outstanding for the period. For purposes of this calculation, preferred stock, unvested RSUs, unvested RSPAs, stock options and warrants to purchase common shares were considered common share equivalents but had been excluded from the calculation of diluted net loss per share applicable to common shareholders as their effect was anti-dilutive. In periods in which the Company reports a net loss applicable to common shareholders, diluted net loss per share available to common shareholders is the same as basic net loss per share applicable to common shareholders, since dilutive common shares are not assumed to have been outstanding if their effect is anti-dilutive. The Company reported net loss applicable to common shareholders for the years ended December 31, 2025 and 2024.

**Fair Value Measurements**

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company elected the fair value option to account for its debt instruments because the Company's debt instruments contain a number of complex features that would have otherwise required bifurcated derivative accounting. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. 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.

Level 2 Inputs other than quoted prices included in Level I, 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.

Level 3 Inputs are unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date.

Assets and liabilities are classified in the hierarchy based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

The Company measures the fair value of certain long-lived assets including finite-lived intangible assets on a nonrecurring basis, when such assets are acquired in a business combination or are required to be written down to fair value if impaired. Such fair values are classified within 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.

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There were no assets measured at fair value on a recurring basis as of December 31, 2025 and 2024.

The carrying amounts of certain financial assets and liabilities, including restricted cash, other current assets, accounts receivable, accounts payable, accrued expenses, and amounts due to related parties approximate fair value because of the short maturity and liquidity of those instruments.

***SAFE and Convertible Notes at Fair Value***

The Company's Simple Agreement for Future Equity with Tokens ("SAFE-T") are financial instruments whereby an investor provides an investment into the Company, and the note is subsequently converted into a preferred equity security at a discount to the price paid by other investors when and if a preferred equity is issued through a qualifying capital raise. Due to certain provisions included in the agreements for these instruments, they are classified as liabilities as of December 31, 2025 and 2024.

The Company elected the fair value option for the convertible notes and SAFE-T financial instruments, which requires them to be remeasured to fair value each reporting period with changes in fair value recorded in Changes in fair value of financial instruments carried at fair value, net on the Consolidated Statements of Operations, except for change in the fair value that results from a change in the instrument specific credit risk which is presented separately within other comprehensive income. The fair value estimate includes significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The decision to elect the fair value option is determined on an instrument-by-instrument basis on the date the instrument is initially recognized, is applied to the entire instrument, and is irrevocable once elected. For instruments measured at fair value, embedded conversion or other features are not required to be separated from the host instrument. Issuance costs related to convertible securities carried at fair value are not deferred and are recognized as incurred within their original expense categories on the Consolidated Statements of Operations.

**Recent Accounting Pronouncements**

***Adopted***

In December 2023, the FASB issued ASU No. 2023-09, *Income Taxes (Topic 740): Improvements to Income Tax Disclosures.* ASU 2023-09 requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024, with early adoption permitted. The Company adopted the guidance prospectively effective December 31, 2025.

***Not Yet Adopted***

In November 2024, the FASB issued ASU No. 2024-03, *Disaggregation of Income Statement Expenses* (Subtopic 220-40). The ASU requires public entities to disaggregate, in a tabular presentation, certain income statement expenses into different categories, such as purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The guidance is effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and may be applied retrospectively. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU No. 2025-06, *Intangibles—Goodwill and Other—Internal-Use Software* (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU simplifies the capitalization guidance by removing all references to prescriptive and sequential software development stages (referred to as "project stages") throughout ASC 350-40. The ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date; or follow a modified transition approach that is based on the status of the respective projects and whether software costs were capitalized before the date of adoption; or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and related disclosures.

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**Note 3. Prepaids and Other Current Assets**

Prepaid expenses and other current assets consisted of the following (in thousands):

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| | | |
|:---|:---|:---|
|  | **December 31,<br>2025** | **December 31,<br>2024** |
| Prepaid software | $5188 | $2177 |
| Prepaid marketing | 2395 | 2434 |
| Engine reserves | 2213 | 1667 |
| Prepaid interest | 1983 |  |
| Vendor operator prepayments | 811 | 744 |
| Prepaid insurance | 624 | 766 |
| Other | 1106 | 723 |
| &nbsp;&nbsp;Total prepaid expenses and other current assets | $14320 | $8511 |

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**Note 4. Property, Plant and Equipment, Net**

Property and equipment, net, consists of the following (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,<br>2025** | **December 31,<br>2024** |
| Aircraft, equipment and rotable spares | $45519 | $40290 |
| Equipment purchase deposits | 2000 | 2000 |
| Leasehold improvements | 2192 | 2301 |
| Office, vehicles and ground equipment | 1245 | 1158 |
| Internal-use software | 4993 | 2729 |
| Property and equipment, gross | 55949 | 48478 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated depreciation | (10354) | (6265) |
| Property and equipment, net | $45595 | $42213 |

---

The Company recorded depreciation expense of $5.7 million and $4.7 million for the years ended December 31, 2025 and 2024, respectively. Depreciation expense is recognized as a component of Depreciation and Amortization expense in the accompanying Consolidated Statement of Operations.

For the years ended December 31, 2025 and 2024, the Company recorded losses on disposal of property and equipment of $1.0 million and gains on disposal of property of $0.7 million, respectively. For the gains recorded during the year ended December 31, 2024, $0.4 million was the result of sale-leaseback transactions (see Note 7, *Leases*).

**Note 5. Intangible Assets, Net**

Intangibles assets, net, consists of the following (in thousands):

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| | | |
|:---|:---|:---|
|  | **December 31,<br>2025** | **December 31,<br>2024** |
| EAS contracts | $25770 | $25770 |
| Tradenames and trademarks | 8340 | 8340 |
| Software | 3122 | 3122 |
| Other intangibles | 225 | 225 |
| Intangible assets, gross | 37457 | 37457 |
| Accumulated amortization | (17390) | (14339) |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible assets, net | $20067 | $23118 |

---

The Company recorded amortization expense of $3.1 million and $3.5 million for the year ended December 31, 2025 and 2024, respectively. Amortization expense is recognized as a component of Depreciation and Amortization expense in the accompanying Consolidated Statement of Operations.

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Expected future amortization as of December 31, 2025 is as follows (in thousands):

---

| | |
|:---|:---|
|  | **Amount** |
| 2026 | $2915 |
| 2027 | 2764 |
| 2028 | 2577 |
| 2029 | 2577 |
| 2030 | 2577 |
| Thereafter | 6657 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $20067 |

---

**Note 6. Other Assets**

Other assets consists of the following (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,<br>2025** | **December 31,<br>2024** |
| Credit support fee | $3706 | $— |
| Security deposits - aircraft operating leases | 1971 | 1971 |
| Long-term technology contracts | 1883 |  |
| Cloud-hosted software | 1645 | 1921 |
| Credit card holdback | 1255 | 1255 |
| Security deposits - other | 704 | 566 |
| Long-term maintenance contracts | 487 |  |
| Other | 37 | 410 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total other assets | $11688 | $6123 |

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**Note 7. Leases**

**Operating Leases**

Supplemental balance sheet information related to operating leases is as follows (in thousands):

---

| | | | |
|:---|:---|:---|:---|
| **Operating Leases** | **Classification** | **December 31,<br>2025** | **December 31,<br>2024** |
| **Assets** |  |  |  |
| &nbsp;&nbsp;Right-of-use assets | Operating lease right-of-use assets | $12510 | $17046 |
| **Liabilities** |  |  |  |
| &nbsp;&nbsp;Lease liabilities, current | Operating lease liabilities, current | $3636 | $4120 |
| &nbsp;&nbsp;Lease liabilities, current | Due to related parties, current | 457 | 1216 |
| &nbsp;&nbsp;Lease liabilities, long term | Operating lease liabilities, long term | 8714 | 11540 |
| &nbsp;&nbsp;Lease liabilities, long term | Due to related parties, long term |  | 457 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total lease liabilities |  | $12807 | $17333 |

---

Lease term and discount rate were as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br>2025** | **December 31,<br>2024** |
| Weighted average remaining lease term | 3.82 years | 4.29 years |
| Weighted average discount rate | 8.82% | 8.68% |

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The components of lease cost are as follows (in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  |  | **Year ended December 31,** | **Year ended December 31,** |
| **Lease Cost** | **Classification** | **2025** | **2024** |
| Operating lease cost - aircraft | Cost of revenue | $7248 | $11123 |
| Operating lease cost - non-aircraft | Cost of revenue | 22 | 781 |
| Operating lease cost - non-aircraft | General and administrative | 802 | 607 |
| Lease cost, short term - aircraft | Cost of revenue | 433 | 548 |
| Lease cost, short term - non-aircraft | Cost of revenue | 2719 |  |
| Lease cost, short term | General and administrative | 29 | 181 |
| Engine reserves | Cost of revenue | 3526 | 3475 |
| &nbsp;&nbsp;Total lease cost |  | $14779 | $16715 |

---

Supplemental disclosures of cash flow and other information related to leases are as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Cash paid for operating lease liabilities | $6788 | $7889 |
| Non-cash transactions - operating lease assets obtained in exchange for operating lease liabilities | $1103 | $11606 |

---

Maturities of operating lease liabilities are as follows as of December 31, 2025 (in thousands):

---

| | |
|:---|:---|
|  | **Amount** |
| 2026 | $5011 |
| 2027 | 3524 |
| 2028 | 2358 |
| 2029 | 2219 |
| 2030 | 1929 |
| Thereafter |  |
| Total lease payment, undiscounted | 15041 |
| Less: imputed interest | 2234 |
| Total | $12807 |

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***Sale-leaseback transactions***

During the year ended December 31, 2024, the Company entered into three sale-leaseback transactions for the Company's owned aircraft. Sales proceeds totaled $8.7 million, which resulted in the addition of corresponding operating use right of use assets and operating lease liabilities. The Company recorded a gain of $0.4 million as a result of the sale transactions. The leases will carry a term of six years.

**Finance Leases**

The Company's finance lease assets include an aircraft, an aircraft engine, and other equipment. Supplemental balance sheet information related to finance leases is as follows (in thousands):

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| | | |
|:---|:---|:---|
|  | **December 31,<br>2025** | **December 31,<br>2024** |
| **Assets** |  |  |
| &nbsp;&nbsp;Finance lease right-of-use assets | $809 | $1115 |
| **Liabilities** |  |  |
| &nbsp;&nbsp;Finance lease liabilities, current | $277 | $265 |
| &nbsp;&nbsp;Finance lease liabilities, long term | 670 | 948 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total finance lease liabilities | $947 | $1213 |

---

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Lease term and discount rate are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,<br>2025** | **December 31,<br>2024** |
| Weighted average remaining lease term | 3.3 years | 4.2 years |
| Weighted average discount rate | 11.48% | 11.37% |

---

Supplemental disclosures of cash flow and other information related to leases are as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Cash paid for finance lease liabilities | $266 | $234 |
| Non-cash transactions - Finance lease assets obtained in exchange for finance lease liabilities | $— | $95 |

---

Maturities of finance lease liabilities are as follows as of December 31, 2025 (in thousands):

---

| | |
|:---|:---|
|  | **Amount** |
| 2026 | $371 |
| 2027 | 336 |
| 2028 | 264 |
| 2029 | 176 |
| 2030 |  |
| Thereafter |  |
| Total lease payment, undiscounted | 1147 |
| Less: imputed interest | (200) |
| Total | $947 |

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**Note 8. Accrued Expenses and Other Current Liabilities**

Accrued expenses and other current liabilities consisted of the following (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,<br>2025** | **December 31,<br>2024** |
| Accrued compensation and benefits | $8767 | $5940 |
| Accrued professional services | 9195 | 10431 |
| Excise and franchise taxes payable | 10054 | 7729 |
| Collateralized borrowings | 2264 | 5842 |
| Software license fee payable | 9547 | 9953 |
| Accrued Monarch legal settlement | 1314 | 1314 |
| Accrued major maintenance | 3669 | 427 |
| Interest and commitment fee payable | 140 | 114 |
| Other accrued liabilities | 2752 | 3746 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total accrued expenses and other current liabilities | $47702 | $45496 |

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***Collateralized Borrowings***

The Company has a revolving accounts receivable financing arrangement that allows the Company to borrow a designated percentage of eligible accounts receivable, as defined in the agreement, up to a maximum unsettled amount of $5 million. The agreement is secured by a first security interest in all assets of Southern Airways Express, LLC, a subsidiary of Southern. The related interest rate is the prime rate plus 1% per annum. Additionally, the Company pays certain ancillary fees associated with each borrowing that vary depending on the borrowed amount and duration, which is generally no more than 45 days.

For the year ended December 31, 2025, the Company borrowed a total of $36.1 million under this financing facility, of which $33.9 million was settled through the transfer of pledged receivables. Interest expense incurred on these borrowings for the year ended December 31, 2025, amounted to $0.5 million, and is included in interest expense in the accompanying Consolidated Statements of Operations.

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As of December 31, 2025 the Company was in compliance with all covenants under this financing facility.

In addition, during the year ended December 31, 2024, the Company received an advance payment of $3.0 million from a financing institution related to an expected future payment under the IRS' Employee Retention Credit Program. Such amounts were collateralized against the value of the credits to be received, as well as other assets of Southern Airways Express, a subsidiary of Southern. During the year ended December 31, 2025, the Company received payments under the IRS' Employee Retention Credit Program totalling $3.6 million, which were fully off-set against the collateralized borrowing, with the associated benefit recorded against associated payroll costs within the Company's Consolidated Statement of Operations. As of December 31, 2025 and December 31, 2024, the Company has recorded $0 and $3.0 million within collateralized borrowings.

***Accrued Professional Services***

During the fourth quarter of 2024, the Company entered into agreements with several professional service firms engaged in support of the Company's July 27, 2023 direct listing on the NYSE. These agreements modify the payment terms of prior service agreements to be contingent on future equity or debt financing by the Company. The Company originally estimated that a total of $7.1 million would be due under these agreements over a five year period. Given the uncertainty regarding the timing and amount of payment, all amounts have been classified as current liabilities within the Company's consolidated balance sheet. During the year ended December 31, 2025, the Company has continued to make contractual payments against certain of these liabilities, with $6.8 million remaining as a current liability within the Company's consolidated balance sheet as of December 31, 2025.

**Note 9. Financing Arrangements**

The Company's long-term debt obligations consist of the following *(in thousands)*:

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| | | |
|:---|:---|:---|
|  | **December 31,<br>2025** | **December 31,<br>2024** |
| Note payable to bank, fixed interest rate of 4.65%, due November 2025 | 4 | 8 |
| Note payable to a financing company, fixed interest rate of 5.49%, due December 2026 | 60 | 120 |
| Notes payable to Clarus Capital, fixed interest rate of 8.66%, due April, June and September 2027 | 12543 | 14022 |
| Note payable to Skywest, fixed interest rates of 4%, due April 2028 | 1802 | 2497 |
| Note payable to Tecnam, fixed interest rate of 6.75%, due July and August 2032 | 2692 | 2962 |
| Credit Agreement to ComVest Partners, floating interest rate of SOFR + 5%, due November 2028 |  | 44984 |
| Debt Issuance Costs |  | (2167) |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt, gross | 17101 | 62426 |
| Current maturities of long-term debt | (2712) | (2543) |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt, net of current maturities | $14389 | $59883 |

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Future maturities of total long-term debt as of December 31, 2025 are as follows *(in thousands)*:

---

| | |
|:---|:---|
|  | **Amount** |
| 2026 | $2712 |
| 2027 | 12029 |
| 2028 | 685 |
| 2029 | 157 |
| 2030 | 450 |
| Thereafter | 1068 |
| &nbsp;&nbsp;Total | $17101 |

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The Company is subject to customary affirmative covenants and negative covenants on all of the above notes payable. As of December 31, 2025, the Company was in compliance with all covenants in the loan agreements.

**Credit Agreement**

On November 14, 2024, the Company entered into a 4-year credit agreement with certain affiliates of Comvest Partners, as lenders (the "Credit Agreement"), pursuant to which the Company borrowed $44.5 million as a term loan, and $5.5 million of delayed draw

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commitments, which the Company will use to fund monthly interest payments under the Credit Agreement. This resulted in net proceeds of $42.7 million after funding debt issuance costs. Borrowings under the delayed draw commitments totaled $3.1 million and $0.5 million for the years ended December 31, 2025 and 2024, respectively.

The loans under the Credit Agreement accrued interest at a rate of (x) SOFR (subject to a 1.00% floor) plus (y) 5.00%, and were subject to a prepayment premium for 18 months after the initial funding date. There was a 1.50% fee on the aggregate loans and commitments, paid at the initial funding. The loans under the Credit Agreement have no payments due other than interest, in advance of the original maturity date on November 14, 2028.

The Credit Agreement was fully backstopped by a letter of credit issued by HSBC Bank USA, N.A. and arranged by Park Lane, a related party, and in connection therewith, the Company had entered into a reimbursement agreement with Park Lane (see Note 18, *Related Party Balances and Transactions*).

During November 2025, the Company made full repayment of all principal and interest due under the Credit Agreement, in addition to an additional $2.2 million due under the prepayment premium defined in the Credit Agreement. The Company recorded a loss on extinguishment of debt of $3.9 million associated with this repayment.

**Fair Value of Convertible Instruments**

The Company has elected the fair value option for convertible notes described below, which requires them to be remeasured to fair value each reporting period with changes in fair value recorded in changes in fair value of financial instruments carried at fair value, net on the Consolidated Statements of Operations, except for change in fair value that results from a change in the instrument specific credit risk which is presented separately within other comprehensive income. The fair value estimate includes significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

*High Trail Convertible Note*

On November 12, 2025, the Company closed a $74 million aggregate principal amount of senior secured convertible notes (the "Note") in a private placement with High Trail Capital (the "Holder"). The Note will be the senior secured obligation of the Company, guaranteed by certain of the Company's subsidiaries. The Note was sold at 87.8% of its principal amount, with the Company receiving $65 million of proceeds before expenses. The Note will not accrue interest except in the event of an event of default, which will accrue interest at a rate of 15% per annum. The Note will mature on October 31, 2028, unless earlier converted, redeemed or repurchased. Repayment of any principal amount remaining outstanding at maturity will be required to be made at 105% of such principal amount.

The Note may be converted at an initial conversion price of approximately $3.98 per share of the Company's common stock, representing an aggregate of 18,574,297 shares of the Company's common stock that could be converted under the Note.

Subject to specified conditions, the Company may force the Holder to convert the Note at any time if the last reported sale price per share of the Company's common stock equals or exceeds 150% of the then current conversion price on each of the immediately preceding 20 consecutive trading days, in amounts (i) not less than the lesser of (x) $10,000,000 and (y) the remaining outstanding principal amount of the Note, but (ii) not greater than 2.5 times the average dollar daily trading volume during the related 20 trading day measurement period.

The Holder will have the option to require the Company to partially redeem the Note on the first and fifteenth day of each month beginning March 1, 2026 in an amount equal to the greater of (a) 5.0% of the aggregate dollar trading volume of the Company's common stock, (b) an amount equal to (i) $2,000,000, minus (ii) the cumulative sum of the amounts by which the principal amounts partially redeemed have exceeded $2,000,000 for all prior redemption periods, less any amounts that have previously been applied by the Company pursuant to this clause (ii) to reduce partial redemption amounts, if any, and (c) $750,000. The Holder may elect to receive shares in an amount determined by applying the conversion rate to the redemption payment otherwise due. Any such partial redemption payment (whether in cash or in shares) shall reduce the principal amount by such paid amount divided by one hundred five percent (105%). The maximum number of shares issuable under the Note (if the entire Note were redeemed on this basis) would be 19,503,012.

Further, on March 1, 2026, the Holder of the Note will have the right to require the Company to redeem a principal amount of the Note equal to up to 50% of the gross proceeds from any equity financings (including from our equity line of credit or any future at-the-market program) since issuance of the Note, provided that in no event will such amount exceed $6,000,000.

The Company is subject to comprehensive negative and affirmative covenants, including, inter alia, restrictions on its ability to incur indebtedness, create liens, make investments, declare or pay cash dividends or repurchase equity, and transfer or sell material assets, in each case subject to certain enumerated exceptions. The Company must also maintain a minimum liquidity of $10,000,000 in unrestricted cash and cash equivalents in controlled accounts. The Company also must obtain prior written consent from a majority of holders of the Note before issuing additional debt or securities that would cause a default under the Note or restrict the Company's ability to pay the principal amount thereon. In addition, the Company must maintain a required reserve of authorized and unissued

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common stock calculated pursuant to a specified formula set forth in the Note, and deliver and maintain a letter of credit to backstop the Note. The Company must also maintain at least $30,000,000 in available capacity under either an equity line of credit or an "at-the-market" offering within the meaning of Rule 415(a)(4) of the Securities Act pursuant to which the Company may issue and sell shares of common stock from time to time. This requirement will be met through continued access to the Share Purchase Agreement with GEM (see Note 10, *Share Purchase Agreement, GEM Purchase, and Mandatory Convertible Security).* Additional affirmative covenants require the Company to maintain its business within existing lines, preserve its corporate existence, properties and intellectual property rights, maintain adequate insurance and ensure affiliate transactions are on arm's length terms.

The Note is partially backstopped by a letter of credit issued by HSBC Bank USA, N.A. and arranged by Park Lane, a related party, and in connection therewith, the Company had entered into an amended reimbursement agreement with Park Lane (see Note 18, *Related Party Balances and Transactions*).

*LamVen Note*

During the year ended December 31, 2025, LamVen transferred $49.9 million of the outstanding principal due under the LamVen Note (see Note 18, *Related Party Balances and Transactions*) to a non-affiliated third party under terms identical to the original LamVen Note (the "New Convertible Note"). Subsequent to these transfers, the holder of the New Convertible Note converted $48.0 million of the principal amount, inclusive of then accrued interest, to 14,025,167 shares of the Company's common stock. As a result, as of December 31, 2025, LamVen retained a principal balance of $0.1 million (the "New LamVen Note"), with $1.9 million outstanding under the New Convertible Note.

During January 2026, the holder of the New Convertible Note converted the remaining $1.9 million of the principal amount, inclusive of then accrued interest, to 967,018 shares of the Company's common stock.

*PFG Convertible Note Purchase Agreement*

On June 21, 2023, the Company entered into a convertible note purchase agreement (the "Convertible Note Purchase Agreement") with PFG for a senior unsecured convertible promissory note for an aggregate principal amount of $8.0 million. The note interest rate of 9.75% and matured on December 31, 2024. All unpaid principal and interest balances may be converted into shares of the Company's common stock, at the option of the holder, at a price equal to 120% of the opening trading price of the Company's common stock on the date of its direct listing on the NYSE. Based on the $35.00 per share opening price on the first day of listing of the Company's common stock, the principal of the Convertible Note Purchase Agreement would be convertible into 196,476 shares of the Company's common stock.

On November 14, 2024, the Company amended the existing Convertible Note Purchase Agreement with PFG, which had an outstanding principal amount of $8.0 million upon amendment.

The Convertible Note Purchase Agreement will accrue interest at the greater of (x) SOFR (subject to a 1.00% floor) plus 5.00% and (y) 9.75%. In the event the Company raises capital in certain equity offerings, a portion of the net cash proceeds from such equity offerings is required to be applied to repay the obligations under the Convertible Note Purchase Agreement. The maturity of the Convertible Note Purchase Agreement is December 31, 2028, which may be accelerated upon the occurrence of certain events of default.

During the year ended December 31, 2025, the Company made principal payments of $4 million against the Convertible Note Purchase Agreement. The obligations under the Convertible Note Purchase Agreement are guaranteed by certain of the Company's subsidiaries, and subject to a security interest on assets of the Company and the subsidiary guarantors, subject to certain exceptions.

As of December 31, 2025, the Company was in compliance with all covenants under the Note and the Convertible Note Purchase Agreement.

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Fair value of convertible notes *(in thousands)*:

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| | | |
|:---|:---|:---|
|  | **Fair Value at** | **Fair Value at** |
|  | **December 31, 2025** | **December 31, 2024** |
| High Trail Note | 61600 |  |
| New Convertible Note | 1875 |  |
| Convertible Note Purchase Agreement | 3982 | 7347 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 67457 | 7347 |
| Convertible notes at fair value, current | (42274) |  |
| Convertible notes at fair value, long-term | $25183 | $7347 |

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**Fair Value of SAFE-T Notes**

The Company's SAFE-T notes are carried at fair value, with fair value determined using Level 3 inputs. The Company determined that the SAFE-T instruments should be classified as liabilities based on evaluating the characteristics of the instruments, which contained both debt and equity-like features. The SAFE-T instrument matured in July 2019, but the holder has elected not to effect an equity conversion of the instrument. Subsequent changes in the fair value of the SAFE-T notes are recorded as part of changes in fair value of financial instruments carried at fair value, net within the Consolidated Statements of Operations. As of December 31, 2025 and 2024, the value of the SAFE-T notes was $5 thousand and $13 thousand, respectively.

**Note 10. Share Purchase Agreement and GEM Mandatory Convertible Security**

**Share Purchase Agreement**

During 2020, the Company entered into a Share Purchase Agreement ("SPA") with GEM Global Yield LLC SCS ("GEM") and an entity affiliated with GEM to provide incremental financing in the event the Company completed a business combination transaction with a SPAC, IPO, or direct listing. On May 17, 2022, February 8, 2023, and September 18, 2023, the SPA was amended to increase the maximum aggregate shares of the Company's common stock that may be required to be purchased by GEM from $200 million to $400.0 million (the "Aggregate Limit") and amend the commitment fee required under the SPA from $4 million to 571,429 shares of the Company's common stock. Pursuant to the amended and restated SPA, and subject to the satisfaction of certain conditions, the Company will have the right from time to time at its option to direct GEM to purchase up to the Aggregate Limit of shares of the Company's common stock over the term of the amended and restated SPA. Upon its public listing, the Company may request GEM to provide advances under the SPA in an aggregate amount of up to $100.0 million, provided that individual advances are not to exceed $25.0 million each, with the first advance not to exceed $7.5 million. Each advance will reduce the amount that the Company can request for future purchases under the SPA. On September 29, 2023, the Company received its first advance under the SPA in the amount of $4.5 million, on a total request of $7.5 million, with the remaining $3.0 million being received on October 3, 2023. Concurrent with the receipt of funds, the Company issued 571,429 shares of its common stock to GEM in full satisfaction of the commitment fee. Following an advance or draw, the number of shares to be transferred to GEM will be based on an average of the volume-weighted average trading price of the Company's common stock over a period of fifteen trading days following the receipt of an advance, subject to a 15 day extension in certain circumstances. This average price will be subject to a contractual discount of 10%. Additionally, contractual provisions within the SPA provide that in no event may GEM receive a share issuance, from a draw under the SPA, that would raise their share ownership percentage above 10% of the Company. This provision may impact the Company's ability to request additional purchases under the SPA.

On June 15, 2023, July 21, 2023, and July 24, 2023, the SPA was further amended to modify the number of shares of the Company's common stock to be issued to GEM at the time of a public listing transaction of the Company from an amount equal to 0.75% of the Company's fully-diluted shares of common stock outstanding to a fixed 185,714 shares of the Company's common stock. The amendments to the SPA also modified certain registration requirements whereby the Company was obligated to file a re-sale registration statement within 5 business days of the Company's public listing. On July 27, 2023, concurrent with the Company's direct listing, the Company issued 185,714 shares of the Company's common stock to GEM in full satisfaction of this provision. Pursuant to GEM's associated registration rights, the Company filed a re-sale registration statement, covering the 185,714 shares, on August 2, 2023, which was declared effective by the SEC on September 28, 2023.

The Company has accounted for the shares issuance contracts under the SPA, as amended, as derivative financial instruments which are recorded at fair value within Other long-term liabilities on the Consolidated Balance Sheets. During the year ended December 31, 2024, the Company settled $2.5 million in advances received from GEM through the issuance of 1,311,235 shares of the Company's common stock. The Company also received total proceeds of $1.4 million during the year ended December 31, 2024, through draws under the SPA. This resulted in the issuance of 236,535 shares of the Company's common stock. Additionally, liabilities related to

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advances received under the SPA prior to March 1, 2024 were reclassified as part of the Mandatory Convertible Security, as discussed below.

During the year ended December 31, 2025, the Company received total proceeds of $47.2 million through completed draws under the SPA, resulting in the issuance of 13,450,000 shares of the Company's common stock. As of December 31, 2025, the Company had $251.4 million in remaining availability for draws under the SPA.

The fair value of the liability related to the SPA was $0 and $0 as of both December 31, 2025 and 2024, as there was no unsettled draws or advances under the SPA. Changes in fair value were recorded in Changes in fair value of financial instruments carried at fair value, net on the Consolidated Statements of Operations.

**GEM Purchase**

On June 15, 2023, and amended on July 21, 2023, and July 24, 2023, the Company and GEM entered into the SPA whereby GEM would purchase 142,857 shares of the Company's common stock for cash consideration of $25.0 million upon the successful public listing of the Company's shares. Under the terms of the agreement, the Company is obligated to file a re-sale registration statement, covering the 142,857 shares issued, within five business days of the Company's public listing. On July 27, 2023, concurrent with the Company's direct listing, the Company received the $25.0 million cash consideration contemplated in the SPA, in exchange for the issuance of 142,857 shares of the Company's common stock. Pursuant to the associated registration rights, the Company filed a re-sale registration statement, covering the 142,857 shares, on August 2, 2023, which was declared effective by the SEC on September 28, 2023.

**GEM Mandatory Convertible Security**

On March 1, 2024, Company entered into a mandatory convertible security purchase agreement (the "MCSPA") with GEM. Pursuant to the MCSPA, the Company has agreed to issue and sell to GEM, and GEM has agreed to purchase from the Company, a mandatory convertible security with a par amount of up to $35,200,000 (the "Mandatory Convertible Security"), which shall be convertible into a maximum of 1,142,857 shares of the Company's common stock, par value $0.0001 per share, subject to adjustment as described in the MCSPA.

The Company issued the Mandatory Convertible Security on August 7, 2024 (the "Closing Date"). The Mandatory Convertible Security will mature on August 7, 2029 (the "Maturity Date"), unless earlier converted or redeemed pursuant to the terms set forth in the Mandatory Convertible Security. As partial consideration for GEM's purchase of the Mandatory Convertible Security, GEM delivered to the Company 900,000 shares of the Company's common stock. In addition, the MCSPA restored the number of shares of the Company's common stock that may be required to be purchased by GEM under the SPA to $300.0 million and $100.0 million of advances, thus restoring the maximum aggregate shares of the Company's common stock that may be required to be purchased by GEM to $400.0 million The respective formulas that the Company and GEM used to determine the par amount of the Mandatory Convertible Security and the consideration for GEM's purchase of the Mandatory Convertible Security are each set forth in the MCSPA.

On the Maturity Date, the Company will pay to GEM, at the Company's option, cash or shares of the Company's common stock in an amount equal to the then outstanding par amount of the Mandatory Convertible Security divided by the lesser of (a) $31.15 (the "Fixed Conversion Price") and (b) the average of the five lowest volume-weighted average prices per share for the Company's common stock trading on the NYSE during the 30 trading days immediately preceding the Maturity Date (the "Floating Conversion Price").

Prior to the Maturity Date, GEM will have the option to convert any portion of the Mandatory Convertible Security into shares of the Company's common stock at a conversion rate equal to the portion of the par amount to be converted into shares of the Company's common stock divided by the lesser of (a) the Fixed Conversion Price and (b) the Floating Conversion Price. If, following the conversion by GEM of any portion of the Mandatory Convertible Security into 1,142,857 shares of the Company's common stock at any time prior to the Maturity Date, any par amount of the Mandatory Convertible Security remains outstanding, the Company will have the option to (x) increase the maximum number of shares of the Company's common stock into which the Mandatory Convertible Security may convert, with such increase to be at the Company's sole discretion, (y) pay to GEM an amount in cash equal to 115% of the remaining outstanding par amount or (z) increase the remaining outstanding par amount by 15% of the amount outstanding immediately after issuance of the 1,142,857 shares of the Company's common stock. GEM may not convert any portion of the Mandatory Convertible Security into shares of the Company's common stock to the extent that GEM (together with its affiliates and any other parties whose holdings would be aggregated with those of GEM for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended) would beneficially own more than 4.99% of the shares of the Company's common stock outstanding after such conversion; provided, however, that GEM may increase or decrease such maximum limitation percentage to not more than 9.99% upon 61 days' notice to the Company.

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The Company may, at its option, redeem the Mandatory Convertible Security, in whole or in part, in cash at a price equal to 115% of the outstanding par amount to be redeemed.

Pursuant to the terms of the MCSPA and the Mandatory Convertible Security, GEM has agreed that, beginning March 1, 2024 and for so long as any shares of the Company's common stock are 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, 2025, the Company made payments against the outstanding principal of the Mandatory Convertible Security totaling $38.6 million, which represented full settlement of the Mandatory Convertible Security. The outstanding principal balance of the Mandatory Convertible Security at December 31, 2025 and December 31, 2024 was $0 and $38.6 million, respectively.

The fair value of the Mandatory Convertible Security 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 11*, Fair Value Measurements).* For the years ended December 31, 2025 and 2024, the Company recorded losses on the change in fair value of financial instruments carried at fair value of $15.4 million and $11.7 million, respectively, related to the Mandatory Convertible Security, resulting in a liability of $0 and $23.2 million as of December 31, 2025 and 2024, respectively, which was included as part of other long-term liabilities within the Consolidated Balance Sheets. Significant inputs in determining period end fair value of the Mandatory Convertible Security as of December 31, 2024 were as follows:

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| | |
|:---|:---|
|  | **December 31, 2024** |
| Par amount | 38615 |
| Probability of default | —% |
| Expected volatility | 155.7% |
| Discount rate | 4.3% |
| Share price | $5.39 |

---

**Note 11. Fair Value Measurements**

The following tables summarize the Company's financial liabilities that are measured at fair value on a recurring basis in the consolidated financial statements *(in thousands)*:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fair Value Measurements at December 31, 2025 Using:** | **Fair Value Measurements at December 31, 2025 Using:** | **Fair Value Measurements at December 31, 2025 Using:** | **Fair Value Measurements at December 31, 2025 Using:** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Liabilities: |  |  |  |  |
| Convertible notes at fair value | $— | $— | $67457 | $67457 |
| SAFE-T notes at fair value |  |  | 5 | 5 |
| LamVen Note |  |  | 100 | 100 |
| Liability classified warrants |  |  | 2831 | 2831 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total financial liabilities | $— | $— | $70393 | $70393 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fair Value Measurements at December 31, 2024 Using:** | **Fair Value Measurements at December 31, 2024 Using:** | **Fair Value Measurements at December 31, 2024 Using:** | **Fair Value Measurements at December 31, 2024 Using:** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Liabilities: |  |  |  |  |
| Convertible notes at fair value | $— | $— | $7347 | $7347 |
| SAFE-T notes at fair value |  |  | 13 | 13 |
| LamVen Note |  |  | 50000 | 50000 |
| GEM derivative liability |  |  | 23221 | 23221 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total financial liabilities | $— | $— | $80581 | $80581 |

---

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The following table provides a reconciliation of activity and changes in fair value for the Company's convertible loans and redeemable convertible preferred stock warrant liability using inputs classified as Level 3 *(in thousands)*:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Convertible Notes at Fair Value** | **SAFE Notes** | **LamVen Note** | **Mandatory Convertible Security** | **Liability Classified Warrants** |
| Balance at December 31, 2024 | $7347 | $13 | $50000 | $23221 | $— |
| Change in fair value | (2765) | (8) |  | 15379 | (2952) |
| Debt and equity financing issuances | 65000 |  |  |  | 5783 |
| Transfers | 49900 |  | (49900) |  |  |
| Conversions into common stock | (48025) |  |  |  |  |
| Payments | (4000) |  |  | (38600) |  |
| Balance at December 31, 2025 | $67457 | $5 | $100 | $— | $2831 |

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**Long-Term Debt**

The carrying amounts and fair values of the Company's long-term debt obligations were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2024** | **As of December 31, 2024** |
|  | **Carrying Amount** | **Fair Value** | **Carrying Amount** | **Fair Value** |
| Long-term debt, including current maturities | $17101 | $16988 | $64593 | $64707 |

---

In assessing the fair value of the Company's long-term debt, including current maturities, the Company primarily uses an estimation of discounted future cash flows of the debt at rates currently applicable to the Company for similar debt instruments of comparable maturities and comparable collateral requirements.

**Note 12. Shareholders' Deficit**

***Registered Direct Offerings***

On March 31, 2025, the Company entered into a securities purchase agreement with an investor relating to the offering and sale in a registered direct offering of an aggregate of 1,860,000 shares of the Company's common stock, at an offering price of $2.50 per share, and pre-funded warrants to purchase up to 140,000 shares of the Company's common stock, at an offering price of $2.4999 per share, which were all exercised concurrent with the closing of the offering on April 1, 2025, and are included as shares issued with the remainder of the offering. As part of this offering, the Company issued warrants to purchase up to 100,000 shares of the Company's common stock to an advisor who assisted with the offerings. These warrants have an exercise price equal to $3.125 per share and are exercisable for five years from the commencement of sales in the offerings.

On June 25, 2025, the Company entered into a securities purchase agreement with certain investors relating to the offering and sale in a registered direct offering of an aggregate of 10,800,002 shares of the Company's common stock, at an offering price of $2.50 per share, including pre-funded warrants to purchase up to 926,668 shares of common stock, at an offering price of $2.4999 per share, which were all exercised concurrent with the closing of the offering on June 26, 2025. As part of this offering, the Company issued warrants to purchase up to 540,000 shares of the Company's common stock to an advisor who assisted with the offerings. These warrants have an exercise price equal to $3.125 per share and are exercisable for five years from the commencement of sales in the offerings.

On November 10, 2025, the Company entered into a securities purchase agreement with certain investors relating to the offering and sale in a registered direct offering of an aggregate of 3,975,901 shares of the Company's common stock, at an offering price of $3.32 per share. Concurrent with the closing of the offering on November 12, 2025, the Company issued warrants to purchase up to 3,975,901 shares of the Company's common stock to the associated investors. These warrants have an exercise price equal to $3.32 per share and are exercisable for two years from the commencement of the offering. Due to settlement provisions included in the warrant agreements, such amounts have been classified as a liability, carried at fair value, with changes in such fair values recorded through earnings at each reporting period.

The Company received gross proceeds from these offerings of $45.2 million, which resulted in approximately $42.6 million of net proceeds after deducting placement agent fees and direct offering expenses totaling $2.6 million. These proceeds have been allocated between the common stock, equity classified warrants, and liability classified warrants issued as part of the offerings.

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In addition, the Company issued 1,000,000 shares of common stock (the "Palantir Shares") on November 10, 2025 at a price of $3.32 per share as a prepayment of consideration for license fees and related professional services to be rendered by Palantir Technologies Inc. ("Palantir") pursuant to the Company's existing software license agreement with Palantir (See Note 13, *Commitments and Contingencies)*. In addition, the Company delivered 881,579 additional shares of its common stock to Palantir as consideration for license fees and related professional services pursuant to the license agreement on an unregistered basis on November 12, 2025, representing a total payment in shares of the Company's common stock of approximately $6 million (together, the "Palantir Placement").

***Private Placements***

During May 2025, the Company sold 816,326 shares of the Company's common stock in private placements for gross proceeds of $2.0 million. Such sales were effected at a purchase price of $2.45 per share, which was the minimum price, under New York Stock Exchange regulations, as of May 22, 2025.

On November 10, 2025, the Company entered into a securities purchase agreement with certain investors relating to the offering and sale in a private placement of an aggregate of 2,048,195 shares of the Company's common stock, at an offering price of $3.32 per share for total proceeds of $6.8 million. Concurrent with the closing of the offering on November 12, 2025, the Company issued warrants to purchase up to 2,048,195 shares of the Company's common stock to the associated investors. These warrants have an exercise price equal to $3.32 per share and are exercisable for two years from the commencement of the offering. Due to settlement provisions included in the warrant agreements, such amounts have been classified as a liability, carried at fair value, with changes in such fair values recorded through earnings at each reporting period.

The Company received net proceeds from these private placement offerings of $8.8 million. These proceeds have been allocated between the common stock and liability classified warrants issued as part of the offerings.

***Warrants***

A summary of warrant activity associated with equity financings for the year ended December 31, 2025 is set forth below:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of Warrants Outstanding** | **Weighted Average Contractual Term (in years)** | **Aggregate Intrinsic Value (in thousands)** | **Weighted<br>Average<br>Exercise Price Per Share** |
| Outstanding at December 31, 2024 | 3389398 | 9.87 | $12296 | $1.83 |
| Granted | 6664096 | 4.45 |  | 3.30 |
| Exercised | (265725) |  |  | 3.13 |
| Canceled |  |  |  |  |
| Outstanding at December 31, 2025 | 9787769 | 6.24 | 373 | 2.80 |
| &nbsp;&nbsp;Exercisable at December 31, 2025 | 9787769 | 6.24 | 373 | 2.80 |

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The assumptions used to estimate the fair value of warrants granted during the year ended December 31, 2025 and 2024 and were as follows:

---

| | | |
|:---|:---|:---|
|  | **For The Year Ended December 31,** | **For The Year Ended December 31,** |
|  | **2025** | **2024** |
| Risk-free interest rate | 3.56% - 3.91% | 4.43% |
| Expected term (in years) | 2.0 - 5.0 | 10.0 |
| Dividend yield |  |  |
| Expected volatility | 77.11%- 153.17% | 146.5% |

---

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**Note 13. Commitments and Contingencies**

**Software License Agreements**

On May 18, 2021, and later modified during July 2025 and November 2025, the Company executed four agreements with Palantir Technologies Inc. ("Palantir") to license a suite of software for a combined term of nine years, commencing on the effective date. The agreements identify two phases where Palantir provides services to customize the software: an initial term from May 18, 2021 through June 30, 2023 with a cost of $11.0 million and an enterprise term from July 1, 2023 to June 30, 2030 with a cost of $30.7 million, for a total cost of $41.7 million.

As of December 31, 2025 and December 31, 2024 the Company capitalized $3.4 million and $3.1 million, respectively, related to the software that Palantir has provided to the Company. During the year ended December 31, 2025, the Company settled $11.8 million in invoiced amounts from Palantir through the issuance of 3,769,385 shares of the Company's common stock. As of December 31, 2025, the Company had $12.6 million in remaining commitments under these agreements, of which $5.1 million has been prepaid through the issuance of shares of the Company's common stock.

In July 2025, the Company and Palantir modified the enterprise term of the existing software license agreement. In addition to a two-year extension, the Company is Palantir's exclusive partner with respect to the configuration and sale of software to part 135 operators and charter brokers. Furthermore, the Company will have the ability to sub-license certain of its rights under the agreement to third-party clients. Palantir has the right to receive equity in Surf Air Technologies, a wholly owned subsidiary of the Company, versus that of the Company, at its election, in exchange for its services and contributions under the modified software license agreement.

**Licensing, Exclusivity and Aircraft Purchase Arrangements**

***Textron Agreement***

On September 15, 2022, the Company entered into agreements with Textron Aviation Inc. and one of its affiliates (collectively, "TAI"), for engineering services and licensing, sales and marketing, and aircraft purchases, which became effective as of the Company's direct listing on July 27, 2023 ("TAI Effective Date").

The engineering services and licensing agreement provides, among other things, that TAI will provide the Company with certain services in furtherance of development of an electrified powertrain technology (the "SAM System"). The engineering agreement requires payment by the Company as such services are provided by TAI. Under this agreement, the Company agrees to meet certain development milestones by specified dates, including issuance of a supplemental type certificate by the Federal Aviation Administration ("FAA"). Should the Company fail to meet certain development milestones, TAI has the right to terminate the collaboration agreement. The Company is currently complying with necessary development milestones under this agreement.

The licensing agreement grants the Company a nonexclusive license to certain technical information and intellectual property for the purpose of developing an electrified propulsion system for the Cessna Caravan aircraft, and to assist in obtaining Supplemental Type Certificates ("STCs") from the FAA, including any foreign validation by any other aviation authority, for electrified propulsion upfits/retrofits of the Cessna Caravan aircraft. The licensing agreement provides for payment by the Company of license fees aggregating $60.0 million over a multi-year period, with an initial $12.5 million in deposits being made as of December 31, 2023. The $12.5 million of deposits were recorded to technology and development expenses within the Company's consolidated statements of operations during the fourth quarter of 2023. During the year ended December 31, 2024, the Company and TAI agreed to apply a previous deposit under the aircraft purchase agreement to amounts due under the licensing agreement. Remaining payments due under the initial license fees of $9.5 million are due as of December 31, 2025 and are included as part of accrued expenses on the Company's Consolidated Balance Sheet. The remaining $35 million of payments under the licensing agreement will be due, via annual payments, following the Company's receipt of the STC, which the company continues to actively pursue.

Under the sales and marketing agreement, the parties agreed to develop marketing, promotional and sales strategies for the specifically configured Cessna Grand Caravans and further agreed to: (a) include Cessna Grand Caravans fitted with the SAM System (the "SAM Aircraft") in sales and marketing materials (print and digital) distributed to authorized dealers, (b) prominently display the SAM Aircraft on their respective websites and social media, (c) include representatives of the Company and TAI at trade show booths, (d) market the SAM Aircraft and conversions to SAM Aircraft to all owners of pre-owned Cessna Grand Caravans, and (e) not advertise or offer any third-party-developed electrified variants of the Cessna Grand Caravan. Certain technologies for aircraft propulsion are specifically carved out from TAI's agreement to exclusively promote the SAM System for Cessna Grand Caravans. The sales and marketing agreement provides for payment by the Company of exclusivity fees aggregating $40.0 million, with certain amounts deferred such that the aggregate fee is payable over four years commencing on the earlier of the year after the Company obtains an STC for the SAM System on the Cessna Grand Caravan or the 5<sup>th</sup>anniversary of the TAI Effective Date. The Company's obligation to pay exclusivity fees in any year may be offset, in whole or in part, based on the achievement of certain sales milestones of SAM Aircraft and Cessna Grand Caravans subsequently converted to a SAM System.

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Under the aircraft purchase agreement, the Company may purchase from TAI 90 specifically configured Cessna Caravans at prevailing market rates whereby the aggregate purchase price could be approximately $297.0 million, with an option to purchase an additional 26 specifically configured Cessna Caravans having an aggregate purchase price in excess of $85.8 million, over the course of seven years (see Note 21, *Subsequent Events).* The final price to be paid by the Company will be dependent upon a number of factors, including the final specifications of such aircraft and any price escalations. During the year ended December 31, 2024, the Company and TAI agreed to apply a previous deposit under the aircraft purchase agreement to amounts due under the licensing agreement. As of December 31, 2025, the Company has made deposits of $2.0 million under this agreement, for aircraft to be delivered during 2026.

***Jetstream Agreement***

On October 10, 2022, the Company and Jetstream Aviation Capital, LLC ("Jetstream") entered into an agreement (the "Jetstream Agreement") that provides for a sale and/or assignment of purchase rights of aircraft from the Company to Jetstream and the leaseback of such aircraft from Jetstream to the Company within a maximum aggregate purchase amount of $450.0 million, including a $120.0 million total minimum usage obligation by the Company. The Jetstream Agreement may be terminated: (i) upon a termination notice by either party in the event that a material adverse change in the business of the other party is not resolved within 30 days of such notice; and (ii) as mutually agreed in writing by the parties. No transactions have been executed under this agreement as of December 31, 2025.

***Palantir Joint Venture***

On August 9, 2024, the Company entered into a joint venture agreement (the "JV Agreement") with Palantir. Pursuant to the JV Agreement, the Company established Surf Air Technologies Inc. ("Surf Air Technologies"), a subsidiary of the Company, in order to develop, market, sell, maintain, and support an artificial intelligence-powered software platform for the advanced air mobility industry, to provide operators of all types of aircraft, amongst other software products and solutions, with systems for the management of planes, airline operations, and customer facing applications.

Instead of consummating the joint venture contemplated by the JV Agreement, on July 2, 2025, the Company and Palantir modified their existing software license agreement, as an expansion and enhancement of the overall relationship between the companies. In addition to a two-year extension, the Company will be Palantir's exclusive partner with respect to the configuration and sale of software to part 135 operators and charter brokers. Furthermore, the Company will have the ability to sub-license certain of its rights under the agreement to third-party clients. Palantir has the right to receive equity in Surf Air Technologies, versus that of the Company, at its election, in exchange for its services and contributions under the modified software license agreement, as discussed above.

**Guarantees**

The Company indemnifies its officers and directors for certain events or occurrences arising as a result of the officer or director serving in such capacity. The term of the indemnification period is for the officer or director's lifetime. The maximum potential future amount the Company could be required to pay under these indemnification agreements is unlimited. The Company believes its insurance would cover any liability that may arise from the acts of its officers and directors and as of December 31, 2025 the Company is not aware of any pending claims or liabilities.

The Company enters into indemnification provisions under agreements with other parties in the ordinary course of business, typically with business partners, contractors, customers, landlords and investors. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of its activities or, in some cases, as a result of the indemnified party's activities under the agreement. These indemnification provisions sometimes include indemnifications relating to representations the Company has made with regards to intellectual property rights. These indemnification provisions generally survive termination of the underlying agreement. The maximum potential future amount the Company could be required to pay under these indemnification provisions is unlimited.

**Legal Contingencies**

In 2017, the Company acquired Rise U.S. Holdings, LLC ("Rise"). Prior to the close of the acquisition, Rise Alpha, LLC and Rise Management, LLC (both of which are wholly-owned subsidiaries of Rise and hereinafter referred to as the "Rise Parties"), were served with a petition for judgment by Menagerie Enterprises, Inc. ("Monarch Air"), relating to breach of contract for failure to pay Monarch Air pursuant to the terms and conditions of a flight services agreement with Monarch Air, which occurred prior to the Company's acquisition of Rise. The Rise Parties filed numerous counterclaims against Monarch Air, including fraud, breach of contract and breach of fiduciary duty. Rise, a subsidiary of the Company, was named as a party in the lawsuit. During 2018 and 2019, certain summary judgments were granted in favor of Monarch Air.

On November 8, 2021, the Rise Parties entered into a final judgment in respect of litigation to finally resolve all claims raised by Monarch Air and the Rise Parties agreed to pay actual damages of $1.0 million, pre-judgment interest of $0.2 million, attorneys' fees of

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$0.06 million and court costs of approximately $0.003 million. The full settlement had been accrued within Accrued expenses and other current liabilities on the Consolidated Balance Sheets by the Company as of December 31, 2025 and December 31, 2024.

The Company is also a party to various other claims and matters of litigation incidental to the normal course of its business, none of which were considered to have a potential material impact as of December 31, 2025. However, the resolution of, or increase in any accruals for, one or more matters may have a material adverse effect on the Company's results of operations and cash flows.

**FAA Matters**

Our operations are highly regulated by several U.S. government agencies, including the U.S. DOT, the Federal Aviation Administration ("FAA") and the Transportation Security Administration. Requirements imposed by these regulators (and others) may restrict the ways we may conduct our business, as well as the operations of our third-party aircraft operators. Failure to comply with such requirements may result in fines and other enforcement actions by the regulators.

**Tax Commitment**

On May 15, 2018, the Company received notice of a tax lien filing from the 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 agreed to a payment plan ("Installment Plan") whereby the IRS would take no further action and remove such liens at the time such amounts have been paid. In 2019, the Company defaulted on the Installment Plan. Defaulting on the Installment Plan can result in the IRS nullifying such plan, placing the Company in default and taking collection action against the Company for any unpaid balance. The Company's total outstanding federal excise tax liability, including accrued penalties and interest, is recorded in Accrued expenses and other current liabilities on the Consolidated Balance Sheets and is in the amount of $9.9 million and $7.7 million as of December 31, 2025 and December 31, 2024, respectively. In June 2024, the Company submitted a formal offer-in-compromise ("OIC") to the IRS, seeking to resolve all consolidated excise tax liabilities. Under the terms of the OIC, all collection actions against the Company, in relation to these matters, were abated and the Company made $34 thousand monthly payments on historical excise tax liabilities through November 2024. In December 2024, the Company received notice from the IRS that the OIC had been rejected. In December 2025, the Company submitted a request for reconsideration to the IRS regarding the previously filed OIC. Along with this request, the Company will continue to explore available options regarding settlement of its federal excise tax liability, including the submission of additional OICs.

During 2018, the Company 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 $0.9 million and $1.6 million as of December 31, 2025 and December 31, 2024, respectively.

**Note 14. Disaggregated Revenue**

The disaggregated revenue for the years ended December 31, 2025 and 2024 were as follows *(in thousands)*:

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| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Scheduled | $76989 | $90735 |
| On-Demand | $29568 | 28690 |
| &nbsp;&nbsp;Total revenue | $106557 | $119425 |

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The revenue deferred and recognized for the years ended December 31, 2025 and 2024 were as follows *(in thousands)*:

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| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Deferred revenue, beginning of period | $17393 | $21725 |
| Revenue deferred | 60515 | 62546 |
| Revenue recognized | (59984) | (66878) |
| &nbsp;&nbsp;Deferred revenue, end of period | $17924 | $17393 |

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Deferred revenue principally represents tickets sold for future travel on the Company's flights. The balance fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one to two years. Accordingly, any revenue associated with tickets sold for future travel will be recognized within 12-24 months, when the tickets are either used by passengers or expired pursuant to their terms. For the year ended December 31, 2025, $11.1 million of revenue was recognized in passenger revenue that was

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included in our deferred revenue liability at December 31, 2024. For the year ended December 31, 2024, $15.5 million of revenue was recognized in passenger revenue that was included in our deferred revenue liability at December 31, 2023.

**Note 15. Stock-Based Compensation**

**2023 Equity Incentive Plan**

On July 27, 2023, concurrent with the Company's direct listing, the Company's board of directors adopted the 2023 Equity Incentive Plan (the "2023 Plan"). A total of 1,071,429 shares of the Company's common stock were initially authorized for issuance with respect to awards granted under the 2023 Plan. In addition, the shares authorized for grant will automatically increase on the first trading day in January of each year (commencing with 2024) by an amount equal to the lesser of (1) 5.0% of the total number of our outstanding shares on the last trading day in December in the prior year, or (2) such number as determined by our board of directors. Any shares subject to awards that are not paid, delivered or exercised before they expire or are canceled or terminated, fail to vest, as well as shares used to pay the purchase or exercise price of awards or related tax withholding obligations, will become available for other award grants under the 2023 Plan. Shares subject to outstanding awards granted under the Company's prior plan, the 2016 Plan, that are not paid, delivered or exercised before they expire or are canceled or terminated will be available for award grants under the 2023 Plan.

Awards under the 2023 Plan may be in the form of incentive or nonqualified stock options, stock appreciation rights, stock bonuses, restricted stock, stock units and other forms of awards including cash awards.

The Company issues shares of common stock upon the vesting and settlement of RSUs and PRSUs and upon the exercises of stock options under the 2023 Plan. The 2023 Plan is administered by the Company's board of directors, or a duly authorized committee of the Company's board of directors.

**2016 Equity Incentive Plan**

No further stock awards will be granted under the 2016 Plan; however, awards outstanding under the 2016 Plan will continue to be governed by their existing terms.

**2023 Employee Stock Purchase Plan**

In conjunction with the Company's direct listing, the Company's board of directors adopted, and the Company's stockholders approved, the Company's 2023 employee stock purchase plan (the "ESPP"). The Company's ESPP initially authorizes the issuance of 114,285 shares of the Company's common stock under purchase rights granted to the Company's employees or to the employees of any of its designated affiliates. The number of shares of the Company's common stock reserved for issuance will automatically increase on January 1 of each year for a period of 10 years, beginning January 1, 2024, by the lesser of (i) 1% of the total number of shares of the Company's common stock outstanding on December 31 of the immediately preceding year; and (ii) 114,285 shares, except before the date of any such increase, the Company's board of directors may determine that such increase will be less than the amount set forth in clauses (i) and (ii).

As of December 31, 2025, there had been no offering period or purchase period under the ESPP, and no such period will begin unless and until determined by the administrator, which is the Company's board of directors or a duly authorized committee of the Company's board of directors.

**Management Incentive Bonus Plan**

In conjunction with the Southern Acquisition, the Company adopted the Southern Management Incentive Bonus Plan (the "Incentive Bonus Plan"). The Incentive Bonus Plan provides select employees, consultants and service providers of the Company who were direct or indirect shareholders of Southern an incentive to contribute fully to the Company's business achievement goals and success. The Incentive Bonus Plan provides for two tranches of bonus pools to be allocated, based on participation units, which vest, contingent upon each employee's continued employment by the Company and the achievement of certain revenue targets. Payments of awards which might become due under the Incentive Bonus Plan may be made in cash or common stock, at the Company's option. Any shares of common stock issued in payment of amounts due under the Incentive Bonus Plan will be charged against the share limit of the Company's 2023 Plan. In addition, any shares which might be issued under the Incentive Bonus Plan are excluded from the Company's common stock issued and outstanding until the satisfaction of these vesting conditions and are not considered a participating security for purposes of calculating net loss per share attributable to common stockholders.

During the year ended December 31, 2024, the Company offered the holders of the participation units underlying the Incentive Bonus Plan restricted stock units in exchange for the termination of all existing and future rights under the Incentive Bonus Plan. The

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offer is for a total pool of 571,429 restricted stock units in exchange for liabilities existing under the Incentive Bonus Plan. During the year ended December 31, 2024, the Company settled approximately 54% of the participation units under the Incentive Bonus Plan through the issuance of 317,663 restricted stock units, of which 158,834 were fully vested at grant and the remainder will vest twelve months from the grant date. Additionally, on December 6, 2024, the Company's board of directors, acting as "Administrator" under the Incentive Bonus Plan, determined that certain targets under the Incentive Bonus Plan were not met, and no payment is due under the terms of the plan. These actions resulted in a $32.3 million reversal of previously accrued stock-based compensation expense, which is included in general and administrative expenses in the Consolidated Statements of Operations.

The Company recorded a net reduction of $16.6 million in stock based compensation expense related to the Incentive Bonus Plan during the year ended December 31, 2024. The Company recorded no additional stock-based compensation expense associated with the Incentive Bonus Plan during the year ended December 31, 2025. As of December 31, 2025 and 2024, a total of $0 was outstanding under the Incentive Bonus Plan.

**Stock Options**

A summary of stock option activity for the year ended December 31, 2025 is set forth below:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number<br>of Stock Options<br>Outstanding** | **Weighted Average Contractual Term (in years)** | **Aggregate Intrinsic Value (in thousands)** | **Weighted<br>Average<br>Exercise Price Per Share** |
| Outstanding at December 31, 2024 | 2689131 | 9.21 | $1353 | $7.80 |
| Granted |  |  |  |  |
| Exercised | (49570) |  |  | 5.09 |
| Canceled | (306799) |  |  | 6.22 |
| Outstanding at December 31, 2025 | 2332762 | 8.24 | 11 | 8.07 |
| Exercisable at December 31, 2025 | 1206243 | 8.09 | 11 | 9.78 |

---

No stock options were granted during the year ended December 31, 2025.

As of December 31, 2025, unrecognized compensation expense related to the unvested portion of the Company's stock options was approximately $0.6 million with a weighted-average remaining vesting period of approximately 1.29 years.

The following table provides supplemental data on stock options for the years ended December 31, 2025 and 2024 (*in $ thousands, except for weighted average figures*):

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| | | |
|:---|:---|:---|
|  | **For The Year Ended December 31,** | **For The Year Ended December 31,** |
|  | **2025** | **2024** |
| Weighted average grant date fair value per option granted | $— | $1 |
| Fair value of options vested | $1431 | $3815 |
| Cash from participants to exercise stock options | $255 | $20 |
| Intrinsic value of options exercised | $142 | $5 |

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The assumptions used to estimate the fair value of stock options granted during the years ended December 31, 2025 and 2024 were as follows:

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| | | |
|:---|:---|:---|
|  | **For The Year Ended December 31,** | **For The Year Ended December 31,** |
|  | **2025** | **2024** |
| Risk-free interest rate |  | 3.97-4.25% |
| Expected term (in years) |  | 3.5 - 5.8 |
| Dividend yield |  |  |
| Expected volatility |  | 55.69% - 59.07% |

---

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**Warrants**

During the year ended December 31, 2025, the Company issued 1,127,040 warrants for purchase of the Company's common stock. Awards to non-employee consultants will vest 25% on the grant date and 25% upon each anniversary over the ensuing three-year period or only upon the achievement of certain market-based metrics.

A summary of warrant activity for the year ended December 31, 2025 is set forth below:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of Warrants Outstanding** | **Weighted Average Contractual Term (in years)** | **Aggregate Intrinsic Value (in thousands)** | **Weighted<br>Average<br>Exercise Price Per Share** |
| Outstanding at December 31, 2024 | 1160560 | 9.71 | $230 | $5.92 |
| Granted | 1127040 | 4.87 |  | 6.12 |
| Exercised |  |  |  |  |
| Canceled | (911544) |  |  | 6.17 |
| Outstanding at December 31, 2025 | 1376056 | 5.30 |  | 5.91 |
| &nbsp;&nbsp;Exercisable at December 31, 2025 | 564790 | 5.30 | 373 | 5.54 |

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As of December 31, 2025, unrecognized compensation expense related to the unvested portion of the Company's common stock warrants was approximately $0.6 million which is expected to be recognized over the weighted-average remaining vesting period of approximately 1.30 years.

The assumptions used to estimate the fair value of warrants granted during the year ended December 31, 2025 and 2024 and were as follows:

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| | | |
|:---|:---|:---|
|  | **For The Year Ended December 31,** | **For The Year Ended December 31,** |
|  | **2025** | **2024** |
| Risk-free interest rate | 3.57% - 4.08% | 3.52% - 4.43% |
| Expected term (in years) | 5.0 - 10.0 | 5.0 - 10.0 |
| Dividend yield |  |  |
| Expected volatility | 153.12% - 157.11% | 47% - 147% |

---

Equity-based awards granted in the form of warrants are not considered granted under the terms of the 2023 Plan and are often subject to separate registration rights that those included under the 2023 Plan.

The Company has also granted warrants as a component of equity financing transactions, which were granted fully vested as of the respective transaction dates (see Note 12, *Shareholders' Deficit*). No compensation expense has been recorded for these transactions.

**Restricted Stock Units**

During the year ended December 31, 2025, the Company issued 2,316,380 RSUs under the 2023 Plan to employees and non-employee directors, which vest upon the satisfaction of certain service periods. The fair value of these RSUs was determined based on the Company's stock price the business day immediately preceding the grant date. The service period of these RSUs is satisfied over a range of 12 months to 4 years.

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A summary of RSU activity for the year ended December 31, 2025 is set forth below:

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| | | |
|:---|:---|:---|
|  | **Number of RSUs** | **Weighted<br>Average<br>Grant Date Fair Value per RSU** |
| Unvested RSUs at December 31, 2024 | 316663 | $4.52 |
| Granted | 2316380 | 2.72 |
| Vested/shares issued | (1209823) | 3.00 |
| Forfeited, cancelled, or expired | (115854) | 2.66 |
| Unvested RSUs at December 31, 2025 | 1307366 | $2.89 |

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During the year ended December 31, 2025, the Company repurchased 196,750 shares from employees for $0.4 million in satisfaction of employee tax withholdings related the issuance of shares under RSU awards.

**Restricted Share Purchase Agreement**

A summary of RSPA activity for the year ended December 31, 2025 is set forth below:

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| | | |
|:---|:---|:---|
|  | **Number<br>of RSPA** | **Weighted<br>Average<br>Grant Date Fair Value per RSPA** |
| Unvested RSPAs at December 31, 2024 | 36907 | $29.13 |
| Granted |  |  |
| Vested | (23421) | 29.13 |
| Forfeited |  |  |
| Unvested RSPAs at December 31, 2025 | 13486 | 29.13 |

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As of December 31, 2025, the unrecognized compensation expense related to the unvested portion of the Company's RSPAs was $0.4 million, which is expected to be recognized over a weighted average period of 0.4 years.

**Performance-Based Restricted Stock Units**

In July 2023, the Company granted a total of 400,000 performance-based restricted stock units ("PRSUs") to the Company's founders ("Founder PRSUs") under the 2023 Plan.

The Founder PRSUs will vest only if (i) the per-share closing price of the Company's common stock over a period of 10 consecutive trading days within five years from the date of the Company's direct listing is greater than $70 per share and (ii) each founder's service to the Company, either through being an employee or non-employee consultant to the Company, or one of its subsidiaries, continues through the date such stock price goal is achieved, subject to certain conditions.

In October 2023, the Company granted 28,571 PRSUs as part of a hiring grant to an executive under the 2023 Plan. These PRSUs will vest upon the satisfaction of a service condition and the achievement of certain stock price goals. These PRSUs will vest based on the average daily closing price of the Company's common stock on a rolling fifteen trading day basis (the "Average Closing Price"): (i) 7,143 RSUs will vest when the Average Closing Price equals or exceeds $35 per share, (ii) 10,714 RSUs will vest when the Average Closing Price equals or exceeds $70 per share, and (iii) 10,714 RSUs will vest when the Average Closing Price equals or exceeds $105 per share.

The Company estimated the grant date fair value of the PRSUs with market conditions based on multiple stock price paths developed through the use of a Monte Carlo simulation model. A Monte Carlo simulation model also calculates a derived service period based on the expected time to achieve the defined stock price target, as described above. 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. The derived service period calculation also requires the cost of equity assumption to be used in the Monte Carlo simulation model. Term and volatility are typically the primary drivers of this valuation.

For Founder PRSUs, granted with market conditions, an expiration term of 5 years (as defined in the grant agreements) was utilized. A volatility of 71.0 percent was determined, based on an established peer group over the maximum term to expiration. The

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weighted-average grant date fair value of the Founders PRSUs was $15.82 per share. The Company will recognize total stock-based compensation expense of $6.3 million over the derived service period of 2.1 years as the founders satisfy the service-based vesting condition.

For the PRSUs, with market conditions, granted in October 2023, an expiration term of 5 years (as defined in the grant agreements) was utilized. A volatility of 71.0 percent was determined, based on an established peer group over the maximum term to expiration. The weighted-average grant date fair value of the PRSUs was $5.67 per share for the 7,143 RSUs vesting upon an Average Closing Price equaling or exceeding $35 per share, $3.85 per share for the 10,714 RSUs vesting upon an Average Closing Price equaling or exceeding $70 per share, and $2.73 per share for the 10,714 RSUs vesting upon an Average Closing Price equaling or exceeding $105 per share. The Company will recognize total stock-based compensation expense of $0.1 million over the derived service period of 2.6 to 3.6 years as the employee satisfies the service-based vesting conditions.

During the year ended December 31, 2025, the Company issued 1,142,500 PRSUs under the 2023 Plan to employees and non-employee consultants. The PRSUs granted will vest upon the achievement of an adjusted EBITDA metric for the year ending December 31, 2025 as well as a service period of four years from the date of grant. The fair value of these PRSUs was determined based on the Company's stock price the business day immediately preceding the grant date.

A summary of PRSU activity for the year ended December 31, 2025 is set forth below:

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| | | |
|:---|:---|:---|
|  | **Number<br>of PRSUs** | **Weighted<br>Average<br>Grant Date Fair Value per PRSU** |
| PRSUs at December 31, 2024 | 428571 | $14.74 |
| Granted | 1142500 | 2.57 |
| Shares issued | (365625) | 15.61 |
| Forfeited, cancelled, or expired | (74375) | 2.32 |
| PRSUs at December 31, 2025 | 1131071 | $3.09 |

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During the year ended December 31, 2025 the Company accelerated the vesting of approximately 360,000 Founder PRSU awards. In connection with this share vesting, the Company recognized $653 thousand in additional stock-based compensation expense pertaining to the remaining grant date fair value of the awards.

The following table represents the various price targets included in the PRSU awards with market conditions and the number of PRSUs that will vest upon achievement of such price targets:

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| | |
|:---|:---|
| **Company Price Target** | **Number of PRSUs Eligible to Vest** |
| $35.00 | 7143 |
| 70.00 | 50713 |
| 105.00 | 10714 |

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A summary of stock-based compensation expense recognized is as follows *(in thousands)*:

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| | | |
|:---|:---|:---|
|  | **For The Year Ended December 31,** | **For The Year Ended December 31,** |
|  | **2025** | **2024** |
| Stock Options | $1431 | $3815 |
| RSUs | 3932 | 2703 |
| RSPAs | 675 | 687 |
| PRSUs | 2973 | 3083 |
| Warrants | 546 | 403 |
| Management Incentive Bonus Plan |  | (16667) |
| Other | 504 |  |
| &nbsp;&nbsp;Total Stock Based Compensation | $10061 | $(5976) |

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**Note 16. Segments**

The Company and its chief operating decision maker ("CODM"), which is the Company's chief executive officer, organize and manage the Company on a consolidated basis, and, accordingly, the Company operates as a single operating and reportable segment, namely its Air Mobility segment.

The Air Mobility segment derives revenues from two categories of services:

*Scheduled Air Service* - revenue from operating scheduled commercial air service flights which are sold to the public primarily on a per seat basis, and through subsidized EAS revenue awards from the Department of Transportation.

*On-Demand*- revenue from on-demand flights created for customers on an ad-hoc, by request basis.

The accounting policies of the Air Mobility segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the Air Mobility segment and decides how to allocate resources based on net loss as reported on the Consolidated Statements of Operations. The measure of segment assets is reported on the balance sheet as total consolidated assets.

In addition to consolidated financial metrics used in assessing the Air Mobility segment, the CODM also regularly reviews additional significant expense categories, which comprise cost of revenue, exclusive of depreciation and amortization within the Company's Consolidated Statements of Operations. Such cost categories are determined to be those most relevant in providing flight services, and are aligned with cost designations measured by other carriers. All other financial statement metrics are reviewed and/or considered on a consolidated basis:

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| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| **Revenue** | $106557 | $119425 |
| **Operating Expenses:** |  |  |
| &nbsp;&nbsp;Aircraft expenses | $76812 | $76164 |
| &nbsp;&nbsp;Pilot expenses | 13709 | 18390 |
| &nbsp;&nbsp;Other <sup>(1)</sup> | 11855 | 15380 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cost of revenue, exclusive of depreciation and amortization | 102376 | 109934 |
| &nbsp;&nbsp;&nbsp;&nbsp;Technology and development | 10299 | 24041 |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing | 8177 | 7514 |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 53285 | 29851 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 9294 | 8341 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total operating expenses** | 183431 | 179681 |
| **Operating loss** | $(76874) | $(60256) |
| **Other income (expense):** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Changes in fair value of financial instruments carried at fair value, net | $(8574) | $(11732) |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (13205) | (8617) |
| &nbsp;&nbsp;&nbsp;&nbsp;Gain (loss) on extinguishment of debt | (3904) | 5398 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other income (expense), net | (8379) | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total other income (expense), net** | $(34062) | $(14939) |
| **Loss before income taxes** | (110936) | (75195) |
| &nbsp;&nbsp;&nbsp;&nbsp;Income tax benefit | 380 | 287 |
| **Net loss** | $(110556) | $(74908) |

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<sup>(1)</sup> Other costs of revenue are comprised of personnel costs related to customer service operations, station expenses, reservation systems and passenger re-accommodation/ re-booking on other carriers.

The CODM uses net loss to evaluate income (loss) generated from segment assets (return on assets) in deciding how to allocate resources. Consolidated net loss is used to monitor budget versus actual results. The monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management's compensation.

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The Company does not have intra-entity sales or transfers. All of the Company's long-lived assets are located in the United States and revenue is substantially earned from flights throughout the United States.

**Note 17. Income Taxes**

Income from continuing operations before provision for income taxes for the Company's domestic and international operations was as follows (*in thousands*):

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Domestic | $(110276) | $(72132) |
| International | (660) | (3063) |
| &nbsp;&nbsp;Loss before provision for income taxes | $(110936) | $(75195) |

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Significant components of the provision for income taxes consist of the following *(in thousands)*:

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| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| **Current:** |  |  |
| &nbsp;&nbsp;Federal | $— | $— |
| &nbsp;&nbsp;State | 15 | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 15 | 8 |
| **Deferred:** |  |  |
| &nbsp;&nbsp;Federal | (262) | (235) |
| &nbsp;&nbsp;State | (133) | (60) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | (395) | (295) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total tax expense (benefit) | $(380) | $(287) |

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Income taxes in our consolidated financial statements have been calculated on a consolidated tax return basis. The following tables present the principal reasons for the difference between the effective tax rate and the federal statutory income tax rate (*in thousands*):

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| | | |
|:---|:---|:---|
|  | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** |
| Federal income taxes at statutory rate | $(23296) | 21.00% |
| State and local income taxes, net of federal benefit <sup>(1)</sup> | (241) | 0.22% |
| Foreign tax effects |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign rate differential | 139 | (0.12)% |
| Nontaxable or nondeductible items |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Share based compensation | 1489 | (1.34)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of financial instruments | 2515 | (2.27)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 329 | (0.30)% |
| Other provision adjustments | 349 | (0.31)% |
| Uncertain tax positions | 177 | (0.16)% |
| Change in valuation allowance | 18159 | (16.37)% |
| &nbsp;&nbsp;Effective income tax rate | $(380) | 0.34% |

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| | | |
|:---|:---|:---|
|  | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** |
| Federal income taxes at statutory rate | $(15791) | 21.00% |
| State tax benefit | (2910) | 3.87% |
| Share based compensation | 592 | (0.79)% |
| Change in fair value of financial instruments | 2464 | (3.28)% |
| Permanent difference | 1422 | (1.89)% |
| Uncertain tax positions | 1453 | (1.93)% |
| Change in valuation allowance | 12483 | (16.60)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Effective income tax rate | $(287) | 0.38% |

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<sup>(1)</sup> 50% of more of our state tax provision relates to the California state taxing jurisdiction(s).

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Significant components of deferred tax assets and liabilities are as follows (*in thousands*):

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| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
| Accrued expenses and reserves | 1107 | 2082 |
| Stock compensation | 1157 | 1316 |
| Interest expense carryforward | 6800 | 3229 |
| Net operating loss carryforward | 72248 | 54169 |
| Capitalized research costs | 4007 | 5102 |
| Lease liabilities - operating leases | 3200 | 4164 |
| Deferred revenues | 961 | 1444 |
| Other | (1191) | 156 |
| &nbsp;&nbsp;Deferred Tax Assets, Gross | 88289 | 71662 |
| Valuation Allowance | (76280) | (57548) |
| &nbsp;&nbsp;Deferred Tax Assets, Net of Valuation Allowance | 12009 | 14114 |
| Depreciation and amortization differences | (9153) | (10302) |
| ROU assets - operating leases | (3242) | (4532) |
| Prepaid expenses | (396) | (321) |
| Other |  |  |
| &nbsp;&nbsp;Total Deferred Tax Liabilities | (12791) | (15155) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Deferred Tax Assets (Liabilities), net | $(782) | $(1041) |

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As of December 31, 2025, the Company has approximately $403.4 million of gross federal net operating loss ("NOL") carryforwards, of which $90.5 million will begin to expire in 2030. The federal NOLs generated after 2017 can be carried forward indefinitely and be used to offset up to 80% of future taxable income. Additionally, as of December 31, 2025, the Company has approximately $355.4 million of gross state NOL carryforwards, which will begin to expire in 2030. The described carryforwards are included in the Company's calculation of its deferred tax asset; however, realization of the deferred tax asset is dependent on the Company generating sufficient taxable income prior to expiration of the NOL carryforwards. Also, utilization of the operating losses and tax credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986 under Section 382 and similar state provisions. As of December 31, 2025 and 2024, the Company recorded a valuation allowance of approximately $76.3 million and $57.5 million, respectively, on the net deferred tax assets, as management does not believe it is more likely than not that the tax assets will ultimately be realized. The valuation allowance increased by $18.7 million during the year primarily due to the increase in the Company's net operating losses during the period.

Section 382 of the Internal Revenue Code, or Section 382, imposes limitations on a corporation's ability to utilize its NOL carryforwards, if it experiences an "ownership change" as defined. In general terms, an ownership change may result from transactions increasing the ownership percentage of certain stockholders in the stock of the corporation by more than 50% over a three-year period. In the event of an ownership change, utilization of the NOL carryforwards would be subject to an annual limitation under Section 382 determined by multiplying the value of the Company's stock at the time of the ownership change by the applicable long-term tax-exempt rate. We have not completed a Section 382 study at this time; however, should a study be completed, certain NOL carryforwards may be subject to such limitations. Any future annual limitation may result in the expiration of NOL carryforwards before utilization.

ASC 740-10 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Furthermore, income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of ASC 740-10 and in subsequent periods.

The following is a tabular reconciliation of the total amount of the Company's unrecognized tax benefits for the year (*in thousands*):

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| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| Unrecognized tax benefits at January 1, | $38979 | $37146 |
| &nbsp;&nbsp;Additions for tax positions of prior years | 217 | 1833 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrecognized tax benefits at December 31, | $39196 | $38979 |

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As of December 31, 2025 and December 31, 2024, the Company had $39.2 million and $39.0 million of unrecognized tax benefits, respectively, none of which would result in a reduction of the Company's effective tax rate, if recognized, due to the valuation recorded

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within the U.S. federal and state jurisdictions. We had no accrued interest or penalties related to uncertain tax positions as of December 31, 2025 and 2024.

The Company is subject to income tax examinations by the U.S. federal and state tax authorities. There are no ongoing income tax examinations as of December 31, 2025. Tax years 2011 and forward remain open to audit for U.S. federal and state income tax purposes.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the United States. The OBBBA includes corporate provisions that make 100% bonus depreciation permanent, allow for the expensing of domestic research costs, and modifies the business interest expense limitation calculation. These changes were incorporated into the Company's income tax provision for the year ended December 31, 2025, resulting in no impact to the fiscal year 2025 effective tax rate and net deferred tax assets as the Company maintains a full valuation allowance.

**Note 18. Related Party Balances and Transactions**

**Term Notes**

The Company entered into term note agreements with LamVen, a related party, with aggregate principal amounts of $4.5 million and $1.0 million, an effective date of November 30, 2022 and January 18, 2023, respectively, and bearing an interest rate of 8.25% per annum. Both term notes were exchanged for cash and scheduled to mature on the earlier of December 31, 2023 or the date on which the note is otherwise accelerated as provided for in the agreement. Interest for the notes are payable in full at maturity or upon acceleration by prepayment. On December 29, 2023, the term notes were amended to extend the maturity date to January 15, 2024. On January 26, 2024, the term notes were amended to extend the maturity date to February 9, 2024, with an effective date of January 15, 2024. On April 28, 2024, the term notes were further amended to extend the maturity date to May 15, 2024, with an effective date of April 15, 2024. On July 31, 2024, the term notes were further amended to extend the maturity date to August 20, 2024, with an effective date of May 15, 2024. In November 2024, the term notes were exchanged for a new secured convertible promissory note with LamVen.

On May 22, 2023, the Company entered into an additional term note agreement in exchange for $4.6 million in cash from LamVen. The note was scheduled to mature on the earlier of December 31, 2023 or the date on which the note is otherwise accelerated as provided for in the agreement. Interest is due upon maturity at a rate of 10.0% per annum until the note is paid in full at maturity or upon acceleration by prepayment. On December 29, 2023, the term notes were amended to extend the maturity date to January 15, 2024. On January 26, 2024, the term notes were amended to extend the maturity date to February 9, 2024, with an effective date of January 15, 2024. On July 31, 2024, the term notes were further amended to extend the maturity date to August 20, 2024, with an effective date of May 15, 2024. In November 2024, the term notes were exchanged for a new secured convertible promissory note with LamVen.

On June 15, 2023, the Company entered into a $5.0 million note agreement with LamVen. The note was scheduled to mature on the earlier of December 31, 2023 or the date on which the note is otherwise accelerated as provided for in the agreement. Interest is due upon maturity at a rate of 10.0% per annum until the note is paid in full at maturity or upon acceleration by prepayment. On December 29, 2023, the note was amended to extend the maturity date to January 15, 2024 and to increase the principal amount of the note to $10.0 million. The Company received $8.5 million in cash as of December 31, 2023, with the remaining $1.5 million under the note received in 2024. On January 26, 2024, the note was further amended to extend the maturity date to February 9, 2024 and the principal amount increased to $15.0 million, effective as of January 15, 2024. On April 28, 2024, the note was further amended to extend the maturity date to May 15, 2024 and the principal amount increased to $25.0 million, effective as of April 15, 2024. The Company received $38.2 million as of September 30, 2024. In October 2024, the Company received an additional $4.9 million under this note agreement, for an aggregate total of $43.1 million cash received under the note since inception. In November 2024, the note was exchanged for a new secured convertible promissory note with LamVen.

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**LamVen Note**

On November 14, 2024, the Company entered into a secured convertible promissory note (the "LamVen Note") in aggregate principal amount of $50.0 million to LamVen, to refinance certain existing notes.

The LamVen Note will accrue interest at the greater of (x) SOFR (subject to a 1.00% floor) plus 5.00% and (y) 9.75%. In the event the Company raises capital in certain equity offerings, a portion of the net cash proceeds from such equity offerings and the net cash proceeds from certain asset sales are required to be applied to repay the obligations under the LamVen Note. The scheduled maturity of the LamVen Note is December 31, 2028, which may be accelerated upon the occurrence of certain events of default.

At the election of LamVen from time to time, on one or more occasions, the outstanding principal amount of the LamVen Note (or any portion thereof), together with all accrued but unpaid interest thereon, can be converted into a number of shares of common stock, using a conversion price per share equal to the Minimum Price, as defined in New York Stock Exchange Listed Company Manual Section 312.04(h) (the "Minimum Price"); provided, however, that LamVen shall not be able to convert the LamVen Note if so doing would increase LamVen's beneficial ownership interest in the Company to 10% or more of the Company's then outstanding common stock.

In addition, on November 14, 2024, outstanding principal and interest of existing LamVen notes of $7,473,131 was exchanged for (i) 750,000 shares of common stock of the Company issued to LamVen at $1.83 per share, which represents the official closing price of the Company's common stock on the New York Stock Exchange on the date immediately preceding November 14, 2024, and (ii) 3,389,398 warrants to purchase common stock of the Company issued to LamVen with a strike price of $1.83 per share (Note 12. *Shareholders' Deficit)*.

The obligations under the LamVen Note are guaranteed by certain of the Company's subsidiaries, and subject to a security interest on assets of the Company and the subsidiary guarantors, subject to certain exceptions.

The conversion feature embedded in the LamVen Note failed to satisfy the requirements for the derivative scope exception for contracts indexed in the Company's own stock. The conversion feature of the LamVen Note required bifurcation from the host contract. The embedded derivative was initially measured at fair value of $6.8 million, with a corresponding debt discount of $6.8 million being recorded as the excess of the principal amount of the LamVen Note over the fair value of the host contract. The debt discount will be amortized to interest expense using the effective interest rate over the term of the LamVen Note. During the year ended December 31, 2025, the Company recorded $1.1 million of interest expense related to the amortization of this discount.

During the year ended December 31, 2025, LamVen transferred $49.9 million of the outstanding principal due under the LamVen Note to a non-affiliated third party under terms identical to the original LamVen Note. Subsequent to the transfer, the holder of the New Convertible Note converted $48.0 million of the principal amount, inclusive of then accrued interest, to 14,025,167 shares of the Company's common stock. As a result, as of December 31, 2025, LamVen retained a principal balance of $0.1 million (the "New LamVen Note"), with $1.9 million (the "New Convertible Note") held by a non-related party.

**Park Lane Reimbursement Agreement**

On November 14, 2024, in connection with the letter of credit backstopping the Credit Agreement, the Company entered into a Reimbursement Agreement with Park Lane, an entity affiliated with a co-founder of the Company (the "Reimbursement Agreement"), such that if the letter of credit is drawn upon, the Company will be required to reimburse Park Lane for the drawn amount of the letter of credit and pay interest to Park Lane at 15.00% per annum on such drawn amounts (subject to increase in the event of default). The Company is separately obligated to pay a fee of 1.00% per annum to Park Lane on the outstanding face amount of the backstop letter of credit. In the event the Company raises capital in certain equity offerings, a portion of the net cash proceeds from such equity offerings is required to be remitted to Park Lane to be held in trust in accordance with the Reimbursement Agreement.

The obligations under the Reimbursement Agreement are guaranteed by certain of the Company's subsidiaries, and subject to a security interest on assets of the Company and the subsidiary guarantors, subject to certain exceptions. The Reimbursement Agreement contains certain representations and warranties, covenants and events of default.

Park Lane appointed an observer to the Company's board of directors, a right that was granted in the Reimbursement Agreement.

On November 12, 2025, the Company entered into an amendment to the Reimbursement Agreement, to add the letter of credit, used in support of the High Trail Convertible Note (Note 9. *Financing Arrangements)* to the scope of the Reimbursement Agreement.

------

As consideration for Park Lane's commitment to provide credit support for the letter of credit over a three year period, the Company issued 2,025,000 shares of the Company's common stock to Park Lane on November 12, 2025. Such amount has been capitalized as a credit enhancement asset of the Company and will be amortized to interest expense over the three year term of the credit support commitment.

**Other Transactions**

The Company previously leased four aircraft from Park Lane, for a monthly lease payment of $25 thousand per aircraft. The lease for the four planes was extended on a month to month basis as of January 31, 2025. In October 2025, the parties entered into a settlement agreement with respect to return conditions under the leases. As consideration, the Company issued 1,200,000 shares (300,000 shares per aircraft) of its common stock to Park Lane and subsequently terminated the respective aircraft leases thereto. As a result of this issuance, the Company recorded the $5.4 million fair value of the shares issued as a settlement expense for the year ended December 31, 2025, which was included as part of other income (expense), net within the Company's Consolidated Statement of Operations.

**JA Flight Services and BAJ Flight Services**

As of December 31, 2025, the Company leased a total of three aircraft from JA Flight Services ("JAFS") and one aircraft from BAJ Flight Services ("BAJFS") under short-term operating leases. JAFS is 50% owned by Bruce A. Jacobs ("BAJ"), an employee and shareholder of the Company, and BAJFS is 100% owned by BAJ.

The Company recorded approximately $0.3 million and $1.3 million in combined lease and engine reserve expense attributable to JAFS and BAJFS during years ended December 31, 2025 and December 31, 2024, respectively.

**Schuman Aviation**

As of December 31, 2025, the Company leased six aircraft from Schuman Aviation Ltd. ("Schuman"), an entity which is owned by an employee and shareholder of the Company. All leases consist of 60-month terms, fixed monthly lease payments and are all eligible for extension at the end of the lease term. All leases are also subject to monthly engine, propeller and other reserve payment requirements, based on actual flight activity incurred on the subject aircraft engine.

The Company recorded approximately $1.7 million in combined lease and engine reserve expense attributable to Schuman for both the year ended December 31, 2025 and the year ended December 31, 2024. As of December 31, 2025, the Company owed approximately $0.5 million to Schuman, which is included in Due to Related Parties, current on the Consolidated Balance Sheet.

Additionally, the Company has an existing agreement with Schuman obtained in conjunction with the acquisition of Schuman in 2020, whereby Schuman agreed not to fly any of its Makani Kai airline routes servicing the Hawaiian Island commuter airspace for a period of 10 years.

**Advisory Services Agreement with Proxima Centauri, LLC**

Proxima Centauri, LLC, an entity wholly-owned by David Anderman, a director of the Company, provides advisory services to the Company for a monthly fee of $20,000 per month pursuant to an Advisory Services Agreement entered into on December 16, 2024. As additional compensation, the Company issued a warrant to Proxima Centauri to purchase up to 142,857 shares of the Company's common stock.

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**Note 19. Supplemental Cash Flows**

Supplemental Cash Flows for the year ended December 31, 2025 and 2024 *(in thousands):*

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| **Supplemental cash flow information** |  |  |
| &nbsp;&nbsp;Cash paid for interest | $9116 | $3410 |
| **Supplemental schedule of non-cash investing and financing activities:** |  |  |
| &nbsp;&nbsp;Common stock issued under Software License Agreement | $11789 | $9574 |
| &nbsp;&nbsp;Issuance of Common shares related to Convertible Notes conversions | $48264 | $— |
| &nbsp;&nbsp;Purchases of property and equipment included in accounts payable | $5112 | $326 |
| &nbsp;&nbsp;Issuance of Common shares in settlement of vendor payables | $760 | $— |
| &nbsp;&nbsp;Reclassification of aircraft deposits to data license fees | $— | $3000 |
| &nbsp;&nbsp;Shares received as consideration for Mandatory Convertible Security | $— | $1796 |
| &nbsp;&nbsp;Conversion of Mandatory Convertible Security to common shares | $— | $1621 |
| &nbsp;&nbsp;Conversion of LamVen Term Notes | $— | $7473 |
| &nbsp;&nbsp;Capitalized Interest on Convertible Notes | $— | $34 |
| &nbsp;&nbsp;Right-of-use assets obtained in exchange for new operating lease liabilities | $— | $10144 |
| &nbsp;&nbsp;Right-of-use assets obtained in exchange for new finance lease liabilities | $— | $95 |

---

**Note 20. Net Loss per Share Applicable to Common Shareholders, Basic and Diluted**

The Company calculates basic and diluted net loss per share attributable to common shareholders using the two-class method required for companies with participating securities. The Company considers preferred stock to be participating securities as the holders are entitled to receive dividends on a pari passu basis in the event that a dividend is paid on common shares.

The following table sets forth the computation of net loss per share applicable to common shareholders *(in thousands, except share data)*:

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Net loss | $(110556) | $(74908) |
| Weighted-average number of common shares used in net loss per share applicable to common shareholders, basic and diluted | 35101792 | 12910341 |
| Net loss per share applicable to common shareholders, basic and diluted | $(3.15) | $(5.80) |

---

The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| Excluded securities: |  |  |
| Options to purchase common shares | 2332762 | 2689131 |
| Warrants to purchase common shares | 11163825 | 4549958 |
| Restricted stock units | 2432187 | 745234 |
| Unvested RSPAs | 13486 | 36907 |
| Convertible notes (as converted to common shares) | 19322698 | 9802974 |
| Mandatory Convertible Security |  | 9887756 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total common shares equivalents | 35264958 | 27711960 |

---

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**Note 21. Subsequent Events**

***BETA Aircraft Purchase and Strategic Agreements***

In March 2026, the Company entered into an agreement with BETA Technologies ("BETA") to purchase 25 BETA CX300 all-electric ALIA aircraft with the option to add up to 75 additional CX300 all-electric ALIA aircraft through 2030. Deliveries are scheduled to commence in 2028 and represent firm purchase commitments in excess of $90.0 million. With this, and other, strategic agreements, the Company will combine its operating expertise, existing passenger demand, and established airport infrastructure with BETA's electric aircraft with the goal of launching the first commercial electric passenger service in Hawaii.

***TAI Aircraft Purchase Agreement***

In February 2026, the Company and TAI amended their aircraft purchase agreement, pursuant to which commitments for firm deliveries of 90 specifically configured Cessna Caravans, and the option to purchase an additional 26 specifically configured Cessna Caravans, were reduced to a commitment for firm deliveries of four specifically configured Cessna Caravans slated for delivery in 2026. Following this amendment, remaining firm commitments under the TAI aircraft purchase agreement have been reduced from $283.8 million to $13.2 million. Previously made deposits of $2 million will be applied against these deliveries. The Company may elect to purchase additional specifically configured Cessna Caravans, on terms consistent with the original aircraft purchase agreement, with mutual agreement from TAI and the payment of a $0.5 million deposit for each aircraft.

***High Trail Convertible Note***

In March 2026, the Company and High Trail Capital entered into an agreement, by which the Company issued 3,510,638 shares of its common stock (the "HT Shares") to High Trail Capital valued at $6.6 million as of the closing price on the day before issuance (the "Issuance Price"), in satisfaction of $6 million in cash payments due pursuant to the terms of the High Trail Convertible Note (see Note 9, *Financing Arrangements*). The Company agreed to file a registration statement with respect to the registration of the HT Shares by March 17, 2026. The Company has agreed to provide additional cash payments based on the average daily volume-weighted average price of the Company's common stock (the "Average VWAP") in the following circumstances: (i) if the Average VWAP falls below the Issuance Price during the 45 trading days following the day after the issuance (the Average VWAP during such period, the "Initial Adjustment Price"); and (ii) if the Average VWAP falls below the lesser of the Issuance Price and the Initial Adjustment Price during the 45 trading days after the effectiveness of the registration statement with respect to the HT Shares. In addition, if there are delays or interruptions in the effectiveness of the registration statement the Company will be subject to liquidated damages and High Trail Capital will have the right to put some or all of the HT Shares back to the Company at the Issuance Price.

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**<u>ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES</u>**

None.

**<u>ITEM 9A. CONTROLS</u>** **<u>AND PROCEDURES</u>**

**Evaluation of Disclosure Controls and Procedures**

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act of 1934, as amended (the "Exchange Act")), that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding required disclosure. It should be noted that, because of inherent limitations, our disclosure controls and procedures, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the disclosure controls and procedures are met.

As required by Rule 13a-15(b) under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2025 due to material weaknesses in our internal control over financial reporting described below.

**Management's Report on Internal Control over Financial Reporting** 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect transactions and the dispositions of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures are being made only in accordance with appropriate authorizations of management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on its financial statements.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025 based on the criteria described in *Internal Control—Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our internal control over financial reporting was not effective as of December 31, 2025 due to the material weaknesses described below.

As of December 31, 2025, material weaknesses existed in our 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. The material weaknesses are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We did not design and maintain an effective control environment commensurate with our financial reporting requirements. Specifically, we lacked a sufficient complement of resources with (i) an appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose accounting matters timely and accurately, and (ii) an appropriate level of knowledge and experience to establish effective processes and controls. Additionally, the lack of a sufficient complement of resources resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in our finance and accounting functions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We did not design and maintain effective controls in response to the risks of material misstatement. Specifically, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting.

These material weaknesses contributed to the following additional material weaknesses:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We did not design and maintain effective controls related to the identification of and accounting for certain non-routine, unusual or complex transactions, including the proper application of U.S. GAAP of such transactions. Specifically, we did

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not design and maintain effective controls to timely identify and account for capitalizable costs, revenue, stock-based compensation, and debt and equity financing transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We did not design and maintain effective controls related to the period-end financial reporting process, including designing and maintaining formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures. Additionally, we did not design and maintain effective controls over the preparation and review of account reconciliations and journal entries, including maintaining appropriate segregation of duties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We did not design and maintain effective information technology ("IT") general controls for information systems that are relevant to the preparation of our financial statements. Specifically, we did not design and maintain: (i) program change management controls to ensure that program and data changes are identified, tested, authorized, and implemented appropriately; (ii) user access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to appropriate personnel; (iii) computer operations controls to ensure that processing and transfer of data, and data backups and recovery are monitored; and (iv) program development controls to ensure that new software development is tested, authorized and implemented appropriately.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•We did not design and maintain effective controls to achieve complete, accurate and timely accounting for debt, deferred liabilities, leases, property and equipment, redeemable convertible preferred shares, accounts payable, and accrued liabilities.

These material weaknesses resulted in audit adjustments to substantially all of our accounts, which were recorded prior to the issuance of the consolidated financial statements as of December 31, 2021 and 2020 and for the years then ended, and as of June 30, 2022 and 2021 and for the six-month periods then ended. Subsequently, these material weaknesses also resulted in misstatements to revenue, deferred revenue, accrued expenses, additional paid-in capital and stock-based compensation expense to the consolidated financial statements as of December 31, 2022 and 2023 and for the years then ended. These material weaknesses also resulted in misstatements to prepaid expenses and other current assets and sales and marketing to the consolidated financial statements as of and for the quarter ended September 30, 2023. Additionally, these material weaknesses could result in a misstatement of substantially all of our accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting as we are an "emerging growth company" as defined in the JOBS Act. For as long as we remain an "emerging growth company," we are exempt from the auditor attestation requirement in the assessment of the effectiveness of our internal control over financial reporting.

**Remediation Plans to Address Material Weaknesses**

As of the date of this Annual Report, we have executed on the following remediation actions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Adding key personnel with sufficient technical knowledge for the proper application of U.S. GAAP and the assessment of complex transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Integration and alignment of enterprise wide accounting operations under uniform financial systems and processes; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Engagement of a third party in the identification of risks of material misstatement and the designing and implementing of key controls to address the identified risks of material misstatement.

Our remediation plan includes the following actions that are ongoing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•further segregate key duties, and actively monitor such duties, to reduce risks that could present a reasonable possibility of material misstatements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•developing and executing action plans to address control deficiencies identified within certain key financial processes, prioritized by potential financial impact and risk;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•develop procedures promoting the consistent operation and evidencing of IT general controls specific to all key systems supporting financial reporting, including program change management, computer operations, program development, and user access reviews; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•formalize our risk assessment process and accounting policies and provide training to relevant personnel on the importance of internal controls and compliance with policies.

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We are prioritizing the above actions to complete our remediation plan. We believe that these actions, when fully implemented, will remediate the deficiencies described above. The deficiencies will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are designed and operating effectively. As we continue to evaluate and improve the applicable controls, management may take additional remedial measures or modify the remediation plan described above.

**Changes in Internal Control over Financial Reporting**

Other than the remediation actions described above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

**Inherent Limitation on the Effectiveness of Internal Control over Financial Reporting and Disclosure Controls and Procedures**

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected or preventable.

**<u>ITEM 9B. OTHER INFORMATION</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Reference is made to the disclosure contained in Note 21, *Subsequent Events* to the consolidated financial statements, which disclosure is incorporated herein by reference.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) During the three months ended December 31, 2025, none of our directors or officers (as defined in Section 16 of the Exchange Act), adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any "non-Rule 10b5-1 trading arrangement" (as defined in Item 408(c) of Regulation S-K of the Exchange Act).

**<u>ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS</u>**

Not Applicable.

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**<u>PART III</u>**

**<u>ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE</u>**

Information required by this item regarding directors and director nominees, executive officers, the board of directors and its committees, and certain corporate governance matters is incorporated by reference to the information set forth under the captions "Proposal 1 – Election of Directors," "Corporate Governance," "Executive Officers of the Company" and "Delinquent Section 16(a) Reports" in the definitive proxy statement for our 2026 annual meeting of stockholders, which will be filed no later than 120 days after December 31, 2025 (the "2026 Proxy Statement").

Our written code of business conduct and ethics (the "Code of Conduct") applies to all of our employees, officers and directors, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. The Code of Conduct is available on our corporate website at investor.surfair.com in the Governance section under "Governance Documents." If we make any substantive amendments to our Code of Conduct or grant any of our directors or executive officers any waiver, including any implicit waiver, from a provision of our Code of Conduct, we will disclose the nature of the amendment or waiver on our website or in a Current Report on Form 8-K.

**<u>ITEM 11. EXECUTIVE COMPENSATION</u>**

Information required by this item regarding executive compensation is incorporated by reference to the information set forth under the captions "Executive Compensation," "Non-Employee Director Compensation" and "Board and Corporate Governance Highlights" in the 2026 Proxy Statement.

**<u>ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS</u>**

Information required by this item regarding security ownership of certain beneficial owners and management is incorporated by reference to the information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" in the 2026 Proxy Statement.

Information required by this item regarding securities authorized for issuance under our equity compensation plans is incorporated by reference to the information set forth under the caption "Equity Compensation Plan Information" in the 2026 Proxy Statement.

**<u>ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE</u>**

Information required by this item regarding certain relationships and related transactions is incorporated by reference to the information set forth under the caption "Transactions with Related Persons" in the 2026 Proxy Statement.

Information required by this item regarding director independence is incorporated by reference to the information set forth under the caption "Corporate Governance" in the 2026 Proxy Statement.

**<u>ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES</u>**

Information required by this item regarding principal accounting fees and services is incorporated by reference to the information set forth under the caption "Proposal 2 – Ratification of Independent Registered Public Accounting Firm" in the 2026 Proxy Statement.

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**<u>PART IV</u>**

**<u>ITEM 15. EXHIBITS, FINA</u><u>NCIAL STATEMENT SCHEDULES</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) List of Documents Filed as part of this Form 10-K:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Consolidated Financial Statements

See Index to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Financial Statement Schedules

All schedules have been omitted because they are not required or the required information is shown in the consolidated financial statements or notes thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Exhibits

The following is a list of exhibits filed, furnished or incorporated by reference as a part of this Annual Report on Form 10-K.

**Exhibit Index**

The following exhibits are included herein or incorporated herein by reference:

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---

| | |
|:---|:---|
| **Exhibit**<br>**Number** | **Description of Document** |
| 2.1+ | [<u>Acquisition Agreement, dated as of March 17, 2021, by and between Surf Air Mobility Inc., Surf Air Global Limited, Surf Air Inc., SAC Merger Sub Inc. and Southern Airways Corporation</u> *<u>(incorporated by reference to Exhibit 2.1 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex2-1_surfair.htm) |
| 2.2 | [<u>Amendment No. 1 to Acquisition Agreement, dated as of August 22, 2021, by and between Surf Air Mobility Inc., Surf Air Global Limited, Surf Air Inc., SAC Merger Sub Inc. and Southern Airways Corporation</u> *<u>(incorporated by reference to Exhibit 2.2 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex2-2_surfair.htm) |
| 2.3 | [<u>Amendment No. 2 to Acquisition Agreement, dated as of May 17, 2022, by and between Surf Air Mobility Inc., Surf Air Global Limited, Surf Air Inc., SAC Merger Sub Inc. and Southern Airways Corporation</u> *<u>(incorporated by reference to Exhibit 2.3 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex2-3_surfair.htm) |
| 2.4 | [<u>Amendment No. 3 to Acquisition Agreement, dated as of November 11, 2022, by and between Surf Air Mobility Inc., Surf Air Global Limited, Surf Air Inc., SAC Merger Sub Inc. and Southern Airways Corporation</u> *<u>(incorporated by reference to Exhibit 2.4 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex2-4_surfair.htm) |
| 2.5 | [<u>Amendment No. 4 to Acquisition Agreement, dated as of May 25, 2023, by and between Surf Air Mobility Inc., Surf Air Global Limited, Surf Air Inc., SAC Merger Sub Inc. and Southern Airways Corporation</u> *<u>(incorporated by reference to Exhibit 2.5 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex2-5_surfair.htm) |
| 2.6 | [<u>Amendment No. 5 to Acquisition Agreement, dated as of June 21, 2023, by and between Surf Air Mobility Inc., Surf Air Global Limited, Surf Air Inc., SAC Merger Sub Inc. and Southern Airways Corporation</u> *<u>(incorporated by reference to Exhibit 2.6 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023050882/fs12023a1ex2-6_surfair.htm) |
| 2.7 | [<u>Agreement and Plan of Merger, dated as of June 21, 2023, by and among Surf Air Global Limited, Surf Air Mobility Inc. and SAGL Merger Sub Limited</u> *<u>(incorporated by reference to Exhibit 2.7 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023050882/fs12023a1ex2-7_surfair.htm) |
| 3.1 | [<u>Amended and Restated Certificate of Incorporation of SAM</u> *<u>(incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K, filed on March 29, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024038767/srfm-ex3_1.htm) |

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|:---|:---|
| 3.2 | [<u>Certificate of Amendment to Amended and Restated Certificate of Incorporation</u> *<u>(incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on August 19, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024098593/srfm-ex3_1.htm) |
| 3.3 | [<u>Amended and Restated Bylaws of SAM</u> *<u>(incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K, filed on March 29, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024038767/srfm-ex3_2.htm) |
| 4.1 | [<u>Description of Securities</u> *<u>(incorporated by reference to Exhibit 4.1 to the Company's Form 10-K, filed on March 29, 2024)</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017024038767/srfm-ex4_1.htm) |
| 10.1 | [<u>Form of Grant Agreement for grants of PRSUs to employees and non-employee directors under the 2023 Equity Incentive Plan</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017023063725/srfm-ex10_1.htm)[*<u>(incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed on November 14, 2023)</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex2-1_surfair.htm). |
| 10.2# | [<u>Employment Agreement dated December 21, 2023, by and between Surf Air Mobility Inc. and Oliver Reeves</u> *<u>(incorporated by reference to Exhibit 10.1 to the Company's Form 8-K, filed on December 27, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017023073152/srfm-ex10_01.htm) |
| 10.3 | [<u>Binding Term Sheet dated as of December 21, 2023, by and between Surf Air Mobility Inc. and GEM Global Yield LLC SCS</u> *<u>(incorporated by reference to Exhibit 10.1 to the Company's Form 8-K, filed on December 28, 2023).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017023073436/srfm-ex10_01.htm) |
| 10.4 | [<u>Security Purchase Agreement, dated March 1, 2024, between Surf Air Mobility, Inc. and GEM Global Yield LLC SCS</u> *<u>(incorporated by reference to Exhibit 10.1 to the Company's Form 8-K, filed on March 6, 2024).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017024027197/srfm-ex10_1.htm) |
| 10.5 | [<u>Form of Grant Agreement for grants of RSUs to employees and non-employee directors under the 2023 Equity Incentive Plan</u> *<u>(incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q, filed on November 14, 2023).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017023063725/srfm-ex10_2.htm) |
| 10.6 | [<u>Share Purchase Agreement, dated as of June 15, 2023, by and among Surf Air Mobility, Inc., GEM Global Yield LLC SCS and GEM Yield Bahamas Limited</u> *<u>(incorporated by reference to Exhibit 10.4 to the Company's Amendment No. 5 Form S-1 and Form S-4 Registration Statement, filed on July 25, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023050882/fs12023a1ex10-4_surfair.htm) |
| 10.7 | [<u>Form of SAFE Agreement</u> *<u>(incorporated by reference to Exhibit 10.3 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-3_surfair.htm) |
| 10.8 | [<u>Form of Director Indemnification Agreement</u> *<u>(incorporated by reference to Exhibit 10.4 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-4_surfair.htm) |
| 10.9+++ | [<u>Collaboration & Engineering Services Agreement, dated as of September 15, 2022, by and between Textron Aviation Inc. and Surf Air Mobility Inc.</u> *<u>(incorporated by reference to Exhibit 10.5 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-5_surfair.htm) |
| 10.10+++ | [<u>Amended Collaboration & Engineering Services Agreement, dated as of May 24, 2023, by and between Textron Aviation Inc. and Surf Air Mobility Inc.</u> *<u>(incorporated by reference to Exhibit 10.6 to the Company's Form S-1, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-6_surfair.htm) |
| 10.11+++ | [<u>Amended and Restated Sales and Marketing Agreement, dated as of September 27, 2022, by and between Textron Aviation Inc. and Surf Air Mobility Inc.</u> *<u>(incorporated by reference to Exhibit 10.7 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-7_surfair.htm) |
| 10.12+++ | [<u>First Amended and Restated Sales and Marketing Agreement, dated as of May 24, 2023, by and between Textron Aviation Inc. and Surf Air Mobility Inc.</u> *<u>(incorporated by reference to Exhibit 10.8 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-8_surfair.htm). |
| 10.13+++ | [<u>Data License Agreement, dated as of September 15, 2022, among Textron Aviation Inc., Textron Innovations Inc. and Surf Air Mobility Inc.</u> *<u>(incorporated by reference to Exhibit 10.9 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-9_surfair.htm) |
| 10.14+++ | [<u>Amendment to Data License Agreement, dated as of May 24, 2023, among Textron Aviation Inc., Textron Innovations Inc. and Surf Air Mobility Inc.</u> *<u>(incorporated by reference to Exhibit 10.10 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-10_surfair.htm) |
| 10.15++ | [<u>Pilot Pathway Agreement, dated as of July 17, 2019, by and between SkyWest Airlines, Inc. and Southern Airways Corporation.</u> *<u>(incorporated by reference to Exhibit 10.11 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-11_surfair.htm) |

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|:---|:---|
| 10.16 | [<u>Amendment No. 1 to Pilot Pathway Agreement, dated as of October 1, 2020, by and between SkyWest Airlines, Inc. and Southern Airways Corporation.</u> *<u>(incorporated by reference to Exhibit 10.12 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-12_surfair.htm) |
| 10.17 | [<u>Amendment No. 2 to Pilot Pathway Agreement, dated as of March 1, 2022, by and between SkyWest Airlines, Inc. and Southern Airways Corporation</u> *<u>(incorporated by reference to Exhibit 10.13 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-13_surfair.htm) |
| 10.18++ | [<u>Amendment No. 3 to Pilot Pathway Agreement, dated as of March 6, 2023, by and between SkyWest Airlines, Inc. and Southern Airways Corporation</u> *<u>(incorporated by reference to Exhibit 10.14 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-14_surfair.htm) |
| 10.19+++ | [<u>Master Agreement, dated as of October 10, 2022, by and between Jetstream Aviation Capital, LLC and Surf Air Mobility Inc.</u> *<u>(incorporated by reference to Exhibit 10.15 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-15_surfair.htm) |
| 10.20++ | [<u>Business Combination Agreement, dated as of May 17, 2022, by and among Tuscan Holdings Corp. II, Surf Air Global Limited, Surf Air Mobility Inc., THCA Merger Sub Inc. and SAGL Merger Sub Limited.</u> *<u>(incorporated by reference to Exhibit 10.16 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-16_surfair.htm) |
| 10.21 | [<u>Amendment No. 1 to Business Combination Agreement, dated as of September 1, 2022, by and among Tuscan Holdings Corp. II, Surf Air Global Limited, Surf Air Mobility Inc., THCA Merger Sub Inc. and SAGL Merger Sub Limited</u> *<u>(incorporated by reference to Exhibit 10.17 to the Company's Form S-1 Registration Statement, filed on June 5, 2023).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-17_surfair.htm) |
| 10.22 | [<u>Mutual Termination and Release Agreement, dated as of November 14, 2022, by and among Tuscan Holdings Corp. II, Surf Air Global Limited, Surf Air Mobility Inc., THCA Merger Sub Inc. and SAGL Merger Sub Limited</u> *<u>(incorporated by reference to Exhibit 10.18 to the Company's Form S-1 Registration Statement, filed on June 5, 2023).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-18_surfair.htm) |
| 10.23# | [<u>Employment Agreement, dated as of May 16, 2022, by and among Surf Air Mobility Inc., Surf Air Global Limited and R. Stanley Little</u> *<u>(incorporated by reference to Exhibit 10.19</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-19_surfair.htm)[*<u>to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-15_surfair.htm)*.* |
| 10.24# | [<u>Amendment to Employee Agreement, dated as of October 23, 2022, by and between Surf Air Mobility Inc. and R. Stanley Little</u> *<u>(incorporated by reference to Exhibit 10.20 to the Company's Form S-1, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-20_surfair.htm) |
| 10.25# | [<u>Employment Agreement, dated as of December 19, 2022, by and among Surf Air Mobility Inc., Surf Air Global Limited and Deanna White</u> *<u>(incorporated by reference to Exhibit 10.21 to the Company's Form S-1, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-21_surfair.htm) |
| 10.26# | [<u>Employment Agreement, dated as of August 20, 2021, by and among Surf Air Mobility Inc., Surf Air Global Limited and Sudhin Shahani</u> *<u>(incorporated by reference to Exhibit 10.22 to the Company's to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-22_surfair.htm) |
| 10.27# | [<u>Amendment to Employment Agreement, dated as of January 20, 2023, by and between Surf Air Mobility Inc. and Sudhin Shahani</u> *<u>(incorporated by reference to Exhibit 10.23 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-23_surfair.htm) |
| 10.28# | [<u>2016 Equity Incentive Plan as amended</u> *<u>(incorporated by reference to Exhibit 10.24 to the Company's Form S-1 Registration Statement, filed on June 5, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex10-24_surfair.htm) |
| 10.29# | [<u>Surf Air Mobility Inc. Amended and Restated 2023 Equity Incentive Plan</u> *<u>(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on June 25, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024078608/srfm-ex10_1.htm) |
| 10.30# | [<u>Employee Stock Purchase Plan</u> *<u>(incorporated by reference to Exhibit 10.28 to the Company's Amendment No. 1 Form S-1 and Form S-4 Registration Statement, filed on June 22, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023050882/fs12023a1ex10-28_surfair.htm) |
| 10.31 | [<u>Convertible Note Purchase Agreement, dated as of June 15, 2023, between Surf Air Mobility Inc. and Partners for Growth V, L.P., conformed for Consent and Amendment, dated November 14, 2024 among the Company, the subsidiaries of the Company party thereto and Partners for Growth V, L.P.</u> *<u>(incorporated by reference to Exhibit 10.6 to the Company's Form 10-Q filed on November 14, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024127106/srfm-ex10_6.htm) |

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| 10.32 | [<u>Second Amendment to Data License Agreement, dated as of June 30, 2023, among Textron Aviation Inc., Textron Innovations Inc. and Surf Air Mobility Inc.</u> *<u>(incorporated by reference to Exhibit 10.30 to the Company's Amendment No. 3 Form S-1 and Form S-4 Registration Statement, filed on July 12, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023056548/fs12023a3ex10-30_surfair.htm) |
| 10.33 | [<u>Third Amendment to Data License Agreement, dated as of September 18, 2023, among Textron Aviation Inc., Textron Innovations Inc. and Surf Air Mobility Inc.</u> *<u>(incorporated by reference to Exhibit 10.31 to the Company's Form S-1 Registration Statement, filed on September 19, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023077482/fs12023ex10-31_surfair.htm) |
| 10.34# | [<u>Southern Incentive Bonus Plan</u> *<u>(incorporated by reference to Exhibit 10.31 to the Company's Form S-1 Registration Statement, filed on July 21, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023058816/fs12023a4ex10-31_surfair.htm) |
| 10.35 | [<u>Amendment No. 2 to the Second Amended and Restated Share Purchase Agreement, dated as of July 21, 2023, among Surf Air Global Limited, GEM Global Yield LLC SCS and GEM Yield Bahamas Limited</u> *<u>(incorporated by reference to Exhibit 10.32 to the Company's Amendment No. 5 Form S-1 and Form S-4 Registration Statement, filed on July 21, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023058816/fs12023a4ex10-32_surfair.htm) |
| 10.36 | [<u>Amendment No. 1 to the Share Purchase Agreement, dated as of July 21, 2023, by and among Surf Air Global Limited, GEM Global Yield LLC SCS and GEM Yield Bahamas Limited</u> *<u>(incorporated by reference to Exhibit 10.33 to the Company's Amendment No. 5 Form S-1 and Form S-4 Registration Statement, filed on July 21, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023058816/fs12023a4ex10-33_surfair.htm) |
| 10.37 | [<u>Amendment No. 3 to the Second Amended and Restated Share Purchase Agreement, dated as of July 24, 2023, among Surf Air Global Limited, GEM Global Yield LLC SCS and GEM Yield Bahamas Limited</u> *<u>(incorporated by reference to Exhibit 10.34 to the Company's Amendment No. 5 Form S-1 and Form S-4 Registration Statement, filed on July 25, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023059372/fs12023a5ex10-34_surfair.htm) |
| 10.38 | [<u>Amendment No. 2 to the Share Purchase Agreement, dated as of July 24, 2023, by and among Surf Air Global Limited, GEM Global Yield LLC SCS and GEM Yield Bahamas Limited</u> *<u>(incorporated by reference to Exhibit 10.35 to the Company's Amendment No. 5 Form S-1 and Form S-4 Registration Statement, filed on July 25, 2023)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023059372/fs12023a5ex10-35_surfair.htm) |
| 10.39 | [<u>Amendment No. 4 to the Amended and Restated Share Purchase Agreement, dated as of September 19, 2023, by and among Surf Air Mobility Inc., Surf Air Global Ltd., GEM Global Yield LLC SCS and GEM Yield Bahamas Limited</u> *<u>(incorporated by reference to Exhibit 10.35 to the Company's Amendment No. 5 Form S-1 and Form S-4 Registration Statement, filed on September 19, 2023).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000121390023077482/fs12023ex10-37_surfair.htm) |
| 10.40 | [<u>Fourth Amendment to Data License Agreement, dated as of December 8, 2023, among Textron Aviation Inc., Textron Innovations Inc. and Surf Air Mobility Inc</u> *<u>(incorporated by reference to Exhibit 10.4 to the Company's Form 10-K, filed on March 29, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024038767/srfm-ex10_40.htm) |
| 10.41# | [<u>Amendment to Employee Agreement, dated as of May 20, 2024, but effective as of May 15, 2024, by and between Surf Air Mobility Inc. and R. Stanley Little</u> *<u>(incorporated by reference to Exhibit 10.42 to the Company's Registration Statement on Form S-1/A, filed on July 11, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024083005/srfm-ex10_42.htm) |
| 10.42# | [<u>Amended and Restated Employment Agreement dated May 17, 2024, but effective as of May 15, 2024, by and between Surf Air Mobility Inc. and Deanna White</u> *<u>(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on May 20, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024062450/srfm-ex10_1.htm) |
| 10.43# | [<u>Amendment to Employment Agreement dated May 20, 2024, by and between Surf Air Mobility Inc. and Oliver Reeves</u> *<u>(incorporated by reference to Exhibit 10.47 to the Company's Registration Statement on Form S-1/A, filed on July 11, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024083005/srfm-ex10_47.htm) |
| 10.44# | [<u>Amendment to Amended and Restated Employment Agreement dated February 4, 2025, but effective as of January 1, 2025, by and between Surf Air Mobility Inc. and Deanna White</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017025043326/srfm-ex10_44.htm) |
| 10.45# | [<u>Second Amendment to Employment Agreement dated February 4, 2025, but effective as of January 1, 2025, by and between Surf Air Mobility Inc. and Oliver Reeves</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017025043326/srfm-ex10_45.htm) |
| 10.46 | [<u>Mandatory Convertible Security, dated August 7, 2024, between Surf Air Mobility, Inc. and GEM Global Yield LLC SCS</u> *<u>(incorporated by reference as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on August 9 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024094783/srfm-ex4_1.htm) |
| 10.47 | [<u>Joint Venture Agreement, dated August 9, 2024, between Surf Air Mobility Inc. and Palantir Technologies, Inc.</u> *<u>(incorporated by reference to the Company's Current Report on Form 8-K filed on August 13, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024095740/srfm-ex10_1.htm) |

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| 10.48 | [<u>Credit Agreement, dated November 14, 2024, 2024, among the Company as borrower, the lenders party thereto, and CCP Agency, LLC as agent</u> *<u>(incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q, filed on November 14, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024127106/srfm-ex10_3.htm) |
| 10.49 | [<u>Reimbursement Agreement, dated November 14, 2024, among the Company, the subsidiaries of the Company party thereto and Park Lane Investments LLC</u> *<u>(incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q, filed on November 14, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024127106/srfm-ex10_4.htm) |
| 10.50 | [<u>Secured Promissory Note, dated November 14, 2024, among the Company, the subsidiaries of the Company party thereto and LamVen LLC</u> *<u>(incorporated by reference to Exhibit 10.5 to the Company's Form 10-Q, filed on November 14, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024127106/srfm-ex10_5.htm) |
| 10.51 | [<u>Fifth Amendment to Data License Agreement dated September 26, 2024</u> *<u>(incorporated by reference to Exhibit 10.7 to the Company's Form 10-Q, filed on November 14, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024127106/srfm-ex10_7.htm) |
| 10.53# | [<u>Advisory Services Agreement, dated as of December 16, 2024, by and between Surf Air Mobility Inc. and Proxima Centauri, LLC</u>*<u>(incorporated by reference to Exhibit 10.1 to the Company's Form 8-K, filed on December 19, 2024)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017024138511/srfm-ex10_1.htm) |
| 10.54 | [<u>Form of Grant Agreement for grants of RSUs to employees for Incentive Bonus Plan settlements under the 2023 Equity Incentive Plan</u> *<u>(incorporated by reference to Exhibit 10.54 to the Company's Form 10-K, filed on March 20, 2025)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017025043326/srfm-ex10_54.htm) |
| 10.55 | [<u>Form of Grant Agreement for grants of RSUs to non-employee consultants for Incentive Bonus Plan settlements under the 2023 Equity Incentive Plan</u>*<u>(incorporated by reference to Exhibit 10.55 to the Company's Form 10-K, filed on March 20, 2025)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017025043326/srfm-ex10_55.htm) |
| 10.56 | [<u>Form of Warrant Agreement</u> *<u>(incorporated by reference to Exhibit 10.56 to the Company's Form 10-K, filed on March 20, 2025)</u>*<u>.</u>](https://www.sec.gov/Archives/edgar/data/1936224/000095017025043326/srfm-ex10_56.htm) |
| 10.57 | [<u>Form of Securities Purchase Agreement</u> *<u>(incorporated by reference as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 1 2025).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017025048519/srfm-ex10_1.htm) |
| 10.58 | [<u>Form of Pre-Funded Warrant</u> *<u>(incorporated by reference as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on April 1, 2025).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017025048519/srfm-ex10_2.htm) |
| 10.59 | [<u>Form of Placement Agent Warrant</u>*<u>(incorporated by reference as Exhibit 10.3 to the Company's Current Report on Form 8-K filed on April 1, 2025).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017025048519/srfm-ex10_3.htm) |
| 10.60<br>| [<u>Form of Securities Purchase Agreement dated June 25, 2025</u> *<u>(incorporated by reference as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 26, 2025).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017025090410/srfm-ex10_1.htm) |
| 10.61 | [<u>Form of Pre-Funded Warrant dated June 25, 2025</u> *<u>(incorporated by reference as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on June 26, 2025).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017025090410/srfm-ex10_2.htm) |
| 10.62<br>| [<u>Form of Placement Agent Warrant dated June 25, 2025</u> *<u>(incorporated by reference as Exhibit 10.3 to the Company's Current Report on Form 8-K filed on June 26, 2025).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017025090410/srfm-ex10_3.htm) |
| 10.63<br>| [<u>Surf Air Mobility Inc. Amended and Restated 2023 Equity Incentive Plan</u> *<u>(incorporated by reference as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 27, 2025).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017025091041/srfm-ex10_1.htm) |
| 10.64 | [<u>Form of Securities Purchase Agreement (</u>*<u>incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on November 12, 2025</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000119312525277566/srfm-ex10_1.htm). |
| 10.65 | [<u>Form of Warrant (Registered) (</u>*<u>incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed on November 12, 2025</u>*<u>)</u>](https://www.sec.gov/Archives/edgar/data/1936224/000119312525277566/srfm-ex10_2.htm). |
| 10.66 | [<u>Form of Warrant (Private Placement) (</u>*<u>incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K, filed on November 12, 2025</u>*<u>)</u>](https://www.sec.gov/Archives/edgar/data/1936224/000119312525277566/srfm-ex10_3.htm). |
| 10.67 | [<u>Senior Secured Convertible Note due 2028 (</u>*<u>incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K, filed on November 12, 2025</u>*<u>).</u>](https://www.sec.gov/Archives/edgar/data/1936224/000119312525277566/srfm-ex10_4.htm) |

---

------

---

| | |
|:---|:---|
| 10.68 | [<u>First Amendment to Reimbursement Agreement (</u>*<u>incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K, filed on November 12, 2025</u>*<u>).</u>](https://www.sec.gov/Archives/edgar/data/1936224/000119312525277566/srfm-ex10_5.htm) |
| 14.1 | [<u>Code of Conduct and Ethics</u> *<u>(incorporated by reference to Exhibit 14.1 to the Company's Form 10-Q, filed November 14, 2023).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017023063725/srfm-ex14_1.htm) |
| 19.1\* | [<u>Insider Trading Policy</u>](srfm-ex19_1.htm) |
| 21.1\* | [<u>List of Subsidiaries</u>](https://www.sec.gov/Archives/edgar/data/1936224/000121390023045915/fs12023ex21-1_surfair.htm) |
| 23.1\* | [<u>Consent of PricewaterhouseCoopers LLP</u>](srfm-ex23_1.htm) |
| 31.1\* | [<u>Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</u>](srfm-ex31_1.htm) |
| 31.2\* | [<u>Certification of Principal Financial and Accounting Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</u>](srfm-ex31_2.htm) |
| 32.1\*\* | [<u>Certification of Principal Executive Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</u>](srfm-ex32_1.htm) |
| 32.2\*\* | [<u>Certification of Principal Financial and Accounting Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</u>](srfm-ex32_2.htm) |
| 97.1 | [<u>Clawback Policy</u> *<u>(incorporated by reference to Exhibit 97.1 to the Company's Annual Report on Form 10-K, filed on March 29, 2024).</u>*](https://www.sec.gov/Archives/edgar/data/1936224/000095017024038767/srfm-ex97_1.htm) |
| 101.INS | Inline XBRL Instance Document |
| 101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |

---

------

\* Filed herewith.

\*\*Furnished herewith

++ Schedules to this Exhibit omitted pursuant to Regulation S-K Item 601(a)(5) promulgated under the Exchange Act. The Registrant agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request.

+++ Specific provisions or terms to this Exhibit omitted pursuant to Regulation S-K Item 601(b)(10)(iv) promulgated under the Exchange Act. The Registrant agrees to furnish supplementally a copy of any omitted schedule to the SEC upon request.

# Indicates management contract or compensatory plan or arrangement.

**<u>ITEM 16. FORM 10-K SUMMARY</u>**

None.

------

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized**.**

---

| | | |
|:---|:---|:---|
|  | Surf Air Mobility Inc. | Surf Air Mobility Inc. |
| Date: March 12, 2026 | By: | /s/ Deanna White |
|  |  | Deanna White |
|  |  | Chief Executive Officer and Chief Operating Officer |

---

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Name** | **Title** | **Date** |
| /s/ Deanna White | Chief Executive Officer and Chief Operating Officer | March 12, 2026 |
| **Deanna White** | (Principal Executive Officer)  |  |
| /s/ Oliver Reeves | Chief Financial Officer | March 12, 2026 |
| **Oliver Reeves** | (Principal Financial Officer and Principal Accounting Officer) |  |
| /s/ Sudhin Shahani | Co-Founder and Director | March 12, 2026 |
| **Sudhin Shahani** |  |  |
| /s/ Carl Albert | Director | March 12, 2026 |
| **Carl Albert** | (Chairman)  |  |
| /s/ John D'Agostino | Director | March 12, 2026 |
| **John D'Agostino** |  |  |
| /s/ Bruce Hack | Director | March 12, 2026 |
| **Bruce Hack** |  |  |
| /s/ Edward Mady | Director | March 12, 2026 |
| **Edward Mady** |  |  |
| /s/ David Anderman | Director | March 12, 2026 |
| **David Anderman** |  |  |
| /s/ Tyler Painter | Director | March 12, 2026 |
| **Tyler Painter** |  |  |
| /s/ Shawn Pelsinger | Director | March 12, 2026 |
| **Shawn Pelsinger** |  |  |

---

------

## Exhibit 4.1

**Exhibit 4.1**

**DESCRIPTION OF SECURITIES**

*The following is a summary of the material terms of securities of Surf Air Mobility Inc. ("we", "us" and "our") registered under Section 12 of the Securities Act of 1934, as amended (the "Exchange Act"), as of December 31, 2023. The summary does not purport to be complete, and is subject to and qualified its entirety by reference to our amended and restated certificate of incorporation (the "Amended and Restated Certificate of Incorporation") and our amended and restated bylaws (the "Amended and Restated Bylaws"), copies of which have been filed as exhibits to the Annual Report on Form 10-K, and relevant provisions of the Delaware General Corporation Law ("DGCL").*

**General**

Our authorized capital stock consists of 800,000,000 shares of our common stock, $0.0001 par value ("*Common Stock*"), and 50,000,000 shares of undesignated preferred stock, $0.0001 par value.

**Common Stock**

All issued and outstanding shares of our Common Stock are duly authorized, validly issued, fully paid, and non-assessable. All authorized but unissued shares of our Common Stock are available for issuance by our board of directors without any further stockholder action, except as required by the listing standards of the New York Stock Exchange ("NYSE").

The rights, preferences, and privileges of holders of Common Stock are subject to and may be adversely affected by the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.

*Voting Rights*

Subject to the limitations on foreign ownership described below, holders of record of our Common Stock are entitled to one vote for each share held on all matters to be voted on by stockholders. Unless specified in our Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws, or as required by applicable provisions of the DGCL or applicable stock exchange rules, the affirmative vote of a majority of our shares of our Common Stock that are voted is required to approve any such matter voted on by our stockholders.

Our Amended and Restated Certificate of Incorporation does not provide for cumulative voting for the election of directors.

*Dividend Rights*

Subject to preferences that may be applicable to any then-outstanding preferred stock, holders of our Common Stock are entitled to receive ratably those dividends, if any, as may be declared by our board of directors out of legally available funds. Under Delaware law, we can only pay dividends either out of "surplus" or out of the current or the immediately preceding year's net profits. Surplus is defined as the excess, if any, at any given time, of the net assets of a corporation over its total liabilities and statutory capital. The value of a corporation's assets can be measured in a number of ways and may not necessarily equal their book value.

*Right to Receive Liquidation Distributions*

In the event of our liquidation, dissolution, or winding up, the holders of our Common Stock will be entitled to share ratably in the assets legally available for distribution to stockholders after the payment of or provision for all of our debts and other liabilities, subject to the prior rights of any preferred stock then-outstanding.

------

*Other Matters*

Our Common Stock does not have preemptive rights pursuant to the terms of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws. There are no redemption or sinking fund provisions applicable to our Common Stock.

**Preferred Stock**

Our Amended and Restated Certificate of Incorporation provides that shares of preferred stock may be issued from time to time in one or more series. Our board of directors is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. In addition, our board of directors is able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of our Common Stock and could have anti-takeover effects. The ability of our board of directors to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of our management.

**Registration Rights**

*GEM*

Pursuant to the terms of the registration rights agreement, dated as of August 26, 2020, that we entered into with GEM Global Yield LLC SCS ("*GEM*") and an affiliated entity, we are required to file a registration statement with respect to securities issued, or that could be issued, and are required to maintain the effectiveness of such registration statement.

The registration rights agreement also provides that, in the event that we propose to register any of our securities under the Securities Act of 1933, as amended (the "*Securities Act*"), either for our own account or for the account of other securityholders, other than (i) on Form S-4, (ii) Form S-8 or (iii) their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with our employee stock option or other employee benefit plans, GEM will be entitled to certain piggyback registration rights allowing it to include its shares in such registration, subject to certain marketing and other limitations. We will pay the registration expenses, other than underwriting discounts and commissions, of the shares registered by the registrations described above.

In addition, we agreed to file a registration statement with the SEC for the resale by GEM and its affiliates of at least 1,142,857 shares of Common Stock less certain shares of our Common Stock sold by GEM and to use our commercially reasonable efforts to maintain the effectiveness of such registration statement until the date on which all of the shares issuable upon the conversion of the mandatory convertible security issued to GEM have been sold.

A registration statement intended to satisfy such registration requirements was declared effective on August 7, 2024.

*Other Registration Rights*

The following parties are entitled to customary rights with respect to the registration of shares of our Common Stock:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Tuscan Holdings Corp II, with respect to the registration of 90,714 shares of our Common Stock issued to it;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an advisor that received 2,142 shares of our Common Stock in satisfaction for fees owed for services in connection with our acquisition of Southern Airways Corporation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Partners for Growth V, L.P. ("*PFG*") with respect to the registration of 190,476 shares of our Common Stock to be issued to PFG upon a conversion of a senior unsecured convertible promissory note.

A registration statement intended to satisfy such registration requirements was declared effective on September 29, 2023.

Palantir Technologies, Inc. ("Palantir") is entitled to certain customary rights with respect to the registration of shares of Common Stock issued to Palantir in satisfaction of fees owed for services. A registration statement

------

intended to satisfy such registration requirements and was initially declared effective on August 26, 2024. We subsequently agreed to file a registration statement with the SEC for the resale by Palantir of additional shares of Common Stock. A registration statement intended to satisfy such registration requirements and was initially declared effective on November 19, 2025. We paid the registration expenses, other than underwriting discounts and commissions, of the shares registered by such registration statements.

LamVen LLC is entitled to certain customary rights with respect to the registration of shares of Common Stock issuable upon exercise of a warrant dated November 14, 2024, issued to LamVen LLC. A registration statement intended to satisfy such registration requirements was declared effective on May 13, 2025.

The holder of a convertible note we issued on November 12, 2025 is entitled to certain customary rights with respect to the registration of the shares of our Common Stock issuable upon conversion of such note. A registration statement intended to satisfy such registration requirements and was initially declared effective on November 19, 2025.

The following parties are entitled to customary rights with respect to the registration of shares of our common stock:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•LamJam II LLC, with respect to the registration of 408,163 shares of Common Stock purchased by LamJam II LLC in a private placement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Sudhin Shahani, with respect to the registration of 408,163 shares of Common Stock purchased by Sudhin Shahani in a private placement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•LamVen LLC, with respect to the registration of the resale of an aggregate of 911,544 shares of our Common Stock issuable upon exercise of unregistered warrants dated May 22, 2025.

No registration statement intended to satisfy such registration requirements has been filed with the SEC. We have obtained waivers from those parties where we have failed to satisfy such registration requirements.

The following additional parties are entitled to customary rights with respect to the registration of shares of our Common Stock:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an advisor and a related party of such advisor, with respect to the registration of the resale of an aggregate of 85,941 shares of Common Stock issuable upon exercise of unregistered warrants dated September 25, 2024 and May 8, 2025;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•LamVen LLC and Park Lane Investments LLC, with respect to the registration of shares of Common Stock issuable upon exercise of unregistered warrants dated November 12, 2025; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•High Trail Special Situations LLC with respect to 3,510,638 shares of Common Stock issued in settlement of a cash payment obligation pursuant to a letter agreement dated March 12, 2026.

We currently expect to file a registration statement intended to satisfy such registration requirements by March 17, 2026.

**Certain Foreign Ownership and Anti-Takeover Provisions of Delaware Law and our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws**

Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide that at no time shall more than 25.0% of our total voting interest be owned or controlled by persons or entities who are not citizens of the United States ("Non-Citizens"). Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws implement this legally-required provision by limiting voting rights of Non-Citizens to Kuzari Investor 94647 LLC and our co-founders, Sudhin Shahani and Liam Fayed, and their respective affiliates (collectively, the "*Permitted Holders*") in the event that Non-Citizens own (beneficially or of record) more than 25.0% of the total voting interest. All other Non-Citizens that own (beneficially or of record) or have voting control over any shares of our capital stock will have their voting rights subject to automatic suspension. The voting rights of the Permitted Holders will be reduced pro rata if their combined ownership percentage exceeds 25.0%. Additionally, our Amended and Restated Bylaws limit the amount of outstanding equity interests held by Non-Citizens who are a resident of a country that is not party to an "open-skies" agreement with the United States to 25.0% and all Non-Citizens collectively to 49.0%.

------

We are subject to the provisions of Section 203 of the DGCL regulating corporate takeovers. This statute prevents certain Delaware corporations, under certain circumstances, from engaging in a "business combination" with:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a stockholder who owns 15% or more our outstanding voting stock (otherwise known as an "interested stockholder");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an affiliate of an interested stockholder; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•an associate of an interested stockholder for three years following the date that the stockholder became an interested stockholder.

A "business combination" includes a merger or sale of our assets with a market value of 10% or more of the aggregate market value of all of our assets or of all of our outstanding stock. However, the above provisions of Section 203 do not apply if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•our board of directors approves the transaction that made the stockholder an "interested stockholder" prior to the date of the transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of our Common Stock; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•on or subsequent to the date of the transaction, the initial business combination is approved by our board of directors and authorized at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.

Under certain circumstances, Section 203 of the DGCL will make it more difficult for a person who would be an "interested stockholder" to effect various business combinations with us for a three-year period. This provision may encourage companies interested in acquiring us to negotiate in advance with our board of directors because the stockholder approval requirement would be avoided if our board of directors approves either the business combination or the transaction that results in the stockholder becoming an interested stockholder. Section 203 of the DGCL also may have the effect of preventing changes in our board of directors and may make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

Our Amended and Restated Certificate of Incorporation provides that our board of directors is classified into three classes of directors. As a result, in most circumstances, a person can gain control of our board of directors only by successfully engaging in a proxy contest at two or more annual meetings.

**Authorized But Unissued Shares**

Our authorized but unissued Common Stock and preferred stock are available for future issuances without stockholder approval (including a specified future issuance) and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions, and employee benefit plans. The existence of authorized but unissued and unreserved Common Stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger, or otherwise.

**Exclusive Forum for Certain Lawsuits**

Although we believe these provisions benefit us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that these provisions are unenforceable, and to the extent they are enforceable, the provisions may have the effect of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.

------

**Special Meeting of Stockholders**

Our Amended and Restated Bylaws provide that special meetings of our stockholders may be called only by a resolution adopted by our board of directors.

**Advance Notice Requirements for Stockholder Proposals and Director Nominations**

Our Amended and Restated Bylaws provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders, must provide timely notice of their intent in writing. To be timely, a stockholder's notice will need to be received by the company secretary at our principal executive offices not later than the close of business on the 90<sup>th</sup> day nor earlier than the opening of business on the 120<sup>th</sup> day prior to the anniversary date of the immediately preceding annual meeting of stockholders. Pursuant to Rule 14a-8 of the Exchange Act, proposals seeking inclusion in our annual proxy statement must comply with the notice periods contained therein. Our Amended and Restated Bylaws also specify certain requirements as to the form and content of a stockholders' meeting. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders.

**Action by Written Consent**

Any action required or permitted to be taken at any annual and special meeting of stockholders may be taken only upon the vote of stockholders at an annual or special meeting duly noticed and called in accordance of the DGCL and may not be taken by written consent of the stockholders without a meeting.

**Classified Board of Directors**

Our board of directors is divided into three classes, Class A, Class B and Class C, with members of each class serving staggered three-year terms. As a result, in most circumstances, a person can gain control of our board of directors only by successfully engaging in a proxy contest at two or more annual meetings. Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide that the authorized number of directors may be changed only by resolution of our board of directors. Subject to the terms of any preferred stock, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative vote of holders of at least 66 2/3% of the voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors, voting together as a single class. Any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office.

**Limitation of Liability of Directors and Officers**

Our Amended and Restated Certificate of Incorporation provides that, to the fullest extent provided by Delaware law, no director or officer will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director or officer, as applicable.

**Transfer Agent**

The transfer agent for our Common Stock is Equiniti Trust Company, LLC. The transfer agent's address is 6201 15th Avenue, Brooklyn, NY 11219.

**Listing** 

Our Common Stock is currently listed on the NYSE under the symbol "SRFM".

------

## Exhibit 19.1

*Exhibit 19.1*

# SURF AIR MOBILITY INC. INSIDER TRADING POLICY
*(as of October 9, 2023)*

**1.** **Background and Purpose of Policy**

Surf Air Mobility Inc. (the "<u>Company</u>") and all directors, officers and employees of the Company and its subsidiaries, if any, are subject to federal and state "<u>insider trading</u>" laws with respect to transactions involving Company securities. These laws prohibit (a) trading in (as defined in Section 4 below) Company securities on the basis of Material Nonpublic Information (as defined in Section 3 below), and (b) disclosing Material Nonpublic Information to others who might trade on the basis of that information. As further described in Section 9 below, anyone violating these laws is subject to personal liability and could face criminal penalties. Under certain circumstances, companies and their controlling persons could also be subject to liability if they fail to take reasonable steps to prevent insider trading by company personnel.

The Company has adopted this policy to promote compliance with federal and state insider trading laws and to protect the Company and its directors, officers and employees (including employees and officers of any subsidiaries of the Company) from the serious liabilities and penalties that can result from trading in Company securities in violation of these laws. **You, however, are responsible for ensuring that you do not violate federal or state insider trading laws or this policy.**

**2.** **Scope of Policy**

This policy applies to (a) all directors, officers and employees of the Company or its subsidiaries, if any, and (b) any other persons, such as contractors or consultants, whom the Company's Chief Financial Officer, as the compliance officer for the Company (the "<u>Compliance Officer</u>"), has designated as subject to this policy because such other persons have access to Material Nonpublic Information concerning the Company or its subsidiaries, if any. The restrictions in this policy also apply to each such person's spouse; any parent, stepparent, child, stepchild, sibling or in-law or other family members; other members of such person's household; any corporation, partnership or other entity that is controlled or managed by such person; and any trust for which such person is the trustee or has a beneficial pecuniary interest (each, a "<u>Related Party</u>"). Directors, officers, employees and other persons designated as subject to this policy are responsible for ensuring compliance by their Related Parties. All persons identified in this paragraph are hereinafter referred to in this policy as "<u>insiders</u>." This policy only provides guidelines and the directors, officers, employees and other persons designated as subject to this policy are still ultimately responsible for ensuring that they and their respective Related Parties do not violate insider trading laws or this policy.

**3.** **Definition of Material Nonpublic Information**

Trading in Company securities "<u>on the basis of</u>" Material Nonpublic Information about the Company or Company securities is prohibited. The term "on the basis of" is generally determined to be met where the person trading in securities was aware of or possessed the Material Nonpublic Information at the time of the transaction. For purposes of determining whether information is "Material Nonpublic Information," the following provisions apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.*<u>Material Information</u>*. Information about the Company or Company securities is considered "<u>material</u>" if there is a substantial likelihood that a reasonable investor would consider the information important in making a decision to purchase, hold or sell Company securities. Any information, if publicly disclosed, that could be expected to affect the value of the Company's securities, whether it is positive or negative, should be considered material information. While it is

------

*Exhibit 19.1*

not possible to define all categories of material information, the following list illustrates various items that could be regarded as material:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•earnings information and projections of earnings information, including estimates of earnings, sales and income or loss, and information regarding expenses, funds from operations, funds available for distribution, liquidity and other non-public financial information;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a pending or proposed merger, acquisition or tender offer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a pending or proposed acquisition or disposition of significant assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a pending or proposed significant joint venture or strategic partnership;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a restructuring of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•impending bankruptcy or financial liquidity problems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•offerings of additional securities, significant borrowings or other financing transactions out of the ordinary course;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•declaration of a dividend, changes in dividend policies or declaration of a stock split;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the establishment of a repurchase program for Company securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in senior management or key personnel of the Company, or the composition of the Company's Board of Directors, including information concerning the business and personal lives of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a change in auditors or notification that the Company may no longer rely on an auditor's audit report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•developments regarding joint venture partners, borrowers, operators, lenders, or acquisition/investment targets of the Company (including the entry into, amendment or loss of an important contract or other arrangement with any of the foregoing);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•changes in credit ratings and actual or potential defaults;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•new major contract or the loss of such contracts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the gain or loss of a significant vendor or supplier;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•significant related party transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•significant regulatory actions or governmental investigations involving the Company or significant actual or threatened litigation matters and developments in such litigation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•material compliance by the Company with any rules or standards for the continued listing of the Company's common stock on the applicable securities exchange registered as a national securities exchange under Section 6 of the Securities Exchange Act of 1934, as amended (the "<u>Exchange Act</u>");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•a material cybersecurity incident or other significant disruption in the Company's operations due to a breach or unauthorized access of the Company's information technology infrastructure; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the imposition of an event-specific restriction on trading in Company securities or the extension or termination of such restriction.

Because trading that receives scrutiny will be evaluated after the fact with the benefit of hindsight, questions concerning the materiality of particular information should be resolved in favor of materiality, and trading should be avoided.

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*Exhibit 19.1*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*<u>Nonpublic Information</u>.* Information that has not been disclosed to the public is generally considered to be "<u>nonpublic</u>" information unless and until it has been effectively communicated to the public and sufficient time has elapsed to permit the market to absorb and evaluate the information. In order to establish that the information has been effectively communicated to the public, it may be necessary to demonstrate that the information has been widely disseminated. Information generally would be considered widely disseminated if it has been distributed through the Dow Jones "broad tape," newswire services, a broadcast on widely-available radio or television programs, publication in a widely-available newspaper, magazine or news website or in a public disclosure document filed with the Securities and Exchange Commission (the "<u>SEC</u>") and available on the SEC's website. By contrast, information would likely not be considered widely disseminated if it is available only to the Company's employees, or if it is only available to a select group of analysts, brokers and/or institutional investors. As a general rule, for the purposes of this Policy, information should be considered nonpublic until the closing of the first full trading day after public disclosure. Depending on the particular circumstances, the Company may determine that a longer period should apply to the release of specific Material Nonpublic Information. "<u>Trading day</u>" means a day on which national securities exchanges are open for trading.

**•** **Restrictions Under This Policy**

**In addition to restrictions set forth elsewhere in this policy, all insiders who are aware of Material Nonpublic Information are prohibited from (a) trading in Company securities, except as expressly permitted by this policy, (b) recommending that any person trade in Company securities, (c) disclosing Material Nonpublic Information to any person, including any Related Party, or (d) assisting anyone engaged in the above activities**. The Company strongly discourages all insiders from giving trading advice concerning the Company or its securities to third parties even when the insiders do not possess Material Nonpublic Information about the Company or its securities. All inquiries from outsiders regarding Material Nonpublic Information about the Company or its securities must be forwarded to the Compliance Officer.

In addition, insiders who, in the course of their employment with the Company or its subsidiaries, if any, learn of material nonpublic information about another company with which the Company or its subsidiaries, if any, does business may not (a) trade in that company's securities until the information becomes public or is no longer material, or (b) disclose such information to any other person or recommend that any person trade in that company's securities.

For purposes of this policy, "<u>trade in</u>" or "<u>trading in</u>" securities includes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•all open market purchases or sales of Company common stock and any other class of securities of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the sale of Company common stock acquired upon the vesting of equity-based awards or the exercise of stock options, including by way of broker-assisted cashless exercise;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•purchases and sales of derivative securities or any interest or position relating to the future price of Company securities, such as put options, call options and short or forward sales; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•gifts of Company securities (including charitable donations and transfers for estate planning purposes).

Notwithstanding the foregoing, "<u>trading in"</u> securities for the purposes of this Policy does not include: (a) the vesting of equity- based awards, (b) the reacquisition or withholding of Company securities by the Company to satisfy a tax withholding obligation upon the vesting of equity-based awards, (c) the crediting of dividend equivalents by the Company on outstanding equity awards in accordance with the terms of the applicable award agreement, (d) the payment by the Company of vested equity awards and (e)

------

*Exhibit 19.1*

the acquisition of securities upon the exercise of stock options where the exercise price and applicable tax withholding amounts are paid in cash or if there is a "net exercise." A "<u>net exercise</u>" is the use of the shares underlying a stock option to pay the exercise price and/or tax withholding obligation.

In addition, trading in Company securities pursuant to a Trading Plan (as such term is defined in Section 7 below), is not subject to the trading prohibitions contained in this policy, provided that the Trading Plan has been approved and adopted in accordance with Section 7 below.

To the extent the Company establishes a dividend reinvestment and/or stock purchase plan (a "<u>DRIP</u>"), this policy shall not apply to "purchases" of such DRIP resulting from reinvestment of dividends paid on the Company's securities under a standing election. However, this policy shall apply in connection with (i) the initial election to participate in any such DRIP or any election to modify the level of participation under such DRIP, (ii) voluntary purchases of the Company's securities resulting from additional contributions to such DRIP, and (iii) the sale of any of the Company's securities purchased under such DRIP.

**•** **Quarterly Blackout Periods and Mandatory Pre-Clearance for Designated Insiders**

The Company's announcement of its annual or quarterly financial results almost always has the potential to have a material effect on the market for the Company's securities. Therefore, to avoid the appearance that an insider traded while aware of Material Nonpublic Information, this policy prohibits each person identified by the Compliance Officer as a "Designated Insider" on <u>Exhibit A</u> and each Related Party of such Designated Insider, from trading in Company securities beginning at 5:00 p.m. Eastern Time (the "<u>Close of Business</u>") on the day that is two weeks prior to the end of the fiscal quarter, or such other period as may be set by the Board of Directors, and ending on the Close of Business at the end of the first full trading day after the date the Company publicly announces its annual or quarterly earnings (each, a "<u>Quarterly Blackout Period</u>"). **The existence or non-existence of a blackout period does <u>not</u> alter the general prohibitions against trading based on Material Nonpublic Information, which are applicable at all times.**

In addition, the Company requires each Designated Insider who desires to trade in Company securities other than during a Quarterly Blackout Period or any Special Blackout Period (as defined below) to obtain written clearance of the proposed transaction from the Compliance Officer or any other person designated by him or her prior to initiating such transaction. Requests for pre-clearance should be submitted to the Compliance Officer at least three business days in advance of the proposed transaction and the person requesting pre-clearance must certify to the Compliance Officer or his or her designee in writing that such person is not in possession of Material Nonpublic Information concerning the Company or its securities. The Designated Insider must complete the proposed trade within two business days after the approval is granted. The Compliance Officer, or his or her designee, is under no obligation to approve a trade submitted for pre- clearance, and may determine not to permit a trade. If a Designated Insider seeks pre-clearance and permission to engage in the trade is denied, then such Designated Insider should refrain from initiating any trade in Company securities and should not inform any other person of such denial. Notwithstanding the foregoing, transactions in Company securities pursuant to a Rule 10b5-1 trading plan are not subject to the pre-clearance requirements of this paragraph; provided that the Rule 10b5-1 trading plan has been pre-approved as described below in Section 7.

**•** **Special Blackout Periods**

From time to time, due to material developments known to the Company that have not been disclosed publicly, the Company may impose a special blackout period (each, a "<u>Special Blackout Period</u>") in addition to the Quarterly Blackout Period. During any Special Blackout Period, Designated Insiders, and

------

*Exhibit 19.1*

any other insiders designated by the Board of Directors, and their respective Related Parties will not be permitted to trade in Company securities. No insider may disclose to any other person that a Special Blackout Period has been designated. For the avoidance of doubt, the trading restrictions imposed under Quarterly Blackout Periods and Special Blackout Periods includes any outstanding "stop-loss" or "limit" orders requested prior to such periods that have not been fulfilled prior to the beginning of such periods, unless such orders are otherwise expressly excepted by this policy.

**•** **Trading Plans**

Rule 10b5-1 under the Exchange Act provides an affirmative defense from insider trading liability under the federal securities laws for trading plans that meet certain requirements of such rule (each, a "<u>Trading Plan</u>"). An insider that has adopted a Trading Plan in compliance with Rule 10b5-1 under the Exchange Act can engage in transactions over an extended period of time, even during a Quarterly Blackout Period or Special Blackout Period, as long as the insider is not aware of Material Nonpublic Information at the time the insider entered into the Trading Plan and has acted in good faith with respect to the plan.

Insiders may trade in Company securities pursuant to a Trading Plan, provided that the Trading Plan has been approved in advance by the Compliance Officer of the Company (or any other person designated by him or her) prior to the individual's entry into the Trading Plan. In the event that the Compliance Officer of the Company desires to trade in Company securities pursuant to a Trading Plan, pre-approval of such plan by the Chief Executive Officer is required. While the Company's Compliance Officer (or Chief Executive Officer, in the case of a Trading Plan proposed to be adopted by the Compliance Officer) has absolute discretion whether to approve a proposed Trading Plan, the Trading Plan must comply with the following minimum requirements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Trading Plan must be adopted at a time other than during a Quarterly Blackout Period or Special Blackout Period <u>and</u> when the insider is not aware of Material Nonpublic Information, and the Trading Plan must contain a representation confirming that the insider is not aware of material non-public information about the Company or its securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the insider must enter into the Trading Plan in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 under the Exchange Act, the insider must act in good faith with respect to the Trading Plan, and the Trading Plan must contain a representation confirming that such plan is being "entered into in good faith" and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Trading Plan must be a written plan or binding contract and must specify the amount of securities to be traded, the prices and the date of transactions or a written algorithm or formula for determining the amounts, prices and dates of transactions under the Trading Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Trading Plan must have a minimum duration of six months and a maximum duration of [two years], unless a shorter or longer term is approved by the Compliance Officer (or Chief Executive Officer, in the case of a Trading Plan proposed to be adopted by the Compliance Officer);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•sales or purchases may not commence under the Trading Plan until the expiration of a waiting period which is the later of (i) 90 days after such plan is adopted, or (ii) two (2) business days

------

*Exhibit 19.1*

following the filing of the Company's Form 10-Q or Form 10-K containing financial results for the fiscal quarter in which the Trading Plan was adopted (subject to a maximum waiting period of 120 days) (such period in which trades may not occur, the "<u>Cooling-Off Period</u>");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•no more than one Trading Plan to effect open market purchases or sales of the same class of securities may be in effect at any time with respect to Company securities beneficially owned by an insider, except that, during the term of a Trading Plan, such insider may:

oadopt a Trading Plan in compliance with this policy with any transactions to take effect upon the completion or expiration of the insider's current Trading Plan; provided, however, that if the insider's current Trading Plan is terminated before its originally scheduled completion date, then the Cooling-Off Period for the later-commencing Trading Plan shall run from the date of such termination (and not from the date the later-commencing Trading Plan was adopted); and

oenter into another contract, instruction or plan providing only for the sale of such securities as are necessary to satisfy tax withholding obligations arising exclusively from the vesting of a compensatory award, and provided that the insider does not exercise control over the timing of such sales (a "<u>Sell-to-Cover Plan</u>");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•other than Sell-to-Cover Plans, no more than one (1) Trading Plan providing for the open-market purchase or sale in a single transaction of the total amount of Company securities subject to the Trading Plan may be adopted within any twelve (12) month period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•during the term of a Trading Plan, all transactions covered by the Trading Plan must occur pursuant to such plan and an insider may not alter or deviate from the terms of the Trading Plan or enter into or alter a corresponding or hedging transaction or position with respect to the securities to be purchased or sold under the Trading Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•any modification or termination of a Trading Plan must be pre-approved in advance by the Compliance Officer of the Company (or any other person designated by him or her) prior to any such modification or termination, and a modification of a Trading Plan must satisfy all of the requirements of Rule 10b5-1 and the provisions of this Section 7 as if such modification constituted the adoption of a new Trading Plan (it being understood that a modification of a Trading Plan includes any change to the amount, price, or timing of the purchase or sale of securities under such plan, but shall not include the substitution of the broker executing trades thereunder as long as such modified plan does not change the price, amount of securities to be purchased or sold or dates on which such purchases or sales are to be executed);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•the Trading Plan must contain and comply with such other terms, conditions and restrictions as may be required by Rule 10b5-1 and applicable SEC rules as in effect from time to time.

**•** **Additional Restrictions on Trades by Insiders**

The following additional restrictions apply to any trading in Company securities by insiders:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*<u>Short Sales</u>*. Short sales of the Company's securities (generally, the sale of a security that the seller does not own) may evidence an expectation on the part of the seller that the securities will decline in value, and therefore signal to the market that the seller lacks confidence in the Company's prospects. Additionally, short sales may reduce a seller's incentive to seek to

------

*Exhibit 19.1*

improve the Company's performance. For these reasons, insiders are prohibited from engaging in short sales of Company securities, which are illegal for officers and directors pursuant to Section 16(c) of the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*<u>Publicly Traded Options</u>.* Trading in "puts" and "calls" (publicly traded options to buy or sell stock) or other derivative securities may create the appearance that an insider is trading based on Material Nonpublic Information and focus an insider's attention on short-term performance at the expense of the Company's long-term objectives. Therefore, insiders are prohibited from engaging in transactions in put options, call options or other derivative securities, on an exchange or in any other organized market, even when they are not aware of Material Nonpublic Information at the time of the transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*<u>Hedging Transactions</u>.* Certain forms of hedging or monetization transactions are complex transactions that are designed to hedge or offset any decrease in the market value of Company securities without the full risks and rewards of ownership. When that occurs, an insider entering into such transactions may no longer have the same objectives as the Company's other stockholders. Therefore, insiders are prohibited from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds), or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company's securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•*<u>Margin Accounts and Pledged Securities</u>.* Securities held by an insider in a margin account for a margin loan may be sold by the broker without the customer's consent if the customer fails to meet a margin call. Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. Because a margin sale or foreclosure sale could occur at a time when the insider is aware of Material Nonpublic Information or otherwise is not permitted to trade in Company securities, insiders are prohibited from margining the Company securities in a margin account or pledging Company securities as collateral for a loan.

**•** **Policy Continues to Apply After Termination of Employment**

This policy continues to apply to the insider's transactions in Company securities even after an insider has terminated employment with the Company. If you are in possession of Material Nonpublic Information when your employment terminates, you may not trade in Company securities until that information has become public or is no longer material.

**•** **Consequences of Violations of This Policy**

Any violation of this policy by a director, officer or employee may result in disciplinary action, up to and including termination of employment or of other relationships with the Company, whether or not the insider's failure to comply results in a violation of law.

In addition, individuals may be subject to civil and criminal penalties for insider trading violations. The federal government may also seek an injunction, bring administrative proceedings and/or commence criminal prosecutions, potentially resulting in fines (up to $5 million per violation), imprisonment (up to twenty years per violation) or both. Civil penalties may be sought by the government for up to three times the profits made (or three times the losses avoided).

Under certain circumstances, the Company may also be subject to civil fines equal to the greater of three times the profit made (or loss avoided) or $1 million, and criminal fines up to $25 million.

**•** **Inquiries**

------

*Exhibit 19.1*

Please contact the Compliance Officer with any questions or other inquiries regarding any of the provisions or procedures of this policy or the public or nonpublic status of Company information.

------

*Exhibit 19.1*

**<u>Exhibit A</u>**

# Designated Insiders
The following insiders of the Company are considered Designated Insiders for purposes of this policy:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•All Members of the Board of Directors

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Chief Executive Officer

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•President, if any

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Chief Technology Officer, if any

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Chief Financial Officer

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Chief Marketing Officer

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Chief Legal Officer

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Chief Strategy Officer

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Co-Founders

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•General Counsel

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Controller

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Treasurer

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Any additional insiders that may be designated from time to time

------

*Exhibit 19.1*

# Surf Air Mobility Inc. Insider Trading Policy Acknowledgment Form
I have received and read this Insider Trading Policy (the "<u>Policy</u>") of Surf Air Mobility Inc. (the

"<u>Company</u>"), and I understand its contents. I agree to comply fully with the Policy. I understand that violations of insider trading laws may subject me to severe civil and/or criminal liabilities or penalties, and that violation of the terms of the Policy may subject me to discipline by the Company up to and including immediate termination of employment.

*Instructions: Carefully read the Policy and sign this Acknowledgement Form. A signed copy of this Acknowledgment Form will be retained in your personnel file. You may retain a copy of your signed Acknowledgement Form along with the Policy for your records.*

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| |
|:---|
| (Signature) |
| (Print Name) |
| (Title) |
| (Date) |

---

------

## Exhibit 21.1

**Exhibit 21.1**

---

| | |
|:---|:---|
| **LIST OF SUBSIDIARIES OF SURF AIR MOBILITY INC.** | **LIST OF SUBSIDIARIES OF SURF AIR MOBILITY INC.** |
| **Name** | **Jurisdiction of Incorporation or Organization** |
| Surf Air Global Limited | British Virgin Islands |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Surf Air US Holdings, Inc. | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Surf Air Sub 1, Inc. | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Surf On Demand Inc. | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments OS Inc. | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Surf Air Technologies Inc. | Delaware |
| Southern Airways Corporation | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Southern Airways Express, LLC | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Southern Airways Pacific LLC | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Southern Airways Autos, LLC | Delaware |

---

------

## Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-1 (Nos. 333-274572, 333-279928, and 333-279929), Form S-3 (Nos. 333-284845, 333-286807, 333-291407, and 333-291485) and Form S-8 (Nos. 333-273444, 333-281555, and 333-288687) of Surf Air Mobility Inc. of our report dated March 12, 2026, relating to the financial statements, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

March 12, 2026

------

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION PURSUANT TO**

**RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Deanna White, certify that:

(1)I have reviewed this Annual Report on Form 10-K of Surf Air Mobility Inc.;

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

(5)The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: March 12, 2026 | By: | /s/ Deanna White |
|  |  | **Deanna White** |
|  |  | **Chief Executive Officer** |

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## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION PURSUANT TO**

**RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Oliver Reeves, certify that:

(1)I have reviewed this Annual Report on Form 10-K of Surf Air Mobility Inc.;

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

(5)The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: March 12, 2026 | By: | /s/ Oliver Reeves |
|  |  | **Oliver Reeves** |
|  |  | **Chief Financial Officer and Principal Accounting Officer** |

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## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report of Surf Air Mobility Inc. (the "Company") on Form 10-K for the period ending December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: March 12, 2026 | By: | /s/ Deanna White |
|  |  | **Deanna White** |
|  |  | **Chief Executive Officer** |

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## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report of Surf Air Mobility Inc. (the "Company") on Form 10-K for the period ending December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: March 12, 2026 | By: | /s/ Oliver Reeves |
|  |  | **Oliver Reeves** |
|  |  | **Chief Financial Officer and Principal Accounting Officer** |

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