SOAR 10-Q
Volato Group, Inc. (SOAR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the Quarterly period ended
OR
For the Transition Period From to
Commission
File Number
(Exact name of Registrant as specified in its charter)
| 4522 | ||||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
Telephone:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of exchange on which registered | ||
| OTC Markets Group, Inc. |
Securities registered pursuant to Section 12(g) of the Act:
None
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ |
| ☒ | Smaller Reporting Company | ||
| Emerging Growth Company |
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 is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As of May 8, 2026, there were shares of common stock outstanding.
VOLATO GROUP, INC.
FORM 10-Q
INDEX
| Page | ||||
| Special Note about Forward-Looking Statements | 3 | |||
| PART I | FINANCIAL INFORMATION | 4 | ||
| Item 1. | Financial Statements | 4 | ||
| Consolidated Balance Sheets | 4 | |||
| Consolidated Statements of Operations | 5 | |||
| Consolidated Statements of Changes In Shareholders’ Deficit | 6 | |||
| Consolidated Statements of Cash Flows | 7 | |||
| Notes to Consolidated Financial Statements | 8 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 32 | ||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 41 | ||
| Item 4. | Controls and Procedures | 41 | ||
| PART II | 42 | |||
| Item 1. | Legal Proceedings | 42 | ||
| Item 1A. | Risk Factors | 42 | ||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 42 | ||
| Item 3. | Defaults Upon Senior Securities | 42 | ||
| Item 4. | Mine Safety Disclosures | 42 | ||
| Item 5. | Other Information | 42 | ||
| Item 6. | Exhibits | 43 | ||
| Signatures | 44 | |||
| 2 |
Special Note About Forward-Looking Statements
This report includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward- looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward- looking statements may appear throughout this report, including the following sections: “Risk Factors” (Part II, Item 1A of this Quarterly Report on Form 10-Q (“Quarterly Report”)), and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part I, Item 2 of this Quarterly Report). These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions or the negative of such terms. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe certain risks and uncertainties that could cause actual results and events to differ materially in the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosures about Market Risk” of our most recent Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.
| 3 |
PART I.
ITEM 1. FINANCIAL STATEMENTS
VOLATO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value amounts)
(unaudited)
| March 31, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Contract assets, net | ||||||||
| Deposits | ||||||||
| Note receivable, current | ||||||||
| Investment in M2i | ||||||||
| Investment in flyExclusive | ||||||||
| Aviation asset option | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Current assets - discontinued operations | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease, right-of-use assets | ||||||||
| Note receivable, non-current | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Dividend payable | ||||||||
| Convertible notes, net | ||||||||
| Operating lease liability | ||||||||
| Customer deposits and deferred revenue | ||||||||
| Current liabilities - discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, non-current | ||||||||
| Total liabilities | $ | $ | ||||||
| COMMITMENTS AND CONTINGENCIES (Note 13) | ||||||||
| Shareholders’ deficit: | ||||||||
| Common Stock Class A, $ par value; authorized; and shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively | $ | $ | ||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and shareholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 4 |
VOLATO GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share data)
(unaudited)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | $ | ||||||
| Costs and expenses: | ||||||||
| Cost of revenue | ||||||||
| Selling, general and administrative | ||||||||
| Total costs and expenses | ||||||||
| Operating income (loss) | ( | ) | ||||||
| Other income (expenses): | ||||||||
| Other income, net | ||||||||
| Gain on sale of asset | ||||||||
| Gain (loss) from change in fair value of financial instruments | ( | ) | ( | ) | ||||
| Interest income (expense), net | ( | ) | ||||||
| Other income (expenses), net | ( | ) | ( | ) | ||||
| Income (loss) before provision for income taxes and discontinued operations | ( | ) | ||||||
| Provision for income taxes | ||||||||
| Net income (loss) from continuing operations | ( | ) | ||||||
| Net income (loss) from discontinued operations, net of taxes | ( | ) | ||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Basic and diluted net income (loss) per share: | ||||||||
| Net income (loss) per share from continuing operations, basic | $ | ( | ) | $ | ||||
| Net income (loss) per share from continuing operations, diluted | $ | ( | ) | $ | ||||
| Net income (loss) per share from discontinued operations, basic | $ | ( | ) | $ | ||||
| Net income (loss) per share from discontinued operations, diluted | $ | ( | ) | $ | ||||
| Net income (loss) per share, basic | $ | ( | ) | $ | ||||
| Net income (loss) per share, diluted | $ | ( | ) | $ | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 5 |
VOLATO GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(Amounts in thousands, except shares)
(unaudited)
| Class A Common Stock | Additional Paid-in | Accumulated | Total Shareholders’ Equity | |||||||||||||||||
| Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Stock-based compensation | — | |||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||
| Net income | — | |||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Class A Common Stock | Additional Paid-in | Accumulated | Total Shareholders’ Equity | |||||||||||||||||
| Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Stock-based compensation | — | |||||||||||||||||||
| Issuance of common stock for debt conversion | ||||||||||||||||||||
| Issuance of restricted stock units | ||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
VOLATO GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Operating activities: | ||||||||
| Net income (loss) from continuing operations | $ | ( | ) | $ | ||||
| Net income (loss) from discontinued operations | ( | ) | ||||||
| Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization expense | ||||||||
| Non-monetary exchange | ||||||||
| Stock compensation expense | ||||||||
| Gain from sale of asset | ( | ) | ||||||
| (Gain) loss from disposal property and equipment | ( | ) | ||||||
| Loss from sale of consolidated entity | ||||||||
| Gain on settlement of liabilities | ( | ) | ||||||
| Loss on dividend payable | ||||||||
| Amortization right-of-use asset | ||||||||
| Amortization of debt discount | ||||||||
| Change in fair value of convertible notes | ||||||||
| Loss on investment in M2i | ||||||||
| Loss on investment in flyExclusive | ||||||||
| Loss on aviation asset option | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Contract assets, net | ( | ) | ||||||
| Prepaid and other current assets | ( | ) | ( | ) | ||||
| Deposits | ||||||||
| Account payable and accrued liabilities | ( | ) | ||||||
| Customers’ deposits and deferred revenue | ( | ) | ||||||
| Change in assets and liabilities of discontinued operations | ( | ) | ( | ) | ||||
| Net cash provided by (used in) operating activities from continuing operations | ( | ) | ||||||
| Net cash used in operating activities from discontinued operations | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing activities: | ||||||||
| Cash payment for property and equipment | ( | ) | ||||||
| Proceeds from the sale of property and equipment | ||||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| Financing activities: | ||||||||
| Principal payment on lease obligations | ( | ) | ( | ) | ||||
| Repayment of loans |
| ( | ) | |||||
| Costs of share issuance | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Non-Cash Investing and Financing Activities: | ||||||||
| Note receivable from sale of GC Aviation, Inc. | $ | $ | ||||||
| Non-cash interest | $ | $ | ||||||
| In-kind dividend paid | $ | ( | ) | $ | ||||
| Credit facility for aircraft deposit | $ | $ | ( | ) | ||||
| Issuance of shares for convertible notes | $ | $ | ||||||
| Investment in flyExclusive | $ | $ | ||||||
| Financing for aircraft purchase | $ | $ | ||||||
| Payment on liability for aircraft purchase | $ | $ | ( | ) | ||||
| Deposits on aircraft | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 7 |
VOLATO GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2026
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Volato Group, Inc. (“we”, “us”, “the Company”, or “Volato”) is a holding company for several wholly owned subsidiaries, including Volato, Inc., Fly Vaunt, LLC, Gulf Coast Aviation, LLC (f/k/a Gulf Coast Aviation, Inc.), Volato Merger Subsidiary, Inc., and Parslee, LLC. The Company’s primary operating subsidiary was founded in 2021. That year, the Company entered the private jet charter and fractional ownership market with its Part 135 HondaJet ownership program, taking delivery of its first jet in August 2021 and completing its first Part 135 charter flight in October of 2021. In March 2022, the Company acquired Gulf Coast Aviation, Inc. (n/k/a Gulf Coast Aviation, LLC), owner of G C Aviation, Inc., a Texas entity and Part 135 air carrier certificate holder. In March 2022, the Company placed orders for four Gulfstream G280s for delivery in 2024 and 2025. In September 2022, the Company started internal development on its full suite Flight Management Software platform Mission Control, in the fourth quarter of 2023 the Company commercially launched Vaunt, our proprietary consumer facing empty leg platform, and in the fourth quarter of 2025 the Company commercially launched Parslee, our AI based document intelligence platform.
In
September 2024, the Company entered into an agreement with flyExclusive, Inc., (“flyExclusive”) a leading provider of private
jet charter services, to transition the management of its aircraft ownership fleet operations to flyExclusive. This move was intended
to bring substantial cost savings and allow Volato to focus on its potential high-growth areas, including aircraft sales and proprietary
software products. The Company has continued to take delivery of new aircraft and also generate revenue from its proprietary software,
including the Vaunt platform, its empty leg consumer app. In the fourth quarter of 2024, we transferred our aircraft lease agreements
to flyExclusive and have no further obligations under the aircraft lease agreements or control over flight operations. The Company has
retained insider card liabilities of $
On February 24, 2025, the Company effected a reverse stock split of its issued and outstanding Class A common stock (also referred to as “common stock” in this Quarterly Report), at a ratio of 1-for-25 (the “Reverse Stock Split”) with no change in par value. All share amounts have been retroactively adjusted to account for the split as if it occurred at inception.
On
March 20, 2025, the Company sold its former subsidiary GC Aviation, Inc., which held the FAA Part 135 certificate for $
On July
28, 2025, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Volato
Merger Subsidiary, Inc., a Nevada corporation and wholly-owned subsidiary of Volato (“Merger Sub”), and M2i Global, Inc.,
a Nevada corporation (“M2i”), pursuant to which Merger Sub will merge with and into M2i, with M2i surviving the merger as
a wholly-owned subsidiary of Volato (together with all other transactions contemplated by the Merger Agreement, the “Merger”).
The Merger is subject to approval by the Company’s stockholders and other customary closing conditions. Upon consummation of the
Merger, it is currently expected that M2i’s stockholders will own approximately
In July 2025, the Company began development of an Artificial Intelligence based software platform designed to enhance the reliability of leading large language models when analyzing contracts, SEC filings and reports, and other structured documents.
| 8 |
On
October 1, 2025, the Company entered into a Fourth Amendment (the “Amendment”) to Aircraft Management Services Agreement
(as amended the “Agreement”) with flyExclusive to bring the Agreement in line with Company’s anticipated shift in operations,
new business directives, and to better accommodate the proposed Merger with M2i. The Amendment served to (i) modify the term of the Agreement;
(ii) grant flyExclusive, subject to certain terms and conditions, the right to purchase certain aviation-related assets from the Company
and assume certain obligations of the Company (the “flyExclusive Asset Option”); (iii) grant the Company, subject to certain
terms and conditions, the right to sell certain aviation-related assets to flyExclusive and assign certain obligations of the Company
to flyExclusive (the “Company Asset Option,” and collectively with the flyExclusive Asset Option, the “Asset Options”);
(iv) obligate flyExclusive to pay the Company $
As
consideration for the execution of the Amendment, flyExclusive agreed to pay $
In January 2026, the Company issued a dividend of shares of Class A common stock of flyExclusive to Volato shareholders.
On
March 6, 2026, the Company signed amendment number five to the Agreement with flyExclusive, pursuant to which the Company sold
certain unused intellectual property assets for $
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Going concern, liquidity, and capital resources
The
Company has limited operating history, the Company realized net loss of approximately $
These above matters raise substantial doubt about the Company’s ability to continue as a going concern. During the next twelve months, the Company intends to fund its operations through the issuance of financial instruments including debt or equity securities and revenues from operations.
| 9 |
Accordingly, management believes that its current cash position, along with its proceeds from future debt and/or equity financings, when combined with prudent expense management, will allow the Company to continue as a going concern and to fund its operations for at least one year from the date of issuance of these financial statements. There are no assurances, however, that management will be able to raise capital or debt on terms acceptable to the Company. If the Company is unable to obtain sufficient additional capital or debt on terms acceptable to the Company, the Company may be required to reduce the near-term scope of its planned development and operations, which could delay implementation of the Company’s business plan and harm its business, financial condition, and operating results. The balance sheets do not include any adjustments that might result from these uncertainties.
On
March 17, 2026, the Company received a notice (the “notice”) from the NYSE American LLC (the “NYSE American”) advising
the Company that it is not in compliance with the NYSE American continued listing standards set forth in Section 1003(a)(i) of the NYSE
American Company Guide (the “Company Guide”) requiring a company to have stockholders’ equity of at least $
Basis of presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP” or “GAAP”) on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business and following the requirements of the Securities and Exchange Commission (the “SEC”). The unaudited interim consolidated financial statements are condensed and should be read in conjunction with the Company’s latest annual audited 2025 condensed consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2026 (the “Form 10-K”). The results of operations for interim periods are not necessarily indicative of results to be expected for the fiscal year ending March 31, 2026 or for any other future annual or interim period.
Principles of consolidation
The unaudited interim consolidated financial statements include the Company’s accounts and the accounts of its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.
Use of estimates
The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Such estimates include:
| ● | Useful lives of property, plant, and equipment. | |
| ● | Assumptions used in valuing debt or equity instruments. | |
| ● | Deferred income taxes and related valuation allowance. | |
| ● | Assessment of long-lived assets impairment. | |
| ● | Assumptions used in the aviation asset put/call option. |
| 10 |
Cash
Cash
consists primarily of cash on hand and bank deposits. The Company maintains cash deposits with financial institutions that may exceed
federally insured limits at times. The Company considers all highly liquid investments with an original maturity of three months or less
when purchased to be cash equivalents. At March 31, 2026 and December 31, 2025, the Company had
Accounts receivable
Accounts receivable are reported on the consolidated balance sheets at the outstanding principal amount adjusted for any allowance for credit losses and any charge offs. The Company provides an allowance for credit losses to reduce trade receivables to their estimated net realizable value equal to the amount that is expected to be collected. This allowance is estimated based on historical collection experience, the aging of receivables, specific current and expected future macro-economic and market conditions, and assessments of the current creditworthiness and economic status of customers. The Company considers a receivable delinquent if it is unpaid after the term of the related invoice has expired. Balances that are still outstanding after management has used reasonable collection efforts are written off. The Company reviews its allowance for credit losses on a quarterly basis.
During
the three months ended March 31, 2026 and 2025, the Company recognized $
Fixed assets
Fixed assets are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets, which range from three to seven years:
| Classification | Life | |||
| Machinery and equipment | ||||
| Automobiles | ||||
| Computer and office equipment | ||||
| Website development costs |
Computer software development
Software
development costs are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) 350-40, Internal Use Software. Internal software development costs are capitalized from the time
the internal use software is considered probable of completion until the software is ready for use. Business analysis, system evaluation
and software maintenance costs are expensed as incurred. The capitalized computer software development costs are reported under the section
“Property and equipment, net” in the consolidated balance sheets and are amortized using the straight-line method over the
estimated useful life of the software, generally
| 11 |
Website development cost
The
costs incurred for activities during the website application and infrastructure development stage are capitalized in accordance with
the guidance on internal-use software in FASB ASC 350-40. The Company capitalized zero of website development costs during the three
months ended March 31, 2026 and 2025, respectively. The Company recognized $
Valuation of long-lived assets
In
accordance with FASB ASC 360, property, plant, and equipment, and long-lived assets are analyzed for impairment whenever events or changes
in circumstances indicate that the related carrying amounts may not be recoverable. The Company evaluates at each balance sheet date
whether events and circumstances have occurred that indicate possible impairment. If there are indications of impairment, the Company
uses future undiscounted cash flows of the related asset or asset grouping over the remaining life in measuring whether the assets are
recoverable. In the event such cash flows are not expected to be sufficient to recover the recorded asset values, the assets are written
down to their estimated fair value.
Fair value of financial instruments
The Company adopted the provisions of FASB ASC 820 (the “Fair Value Topic”) which defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements.
The Company measures fair value under a framework that utilizes a hierarchy prioritizing the inputs to relevant valuation techniques. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of inputs used in measuring fair value are:
| ■ | Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company as the ability to access. | |
| ■ | Level 2: Inputs to the valuation methodology include: |
| ● | Quoted prices for similar assets or liabilities in active markets. | |
| ● | Quoted prices for identical or similar assets or liabilities in inactive markets. | |
| ● | Inputs other than quoted prices that are observable for the asset or liability. | |
| ● | Inputs that are derived principally from or corroborated by observable market date by correlation or other means; and | |
| ● | If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. |
| ■ | Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
In
December 2024, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) pursuant to which
the Company may issue a series of convertible notes for an aggregate principal amount not to exceed $
| 12 |
On
September 30, 2025, Company, entered into Share Exchange Agreements (the “Share Exchange Agreements”), with two investors
(together the “Investors”). The Investors are shareholders of M2i whose common stock is publicly quoted on the OTCQB Venture
Market of OTC Markets Group, Inc. under the symbol “MTWO”. Pursuant to the Share Exchange Agreements, the Company agreed
to issue an aggregate of shares of the Company’s Class A common stock to the Investors in exchange for an aggregate of
shares of M2i common stock (the “Investment in M2i”). At the date of the exchange, the Company recognized a loss
of $
Pursuant
to ASC 321, the Investment in M2i is measured at fair value each reporting period, with unrealized gain or loss recognized in
earnings. The Investment in M2i is classified within Level 2 of the fair value hierarchy under ASC 820, as it is based on quoted
prices for identical assets in inactive markets. The inputs are obtained from OTC quoted prices for level II. During the three
months ended March 31, 2026, the Company recorded a loss of $
On
October 1, 2025, the Company entered into the Amendment with flyExclusive, as described in Note 1. As part of the amendment, flyExclusive
agreed to pay $
On
March 6, 2026, the Company signed amendment number five to the Agreement with flyExclusive, pursuant to which the Company sold certain
unused intellectual property assets for $
Pursuant to ASC 321, the Investment in flyExclusive is measured at fair value each reporting period, with unrealized gain or loss recognized in earnings. The Investment in flyExclusive is classified within Level 1 of the fair value hierarchy under ASC 820, as it is traded in an active market.
Additionally,
with the signing of the Amendment with flyExclusive, as described in Note 1, it granted flyExclusive the right to purchase certain
aviation-related assets from the Company and assume certain obligations of the Company (the “Call Option”) and granted
the Company the right to sell certain obligations of the Company to flyExclusive (the “Put Option”). The fair value of
the Company’s recorded Aviation Asset Option was determined based on unobservable inputs that are not corroborated by market
data, which require a Level 3 classification. A Black-Scholes model was used to determine the fair value as of December 31, 2025. As
of December 31, 2025 the Company fair valued the aviation asset and recorded a gain on the asset of $
| 13 |
The following table presents balances of the fair value instruments as of March 31, 2026 and December 31, 2025, in thousands:
| Fair Value Measurements as of March 31, 2026 | ||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||
| Financial liabilities: | ||||||||||||||||
| Third Tranche Note | $ | $ | $ | $ | ||||||||||||
| Total financial liabilities | $ | $ | $ | $ | ||||||||||||
| Financial assets: | ||||||||||||||||
| Investment in M2i | $ | $ | $ | $ | ||||||||||||
| Investment in flyExclusive | ||||||||||||||||
| Total financial assets | $ | $ | $ | $ | ||||||||||||
| Fair Value Measurements as of December 31, 2025 | ||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||
| Financial liabilities: | ||||||||||||||||
| Third Tranche Note | $ | $ | $ | $ | ||||||||||||
| Fourth Tranche Note | ||||||||||||||||
| Total financial liabilities | $ | $ | $ | $ | ||||||||||||
| Financial assets: | ||||||||||||||||
| Investment in M2i | $ | $ | $ | $ | ||||||||||||
| Investment in flyExclusive | ||||||||||||||||
| Aviation asset option | ||||||||||||||||
| Total financial assets | $ | $ | $ | $ | ||||||||||||
| 14 |
The following table presents changes of all convertible notes issued under the Securities Purchase Agreement (see Note 10) with significant unobservable inputs (Level 3) for the three months ended March 31, 2026, in thousands:
| 2024 Convertible Note | ||||
| Balance at December 31, 2025 | $ | |||
| Change in fair value | ||||
| Conversions | ( | ) | ||
| Balance at March 31, 2026 | $ | |||
The Company measured the Third Tranche Notes using a Monte Carlo simulation valuation model using the following assumptions:
| Three months ended March 31, 2026 | ||||
| Third Tranche Note | ||||
| Volume Weighted average stock price (“VWAP”) | ||||
| Simulation Period | ||||
| Expected Volatility | % | |||
| Credit risk-adjusted rate | % | |||
| Risk-free Rate | % | |||
The following table represents the change in the Aviation asset option for the three months ended, March 31, 2026, in thousands:
| Aviation asset option | ||||
| Balance at December 31, 2025 | $ | |||
| Additions | ||||
| Change in fair value | ( | ) | ||
| Balance at March 31, 2026 | $ | |||
There were no transfers between fair value levels during the period. There were no gains and losses attributable to changes in instrument specific credit risk as the Company determined the likelihood of an event of default to be de minimus. The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepaid and other assets, accounts payable and accrued expenses, deposits, and members’ deposits approximate their fair value because of the short maturity of those instruments. The Company’s credit facility, convertible notes and other loans approximate the fair value of such liabilities based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements and due to the short-term maturity of these instruments at March 31, 2026 and December 31, 2025.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB ASC to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred, and the amount of the assessment can be reasonably estimated.
| 15 |
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480 Distinguishing Liabilities from Equity (“ASC 480”) and FASB ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period end date while the warrants are outstanding. All of the Company’s warrants have met the criteria for equity treatment.
Revenue recognition
Revenues are recognized on a gross basis and presented on the consolidated statements of operations net of rebates, discounts, and taxes collected concurrent with revenue-producing activities. The transaction price in the Company’s contracts with its customers is fixed at the time control of goods and services are transferred to the customer. Therefore, the Company does not estimate variable consideration or perform a constraint analysis for our contracts.
The Company determines revenue recognition pursuant to ASC 606, Revenue from Contracts with Customers, through the following steps:
| 1. | Identification of the contract, or contracts, with a customer. | |
| 2. | Identification of the performance obligation(s) in the contract. | |
| 3. | Determination of the transaction price. | |
| 4. | Allocation of the transaction to the performance obligation(s) in the contract. | |
| 5. | Recognize revenue when or as the entity satisfies a performance obligation. |
The Company has generated revenue primarily through: (i) the sale of aircraft, and (ii) our Vaunt software-as-a-subscription product. Revenue is recognized when control of the promised service is transferred to a customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies, as a performance obligation, each promise to transfer a good or service to a customer that is distinct. To identify its performance obligations, the Company considers all of the goods and services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.
For each revenue stream, we evaluate whether our obligation is to provide the good or service itself, as the principal or to arrange for the good or service to be provided by the other party, as the agent, using the control model. In such circumstances, the Company is primarily responsible for satisfying the overall performance obligation with the customer and is considered the principal in the relationship.
| 16 |
Revenue from aircraft sales is recognized upon the delivery of the aircraft.
The Company generated revenue during the three months ended March 31, 2026 and 2025, broken down as follows, in thousands:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Aircraft sales | $ | $ | ||||||
| Subscription | ||||||||
| Total | $ | $ | ||||||
Revenue from the sales of our Vaunt Software-as-a-subscription is deferred and recognized over the subscription term of the software and is included in customer deposits and deferred revenue on the consolidated balance sheets. Additionally, in the three months ended March 31, 2026 we recognized revenue related to mission control and the third-party non-monetary transaction.
The following table provides a rollforward of deferred revenue, recorded in customer deposits and deferred revenue in the consolidated balance sheets, for the three months ended March 31, 2026, in thousands:
| Amount | ||||
| Balance as of December 31, 2025 | $ | |||
| Revenue recognized | ( | ) | ||
| Revenue deferred | ||||
| Balance as of March 31, 2026 | $ | |||
Assets Recognized from the Costs to Obtain Revenue Contracts
We
recognize an asset for the incremental costs of obtaining a contract with a client if we expect the amortization period to be longer
than one year, such costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations,
and are expected to be recovered. We have determined the costs incurred are incremental and recoverable and are subject to capitalization
and amortization under ASC 340-40. The capitalized costs relate to revenue share with Vaunt operators and Vaunt sales commissions. The
assets are capitalized and amortized ratably over the expected period of the benefit, which is currently estimated at
The following tables present the asset balances and related amortization expense for the contract assets:
| As of and for the three months ended March 31, 2026 | ||||||||||||||||
| Beginning Balance | Amount Capitalized | Amortization | Ending Balance | |||||||||||||
| Contract assets | $ | $ | $ | ( | ) | $ | ||||||||||
| As of and for the twelve months ended December 31, 2025 | ||||||||||||||||
| Beginning Balance | Amount Capitalized | Amortization | Ending Balance | |||||||||||||
| Contract assets | $ | $ | $ | ( | ) | $ | ||||||||||
| 17 |
Income taxes
The Company follows Section 740-10-30 of the FASB ASC, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company follows the guidance of 740-10-25 of the FASB ASC (“Section 740-10-25”) with regards to uncertainty in income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its assets and/or liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
The Company is subject to tax in the United States (“U.S.”) and files tax returns in the U.S. Federal jurisdiction, and state jurisdictions. The Company is subject to U.S. Federal, state, and local income tax examinations by tax authorities. The Company currently is not under examination by any tax authority.
The Company accounts for equity-based compensation using the fair value method as set forth in the ASC 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based payment awards based on estimated fair values. This method requires companies to estimate the fair value of stock-based compensation on the date of grant using an option pricing model. The Company estimates the fair value of each equity-based payment award on the date of grant using the Black-Scholes pricing model.
The Black-Scholes model determines the fair value of equity-based payment awards based on the fair value of the underlying common stock on the date of grant and requires the use of estimates and assumptions, including the fair value of the Company’s common stock, exercise price of the stock option, expected volatility, expected life, risk-free interest rate and dividend rate. The Company estimates the expected volatility of its stock options by taking the average historical volatility of a group of comparable publicly traded companies over a period equal to the expected life of the options; it is not practical for the Company to estimate its own volatility due to the lack of historical prices. The expected term of the options is determined in accordance with existing equity agreements as the underlying options are assumed to be exercised upon the passage of time. The risk-free interest rate is the estimated average interest rate based on U.S. Treasury zero-coupon notes with terms consistent with the expected life of the awards. The expected dividend yield is zero as the Company does not anticipate paying any recurring cash dividends in the foreseeable future. The Company accounts for forfeitures as they occur.
The Company computes basic and diluted earnings per share amounts pursuant to section 260-10-45 of the FASB ASC. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially dilutive debt or equity. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. Securities that are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been antidilutive for the three months ended March 31, 2026, include stock options, restricted stock units and warrants.
| 18 |
The Company had and outstanding stock options to purchase an equivalent number of shares of common stock at March 31, 2026, and 2025, respectively.
The Company had and outstanding restricted stock units to purchase an equivalent number of shares of common stock at March 31, 2026 and 2025, respectively.
The
Company also had
Concentration of credit risk
The
Company maintains its cash with a major financial institution located in the United States of America which it believes to be creditworthy.
Balances are insured by the Federal Deposit Insurance Corporation up to $
Intangible assets
Intangible assets other than goodwill consisted of acquired finite-lived customer relationships and acquired indefinite-lived Part 135 air carrier certificate. At initial recognition, intangible assets acquired in a business combination were recognized at their fair value as of the date of acquisition. Following initial recognition, finite-lived intangible assets were carried at cost less accumulated amortization and impairment losses, if any, and are amortized on a straight-line basis over the estimated useful life of the asset, which was determined based on management’s estimate of the period over which the asset will contribute to our future cash flows.
The Company reviewed the intangible assets for impairment on an annual basis or if events or changes in circumstances indicate it is more likely than not that they are impaired. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale, or disposition of a significant portion of the business, or other factors. If the review indicated the impairment, an impairment loss would be recorded for the difference of the value recorded and the fair value. There was no impairment loss for the three months ended March 31, 2026 or 2025, respectively.
Goodwill
Goodwill represents the excess of the aggregate purchase price paid over the fair value of the net assets acquired in our business combinations. Goodwill is not amortized and is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Events or changes in circumstances that could trigger an impairment review include a significant adverse change in business climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, or significant underperformance relative to expected historical or projected future results of operations. The Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill.
If,
after assessing the totality of events or circumstances, the Company determines that it is not more likely than not that the fair value
of a reporting unit is less than its carrying amount, additional impairment testing is not required. The Company tests for goodwill impairment
annually during its fourth quarter. In March 2025, the Company sold GC Aviation, Inc. which held the Part 135 air carrier certificate. In connection
with that sale, the Company recorded an impairment on goodwill of $
| 19 |
Segment reporting
The Company identifies operating segments as components of the Company for which discrete financial information is available and is regularly reviewed by the chief operating decision maker (“CODM”), or decision-making group, in making decisions regarding resource allocation and performance assessment. The CODM is the chief executive officer. We determined that the Company operates in a single operating and reportable segment, private aviation services, and the CODM reviews financial information including total assets from continuing operations and net income (loss) from continuing operations before income taxes presented on a consolidated basis for purposes of making operating decisions, allocating resources, and assessing performance. Substantially all of our long-lived assets are located in the U.S.
Cost of revenue
Cost of revenue includes costs that are directly related to the related revenue streams – aircraft sales and subscription based revenue. Aircraft sales cost of revenue is our purchase price of the aircraft. Subscription costs includes costs of our proprietary software, the Vaunt platform.
Advertising costs
Advertising
costs are expensed as incurred and included in selling, general and administrative expenses on the statements of operations. Such advertising
amounted to $
Leases
ASC Topic 842, “Leases” (“ASC 842”) requires lessees to recognize most leases on the balance sheet with a corresponding right-of-use asset (“ROU asset”). ROU asset represents the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease. The right-of-use asset and lease liability are recognized at the lease commencement date based on the estimated present value of fixed lease payments over the lease term. ROU asset is evaluated for impairment using the long-lived asset impairment guidance. Leases will be classified as financing or operating, which will drive the expense recognition pattern. The Company elects to exclude short-term leases when recording a ROU asset and lease liability if and when the Company has them.
Recent accounting pronouncements
In November 2023, the FASB issued Accounting Standards Update “ASU” 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which modifies the disclosure and presentation requirements of reportable segments. The amendments in the update require the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker “CODM” and included within each reported measure of segment profit and loss. The amendments also require disclosure of all other segment items by reportable segment and a description of its composition. Additionally, the amendments require disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. This update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption was permitted. The Company adopted this standard and the adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. The Company has one reportable segment.
| 20 |
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation and cash taxes paid. The Company adopted this standard in its Annual Report on Form 10-K for the year ended December 31, 2025 using the prospective approach. The adoption affected disclosures only and did not impact the Company’s consolidated financial position, results of operations, or cash flows.
In November 2024, the FASB issued Accounting Standards Update 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 is intended to enhance the disclosures for expenses for all public entities in accordance with ASC Topic 220, Income Statement-Reporting Comprehensive Income. ASU 2024-03 addresses investor requests for more detailed information about expenses, specifically cost of sales and selling, general, and administrative expenses. ASU 2024-03 requires a public entity to disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption presented on the face of the income statement as well as a qualitative description of the amounts remaining in the relevant expense captions that are not separately disaggregated quantitatively. ASU 2024-03 also requires a public entity to disclose the total amount of selling expenses and the entity’s definition of selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. A public entity should apply ASU 2024-03 either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2024-03 on its future consolidated financial statements and related disclosures.
NOTE 3 – DISCONTINUED OPERATIONS
In September 2024, the Company entered into an agreement with flyExclusive to transition our aircraft ownership program fleet operations to flyExclusive. During 2024 and 2025 we continued to take delivery of new aircraft, while also generating revenue from our proprietary software, including the Vaunt platform, Volato’s empty leg consumer app. In March 2025, the Company sold GC Aviation, Inc., which held the FAA Part 135 certificate, therefore items related to managed aircraft and GC Aviation Inc. are included in discontinued operations.
Major classes of line items constituting net income (loss) from discontinued operations are as follows:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue - Aircraft usage | $ | $ | ||||||
| Revenue - Managed aircraft | ||||||||
| Costs of Revenue - Aircraft usage | ||||||||
| Cost of Revenue - Managed aircraft | ||||||||
| Selling, general and administrative | ||||||||
| Other income (loss) from discontinued operations | ( | ) | ||||||
| Loss from discontinued operations before provision for taxes | ( | ) | $ | ( | ) | |||
| Benefit for taxes from discontinued operations | ( | ) | ||||||
| Net income (loss) from discontinued operations, net | $ | ( | ) | $ | ||||
| 21 |
Carrying amounts and major classes of assets included as part of discontinued operations are as follows:
| March 31, 2026 | December 31, 2025 | |||||||
| Accounts receivable, net | $ | $ | ||||||
| Prepaid and other assets | ||||||||
| Total assets associated with discontinued operations | $ | $ | ||||||
Carrying amounts and major classes of liabilities included as part of discontinued operations are as follows:
| March 31, 2026 | December 31, 2025 | |||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Customer deposits and deferred revenue | ||||||||
| Total liabilities associated with discontinued operations | $ | $ | ||||||
NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current
assets totaled $
NOTE 5 – INTANGIBLES
Indefinite - Lived Intangible Assets
In
March 2025, the Company sold GC Aviation, Inc., which held the FAA Part 135 Certificate for $
NOTE 6– PROPERTY AND EQUIPMENT, NET
Property and equipment, net consist of the following at March 31, 2026 and December 31, 2025, in thousands:
| March 31, 2026 | December 31, 2025 | |||||||
| Machinery and equipment | $ | $ | ||||||
| Website development costs | ||||||||
| Computer and office equipment | ||||||||
| Software development costs | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
During
the three months ended March 31, 2026 and 2025, the Company recognized $
During
the three months ended March 31, 2026 and 2025, the Company reduced the value of software development cost by $
| 22 |
NOTE 7 – DEPOSITS
Deposits consist of the following at March 31, 2026 and December 31, 2025, in thousands:
| March 31, 2026 | December 31, 2025 | |||||||
| Other deposits | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Total deposits, non-current | $ | $ | ||||||
NOTE 8 – UNSECURED CONVERTIBLE NOTES
Unsecured convertible notes consisted of the following at March 31, 2026 and December 31, 2025, in thousands:
| March 31, 2026 | December 31, 2025 | |||||||
| Unsecured convertible note, | ||||||||
| Unsecured convertible note, | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Total unsecured convertible note, long term | $ | $ | ||||||
| ** |
| *** |
During the year ended December 31, 2024, the Company
entered into the Securities Purchase Agreement as described in Note 2 above pursuant to which the Company may issue a series of convertible
notes for an aggregate principal not to exceed $
Unsecured convertible note due December 2025 - 2024 Convertible Note
During
the year ended December 31, 2024, the Company issued a single convertible note in a principal amount of $
The 2024 Convertible Note is accounted for as a single liability measured at fair value in accordance with ASC 825-10. At March 31, 2026 and 2025 , the Company valued the 2024 Convertible Note using the Monte-Carlo valuation model. See Note 2.
In
June 2025, the outstanding principal and interest of the 2024 Convertible Note was converted into shares of the Company’s
common stock, settling in full the Company’s repayment obligations related to that note. Immediately prior to the conversions,
the Company remeasured the liability to its fair value as of the conversion date. The Company recognized a loss of $
| 23 |
Unsecured convertible note due June 2026 - Second Tranche Note
In
June 2025, the Company issued a second convertible note (the “Second Tranche Note”) in accordance with the terms of the Securities
Purchase Agreement in the principal amount of $
In
July 2025, $
Unsecured convertible note due July 2026 - Third Tranche Note
In
July 2025, the Company issued a third convertible note, (the “Third Tranche Note”), in accordance with the terms of the Securities
Purchase Agreement, in the principal amount of $
In
the first quarter of 2026, $
Unsecured convertible note due October 2026 - Fourth Tranche Note
In
October 2025, the Company issued a fourth convertible note, (the “Fourth Tranche Note”) in accordance with the Securities
Purchase Agreement, in the principal amount of $
| 24 |
NOTE 9 – CREDIT FACILITY AND OTHER LOANS
SAC Leasing G280 LLC Line of credit
The
Company entered into the pre-delivery payment agreement on October 5, 2022, with SAC Leasing G280 LLC to obtain loans in the
aggregate amount of $
During
the year ended December 31, 2022, the Company executed a series of purchase agreements with Gulfstream Aerospace, LP for the
acquisition of four (
During
the three months ended March 31, 2025, the Company decreased its SAC leasing G280 LLC line of credit by $
During
the three months ended March 31, 2026 and 2025, the Company amortized to interest expense
During
the three months ended March 31, 2026 and 2025, the Company incurred
OgaraJets
In
connection with the purchase and sale of the second G280, the Company entered into a financing agreement with OgaraJets. The Company
borrowed $
In
connection with the purchase and sale of the third G280, the Company entered into a financing agreement with OgaraJets. The Company borrowed
$
In
connection with the purchase and sale of the fourth G280, the Company entered into a financing agreement with Ogara Jets. The Company
borrowed $
| 25 |
NOTE 10 – RELATED PARTIES
Liotta Family Office, LLC
Liotta
Family Office, LLC (“LFO”) is owned
NOTE 11 – INCOME TAXES
Management has determined that the Company does not have any uncertain tax positions and associated unrecognized benefits that would impact the consolidated financial statements or related disclosures.
The
effective tax rate was
NOTE 12 – SHAREHOLDERS’ EQUITY (DEFICIT)
On October 28, 2024, the Company filed an amendment to its Amended and Restated Certificate of Incorporation to increase the number of authorized shares to shares consisting of shares of common stock and shares of preferred stock.
| 26 |
On February 24, 2025, the Company effected the Reverse Stock Split described elsewhere in this Quarterly Report. All share amounts have been retroactively adjusted to account for the Reverse Stock Split as if it occurred at inception. The Reverse Stock Split did not have an effect on the number of authorized shares of common stock.
Common stock at the market sales agreement
On
December 5, 2025, the Company entered into an ATM Sales Agreement with Virtu Americas LLC (“Virtu”)
pursuant to which Virtue acted as the Company’s sole sales agent or principal with respect to the offer and sale from time-to-time
of shares of the Company’s Class A Common Stock, par value $ per share, having an aggregate gross sales price of an aggregate
of up to $
On March 19, 2026, the Company delivered a notice of termination to Virtu terminating the ATM Sales Agreement as of March 22, 2026.
On
March 27, 2026, the Company entered into an ATM Sales Agreement with Curvature Securities, LLC (“Curvature”) pursuant to
which Curvature will act as the Company’s sole sales agent or principal with respect to the offer and sale from time-to-time of
shares of the Company’s Class A Common Stock, par value $ per share, having an aggregate gross sales price of an aggregate
of up to $
Preferred Stock
shares of preferred stock have been issued as of March 31, 2026 and December 31, 2025.
Stock Options - Equity Incentive Plans
Summary of the 2025 Plan
The 2025 Stock Incentive Plan (the “2025 Plan”) was approved at the annual meeting of the shareholders of the Company on July 21, 2025. The 2025 Plan provides for the grant of stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, performance-based awards, and other stock- and cash-based awards. The Company has reserved a pool of shares of common stock for issuance pursuant to awards under the 2025 Plan equal to shares. As of March 31, 2026 the Company had shares available for issuance.
Summary of the 2023 Plan
The 2023 Stock Incentive Plan (the “2023 Plan”) was approved at the special meeting of the shareholders of the Company on November 28, 2023. The 2023 Plan provides for the grant of stock options (both incentive stock options and non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, performance-based awards, and other stock- and cash-based awards. The Company has reserved a pool of shares of common stock for issuance pursuant to awards under the 2023 Plan equal to shares. As of March 31, 2026 the Company had shares available for issuance.
| Options | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term (years) | ||||||||||
| Outstanding as of December 31, 2025 | $ | |||||||||||
| Granted | ||||||||||||
| Cancelled | ( | ) | ||||||||||
| Exercised | ||||||||||||
| Outstanding as of March 31, 2026 | $ | |||||||||||
| Exercisable as of March 31, 2026 | $ | |||||||||||
| 27 |
The Black-Scholes option pricing model is used by the Company to determine the weighted-average fair value of share-based payments. The Company recognizes forfeitures as they occur. There were no stock options granted in the three months ended March 31, 2026 or 2025.
Restricted Stock
| Restricted Stock Units | Weighted Average Grant Date Fair Value | |||||||
| Outstanding as of December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ||||||||
| Outstanding as of March 31, 2026 | $ | |||||||
Stock
based compensation expense was $
thousand and $
thousand for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026 the unrecognized compensation costs related to non-vested awards was $
Warrants
As
of March 31, 2026, there were
Private placement warrants
The
Company has
Public warrants
Pursuant
to the initial public offering (“IPO”) by Proof Acquisition Corp I (“PACI”) in 2021, the Company sold
The
public warrants became exercisable on the later of (a)
| 28 |
NOTE 13 – COMMITMENT AND CONTINGENCIES
Facilities
Our
facilities leases are for space at airports throughout the south with remaining terms ranging from one to
In
January 2024, the Company began leasing space for aircraft with a term of
Customer Deposits and Deferred Revenue
Customer
deposits and deferred revenue consisted of deposits from customers for the purchase of aircraft of $
Legal Contingencies
From time to time, the Company receives claims of and becomes subject to consumer protection, employment, intellectual property and other commercial litigation related to the conduct and operation of the Company’s business. In connection with such litigation, the Company may be subject to significant damages. We may also be subject to equitable remedies and penalties. Such litigation could be costly and time consuming and could divert or distract Company management and key personnel from its business operations. The Company is currently the defendant in suits brought by vendors, customers and suits related to the transfer of the flight operations and leases to flyExclusive and does not currently believe that any of its outstanding litigation will have a material adverse effect on its financial statements or business. However, due to the uncertainty of litigation and depending on the amount and the timing, an unfavorable resolution of some or all of these matters could materially affect the Company’s business, results of operations, financial position, or cash flows.
In
the Tampa Division of the U.S. District Court, in and for the Middle District of Florida on September 12, 2024, Joshua G. Newsteder,
LouAnn Gray, and those similarly situated (the “Plaintiffs”) filed suit against the Volato Group, Inc. and Volato, Inc. (together,
the “Defendants”) citing various allegations including that the termination of employment of
| 29 |
NOTE 14 – SEGMENT INFORMATION
The Company has one reportable segment, private aviation services, managed on a consolidated basis by the CEO who is the CODM. The private aviation services segment provides airplane sales and software-as-a-service subscriptions. The Company derives revenue primarily in North America and manages the business activities on a consolidated basis.
The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance and decides how to allocate resources based on net income (loss) from continuing operations before income taxes that is also reported on the consolidated statements of operations. The measure of segment assets is reported on the consolidated balance sheets as consolidated total assets.
The CODM allocates resources and evaluates performance based on net income (loss) from continuing operations before income taxes, which is the Company’s measure of segment profit or loss. The CODM considers year-over-year variances for net income (loss) from continuing operations before taxes when making decisions about how to utilize the Company’s resources.
The components of segment profit or loss were as follows:
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | $ | ||||||
| Less: | ||||||||
| Cost of revenue | ||||||||
| Selling, general and administrative(1) | ||||||||
| Loss on fair value adjustment of financial instruments | ( | ) | ( | ) | ||||
| Interest income (expense), net | ( | ) | ||||||
| Add: | ||||||||
| Other gain (loss)(2) | ||||||||
| Net income (loss) from continuing operations before income taxes | $ | ( | ) | $ | ||||
| (1) |
| (2) |
| 30 |
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Numerator: | ||||||||
| Net income (loss) from continuing operations | $ | ( | ) | $ | ||||
| Add: stock based compensation expense, net of note, net of tax | ||||||||
| Add: loss on convertible note, net of tax | ||||||||
| Net income (loss) attributable to common stockholders from continuing operations, dilutive | ( | ) | ||||||
| Net income (loss) from discontinued operations | $ | ( | ) | $ | ||||
| Denominator: | ||||||||
| Weighted-average common shares outstanding, basic | ||||||||
| Add: options and restricted stock units | ||||||||
| Add: 2024 Convertible note on as-converted basis | ||||||||
| Weighted-average shares outstanding, dilutive | ||||||||
| As of March 31, | ||||||||
| 2026 | 2025 | |||||||
| Warrants to purchase common stock | ||||||||
| Stock options outstanding | ||||||||
| Restricted stock units with performance and market conditions | ||||||||
| Total | ||||||||
NOTE 16– SUBSEQUENT EVENTS
In
April 2026, the Company received $
In April 2026, the remaining $
In April, 2026, the Company entered into a Share exchange Agreement (the “Share Exchange Agreement”), with three investors (together the “Investors”). The investors are shareholders of M2i whose common stock is publicly quoted on the OTCQB Venture Market of OTC Markets Group, Inc. under the symbol “MTWO”. Pursuant to the Share Exchange Agreements, the Company agreed to issue an aggregate of shares of the Company’s Class A common stock to the Investors in exchange for an aggregate of shares of M2i common stock.
On May 7, 2026, the Company held a special meeting of its shareholders to seek approval of the Merger and related matters and the Company’s shareholders approved all proposals presented at the meeting, including the adoption of the Merger Agreement and approval of all transactions contemplated by the Merger Agreement.
| 31 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes. This discussion contains forward-looking statements which involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2025 and elsewhere in this Quarterly Report. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section to “we,” “us,” “our,” and “the Company” are intended to mean the business and operations of Volato Group, Inc.
Overview of Our Business
Our historical mission has been to provide our customers more time for the rest of their lives by providing convenient and high-quality travel by using the right aircraft for the mission and by developing proprietary technology designed to make the travel experience more seamless. Our revenue is generated through airplane sales and software-as-a-service subscriptions.
In September 2024, we entered into an agreement with flyExclusive, a leading provider of private jet charter services, to transition our aircraft ownership program fleet operations to flyExclusive. This move was intended to bring substantial cost savings and provide Volato with the opportunity to focus on what it believes to be its high-growth areas, including aircraft sales and products and services utilizing our proprietary software. Volato sought to benefit from the margins on aircraft sales without the burden of operational costs, while also generating revenue from its proprietary software, including the Vaunt platform, Volato’s empty leg consumer app. In the fourth quarter of 2024, we transferred the aircraft lease agreements to flyExclusive and have no further obligations under the aircraft lease agreements or control over such flight operations. Items related to our aircraft ownership program fleet operations are included in discontinued operations.
Recent Developments
On July 28, 2025, the Company entered into the Merger Agreement with Merger Sub and M2i, pursuant to which Merger Sub will merge with and into M2i, with M2i surviving the Merger as a wholly-owned subsidiary of Volato. The Merger is subject to approval by the Company’s stockholders and various other customary closing conditions. M2i’s business focuses on providing its partners with access to turnkey solutions, facilitating expanded business opportunities, securing offtake agreements, influencing strategic government policy, and engaging with aligned organizations and laboratories. M2i specializes in the development and execution of a complete global value supply chain for critical minerals, including the creation of a private critical minerals reserve. Upon consummation of the Merger it is currently expected that M2i’s stockholders will own approximately 85% of the combined company.
In July 2025, the Company began development of an enterprise AI “Artificial Intelligence” platform that deploys autonomous agents within Microsoft 365 environments to automate workflows, synthesize information across systems, and execute multi-step business processes; the platform includes optional deterministic document processing capabilities for applications requiring enhanced reliability and auditability, such as contract analysis and regulatory filings.
| 32 |
On October 16, 2025, pursuant to the Securities Purchase Agreement the Company issued a fourth tranche Convertible Note in the principal amount of $2.2 million for a purchase price of $2.0 million, representing an original issue discount of ten percent (10%). The Convertible Note matures on October 16, 2026.
On October 1, 2025, the Company entered into a Fourth Amendment (the “Amendment”) to Aircraft Management Services Agreement (as amended the “Agreement”) with flyExclusive to bring the Agreement in line with Company’s anticipated shift in operations, new business directives, and to better accommodate the proposed Merger with M2i. The Amendment served to, (i) modify the term of the Agreement; (ii) grant flyExclusive, subject to certain terms and conditions, the right to purchase certain aviation-related assets from the Company and assume certain obligations of the Company (the “flyExclusive Asset Option”); (iii) grant the Company, subject to certain terms and conditions, the right to sell certain aviation-related assets to flyExclusive and assign certain obligations of the Company to flyExclusive (the “Company Asset Option,” and collectively with the flyExclusive Asset Option, the “Asset Options”); (iv) obligate flyExclusive to pay the Company $100,000 upon execution of the Amendment as settlement of net payables owed by flyExclusive to the Company under the terms of the Agreement (the “Net Payables Obligation”); and (v) modify the material terms of flyExclusive’s right to cause the Company to merge with and into a wholly owned subsidiary of flyExclusive (the “flyExclusive Merger Option”), including that the flyExclusive Merger Option is to be only exercisable in the event that the Company and M2i terminate the Merger Agreement. The purchase price for the Asset Options and the Net Payables Obligations may be paid by flyExclusive in cash or shares of flyExclusive Class A common stock, at the sole discretion of flyExclusive. flyExclusive elected to pay the Net Payables Obligation by issuing the Company 20,576 shares of Class A common stock.
As consideration for the execution of the Amendment, flyExclusive agreed to pay $2,000,000 to the Company, in cash or shares of flyExclusive Class A common stock, in exchange for the right to receive either (i) the net proceeds that the Company receives from the sale of a certain G280 aircraft, which is expected to be delivered to the Company pursuant to an existing agreement (the “G280 Agreement”) with Gulfstream Aerospace Corporation (“Gulfstream”), or (ii) if, and only if, Gulfstream provides written consent, assignment of the G280 Agreement from the Company to flyExclusive subject to the execution of an asset purchase agreement relating solely to the transfer of the G280 Agreement. flyExclusive elected to pay all of the $2,000,000 in shares of its Class A common stock and issued an aggregate of 411,523 shares of its Class A common stock to the Company.
On December 16, 2025 the Company announced a stock dividend of shares of flyExclusive stock to Volato shareholders of record as of December 26, 2025. The dividend was effected in January 2026.
On March 6, 2026, the Company signed amendment number five to the Agreement with flyExclusive, pursuant to which the Company sold certain unused intellectual property assets for $1.3 million payable in cash or shares of flyExclusive’s Class A common stock. Such assets represent a portion of the total assets which were anticipated to be sold under one of the Asset Options as described above. Following the sale of the intellectual property assets pursuant to the fifth amendment, there is $700,000 in remaining assets that may be sold to flyExclusive under the terms of the Agreement, as amended.
On May 7, 2026, the shareholders of the Company approved the Merger.
| 33 |
Key Factors Affecting Results of Operations
We believe that the below key factors have affected our financial condition and results of operations and may continue to have a significant effect. In addition, upon closing the Merger our financial condition and results of operations will be impacted by those of M2i and its industry.
Airplane Sales
During 2025, we took delivery of three Gulfstream G280 aircraft, which were delivered and sold to third parties. We do not expect to take delivery of additional aircraft in 2026.
Costs and Expense Management
In 2022 and 2023, we invested in the core business systems, processes and people required to safely operate a growing, publicly traded private aviation company. In September 2024, we entered into an agreement with flyExclusive to transition our fleet operations to flyExclusive. This move resulted in substantial cost savings and provided us with the opportunity to focus on what we believe to be our high-growth areas, including aircraft sales and proprietary software. We have benefited from the margins on aircraft sales without the burden of operational costs, while also generating revenue from our proprietary software, including the Vaunt platform, our empty leg consumer app.
Economic Conditions
The private aviation industry is volatile and affected by economic cycles and trends. Our financial performance is susceptible to economically driven changes in demand for our Vaunt platform. Historically, our cost structure and private aviation demand levels had been greatly impacted by the price of jet fuel, pilot salaries and availability, changes in government regulations, consumer confidence, safety concerns, and other factors.
| 34 |
Results of Operations
Comparison of three months ended March 31, 2026 and 2025
The following table sets forth our results of operations for the three months ended March 31, 2026 and 2025 (in thousands, except percentages):
| Three Months Ended March 31, | Change In | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| Revenue | $ | 997 | $ | 25,483 | $ | (24,486 | ) | (96 | )% | |||||||
| Costs and expenses: | ||||||||||||||||
| Cost of revenue | 294 | 20,987 | (20,693 | ) | (99 | )% | ||||||||||
| Selling, general and administrative | 3,050 | 1,970 | 1,080 | 55 | % | |||||||||||
| Total costs and expenses | 3,344 | 22,957 | (19,613 | ) | (85 | )% | ||||||||||
| Operating income (loss) | (2,347 | ) | 2,526 | (4,873 | ) | (193 | )% | |||||||||
| Other income (expenses): | ||||||||||||||||
| Other income, net | 26 | 1,181 | (1,155 | ) | (98 | )% | ||||||||||
| Gain on sale of asset | 1,094 | — | 1,094 | N/M | ||||||||||||
| Loss from change in fair value of financial instruments | (1,378 | ) | (849 | ) | (529 | ) | 62 | % | ||||||||
| Interest income (expense), net | 27 | (2,400 | ) | 2,427 | (101 | )% | ||||||||||
| Other income (expenses), net | (231 | ) | (2,068 | ) | 1,837 | (89 | )% | |||||||||
| Income (loss) before provision for income taxes and discontinued operations | (2,578 | ) | 458 | (3,036 | ) | (663 | )% | |||||||||
| Provision for (benefit from) incomes taxes | 5 | 98 | (93 | ) | N/M | |||||||||||
| Net income (loss) from continuing operations | (2,583 | ) | 360 | (2,943 | ) | (818 | )% | |||||||||
| Net income (loss) from discontinued operations, net of taxes | (51 | ) | 95 | (146 | ) | (154 | )% | |||||||||
| Net income (loss) | $ | (2,634 | ) | $ | 455 | $ | (3,089 | ) | (679 | )% | ||||||
N/M - the percentage change is not meaningful
| 35 |
Revenue
Revenue consists of the following (in thousands, except percentages):
| Three Months Ended March 31, | Change In | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| Aircraft sales | $ | — | $ | 25,100 | $ | (25,100 | ) | (100 | )% | |||||||
| Subscription | 997 | 383 | 614 | 160 | % | |||||||||||
| Total | $ | 997 | $ | 25,483 | $ | (24,486 | ) | (96 | )% | |||||||
Revenue decreased by $25.1 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The decrease in revenue was the result of a decrease in aircraft sales of $25.0 million, as we did not take delivery of aircraft during the year, and an increase in subscription based revenue of $0.6 million during the three months ended March 31, 2026 compared to the prior year period. The increase in subscription based revenues is attributable to our Vaunt platform.
Cost of Revenue
Cost of revenue comprises expenses tied to the associated revenue streams: aircraft sales and subscription based revenue. Aircraft sales cost of revenue is the purchase price of the aircraft. Subscription cost of revenue includes costs we incur related to our proprietary software, the Vaunt platform.
Cost of revenue consists of the following (in thousands, except percentages):
| Three Months Ended March 31, | Change In | |||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||
| Aircraft sales | $ | — | $ | 20,930 | $ | (20,930 | ) | (100 | )% | |||||||
| Subscription | 294 | 57 | 237 | 416 | % | |||||||||||
| Total | $ | 294 | $ | 20,987 | $ | (20,693 | ) | (99 | )% | |||||||
Cost of revenue decreased by $20.9 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The decrease in cost of revenue was primarily a result of a decrease in aircraft sales as we purchased and took delivery of one aircraft during the three months ended March 31, 2025.
Selling, general and administrative
Selling, general and administrative expenses increased by $1.1 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase in selling, general and administrative is primarily related to a $0.5 million increase in accounting, legal and other professional fees as we work toward the merger with M2i, a $0.4 million increase related to professional fees and software development for our Vaunt platform and $0.2 million increase in salaries and wages for our Parslee platform.
Gain (loss) on change in fair value of financial instruments
For the three months ended March 31, 2026, the loss on the change in fair value of financial instruments relates to a non-cash loss on the Investment in M2i share exchange of $0.8 million, a loss on the Investment of flyExclusive of $174 thousand, a loss on the fair value of the aviation asset of $0.3 million and a loss on the change in the fair value of the Convertible Notes of $60 thousand.
| 36 |
For the three months ended March 31, 2025, the loss on the change in fair value of financial instruments relates to the fair value adjustment on the 2024 Convertible Notes resulting in a non-cash loss of $0.8 million during the three months ended March 31, 2025.
Gain on sale of asset
Gain on sale of asset, consists of the sale of mission control software to flyExclusive with the fifth amendment on March 6, 2026.
Interest Income (expense), Net
Interest income (expense) net, primarily consists of interest related to the note receivable and the sale of the GC Aviation, Inc in March 2025.
Interest income (expense), net primarily consists of interest related to our aircraft brokerage and services agreement with OgaraJets LLC and the pre-delivery payment agreement with SAC Leasing G280 LLC as of March 31, 2025.
Liquidity and Capital Resources
Overview
Our principal sources of liquidity have historically consisted of financing activities, including proceeds from the issuance of stock, borrowings under our credit facilities, and proceeds from sales of debt and equity securities. We additionally generate revenue through sales subscriptions to our software application. As of March 31, 2026, we had $2.0 million of cash and cash equivalents.
Our primary needs for liquidity are to fund working capital, debt service requirements, and for general corporate purposes.
We believe the primary factors that could affect our liquidity include whether the closing conditions under the Securities Purchase Agreement are met (or waived) such that we are able to issue one or more additional convertible notes under that arrangement, our ability to raise additional funds on favorable terms, the timing and extent of spending on software development and other growth initiatives, our ability to manage our expense, and overall economic conditions. To the extent that our current liquidity is insufficient to fund future activities, we will need to raise additional capital. We may attempt to raise additional capital through the sale of equity securities, through debt financing arrangements, or both. Raising additional capital by issuing equity securities will dilute the ownership of existing stockholders. The occurrence of additional debt financing would result in debt service obligations, and any future instruments governing such debt could provide for operating and financing covenants that could restrict our operations. In the event that additional capital is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.
Except for our 2025 fiscal year, we have historically incurred negative cash flows from operating activities and significant losses from operations. Management believes that its current cash position, along with proceeds from future debt and/or equity financings, when combined with prudent expense management, will allow the Company to continue as a going concern and to fund its operations for at least one year from the date of this Quarterly Report. There are no assurances, however, that management will be able to raise capital or debt on terms acceptable to the Company. If the Company is unable to obtain sufficient additional capital or debt on terms acceptable to the Company, the Company may be required to reduce the near-term scope of its planned development and operations, which could delay implementation of the Company’s business plan and harm its business, financial condition, and operating results. These above matters raise substantial doubt about the Company’s ability to continue as a going concern.
| 37 |
Cash Flows
The following table summarizes our cash flows for the three months ended March 31, 2026, and 2025 (in thousands):
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Net cash used in operating activities | $ | (2,573 | ) | $ | (312 | ) | ||
| Net cash (used in) provided by investing activities | (176 | ) | 21 | |||||
| Net cash used in financing activities | (46 | ) | (1,133 | ) | ||||
| Net decrease in cash and restricted cash | $ | (2,795 | ) | $ | (1,424 | ) | ||
Cash Flow from Operating Activities
Net cash used in operating activities for the three months ended March 31, 2026 was $2.5 million. The cash outflow from operating activities consisted of our net loss of $2.6 million, non-cash items of $0.4 million, a change in net operating assets and liabilities of $0.3 million and a change in net assets and liabilities for discontinued operations of $0.2 million. The change in net operating assets and liabilities was primarily a result of an increase in prepaid and other current assets of $0.6 million, an increase in member deposits and deferred revenue of $0.6 million and an increase in contract assets of $0.2 million.
Net cash used in operating activities for the three months ended March 31, 2025 was $0.3 million. The cash outflow from operating activities consisted of our net income of $0.4 million, non-cash items of $1.1 million, a change in net operating assets and liabilities of $0.3 million, and a change in net assets and liabilities for discontinued operations of $1.5 million. The change in net operating assets and liabilities was primarily as a result of a decrease in customer deposits and deferred revenue of $2.1 million and a decrease in deposits of $1.8 million.
Cash Flow from Investing Activities
Net cash used in investing activities for the three months ended March 31, 2026 was $0.2 million. The cash flow from investing activities consisted of the purchase of property and equipment.
Net cash provided by investing activities for the three months ended March 31, 2025 was $21 thousand. The cash flow from investing activities consisted of the sale of property and equipment.
Cash Flow from Financing Activities
Net cash used in financing activities for the three months ended March 31, 2026 was $46 thousand. Cash flow used in financing activities consisted primarily of the issuance of costs of share issuances.
Net cash used in financing activities for the quarter ended March 31, 2025 was $1.1 million. Cash flow used in financing activities consisted of the repayment on loans of $1.1 million.
Sources of Liquidity
To date, we have financed our operations primarily as a result of the 2023 business combination, sales of preferred stock, borrowings of long-term and short-term debt, loans and convertible notes. As of March 31, 2026, we had negative working capital of approximately $2.5 million and our primary source of liquidity was cash totaling $1.9 million. Based on our recent trends, we expect to fund our operations in 2026 from our cash on hand, cash from operations, or one or more sales of convertible promissory notes in accordance with the Securities Purchase Agreement described in Note 2 and Note 8 to our unaudited financial statements in this Quarterly Report and potentially additional sales of equity or debt securities (including potential sales of common stock in our at-the-market sales program described below and elsewhere in this Quarterly Report). The Company believes it has the ability to generate and obtain enough cash to meet its obligations for the next 12 months.
| 38 |
The Company entered into the pre-delivery payment agreement on October 5, 2022, with SAC Leasing G280 LLC to obtain loans in the aggregate amount of $40.5 million for the purchase of four (4) Gulfstream G280 aircraft to be delivered in 2024 and 2025. The maturity date was the earlier of the delivery date of the aircraft or September 14, 2025, which is thirty-five (35) months from the date of funding. The purchase agreement contracts were assigned to SAC Leasing G280 LLC as collateral on this credit facility. In the third quarter of 2024, $9.0 million was repaid to SAC Leasing G280 LLC as a result of the delivery of the first Gulfstream G280. In the first quarter of 2025, an additional $19.5 million was repaid to SAC Leasing G280 LLC as a result of the delivery of the second Gulfstream G280 and the return of $9.0 million in deposits related to the fourth Gulfstream G280. After the delivery of the second Gulfstream G280 and the deposit return related to the fourth Gulfstream G280, the outstanding balance of the credit facility from SAC Leasing G280 LLC was $8.5 million, net. In the second quarter of 2025, with the delivery of the third G280, the remaining outstanding balance of the SAC Leasing G280 LLC credit facility was paid in full.
On March 27, 2026, the Company entered into an ATM Sales Agreement with Curvature Securities, LLC (the “Agent”), pursuant to which the Agent will act as the Company’s sole sales agent or principal with respect to the offer and sale from time-to-time of shares of the Company’s Class A Common Stock, having an aggregate gross sales price of an aggregate of up to $3.7 million. In April 2026, the Company received $3.6 million in net proceeds from the sale of stock under our at-the-market program.
Contractual Obligations and Commitments
Our principal contractual commitments consist of obligations under our convertible promissory notes and operating leases.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of our operations is based on our consolidated financial statements and accompanying notes, which have been prepared in accordance with GAAP. Certain amounts included in or affecting the consolidated financial statements presented in this Quarterly Report and related disclosure must be estimated, requiring management to make assumptions with respect to values or conditions which cannot be known with certainty at the time the consolidated financial statements are prepared. Management believes that the accounting policies set forth below comprise the most important “critical accounting policies” for the company. A “critical accounting policy” is one which is both important to the portrayal of our financial condition and results of operations and that involves difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management evaluates such policies on an ongoing basis, based upon historical results and experience, consultation with experts and other methods that management considers reasonable in the particular circumstances under which the judgments and estimates are made, as well as management’s forecasts as to the manner in which such circumstances may change in the future.
Revenue Recognition
Revenues are recognized on a gross basis and presented on the consolidated statements of operations net of rebates, discounts, and taxes collected concurrent with revenue-producing activities. The transaction price in the Company’s contracts with its customers is fixed at the time control of goods and services are transferred to the customer. Therefore, the Company does not estimate variable consideration or perform a constraint analysis for our contracts.
The Company determines revenue recognition pursuant to Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, through the following steps:
| 1. | Identification of the contract, or contracts, with a customer. |
| 39 |
| 2. | Identification of the performance obligation(s) in the contract. | |
| 3. | Determination of the transaction price. | |
| 4. | Allocation of the transaction to the performance obligation(s) in the contract. | |
| 5. | Recognize revenue when or as the entity satisfies a performance obligation. |
The Company generated revenue primarily through: (i) the sale of aircraft and (ii) our Vaunt software-as-a-subscription platform. Revenue is recognized when control of the promised service is transferred to a customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies, as a performance obligation, each promise to transfer a good or service to a customer that is distinct. To identify its performance obligations, the Company considers all of the goods and services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.
For each revenue stream, we evaluate whether our obligation is to provide the good or service itself, as the principal or to arrange for the good or service to be provided by the other party, as the agent, using the control model. In such circumstances, the Company is primarily responsible for satisfying the overall performance obligation with the customer and is considered the principal in the relationship.
Revenue from aircraft sales is recognized upon the delivery of the aircraft.
Stock-Based Compensation
The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. The Company recognizes the cost of services received in exchange for awards of equity instruments based on the grant-date fair value of equity awards. This cost is recognized as expense over the employee’s requisite vesting period or over the nonemployee’s period of providing goods or services. Any forfeitures of stock-based compensation are recorded as they occur.
The Company utilizes the Black Scholes valuation model to value the issuance of stock-based compensation. See Note 14, “Shareholders’ Equity (Deficit)” of the accompanying Notes to Consolidated Financial Statements.
JOBS Act
We are an “emerging growth company” as defined in the JOBS Act. The JOBS Act permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. We have elected to use this extended transition period under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. The Company’s financial statements have not been impacted by the JOBS Act as of March 31, 2026.
We have chosen to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company” we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404 of SOX, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (United States) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation-related items, such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation. We may remain an emerging growth company until the last day of the fiscal year ending after the fifth anniversary of our IPO, although circumstances could cause us to lose that status earlier, including if we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act or if we have total annual gross revenue of $1.235 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during any three year period before that time, we would cease to be an emerging growth company immediately.
Recent Accounting Pronouncements
For further information on recent accounting pronouncements, see Note 2 “Summary of Significant Accounting Policies” of the accompanying consolidated financial statements included elsewhere in this Quarterly Report.
| 40 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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, as appropriate, to allow timely decisions regarding required disclosure. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As of the end of the period covered by the report, as required by Rules 13a-15 and 15d-15 under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, our disclosure controls and procedures were not effective due to material weaknesses in the Company’s internal control over financial reporting as described below.
Nevertheless, based on the performance of additional procedures by management designed to ensure reliability of financial reporting, management has concluded that, notwithstanding the material weaknesses described below, 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 Company as of the dates, and for the periods presented, in conformity with U.S. GAAP.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended on March 31, 2026 covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 41 |
PART II
ITEM 1. LEGAL PROCEEDINGS
From time to time, we are a defendant or plaintiff in various legal proceedings which arise in the normal course of business. As such, we are required to assess the likelihood of any adverse outcomes to these proceedings as well as potential ranges of probable losses. If one or more legal matters were resolved against us in a reporting period for amounts above management’s expectations, our financial condition and operating results for that reporting period could be materially adversely affected.
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026. Investors should review the risks provided in the Form 10-K prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Form 10-K, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
The Company did not sell any unregistered securities during the quarter ended March 31, 2026, which were not previously reported in a Current Report on Form 8-K filed by the Company with the SEC.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The Company and its affiliates did not repurchase any shares of common stock during the quarter ended March 30, 2026.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
(a) During the quarter ended March 31, 2026, there was no information required to be disclosed in a report on Form 8-K which was not disclosed in a report on Form 8-K.
(b) During the quarter ended March 31, 2026, there were no material changes to the procedures by which stockholders may recommend nominees to our board of directors.
(c)
During the quarter ended March 31, 2026, no director or officer of the Company
| 42 |
ITEM 6. EXHIBITS
*Filed herewith
** Furnished herewith
| 43 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized.
Date: May 15, 2026
| VOLATO GROUP, INC. | ||
| By: | /s/ Matthew Liotta | |
| Name: | Matthew Liotta | |
| Title: | Chief Executive Officer | |
| By: | /s/ Mark Heinen | |
| Name: | Mark Heinen | |
| Title: | Chief Financial Officer | |
| 44 |