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, 2025
Or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ________ to ________
Commission
file number: 001-40725
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
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
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 registrant 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 registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by 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 $11,905,209 as of the last business day
of the registrant’s most recently completed second fiscal quarter.
As
of March 6, 2026, there were 119,209,666 shares of the Company’s common stock, par value $0.0001, issued and outstanding.
TABLE
OF CONTENTS
Page
Cautionary Note Regarding Forward-Looking Statements ii
Market and Industry Data ii
Summary of Risk Factors iii
PART I
Item 1 Business 1
Item 1A Risk Factors 14
Item 1B Unresolved Staff Comments 35
Item 1C Cybersecurity 35
Item 2 Properties 36
Item 3 Legal Proceedings 36
Item 4 Mine Safety Disclosures 36
PART II
Item 6 [Reserved] 38
Item 7A Quantitative and Qualitative Disclosures About Market Risk 49
Item 8 Financial Statements and Supplementary Data 49
Item 9A Controls and Procedures 49
Item 9B Other Information 50
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 50
PART III
Item 10 Directors, Executive Officers and Corporate Governance 51
Item 11 Executive Compensation 57
Item 14 Principal Accountant Fees and Services 75
PART IV
Item 15 Exhibits and Financial Statement Schedules 76
Signatures 78
Index to Consolidated Financial Statements 79
i
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K (this “Report”) contains forward-looking statements, within the meaning of the Private Securities
Litigation Reform Act of 1995, that involve risks and uncertainties. We have based these forward-looking statements on our current expectations
and projections about future events. All statements, other than statements of present or historical fact included in this Report, regarding
our future financial performance and our strategy, expansion plans, market opportunity, future operations, future operating results,
estimated revenues, losses, projected costs, prospects, plans and objectives of management are forward-looking statements. In some cases,
you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,”
“will,” “expect,” “plan,” “anticipate,” “intend,” “believe,”
“estimate,” “continue,” “project” or the negative of such terms or other similar expressions, but
the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are subject to known
and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements
to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking
statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which
are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Report. We caution
you that the forward-looking statements contained herein are subject to numerous risks and uncertainties, most of which are difficult
to predict and many of which are beyond our control.
Therefore,
actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements
due to numerous factors discussed from time to time in this Report, including the risks described under “Item 1A Risk Factors,”
and “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report
and in other documents which we file with the Securities and Exchange Commission (“SEC”). In addition, such statements could
be affected by risks and uncertainties related to:
● the outcome of any legal proceedings;
● the risk of downturns in the aviation industry;
● data security breaches, cyber attacks, or other network outages;
● our ability to adequately protect our intellectual property interests;
● our reliance on third parties and joint venture partners;
Should
one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results
may vary in material respects from those expressed or implied by these forward-looking statements. Forward-looking statements speak only
as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and we assume no obligation
and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise,
except as required by applicable law.
MARKET
AND INDUSTRY DATA
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.
ii
SUMMARY
OF RISK FACTORS
Our
business is subject to a number of risks of which you should be aware. These risks are discussed more fully in the “Risk Factors”
section of this Report. These risks include, but are not limited to, the following:
● We are an early-stage company with a limited operating history.
● We may not be able to successfully implement our growth strategies.
iii
iv
PART
I
Item
1 Business
Overview
Our
business strategy combines concepts from fractional jet and charter jet programs with innovations in artificial intelligence, also referred
to herein as “AI.”
We
formed our company on June 4, 2018. We developed and, in September 2019, launched our booking platform represented by our iOS app Jet
Token, 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. Beginning in 2023, we launched our Jet.AI Operator Platform to provide a business-to-business
(“B2B”) software platform for software-as-a-service (“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 for the Las Vegas Golden Knights professional ice
hockey team and Great Western Air, LLC (DBA Cirrus Aviation Services, LLC) (“Cirrus”) via 380 Software LLC. 380 Software
LLC is a by-the-seat charter joint venture between us and Cirrus.
Our
strategy historically has involved 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 CharterGPT, and expanding upon our
B2B software offerings. Our strategy currently involves further enhancing the AI functionality of Ava, our agentic AI model, and CharterGPT,
and expanding upon Reroute AI and DynoFlight.
During
2025, we began executing a strategic transformation to become a pure-play AI data center infrastructure company. This strategic pivot
was driven by significant growth in demand for high-performance computing infrastructure to support artificial intelligence workloads.
Potential
Sale of Aviation Business Assets
On
February 13, 2025, we entered into an Agreement and Plan of Merger and Reorganization (the “Original Merger Agreement”) with
flyExclusive, Inc. (“flyExclusive”), FlyX Merger Sub, Inc., a wholly owned subsidiary of flyExclusive (“Merger Sub”),
and Jet.AI SpinCo, Inc., a wholly owned subsidiary of the Company (“SpinCo”). On May 6, 2025, the parties entered into an
Amended and Restated Agreement and Plan of Merger and Reorganization (as subsequently amended, the “Merger Agreement”). Pursuant
to the Merger Agreement, (i) as a condition to closing on the Merger Agreement, we will distribute all of the shares of SpinCo, on a
pro rata basis, to our stockholders (the “Distribution”), (ii) Merger Sub will merge with and into SpinCo (the “Merger”
and, together with the Distribution and all other transactions contemplated under the Merger Agreement, the “Transactions”)
with SpinCo surviving the Merger as a wholly owned subsidiary of flyExclusive, and (iii) as consideration for the Merger, our existing
stockholders will have the right to receive shares of Class A common stock of flyExclusive. Additionally, our stockholders will continue
to own and hold their existing shares of our common stock as of closing of the Merger.
The
Merger Agreement amends, restates, replaces and supersedes the Original Merger Agreement in its entirety. Except as follows, the material
terms of the Transactions were unchanged in the Merger Agreement. The Merger Agreement, among other things, amended the Original Merger
Agreement to provide that eighty percent of the merger consideration shares will be issued upon the closing, and twenty percent of the
merger consideration shares will be held in reserve by flyExclusive until a final post-closing purchase price is determined. Once the
final post-closing purchase price is determined, flyExclusive will only issue additional merger consideration shares from the reserve
on a dollar for dollar basis up to the lesser of the final purchase price and the initial purchase price.
On
February 11, 2026, the parties entered into an amendment to the Merger Agreement (the “Amendment”), which (i) eliminates
the closing condition that would have required us to execute a new securities purchase agreement with a third-party investor, pursuant
to which we would have issued the investor a warrant to purchase up to $50 million worth of shares of a newly-designated series of preferred
stock, and (ii) provides us with the ability to explore and negotiate potential post-closing strategic transactions, provided that any
such transaction must be conditioned upon the closing of the Transactions and consummated after the closing of the Transactions.
In
connection with executing the Original Merger Agreement, we, SpinCo, and flyExclusive entered into a Separation and Distribution Agreement
(the “Separation and Distribution Agreement”), pursuant to which we will transfer the business, operations, services and
activities of our fractional and jet card business to SpinCo (the “Separation”) and consummate the Distribution. After the
Separation and Distribution, we will no longer operate a fractional or jet card business. We will continue to operate and retain our
software and intellectual property assets, but will cease to hold our aircraft fractional, jet card and management assets. The Transactions
are subject to various conditions to closing, including the receipt of stockholder approval and are expected to close during the first
or second quarter of 2026.
Joint
Venture and Contribution Agreements
On
June 26, 2025, we entered into a Joint Venture Agreement (the “JV Agreement”) with Consensus Core Technologies Inc. (“Consensus
Core”) pursuant to which we and Consensus Core agreed to establish a joint venture allowing us to collaborate in developing data
centers. In furtherance of this collaboration, we entered into a Contribution Agreement (the “Contribution Agreement”) with
Consensus Core and Convergence Compute LLC, a Delaware limited liability company and the joint venture entity contemplated by the JV
Agreement (“Convergence Compute”), on July 2, 2025. Pursuant to the Contribution Agreement, we contributed $300,000 to Convergence
Compute at the first closing of the transactions contemplated by the JV Agreement and acquired a 0.5% equity interest in Convergence
Compute. Ultimately, we have agreed to contribute up to an aggregate $20 million to Convergence Compute in five tranches that are each
tied to specific project development milestones.
On
November 7, 2025, we announced that the milestones associated with the second closing—including the contribution by Consensus Core
of all equity interests of its data center project located in Midwestern Canada (the “Midwest Project”) to Convergence Compute—had
been substantially completed and we have since contributed the $1.7 million in connection with the second milestone. As a result, we
and Consensus Core each received a 17.5% equity interest in the Midwest Project and we received an additional 0.5% equity interest in
Convergence Compute.
In
connection with the third closing under the Contribution Agreement, Consensus Core will contribute all equity interests in its data center
project located in Maritime Canada (the “Maritime Project”) to Convergence Compute. As a result of this contribution, we
and Consensus Core each will receive a 17.5% equity interest in the Maritime Project and we will receive an additional 0.5% equity interest
in Convergence Compute. If all five closings contemplated by the Contribution Agreement occur, we will receive hold an aggregate equity
interest of 2.5% of Consensus Core, an equity interest of 17.5% in the Midwest Project, and an equity interest of 17.5% in the Maritime
Project.
Anticipated
Projects
Midwest
Project
The
joint venture is developing a data center campus in Midwestern Canada, to expand its portfolio of high-capacity, sustainable data infrastructure.
The location sits adjacent to a natural gas pipeline in North America, historically intended to support the now-canceled Keystone Pipeline.
This pipeline transports Alberta gas eastward and includes the Emerson line.
The
site connects directly to a 115 kV transmission line tied to a main generation aggregation point. This line terminates at a pad owned
by Hydro. The site already hosts a 2 MVA transformer, switchgear, and a package substation capable of supporting a 15 MW load. This infrastructure
is in place and operational, the result of zoning changes (from agricultural to industrial) and regulatory approvals. A small proof-of-concept
data center is currently installed and tested on-site, housing approximately 2 MW of capacity. Although idle, the infrastructure is active.
Maritime
Project
The
joint venture is developing a high-capacity data center campus in Maritime Canada. Strategically positioned to capitalize on the region’s
energy infrastructure and sustainability potential the Maritime Project aims to address the escalating demand for cloud computing, artificial
intelligence, and digital infrastructure across North America.
The
Maritime Project benefits from immediate access to 40 megawatts of substation capacity, that would be expected to enable operations to
commence promptly upon development. The site is expected to scale to 100 megawatts in the near term, with long-term plans to exceed 1
gigawatt, which at that scale would position the site as a major hub for hyperscale data center operations. Located alongside an established
large-scale critical energy hub, the campus has access to substantial natural gas resources, increasing the probability of reliable and
cost-effective power delivery. Additionally, the site is adjacent to 10,000 acres of developable land earmarked for future green energy
production expansion.
Recent
Events
Proposed
Moapa, Nevada Data Center
On
December 23, 2025, we announced a planned joint venture with for a 50-megawatt data center campus in Moapa, Clark County, Nevada, on
approximately 20 acres. The site is adjacent to a remediated coal plant (now a 200MW battery storage facility) with access to electric
transmission, natural gas, fiber, water, and transportation infrastructure. If successfully implemented, and subject to the execution
of definitive agreements, completion of diligence, and satisfaction of customary conditions, we expect to commit approximately $10 million
over two years, with certain economic incentives to be allocated approximately 70% to us and 30% to our joint venture partner. We entered
into a non-binding term sheet with respect to the joint venture in December 2025 and currently expect to enter into definitive agreements
in the first or second quarter of 2026.
Nasdaq
Compliance
On
February 6, 2026, we received a notification letter from the Listing Qualifications Department of Nasdaq (the “Notice Letter”)
stating that we are not in compliance with Nasdaq Listing Rule 5450(a)(1), as the minimum bid price of our common stock had been below
$1.00 per share for 30 consecutive business days (the “Minimum Bid Price Requirement”). The Notice Letter has no immediate
effect on the listing or trading of our common stock. We have 180 calendar days, or until August 45, 2026 (the “Initial Compliance
Period”), to regain compliance with the Minimum Bid Price Requirement. In the event we do not regain compliance with the Minimum
Bid Price Requirement during the Initial Compliance Period, we may be eligible for an additional 180-calendar day compliance period (the
“Additional Compliance Period”) if, at that time, we meet the continued listing requirement for the market value of publicly
held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement.
At
the 2025 annual meeting of stockholders the Company received stockholder approval to effect a reverse stock split of our issued and outstanding
shares of common stock at a ratio of up to 1-for-250. Should we not regain compliance with the Minimum Bid Price Requirement during the
Initial Compliance Period or the Additional Compliance Period, if applicable, we expect to effect such a reverse stock split in a sufficient
ratio so as to cause us to regain compliance with the Minimum Bid Price Requirement. Although we believe that we will be able to regain
compliance with the Minimum Bid Price Requirement, there can be no assurance that we will be able to regain compliance with the Minimum
Bid Price Requirement, satisfy the requirements necessary for eligibility for an Additional Compliance Period, or maintain compliance
with any other listing requirements.
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 previously acquired four HondaJet Elite aircraft under our 2020 purchase agreement with
Honda Aircraft Company, LLC (“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. Cirrus is managing, operating, and maintaining
our aircraft.
We
offer the following programs for our HondaJet Elite aircraft:
In
addition to servicing members, fractional owners and third-party charter clients, we intend for our HondaJet Elites to be 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 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 our charter and
jet card inventory. The Onboard Program requires one month FAA conformity of aircraft onto the Cirrus Part 135 certificate, a one-week
pilot recertification course for charter operation and execution of a limited management agreement. We currently have one Cessna Citation
Jet CJ4 aircraft (“Citation CJ4 Gen 2”) and one Beechcraft Super King Air B300 (350I) aircraft (“King Air 350i”)
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. 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; and (4) verify that payment for the charter has cleared.
Our
Agentic AI Model –Ava
In
late 2024 we announced the launch of our agentic AI model, “Ava,” that books private jets. Through Ava, customers can book
private jets by calling or texting a toll-free number where the AI provides real-time aircraft availability, transparent pricing, and
expert guidance to help users select the perfect jet for their intended journey. For those who prefer texting, Ava enables full conversational
experience via SMS, responding to inquiries, sharing details, and providing a direct link to the CharterGPT app for seamless trip management.
The AI is intended to ensure every customer receives a personalized and efficient experience, whether they’re seasoned flyers or
first-time travelers.
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. We generate 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, we act 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 advanced 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, we 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.
AI
Data Centers
With
our announcement of the potential sale of our fractional and jet card business assets, we also announced our entry into the AI
infrastructure space and have entered into the JV Agreement for our first 50-megawatt project as part of a new twenty-acre campus.
Consensus Core is a Vancouver-based provider of high-performance graphics processing unit infrastructure and AI cloud services. The
joint venture is expected to develop two hyperscale data center campuses - one located in Manitoba Canada and the other in Maritime
Canada - with a combined power capacity target of approximately 1.5 gigawatts. The Midwest Project currently has 2 megawatts of
capacity live and is expected to reach 100 megawatts within 12 months, while the Maritime Project is expected to begin with 40
megawatts and scale to over 1 gigawatt.
Under
the JV Agreement and Contribution Agreement, on July 2, 2025, we contributed $300,000 to Convergence Compute and acquired a 0.5%
equity interest in Convergence Compute. We have invested additional $1.7 million securing a 17.5% equity interest in the Midwest
Project, and plan to invest an additional $2 million at a later date to obtain a 17.5% equity interest in the Maritime Project. We
will have the option to complete the fourth and fifth closings under the Contribution Agreement, which would result in us having
contributed an aggregate of $20 million if all five closings are consummated. The project development milestones and additional cash
contributions that we have agreed to contribute or have the option of contributing are outlined in the table below.
Closing Event Midwest Milestones Maritime Milestones Contribution Amount
Initial(1) Signing Definitive Agreement. Signing Definitive Agreement. $ 300,000
(1)
The initial closing occurred on July 2, 2025.
(2)
On November 7, 2025, we announced that the milestones associated with the second closing had been substantially completed, and the parties
subsequently completed that closing in January 2026 following the Company’s funding of this milestone.
The
joint venture is structured to generate recurring cash flow from our equity interests and offer potential capital appreciation, aligning
with our long-term strategy to become a leading developer of AI infrastructure. The projects feature access to large-scale power infrastructure,
including transmission lines, natural gas pipelines, and proximity to hydroelectric sources, positioning them for scalable and sustainable
growth in the rapidly evolving AI compute market.
AI
Infrastructure Acquisition Corp.
We
hold an approximate 49.9% ownership interest in AIIA Sponsor Ltd., the sponsor of AI Infrastructure Acquisition Corp. (NYSE: AIIA) (“AI
Acquisition”), a special purpose acquisition company focused on opportunities in the broader AI infrastructure sector. On October
3, 2025, AI Acquisition completed an initial public offering of 13.8 million units at $10.00 per unit, raising $138 million in gross
proceeds. Through our interest in the sponsor, we have an indirect interest in approximately 2.3 million Class B ordinary shares of AI
Infrastructure, approximately 132,000 Class A ordinary shares of AI Infrastructure, and approximately 132,000 private placement rights,
with each right entitling the holder to receive one-fifth (1/5) of one Class A ordinary share of AI Infrastructure .
Strategy
Aircraft
Operations
Having
purchased and sold four HondaJet Elite aircraft, three of which remain part of our fleet, as discussed below, we previously planned to
gradually expand our fleet with larger light jet and super-mid-size aircraft. In October 2024, we entered into an aircraft purchase agreement
with Textron Aviation Inc. (“Textron”), for the purchase of three Citation CJ4 Gen 2 aircraft. In August 2025, we replaced
our three orders for Citation CJ4 Gen 2 aircraft with three orders for Citation CJ3 aircraft. The aircraft are currently expected to
be delivered in 2027. Upon delivery, the jets would, in turn, be managed by Cirrus and listed on their Part 135 certificate. Customers
who purchase fractional interest in these jets would be expected to make a down payment and progress payments, consistent with fractional
industry norms.
Because
all major manufacturers of larger cabin aircraft such as Gulfstream, Falcon, Bombardier, Embraer, and Textron each have one to three
year waiting lists for purchasing an aircraft, 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 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
Citation CJ3.
The
above description of our aircraft operations strategy assumes that our current operations will remain the same. However, if we consummate
the proposed Transactions pursuant to the Merger Agreement with flyExclusive, we will transfer the business, operations, services and
activities of our fractional and jet card business to SpinCo and will no longer operate a fractional and jet card business.
Artificial
Intelligence
We
operate CharterGPT, our enhanced booking app, in the iOS and Android stores. The app functions as a prospecting and quoting tool for
those interested in chartering a private jet. We released CharterGPT in 2023 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. In late 2024,
we followed up with our agentic AI model, Ava. 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; and (4) verify that payment
for the charter has cleared.
In
addition, in 2024, we incorporated the following AI-powered features into CharterGPT and Ava to offer a continually improving unique
and personalized experience to customers:
Aircraft
Recommendation Engine: This feature provides customers greater transparency and understanding of the characteristics of the aircraft
that are available for their trips, making it easier for customers to make an informed decision regarding which aircraft to book. The
recommendation engine analyzes a list of available jets based on the traveler’s 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. Our management believes that untrained call center staff and brittle chat
bots still 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.
The
back end of the CharterGPT 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 uses historical traffic patterns and traveler preferences, and is expected to make use of information
such as airport closures, fuel prices, and landing fees 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), and 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 analyzes 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 recommends optimal departure times 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 recommends 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 (Aircraft Operations)
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 LinkedIn. 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.
Our
Aircraft
Our
aircraft fleet consists of five aircraft – three HondaJet Elites, one Citation CJ4 Gen 2 aircraft and one King Air 350i aircraft.
We acquired the three HondaJet Elites pursuant to a purchase agreement with Honda Aircraft Company for a multi-aircraft deal for four
HondaJet Elites, all four of which have been sold, but three of which remain part of our fleet. One of the HondaJet Elites in our current
fleet was sold and we now lease the aircraft 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 now operate both of those HondaJet
Elites. We also acquired an additional 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. We do not operate this HondaJet Elite aircraft. The fourth and fifth aircraft in our current fleet
- the Citation CJ4 Gen 2 aircraft and King Air 350i aircraft - are 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.
As
discussed in “Business – Strategy – Aircraft Operations” above, we have executed a fleet purchase agreement
to acquire three Citation CJ3 aircraft from Textron Aviation, consisting of three firm orders. 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.
We
currently base our fleet at Harry Reid International airport in Las Vegas, NV, 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. We believe that the ability to safely offer guaranteed capacity,
on demand, is one of the most important features one can deliver in private aviation. Also, possessing a dedicated fleet enables us to
offer dynamic pricing to customers, which is attractive to online customers.
We
have entered into several Executive Aircraft Management and Charter Services Agreements with Cirrus. Under these agreements, 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 our 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.
The
above description of our aircraft assumes that our current operations will remain the same. However, if we consummate the proposed Transactions
pursuant to the Merger Agreement with flyExclusive, we will transfer the business, operations, services and activities of our fractional
and jet card business to SpinCo and will no longer operate a fractional and jet card business.
Competition
Aircraft
Operations:
The
private air travel industry is extraordinarily competitive. We compete against other 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, Nicholas Air, Executive Air Share, Plane Sense, One Sky
Jets, StarJets, Jet Aviation, 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.
AI
Data Centers:
The
AI data center infrastructure market is highly competitive and capital-intensive, characterized by rapidly growing demand for