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Jet.AI Inc. JTAI US Equity

Industrials · CIK 1861622 · FY ends Dec 31
$1.51
-0.05 (-3.51%)
USD · as of 2026-08-28 · marketstack

Jet.AI Inc. (Nasdaq: JTAI), an SEC filer in Air Transportation, Nonscheduled, closed at $1.51, -3.5%, on 2026-08-28, with a market cap of $21M, a trailing P/E of 4.6, a return on equity of 32.2%, a net margin of 50.0% and 3-year sales growth of -25.1%. Institutional ownership, earnings history and filed financials are on the tabs below.

JTAI · 10-K · period ended 2023-12-31

← all JTAI documents
filed 2024-04-01 · EDGAR original ↗

Our rendering of the filing — original pagination and typography are not reproduced, and tables are reduced to their short label cells (the figures live on FA). Nothing is summarized: every line below is the filing's own text.

blocks 1600 of 3,398280k characters rendered

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

D.C. 20549

FORM

10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE

SECURITIES EXCHANGE ACT OF 1934

For

the fiscal year ended December 31, 2023

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE

SECURITIES EXCHANGE ACT OF 1934

For

the transition period from ________ to ________

Commission

file number: 001-40725

Jet.AI

Inc.

(Exact

Name of Registrant As Specified In Its Charter)

(Address of Principal Executive Offices) (ZIP Code)

(702)747-4000

(Registrant’s

telephone number, including area code)

Securities

to be registered under Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

Common stock, par value $0.0001 per share JTAI The Nasdaq Stock Market LLC

Securities

to be registered under Section 12(g) of the Act: None

Indicate

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes

☐ No ☒

Indicate

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes

☐ No ☒

Indicate

by check mark whether the registrant has (1) filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act

of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has

been subject to such filing requirements for the past 90 days.

Yes

☒ No ☐

Indicate

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule

405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant

was required to submit such files).

Yes

☒ No ☐

Indicate

by check mark whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,

or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller

reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☒

If

an emerging growth company, indicate by check mark if the Company has elected not to use the extended transition period for complying

with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate

by check mark whether the registrant has fi led a report on and attestation to its management’s assessment of the effectiveness

of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered

public accounting firm that prepared or issued its audit report. ☐

If

securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant

included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation

received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate

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

The

aggregate market value of the voting and non-voting common equity held by non-affiliates was $12,902,168as of the last business day

of the registrant’s most recently completed second fiscal quarter. As of March 27, 2024, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was

$6,250,320.

As

of March 27, 2024, there

were 12,205,144

of the Company’s common stock, par value $0.0001, issued and outstanding.

DOCUMENTS

INCORPORATED BY REFERENCE

Portions

of the registrant’s definitive proxy statement to be filed for its 2024 Annual Meeting of Stockholders are incorporated by reference

into Part III hereof. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the end of the

fiscal year covered by this Annual Report on Form 10-K.

TABLE

OF CONTENTS

Page

PART I

Item 1 Business 1

Item 1A Risk Factors 12

Item 1B Unresolved Staff Comments 28

Item 1C Cybersecurity 28

Item 2 Properties 29

Item 3 Legal Proceedings 29

Item 4 Mine Safety Disclosures 29

PART II

Item 6 [Reserved] 32

Item 7A Quantitative and Qualitative Disclosures About Market Risk 51

Item 8 Financial Statements and Supplementary Data 51

Item 9A Controls and Procedures 52

Item 9B Other Information 52

Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 52

PART III

Item 10 Directors, Executive Officers and Corporate Governance 53

Item 11 Executive Compensation 53

Item 14 Principal Accountant Fees and Services 53

PART IV

Item 15 Exhibits and Financial Statement Schedules 53

Signatures 57

Index to Consolidated Financial Statements 58

i

On

August 10, 2023 (the “Closing Date”), we consummated the previously announced “Business Combination” pursuant

to the Business Combination Agreement and Plan of Reorganization, dated February 24, 2023, as amended by Amendment No. 1 to the Business

Combination Agreement, dated as of May 11, 2023 (the “Business Combination Agreement”), by and among the Oxbridge Acquisition

Corp., OXAC Merger Sub I, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (“First Merger Sub”),

Summerlin Aviation LLC (f/k/a OXAC Merger Sub II, LLC), a Delaware limited liability company and a direct, wholly-owned subsidiary of

the Company (“Second Merger Sub” and, together with First Merger Sub, the “Merger Subs”), and Jet Token Inc.,

a Delaware corporation (“Jet Token”). In connection with the Business Combination, we changed our name from Oxbridge Acquisition

Corp., a Cayman Islands exempted company (Oxbridge”), to Jet.AI Inc.

Unless

otherwise noted in this report, “Jet.AI,” “the Company,” “we,” “us,” “our”

and similar terms refer to are to (a) Oxbridge prior to the Closing of the Business Combination and (b) Jet.AI, Inc. after giving effect

to the Closing of the Business Combination. See “Item 7 – Management’s Discussion and Analysis of Financial Condition

and Results of Operations – Business Combination.”

Some

of the market and industry data contained in this report are based on independent industry publications or other publicly available information.

We believe this information is reliable as of the applicable date of its publication, however, we have not independently verified and

cannot assure you as to the accuracy or completeness of this information. As a result, you should be aware that the market and industry

data contained herein, and our beliefs and estimates based on such data, may not be reliable.

THIS

FILING MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY,

AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE

TO THE COMPANY’S MANAGEMENT. WHEN USED HEREIN, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,”

“ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING

STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE

EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE

CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS,

WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING

STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

ii

PART

I

Item 1Business

Overview

Our

business strategy combines concepts from fractional jet and charter jet programs with innovations in artificial intelligence, also referred

to herein is “AI.” Our purposeful enhancement of price discovery have the potential to produce fairer and more inclusive

results for aircraft owners and travelers alike.

We

formed our company on June 4, 2018. We developed and, in September 2019, launched our booking platform represented by our iOS app JetToken

(the “App”), which originally functioned as a prospecting and quoting platform to arrange private jet travel with third party

carriers. Following our acquisition of HondaJets, we began selling jet cards and fractional ownership interests in our aircraft. In 2023,

we launched an AI-enhanced booking app called CharterGPT, as more fully discussed under “ – Our Software Platforms –

Our Booking Platform and CharterGPT” and “Strategy - Artificial Intelligence” below.

Beginning

in 2023, we launched our Jet.AI Operator Platform to provide a B2B software platform for SaaS products. Currently we offer the following

SaaS software to aircraft owners and operators generally:

We

have also established a specific version of a private jet by the seat booking tool called for the Las Vegas Golden Knights and Cirrus

Aviation via 380 Software LLC. 380 Software LLC is a by-the-seat charter joint venture between us and Cirrus Aviation.

Our

strategy involves expanding our fleet of aircraft with larger aircraft capable of traveling longer distances, developing a national jet

card program based on third party aircraft, further enhancing the AI functionality of Charter GPT, and expanding upon our B2B software

offerings. Our strategy involves expanding our fleet of aircraft with larger aircraft capable of traveling longer distances, further

enhancing the AI functionality of Charter GPT, expanding upon Reroute AI and DynoFlight.

The

Business Combination

General

On

August 10, 2023, Jet.AI Inc., a Delaware corporation (f/k/a Oxbridge Acquisition Corp.), consummated a “Business Combination”

pursuant to the Business Combination Agreement and Plan of Reorganization, dated February 24, 2023, as amended by Amendment No. 1 to

the Business Combination Agreement, dated as of May 11, 2023, by and among Oxbridge Acquisition Corp. (“Oxbridge”), the Merger

Subs and Jet Token. Pursuant to the Business Combination Agreement, Oxbridge redomiciled as a Delaware corporation and was immediately

renamed Jet.AI, Inc., and promptly thereafter, (a) First Merger Sub merged with and into Jet Token with Jet Token surviving the merger

as a wholly owned subsidiary of Jet.AI Inc. and (b) Jet Token merged with and into Second Merger Sub (each merger and all other transactions

contemplated by the Business Combination Agreement, the “Business Combination”).

As

a result of the Business Combination:

As

a result of the Business Combination, Jet.AI Inc. has one class of common stock, listed on Nasdaq under the ticker symbol “JTAI”,

and two classes of warrants the Jet.AI Warrants and the Merger Consideration Warrants, listed on Nasdaq under the ticker symbols “JTAIW”

and “JTAIZ” respectively.

The

foregoing description of the Business Combination does not purport to be complete and is qualified in its entirety by the full text of

the Business Combination Agreement and the First Amendment to Business Combination Agreement, which are attached as Exhibit 2.1 and Exhibit

2.2, respectively, to this report.

Certain

Financing Arrangements

Prior

to and in connection with the Business Combination, we entered into financing arrangements intended to provide us with equity-based financing.

In

August 2022, Jet Token entered into a Share Purchase Agreement, dated as of August 4, 2022 (the “Share Purchase

Agreement”), with GEM Yield LLC SCS and GEM Yield Bahamas Limited (together with GEM Yield LLC SCS, “GEM”), which

was automatically assigned to the Company upon the Closing of the Business Combination. Under the Share Purchase Agreement, the

Company has the right to periodically issue and sell to GEM, and GEM has agreed to purchase, up to $40,000,000 aggregate value of

shares of the Company’s common stock (the “Aggregate Limit”) during the 36-month period following the date of the

Closing of the Business Combination. GEM is not obligated to purchase shares under the Share Purchase Agreement if any purchase of

shares would result in GEM and its affiliates beneficially owning, directly or indirectly, at the time of the proposed issuance,

more than 9.99% of the number of issued and outstanding shares of common stock as of the date of such proposed issuance. In

consideration for these services, the Company has agreed to pay GEM a commitment fee equal to $800,000 payable in cash or freely

tradable shares of common stock at the “Daily Closing Price” of the common stock, at the option of the Company. Pursuant

to the Share Purchase Agreement, on August 10, 2023, the Company issued GEM a warrant (as subsequently amended, the “GEM

Warrant”) granting it the right to purchase up to 6% of the outstanding common stock of the Company on a fully diluted basis

as of the date of listing, with exercisability currently limited to 4.99% of the Company’s common stock outstanding

immediately after giving effect to such exercise. The GEM Warrant has a term of three years from the date of issuance and, as of

December 31, 2024, had an exercise price of $8.40 per share (subject to potential reduction in August 2024).

On

August 6, 2023, we entered into an agreement with (i) Meteora Capital Partners, LP (“MCP”), (ii) Meteora Select Trading Opportunities

Master, LP (“MSTO”), and (iii) Meteora Strategic Capital, LLC (“MSC” and, collectively with MCP and MSTO, “Meteora”)

(as amended on August 31, 2023 and October 2, 2023, the “Forward Purchase Agreement”) for OTC Equity Prepaid Forward Transactions.

The primary purpose of our entering into this agreement and these transactions was to provide a mechanism whereby Meteora would purchase,

and waive their redemption rights with respect to, a sufficient number of Oxbridge Class A ordinary shares to enable Oxbridge to have

at least $5,000,000 of net tangible assets, a non-waivable condition to the Closing of the Business Combination and to provide the Company

with cash to meet a portion of the transaction costs associated with the Business Combination. Following the Closing of the Business Combination, we paid to Meteora $6,805,651, representing amounts payable by

us to Meteora under the Forward Purchase Agreement, net of the aggregate purchase price of the total number of Additional Shares (as defined

and discussed below) issued to Meteora under the FPA Funding Amount PIPE Subscription Agreement; and Meteora paid us 1⁄2 of the Prepayment

Shortfall (as defined below), or $625,000. The Forward Purchase Agreement was amended to provide payment to the Company of an additional

$550,000, reflecting payment in full of the amended Prepayment Shortfall of $1,175,000. The Company also received approximately $1.2 million

from the issuance of common stock under the Forward Purchase Agreement, including due to early termination of the facility.

In

connection with the Business Combination, we also entered into settlement agreements with Maxim Group

LLC, the underwriter for the Company’s initial public offering and this offering (“Maxim”),

and with OAC Sponsor Ltd., a Cayman Islands exempted company (the “Sponsor”), the sponsor of Oxbridge, each providing

for the issuance of equity in satisfaction of Oxbridge payment obligations.

Please

see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations –

Liquidity and Capital Resources – Overview” for a further discussion of the terms of these financing arrangements

and other recent financing transactions.

Recent

Events

Our

common stock is currently listed on The Nasdaq Global Market under the symbol “JTAI”. On December 1, 2023, the Company received

a notification letter (the “Letter”) from the Nasdaq Listing Qualifications Staff of Nasdaq notifying the Company that its

failed to meet the continued listing requirements for The Nasdaq Global Market. In accordance with Nasdaq rules and as stated in the

Letter, the Company submitted a plan to regain compliance, involving a proposed transfer to The Nasdaq Capital Markets with lower listing

requirements, as well as a number of capital raising measures that the Company intended to take such as this offering. Nasdaq provided

written confirmation of its acceptance of the Company’s compliance plan and granted the Company an extension through May 29, 2024

to evidence completion of its plan. Although the Company believes it will be able to achieve compliance with the Nasdaq Capital Markets

continued listing requirement, there can be no assurance that we will be able to achieve compliance with these requirements within the

time frame required by Nasdaq or at all, particularly if our stock price trades below $1.00 for a sustained period. Furthermore, there

can be no assurance that the Company will be able to maintain compliance with continued listing criteria of the Nasdaq Capital Markets

in the future. Nasdaq’s determination that we fail to meet the continued listing standards of Nasdaq may result in our securities

being delisted from Nasdaq.

Our

Aircraft Operations

In

July 2021, we leased a HondaJet aircraft under a short-term lease arrangement, which terminated in February 2022, to accelerate our aircraft

operations and sales of jet card memberships. We have acquired four HondaJet Elite aircraft under our 2020 Purchase Agreement with Honda

Aircraft Company, discussed under “– Our Aircraft” below, all four of which have been sold, but three of which

remain part of our fleet, as discussed below, with three of the four aircraft having been delivered in 2022. Great Western Air, LLC (DBA

Cirrus Aviation Services, LLC) (“Cirrus”) is managing, operating, and maintaining our aircraft and has a growing team of

pilots that have been specially trained on the HondaJet at the Flight Safety facility on the Honda Aircraft Company campus in Greensboro,

NC. Cirrus has additionally developed a safety co-pilot training program in coordination with the FAA and a local flight training academy

for licensed pilots already skilled with the Garmin 1000 avionics suite.

We

offer the following programs for our HondaJet Elite aircraft:

In

addition to servicing members, fractional owners and third-party charter clients, our HondaJets are available to address unexpected cancellations

or delays on brokered charters. Unlike most of our brokerage competitors, as well as many business jet management companies which require

owner approval before their aircraft can be used for third party charter, we believe maintaining a fleet of readily available aircraft

to back fill third party charter services provides more reliability and is an attractive selling point for potential clients.

In

2022, we entered into agreements with Cirrus under which we will sell jet cards for Cirrus’s aircraft, for a commission for sales

and client management services, and we make Cirrus’s aircraft available to our customers for charter bookings at preferred rates

and with certain service guarantees. As a result, our jet card members and charter customers have access to twenty of Cirrus’s

aircraft in the light, mid, super-mid, heavy, and ultra-long-range categories, comprising the following aircraft: CJ3+, CJ4, Lear 45XR,

Citation XLS+, Lear 60, Hawker 900XP, Challenger 300, Challenger 604, Falcon 900EX, Challenger 850, Gulfstream V and Gulfstream G550.

In

the fourth quarter of 2022, we launched the Onboard Program to allow aircraft owners to contribute their aircraft to the Company’s

charter and jet card inventory. The Onboard Program requires one month FAA conformity of aircraft onto the Cirrus Aviation Part 135 certificate,

a one-week pilot recertification course for charter operation and execution of a limited management agreement. To date we have a CJ4

customer aircraft managed pursuant to our OnBoard Program.

Our

Software Platforms

Our

Booking Platform CharterGPT

Our

booking platform displays a variety of options across private aircraft types in addition to the pricing of our own aircraft, with a range

of prices drawn from a list of thousands of aircraft for hire. We offer users the ability to request a jet and to simultaneously task

us with seeking a lower-cost otherwise superior alternative. Our App (or CharterGPT) is directly connected via our application programming

interface (API) to Avinode, the major centralized database in private aviation. Through Avinode we can electronically and automatically

correspond with operators of private jets who have posted their aircraft for hire. We envision a time when CharterGPT draws upon resources

other than Avinode for private aircraft inventory, in particular we contemplate a connection between the inventory found in Reroute AI

and CharterGPT.

The

CharterGPT app, which we released in the iOS and Android stores in 2023 to replace the charter booking function of our Jet Token App,

automates certain of these manual steps involved in charter bookings, and we believe this automation will enable us to scale charter

activity with fewer persons than would be normally required. In particular, CharterGPT is designed to do the following: (1) intake travel

requirements in natural language and then interact with customers to provide substantive replies and actionable suggestions with quality

indistinguishable from an experienced charter professional; (2) power the content behind outbound calls to smaller charter operators

to confirm electronic indications of interest communicated via the Avinode centralized booking database of private aircraft; (3) reconcile

the natural language terms in a third party jet operator contract with the terms and conditions in the contract the customer signs with

us (4) verify that payment for the charter has cleared.

Jet.AI

Operator Platform

Jet.AI

provides and continues to develop a B2B software platform for a suite of SaaS products termed “Jet.AI Operator Platform”

which currently consists of:

Reroute

AI

In

2024 we launched Reroute AI. Reroute AI software is web based and enables FAA Part 135 operators to earn revenue on otherwise empty flight

legs. When prompted with basic travel itinerary information such as city pair and date of travel, Reroute AI searches its database of

empty flight legs and proposes novel combinations of those legs that meet these constraints it has been given. Its database of empty

flight legs comes from API integrations with certain other databases and a ChatGPT enhanced scrape of publicly available empty leg lists

published by Part 135 operators. An operator may upload its own aircraft tail numbers and empty leg list if for any reason one or both

have not already been uploaded into the system. Jet.AI generates revenue from Reroute AI when an operator wishes to book an itinerary

proposed by the software that involves the use of aircraft outside that operator’s fleet. In that instance, Jet.AI acts as broker

to the operator using Reroute AI’s proposed itinerary and a human in the loop to negotiate the new pricing and new routing of the

third party operator’s aircraft.

DynoFlight

DynoFlight

is a software API that we launched at the end of 2023. It enables aircraft operators to track and estimate emissions and then purchase

carbon offset credits. DynoFlight offers small to medium sized operators a way to begin tracking and offsetting their carbon credits

with advances estimation techniques, compliant practices, and quality credits at prices usually only accessible to operators working

at a much larger scale that are buying in bulk. In February, 2024, the Company announced a collaboration with FL3XX, a web and app-based

aviation management platform, to introduce the DynoFlight carbon offset platform to FL3XX customers. We believe the DynoFlight API may

offer an advantage even to large organizations that wish to manage working capital more efficiently (i.e. pay as they fly instead of

buying in bulk). We are currently in the process of integrating the DynoFlight API with the FL3XX systems. We believe that, once the

DynoFlight API has been integrated with FL3XX and future customers, it will generate monthly and usage-based revenues with modest operating

costs limited to server administration and maintenance of the code base.

FlightClub

– Cirrus Specific

The

Flight Club API is designed to enable FAA Part 135 operators to function simultaneously under FAA Part 380 which permits sale of private

jet service by the seat instead of by whole aircraft. The Flight Club software integrates front end ticketing and payment collection

with the flight management systems of an FAA Part 135 operator. It automates the process of filing forms for each flight with DOT and

conforms with DOT escrow requirements around ticketing and movement of customer funds. Our initial use case of the Flight Club is through

380 Software LLC, a 50% owned subsidiary founded in co-operation with our operating partner and 50% owner of 380 Software LLC, Cirrus

Aviation. The Company retains all rights to the technology powering 380 Software LLC and has granted 380 Software LLC a perpetual non-transferrable

license. This initial implementation of the Flight Club permits the owners of Cirrus Aviation-managed aircraft to fly on one another’s

planes at a significantly reduced cost when those planes are otherwise flying empty. The operating costs of these flights are typically

borne by the previous charter customer who is typically obliged to pay not only the cost of an outbound leg but also the cost of the return

leg. The charter customer is typically obliged to pay the cost of the return because the sale of the empty return is an inherently low

probability event based on historical industry experience.

We

are currently focused on our partnership with the Las Vegas Golden Knights and on integrating with their systems to generate seat sales.

Once we learn more from the Cirrus and Las Vegas Golden Knight partnerships we will decide whether to expand the availability of Flight

Club.

Strategy

Aircraft

Operations

Having

successfully executed the HondaJet four aircraft fleet deal and further having sold through all four aircraft, three of which remain

part of our fleet, as discussed below, we plan to gradually expand our fleet with super-mid-size aircraft and the help of our operating

partner, Cirrus. Cirrus manages a fleet of 30 jets in Las Vegas, where we are headquartered. We have executed a non-binding letter of

intent to acquire five new Challenger 3500 aircraft from Bombardier, consisting of three prospective firm orders and two options. Subject

to (1) our securing of debt financing to fund the initial fleet purchase down payment and (2) the development of a management, interchange

and support plan with our partner Cirrus, we would then plan to execute a formal fleet purchase agreement, and anticipate being able

to secure the first Challenger 3500 delivery in the second quarter of 2026. Once a fleet purchase agreement is in force, we would then

look to pre-sell fraction interests in these aircraft with a bias toward larger fractions. Upon delivery, the jets would in turn be managed

by Cirrus and listed on their Part 135 certificate. Customers would be expected to make a down payment and progress payments, consistent

with fractional industry norms.

Given

the two-year timeframe prior to delivery the company may consider independent development of Part 135 operations, subject to management’s

internal return on capital targets and, depending on the level of scale, the prospective benefits of enhanced operational control on

customer service.

Because

all major manufacturers of super-mid or large cabin aircraft such as Gulfstream, Falcon, Bombardier, Embraer, and Textron each have one

to three year waiting lists for super-mid-size jets, many of our fractional competitors can only pre-sell, and remain otherwise unable

to offer the related service. Our strategy is to allow customers, in advance of delivery, to fly on Cirrus’s managed Challenger

300/350, 604/605 and 850 model Bombardier aircraft. In return the customer would pay a monthly management fee (MMF) and an occupied hourly

fee (OHF) at rates substantially similar to those for their Challenger 3500. We believe this “buy and fly” approach may resonate

with market participants who may appreciate the convenience of a fractional program without the extraordinarily long wait.

Conventional

wisdom in private aviation has been that a light jet FAA Part 135 operation presents financial challenges because the lower hourly rate

of a light jet leaves little margin to pay a second pilot and remain profitable. Thanks to our partnership with Cirrus, we have addressed

this concern by having a typed pilot in command with at least 1,500 hours in jets, 1,000 of which must have been in the HondaJet specifically,

fly alongside a co-pilot who has been through an FAA approved ground school developed by Cirrus and Chennault Flying Service. This “safety

co-pilot” is permitted to operate the aircraft in the unlikely event the pilot in command is incapacitated or otherwise unable

to act. The HondaJet, which has been designated by the FAA for single pilot operation, integrates the Garmin 3000 flight system and by

law does not require a second pilot to fly. This safety co-pilot program brings trained pilots who are already schooled in either the

Garmin 1000 or Garmin 3000 flight system, gives them additional training on the HondaJet and Garmin 300 system, and then allows them

to develop their skills alongside a mentor. Importantly, the presence of this safety co-pilot is regarded by our insurer as sufficient

to maintain our present level of premium. The safety pilot does not require a full wage because of their status as a trainee and the

professional value they gain from accruing jet flight hours. This lower cost of labor helps the company overcome the traditional costs

of paying a second pilot and helps bring a stream of prospective pilot in command candidates. Some safety pilots are newer to aviation

while others have had many years of flight training and thousands of hours of flight time on civilian (or military) jet or turboprop

aircraft. We believe that the comparatively low cost of entry of the HondaJet and the proven capabilities of the Challenger 3500 are

attractive to new and seasoned traveler alike, particularly given our ability to offer interchange between the two aircraft and onto

any one of twenty of the thirty aircraft managed by Cirrus. In addition, while some customers have shorter mission profiles and lower

passenger loads better suited to the HondaJet others have longer mission profiles with higher passenger loads – and so the HondaJet

and the Challenger 3500 (plus Cirrus’s fleet) again make an excellent combination in our view. We have taken a gradual approach

to fleet expansion given the capital-intensive nature of aviation and our view that customers should bear the risk (and related tax reward)

of owning and maintaining airplanes.

Jet.AI

Operator Platform

Jet.AI

provides and continues to develop a B2B software platform for a suite of SaaS products termed “Jet.AI Operator Platform.”

In addition to continuing to develop and enhance Reroute AI and DynoFlight, we may further develop our Flight Club API described above

to make it available to Part 135 operators more broadly. We also plan to further enhance our our internally developed membership portal.

Artificial

Intelligence

We

operate an app in the iOS and Android stores. The app functions as a prospecting and quoting tool for those interested in chartering

a private jet. In 2023, we released an enhanced booking app called CharterGPT to automate much of the manual labor in charter bookings

for all of the steps between a customer’s firm indication of interest and their arrival at ultimate destination. We believe this

automation will enable us to scale charter activity with fewer persons than would be normally required. In particular, CharterGPT is

designed to do the following: (1) intake travel requirements in natural language and then interact with customers to provide substantive

replies and actionable suggestions with quality indistinguishable from an experienced charter professional; (2) power the content behind

outbound calls to smaller charter operators to confirm electronic indications of interest communicated via the Avinode centralized booking

database of private aircraft; (3) reconcile the natural language terms in a third party jet operator contract with the terms and conditions

in the contract the customer signs with us (4) verify that payment for the charter has cleared.

In

addition, in 2024, we incorporated the following AI-powered features to offer a continually improving unique and personalized experience

to customers:

Aircraft

Recommendation Engine: Our This feature provides customers greater transparency and understanding of the characteristics of charter

relevant to their trips, making it easier for them to make an informed decision. The recommendation engine analyzes a list of available

jets based on the travelers request, and considers factors such as budget, preferred aircraft size, age of aircraft, distance of the

trip compared with non-stop/range capability, number of passengers, ages and weights of passengers and their respective bags compared

with cargo capacity, basic take-off weight limitations, operator safety audit (Argus/Wyvern), cabin amenities such as a fully enclosed

lavatory, WiFi availability and years since last interior refurbishment.

Customer

service: This feature provides intelligent customer service by using natural language processing and machine learning algorithms

to understand and respond to initial booking requests. Untrained call center staff and brittle chat bots characterize much of the customer

facing experience today in the US. With the advent of AI, we believe that even for high ticket items, consumers will come to expect a

natural language interface trained on terabytes of data that relate specifically to their respective purchases.

Charter

brokerage is labor intensive, and most customers are highly price sensitive. We believe these two factors explain why no charter broker

has acquired more than 3-5% of the one million brokered flights that land each year in North America. The back end of the App is expected

to provide three features that may address the labor intensity (and hence scalability) of our charter brokerage business. First, each

charter operator has its own form of legal contract for carriage and that contract must be reconciled with the terms found in the charter

brokers’ agreement with the passenger. Our AI is expected to perform this reconciliation automatically, improving the speed to

close with the client and reducing labor costs. Second, many charter operators do not initially respond to electronic requests delivered

through the Avinode charter database that powers our app. Our generative chat AI is expected to perform outbound voice calls to prompt

aircraft operators to respond to quotes we have requested via the web interface to their Avinode account. Third, we expect to develop

our AI to integrate with Schedero (an Avinode based scheduling application) to generate a trip sheet for a given charter and then to

further integrate with Stripe to invoice and confirm payment via credit card, wire, or ACH.

In

addition, we are developing the following AI-powered features to incorporate into the AI functionality of CharterGPT:

Predictive

Destination Optimization: CharterGPT is expected to initially make use of information such as airport closures, fuel prices, historical

traffic patterns, landing fees, and traveler preferences to then recommend which private airport to select when a traveler’s destination

address is serviced by multiple airstrips. For example, Los Angeles is serviced by Los Angeles International Airport (LAX), Van Nuys

Airport (KVNY), Burbank Bob Hope Airport (KBUR), John Wayne Airport (KSNA). Landing at an airport farther from one’s ultimate destination

may save time if doing so enables faster ground transportation.

Predictive

Departure Date: CharterGPT is expected to analyze historical pricing data and forward-looking event data related to a given itinerary

to predict the best date to book a flight to obtain the lowest price for their desired charter itinerary. Although approximately thirty-five

blackout days a year are widely understood to absorb most domestic private aviation capacity, a variety of lesser appreciated grey-out

days centered around key sporting events or entirely new happenings can affect both regional and national pricing.

Predictive

Departure Time: CharterGPT is expected to use machine learning algorithms to recommend the optimal departure time based on both historical

and live weather conditions, air traffic, and other factors, to help customers more reliably arrive at their destination on time.

Predictive

Ground Transportation: CharterGPT is expected to recommend ground transportation. For example, some airports run out of rental cars

at certain times each year because of an annual conference or other recurring special event. Some of our competitors have taken steps

to remedy the shortage at some airports by positioning in their own vehicles for customer use.

Sales

and Marketing

Our

marketing and advertising efforts are focused on high-net-worth individuals. We have observed that many first-time private flyers came

to market beginning in 2020 in an effort to avoid commercial travel and thereby curtail their prospective exposure to COVID-19. We intend

to continue to expand our marketing and advertising through the following channels: online marketing, television advertising and event

marketing. Paid social media and search engine advertising drive our online marketing. In the past we have launched 15 and 30 second

advertising spots that are targeted at high-net-worth individuals and corporate executives through several channels, including CNBC,

Fox Business, and The Golf Channel, as well as online through Facebook and Linked-In. We intend to expand social media and event marketing

in particular, provided those meet our internal return targets. With respect to event marketing we intend to have a presence at sporting

events, business jet industry gatherings and company hosted aircraft static displays.

Market

Opportunity

Over

the past 30 years, the market for private jet travel has transformed significantly. First the model of full aircraft ownership transformed

into fractional ownership with companies such as NetJets and FlexJet. This was followed by operators offering jet cards and on-demand

service through their fleet of aircraft. The latest iteration of private jet travel provides even more flexibility by providing an on-demand

service to travelers while leveraging the flight availability of one or more third party carriers. The result of this transformation

is a highly segmented industry with numerous market participants offering varying levels of ownership.

We

believe that by combining the private jet on-demand model with commercial airline flight availability and prospectively the underutilized

flight hours of private jet operators, our company will be positioned to provide optimum flexibility and cost efficiency for our clients.

Our

Aircraft

The

Company’s aircraft fleet consists of four aircraft – three HondaJet HA-420 aircraft (the “HondaJet Elites”) and

one Citation CJ4 Gen 2 aircraft. The Company acquired the three HondaJet Elites pursuant to a Purchase Agreement with Honda Aircraft

Company for a multi-aircraft deal for four HondaJet Elites. One of the HondaJet Elites in our current fleet was sold and is now leased

by the Company from Western Finance Company. The other two HondaJet Elites in our current fleet were purchased and subsequently financed

through the sale of all fractional interests in each of these aircraft. We also acquired a fourth HondaJet Elite pursuant to the Purchase

Agreement with Honda Aircraft Company, but we sold this aircraft in June 2022, after we determined, based on our internal financial and

legal review, that the sale of the aircraft would offer a net benefit to our stakeholders. The fourth aircraft in our current fleet -

the Citation CJ4 Gen 2 aircraft - is wholly owned by one of our customers who committed his aircraft to us via our Onboard Program for

management and charter pursuant to our limited management agreement. Under the terms of our management agreement, which has a term of

one year that automatically renews unless otherwise terminated by either party upon 30 days prior notice, the customer pays us a monthly

management fee for services, including aircraft management services, flight crew services, such as pilot hiring, flight operations services,

aircraft maintenance management and other administrative services.

HondaJet

Elite aircraft are ideally suited for trips under 3 hours carrying 2-4 passengers plus two pilots. We believe the HondaJet Elite aircraft

is one of the most spacious and cost-efficient light jets on the market with ample baggage and interior room (including an enclosed lavatory).

The wing mounted engines allow for a tranquil, spacious interior. Engines on the wings mean less weight on the tail and more room in

the cabin.

As

discussed above in “Business – Strategy – Aircraft Operations” above we have executed a non-binding letter

of intent to acquire five new Challenger 3500 aircraft from Bombardier, consisting of three prospective firm orders and two options.

Subject to (1) our securing of debt financing to fund the initial fleet purchase down payment and (2) the development of a management,

interchange and support plan with our partner Cirrus, we would then plan to execute a formal fleet purchase agreement, and anticipate

being able to secure the first Challenger 3500 delivery in the second quarter of 2026. once a fleet purchase agreement is in force, we

would then look to pre-sell one quarter, one half or full interest in these aircraft. Upon delivery, the jets would in turn be managed

by Cirrus and listed on their Part 135 certificate. Customers would be expected to make a down payment and progress payments, consistent

with fractional industry norms.

If

we include its predecessors the Challenger 300 and Challenger 350, Bombardier has sold over 1,000 serial numbers in the Challenger 3500

line, which in our view remains one of the most popular and reliable super-mid-size jets in the world. The aircraft requires no major

scheduled maintenance overhaul in its first two years of service, a testament to the depth of historical experience the manufacturer

has developed with this model of aircraft since the Challenger 300 was introduced in 1999. The spacious 8-9 seat stand-up cabin, 43,000

foot flight ceiling and Mach 0.83 capability, make it a leading choice for travelers. After twenty-four years in service the Challenger

300/350/3500 airframe has attracted a sizable community of typed pilots and Bombardier has constructed 41 worldwide service centers (11

in the US) to support utilization.

We

currently base our fleet at Harry Reid International airport in Las Vegas, NV, a top ten private jet destination and may relocate the

fleet based on seasonal travel patterns and the travel patterns of our membership.

Based

on our experience, and in light of many of our competitors restricting charters on certain “blackout dates,” we estimate

that thirty calendar days per year (due to holidays, major sporting events, etc.) it is extremely difficult to fly private without the

guaranteed access provided by a jet membership program such as ours. The ability to safely offer guaranteed capacity, on demand, is one

of the most important features one can deliver in private aviation. Also, our aircraft give us the ability to attract online visitors

with dynamically priced offers.

We

have entered into an Executive Aircraft Management and Charter Services Agreement with Cirrus. Under this agreement, Cirrus provides

management services to us with respect to the marketing, operation, maintenance and administration of our aircraft. Specifically, following

the initial set-up services, Cirrus provides Flight Crew Services, including selection, training, employment and management of the pilots

necessary for operating the Company’s Aircraft; Flight Operation Services, including flight scheduling, following and support services;

Aircraft Maintenance Services, including maintenance of the Aircraft and/or management of maintenance of the Aircraft performed by third

parties, related maintenance support functions and the administration of the Aircraft’s log books, manuals, data, records, reports

and subscriptions; Administrative Services, including budgeting, accounting and reporting services; Facility Services, including providing

and/or arranging for aircraft hangar and support facilities at the Aircraft’s Operating Base and other locations at which the Aircraft

may be situated from time to time; and Insurance Services, including providing insurance policies for the Aircraft.

Cirrus

is the largest private jet charter company based in Las Vegas. The Cirrus team has been managing and operating aircraft – commercially

and privately – for more than 40 years. In addition, Cirrus is:

● FAA Eligible On-Demand Approved

● ARG/US Platinum Rated

● Wyvern Recommended

Cirrus

maintains, services and operates our aircraft on our behalf and in compliance with all applicable FAA regulations and certification requirements.

Cirrus has the capability to provide substitute aircraft at competitive rates in periods of excess demand for our aircraft.

Competition

The

private air travel industry is extraordinarily competitive. We will compete against private jet charter and fractional jet companies.

Established private jet brokerage and fractional companies include but are not limited to, NetJets, FlexJet, VistaGlobal (including JetSmarter

powered by XO), SentientJet, WheelsUp, JetSuite, Flight Options, Nicholas Air, Jet Alliance, Executive Air Share, Plane Sense, One Sky

Jets, StarJets, Jet Aviation, Volato and Luxury Aircraft Solutions. All compete for passengers with a variety of pricing plans, aircraft

types, blackout periods, booking terms, flyer programs and other products and services, including seating, food, entertainment and other

on-board amenities.

Both

the private jet charter companies and the legacy airlines and low-cost carriers have numerous competitive advantages that enable them

to attract both business and leisure travelers. Our competitors may have corporate travel contracts that direct large numbers of employees

to fly with a preferred carrier. The enormous route networks operated by our competitors, combined with their marketing and partnership

relationships with regional airlines and international alliance partner carriers, allow them to generate increased passenger traffic

from domestic and international cities. Our access to smaller aircraft fleet networks and lack of connecting traffic and marketing alliances

puts us at a competitive disadvantage, particularly with respect to our appeal to higher-fare business travelers.

The

fractional private jet companies and the legacy airlines and low-cost carriers each operate larger fleets of aircraft and have greater

financial resources, which would permit them to add service in response to our entry into new markets. Due to our relatively small size,

we are more susceptible to fare wars or other competitive activities, which could prevent us from attaining the level of traffic or maintaining

the level of sales required to sustain profitable operations.

In

2018 and 2019, respectively, VistaJet acquired XOJET and JetSmarter, combining its heavy jet subscription-based service targeting multinational

corporations and ultra-high net worth individuals with XOJET’s super-midsize jet on demand service and JetSmarter’s digital

booking platform for business aviation. In addition, during 2020, Wheels Up acquired Delta Private Jets as well as Gama Aviation, a business

jet services company and in 2021 Vista Jet acquired a number of smaller players as well as Apollo Jets. Increased consolidation in our

industry could further intensify the competitive environment we face.

Intellectual

Property

We

registered a trademark on our brand name, Jet Token, and our logo, with the United States Patent and Trademark Office. We have also purchased

our domain name, jettoken.com and operate our website under that domain. We have an application pending with the United States Patent

and Trademark Office for Jet.AI. We are the sole owner of the copyrights in and to the software code underlying our App, CharterGPT and

the software code underlying our Jet.AI Operator Platform offerings.

Employees

We

have 9 full-time employees, including our Executive Chairman and Interim Chief Executive Officer, our Interim Chief Financial Officer,

our Chief Operating Officer, and our Chief Marketing Officer.

Regulation

Regulations

Applicable to the Ownership and Operation of Our Aircraft

Once

we have leased our aircraft, Cirrus, which will maintain and manage our aircraft, is subject to a high degree of regulation that affects

our business, including regulations governing aviation activity, safety standards and environmental standards.

U.S.

Department of Transportation (“DOT”)

The

DOT primarily regulates economic issues affecting air transportation such as the air carrier’s financial and management fitness,

insurance, consumer protection and competitive practices. The DOT has the authority to investigate and bring proceedings to enforce its

regulations and may assess civil penalties, revoke operating authority, and seek criminal sanctions. Our operating as an air charter

carrier is regulated and certificated by the DOT. The DOT authorizes the carrier to engage in on-demand air transportation within the

United States, its territories, and possessions. The DOT can suspend or revoke that authority for cause, essentially stopping all operations.

Federal

Aviation Administration (“FAA”)

The

Source: SEC EDGAR (public domain) · 10-K for the period ended 2023-12-31, filed 2024-04-01 · accession 0001493152-24-012382

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