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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[Mark One]


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

For the quarterly period ended March 31, 2026


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

For the transition period from ____________ to ____________

Commission File Number: 001-41759

Surf Air Mobility Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware	4522	36-5025592
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

12111 S. Crenshaw Blvd.

Hawthorne, CA 90250

(424) 332-5480

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

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


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

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

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

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


Large accelerated filer	☐	Accelerated filer	☒
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 8, 2026, 100,396,873 shares of common stock, $0.0001 par value per share, were outstanding.

SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

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

•

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

•

the Company’s ability to meet the requirements of its term loan credit facility or other debt obligations;

•

the Company’s limited operating history and the aircraft electrification technology the Company plans to develop or deploy does not yet exist and/ or remains subject to approval by regulators;

•

the impact of changes in the U.S. or foreign trade policies, including the imposition of tariffs and other protectionist trade measures, and other factors beyond the Company’s control;

•

the Company’s ability to maintain and strengthen the Company’s brand and its reputation as a regional airline;

•

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

•

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

•

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

•

the Company’s ability to execute business objectives and growth strategies successfully or sustain the Company’s growth;

•

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

•

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

•

the ability of the Company’s customers and potential customers to pay for the Company’s services;

•

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

•

whether EAS funding will continue without interruption or appropriations will be made on a timely basis and also whether the U.S. Department of Transportation will restore and fund Essential Air Service obligations retroactively;

•

the outcome of any legal proceedings that might be instituted against the Company; and

•

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

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

TABLE OF CONTENTS


		Page
	Special Note Regarding Forward Looking Information
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets	1
	Unaudited Condensed Consolidated Statements of Operations	2
	Unaudited Condensed Consolidated Statement of Changes in Shareholders’ Deficit	3
	Unaudited Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34

PART II.	OTHER INFORMATION	37
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
Signatures		43

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Surf Air Mobility Inc.

Unaudited Condensed Consolidated Balance Sheets

March 31, 2026 and December 31, 2025

(in thousands, except share and per share data)

(Unaudited)


	March 31, 2026			December 31, 2025
Assets:
Current assets:
Cash	$	4,163		$	12,672
Accounts receivable, net		3,705			3,929
Prepaid expenses and other current assets		13,190			14,320
Total current assets		21,058			30,921
Restricted cash		10,156			10,091
Property and equipment, net		47,393			45,595
Intangible assets, net		19,330			20,067
Operating lease right-of-use assets		11,358			12,510
Finance lease right-of-use assets		735			809
Other assets		10,797			11,688
Total assets	$	120,827		$	131,681
Liabilities and Shareholders’ Deficit:
Current liabilities:
Accounts payable	$	21,143		$	18,437
Accrued expenses and other current liabilities		41,290			47,702
Deferred revenue		18,590			17,924
Current maturities of long-term debt		2,741			2,712
Operating lease liabilities, current		3,636			3,636
Finance lease liabilities, current		282			277
SAFE notes at fair value, current		3			5
Convertible notes at fair value, current		44,867			42,274
Due to related parties, current		374			643
Total current liabilities		132,926			133,610
Long-term liabilities:
Long-term debt, net of current maturities		13,760			14,389
Convertible notes at fair value, long term		14,029			25,183
Operating lease liabilities, long term		7,801			8,714
Finance lease liabilities, long term		599			670
Due to related parties, long term		100			100
Other long-term liabilities		8,207			3,872
Total liabilities	$	177,422		$	186,538
Commitments and contingencies (Note 10):
Redeemable Common Stock:
Common Stock, $0.0001 par value; 3,510,638 and 0 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively (Note 12).		6,600			-
Shareholders’ deficit:
Preferred Stock, $0.0001 par value; 50,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2026 and December 31, 2025		—			—
Common stock, $0.0001 par value; 800,000,000 shares authorized as of both March 31, 2026 and December 31, 2025; 78,399,455 shares issued and outstanding as of March 31, 2026 and 73,082,025 shares issued and outstanding as of December 31, 2025		8			7
Additional paid-in capital		745,058			733,135
Accumulated deficit		(808,261	)		(787,999	)
Total shareholders’ deficit	$	(63,195	)	$	(54,857	)
Total liabilities, redeemable common stock, and shareholders’ deficit	$	120,827		$	131,681

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

Surf Air Mobility Inc.

Unaudited Condensed Consolidated Statements of Operations

Three Months Ended March 31, 2026 and 2025

(in thousands, except share and per share data)

(Unaudited)


	Three Months Ended March 31,
	2026			2025
Revenue	$	25,613		$	23,506
Operating expenses:
Cost of revenue, exclusive of depreciation and amortization		25,946			24,706
Technology and development		2,445			2,680
Sales and marketing		1,966			1,653
General and administrative		6,059			10,886
Depreciation and amortization		2,552			2,148
Total operating expenses		38,968			42,073
Operating loss	$	(13,355	)	$	(18,567	)
Other income (expense):
Changes in fair value of financial instruments carried at fair value, net	$	(3,613	)	$	5,396
Interest expense		(1,224	)		(3,895	)
Gain on extinguishment of debt		—			39
Other expense, net		(2,109	)		(1,492	)
Total other income (expense), net	$	(6,946	)	$	48
Loss before income taxes		(20,301	)		(18,519	)
Income tax benefit		39			53
Net loss	$	(20,262	)	$	(18,466	)
Net loss per share applicable to common shareholders, basic and diluted	$	(0.26	)	$	(1.09	)
Weighted-average number of common shares used in net loss per share applicable to common shareholders, basic and diluted		76,872,371			16,905,684

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

Surf Air Mobility Inc.

Unaudited Condensed Consolidated Statement of Changes in Shareholders’ Deficit

Three Months Ended March 31, 2026 and 2025

(in thousands, except share data)

(Unaudited)


	Common Shares
	Number of Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Total Shareholders' Deficit
Balance at January 1, 2025		16,933,692	$	2	$	557,444	$	(677,443	)	$	(119,997	)
Issuance of common stock related to restricted shares		20,554		—		—		—			—
Issuance of common stock under software license agreement		244,011		—		947		—			947
Stock-based compensation expense		—		—		1,879		—			1,879
Net loss		—		—		—		(18,466	)		(18,466	)
Balance at March 31, 2025		17,198,257		2		560,270		(695,909	)		(135,637	)


	Common Shares
	Number of Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Total Shareholders' Deficit
Balance at January 1, 2026		73,082,025	$	7	$	733,135	$	(787,999	)	$	(54,857	)
Issuance of common stock related to convertible note conversions		967,018		—		1,876		—			1,876
Issuance of common shares under Share Purchase Agreement		4,350,412		1		8,659		—			8,660
Stock-based compensation expense		—		—		1,388		—			1,388
Net loss		—		—		—		(20,262	)		(20,262	)
Balance at March 31, 2026		78,399,455	$	8	$	745,058	$	(808,261	)	$	(63,195	)

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

Surf Air Mobility Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2026 and 2025

(in thousands)

(Unaudited)


	Three Months Ended March 31,
	2026			2025
Cash flows from operating activities:
Net loss	$	(20,262	)	$	(18,466	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,552			2,148
Loss on sale of fixed assets		—			667
Non-cash operating lease expense		1,059			1,480
Gain on extinguishment of debt		—			(39	)
Stock-based compensation expense		1,388			1,879
Changes in fair value of financial instruments carried at fair value, net		3,613			(5,396	)
Non-cash transaction costs for issuance of HT Shares		1,608			—
Amortization of debt discounts and debt issuance costs		182			605
Deferred income taxes		(39	)		(53	)
Changes in operating assets and liabilities:
Accounts receivable, net		224			(472	)
Prepaid expenses and other current assets		1,053			(114	)
Other assets		891			16
Accounts payable		2,706			1,434
Due to related parties		(130	)		(91	)
Accrued expenses and other current liabilities		(6,943	)		2,829
Deferred revenue		666			(790	)
Operating lease liabilities		(820	)		(1,436	)
Other liabilities		—			(5	)
Cash flows used in operating activities	$	(12,252	)	$	(15,804	)
Cash flows from investing activities:
Purchase of property and equipment		(2,764	)		(1,271	)
Proceeds from the sale of fixed assets		—			2,681
Internal-use software development costs		(775	)		(628	)
Net cash used in investing activities	$	(3,539	)	$	782
Cash flows from financing activities:
Payments of borrowings on convertible notes		(4,000	)		—
Proceeds from borrowings on long-term debt		—			917
Principal payments on long-term debt		(639	)		(595	)
Proceeds from sales and advances under Share Purchase Agreement		12,000			—
Proceeds from (payments on) collateralized borrowings, net of repayment		52			282
Payment of finance lease obligations		(66	)		(62	)
Net cash provided by financing activities	$	7,347		$	542
Increase in cash, cash equivalents and restricted cash		(8,444	)		(14,480	)
Cash, cash equivalents and restricted cash at beginning of period		22,763			21,675
Cash, cash equivalents and restricted cash at end of period	$	14,319		$	7,195

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

Surf Air Mobility Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business

Organization

Surf Air Mobility Inc. (“Surf Air Mobility,” or the “Company”), a Delaware corporation, is a regional air mobility platform that aims to transform regional flying. The Company currently operates one of the largest commuter airlines in the United States by scheduled departures as well as an expanding on-demand charter marketplace for passengers in the U.S. and globally. The Company’s operations provide scale, distribution and real-world operating data to validate and, eventually, deploy the software and technology offerings it is currently developing to support the modernization of air operations and the adoption of next-generation aircraft.

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

The Company was incorporated in 2021 and became the ultimate parent of both Surf Air Global Limited (“Surf Air”) and Southern Airways Corporation (“Southern”) in July of 2023 following the Company’s public listing on the New York Stock Exchange (“NYSE”). For 2025, the Company’s combined network served over 300,000 passengers with approximately 62,000 scheduled departures. The Company expects the combination of its legacy networks will continue to provide the basis for its expanded, nationwide regional air mobility platform.

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

Liquidity and Going Concern

The Company has incurred losses from operations, negative cash flows from operating activities and has a working capital deficit. In addition, the Company is currently in default of certain excise and property taxes as well as certain debt obligations. These tax and debt obligations are classified as current liabilities on the Company’s Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025. As discussed in Note 10, Commitments and Contingencies, on May 15, 2018, the Company received a notice of a tax lien filing from the Internal Revenue Service (“IRS”) for unpaid federal excise taxes for the quarterly periods from October 2016 through September 2017 in the amount of $1.9 million, including penalties and interest as of the date of the notice. The Company agreed to a payment plan (the “Installment Plan”) whereby the IRS would take no further action and remove such liens at the time such amounts have been paid. In 2019, the Company defaulted on the Installment Plan. Defaulting on the Installment Plan can result in the IRS nullifying such plan, placing the Company in default and taking collection action against the Company for any unpaid balance. The Company is currently in default of these obligations, with a total outstanding federal excise tax liability, including accrued penalties and interest, of $9.9 million included in accrued expenses and other current liabilities on the Company’s Condensed Consolidated Balance Sheet as of March 31, 2026. The Company has also defaulted on its property tax obligations in various California counties in relation to fixed assets, plane usage and aircraft leases. The Company’s total outstanding property tax liability including penalties and interest is approximately $0.9 million as of March 31, 2026. Additionally, Los Angeles County had previously imposed a tax lien on four of the Company’s aircraft due to the late filing of the Company’s 2022 property tax return. During the year ended December 31, 2025, the Los Angeles County tax liens were released as the Company finalized remediation of the late filing, inclusive of the completion of county audits, and made payments of $1.0 million on all property taxes due to Los Angeles County that were underlying the prior aircraft liens. As of March 31, 2026, the Company was also in default of the Simple Agreements for Future Equity with Token allocation (“SAFE-T”) note, where the note matured in July 2019 (see Note 7, Financing Arrangements). The SAFE-T note is subordinate to most of the Company’s debt obligations (see Note 7, Financing Arrangements); therefore, the Company cannot pay the outstanding balance prior to paying amounts due under more senior debt obligations. The SAFE-T note had an outstanding principal amount of $0.5 million as of March 31, 2026 and December 31, 2025.

The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The airline industry and the Company’s operations are cyclical and highly competitive. The Company’s success is largely dependent on the ability to raise debt and equity capital, achieve a high level of aircraft and crew utilization, increase flight services and the number of passengers flown, and continue to expand into regions profitably throughout the United States.

The Company’s prospects and ongoing business activities are subject to the risks and uncertainties frequently encountered by companies in new and rapidly evolving markets. Risks and uncertainties that could materially and adversely affect the Company’s business, results of operations or financial condition include, but are not limited to the ability to (i) raise additional capital (or financing) to fund operating losses, (ii) refinance its current outstanding debt, (iii) maintain efficient aircraft utilization, primarily through the proper utilization of pilots and managing market shortages of maintenance personnel and critical aircraft components, (iv) sustain ongoing operations, (v) attract and maintain customers, (vi) integrate, manage and grow recent acquisitions and new business initiatives, (vii) obtain and maintain relevant regulatory approvals, and (viii) measure and manage risks inherent to the business model.

The Company historically has funded its operations and capital needs primarily through the net proceeds received from the issuance of various debt instruments, convertible securities, related party funding, and preferred and common stock financing arrangements and expects to continue to do so, as available. In particular, as market conditions permit, the Company may raise additional funds through sales of equity (including through the SPA (see Note 8, Share Purchase Agreement and GEM Mandatory Convertible Security) with GEM Global Yield LLC SCS (“GEM”)) or convertible debt, using proceeds (as available) to strengthen the Company’s balance sheet, among other things.

During the three months ended March 31, 2026, the Company received $12 million in advances under the SPA with GEM, of which $8.3 million had been settled through the issuance of 4,350,412 shares of the Company’s common stock. As of March 31, 2026, the contractual terms allow the Company to make further advances of up to $85.5 million under the SPA. Additionally, the Company has the ability to draw an additional $251.4 million under the SPA, subject to daily volume limitations and GEM’s requirement to hold less than 10% of the fully-diluted shares of the Company. As of March 31, 2026, GEM held 0% of the then fully-diluted shares of the Company. At March 31, 2026, the daily volume limitations under the SPA significantly restricted our ability to take additional draws under the SPA to approximately 8.6 million shares per draw. Additionally, the Company’s ability to draw upon the SPA is contingent on the Company’s common stock being listed on a national exchange.

The Company is currently implementing operational improvements and stringent operating expenses management to improve the profitability of its airline operations. In parallel, the Company is advancing its technology initiatives, including its software technology platform and electrification programs. In addition, the Company continues to evaluate strategies to obtain additional funding for future operations. These strategies may include, but are not limited to, obtaining additional equity financing, issuing additional debt or entering into other financing arrangements, forming joint venture and other partnerships, and restructuring operations to grow revenues and decrease expenses. There can be no assurance that the Company will be successful in achieving its strategic plans, or that new financing will be available to the Company in a timely manner or on acceptable terms, if at all. If the Company is unable to raise sufficient financing when needed or events or circumstances occur such that the Company does not meet its strategic plans, the Company will be required to take additional measures to conserve liquidity, which could include, but are not necessarily limited to, reducing certain spending, altering or scaling back development plans, including plans to further develop our software technology platforms and to equip our regional airline operations with fully-electric or hybrid-electric aircraft, or reducing funding of capital expenditures, which could have a material adverse effect on the Company’s financial position, results of operations, cash flows, and ability to achieve its intended business objectives. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

Note 2. Summary of Significant Accounting Policies

Interim Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, the interim financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements and should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2025 and the related notes, as included in the Company’s Form 10-K filed on March 12, 2026. The information herein reflects all material adjustments, including normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the period presented. The results

for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026.

Except to the extent discussed below, there have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2026 from those disclosed in the notes to the Company’s consolidated financial statements for the year ended December 31, 2025.

Basis of Presentation and Principles of Consolidation

The condensed consolidated financial statements include the assets, liabilities, and operating results of the Company. All intercompany balances and transactions have been eliminated in consolidation.

Cash and Restricted Cash

Cash and restricted cash consists of cash on hand held in commercial bank accounts. The Company classifies all cash with use limited by contractual provisions as restricted cash. As of March 31, 2026 and December 31, 2025 the Company had restricted cash of $10.2 million and $10.1 million, respectively, primarily consisting of funds restricted under the terms of the High Trail Convertible Note (see Note 7, Financing Arrangements). The Company has classified the restricted cash as long term, which represents the expected lapse of restrictions.

Accounts Receivable, Net

Accounts receivable primarily consist of amounts due from the U.S. Department of Transportation (“DOT”) in relation to certain air routes served by the Company under the Essential Air Service (“EAS”) program, amounts due from airline business partners, and pending transactions with credit card processors. Receivables from the U.S. DOT and our business partners are typically settled within 30 days. All accounts receivable are reported net of an allowance for credit losses, which was not material as of March 31, 2026, and December 31, 2025. The Company has considered past and future financial and qualitative factors, including the age of unpaid receivables, payment history and other credit monitoring indicators, when establishing the allowance for credit losses.

Collateralized Borrowings

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

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

Redeemable Common Stock

The Company accounts for certain shares of common stock that are subject to redemption features as temporary equity in accordance with the guidance in Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity, and related SEC interpretive guidance. These shares are classified outside of permanent equity (i.e., in mezzanine equity) because they are redeemable upon the occurrence of events that are not solely within the Company’s control.

The Company has issued shares of common stock that are subject to a contingent redemption feature, whereby holders have the right to require the Company to repurchase such shares for cash upon the occurrence of specified events, including a failure to maintain the effectiveness of a registration statement covering the resale of such shares. As the redemption feature is outside the Company’s control, these shares are presented as redeemable common stock in the mezzanine section of the Condensed Consolidated Balance Sheets.

Redeemable common stock is initially recorded at its issuance date fair value, net of issuance costs. Subsequently, the Company evaluates the probability of the redemption event occurring and, if it becomes probable that the shares will become redeemable, the Company accretes the carrying value of the redeemable common stock to its redemption value over the period from the date it becomes probable to the earliest redemption date. Changes in the carrying value are recorded as adjustments to additional paid-in capital, or accumulated deficit if additional paid-in capital is insufficient.

If redemption is not probable, the Company does not accrete the carrying amount to redemption value until such time that redemption becomes probable.

Restricted Stock Unit Awards

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

Performance-Based Restricted Stock Units

During the three months ended March 31, 2026 and the year ended December 31, 2025, the Company granted performance-based restricted stock units (“PRSUs”) to employees, which will vest upon the achievement of an adjusted EBITDA metric for the year ending December 31, 2025 as well as a service period of four years from the date of grant. The grant date fair value of these PRSUs was determined based on the Company’s stock price the business day immediately preceding the grant date. Expense attribution for these awards is based on a probability assessment regarding the achievement of the financial metric. The Company will record compensation expense on a cumulative basis to reflect the grant date fair value of shares expected to vest over the service period of each award.

During 2023, the Company granted founder PRSUs (“founder PRSUs”) that contain a market condition in the form of future stock price targets. The grant date fair value of the founder PRSUs was determined using a Monte Carlo simulation model and the Company estimates the derived service period of the founder PRSUs. The grant date fair value of founder PRSUs containing a market condition is recorded as stock-based compensation over the derived service period. Provided that each founder continues to be employed by the Company, either directly or as a non-employee consultant, stock-based compensation expense is recognized over the derived service period, regardless of whether the stock price goals are achieved. If the stock price goals are met sooner than the derived service period, any unrecognized compensation expenses related to the founder PRSUs will be expensed during the period in which the stock price targets are achieved.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of income and expense during the reporting period.

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

Recent Accounting Pronouncements Not Yet Adopted

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

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

Note 3. Prepaid Expenses and Other Current Assets

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


	March 31, 2026		December 31, 2025
Prepaid software	$	4,074	$	5,188
Prepaid marketing		2,389		2,395
Engine reserves		2,395		2,213
Prepaid interest		1,983		1,983
Vendor operator prepayments		1,207		811
Prepaid insurance		504		624
Other		638		1,106
Total prepaid expenses and other current assets	$	13,190	$	14,320

Note 4. Property, Plant and Equipment, Net

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


	March 31, 2026			December 31, 2025
Aircraft, equipment and rotable spares	$	46,759		$	45,519
Equipment purchase deposits		2,000			2,000
Leasehold improvements		4,914			2,192
Office, vehicles and ground equipment		2,431			1,245
Internal-use software		6,035			4,993
Property and equipment, gross		62,139			55,949
Accumulated depreciation		(14,746	)		(10,354	)
Property and equipment, net	$	47,393		$	45,595

The Company recorded depreciation expense of $1.7 million and $1.2 million for the three months ended March 31, 2026 and 2025, respectively. Depreciation expense is recognized as a component of Depreciation and amortization expense in the accompanying Condensed Consolidated Statements of Operations.

The Company recorded a loss of $0.7 million on the sale of property and equipment for the three months ended March 31, 2025. The Company did not have any sales of property and equipment during the three months ended March 31, 2026.

Note 5. Intangible Assets, Net

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


	March 31, 2026			December 31, 2025
EAS contracts	$	25,770		$	25,770
Tradenames and trademarks		8,340			8,340
Software		3,122			3,122
Other intangibles		225			225
Intangible assets, gross		37,457			37,457
Accumulated amortization		(18,127	)		(17,390	)
Intangible assets, net	$	19,330		$	20,067

The Company recorded amortization expense of $0.7 million and $0.9 million for the three months ended March 31, 2026 and 2025, respectively. Amortization expense is recognized as a component of Depreciation and amortization expense in the accompanying Condensed Consolidated Statements of Operations.

Expected future amortization as of March 31, 2026 is as follows (in thousands):


	Amount
Remainder of 2026	$	2,177
2027		2,764
2028		2,577
2029		2,577
2030		2,577
Thereafter		6,658
Total	$	19,330

Note 6. Accrued Expenses and Other Current Liabilities

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


	March 31, 2026		December 31, 2025
Accrued compensation and benefits	$	4,449	$	8,767
Accrued professional services		9,399		9,195
Excise and franchise taxes payable		10,108		10,054
Collateralized borrowings		2,304		2,264
Software license fee payable		9,552		9,547
Accrued Monarch legal settlement		1,314		1,314
Accrued major maintenance		1,140		3,669
Interest and commitment fee payable		146		140
Other accrued liabilities		2,878		2,752
Total accrued expenses and other current liabilities	$	41,290	$	47,702

Collateralized Borrowings

The Company has a revolving accounts receivable financing arrangement that allows the Company to borrow a designated percentage of eligible accounts receivable, as defined in the agreement, up to a maximum unsettled amount of $5.0 million. The agreement is secured by a first security interest in all assets of Southern Airways Express. The related interest rate is the prime rate plus 1% per annum. Additionally, the Company pays certain ancillary fees associated with each borrowing that vary depending on the borrowed amount and duration, which is generally no more than 45 days.

For the three months ended March 31, 2026, the Company borrowed a total of $6.5 million under this financing facility, of which $4.2 million was settled through the transfer of pledged receivables. Interest expense incurred on these borrowings for the three months ended March 31, 2026 amounted to $76 thousand, and is included in interest expense in the accompanying Condensed Consolidated Statements of Operations.

As of March 31, 2026 the Company was in compliance with all covenants.

Accrued Compensation and Benefits

The Company maintains incentive compensation programs under which payouts are based on a combination of performance metrics and are subject to discretionary adjustments by the Company’s board of directors (the “Board”).

As of December 31, 2025, the Company recorded an accrual of $4.8 million representing its estimate of expected payouts under the programs. During the three months ended March 31, 2026, final payouts under the plans were approved at $1.8 million. The resulting $3.0 million reduction in accrued compensation has been recognized as a $0.3 million reduction to sales and marketing expense and a $2.7 million reduction to general and administrative expenses in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2026.

Accrued Professional Services

During the fourth quarter of 2024, the Company entered into agreements with several professional service firms engaged in support

of the Company’s July 27, 2023 direct listing on the NYSE. These agreements modify the payment terms of prior service agreements to be contingent on future equity or debt financing by the Company. The Company originally estimated that a total of $7.1 million would be due under these agreements over a five year period. Given the uncertainty regarding the timing and amount of payment, all amounts have been classified as current liabilities within the Company’s Condensed Consolidated Balance Sheets. During the year ended December 31, 2025, the Company has continued to make contractual payments against certain of these liabilities, with $6.7 million remaining as a current liability within the Company’s Condensed Consolidated Balance Sheets as of March 31, 2026.

Note 7. Financing Arrangements

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


	March 31, 2026			December 31, 2025
Note payable to bank, fixed interest rate of 4.65%, due November 2025		—			4
Note payable to a financing company, fixed interest rate of 5.49%, due December 2026		43			60
Notes payable to Clarus Capital, fixed interest rate of 8.66%, due April, June and September 2027		12,147			12,543
Note payable to Skywest, fixed interest rates of 4%, due April 2028		1,691			1,802
Note payable to Tecnam, fixed interest rate of 6.75%, due July and August 2032		2,620			2,692
Long-term debt, gross		16,501			17,101
Current maturities of long-term debt		(2,741	)		(2,712	)
Long-term debt, net of current maturities	$	13,760		$	14,389

Future maturities of total long-term debt as of March 31, 2026 are as follows (in thousands):


	Amount
Remainder of 2026	$	2,113
2027		12,029
2028		685
2029		157
2030		450
Thereafter		1,067
Total	$	16,501

The Company is subject to customary affirmative covenants and negative covenants on all of the above notes payable. As of March 31, 2026, the Company was in compliance with all covenants in the loan agreements.

Fair Value of Convertible Instruments

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

High Trail Convertible Note

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

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

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

The Holder will have the option to require the Company to partially redeem the High Trail Convertible Note on the first and fifteenth day of each month beginning March 1, 2026 in an amount equal to the greater of (a) 5.0% of the aggregate dollar trading volume of the Company’s common stock, (b) an amount equal to (i) $2,000,000, minus (ii) the cumulative sum of the amounts by which the principal amounts partially redeemed have exceeded $2,000,000 for all prior redemption periods, less any amounts that have previously been applied by the Company pursuant to this clause (ii) to reduce partial redemption amounts, if any, and (c) $750,000. The Holder may elect to receive shares in an amount determined by applying the conversion rate to the redemption payment otherwise due. Any such partial redemption payment (whether in cash or in shares) shall reduce the principal amount by such paid amount divided by one hundred five percent (105%). The maximum number of shares issuable under the High Trail Convertible Note (if the entire High Trail Convertible Note were redeemed on this basis) would be 19,503,012. During the three months ended March 31, 2026 the Company made partial redemption payments totaling $ 4.0 million.

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

The Company is subject to comprehensive negative and affirmative covenants, including, inter alia, restrictions on its ability to incur indebtedness, create liens, make investments, declare or pay cash dividends or repurchase equity, and transfer or sell material assets, in each case subject to certain enumerated exceptions. The Company must also maintain a minimum liquidity of $10,000,000 in cash and cash equivalents in controlled accounts. The Company also must obtain prior written consent from a majority of holders of the High Trail Convertible Note before issuing additional debt or securities that would cause a default under the Note or restrict the Company’s ability to pay the principal amount thereon. In addition, the Company must maintain a required reserve of authorized and unissued common stock calculated pursuant to a specified formula set forth in the High Trail Convertible Note, and deliver and maintain a letter of credit to backstop the High Trail Convertible Note. The Company must also maintain at least $30,000,000 in available capacity under either an equity line of credit or an “at-the-market” offering within the meaning of Rule 415(a)(4) of the Securities Act pursuant to which the Company may issue and sell shares of common stock from time to time. This requirement will be met through continued access to the SPA with GEM (see Note 8, Share Purchase Agreement and GEM Mandatory Convertible Security). Additional affirmative covenants require the Company to maintain its business within existing lines, preserve its corporate existence, properties and intellectual property rights, maintain adequate insurance and ensure affiliate transactions are on arm’s length terms.

The High Trail Convertible Note is partially backstopped by a letter of credit issued by HSBC Bank USA, N.A. and arranged by Park Lane, a related party, and in connection therewith, the Company had entered into an amended reimbursement agreement with Park Lane (see Note 16, Related Party Balances and Transactions).

In March 2026, the Company and the Holder entered into an agreement, by which the Company issued 3,510,638 shares of its common stock (the “HT Shares”) to the Holder valued at $6.6 million as of the closing price on the day before issuance (the “Issuance Price”), in satisfaction of $6 million in cash payments due pursuant to the terms of the High Trail Convertible Note (see Note 12, Redeemable Common Stock and Shareholders’ Deficit). The Company has agreed to provide additional cash payments based on the average daily volume-weighted average price of the Company’s common stock (the “Average VWAP”) in the following circumstances: (i) if the Average VWAP falls below the Issuance Price during the 45 trading days following the day after the issuance (the Average VWAP during such period, the “Initial Adjustment Price”); and (ii) if the Average VWAP falls below the lesser of the Issuance Price and the Initial Adjustment Price during the 45 trading days after the effectiveness of the registration statement with respect to the HT Shares (together, the “Make Whole Provision”). In addition, if there are delays or interruptions in the effectiveness of the registration statement the Company will be subject to liquidated damages and the Holder will have the right to put some or all of the HT Shares back to the Company at the Issuance Price. The registration statement for the HT shares was declared effective by the SEC on March 26, 2026.

The Company has recorded transaction costs associated with the issuance of the HT Shares totaling $1.6 million, which are comprised of $0.6 million for the premium paid over the principal redemption amount and the initial fair value of the Make Whole Provision and the put right associated with the HT Shares. Such instruments are accounted for as derivative instruments which will be remeasured to fair value at each reporting period with changes in fair value recorded in Changes in fair value of financial instruments carried at fair value, net on the Condensed Consolidated Statements of Operations (see Note 9, Fair Value Measurements).

LamVen Note

During the year ended December 31, 2025, LamVen LLC (“LamVen”) transferred $49.9 million of the outstanding principal due under the LamVen Note (see Note 16, Related Party Balances and Transactions) to a non-affiliated third party under terms identical to the original LamVen Note (the “New Convertible Note”). Subsequent to these transfers, during 2025, the holder of the New Convertible Note converted $48.0 million of the principal amount, inclusive of then accrued interest, to 14,025,167 shares of the Company’s common stock. As a result, as of December 31, 2025, LamVen retained a principal balance of $0.1 million (the “New LamVen Note”), with $1.9 million outstanding under the New Convertible Note.

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

PFG Convertible Note Purchase Agreement

On June 21, 2023, the Company entered into a convertible note purchase agreement (the “Convertible Note Purchase Agreement”) with Partners for Growth V.L.P. (“PFG”) for a senior unsecured convertible promissory note for an aggregate principal amount of $8.0 million.

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

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

PFG has the right to convert, at its option, the amounts outstanding under the Convertible Note Purchase Agreement into common stock of the Company, at a conversion price of $42.00 per share.

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

As of March 31, 2026, the Company was in compliance with all covenants under the Convertible Note Purchase Agreement.

Fair value of convertible notes (in thousands):


	Fair Value at
	March 31, 2026			December 31, 2025
High Trail Note	$	54,900		$	61,600
New Convertible Note		—			1,875
Convertible Note Purchase Agreement		3,996			3,982
Total		58,896			67,457
Convertible notes at fair value, current		(44,867	)		(42,274	)
Convertible notes at fair value, long-term	$	14,029		$	25,183

Fair Value of SAFE-T Notes

The Company’s SAFE-T notes are carried at fair value, with fair value determined using Level 3 inputs. The Company determined that the SAFE-T instruments should be classified as liabilities based on evaluating the characteristics of the instruments, which contained both debt and equity-like features. The SAFE-T instrument matured in July 2019, but the holder has elected not to effect an equity conversion of the instrument. Subsequent changes in the fair value of the SAFE-T notes are recorded as part of changes in fair value of financial instruments carried at fair value, net within the Consolidated Statements of Operations. As of March 31, 2026 and December 31, 2025, the value of the SAFE-T notes was $3 thousand and $5 thousand, respectively.

Note 8. Share Purchase Agreement and GEM Mandatory Convertible Security

Share Purchase Agreement

During 2020, the Company entered into a Share Purchase Agreement (“SPA”) with GEM and an entity affiliated with GEM to provide incremental financing in the event the Company completed a business combination transaction with a SPAC, IPO, or direct listing. On May 17, 2022, February 8, 2023, and September 18, 2023, the SPA was amended to increase the maximum aggregate shares of the Company’s common stock that may be required to be purchased by GEM from $200.0 million to $400.0 million (the “Aggregate Limit”) and amend the commitment fee required under the SPA from $4.0 million to 571,429 shares of the Company’s common stock. Pursuant to the amended and restated SPA, and subject to the satisfaction of certain conditions, the Company will have the right from time to time at its option to direct GEM to purchase up to the Aggregate Limit of shares of the Company’s common stock over the term of the amended and restated SPA. Upon its public listing, the Company may request GEM to provide advances under the SPA in an aggregate amount of up to $100.0 million, provided that individual advances are not to exceed $25.0 million each, with the first advance not to exceed $7.5 million. Each advance will reduce the amount that the Company can request for future purchases under the SPA. Following an advance or draw, the number of shares to be transferred to GEM will be based on an average of the volume-weighted average trading price of the Company’s common stock over a period of fifteen trading days following the receipt of an advance, subject to a 15 day extension in certain circumstances. This average price will be subject to a contractual discount of 10%. Additionally, contractual provisions within the SPA provide that in no event may GEM receive a share issuance, from a draw under the SPA, that would raise their share ownership percentage above 10% of the Company. This provision may impact the Company’s ability to request additional draws under the SPA.

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

The Company has accounted for the shares issuance contracts under the SPA, as amended, as derivative financial instruments which are recorded at fair value within Other long-term liabilities on the Condensed Consolidated Balance Sheets.

For the three months ended March 31, 2026, the Company received total proceeds of $12 million through completed advances under the SPA, for which the Company has issued 4,350,412 shares of common stock as partial settlement as of March 31, 2026. The fair value of unsettled liabilities related to the SPA was $4.1 million and $0 as of March 31, 2026 and December 31, 2025, respectively. Changes in fair value were recorded in Changes in fair value of financial instruments carried at fair value, net on the Consolidated Statements of Operations (see Note 9, Fair Value Measurements).

As of March 31, 2026, the Company had $251.4 million in remaining availability for draws under the SPA, as well as $85.5 million in remaining availability for advances.

GEM Mandatory Convertible Security

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

During the year ended December 31, 2025, the Company made payments against the outstanding principal of the Mandatory Convertible Security totaling $38.6 million, which represented full settlement of the Mandatory Convertible Security. As a result, the outstanding principal balance of the Mandatory Convertible Security was $0 as of both March 31, 2026 and December 31, 2025.

Note 9. Fair Value Measurements

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


	Fair Value Measurements at March 31, 2026 Using:
	Level 1		Level 2		Level 3		Total
Liabilities:
Convertible notes at fair value	$	—	$	—	$	58,896	$	58,896
SAFE-T notes at fair value		—		—		3		3
New LamVen Note		—		—		100		100
GEM Derivative		—		—		4,052		4,052
HT Side Letter Agreement						2,509		2,509
Liability classified warrants		—		—		1,024		1,024
Total financial liabilities	$	—	$	—	$	66,584	$	66,584


	Fair Value Measurements at December 31, 2025 Using:
	Level 1		Level 2		Level 3		Total
Liabilities:
Convertible notes at fair value	$	—	$	—	$	67,457	$	67,457
SAFE-T notes at fair value		—		—		5		5
New LamVen Note		—		—		100		100
Liability classified warrants		—		—		2,831		2,831
Total financial liabilities	$	—	$	—	$	70,393	$	70,393

The following table provides a reconciliation of the Company’s financial liabilities that are measured at fair value using inputs classified as Level 3 (in thousands):


	Convertible Notes at Fair Value			SAFE Notes			New LamVen Note		GEM Derivative			HT Side-Letter Agreement		Liability Classified Warrants
Balance at December 31, 2025	$	67,457		$	5		$	100	$	—		$	—	$	2,831
Change in fair value		3,132			(2	)		—		789			1,501		(1,807	)
Debt and equity financing issuances		—			—			—		12,000			1,008		—
Transfers		182			—			—		(77	)		—		—
Conversions into common stock		(1,875	)		—			—		(8,660	)		—		—
Payments and share settlement		(10,000	)		—			—		—			—		—
Balance at March 31, 2026	$	58,896		$	3		$	100	$	4,052		$	2,509	$	1,024

Long-Term Debt

The carrying amounts and fair values of the Company’s long-term debt obligations were as follows (in thousands):


	As of March 31, 2026				As of December 31, 2025
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt, including current maturities	$	16,501	$	16,258	$	17,101	$	16,988

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

Note 10. Commitments and Contingencies

Software License Agreements

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

As of both March 31, 2026 and December 31, 2025, the Company had capitalized $3.4 million related to the software that Palantir has provided to the Company. During the year ended December 31, 2025, the Company settled $11.8 million in invoiced amounts from Palantir through the issuance of 3,769,385 shares of the Company's common stock. As of March 31, 2026, the Company had $11.5 million in remaining commitments under these agreements, of which $4.5 million has been prepaid through the issuance of shares of the Company’s common stock.

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

Licensing, Exclusivity and Aircraft Purchase Arrangements

Textron Agreement

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

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

The licensing agreement grants the Company a nonexclusive license to certain technical information and intellectual property for the purpose of developing an electrified propulsion system for the Cessna Caravan aircraft, and to assist in obtaining Supplemental Type Certificates (“STCs”) from the FAA, including any foreign validation by any other aviation authority, for electrified propulsion upfits/retrofits of the Cessna Caravan aircraft. The licensing agreement provides for payment by the Company of license fees aggregating $60.0 million over a multi-year period, with an initial $12.5 million in deposits being made as of December 31, 2023. During the year ended December 31, 2024, the Company and TAI agreed to apply a previous deposit under the aircraft purchase agreement to amounts due under the licensing agreement. Remaining payments due under the initial license fees of $9.5 million have been previously accrued for and are due as of March 31, 2026. The remaining $35.0 million of payments under the licensing agreement will be due, via annual payments, following the Company’s receipt of the STC, which the Company continues to actively pursue.

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

Under the aircraft purchase agreement, the Company may purchase from TAI 90 specifically configured Cessna Caravans at prevailing market rates whereby the aggregate purchase price could be approximately $297.0 million, with an option to purchase an additional 26 specifically configured Cessna Caravans having an aggregate purchase price in excess of $85.8 million, over the course of seven years. The final price to be paid by the Company will be dependent upon a number of factors, including the final specifications of such aircraft and any price escalations. As of March 31, 2026, the Company has made deposits of $2.0 million under this agreement. The Company accepted delivery of four aircraft under the aircraft purchase agreement during 2024.

In February 2026, the Company and TAI amended their aircraft purchase agreement, pursuant to which commitments for firm deliveries of 90 specifically configured Cessna Caravans, and the option to purchase an additional 26 specifically configured Cessna Caravans, were reduced to a commitment for firm deliveries of four specifically configured Cessna Caravans slated for delivery in 2026. Following this amendment, remaining firm commitments under the TAI aircraft purchase agreement have been reduced from $283.8 million to $13.2 million. Previously made deposits of $2 million will be applied against these deliveries. The Company may elect to purchase additional specifically configured Cessna Caravans, on terms consistent with the original aircraft purchase agreement, with mutual agreement from TAI and the payment of a $0.5 million deposit for each aircraft.

BETA Aircraft Purchase and Strategic Agreements

In March 2026, the Company entered into an agreement with BETA Technologies (“BETA”) to purchase 25 BETA CX300 all-electric ALIA aircraft with the option to add up to 75 additional CX300 all-electric ALIA aircraft through 2030. Deliveries are scheduled to commence in 2028 and represent firm purchase commitments in excess of $90.0 million. With this, and other, strategic agreements, the Company will combine its operating expertise, existing passenger demand, and established airport infrastructure with BETA’s electric aircraft with the goal of launching the first commercial electric passenger service in Hawaii.

Jetstream Agreement

On October 10, 2022, the Company and Jetstream Aviation Capital, LLC (“Jetstream”) entered into an agreement (the “Jetstream Agreement”) that provides for a sale and/or assignment of purchase rights of aircraft from the Company to Jetstream and the leaseback of such aircraft from Jetstream to the Company within a maximum aggregate purchase amount of $450.0 million, including a $120.0 million total minimum usage obligation by the Company. The Jetstream Agreement may be terminated: (i) upon a termination notice by either party in the event that a material adverse change in the business of the other party is not resolved within 30 days of such notice; and (ii) as mutually agreed in writing by the parties. No transactions have been executed under this agreement as of March 31, 2026.

Palantir Joint Venture

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

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

Guarantees

The Company indemnifies its officers and directors for certain events or occurrences arising as a result of the officer or director serving in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum potential future amount the Company could be required to pay under these indemnification agreements is unlimited. The Company believes its insurance would cover any liability that may arise from the acts of its officers and directors and as of March 31, 2026 the Company is not aware of any pending claims or liabilities.

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

indemnification provisions generally survive termination of the underlying agreement. The maximum potential future amount the Company could be required to pay under these indemnification provisions is unlimited.

Legal Contingencies

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

On November 8, 2021, the Rise Parties entered into a final judgment in respect of litigation to finally resolve all claims raised by Monarch Air, and the Rise Parties agreed to pay actual damages of $1.0 million, pre-judgment interest of $0.2 million, attorneys’ fees of $60 thousand and court costs of approximately $3 thousand. Since then, Monarch Air has been conducting post-judgment discovery. The full settlement had been accrued within Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets by the Company as of March 31, 2026 and December 31, 2025.

The Company is also a party to various other claims and matters of litigation incidental to the normal course of its business, none of which were considered to have a potential material impact on the Company as of March 31, 2026. However, the resolution of, or increase in any accruals for, one or more matters may have a material adverse effect on the Company’s results of operations and cash flows.

FAA Matters

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

Tax Commitment

On May 15, 2018, the Company received notice of a tax lien filing from the IRS for unpaid federal excise taxes for the quarterly periods from October 2016 through September 2017 in the amount of $1.9 million, including penalties and interest as of the date of the notice. The Company agreed to an Installment Plan whereby the IRS agreed to take no further action and remove such liens at the time such amounts have been paid. In 2019, the Company defaulted on the Installment Plan. Defaulting on the Installment Plan can result in the IRS nullifying such plan, placing the Company in default and taking collection action against the Company for any unpaid balance. The Company’s total outstanding federal excise tax liability, including accrued penalties and interest, is recorded in Accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets and is in the amount of $9.9 million and $9.9 million as of March 31, 2026 and December 31, 2025, respectively. In June 2024, the Company submitted a formal offer-in-compromise (“OIC”) to the IRS, seeking to resolve all consolidated excise tax liabilities. Under the terms of the OIC, all collection actions against the Company, in relation to these matters, were abated and the Company made $34 thousand monthly payments on historical excise tax liabilities through November 2024. In December 2024, the Company received notice from the IRS that the OIC had been rejected. In December 2025, the Company submitted a request for reconsideration to the IRS regarding the previously filed OIC. Along with this request, the Company will continue to explore available options regarding settlement of its federal excise tax liability, including the submission of additional OICs.

During 2018, the Company defaulted on its property tax obligations in various California counties in relation to fixed assets, plane usage and aircraft leases. Additionally, Los Angeles County had previously imposed a tax lien on four of the Company’s aircraft due to the late filing of the Company’s 2022 property tax return. During 2025 the Company finalized remediation of the late filing, inclusive of the completion of county audits, and made payment on all property taxes due to Los Angeles County that were underlying the prior aircraft liens. The Company’s total outstanding property tax liability including penalties and interest is $0.9 million and $0.9 million as of March 31, 2026 and December 31, 2025, respectively.

Note 11. Disaggregated Revenue

The disaggregated revenue for the three months ended March 31, 2026 and 2025 were as follows (in thousands):


	Three Months Ended March 31,
	2026		2025
Scheduled	$	15,461	$	17,783
On-Demand	$	10,152	$	5,723
Total revenue	$	25,613	$	23,506

The revenue deferred and recognized for the three months ended March 31, 2026 and 2025 were as follows (in thousands):


	Three Months Ended March 31,
	2026			2025
Deferred revenue, beginning of period	$	17,924		$	17,399
Revenue deferred		17,781			11,263
Revenue recognized		(17,115	)		(12,059	)
Deferred revenue, end of period	$	18,590		$	16,603

Deferred revenue principally represents tickets sold for future travel on the Company’s flights. The balance fluctuates with seasonal travel patterns. The contract duration of passenger tickets is generally one to two years. Accordingly, any revenue associated with tickets sold for future travel will be recognized within 12 to 24 months, when the tickets are either used by passengers or expired pursuant to their terms. For the three months ended March 31, 2026, $4.2 million of revenue was recognized in passenger revenue that was included in the Company’s deferred revenue liability at December 31, 2025.

Note 12. Redeemable Common Stock and Shareholders’ Deficit

Redeemable Common Stock

Redeemable common stock is comprised of 3,510,638 shares of the Company’s common stock (par value $0.0001), issued and outstanding, that is contingently puttable to the Company upon the satisfaction of certain events. As part of a side-letter agreement to the High Trail Convertible Note (see Note 7, Financing Arrangements), the Company granted to the Holder the option to put the 3,510,638 shares of the Company’s common stock delivered as part of satisfaction of $6 million in redemption payments due under the High Trail Convertible Note. This instrument will be exercisable in the event there are interruptions in the effectiveness of the registration statement covering the HT Shares. Given the presence of conditional redemption features that are outside of the Company’s control, this instrument is required to be classified as temporary equity under ASC 480-10-S99. The instrument was originally valued at $6.6 million, an amount equal to the fair value of the shares of common stock issued. This amount has not been subsequently adjusted as of March 31, 2026 due to the instrument not currently being redeemable and it not being probable that the instrument will become redeemable due to a default on the Company’s obligation to maintain the effectiveness of the registration statement for the periods required.

Registered Direct Offerings

On March 31, 2025, the Company entered into a securities purchase agreement with an investor relating to the offering and sale in a registered direct offering of an aggregate of 1,860,000 shares of the Company’s common stock, at an offering price of $2.50 per share, and pre-funded warrants to purchase up to 140,000 shares of the Company’s common stock, at an offering price of $2.4999 per share, which were all exercised concurrent with the closing of the offering on April 1, 2025.

On June 25, 2025, the Company entered into a securities purchase agreement with certain investors relating to the offering and sale in a registered direct offering of an aggregate of 10,800,002 shares of the Company’s common stock, at an offering price of $2.50 per share, including pre-funded warrants to purchase up to 926,668 shares of common stock, at an offering price of $2.4999 per share, which were all exercised concurrent with the closing of the offering on June 26, 2025.

As part of these offerings, the Company issued warrants to purchase up to 640,000 shares of the Company’s common stock to an advisor who assisted with the offerings. These warrants have an exercise price equal to $3.125 per share and are exercisable for five years from the commencement of sales in the offerings.

The Company received gross proceeds from these offerings of $32 million, which resulted in approximately $29.4 million of net proceeds after deducting placement agent fees and direct offering expenses totaling $2.6 million. These proceeds have been allocated between the common stock and warrants issued as part of the offerings, both of which are included as part of shareholders’ deficit in the consolidated financial statements.

Private Placements

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

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

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

Warrants

A summary of warrant activity associated with equity financings as of March 31, 2026 is set forth below:


	Number of Warrants Outstanding		Weighted Average Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)		Weighted Average Exercise Price Per Share
Outstanding at December 31, 2025		9,787,769		6.24	$	373	$	2.80
Granted		—		—		—		—
Exercised		—		—		—		—
Canceled		—		—		—		—
Outstanding at March 31, 2026		9,787,769		5.99		—		2.80
Exercisable at March 31, 2026		9,787,769		5.99		—		2.80

Note 13. Stock-Based Compensation

Stock Options

A summary of stock option activity for the three months ended March 31, 2026 is set forth below:


	Number of Stock Options Outstanding		Weighted Average Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)		Weighted Average Exercise Price Per Share
Outstanding at December 31, 2025		2,332,762		8.24	$	11	$	8.07
Granted		—		—		—		—
Exercised		—		—		—		—
Canceled		—		—		—		—
Outstanding at March 31, 2026		2,332,762		8.00		6		8.07
Exercisable at March 31, 2026		1,292,236		7.84		6		9.74

No stock options were granted during the three months ended March 31, 2026.

As of March 31, 2026, unrecognized compensation expense related to the unvested portion of the Company’s share options was approximately $0.5 million with a weighted-average remaining vesting period of approximately 1.05 years.

Warrants

A summary of common stock warrant activity for the three months ended March 31, 2026 is set forth below:


	Number of Warrants Outstanding		Weighted Average Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)		Weighted Average Exercise Price Per Share
Outstanding at December 31, 2025		1,376,056		5.30	$	—	$	5.91
Granted		—		—		—		—
Exercised		—		—		—		—
Canceled		—		—		—		—
Outstanding at March 31, 2026		1,376,056		5.25		—		5.91
Exercisable at March 31, 2026		564,790		5.51		—		5.54

As of March 31, 2026, unrecognized compensation expense related to the unvested portion of the Company’s common stock warrants was approximately $0.5 million which is expected to be recognized over the weighted-average remaining vesting period of approximately 1.07 years.

Equity-based awards granted in the form of warrants are not considered granted under the terms of the 2023 Plan and are often subject to separate registration rights that those included under the 2023 Plan.

The Company has also granted warrants as a component of equity financing transactions, which were granted fully vested as of the respective transaction dates (see Note 12, Redeemable Common Stock and Shareholders’ Deficit). No compensation expense has been recorded for these transactions.

Restricted Stock Units

During the three months ended March 31, 2026, the Company issued 180,000 RSUs pursuant to the Company’s Amended and Restated 2023 Equity Incentive Plan (the “2023 Plan”) to employees and non-employee consultant which vest upon the satisfaction of certain service periods. The fair value of these RSUs was determined based on the Company’s stock price the business day immediately preceding the grant date. The service period of these RSUs is satisfied over a range of 12 months to 4 years.

A summary of RSU activity for the three months ended March 31, 2026 is set forth below:


	Number of RSUs		Weighted Average Grant Date Fair Value per RSU
Unvested RSUs at December 31, 2025		1,307,366	$	2.89
Granted		180,000		2.01
Vested/shares issued		—		—
Forfeited, cancelled, or expired		—		—
Unvested RSUs at March 31, 2026		1,487,366	$	2.78

As of March 31, 2026, unrecognized compensation expense related to the unvested portion of the Company’s RSUs was approximately $2.8 million which is expected to be recognized over the weighted-average remaining vesting period of approximately 2.83 years.

Restricted Share Purchase Agreement (“RSPA”)

A summary of RSPA activity for the three months ended March 31, 2026 is set forth below:


	Number of RSPA			Weighted Average Grant Date Fair Value per RSPA
Unvested RSPAs at December 31, 2025		13,486		$	29.13
Granted		—			—
Vested		(5,780	)		29.13
Forfeited		—			—
Unvested RSPAs at March 31, 2026		7,706			29.13

As of March 31, 2026, the unrecognized compensation expense related to the unvested portion of the Company’s RSPAs was $0.2 million, which is expected to be recognized over a weighted average period of 0.16 years.

Performance-Based Restricted Stock Units

During the three months ended March 31, 2026, the Company issued 80,000 PRSUs under the 2023 Plan to employees and non-employee consultants. The PRSUs granted will vest upon the achievement of an adjusted EBITDA metric for the year ending December 31, 2025 as well as a service period of four years from the date of grant. The fair value of these PRSUs was determined based on the Company’s stock price the business day immediately preceding the grant date.

A summary of PRSU activity for the three months ended March 31, 2026 is set forth below:


	Number of PRSUs		Weighted Average Grant Date Fair Value per PRSU
PRSUs at December 31, 2025		1,131,071	$	3.09
Granted		80,000		1.57
Shares issued		—		—
Forfeited, cancelled, or expired		—		—
PRSUs at March 31, 2026		1,211,071	$	2.99

As of March 31, 2026, the unrecognized compensation expense related to the unvested portion of the Company’s PRSUs was $1.6 million, which is expected to be recognized over a weighted average period of 2.11 years.

A summary of stock-based compensation expense recognized for the three months ended March 31, 2026 and 2025 is as follows (in thousands):


	For The Three Months Ended March 31,
	2026		2025
Stock Options	$	119	$	501
RSUs		487		380
RSPAs		169		169
PRSUs		410		757
Warrants		203		72
Other		—		—
Total Stock Based Compensation	$	1,388	$	1,879

Note 14. Segment Reporting

The Company and its chief operating decision maker (“CODM”), which is the Company’s chief executive officer, organize and manage the Company on a consolidated basis, and, accordingly, the Company operates as a single operating and reportable segment, namely its Air Mobility segment.

The Air Mobility segment derives revenues from two categories of services:

Scheduled Air Service – revenue from operating scheduled commercial air service flights which are sold to the public primarily on a per seat basis, and through subsidized EAS revenue awards from the Department of Transportation.

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

The accounting policies of the Air Mobility segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the Air Mobility segment and decides how to allocate resources based on net loss as reported on the Condensed Consolidated Statements of Operations. The measure of segment assets is reported on the Condensed Consolidated Balance Sheets as total consolidated assets.

In addition to consolidated financial metrics used in assessing the Air Mobility segment, the CODM also regularly reviews additional significant expense categories, which comprise cost of revenue, exclusive of depreciation and amortization within the Company’s Condensed Consolidated Statements of Operations. Such cost categories are determined to be those most relevant in providing flight services, and are aligned with cost designations measured by other carriers. All other financial statement metrics are reviewed and/or considered on a consolidated basis as follows (in thousands):


	Three Months Ended March 31,
	2026		2025

Revenue	$	25,613	$	23,506
Operating Expenses:
Aircraft expenses	$	19,535	$	17,789
Pilot expenses		3,489		3,892
Other (1)		2,922		3,025
Cost of revenue, exclusive of depreciation and amortization		25,946		24,706
Technology and development		2,445		2,680

SURF AIR MOBILITY INC. 10-Q