ITEM 1A. RISK FACTORS
Risk Factors Relating to Our Business
We have a limited operating history, which makes it difficult to forecast our revenue and evaluate our business and future prospects.
GlobalX has been in the build-out stage of the airline and as a result, investors are unable and may be unable for the next several years to review and consider any significant operational history to evaluate future viability or profitability. GlobalX will be subject to the risks, difficulties and uncertainties associated with a start-up airline. The likelihood of GlobalX’s success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the expansion of a business operation in a competitive industry and the development of a customer base. GlobalX could also sustain material losses in the future. GlobalX’s future performance will depend upon a number of factors, including its ability to:
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maintain the safety and security of operations;
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capitalize on its business strategy;
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implement its growth strategy;
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provide the intended services at the prices anticipated;
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maintain adequate control of expenses;
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attract, retain and motivate qualified personnel;
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react to customer and market demands; and
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generate operating revenue.
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We have a history of net losses, we anticipate increasing operating expenses in the future, and we may not be able to achieve and, if achieved, maintain profitability.
GlobalX has historically had and continues to have negative cash flow from operating activities. It is anticipated that GlobalX will continue to have negative cash flow for the foreseeable future. If our revenue does not increase to offset the expected increases in our operating expenses or if our operating expenses are not contained, then we will not be profitable in future periods. Continued losses may have the following consequences:
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increasing GlobalX’s vulnerability to general adverse economic and industry conditions;
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limiting GlobalX’s ability to obtain additional financing to fund future working capital, capital expenditures, operating costs and other general corporate requirements; and
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limiting GlobalX’s flexibility in planning for, or reacting to, changes in its business.
Our ability to purchase or lease aircraft on favorable terms will have a significant impact on our operating performance, need for capital and profitability.
To operate in accordance with its business plan, GlobalX will need to acquire or lease additional aircraft. While GlobalX does not anticipate any difficulties in entering into satisfactory leasing arrangements or purchase agreements for additional aircraft, there is no guarantee that we will be able to enter into agreements for additional aircraft on terms satisfactory to us, or at all.
The terms of GlobalX’s leasing arrangements and purchase agreements will impact the potential profitability of GlobalX’s business. If we are unable to acquire or lease additional aircraft on satisfactory terms, then we will be unable to operate in accordance with its business plan. GlobalX’s ability to pay any fixed costs associated with aircraft lease or purchase contractual obligations will depend on GlobalX’s operating performance, cash flow, its ability to secure adequate financing, whether fuel prices continue at current price levels and/or further increase or decrease, further weakening or improvement in the United States economy, as well as general economic and political conditions and other factors that are, to a large extent, beyond GlobalX’s control.
Our business has grown rapidly, and we may fail to manage our growth effectively.
GlobalX may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls. The ability of GlobalX to manage growth effectively will require it to continue to implement and improve its operations and financial systems and to expand, train, and manage its employee base. The inability of GlobalX to deal with potential growth could result in a material adverse effect.
Any expansion of operations GlobalX may undertake will entail risks; such actions may involve specific operational activities, which may negatively impact the profitability of GlobalX. Consequently, shareholders must assume the risk that: (i) such expansion may ultimately involve expenditures of funds beyond the resources available to GlobalX at that time; and (ii) management of such expanded operations may divert management’s attention and resources away from any other operations, all of which factors may result in a material adverse effect.
If we fail to implement our business strategy successfully, our business, results of operations and financial condition will be materially adversely affected.
The viability of GlobalX’s business model and its ability to implement this model is dependent on a number of inputs and assumptions, including:
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the timing and receipt of all regulatory approvals required or desirable for operations by GlobalX and their impact upon expectations as to future operations of GlobalX;
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the expected operations and performance of GlobalX’s business as compared to existing charter operators;
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the anticipated competitive response from existing charter operators as well as potential new market entrants which may compete with GlobalX;
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impact of existing or new governmental regulation on GlobalX;
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future development and growth prospects;
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expected operating costs, general administrative costs, costs of services and other costs and expenses;
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the anticipated increase in the size of the airline passenger market in North America;
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ability to meet current and future obligations;
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treatment under governmental regulatory regimes;
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projections of market prices and costs;
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ability to obtain equipment, services and supplies in a timely manner, including the ability to lease or purchase aircraft; and
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ability to obtain financing or leasing arrangements on acceptable terms, or at all.
If one or more of these inputs and assumptions is incorrect or fails to occur as anticipated, then there is a risk that GlobalX’s business model may not be implemented as anticipated and GlobalX may suffer a material adverse effect.
In addition, to successfully implement our growth strategy, we will require access to an additional number of airport gates and other services at airports we currently serve or may seek to serve. We believe there are currently significant restraints on gates and related ground facilities at many of the most heavily utilized airports in the United States. As a result, if we are unable to obtain access to a sufficient number of slots, gates or related ground facilities at desirable airports to accommodate our growing fleet, then we may be unable to compete in those markets, our aircraft utilization rate could decrease, and we could suffer a material adverse effect on our business, results of operations and financial condition. There can be no assurance that we will be able to enter into these arrangements on terms that we deem desirable or at all. Our Airport Use Agreement with Miami International Airport does not guarantee availability of boarding gates or landing slots at that airport.
Our reputation and business could be adversely affected in the event of an emergency, accident or similar public incident involving our aircraft or personnel.
A major safety incident involving GlobalX’s aircraft during operations would likely incur substantial repair or replacement costs to the damaged aircraft and a disruption in service. GlobalX could also incur potentially significant claims relating to injured passengers and parties, along with a significant negative impact on GlobalX’s reputation for safety, adversely affecting GlobalX’s ability to attract and retain passengers.
We may face unanticipated obstacles to the execution of GlobalX’s business plan.
As GlobalX’s business evolves and grows, its business plans may change significantly. GlobalX may need to make significant modifications to some or all of GlobalX’s stated strategies depending on future events or developments in the marketplace. We may struggle to adapt our business plan or fail to anticipate the changes that are necessary in order for our business to be successful. The execution of GlobalX’s business plan is capital intensive and may become subject to statutory or regulatory requirements.
We may require additional capital, which may not be available on terms acceptable to us or at all.
The ability of GlobalX to execute its build-out and growth strategy and achieve operations will depend on acquiring substantial additional financing through debt financing, equity financing or other means. Failure to obtain such financing may result in the delay or indefinite postponement of such growth strategy or even impact the ability of GlobalX to continue as a going concern.
There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable to GlobalX. If additional financing is raised by GlobalX through the issuance of its securities, shareholders may suffer significant dilution. If additional financing is not available, or if available, not available on satisfactory terms, then this could result in a material adverse effect or could require GlobalX to reduce, delay, scale back or eliminate portions of its actual or proposed operations or could prevent GlobalX from continuing as a going concern.
GlobalX may also need to raise capital by incurring long-term or short-term indebtedness in order to fund its business objectives. This could result in increased interest expense and decreased net income. Investors are cautioned that there can be no assurance as to the terms of such financing and whether such financing will be available. The level of GlobalX’s indebtedness could impair its ability to obtain additional financing in the future on a timely basis to take advantage of business opportunities that may arise.
We rely on third-party specialists and other commercial partners to perform functions integral to our operations.
GlobalX is expected to secure goods and services from a number of third party suppliers. Any significant interruption in the provision of goods and services from any such key suppliers, some of which would be beyond GlobalX’s control, or any significant increase in price of such goods and services, could have a material adverse effect. GlobalX will be reliant upon providers of aircraft, such as Airbus and other third party leasing companies, which will make GlobalX susceptible to any problems connected with aircraft or engines or components, including defective materials, mechanical problems or negative perceptions in the traveling community. The delay or
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inability of any provider of aircraft to deliver aircraft or engines or components as GlobalX requires could negatively impact GlobalX’s growth strategy and could result in a material adverse effect.
Our business may become subject to disruption due to unscheduled maintenance and variability in fuel costs.
Given the limited number of aircraft GlobalX currently operates, if one or more aircraft becomes unavailable due to unscheduled maintenance, repairs or other reasons, GlobalX could suffer material adverse financial and reputational impacts.
Our business has been and in the future may be materially adversely affected by the price and availability of aircraft fuel. Unexpected increases in the price of aircraft fuel or a shortage or disruption in the supply of aircraft fuel could have a material adverse effect on our business, results of operations and financial condition. For example, a major hurricane making landfall along the Gulf Coast could disrupt oil production, refinery operations and pipeline capacity in that region, possibly resulting in significant increases in the price of aircraft fuel and diminished availability of aircraft fuel supply. Fuel prices also may be affected by geopolitical and macroeconomic conditions and events that are outside of our control, including volatility in the relative strength of the U.S. dollar, the currency in which oil is denominated. Instability within major oil producing regions, such as the Middle East and Venezuela, Russia’s ongoing conflict in Ukraine, ongoing conflicts throughout the Middle East, changes in demand from major petroleum users such as China, and increases in competing energy sources are examples of these trends.
GlobalX will be dependent on fuel to operate its business. Fuel supply is impacted by a host of global events outside of GlobalX’s control, such as significant weather events, market speculation, geopolitical tensions, refinery capacity, government taxes and levies, and GlobalX demand and supply. A significant change in fuel availability would materially affect GlobalX’s projected operating results and growth strategy.
We operate a limited number of aircraft types.
Critical to GlobalX’s business model is a supply of modern and cost-effective aircraft that can service the various sectors required to fly GlobalX’s planned route network. If the A320 family of aircraft is not available in accordance with GlobalX growth strategy or if the aircraft lease or maintenance costs increase drastically, then there could be a material impact on GlobalX’s growth strategy, cost structure and potential profitability. In addition, a switch to a different family of aircraft could have a material adverse effect on our cost structure.
A critical cost-saving element of our business strategy is to operate a limited number of aircraft types; however, our dependence on the A320 family of aircraft for all of our aircraft makes us vulnerable to any design defects or mechanical problems associated with this aircraft type or these engines. In the event of any actual or suspected design defects or mechanical problems with this family of aircraft, whether involving our aircraft or that of another airline, we may choose or be required to suspend or restrict the use of our aircraft. Our business could also be materially adversely affected if the public avoids flying on our aircraft due to an adverse perception of our plane type or engine type, whether because of safety concerns or other problems, real or perceived, or in the event of an accident involving such aircraft or engine. Our intellectual property rights, particularly our branding rights, are vulnerable, and any inability to protect them may adversely affect our business and financial results.
We consider our intellectual property rights, particularly our branding rights such as our trademark applicable to our airline, to be a significant and valuable aspect of our business. We aim to protect our intellectual property rights through a combination of trademark, copyright and other forms of legal protection, contractual agreements and policing of third-party misuses of our intellectual property, but cannot guarantee that such efforts will be successful. Our failure to obtain or adequately protect our intellectual property or any change in the law that lessens or removes the current legal protections of our intellectual property may diminish our competitiveness and adversely affect our business and financial results. Any litigation or disputes regarding intellectual property may be costly and time-consuming and may divert the attention of our management and key personnel from our business operations, either of which may adversely affect our business and financial results.
Our quarterly results of operations fluctuate due to a number of factors, including seasonality.
The charter airline industry is seasonal. The demand for and the pricing of charter services does fluctuate throughout the year, as it does with most air travel industries. Historically, demand for air travel can vary greatly on a month to month basis different customers due to seasonality. This can be offset by managing the customer mix, longer term contracts with guaranteed minimum hours and focusing on different geographies. In as much as GlobalX has fixed costs relating to air crews, insurance, leases, rent, and other payments, lower periods of demand, combined with lower prices, could lead to negative cash flow and earnings for a given period.
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Threatened or actual terrorist attacks or security concerns involving airlines could have a material adverse effect on our business, results of operations and financial condition.
The September 11, 2001 terrorist attacks and subsequent terrorist activity have caused uncertainty in the minds of the traveling public. The occurrence of a major terrorist attack or attempted terrorist attack (whether domestic or international and whether involving GlobalX or another carrier or no carrier at all) and additional restrictive security measures that are implemented in response could have a material adverse effect on passenger demand for air travel and on the number of passengers traveling on GlobalX’s flights. It could also lead to a substantial increase in insurance, airport security and other costs. Any resulting reduction in passenger revenues and/or increases in insurance, security or other costs could result in a material adverse effect.
General economic conditions may reduce the demand for our services.
The financial success of GlobalX may be sensitive to adverse changes in general economic conditions in the United States such as war, terrorist attacks, recession, inflation, labor disputes, demographic changes, pandemics, weather or climate changes, unemployment and interest rates. Such changing conditions could reduce demand in the marketplace for GlobalX’s services.
Inflation may have an adverse impact on our business, results of operations and financial condition.
In recent years, inflation increased throughout the U.S. economy. In response, the Federal Reserve raised certain benchmark interest rates in an effort to combat inflation. Inflation can adversely affect us by resulting in increased costs of goods and services, including those GlobalX uses in its operations, which would increase GlobalX’s expenses. In addition, GlobalX’s customers could also be affected by inflation, which could have a negative impact on demand for air travel. If the U.S. economy continues to feel the effects of inflationary pressures, then GlobalX’s business, results of operations and financial condition could be materially adversely affected.
We may become involved in litigation that may materially adversely affect us.
GlobalX may be subject to litigation arising out of its operations. Damages claimed under such litigation may be material or may be indeterminate, and the outcome of such litigation may materially impact GlobalX’s business, results of operations, or financial condition. While GlobalX will assess the merits of any lawsuit and defend itself accordingly, it may be required to incur significant expense or devote significant financial resources to defending itself against such litigation. In addition, the adverse publicity surrounding such claims may result in a material adverse effect.
Increased labor costs, union disputes, employee strikes and other labor-related disruption, may adversely affect our business, results of operations and financial condition.
GlobalX currently has and intends to maintain a non-unionized workforce. In the event that unionization activities occur with its workforce, GlobalX will incur increased labor costs. Increased labor costs will negatively impact GlobalX’s cost structure and will adversely affect GlobalX’s ability to successfully operate its business.
Many factors could affect our ability to control our costs and to maintain a low cost structure.
Our business plan calls for our operations to be based out of three primary hubs; MIA, AEX and HRL, with the vast majority of our projected flights consisting of daily round trips departing from and returning to their respective bases. If we are unable to continue to secure operating capacity at these hubs for our operations or planned expansion, then our business will be substantially harmed. And, assuming that we do obtain operating capacity at these locations, there is no guarantee that the fees and other costs related to operating out of these locations will not increase. Our operating performance and results of operations could be harmed by any such increase in fees or costs charged by the airport.
We rely heavily on technology and automated systems to operate our business and any failure of these technologies or systems or failure by their operators could harm our business.
We have put in place a significant amount of information technology and automated systems to operate our business. The functionality of these systems is one of the keys to achieving low operating costs. These systems include a computerized airline reservation system, flight operations system, financial planning, management and accounting systems, telecommunications systems, website and maintenance systems. For our operations to work efficiently, all of our systems will need to be able to accommodate a high volume of traffic, maintain secure information and deliver flight information. If any of our operational systems fail or experience interruptions, then we could lose a significant amount of revenue and experience operational difficulties which could lead to reputational harm and have a material adverse impact on our business.
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Unauthorized breach of our information technology infrastructure could compromise the personally identifiable information of our passengers, prospective passengers or personnel and expose us to liability, damage our reputation and have a material adverse effect on our business, results of operations and financial condition.
Our processing, storage, use and disclosure of personal data could give rise to liabilities as a result of government regulation or a significant data breach may adversely affect the Company’s business. In our regular business operations, we collect, transmit, process and store sensitive data, including personal and financial information of our customers and employees such as payment processing information and information of our business partners. GlobalX depends on the ability to use information we collect to provide our services and operate our business.
GlobalX must manage increasing legislative, regulatory and consumer focus on privacy issues and data security. For example, in May 2018, the EU’s General Data Protection Regulation became effective, which imposes significant privacy and data security requirements, as well as potential for substantial penalties for non-compliance. Recent penalties imposed by regulators have resulted in substantial adverse financial consequences to those companies. Also, some of GlobalX’s commercial partners, such as credit card companies, have imposed data security standards that GlobalX must meet. These standards continue to evolve. GlobalX will continue its efforts to meet its privacy and data security obligations; however, it is possible that certain new obligations or customer expectations may be difficult to meet and could increase GlobalX’s costs.
Additionally, GlobalX must manage evolving cybersecurity risks. Our network systems and storage applications, and those systems and storage and other business applications maintained by our third-party providers, may be subject to attempts to gain unauthorized access, breach, malfeasance or other system disruptions. In some cases, it is difficult to anticipate or to detect immediately such incidents and the damage caused thereby. In addition, as attacks by cybercriminals become more sophisticated, frequent and intense, the costs of proactive defense measures may increase. While we continually work to safeguard our internal network systems, including through risk assessments, system monitoring, information security policies and employee awareness and training, and review and validate our third-party security standards, there is no assurance that such actions will be sufficient to prevent cyber-attacks or data breaches.
The loss, disclosure, misappropriation of or access to customers’, employees’ or business partners’ information or GlobalX’s failure to meet its obligations could result in legal claims or proceedings, penalties and remediation costs. A significant data breach or GlobalX’s failure to meet its obligations may adversely affect GlobalX’s reputation, relationships with our business partners, business, operating results and financial condition.
Failure to comply with applicable environmental laws and regulations could have a material adverse effect on our business, results of operations and financial condition.
We expect to be subject to stringent federal, state, local and foreign laws, regulations and ordinances relating to the protection of the environment, including those relating to emissions to the air, discharges to surface and subsurface waters, safe drinking water, and the management of hazardous substances, oils and waste materials. Compliance with all environmental laws and regulations can require significant expenditures and any future regulatory developments in the U.S. and abroad could adversely affect operations and increase operating costs in the airline industry. Future operations and financial results may vary as a result of environmental laws and regulations. Compliance with environmental laws and regulations that may be applicable to us in the future could increase our cost base and could have a material adverse effect on our business, results of operations and financial condition. Governmental authorities in several U.S. and foreign cities are also considering or have already implemented aircraft noise reduction programs, including the imposition of nighttime curfews and limitations on daytime take-offs and landings, which could adversely affect our operations going forward, particularly if locally-imposed regulations become more restrictive or widespread.
Changes in legislation, regulation and government policy have affected, and may in the future have a material adverse effect on, our business.
Executive orders could affect GlobalX’s business, operations, strategies and increase GlobalX’s costs of compliance. Any such changes may make it more difficult and/or more expensive for GlobalX to acquire or lease new aircraft or engines and parts to maintain existing aircraft or engines or make flying less profitable. GlobalX also faces uncertainty regarding increased tariffs under the second Trump Administration, which could result in retaliatory tariffs imposed on U.S. businesses from countries affected by such tariffs. While GlobalX cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the United States and other countries, the tariffs described above, the adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs, trade agreements or related policies have the potential to adversely impact GlobalX’s business, results of operations, and financial condition. Any tariffs imposed on commercial aircraft and related parts imported from outside the United States may have a material adverse effect on GlobalX’s fleet, business, financial condition and results of operations. To the extent that any such changes have a negative impact on us or the airline industry, including as a result of related uncertainty, these changes may materially and adversely impact GlobalX’s business, financial condition, results of operations and cash flows.
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Non-compliance with regulations and guidelines for minimizing aircraft emissions and their impact on climate change.
Concerns about climate change may prompt governments to introduce regulatory changes affecting the aviation industry, potentially resulting in increased costs. These changes could involve emission reduction requirements, capital investments in specific equipment or technologies, or other additional expenses linked to emissions. Indirectly, these regulatory activities may raise operating costs, including fuel expenses.
Assets securing loans, such as aircraft, spare parts, and airport slots, may depreciate if there is a shift in customer demand towards low-carbon alternatives. Operational impacts, such as increased flight cancellations, may result in revenue loss. We may incur significant expenses to enhance the climate resilience of our infrastructure in response to the physical effects of climate change, although the materiality of such costs remains uncertain.
Growing public awareness of climate change threats might lead customers to reduce air travel frequency or opt for airlines perceived as more environmentally sustainable. Business customers may explore alternatives like virtual meetings and workspaces. The advancement of high-speed rail in markets served by short-haul flights may offer passengers lower-carbon travel options, affecting the demand for our services.
In addition, the ICAO endorsed the implementation of CORSIA. CORSIA aims to achieve carbon-neutral growth in the global aviation sector from 2021 to 2035. It mandates airlines to offset the increase in CO2 emissions, relative to an ICAO-defined baseline, for a significant majority of international flights. This offsetting is accomplished through the acquisition of carbon offsets or the utilization of low-carbon fuels.
The future costs associated with CORSIA compliance are uncertain, influenced by variables like the availability and pricing of carbon offset credits and low-carbon aircraft fuels. We acknowledge the potential impact on our business due to the uncertain landscape of compliance costs.
Notably, we lack direct control over CORSIA compliance costs until 2032, as they are contingent on global aviation sector emissions growth. Beginning in 2033, such requirements incorporate a factor for individual airline operator emissions growth. Due to the competitive and unpredictable nature of the airline industry, we cannot assure the ability to offset CORSIA-related costs through fare adjustments, surcharges, revenue increases, or other operating cost reductions.
We have a significant amount of aircraft-related fixed obligations that could impair our liquidity and thereby harm our business, results of operations and financial condition.
We expect to lease or finance the majority of our aircraft. Our ability to pay the fixed costs associated with our contractual obligations under these leases and debt arrangements will depend on our operating performance and cash flow, which will in turn depend on, among other things, the success of our current business strategy, whether fuel prices continue at current price levels and/or further increase or decrease, further weakening or improving in the U.S. economy, as well as general economic and political conditions and other factors that are, to some extent, beyond our control. The amount of our aircraft related fixed obligations could have a material adverse effect on our business, results of operations and financial condition.
Rising maintenance and repair costs could adversely affect cash flow and results of operation.
As we anticipate taking delivery of all aircraft fresh from maintenance, our initial maintenance costs will in all likelihood be lower at delivery of the aircraft and rise throughout the term of the lease or ownership of the aircraft. Our fleet will require more maintenance as it ages and our maintenance and repair expenses for each of our aircraft will likely be incurred at approximately the same intervals. Moreover, because much of our current fleet has been acquired over a relatively short period, significant maintenance that is scheduled on each of these planes will likely occur at roughly the same time, meaning we will likely incur our most expensive scheduled maintenance obligations, known as heavy maintenance, across our present fleet around the same time. These more significant maintenance activities could result in out-of-service periods during which our aircraft are dedicated to maintenance activities and unavailable to generate revenue. In addition, we anticipate that the terms of our lease agreements will require us to pay supplemental rent, also known as maintenance reserves, to be paid to the lessor in advance of the performance of major maintenance, resulting in our recording significant prepaid deposits on our balance sheet. We expect scheduled and unscheduled aircraft maintenance expenses to increase as a percentage of our revenue over the next several years. Any significant increase in maintenance and repair expenses would have a material adverse effect on our business, results of operations and financial condition.
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We may face difficulties in recruiting and hiring our workforce.
From time to time, the airline industry has experienced a shortage of personnel licensed by the FAA, especially pilots and mechanics. We expect to compete against the major U.S. and foreign flag airlines for labor in these highly-skilled positions. Major U.S. airlines may offer wage and benefit packages that exceed our wage and benefit packages. If we are unable to hire, train and retain qualified employees at its anticipated costs, we may be unable to successfully execute our business plan. Moreover, in the future, we may have to increase wages and benefits in order to attract and retain qualified personnel or risk considerable employee turnover.
The airline industry is particularly sensitive to changes in economic conditions.
Negative economic conditions or a recurrence of such conditions would negatively impact our business, results of operations and financial condition. Our business and the airline industry in general are affected by many changing economic conditions beyond our control, including, among others:
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changes and volatility in general economic conditions, including the severity and duration of any downturn in the U.S. or global economy and financial markets;
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changes in consumer preferences, perceptions, spending patterns or demographic trends, including any increased preference for higher-fare carriers offering higher amenity levels, and reduced preferences for low-fare carriers offering more basic transportation, during better economic times;
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higher levels of unemployment and varying levels of disposable or discretionary income;
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depressed housing and stock market prices; and
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lower levels of actual or perceived consumer confidence.
These factors can adversely affect the results of our operations, our ability to obtain financing on acceptable terms, and our liquidity generally. Unfavorable general economic conditions, such as higher unemployment rates, a constrained credit market, housing-related pressures and increased focus on reducing business operating costs can reduce spending for leisure, visiting friends and relatives, and business travel. For many travelers, in particular leisure travelers visiting friends and relatives, air transportation is a discretionary purchase that they can eliminate from their spending in difficult economic times. Unfavorable economic conditions could also affect our ability to raise prices to counteract increased fuel, labor or other costs, resulting in a material adverse effect on our business, results of operations and financial condition.
Risks associated with our presence in international emerging markets, including political or economic instability, and failure to adequately comply with existing legal requirements, may materially adversely affect us.
We sometimes operate in countries with less developed economies, legal systems, financial markets and business and political environments that are vulnerable to economic and political disruptions, such as significant fluctuations in gross domestic product, interest and currency exchange rates, civil disturbances, government instability, nationalization and expropriation of private assets, trafficking and the imposition of taxes or other charges by governments. The occurrence of any of these events in markets served by us now or in the future and the resulting instability may have a material adverse effect on our business, results of operations and financial condition.
We emphasize compliance with all applicable laws and regulations and implement and refresh policies, procedures and certain ongoing training of our employees, third-party specialists and partners with regard to business ethics and key legal requirements; however, we cannot assure you that our employees, third-party specialists or partners will adhere to our code of ethics, other policies or other legal requirements. If we fail to enforce our policies and procedures properly or maintain adequate recordkeeping and internal accounting practices to record our transactions accurately, then we may be subject to sanctions. In the event we believe or have reason to believe our employees, third-party specialists or partners have or may have violated applicable laws or regulations, we may incur investigation costs, potential penalties and other related costs which in turn may have a material adverse effect on our reputation, business, results of operations and financial condition.
We face limits on foreign ownership and control.
To comply with restrictions imposed by federal law on foreign ownership of U.S. airlines, we restrict voting of shares of capital stock by non-U.S. citizens. The restrictions imposed by federal law currently require that no more than 25% of our stock be voted or controlled, directly or indirectly, by persons who are not U.S. citizens and that our president and at least two-thirds of the members of our board of directors be U.S. citizens.
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To be considered a U.S. citizen, you must be: (1) an individual who is a citizen of the U.S.; (2) a partnership each of whose partners is an individual who is a citizen of the U.S.; or (3) a corporation or association organized under the laws of the U.S. or a state, the District of Columbia, or a territory or possession of the U.S., of which the president and at least two-thirds of the board of directors and other managing officers are citizens of the U.S., which is under the actual control of citizens of the U.S., and in which at least 75 percent of the voting interest is owned and controlled by persons that are citizens of the U.S.
No shares of stock may be voted by or at the direction of non-U.S. citizens unless such shares are registered on a separate stock record, which is referred to as the foreign stock record. Further, no shares of a non-U.S. citizen’s capital stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by federal law.
We are subject to extensive regulation by the FAA, the DOT, the TSA, CBP and other U.S. and foreign governmental agencies, compliance with which could cause us to incur increased costs and adversely affect our business, results of operations and financial condition.
Airlines are subject to extensive regulatory and legal compliance requirements, both domestically and internationally, that involve significant costs. In the last several years, Congress has passed laws, and the DOT, FAA and TSA have issued regulations, relating to the operation of airlines that have required significant expenditures. We expect to continue to incur expenses in connection with complying with government regulations. Additional laws, regulations, taxes and airport rates and charges have been proposed from time to time that could significantly increase the cost of airline operations or reduce the demand for air travel. If adopted, these measures could have the effect of raising charter prices, reducing revenue and increasing costs.
We cannot assure you that these and other laws or regulations enacted in the future will not harm our business. Our ability to operate as an airline is dependent on our maintaining certifications issued to us by the DOT and the FAA. The FAA has the authority to issue mandatory orders relating to, among other things, the grounding of aircraft, inspection of aircraft, installation of new safety-related items and removal and replacement of aircraft parts that have failed or may fail in the future. A decision by the FAA to ground, or require time consuming inspections of or maintenance on, our aircraft, for any reason, could negatively affect our business and financial results. Federal law requires that air carriers operating large aircraft be continuously “fit, willing and able” to provide the services for which they are licensed. Our “fitness” is monitored by the DOT, which considers factors such as unfair or deceptive competition, advertising, baggage liability and disabled passenger transportation. While the DOT has seldom revoked a carrier’s certification for lack of fitness, such an occurrence would render it impossible for us to continue operating as an airline. The DOT may also institute investigations or administrative proceedings against airlines for violations of regulations.
International routes are regulated by treaties and related agreements between the United States and foreign governments. Our ability to operate international routes is subject to change because the applicable arrangements between the United States and foreign governments may be amended from time to time. Our access to new international markets may be limited by our ability to obtain the necessary certificates to fly the international routes. In addition, our operations in foreign countries are subject to regulation by foreign governments and our business may be affected by changes in law and future actions taken by such governments, including granting or withdrawal of government approvals and restrictions on competitive practices. We are subject to numerous foreign regulations based on the large number of countries outside the United States where we currently provide service. If we are not able to comply with this complex regulatory regime, then our business could be significantly harmed.
Risk Factors Relating to Ownership of Our Common Stock
We do not know whether an active, liquid and orderly market will develop for our common stock or what the market price of our common stock will be, and, as a result, it may be difficult for you to sell your shares of our common stock.
Our common stock currently trades on the OTCQB and CBOE CA and our Class B Non-Voting Common Stock trades on the CBOE CA, each with very limited daily trading volume. The market price of our common stock and our Class B Non-Voting Common Stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
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limited daily trading volume resulting in the lack of a liquid market;
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our success in purchasing aircraft, obtaining regulatory approval and other authorizations for our business;
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general market, political and economic conditions;
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changes in fuel prices;
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changes in earnings estimates and recommendations by financial analysts;
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our failure to meet financial analysts’ performance expectations;
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changes in market valuations of our competitors; and
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the expiration of the lock-up periods on shares of our common stock that were outstanding.
Until our common stock is listed on a qualified national securities exchange or our common stock price exceeds $5 per share, our common stock will be considered a “penny stock” and will not qualify for exemption from the “penny stock” restrictions, which may make it more difficult for you to sell your shares.
Our common stock has traded on the OTCQB at a price of less than $5.00 per share and, as a result, is considered a “penny stock” by the SEC and subject to rules adopted by the SEC regulating broker-dealer practices in connection with transactions in “penny stocks.” The SEC has adopted regulations which generally define a “penny stock” to be any equity security that is not listed on a qualified national securities exchange and that has a market price of less than $5.00 per share, or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, these rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule relating to the penny stock market. Disclosure is also required to be made about current quotations for the securities and commissions payable to both the broker-dealer and the registered representative. Finally, broker-dealers must send monthly statements to purchasers of penny stocks disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. As a result of our common stock being subject to the rules on penny stocks, the liquidity of our common stock may be adversely affected.
We will require additional capital in the future and raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our business assets.
We will require additional capital in the future and we may seek additional capital through a combination of public and private equity offerings, debt financings, working capital lines of credit and potential licenses and collaboration agreements. We, and indirectly, our stockholders, will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any future offerings. To the extent that we raise additional capital through the sale of equity or debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. The incurrence of indebtedness would result in increased fixed payment obligations and could involve restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire additional aircraft and other operating restrictions that could adversely impact our ability to conduct our business. Additionally, any future collaborations we enter into with third parties may provide capital in the near term but limit our potential cash flow and revenue in the future.
If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, then the price of our stock could decline.
The trading market for our common stock and our Class B Non-Voting Stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not currently have and may never obtain research coverage by industry or financial analysts. If no or few analysts commence coverage of us, then the trading price of our stock could decrease. Even if we do obtain analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our stock, then the price of our stock could decline. If one or more of these analysts cease to cover our stock, then we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.
Insiders will continue to have substantial influence over us, which could limit your ability to affect the outcome of key transactions, including a change of control.
Our directors, executive officers, holders of more than 5% of our outstanding stock and their respective affiliates beneficially own shares representing approximately 48% of our outstanding common stock . As a result, these stockholders, if they act together, will be able to influence our management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control of our company and might affect the market price of our common stock and our Class B Non-Voting Common Stock.
Exercise of our warrants or conversion of our Class A Non-Voting Common Stock may dilute the ownership interest of existing stockholders.
Holders of our outstanding warrants and our Class A Non-Voting Common Stock may elect to convert their securities into shares of our common stock. As a result, the conversion of some or all of the convertible securities may dilute the ownership interests of existing stockholders. Any sales in the public market of the common stock issuable upon such conversion of the convertible securities could adversely affect prevailing market prices of our common stock. In addition, the existence of the convertible securities may encourage short selling by market participants because the conversion of the convertible securities could depress the price of our common stock.
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We do not intend to pay cash dividends for the foreseeable future.
We have never declared or paid cash dividends on our common stock. We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business. We do not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in current or future financing instruments, business prospects and such other factors as our board of directors deems relevant.
Our corporate charter and Bylaws include provisions limiting voting and ownership by non-U.S. citizens.
To comply with restrictions imposed by federal law on foreign ownership of U.S. airlines, our Certificate of Incorporation and Bylaws restrict voting of shares of our common stock by non-U.S. citizens. The restrictions imposed by federal law currently require that no more than 25% of our stock be voted, directly or indirectly, by persons who are not U.S. citizens, that no more than 49.9% of our outstanding stock be owned (beneficially or of record) by persons who are not U.S. citizens and that our president and at least two-thirds of the members of our board of directors and senior management be U.S. citizens. Our Bylaws provide that the failure of non-U.S. citizens to register their shares on a separate stock record, which we refer to as the “foreign stock record,” would result in a suspension of their voting rights in the event that the aggregate foreign ownership of the outstanding common stock exceeds the foreign ownership restrictions imposed by federal law. Our Bylaws also provide that any transfer or issuance of our stock that would cause the amount of our stock owned by persons who are not U.S. citizens to exceed foreign ownership restrictions imposed by federal law will be void and of no effect.
Our Bylaws further provide that no shares of our common stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by federal law. If it is determined that the amount registered in the foreign stock record exceeds the foreign ownership restrictions imposed by federal law, then shares will be removed from the foreign stock record in reverse chronological order based on the date of registration therein, until the number of shares registered therein does not exceed the foreign ownership restrictions imposed by federal law. To our knowledge, we are currently in compliance with these ownership restrictions.
We are an “emerging growth company” and a “smaller reporting company” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permitted and plan to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include, but are not limited to: (i) exemption from compliance with the auditor attestation requirements pursuant to SOX; (ii) exemption from compliance with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; (iii) reduced disclosure about our executive compensation arrangements; and (iv) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
We incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.
As a public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company. SOX, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and other applicable securities rules and regulations, including the rules of national securities exchanges, impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.
We expect that we will need to hire additional accounting, finance, and other personnel as we continue to grow to comply with public company reporting requirements, as a public company, and our management and other personnel will need to devote a substantial amount of time towards maintaining compliance with these requirements. These requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, the rules and regulations applicable to us as a public company may make it more difficult and more expensive for us to maintain director and officer liability insurance, which could make it more difficult for us to attract and retain qualified members of our board of directors. We are currently evaluating these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
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Pursuant to Section 404 of SOX, we are required to furnish a report by our management on our internal control over financial reporting beginning with our second filing of an Annual Report on Form 10-K with the SEC after we became a public company. However, while we remain an emerging growth company or smaller reporting company, we are not required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 of SOX within the prescribed period, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we need to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we are not able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404 of SOX. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
Delaware law and provisions in our Certificate of Incorporation and Bylaws might discourage, delay, or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.
Provisions in our Certificate of Incorporation and Bylaws may discourage, delay, or prevent a merger, acquisition, or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. Therefore, these provisions could adversely affect the price of our common stock.
In addition, Section 203 of the General Corporation Law of the State of Delaware, or DGCL, prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns, or within the last three years has owned, 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.
Any provision of our Certificate of Incorporation, Bylaws, or Delaware law that has the effect of delaying or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our capital stock and could also affect the price that some investors are willing to pay for our common stock.
We may experience volatility in the trading price of our shares due to fluctuations in our quarterly operating results or other factors.
Significant fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Trading in the shares
of our common stock has been volatile, often has limited volume and is subject to fluctuations in response to various factors, some of
which are beyond our control. Accordingly, the valuation ascribed to us and our common stock may not be indicative of the price that
will prevail in the trading market in the future. Any of the factors in this Annual Report on Form 10-K could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
As a public company, we are subject to the periodic reporting requirements of the Exchange Act. Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act are accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
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ITEM 1C. CYBERSECURITY
GlobalX’s Audit Committee, comprising board members and senior management from various departments including IT, operations, legal, risk management, and others, diligently engage in regular cybersecurity risk assessments. These comprehensive assessments are designed to proactively identify potential threats, vulnerabilities, and risks that could impact the integrity and security of the company’s airline systems, data infrastructure, and operational continuity. Evaluations span critical areas such as safeguarding flight systems, protecting passenger data, and mitigating operational disruptions.
Moreover, the Audit Committee remains committed to providing timely updates and detailed reports, offering insights into the airline’s cybersecurity posture, ongoing initiatives, prevalent incident trends, and active remediation efforts. These reports are meticulously crafted, incorporating key metrics, performance indicators, and actionable recommendations aimed at continual enhancement.
The Board of Directors (the “Board”) conducts periodic reviews of GlobalX’s cybersecurity policies, procedures, and controls. These reviews are pivotal in ensuring the ongoing effectiveness of the company’s cybersecurity framework and its alignment with emerging threats and evolving industry best practices. Regular updates are meticulously implemented in an effort to fortify the company’s cybersecurity resilience in response to emerging risks and evolving regulatory requirements.
On May 5, 2025, the Company learned of unauthorized activity within its computer networks and systems supporting portions of its business applications, which the Company determined to be the result of a cybersecurity incident. Upon learning of this activity, the Company immediately (1) activated its incident response protocols and third-party cybersecurity experts to assist with containment and mitigation activities and to investigate the nature and scope of the incident and (2) took actions to contain and isolate the affected servers and prevent further intrusion. The Company also promptly notified law enforcement and fully coordinated with them.
The Company conducted an investigation and concluded that none of its operations were disrupted or negatively impacted by the incident or resulted in any material effect on the Company, or its financial condition or results of the operation. In addition, the Company has complied with all federal, state and local requirements for disclosure in regards to the incident.
As of December 31, 2025, and 2024, GlobalX remains proud to report that it has not encountered any cybersecurity incidents that have materially impacted, or are reasonably likely to materially impact, the Company.
ITEM 2. PROPERTIES
Not applicable.
ITEM 3. LEGAL PROCEEDINGS
On October 8, 2021, a former executive of the Company, Mr. Mark Morabito, was alleged to have committed insider trading by transferring shares to his spouse while in possession of undisclosed material information. Consequently (i) Mr. Morabito resigned as a director and officer of the Company on December 12, 2019; (ii) the Company underwent an organizational restructuring with a change of leadership of the Company and the moving of the headquarters of the Company to the United States in June 2020; and (iii) the Company adopted an Insider Trading Policy applicable to all employees, directors and officers. Mr. Morabito (joined by GlobalX) appealed to the British Columbia Court of Appeal regarding an abuse of process hearing. The British Columbia Court of Appeal ruled in favor of Mr. Morabito (and GlobalX) and ordered a new hearing on the abuse of process matter be held in front a new panel of British Columbia Securities Commission. On July 25, 2025, GlobalX and Mr. Morabito entered into a settlement agreement pursuant to which the parties agreed that GlobalX would pay Mr. Morabito approximately $4,000. Pursuant to the terms of the settlement agreement, in the third quarter of 2025 GlobalX paid the full settlement amount and Mr. Morabito has since filed a satisfaction of judgment in the British Columbia Court of Appeal, effectively settling this issue.
There have been no material changes in our risk factors from those disclosed above in “Part I. Item 1A. Risk Factors”.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our shares of common stock are traded on the OTCQB Marketplace (“OTCQB”) under the symbol “JETMF” and on the CBOE Canada (“CBOE CA”) under the symbol “JET.” Our shares of Class B Non-Voting Common Stock are traded on the CBOE CA under the symbol “JET.B”.
Dividend Policy
The Company has not paid any cash dividends. In deciding whether to recommend any future dividend on our common stock, the Board would take into account any legal or contractual limitations, our actual and anticipated future earnings, cash flows, debt service, and capital requirements, our business plans and such other matters as the Board believes appropriate, in its discretion. We anticipate that any available cash will be retained by us to satisfy our operational and other cash needs. Accordingly, we do not expect to pay any cash dividend on shares of common stock in the foreseeable future.
The equity compensation plan information called for by Item 201(d) of Regulation S-K is hereby incorporated by reference from our Proxy Statement pertaining to our 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the Company’s fiscal year end covered by this Annual Report on Form 10-K.
Issuer Purchases of Equity Securities
We did not purchase any of our registered equity securities during the period covered by this Annual Report on Form 10-K.
ITEM 6. [Reserved]
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the Financial Statements included in Item 8 of this report. This Item 7 contains forward-looking statements that involve risks and uncertainties. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date of this report. Actual results may differ materially from those expressed or implied in such forward-looking statements. Factors which could cause actual results to differ materially are discussed throughout this report and include, but are not limited to, those set forth at the end of this Item 7 under the heading “Cautionary Note Regarding Forward-Looking Statements.” Additional factors are found in Item 1A under the heading “Risk Factors”.
Background
Certain Terms - Glossary
The following represents terms and statistics specific to our business and industry. They are used by management to evaluate and measure operations, results, productivity, and efficiency.
Utilization: The average number of Block Hours operated per day per aircraft.
Business Overview
GlobalX operates a US Part 121 domestic flag and supplemental airline using the Airbus A320 family of aircraft. GlobalX’s business model is to (1) provide services on an ACMI basis using wet lease contracts to airlines, whereby we provide aircraft, crew, maintenance, and insurance to customers, and (2) on a Charter basis whereby we provide passenger aircraft charter services to customers by charging an “all-in” fee that includes fuel, insurance, landing fees, navigation fees and most other operational fees and costs. GlobalX operates within the United States, Europe, Canada, the Caribbean Islands, and Central and South America.
Focused on becoming a market leader with differentiated, value-creating solutions
GlobalX intends to become the best-in-class U.S. narrow-body, ACMI charter airline, operating both passenger and cargo charter aircraft while recruiting and maintaining a dynamic team of customer-centric flight crews, ground and maintenance teams and management staff.
GlobalX operates its A320 family aircraft for government agencies, airlines, tour operators, college and professional sports teams, and incentive groups. It is our goal to deliver best in class on time performance and dispatch reliability, expand existing relationships and develop additional relationships.
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Business Developments
During the twelve month period ended December 31, 2025 the team devoted efforts towards our stated goal of creating the largest narrow body charter operation in North America with an aim of generating sustainable, long-term profits. To achieve this goal, GlobalX continues to invest in its three key assets– certifications, aircraft, and crew.
From a certifications perspective GlobalX, in the twelve month period ended December 31, 2025, received approval from the Australian Civil Aviation Authority to allow flights into and out of Australia.
From an aircraft perspective GlobalX, in the twelve month period ended December 31, 2025:
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Entered into lease agreements for four A319 passenger aircraft.
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Took delivery of one A321 passenger aircraft, one A319 aircraft and one A320 airframe.
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Leased two engines for the delivered A320 airframe
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Purchased one A320 passenger aircraft, which had been previously leased by GlobalX.
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Extended leases of one A320 aircraft and one A321 aircraft each of which is currently in our fleet.
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Returned one A319 aircraft to the lessor per the terms of the applicable lease.
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Completed nine heavy maintenance events and forty-two non-heavy maintenance events.
From a crew perspective, GlobalX in the twelve month period ended December 31, 2025, increased its pilot headcount from 142 to an all-time Company high of 154.
In short, the twelve month period ended December 31, 2025, was a time when GlobalX invested in its people, prepared for its growth, and established a robust infrastructure for its future.
Reducing Operational Costs
To control costs and maintain a competitive cost per Block Hour flown, GlobalX:
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Flies only one aircraft family (A320).
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Maintains focus on continuous financial discipline and strict departmental budgeting.
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Has implemented and utilizes digital operating methods for both flight and maintenance operations, using best in class aviation software operating systems from leading suppliers including dispatch (Navblue), maintenance (Trax) and training software (Mint). By capitalizing on the latest software, GlobalX can effectively eliminate most manual processes and operate effectively with fewer people than a comparably-sized airline using older software systems.
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Promotes organizational culture of efficiency and high productivity.
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In late Q3, GlobalX initiated several actions to reduce headcount and salaries to better match our revenue projections. Headcount in December was reduced to 661 from a high of 727 in July.
Marketing Plan
GlobalX plans to achieve its revenue goals by flying charter operations for a variety of client groups:
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Scheduled airlines that have short-term or long-term capacity needs to supplement their existing routes or fleets.
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Major tour operators that require airlift above and beyond scheduled service to meet their occupancy needs.
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Professional and collegiate sports teams
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Charter brokers representing a variety of interests, including the entertainment industry, dignitary travel, political campaigns, and government programs.
The Cargo Charter Market
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GlobalX added the A321F aircraft to its operating certificate during the first quarter of 2023. The Company believes that the A321F will eventually be a highly sought-after cargo aircraft as a replacement for the aging and retiring Boeing B757 freighter fleet. During the twelve months ended December 31, 2025, we had four cargo aircraft operating. In 2025, GlobalX saw a 55% increase in Block Hours operated compared to 2024. Despite this increased activity level, the cargo charter market continues to be a significant drag on earnings. This is primarily due to the low rates being offered by brokers and customers and the relatively low utilization rates on a per aircraft basis, relative to the rates offered. We expect this dynamic to continue into 2026, and consequently, we are exploring all options to mitigate future losses, including, but not limited to, leasing out engines, parking aircraft, and or returning one or more of our freighter aircraft to lessors.
The Passenger Charter Market
Unlike the cargo charter market, the passenger charter market continues to demonstrate strong demand and served as the economic engine for GlobalX in 2025. There are several macro factors, including the supply of aircraft, reduced direct competition, increased reliance on air charter by college sports teams and general increased customer demand, which are driving increased demand for our services. GlobalX anticipates the high level of demand will continue into 2026. To address this demand, the Company has prioritized the passenger charter market over the cargo charter market, devoted sales and operational resources to develop long-term relationships with key customers and looked to expand the markets served as opportunities arise.
GlobalX Aircraft Fleet
Critical to GlobalX’s business model is a fleet of modern and cost-effective aircraft. To achieve this objective, GlobalX has selected what it believes is the best overall single-aisle aircraft family to operate. This approach differs from traditional airlines, which purchase a variety of aircraft, often from different manufacturers, to achieve their operational flight sectors, resulting in increased training, operating costs and maintenance costs. GlobalX conducted research to determine the best aircraft to fly in competition with other narrow-body charter airlines in the single-aisle seat market and after such research GlobalX selected the A320 aircraft family.
The following factors support GlobalX’s choice to operate the Airbus A320 and A321 aircraft versus the Boeing-737 family of aircraft:
Cost and Operating factors: lower fuel burn, and better aircraft and cockpit crew pool availability.
Operational Capability: the A320 has a range advantage over the 737-800 and can fly non-stop from Miami to most airports throughout North America, South America and the Caribbean, and between most major destinations in Europe. The A320 has excellent maintenance dispatch reliability and strong availability of spare parts and components, making the A320, in management’s estimation, the most popular aircraft among low-cost airlines.
Passenger comfort: wider seat width, larger cargo bin volume for carry-on baggage and larger cargo hold volume.
Aircraft Maintenance
Heavy maintenance checks are expected to be outsourced to FAA-approved service providers. The 6Y and 12Y Checks will be primarily paid for using funds from the accrued maintenance reserves paid to lessors under operating leases.
Strategy to Address Competitive Response
We expect the existing charter operators based in the U.S. to respond to GlobalX’s entry into the market by lowering their pricing to customers. The expected competitive response typically includes lowered ACMI rates for key contracts. We believe GlobalX’s existing relationships with potential customers and the underserved demand in the U.S., coupled with our newer planes allowing for a more cost-efficient operation, will allow us to address and respond to competitive pressures and grow our business.
Experienced management team
Our management team has extensive operating and leadership experience in the airfreight, airline, and aircraft leasing, maintenance, and management industries at companies such as Virgin America, American Airlines, US Airways, Atlas Air, DHL, Eastern Airlines Express, Emirates, North American Airlines, Miami Air, Spirit Airlines, Continental Airlines, Pan Am, and Flair Airlines, as well as the United States Army, and Air Force. In addition, our management team has a diversity of experience from other industries at companies such as KBR, Teladoc, Halliburton, Lehman Brothers, and the Burger King Corporation.
Results of Operations
22
Years ended December 31, 2025 and 2024
Operating Revenue & Statistics
The analysis of GlobalX results for the years ended December 31, 2025 and 2024 requires an understanding of how the Company fundamentally evolved during that time period. 2024 was our third year of full operations and was a period where the Company was focused on securing additional customers, entering new markets and flying to additional locations; primarily in the domestic and Caribbean markets and within the European market. As a growing company, we were also focused on operating effectively and efficiently.
In 2025, GlobalX continued expanding existing governmental agency relationships, acquired new partners, secured long-term cargo contracts, expandedoperations in the European ACMI market and continued its operations with existing airlines. Our key metric is Block Hours flown and Block Hours flown per available aircraft, which is the measure by which we track commercial activity. While other airlines discuss available seat miles and revenue per available seat mile, cost per available seat mile, these metrics are not germane to our business model as an ACMI and Charter operator. GlobalX charters the entire aircraft, does not take fuel risk, and does not take third party risk therefore our results are evaluated on a Block Hour and Utilization basis.
The following table compares our Operating Fleet (average aircraft equivalents during the period) and total Block Hours operated:
Year Ended December 31,
Operating Fleet 2025 2024 Inc/(Dec) % Change
Total Operating Average Aircraft Equivalents 19.0 16.4 2.6 15.7 %
The following table describes the revenues (in thousands) generated by the Charter, ACMI, and Other operations of GlobalX’s business as well as the number of Block Hours serviced by the Charter, ACMI, and Non-Revenue operations of GlobalX’s business.
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Year Ended December 31,
Block Hours
Revenue per Block Hour
Charter revenue for the period decreased $33.2 million or 34.8%, from $95.5 million in 2024 to $62.3 million in 2025. This reduction was primarily driven by a reduction in Charter Block Hours of 28.1%, decreasing from 7,582 Block Hours in 2024 to 4,580 block hours in 2025, which resulted in a $36.2 million reduction in revenue. This reduction was partially offset by an increase in the rate for Charter flying of 4.8% from $12,590 per Block Hour in 2024 to $16,594 per Block Hour in 2025, resulting in a $1.0 million increase in revenue. The decrease in Charter Block Hours was due to an intentional focus on an increased level of flying on an ACMI basis and the Company’s exit from the Cuba-based charter market.
ACMI revenue for the period increased by $52.7 million or 42.8% from $123.1 million in 2024 to $175.8 million in 2025. This increase was driven by an increase in Block Hours from 20,539 in 2024 to 28,251 in 2025, an increase of 37.5% or 7,712 Block Hours. This increase in volume accounted for 86.3% or $45.5 million of the revenue increase. The average revenue per Block Hour increased $257 from $5,992 per Block Hour in 2024 to $6,222 per Block Hour in 2025 and accounted for $7.2 million or 13.7% of the revenue increase. The primary driver for the rate increase was related to our ability to negotiate higher rates with key customers underpinned by strong market demand and a shortage of supply.
Other revenue for the period increased by $3.1 million from $5.2 million in 2024 to $8.3 million in 2025. The increase is primarily driven by more ancillary services provided to our customers.
Operating Expenses
The following table compares our Operating Expenses (in thousands):
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Year Ended December 31,
Operating Expenses 2025 2024 Inc/(Dec) % Change
Salaries, wages, and benefits increased $12.7 million or 18.8%, from $67.8 million in 2024 to $80.5 million in 2025, primarily due to an increase in the overall headcount in late 2024 and early 2025. In late Q3 of 2025, several actions were initiated to reduce headcount and salaries in response to aircraft delivery delays and subsequent revenue projections. In December 2025, headcount was reduced to 661 from a high of 727 in July, which will continue to yield operational savings in 2026.
Aircraft fuel decreased by $8.6 million or 36.0%, from $23.8 million to $15.3 million. Approximately 68.6% or $5.9 million of this decrease is attributable to the reduction in the amount of Charter and Non-Revenue Block Hours and approximately 31.4% or $2.7 million is attributable to a reduction in the price of base jet fuel.
Maintenance, materials, and repairs increased by $5.9 million or 44.7%, from $13.2 million to $19.1 million. $3.2 million of the increase or 54.2% was primarily due to the volume of Block Hours flown which increased 6,389 or 24.0% from 26,628 to 33,017 Block Hours. In addition, rate per Block Hour increased $83 per Block Hour or 16.7% from $496 per Block Hour to $579 per Block Hour resulting in an additional $2.7 million of expense. This is primarily due to significant price inflation in both labor and parts.
Depreciation and amortization increased by $5.7 million or 90.8%, from $6.3 million in 2024 to $12.0 million in 2025, primarily driven by aircraft deliveries secured on capital leases, the purchase of an A320 aircraft, and an increase in rotable parts owned.
Contracted ground and aviation services expenses decreased by $1.4 million or 7.1%, from $19.6 million in 2024 to $18.2 million in 2025. This was primarily driven by the reduced number of charter hours since contracted ground and aviation services are not associated with ACMI services.
Travel expensesdecreased $1.7 million or 15.0%, from $11.2 million to $9.5 million. This decrease was primarily driven by a conscious effort of management to focus on reducing travel expense through the creation of local bases tied to flight activity and contract rate negotiations. We are happy with the improvement in 2025 and will continue this focus into 2026.
Insurance expenses decreased $1.0 million or 15.8%, from $6.2 million to $5.2 million, primarily related to a favorable renegotiation of our insurance rates.
Aircraft rent expensesdecreased $0.3 million or 0.4%, from $57.7 million in 2024 to $57.4 million in 2025, primarily driven by a $7.8 million decrease in the number of sub service hours required in 2025 versus 2024. Adding to the savings was a decrease in base rent expenses of $1.1 million or 3.7% from $29.5 million in 2024 to $28.4 million in 2025 driven by a decrease in the average number of aircraft on operating leases in the fleet from 14.2 in 2024 to 13.8 in 2025. Offsetting the savings, was an increase in supplemental rent expenses of $8.6 million or 48.7%, from $17.7 million in 2024 to $26.3 million in 2025 driven by a year-over-year increase in Block Hours.
Operating income (loss) improved $10.0 million, from an operating loss of $1.1 million in 2024 to an operating income of $8.9 million in 2025. This marks the first time in our history that GlobalX has delivered positive operating income. Operating (loss) income as a percentage of revenue improved by 4.1% from (0.5%) in 2024 to 3.6% in 2025. This improvement was a result of GlobalX’s ability to grow its revenue faster than its cost structure as the airline works towards achieving scale and profitability. Three factors drove these results: rates, utilization and scale. The Company’s ACMI rate for the period grew 3.3%, from $5,992 per Block Hour in 2024 to $6,249 per Block Hour in 2025. The Company’s average utilization per available aircraft grew 6.8% for the period from 1,930 Block Hours in 2024 to 2,062 Block Hours in 2025. The Company’s increasing scale also contributed to this positive result, for example, there were savings on a per block hour basis in travel and insurance, which combined with the other factors to drive the improvement.
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Non-Operating Expenses
The following table compares our Non-Operating Expenses (in thousands):
Year Ended December 31,
Non-Operating Expenses 2025 2024 Inc/(Dec) % Change
Loss in Canada Jetlines Operations Ltd. - 1,300 (1,300 ) N/A
Interest expense, increased $2.6 million or 28.5% from $9.0 million to $11.5 million driven by the increase of aircraft on capital leases from 2.2 to 4.7 equivalent aircraft, and the financed purchase of one aircraft.
Loss in Canada Jetlines Operations. The bankruptcy of Canada Jetlines resulted in a payment of $1.3 million by the Company to a lessor associated with an aircraft lease for which GlobalX had provided a guarantee, there were no further payments owed or made in 2025 pursuant to this guarantee and none are expected to arise in the future.
Net Loss
Net Loss for the period, due to events and circumstances noted above, improved by $8.8 million or 77.2%, from a net loss of $11.4 million in 2024 to $2.6 million in 2025.
Liquidity and Capital Resources
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As of December 31, 2025, the Company had a working capital deficit of $60.5 million and retained deficit of $73.6 million. The Company began flight operations in August 2021. Without ongoing income generation or additional financing, the Company will be unable to fund general and administrative expenses and working capital requirements for the next 12 months. These material uncertainties raise substantial doubt as to the Company’s ability to continue as a going concern.
As of December 31, 2025, the Company had approximately $16.7 million in unrestricted cash and cash equivalents and approximately $3.8 million in restricted cash, an increase of approximately $4.4 million and $2.1 million, respectively, from December 31, 2024. The changes were primarily due to new aircraft deliveries, customer deposits, and cash flow from operations.
The Company has significant fixed and noncancelable lease commitments of aircraft, equipment and related maintenance checks. As of December 31, 2025, the Company had a total of $24.6 million due in the next 12 months of future minimum lease payments under finance and operating leases. As of December 31, 2025, the Company had a total of $100.1 million due after 12 months from the balance sheet date of future minimum lease payments under finance and operating leases, respectively, and approximately $40.5 million in notes payable included in the non-current liabilities presented in the Company’s Consolidated Balance Sheets. The Company finished 2025 with sixteen passenger aircraft and four cargo aircraft and expects the fleet to increase to twenty-one passenger aircraft and remain at four cargo aircraft by the end of 2026. To achieve the number of aircraft deliveries in 2026, the Company currently has threeaircrafts under lease with partial or total deposits paid and two aircraft under binding agreements that are subject to execution of definitive lease documentation and fulfillment of certain closing conditions.
In 2026 GlobalX will continue its business growth by (i) providing services on an ACMI basis using wet lease contracts to airlines and non-airlines, and (ii) on a Charter basis providing passenger and cargo aircraft charter services to customers by charging an “all-in” fee that includes fuel, insurance, landing fees, navigation fees and most other operational fees and costs, (iii) extending GlobalX current operations within the United States, Europe, Canada, Central and South America and continuing recruiting and maintaining a dynamic team of customer-centric flight crews, ground teams and management staff, (iv) Increasing GlobalX’s passenger aircraft fleet to 16 and GlobalX’s cargo aircraft fleet to remain at four within the next 12 months, and (v) projects an increase in total revenue.
The Company expects to improve profitability during the year 2026, mainly as a result of GlobalX’s strategy and ability started in 2024 of developing and implementing growth in its revenue faster than its cost structure. There are a few factors management expects to drive
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the improved margins. The Company expects to continue securing higher rates for both ACMI and Charter contracts and the increase of passenger aircraft from 16 to 21 along with improve seasonality on Cargo aircraft contracts.
The ability of GlobalX to execute its build-out and growth strategy and achieve operations will depend on acquiring substantial additional financing through debt financing, equity financing or other means. Failure to obtain such financing may result in the delay or indefinite postponement of such growth strategy or even impact the ability of GlobalX to continue as a going concern.
There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable to GlobalX. If additional financing is raised by GlobalX through the issuance of its securities, shareholders may suffer significant dilution. If additional financing is not available, or if available, not available on satisfactory terms, then this could result in a material adverse effect or could require GlobalX to reduce, delay, scale back or eliminate portions of its actual or proposed operations or could prevent GlobalX from continuing as a going concern.
GlobalX may also need to raise capital by incurring long-term or short-term indebtedness in order to fund its business objectives. This could result in increased interest expense and decreased net income. Investors are cautioned that there can be no assurance as to the terms of such financing and whether such financing will be available. The level of GlobalX’s indebtedness could impair its ability to obtain additional financing in the future on a timely basis to take advantage of business opportunities that may arise.
The Company regularly assesses its anticipated working capital needs, debt and leverage levels, debt maturities, capital expenditure requirements and future investments or acquisitions to maximize shareholder return, efficiently finance our ongoing operations and maintain flexibility for future strategic transactions. The Company also regularly evaluates its liquidity and capital structure to ensure financial risks, adequate liquidity access and lower cost of capital are efficiently managed. Management is actively assessing various options to procure additional funds, including exploring opportunities for additional equity or debt financing to the extent it determines such financing is necessary or appropriate. Management is confident that the augmented cash and cash equivalents, coupled with the anticipated rise in sales linked to the Company’s strategies to attract more funds, will adequately address the Company’s liquidity requirements.
The most significant liquidity events during 2025 were as follows:
Operating Activities. For 2025, net cash provided by operating activities increased $20.0 million to $28.1 million, consisting primarily of $31.4 million in noncash adjustments for depreciation and amortization of fixed assets, operating lease right of use assets and debt issue costs, $11.9 million of increase in accrued liabilities and other liabilities, $4.7 million in interest on finance leases, $2.7 million of share-based payments, $1.3 million of increase in accounts payable and $0.5 million of credit losses. These were partially offset by $19.6 million of decrease in operating leases obligations, $2.6 million of net loss, $1.3 million of increase in prepaid expenses and other current assets, and $0.5 million of increase in accounts receivable. For 2024, net cash provided by operating activities increased $9.5 million to $8.1 million, consisting primarily of $21.2 million in noncash adjustments for depreciation and amortization of fixed assets, operating lease right of use assets and debt issue costs, $5.3 million of increase in accounts payable, $3.2 million of decrease in accounts receivable, $3.1 million in interest on finance leases, $1.7 million of share-based payments, $0.4 million of decrease in prepaid expenses and other current assets and $0.5 million of credit losses. These were partially offset by $14.4 million of increase in operating lease obligations, $1.3 million of decrease in accrued liabilities and other liabilities, $0.4 million of increase of assets held for sale and $11.4 million of net loss.
Investing Activities. For 2025, net cash used for investing activities increased $4.3 million to $14.3 million, consisting of $11.6 million of Purchases of property and equipment, partially offset by $2.7 million of decrease of deposit, deferred costs and other assets. For 2024, net cash used for investing activities decreased $3.3 million to $10.0 million, consisting of $7.2 million of Purchases of property and equipment and $6.3 million of a decrease of deposit, deferred costs and other assets.
Financing Activities. For 2025, net cash used in financing activities increased $5.6 million to $7.3 million, consisting primarily of $5.6 million of Principal payments on finance leases, $1.5 million of Principal payments on note payable, $0.5 million of Noncontrolling interest dividends paid, and $0.2 million of Debt issue costs, partially offset by $0.3 million from Proceeds on issuance of shares. For 2024, net cash used in financing activities was $1.7 million, consisting of $1.8 million of Principal payments on finance leases and $0.2 million of Noncontrolling interest dividends paid, partially offset by $0.3 million from Proceeds on issuance of shares.
Off-Balance Sheet Arrangements
As of December 31, 2025, the Company had no off-balance sheet arrangements.
Critical Accounting Estimates
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The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if:
•
requires assumptions to be made that were uncertain at the time the estimate was made, and
•
changes in the estimate or different estimates that could have been selected could have a material impact on our results of operations or financial condition
We base our estimates and judgments on our experience, our current knowledge, our beliefs of what could occur in the future, our observation of trends in the industry, information provided by our customers and information available from other resources. Actual results may differ from the estimates under different assumptions or conditions. We have identified the following policies and estimates as those that we believe are most critical to our financial condition and results of operations and that require management’s most subjective and complex judgments in estimating the effect of inherent uncertainties: allowance for credit losses, determination of IBR for leases, estimates related to going concern, and deferred tax valuation allowance. See Note 2 of the Company’s consolidated financial statements for significant accounting policies.
Recently Issued Accounting Standards
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard requires public companies, on an annual basis, to provide enhanced rate reconciliation disclosures, including disclosure of specific categories and additional information for reconciling items that meet a quantitative threshold. The standard also requires public companies to, among other things, disaggregate income taxes paid by federal, state, and foreign taxes. ASU No. 2023-09 became effective for this Annual Report on Form 10-K and was applied using a prospective approach. The standard only impacts required disclosures and did not impact the Company's financial position, results of operations, or cash flows. See note 15 for the Company's income tax disclosures.
In March 2024, the FASB issued ASU 2024-01 – Compensation-Stock Compensation – Amendments. This update aims to improve GAAP by adding an illustrative example to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards (“profits interest awards”) should be accounted for in accordance with Topic 718, Compensation-Stock Compensation. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2024. The Company adopted the provisions of ASU 2024-01 as of January 1, 2025, which did not materially impact the Company’s financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. The standard requires disclosure of certain prescribed costs and expenses within the notes to consolidated financial statements. ASU No. 2024-03 becomes effective for the Company's 2027 Annual Report on Form 10-K. The standard only impacts required disclosures and will not impact the Company's financial position, results of operations, or cash flows. The Company is currently in the early stages of evaluating the impact of ASU No. 2024-03 on its disclosures.
In July 2025, the FASB issued ASU 2025-05 – Financial Instruments—Credit Losses. This update provides all entities with a practical expedient in developing reasonable and supportable forecasts as part of estimating expected credit losses. All entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. This update will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. Management expects no significant impact after adoption of the new standard.
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk.
Not Applicable.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Global Crossing Airlines Group Inc. CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB No. 89) 29
Consolidated Balance Sheets as of December 31, 2025 and 2024 30
Notes to Consolidated Financial Statements 34
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Global Crossing Airlines Group Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Global Crossing Airlines Group Inc. (the Company) as of December 31, 2025 and 2024, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has limited operating history, has recurring net losses, and has a working capital deficit as of December 31, 2025. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Rosenberg Rich Baker Berman P.A.
We have served as the Company’s auditor since 2020.
Somerset, New Jersey
March 5, 2026
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GLOBAL CROSSING AIRLINES GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share quantities)
Current Assets
Accounts receivable, net of allowance for credit losses 6,782 6,678
Prepaid expenses and other current assets 3,529 2,142
Current assets held for sale 405 489
Current liabilities
Current portion of note payable 3,080 -
Current portion of long-term operating leases 14,262 16,479
Current portion of finance leases 10,304 3,434
Other liabilities
Note payable, net of unamortized debt issuance costs 40,447 29,729
Stockholders’ Equity (Deficit)
Common Stock
Total Company’s stockholders’ deficit (29,530 ) (29,555 )
Noncontrolling interest 52 87
See accompanying notes to consolidated financial statements.
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GLOBAL CROSSING AIRLINES GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
Operating Expenses
Contracted ground and aviation services 18,227 19,599
Non-Operating Expenses
Loss in Canada Jetlines Operations Ltd. - 1,300
Income tax expense 18 2
Net Income attributable to Noncontrolling Interest 433 87
Net Loss attributable to the Company (3,051 ) (11,472 )
Loss per share:
See accompanying notes to consolidated financial statements.
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GLOBAL CROSSING AIRLINES GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the years ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile net loss to net cash provided by operating activities:
(Gain) loss on sale of spare parts (214 ) 173
Gain on lease modification (132 ) —
Amortization of debt issue costs 813 649
Amortization of operating lease right of use assets 18,599 14,300
Changes in assets and liabilities:
Assets held for sale 3 (364 )
Prepaid expenses and other current assets (1,293 ) 410
Net cash provided by operating activities 28,095 8,071
CASH FLOWS FROM INVESTING ACTIVITIES
Deposits, deferred costs and other assets (2,685 ) (2,775 )
Purchases of property and equipment (11,603 ) (7,218 )
Net cash used in investing activities (14,288 ) (9,993 )
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on finance leases (5,553 ) (1,815 )
Principal payments on note payable (1,496 ) —
Debt issuance costs (169 ) —
Proceeds on issuance of shares 327 329
Proceeds from disgorgement of stockholders’ short-swing profits 12 —
Net cash used in financing activities (7,347 ) (1,711 )
Cash, cash equivalents and restricted cash - end of the period $ 20,503 $ 14,043
Non-cash investing and financing activities
Right-of-use (ROU) assets acquired through operating leases $ 1,614 $ 27,229
Aircraft acquired through note payable $ 14,650 $ -
Aircraft acquired through finance leases $ 24,221 $ 26,414
Airframe acquired through finance leases $ 3,536 $ -
Equipment acquired through finance leases $ 387 $ 205
Cash paid for
See accompanying notes to consolidated financial statements.
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GLOBAL CROSSING AIRLINES GROUP INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands, except shares quantities)
Dividends declared to noncontrolling interest — — — — - (225) (225)
Issuance of shares – options exercised 246,667 — 61 — 61 — 61
Dividends — — — — — (468) (468)
See accompanying notes to consolidated financial statements.
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GLOBAL CROSSING AIRLINES GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2025 AND 2024
1. NATURE OF OPERATIONS AND GOING CONCERN
Global Crossing Airlines Group Inc., a Delaware corporation (the “Company”, “GlobalX”, “we”, or “our”) was initially incorporated under the laws of British Columbia and continued as a Federal corporation pursuant to the Canada Business Corporations Act effective February 28, 2017. During the year ended December 31, 2020, the Company completed a business acquisition pursuant to which it acquired all of the issued and outstanding shares of Global Crossing Airlines, Inc., a Delaware corporation (“Global USA”). For financial reporting purposes, the Company is considered a continuation of Global USA, the legal subsidiary, except with regard to authorized and issued common stock which is that of the Company, the legal parent. On December 22, 2020, the Company changed its jurisdiction of incorporation from the province of British Columbia, Canada to the State of Delaware. The U.S. Domestication was required for the Company to complete its charter licensing process and will also reflect the Company’s U.S.-business and operations. The Company’s principal business activity is providing passenger aircraft to customers through aircraft operating service agreements including, crew, maintenance, insurance (“ACMI”) and Charter services serving the US, Caribbean and Latin American markets. The Company’s shares trade on the CBOE Canada (the “Exchange” or “CBOE CA”) under the symbol “JET” and the OTCQB under the symbol “JETMF.”
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As of December 31, 2025, the Company had a working capital deficit of $60.5 million and retained deficit of $73.6 million. The Company began flight operations in August 2021. Without ongoing income generation or additional financing, the Company will be unable to fund general and administrative expenses and working capital requirements for the next 12 months. These material uncertainties raise substantial doubt as to the Company’s ability to continue as a going concern. The Company is evaluating financing its future requirements through a combination of debt, equity and/or other facilities. There is no assurance that the Company will be able to obtain such financing or obtain them on favorable terms. The consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary were the going concern assumption deemed to be inappropriate. These adjustments could be material.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
The consolidated financial statements include the accounts of the Company, and the following subsidiaries. All intercompany transactions and balances have been eliminated on consolidation. Certain reclassification and format changes have been made to prior year amounts to conform to the 2025 presentation.
Subsidiaries Name Place of incorporation Interest % Principal activity
Investment in Top Flight:
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On September 18, 2023, the Company acquired 80% of Charter Air Solutions, LLC (“Top Flight”). Top Flight was established on February 8, 2023, and had no significant transactions from the date of formation to the acquisition date. The balance sheet and operating activity of Top Flight are included in the Company’s consolidated financial statements and we adjust the net income in our consolidated statement of operations to exclude the noncontrolling interests’ proportionate share of results. We present the proportionate share of equity attributable to noncontrolling interests as equity within our Consolidated Balance Sheets. As of December 31, 2025, Top Flight figures did not materially impact the consolidated financial statements of the Company.
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Cash and Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company maintains cash balances at several financial institutions; at times, such balances may be in excess of insurance limits. The Company has not experienced any losses on these balances.
Restricted Cash
As of December 31, 2025 and 2024, restricted cash of $3.8 and $1.7 million, respectively, were being held by a financial institution as security for future flights.
Accounts Receivable
Accounts Receivable are recorded at the amount due from customers and do not bear interest. The Company determines its allowances for credit losses by considering a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole.
The activity of allowance for credit losses for the years ended December 31, 2025 and 2024, is as follows (in thousands):
December 31,
Balance at beginning of period $ 580 $ 95
Additions to allowance account during period 460 482
Deductions to allowance account during period (250 ) 3
Balance at end of period $ 790 $ 580
The table below details the percentage of overall accounts receivable for customers that represented 10% or more of the total as of the end of each year:
% of Total Accounts receivable
Customer B 15 % 0 %
Customer C 12 % 0 %
Assets held for sale
Assets held for sale mostly consist of the purchased airframe parts from used Airbus 320 bearing manufacturer’s serial number 2090 as completed on sales agreement entered on March 2, 2022. Assets held for sale are valued at the lower of the carrying amount or the net realizable value estimated at December 31, 2025. They were recorded at average cost and are expensed when sold, used or consumed. An allowance for obsolescence on aircraft airframe parts is recorded when impaired to reduce the carrying costs to lower of cost or net realizable value. The Company monitors resale values for its assets held for sale on a regular basis using various qualitative and
35
quantitative matters including analysis of current sales, estimates obtained from outside vendors, physical counts, internal discussions, among others. As of December 31, 2025, the Company did not identify items that were obsolete and recorded a $0 allowance for obsolete items on the Consolidated Balance Sheet.
Intangible Assets
The Company entered into an agreement on September 21, 2023, to invest $0.5 million in the purchase of 54,000 carbon offsets from Karbon-X to be paid monthly over 36 months from October 1, 2023, to September 1, 2026. The carbon offsets intangibles were initially measured at cost and carried at cost less any accumulated amortization.
During the year ended December 31, 2024, the Company decided to cancel the Karbon-X project, and thus the purchase of the remaining unpaid 36,000 carbon offsets. As a result, during the year ended December 31, 2024, the Company adjusted intangible asset cost and related liabilities for $0.3 million. No cost was incurred because of the cancellation of the carbon offsets.
As of December 31, 2025, the Company had $0.4 million of intangible asset cost and accumulated amortization of $38,000, which is presented in the “Deposits and Other Assets” on the Consolidated Balance Sheet.
Lessor Maintenance Deposits
GlobalX’s aircraft lease agreements provide that GlobalX pay maintenance reserves monthly to aircraft lessors to be held as collateral in advance of major maintenance activities required to be performed by GlobalX. Maintenance reserve payments are either fixed, or variable based on actual flight hours or cycles. These lease agreements provide that maintenance reserves are reimbursable to GlobalX upon completion of the maintenance event in an amount equal to the lesser of (1) the amount of the maintenance reserve held by the lessor associated with the specific maintenance event or (2) the qualifying costs related to the specific maintenance event.
Maintenance reserve payments that are expected to be recoverable via reimbursable expenses will be reflected as Lessor Maintenance Deposits on the accompanying Consolidated Balance Sheets in “Prepaid expenses and other current assets” and “Other assets”. As of December 31, 2025 and 2024, Lessor Maintenance Deposits totaled $2.8 million and $2.1 million, respectively.
Heavy Maintenance
The Company accounts for heavy maintenance costs for airframes and engines using the deferral method. Under this method, expense recognition of scheduled heavy maintenance events is deferred and amortized over the estimated period until the next scheduled heavy maintenance event is required. For the year ended December 31, 2025, the Company incurred amortization expense of $1.1 million with respect to heavy maintenance costs and had $4.4 million in deferred maintenance costs. For the year ended December 31, 2024, the Company incurred amortization expense of $1.1 million with respect to heavy maintenance costs and had $2.9 million in deferred maintenance costs.
Property & Equipment
Property and equipment are recorded at cost at the acquisition date of such property or equipment and depreciated on a straight-line basis to an estimated residual value over their estimated useful lives or lease term, whichever is shorter, as follows:
Office and Ground Equipment 5 years
Computer Hardware and Software 3-5 years
Airframe 6 years (lesser of 25 years or date until next 12Y check)
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Modifications that enhance the operating performance or extend the useful lives of leased airframes are considered leasehold improvements and are capitalized and depreciated over the economic life of the asset or the term of the lease, whichever is shorter.
The Airframe and Engines of the Company have an estimated salvage and residual value of $2.8 million and $11.0 million, respectively. Such amounts were determined in conjunction with third-party appraisers.
The components of property and equipment, net are as follows (in thousands):
Leasehold Improvements, Aircraft, Other 3,913 2,880
Computer Hardware and Software 1,425 1,303
Less: Accumulated Depreciation (4,899 ) (1,821 )
Total Property and Equipment, Net $ 33,578 $ 10,308
During the years ended December 31, 2025 and 2024, depreciation of property and equipment was $3.2 million and $1.8 million, respectively.
Equity Investments
Investments in partnerships and less-than-majority owned subsidiaries in which the Company does not have control but has the ability to exercise significant influence over operating and financial policies, are accounted for using the equity method of accounting. The equity method investments are included in the accompanying Consolidated Balance Sheets under “Other assets”. The Company’s share of earnings or losses from these investments is shown in the accompanying Consolidated Statements of Operations in Expenses – Other”. Equity method investments are initially recognized at cost. The carrying amount of the equity investment is adjusted at each reporting period by the percentage of any change in its equity corresponding to the Company’s percentage interest in these equity affiliates. The carrying costs of these investments are also increased or decreased to reflect additional contributions or withdrawals of capital. Any difference in the book equity and the Company’s pro-rata share of the net assets of the investment will be reported as gain or loss at the time of the liquidation of the investment. It is the Company’s policy to record losses in excess of the investment if the Company is committed to provide financial support to the investee. No equity investments at December 31, 2025 and 2024. See Note 3.
Fair Value Measurements
Accounting standards define fair value as the exchange price that would be received for an asset or the price paid to transfer a liability in the principal or most advantageous market for such asset or liability in an orderly transaction between market participants on a given measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Under GAAP, there are three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices for identical assets or liabilities in active markets.
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
As of December 31, 2025 and 2024, the Company’s assets’ and liabilities’ carrying values are approximately equal to their fair values.
Evaluation of Long-Lived Assets
Long-lived assets are evaluated whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed. Such indicators include significant technological changes, adverse changes in market conditions and/or poor operating results. The carrying value of a long-lived asset group is considered impaired when the projected undiscounted future cash flows are less than its carrying value. The amount of impairment loss recognized is the difference between the estimated fair value
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and the carrying value of the asset or asset group. Fair value is determined using various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment losses were recognized during the years ended December 31, 2025 and 2024.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”) which establishes financial accounting and reporting standards for stock-based employee compensation. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument.
The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest.
Estimating fair value for granted stock options and compensatory warrants requires determining the most appropriate valuation model which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the option or warrant, volatility, dividend yield, and rate of forfeitures and making assumptions about them.
Estimating fair value for granted restricted share units requires estimating the number of awards likely to vest on grant and at each reporting date up to the vesting date. The estimated forfeiture rate is adjusted for actual forfeitures in the period.
Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, then any previously recognized compensation cost is reversed in the period related to the termination of service. Stock-based compensation expenses are included in the Consolidated Statements of Operations under the heading “Salaries, Wages, & Benefits”.
Income taxes
The estimation of income taxes includes evaluating the recoverability of deferred tax assets and liabilities based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets and liabilities will not be realized. The ultimate realization of deferred tax assets and liabilities is dependent upon the generation of future taxable income. To the extent that management’s assessment of the Company’s ability to utilize future tax deductions changes, the Company would be required to recognize more or fewer deferred tax assets or liabilities, and deferred income tax provisions or recoveries could be affected.
Leases
Lease classification is evaluated by the Company at lease commencement and when significant amendments are executed. The Company’s leases generally do not provide a readily determinable implicit rate; therefore, the Company estimates the incremental borrowing rate to discount lease payments based on information available at lease commencement. The lease term consists of the noncancellable period of the lease and periods covered by options to extend the lease if the Company is reasonably certain to exercise the option. For leases of 12 months or less, the Company expenses lease payments on a straight-line basis over the lease term.
Operating lease right-of-use assets and Operating lease obligations
For all operating leases with a term greater than 12 months, the Company recognizes a right-of-use asset and a lease liability at the lease commencement date based on the estimated present value of future minimum lease payments, which includes certain lease and non-lease components, over the lease term. “Operating lease right-of-use assets” and “Operating lease obligations” have their own lines on the Consolidated Balance Sheets.
Finance Leases
Finance leases are initially recorded at the net present value of future minimum lease payments, which includes certain lease and non-lease components. Finance leases generally have one of these five attributes: 1) ownership of the underlying asset transfers to the Company at the end of the lease term, 2) the lease agreement contains a purchase option that the Company is reasonably certain to exercise, 3) the lease term represents the major part of the asset’s economic life, 4) the present value of lease payments over the lease term equals or exceeds substantially all of the fair value of the asset, and 5) the underlying asset is so specialized in nature that it provides no alternative use to the lessor after the lease term. Finance lease assets are presented separately on the Consolidated Balance Sheets
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under the heading “Finance leases, net”. The Company depreciates finance lease assets consistent with its useful life policy presented in the property & equipment table above.
Leased Aircraft Return Costs
The Company’s aircraft lease agreements often contain provisions that require the Company to return aircraft airframes, engines, and other aircraft components to the lessor in a certain condition or pay an amount to the lessor based on the airframe and engine’s actual return condition. Lease return costs are recognized beginning when it is probable that such costs will be incurred, and they can be estimated. The Company assesses the need to accrue lease return costs periodically throughout the year or whenever facts and circumstances warrant an assessment. When costs become both probable and estimable, lease return costs are expensed as a component of “Aircraft Rent” on the Consolidated Statements of Operations.
In addition, the Company leases office space under a month-to-month agreement. For leases with terms greater than 12 months, including renewal options when appropriate, we record the related right-of-use asset and lease liability as the present value of fixed lease payments over the lease term.
Customer deposits
Customer deposits represent money we receive from our customers as a security deposit for their contract. The money will either be returned to the customer at the end of the contract or used for payment of any unpaid invoices/debts the customer has during the contract term.
Deferred revenue
Deferred revenue represents revenue prepayments. Customers pay in advance of their flights and the funds are held as Deferred revenue until the flight takes place. Charter customers typically pay a 10% deposit upon signing a contract and the remainder 30 days before the flight. If the contract is signed less than 30 days from the date of the flight, then the entire amount is collected upon signing. ACMI customers typically pay 2 weeks in advance other than government contracts which pay approximately 2 weeks in arrears.
Revenue Recognition
The Company generates operating revenues by providing passenger aircraft outsourcing services to customers on a Charter and ACMI basis, in exchange for guaranteed minimum revenues at predetermined levels of operation for defined periods of time. The Company also generates other operating revenue from the cancellation of flights from customers and chargebacks related to charter costs including but not limited to fuel, airport fees, navigation fees, and ground handling.
Our performance obligations under Charter contracts involve the provision of passenger aircraft charter services to customers, including various US Government agencies, brokers, freight forwarders, direct shippers, airlines, college sports teams and fans, and private charter customers. Our obligations are for one or more flights based on a specific origin and destination. The Company typically bears all direct operating costs for charters, which include fuel, insurance, landing and navigation fees, and most other operational fees and costs. The time interval between when an aircraft departs the terminal until it arrives at the destination terminal is measured in hours and called “Block Hours.” Revenue from Charter contracts is typically recognized over time as the services are performed based on Block Hours operated on behalf of a customer. Payment terms and conditions vary by charter contract, although the vast majority of contracts require payment in advance of the services being provided. Since advance payments are typically made shortly before the services are performed, such payments are not considered significant financing components.
Our performance obligations under ACMI contracts involve outsourced passenger aircraft operating services, including the provision of an aircraft, crew, maintenance and insurance. ACMI contracts generally provide for the transfer of the benefits from these performance obligations on a combined basis through the operation of the aircraft over time. Customers assume fuel, demand and price risk. Generally, customers are also responsible for landing, navigation and most other operational fees and costs. When we act as an agent for costs reimbursed by customers, such reimbursed amounts are recorded as operating revenue, net of the related costs, when the costs are incurred. When we are responsible for any of these costs, such reimbursed amounts are recorded as operating revenue and the costs are recorded as Operating Expenses as incurred.
Revenue from ACMI contracts is typically recognized over time as the services are performed based on Block Hours operated on behalf of a customer during a given month.
Other operating revenue is typically recognized over time as the services aforementioned are provided to customers. Related to the cancellation fees, these are earned from customers and recognized in the period for which the operations were scheduled.
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The following table presents disaggregated revenues by service type for the years ended December 31, 2025 and 2024 (in thousands):
For the years ended December 31,
The table below details the percentage of overall revenue for customers that represented 10% or more of the total as of the end of each year:
% of Total Consolidated Revenue
For the years ended December 31,
Customer B 0 % 12 %
Segment Reporting
In accordance with FASB ASC Topic 280, Segment Reporting, the Company has determined that it conducts its business through one reportable which is a single operating segment by providing charter customized, non-scheduled passenger and cargo air transportservices with narrow-body Airbus A320 and A321 family aircraft. The Company derives all its revenue in the United States of America (USA).
Our key metric is Block Hours flown and Block Hours flown per available aircraft, which is the measure by which the Company tracks commercial activity. The Company's President and Chief Financial Officer, considered the Company’s chief operating decision maker (CODM), manages the business activities of the entire aircraft fleet and evaluate results on a consolidated Block Hour and Utilization basis.
The CODM also review financial results of the Company's on a consolidated basis, including disaggregated information about our revenue, for purposes of making operating decisions, assessing financial performance and allocating resources. Net income (loss) is our primary measure of profit or loss, as presented on our Consolidated Statements of Operations. The CODM is not provided asset information by reportable segment as asset information is provided to the CODM on a consolidated basis.
The CODM also uses net income (loss) to monitor budget versus actual results. The monitoring of net income (loss) budgeted versus actual results are also used in in making operating decisions, assessing financial performance and allocating resources.
The Company did not have intra-entity sales or transfers during the years ended December 31, 2025 and 2024.
3. EQUITY INVESTMENTS
Investment in Canada Jetlines Operations Ltd.:
GlobalX held 25% of the shares issued and outstanding of Canada Jetlines Operations Ltd. (“Jetlines”) and accounted for the investment in accordance with the equity method.
On September 11, 2024, Canada Jetlines Operations Ltd. filed an Assignment in Bankruptcy after finding that it would be unable to secure financing to continue with its proposal under the Bankruptcy and Insolvency Act. BDO Canada Limited was assigned as trustee of the bankrupt estate. Prior to bankruptcy, the Company held approximately 7% ownership of Jetlines. As a result of the filing, Jetlines shares were deemed to be worthless with its outstanding shares cancelled in accordance with its proposal under the Bankruptcy and Insolvency Act.
The Company had provided a guarantee for one of their aircraft and as a result it settled a $1.3 million obligation with lessor of related aircraft during the year ended December 31, 2024, as recorded in current liabilities and non-operating expenses on the Company’s Consolidated Balance Sheets and Statement of Operations, respectively.
4. DEBT ISSUANCE COSTS
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In relation to the aggregate of $35.7 million of Secured Notes issued by the Company on August 2, 2023, and December 21, 2023, the Company capitalized $6.9 million of debt issuance costs. These debt issuance costs are netted against the outstanding principal portion on the Consolidated Balance Sheets as “Note payable, net of unamortized debt issuance costs” and amortized to interest expense using the effective interest method. The Company amortized $0.8 million and $0.6 million of the related debt issuance costs during the years ended December 31, 2025 and 2024, respectively. In addition, as of December 31, 2025 and 2024, unamortized debt issuance costs totaled $5.2 million and $6.0 million, respectively, and are included in “Note payable, net of debt issuance costs” in the Consolidated Balance Sheets.
As it relates to the $14.7 million Promissory Note issued by the Company on July 11, 2025, the Company netted $0.2 million of debt issuance costs against the outstanding principal portion. These debt issuance costs are capitalized on the Consolidated Balance Sheets as “Note payable, net of unamortized debt issuance costs” and amortized to interest expense using the straight-line method, as results are materially consistent with the effective interest method. The Company amortized $12 thousand of the related debt issuance costs during the year ended December 31, 2025. In addition, as of December 31, 2025, unamortized debt issuance costs totaled approximately $154,000 and are included in “Note payable, net of debt issuance costs” in the Consolidated Balance Sheets.
5. LEASES
As of December 31, 2025, and 2024, the Company operated 19 and 18 leased aircraft, respectively, which are accounted for under operating and finance lease agreements with terms ranging from 22 months to 10 years.Leases with an initial term of 12 months or less will be recognized in the Consolidated Statements of Operations on a straight-line basis over the lease term. These leases primarily relate to the Company’s lease agreements for the month-to-month agreement for office space and leases for office equipment.