Jet.AI Inc.: Form 10-Q for the period ended Jun 30, 2026

The following discussion and analysis provides information which Jet.AI’s management believes is relevant to an assessment and understanding of its consolidated results of operations and financial condition. You should read the following discussion and analysis of Jet.AI’s financial condition and results of operations together with the historical unaudited consolidated financial statements as of June 30, 2026 and December 31, 2025, and the three and six months ended June 30, 2026 and 2025, and the related notes that are included elsewhere in this Quarterly Report.

Certain of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to plans and strategy for Jet.AI’s business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in “Item 1A – Risk Factors” in Jet.AI’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 6, 2026, and factors identified in other subsequent reports filed with the SEC, Jet.AI’s actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Factors that could cause or contribute to such differences include, but are not limited to, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this report. We assume no obligation to update any of these forward-looking statements.

Percentage amounts included in this report have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. Certain other amounts that appear in this Quarterly Report may not sum due to rounding.

Unless otherwise indicated, all share and per-share amounts in this Quarterly Report, including share and per-share amounts for prior periods, have been retroactively adjusted to give effect to the 1-for-200 reverse stock split of the Company’s common stock that became effective on April 8, 2026 (the “Reverse Stock Split”).

Overview

Jet.AI Inc., a Delaware corporation (“Jet.AI”, “Company”, “we” or “us”), was founded in 2018. We are an emerging provider of high-performance GPU infrastructure and artificial intelligence cloud services, and we continue to make available a suite of SaaS software to aircraft owners and operators, as well as software used to charter aircraft.

The Company, directly and indirectly through its subsidiaries, historically was principally involved in (i) the sale of fractional and whole interests in aircraft, (ii) the sale of jet cards, which enable holders to use certain of the Company’s and other’s aircraft at agreed-upon rates, (iii) the operation of a proprietary booking platform, which functions as a prospecting and quoting platform to arrange private jet travel with third-party carriers as well as via the Company’s leased and managed aircraft, (iv) direct chartering of its HondaJet Elite aircraft by Cirrus Aviation Services, (v) aircraft brokerage and (vi) monthly management and hourly operation of customer aircraft.

Currently we offer the following SaaS software to aircraft owners and operators generally:

• Reroute AI: recycles aircraft waiting to embark to their next revenue flight into prospective new charter bookings to destinations within specific operational parameters.
• DynoFlight: enables aircraft operators to estimate aircraft emissions then purchase carbon removal credits via our DynoFlight application programming interface (“API”).

In 2024 and 2025, we launched CharterGPT, our AI-enhanced booking app, and Ava, our agentic AI model, respectively.

In 2025 the Company began transitioning its primary focus to AI data center operations and assets. As part of that transition, in 2025 the Company acquired an approximately 49.9% ownership interest in AIIA Sponsor Ltd. (“Sponsor”), the sponsor of AI Infrastructure Acquisition Corp. (NYSE: AIIA) (“AI Acquisition”), a special purpose acquisition company that completed its initial public offering in October 2025. See “Investment in AIIA Sponsor” below for further discussion.

Recent Developments

flyExclusive Transaction.

On February 13, 2025, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Original Merger Agreement”) with flyExclusive, Inc. (“flyExclusive”), FlyX Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of flyExclusive (“Merger Sub”), and Jet.AI SpinCo, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“SpinCo”). On May 6, 2025, the parties entered into an Amended and Restated Agreement and Plan of Merger and Reorganization (as subsequently amended, the “Merger Agreement”). As of June 30, 2026, the transactions contemplated by Merger Agreement had not yet closed. The transactions subsequently closed on July 13, 2026. See “Subsequent Events—flyExclusive Transaction” below.

Pursuant to the Merger Agreement, (i) as a condition to closing on the Merger Agreement, the Company distributed all of the shares of SpinCo, on a pro rata basis, to the Company’s stockholders (the “Distribution”), (ii) Merger Sub merged with and into SpinCo (the “Merger” and, together with the Distribution and all other transactions contemplated under the Merger Agreement, the “Transactions”), with SpinCo surviving the Merger as a wholly owned subsidiary of flyExclusive, and (iii) as consideration for the Merger, the Company’s existing stockholders acquired the right to receive shares of Class A common stock of flyExclusive. At the closing of the Merger, the Company’s stockholders continued to own and hold their existing shares of the Company’s common stock.

In connection with executing the Merger Agreement, the Company, SpinCo, and flyExclusive entered into a Separation and Distribution Agreement (the “Separation and Distribution Agreement”) pursuant to which, in connection with the closing, the Company transferred the business, operations, services and activities of the Company’s fractional and jet card business to SpinCo (the “Separation”). Upon the terms and subject to the conditions set forth in the Separation and Distribution Agreement, the Company consummated the Distribution and at that time ceased to operate a fractional or jet card business. The Company will continue to operate and retain its software and intellectual property assets, but ceased to hold its aircraft fractional, jet card and management assets. The Transactions were subject to various conditions to closing, including the receipt of stockholder approval.

Reverse Takeover Letter of Intent.

On July 15, 2026, the Company entered into a non-binding letter of intent (the “LOI”) which sets forth terms by which the Company would effect a reverse takeover transaction with a privately held operating company, under which the Company’s shareholders would receive an aggregate of approximately $20 million in cash and equity of the combined company, and the Company would spin off its data center joint venture interest and its beneficial ownership interest in AI Acquisition into a new company that is intended to be publicly listed. See “Subsequent Events—Reverse Takeover Letter of Intent” below.

Sale of HondaJet Aircraft.

In May 2026, the Company, through its subsidiary Galilee 1 SPV LLC, exercised its purchase option under an aircraft lease dated November 23, 2021 with respect to a 2020 Honda Aircraft Company LLC model HA-420 aircraft (manufacturer’s serial number 42000181, FAA registration number N211PJ) and sold the aircraft, with the sale closing on May 7, 2026 at a sales price of $3,450,000. Consistent with the Company’s revenue recognition policy for aircraft sales, the sale is presented on a gross basis, with aircraft sale revenues of $3,454,913 (including the reimbursement of $2,913 of repositioning costs) and related cost of revenues of $3,358,863 recorded in the Company’s consolidated statements of operations, resulting in a gain of $96,050 on the sale during the three and six months ended June 30, 2026. In connection with the exercise of the purchase option and the sale, the related operating lease was terminated and the associated right-of-use asset and operating lease liability were derecognized, with no lease-termination gain or loss embedded in the gain on the sale.

Reverse Stock Split.

On March 9, 2026, the Company’s Board of Directors approved a 1-for-200 reverse stock split of the Company’s issued and outstanding common stock, which became effective at 12:01 a.m. Eastern Time on April 8, 2026 (the “Reverse Stock Split”). On the effective date, every 200 shares of common stock issued and outstanding were combined into one issued share of common stock, and no fractional shares were issued, with stockholders otherwise entitled to fractional shares receiving a cash payment in lieu thereof. The Company’s common stock began trading on a split-adjusted basis on April 8, with a new CUSIP number. Proportional adjustments were made to the Company’s outstanding employee stock options and the GEM Warrant, which were the only options, warrants or other convertible securities of the Company outstanding, and to the shares issuable under its equity compensation plans. The Company effected the Reverse Stock Split to, among other things, regain compliance with the Nasdaq Stock Market LLC’s continued listing rules requiring a minimum bid price of at least $1.00 per share. All share and per-share amounts in this Quarterly Report have been retroactively adjusted to give effect to the Reverse Stock Split.

Joint Venture

On June 26, 2025, the Company, entered into a Joint Venture Agreement (the “JV Agreement”) with Consensus Core Technologies Inc., a British Columbia corporation (“Consensus Core”), pursuant to which the parties agreed to enter into a joint venture to collaborate in developing data centers. The JV Agreement provided certain terms of the joint venture, including: (i) the parties would enter into a Contribution Agreement (the “Contribution Agreement”) with a joint venture limited liability company outlining the full terms of the joint venture; (ii) the joint venture limited liability company would be organized under the laws of the State of Delaware prior to any initial closing under the Contribution Agreement, which would initially be wholly owned by Consensus Core; and (iii) the joint venture limited liability company would establish separate subsidiaries for each data center project to be contributed to the joint venture.

On July 2, 2025, the Company entered into the Contribution Agreement with Consensus Core and Convergence Compute LLC, a Delaware limited liability company (“Convergence Compute”), pursuant to which the Company contributed $300,000 to Convergence Compute in the first closing of the transactions contemplated by the JV Agreement and acquired a 0.5% equity interest in Convergence Compute. Upon the completion of certain data center project milestones, each of the Company and Consensus Core will make additional contributions to Convergence Compute and will receive additional equity interests in Convergence Compute and its subsidiaries.

Pursuant to the Contribution Agreement, the Company will contribute up to an aggregate $20 million to Convergence Compute in five tranches, with the obligation to deliver each tranche tied to specific project development milestones identified in the Contribution Agreement. Consensus Core contributed 100% of the equity interests of its data center project located in Midwestern Canada (the “Midwest Project”) to Convergence Compute at the second closing under the Contribution Agreement and contributed 100% of the equity interests of its data center project located in Maritime Canada (the “Maritime Project”) to Convergence Compute at the third closing under the Contribution Agreement. In consideration for such contributions, the Company and Consensus Core each received a 17.5% equity interest in the Midwest Project upon the second closing and a 17.5% equity interest in the Maritime Project upon the third closing. The Company will also receive an additional 0.5% equity interest in Convergence Compute upon each additional closing, for an aggregate equity interest of up to 2.5% if all five tranches are consummated.

During the three months ended March 31, 2026, the second and third project milestones under the Contribution Agreement were met, and the Company acquired an additional 1% equity interest in Convergence Compute, reflecting an incremental 0.5% equity interest upon the achievement of each of the second and third milestones. As a result, as of June 30, 2026, the Company held an aggregate 1.5% equity interest in Convergence Compute, a 17.5% equity interest in the Midwest Project, and a 17.5% equity interest in the Maritime Project.

The Company’s funding of its contribution obligations under the Contribution Agreement is determined on a schedule that is separate from the achievement of the related project milestones. The Company’s contribution obligation associated with the third milestone was $2.0 million, of which $665,000 had been funded as of March 31, 2026, at which date the Company had contributed a total of $2.7 million under the Contribution Agreement. During the three months ended June 30, 2026, the Company funded an additional $1.2 million toward the third-milestone obligation, consisting of $600,000 funded on April 3, 2026, $300,000 funded April 28, 2026, and $300,000 funded on May 29, 2026, bringing the Company’s total contributions under the Contribution Agreement to $3.9 million as of June 30, 2026. The Company funded the remaining $135,000 of the third-milestone obligation on July 17, 2026, thereby fully funding that obligation.

Results of Operations

The following table sets forth our results of operations for the periods indicated.

Three Months Ended June 30, 2026 and 2025

Revenues

Revenues for the second quarter of 2026 totaled $5.3 million, a $3.1 million increase from second quarter of 2025 revenues of approximately $2.2 million, and were comprised of $506,000 in services revenue from the management of customers’ aircraft, $1.3 million of revenues related to our software app and Cirrus charter services, $84,000 in jet card revenue for hours flown and other charges based on hours flown, and $3.5 million from the sale of a HondaJet aircraft, as described above under “Recent Developments—Sale of HondaJet Aircraft.”

The increase was primarily attributable to the $3.5 million gross revenue recognized on the sale of the N211PJ HondaJet aircraft, partially offset by the continued wind-down of the Company’s fractional and jet card business in anticipation of the closing of the Transactions with flyExclusive. Excluding the aircraft sale, recurring revenues from services, software app, Cirrus charter and jet card activity decreased period-over-period, consistent with the planned wind-down of those legacy business operations. With the closing of the Transactions with flyExclusive in July 2026 we will cease to generate revenues from our legacy jet card and fractional programs.

The following table sets forth a breakout of revenue components by subcategory for the three months ended June 30, 2026 and 2025.

The Company recognized approximately $1.0 million in revenue related to app-generated services and software revenues related to charter bookings made through its software app in the second quarter of 2026, compared to $806,000 in the second quarter of 2025, reflecting increased charter bookings on the platform.

The Company recognized $506,000 in service revenue in the second quarter of 2026, compared to $532,899 in the second quarter of 2025, relating to reduced flying by the owners of the Company’s managed aircraft.

During the second quarter of 2026, the Company recognized approximately $84,000 of revenue for 12.7 flight hours flown or forfeited, as well as additional charges. Prepaid flight hours are recognized as revenue as the flight hours are used or forfeited. At June 30, 2026, the Company had recorded deferred revenue of approximately $143,000 on its consolidated balance sheet representing prepaid flight hours for which the related travel had not yet occurred.

In the second quarter of 2025, the Company did not sell any prepaid flight hours and recognized $421,306 of revenue for 75 flight hours flown or forfeited, as well as additional charges.

The decrease in flight hours flown period over period is a direct result of the Company winding-down certain of its operations while planning and preparing for the sale of the Company’s aviation assets to flyExclusive.

The following table details the flight hours sold and flown or forfeited, as well as the associated deferred revenues and recognized revenues, respectively, and additional charges for the three months ended June 30, 2026 and 2025:

(1) Deferred revenue at December 31, 2025 and 2024 also includes $184,046 and $212,278, respectively, with respect to customer prepayments associated with software app transactions and $315 and $16,233, respectively, with respect to customer prepayments associated with management and other services revenue.

(2) Deferred revenue at June 30, 2026 and 2025 also includes $126,493 and $130,764, respectively, with respect to customer prepayments associated with software app transactions and $315 and $16,233, respectively, with respect to customer prepayments associated with management and other services revenue.

In addition to its software app and jet card revenues, the Company also historically has generated revenue through the direct chartering of its HondaJet aircraft by Cirrus, which contributed Cirrus charter revenue of approximately $289,000 in the second quarter of 2026, compared to $465,000 in the second quarter of 2025, reflecting the continued wind-down of the Company’s flight operations and the May 2026 sale of the N211PJ HondaJet.

Cost of revenues

Our cost of revenue is comprised of payments to Cirrus for the maintenance and management of our fleet aircraft, commissions to Cirrus for their arranging for charters on our aircraft, aircraft lease expense, federal excise tax relating to jet card and third-party charters, and payments to third-party aircraft operators for both charter flights booked through CharterGPT, as well as the cost of subcharters for covering jet card flights when our HondaJets were unavailable. The management of our aircraft by Cirrus covers all our aircraft regardless of whether the aircraft are used for program flight hours or charter flights and includes expenses such as fuel, pilot wages and training costs, aircraft insurance, maintenance and other flight operational expenses.

In the second quarter of 2026, the Company operated a reduced fleet as compared to the second quarter of 2025, reflecting the continued wind-down of its aviation operations in anticipation of the sale of its aviation business and the May 2026 sale of the N211PJ HondaJet.

As a result of the decrease in Cirrus charter flight activity, costs related to the operation of these aircraft and payments to Cirrus for their management and maintenance of our fleet decreased to approximately $959,000 in the second quarter of 2026, from approximately $1.6 million in the second quarter of 2025, of which aircraft lease payments were approximately $181,000 and $323,000, respectively. The Company also incurred third-party charter costs (including subcharter costs) of approximately $1.1 million in the second quarter of 2026, compared to approximately $624,000 in the second quarter of 2025, reflecting both increased reliance on third-party operators as the Company’s owned fleet wound down and increased app-generated services. Merchant fees and federal excise tax relating to charter flights were approximately $80,000 and $71,000 in the second quarter of 2026 and 2025, respectively.

In total, it cost approximately $2.1 million to operate the Company’s aircraft in the second quarter of 2026 (before giving effect to the aircraft sale discussed below), compared to $2.3 million to operate five aircraft in the second quarter of 2025. Cost of revenues for the second quarter of 2026 also included $3.4 million related to the HondaJet aircraft sold, comprising the aircraft’s carrying amount and repositioning costs, resulting in a gain on sale of $96,000.

Gross loss

The resulting gross loss totaled approximately $184,000 for the second quarter of 2026, compared to a gross loss of approximately $110,000 for the second quarter of 2025. The gross loss for the second quarter of 2026 includes the $96,000 net gain on the HondaJet sale described above.

Total Operating Expenses

In the second quarter of 2026, the Company’s total operating expenses increased by approximately $129,000 over the prior year comparable period. Excluding non-cash stock-based compensation of $64,000 and $763,000 in the second quarter of 2026 and 2025, respectively, general and administrative expenses increased by approximately $606,000, primarily due to increases of approximately $220,000 in payroll costs, $101,000 in legal fees, $175,000 in consulting fees, $99,000 in Delaware franchise tax, and $52,000 in regulatory fees, a significant portion of the increases related to the flyExclusive transaction and the Company’s strategic transition, partially offset by a decrease of approximately $43,000 in director and officer insurance expense and lower accounting expenses of $29,000.

The Company’s sales and marketing expenses were $289,000 in the second quarter of 2026, compared to $82,000 in the second quarter of 2025, an increase of approximately $208,000 attributable to increased advertising and marketing spend of approximately $165,000 and online advertising spend of approximately $45,000, partially offset by a decrease of approximately $2,000 in conference and event expenses.

Research and development expenses were $55,000 in the second quarter of 2026, compared to $41,000 in the second quarter of 2025.

Operating Loss

As a result of all of the above, in the second quarter of 2026 the Company recognized an operating loss of approximately $2.7 million, compared to an operating loss of approximately $2.5 million in the second quarter of 2025.

Other Income

During the second quarter of 2026, the Company recognized approximately $0.4 million in other income, as compared to other income of approximately $95,000 in the second quarter of 2025. Other income, for the second quarter of 2026, included an unrealized gain of $399,000 from the change in fair value of the Company’s beneficial interest in AI Acquisition (see “Investment in AIIA Sponsor” below).

Net Loss

The Company recorded a net loss of approximately $2.3 million for the second quarter of 2026, compared to a net loss of approximately $2.4 million for the second quarter of 2025.

Net loss per share — basic and diluted was $(1.72) and $(184.63), respectively, for the second quarter of 2026 and 2025, based on weighted average shares outstanding of 1,326,189 and 12,918, respectively, in each case as adjusted to give effect to the Reverse Stock Split.

Six Months Ended June 30, 2026 and 2025

Revenues

Revenues for the first six months of 2026 totaled approximately $7.0 million, a $1.3 million increase from revenues of approximately $5.7 million in the first six months of 2025, and were comprised of approximately $1.2 million in services revenue from the management of customers’ aircraft, $2.2 million of revenues related to our software app and Cirrus charter services, $143,000 in jet card revenue for hours flown and other charges based on hours flown, and $3.5 million from the sale of a HondaJet aircraft in May 2026.

The increase was primarily attributable to the $3.5 million gross revenue recognized on the May 2026 sale of the N211PJ HondaJet, partially offset by the continued wind-down of the Company’s fractional and jet card business. Excluding the aircraft sale, recurring revenues decreased $2.2 million period-over-period: the Company recognized approximately $1.2 million in service revenue from the management of customers’ aircraft in the first six months of 2026, compared to $1.8 million in the first six months of 2025, and $143,000 in jet card revenue, compared to $765,000 in the first six months of 2025.

The following table sets forth a breakout of revenue components by subcategory for the six months ended June 30, 2026 and 2025.

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The Company recognized approximately $1.3 million in revenue related to app-generated services and software revenues related to charter bookings made through its software app in the first six months of 2026, compared to $1.8 million in the first six months of 2025, reflecting reduced charter bookings on the platform.

The Company recognized $1.2 million in service revenue in the first six months of 2026, compared to $1.8 million in the first six months of 2025, relating to reduced flying by the owners of the Company’s managed aircraft.

During the first six months of 2026, the Company recognized approximately $143,000 of revenue for 20.7 flight hours flown or forfeited, as well as additional charges. Prepaid flight hours are recognized as revenue as the flight hours are used or forfeited. At June 30, 2026, the Company had recorded deferred revenue of approximately $143,000 on its consolidated balance sheet representing prepaid flight hours for which the related travel had not yet occurred.

In the first six months of 2025, the Company sold 20 prepaid flight hours for $116,000 and recognized $765,000 of revenue for 127 flight hours flown or forfeited, as well as additional charges.

The decrease in flight hours flown period over period is a direct result of the planned sale of the Company’s aviation assets to flyExclusive.

The following table details the flight hours sold and flown or forfeited, as well as the associated deferred revenues and recognized revenues, respectively, and additional charges for the six months ended June 30, 2026 and 2025:

(1) Deferred revenue at December 31, 2025 and 2024 also includes $184,046 and $212,278, respectively, with respect to customer prepayments associated with software app transactions and $315 and $16,233, respectively, with respect to customer prepayments associated with management and other services revenue.

(2) Deferred revenue at June 30, 2026 and 2025 also includes $126,493 and $130,765, respectively, with respect to customer prepayments associated with software app transactions and $315 and $16,233, respectively, with respect to customer prepayments associated with management and other services revenue.

In addition to its software app and jet card revenues, the Company also historically has generated revenue through the direct chartering of its HondaJet aircraft by Cirrus, which contributed Cirrus charter revenue of approximately $858,000 in the first six months of 2026, compared to $1.3 million in the first six months of 2025, reflecting the continued wind-down of the Company’s flight operations and the May 2026 sale of the N211PJ HondaJet.

Cost of revenues

Our cost of revenue is comprised of payments to Cirrus for the maintenance and management of our fleet aircraft, commissions to Cirrus for arranging charters on our aircraft, aircraft lease expense, federal excise tax relating to jet card and third-party charters, and payments to third-party aircraft operators. Costs related to the operation of these aircraft and payments to Cirrus for their management and maintenance of our fleet were approximately $2.2 million in the first six months of 2026, compared to approximately $4.4 million in the first six months of 2025, of which aircraft lease payments were approximately $502,000 and $648,000, respectively. The Company also incurred third-party charter costs of approximately $1.7 million in the first six months of 2026, compared to approximately $1.4 million in the first six months of 2025. Merchant fees and federal excise tax relating to charter flights were approximately $114,000 and $159,000 in the first six months of 2026 and 2025, respectively. In total, it cost approximately $7.4 million to operate the Company’s aircraft in the first six months of 2026 (including $3.4 million of cost of revenues related to the HondaJet aircraft sold), compared to $5.9 million to operate five aircraft in the first six months of 2025, reflecting reduced flight activity and the May 2026 sale of the N211PJ HondaJet.

Gross loss

The resulting gross loss totaled approximately $418,000 for the first six months of 2026, compared to a gross loss of approximately $226,000 for the first six months of 2025. The gross loss for the first six months of 2026 includes the $96,000 net gain on the HondaJet sale described above.

Total Operating Expenses

In the first six months of 2026, the Company’s total operating expenses decreased by approximately $295,000 to $5.1 million, compared to slightly above $5.4 million in the first six months of 2025. Excluding non-cash stock-based compensation of $129,000 and $1.3 million in the first six months of 2026 and 2025, respectively, general and administrative expenses increased by approximately $666,000, primarily due to increases of approximately $276,000 in legal fees, $209,000 in consulting fees, $96,000 in Delaware franchise tax, $119,000 in regulatory fees, and $40,000 in accounting fees, a significant portion of the increase related to the flyExclusive transaction and the Company’s strategic transition to an AI infrastructure business plan, partially offset by decreases of approximately $50,000 in board of advisors fees and $43,000 in director and officer insurance expense.

The Company’s sales and marketing expenses were $596,000 in the first six months of 2026, compared to $376,000 in the first six months of 2025, an increase of approximately $220,000 attributable to increases of approximately $85,000 in advertising and marketing spend, $78,000 in online advertising, and $57,000 in conference and event expenses, reflecting increased business development activity related to the Company’s strategic transition. Research and development expenses were $155,000 in the first six months of 2026, compared to $150,000 in the first six months of 2025.

Operating Loss

As a result of the foregoing, in the first six months of 2026 the Company recognized an operating loss of approximately $5.5 million, compared to an operating loss of approximately $5.7 million in the first six months of 2025.

Other Income

In the first six months of 2026, the Company recorded approximately $0.6 million of other income, compared to net other income of approximately $96,000 in the first six months of 2025. Other income for the first six months of 2026 included an unrealized gain of $493,000 from the change in fair value of the Company’s beneficial interest in AI Acquisition.

Net Loss

The Company recorded a net loss of approximately $5.0 million for the first six months of 2026, compared to $5.6 million for the first six months of 2025. Net loss per share — basic and diluted was $(5.72) and $(479.73) for the first six months of 2026 and 2025, respectively, based on weighted average shares outstanding of 866,305 and 11,579, respectively, in each case as adjusted to give effect to the Reverse Stock Split.

Liquidity and Capital Resources

Overview

As of June 30, 2026, our cash and cash equivalents totaled approximately $10.6 million. Current assets exceeded current liabilities by approximately $8.8 million, including approximately $270,000 in deferred revenue, which will be recognized as revenue upon the utilization or forfeiture of prepaid flight hours. Deferred revenue of approximately $143,000 relating to prepaid flight hours under the jet card program was transferred to SpinCo on July 13, 2026.

During the six months ended June 30, 2026, the Company raised approximately $27.7 million in gross proceeds from sales of common stock under its at-the-market sales agreement.

We have historically incurred negative cash flows from operations and significant operating losses, resulting in an accumulated deficit of approximately $52.9 million as of June 30, 2026. Following the closing of the flyExclusive transaction in July 2026, our continuing focus is on high-performance GPU infrastructure and AI cloud services, our data center joint venture, and matters related to our beneficial interest in AI Acquisition. We expect to incur operating losses for at least the next 12 months. To fund operations, we plan to utilize cash generated by our remaining operations together with cash on hand and funds from potential sales of equity or debt securities. Contractual limitations may restrict certain funding options, and further equity issuances may adversely affect our stock price and ability to raise capital.

Of the Company’s cash and cash equivalents of approximately $10.6 million as of June 30, 2026, which reflected the Company’s consolidated financial position prior to the closing of the flyExclusive transaction, the Company transferred $5.3 million of cash to SpinCo in connection with the closing on July 13, 2026, together with its aircraft-related assets, its $5.3 million of VERSO Capital equity certificates that track shares of SpaceX, and the other assets and liabilities of the fractional and jet card business, as part of the Separation. Following the closing, the Company retained its interest in the data center joint venture and its beneficial interest in AI Acquisition, as well as its aviation software. See “Subsequent Events—flyExclusive Transaction” below.

In the absence of external financing, we are prepared to reduce cash utilization by halting marketing, suspending software development, streamlining operations, and focusing on existing customers, enabling operations to continue for at least one year, during which we would seek new financing to resume full operations. Forward-looking statements regarding our financial condition and liquidity are subject to risks and uncertainties, as detailed in Part II, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 6, 2026.

During the six months ended June 30, 2026, on April 8, 2026, the Company completed a subscription for 8,347 equity certificates in VERSO Capital 2 SCSP for an aggregate subscription price of $5.3 million, inclusive of a 5% subscription fee of $250,000. The subscription was funded from the Company’s cash on hand and reduced our available liquidity by a corresponding amount.

Ionic / Hexstone Transaction

General

On March 28, 2024, the Company entered into a Securities Purchase Agreement (the “Series B Securities Purchase Agreement”) and related documents described below for a private placement with Ionic Ventures, LLC (“Ionic”), which closed on March 29, 2024, which we collectively refer to as the “Ionic Transaction.” At the initial closing, the Company issued to Ionic (i) 150 shares of the Company’s Series B Preferred Stock, which were convertible into shares of the Company’s common stock, (ii) a warrant to purchase up to 1,500 shares of Series B Preferred Stock (the “Ionic Warrant”), at an exercise price of $10,000 per share, and (iii) 5 shares of the Company’s common stock. Ionic fully exercised the Ionic Warrant for a total of 1,500 shares of Series B Preferred Stock, resulting in gross proceeds to the Company of $15.0 million and we will not receive additional funds under the Ionic Transaction.

Conversions of Series B Preferred Stock; Warrant Exercises

Starting in October 2024, and through the first quarter of 2026, Ionic converted in full the 150 shares of Series B Preferred Stock issued at the initial closing, the 50 additional shares of Series B Preferred Stock issued in connection with a letter agreement entered into in September 2024, and all 1,500 shares of Series B Preferred Stock issued pursuant to the full exercise of the Ionic Warrant. Those conversions, in total, resulted in the issuance of 218,979 shares of Common Stock (as adjusted to give effect to the reverse stock split).

Ionic effected partial exercises of the Ionic Warrant on the following dates and in the following amounts: (i) on October 28, 2024, for 150 additional shares of Series B Preferred Stock, resulting in total proceeds to the Company of $1.5 million, (ii) on November 14, 2024, for 250 additional shares of Series B Preferred Stock, resulting in total proceeds to the Company of $2.5 million, (iii) on January 23, 2025, for 250 additional shares of Series B Preferred Stock, resulting in total proceeds to the Company of $2.5 million, and (iv) on February 27, 2025, for 850 additional shares of Series B Preferred Stock, resulting in total proceeds to the Company of $8.5 million.

From the closing of the Ionic Transaction through December 31, 2025, Ionic sold an aggregate of 18,126 shares of our common stock, comprised of: (i) 7,332 shares sold pursuant to Rule 144; (ii) 668 shares sold under a registration statement on Form S-1 (Reg. No. 333-279385); (iii) 3,000 shares sold under our registration statement on Form S-3 (Reg. No. 333-283207); (iv) 6,346 shares sold under our registration statement on Form S-3 (Reg. No. 333-284504); and (v) 780 shares sold under our registration statement on Form S-3 (Reg. No. 333-289982). As of December 31, 2025, Ionic held 300 shares of Series B Preferred Stock.

During the six months ended June 30, 2026, Ionic sold an additional 50,647 shares pursuant to Rule 144. Ionic no longer holds any shares of our Series B Preferred Stock or common stock.

During the six months ended June 30, 2026, Hexstone Capital, LLC (who was assigned certain rights or shares by Ionic) sold an aggregate of 150,206 shares of our common stock, comprised of: (i) 9,000 shares sold under our registration statement on Form S-3 (Reg. No. 333-289982); and (ii) 141,206 shares sold pursuant to Rule 144. As of December 31, 2025, Hexstone held 450 shares of our Series B Preferred Stock. Hexstone no longer holds any shares of our Series B Preferred Stock.

Investment in AIIA Sponsor

In July 2025, the Company made a capital contribution of approximately $2.7 million to Sponsor, which serves as the sponsor of AI Acquisition, in exchange for 1,912,833 units comprising ordinary shares and preference shares (together, the “Sponsor Equity Interest”). The Company’s contribution represents an approximate 49.9% interest in the Sponsor. AI Acquisition is a special purpose acquisition company that intends to focus on opportunities with companies and/or strategic assets in high-impact private technology companies advancing artificial intelligence and machine learning capabilities, as well as those involved in building, operating, or enabling next-generation data center infrastructure. Sponsor was founded and organized by certain of the Company’s executive officers and directors.

On October 6, 2025, AI Acquisition completed its initial public offering, selling an aggregate of 13,800,000 Units at a price of $10.00 per unit, resulting in total gross proceeds of $138,000,000. In connection with the initial public offering, Sponsor purchased 269,000 private placement units at $10.00 per unit. At the close of the offering, Sponsor held 4,600,000 Class B ordinary shares of AI Infrastructure and 269,000 private placement units.

As of June 30, 2026, the fair value of the Sponsor Equity Interest was $17,630,000, as determined using a probability weighted expected return method as described in Note 4 to the consolidated financial statements in this Report. During the three and six months ended June 30, 2026, the Company recognized an unrealized gain of $399,000 and $493,000, respectively, in other income related to the change in fair value of this investment.

The Company’s Sponsor Equity Interest is a level 3 fair value measurement that requires significant unobservable inputs, including the probability of AI Acquisition consummating a business combination. An increase or decrease in any of the unobservable inputs could result in a material change in the estimated fair value. See Note 4 to the consolidated financial statements for additional information regarding the fair value methodology.

At the Market Offering

On November 21, 2025, we put an ATM (“At the Market”) program in place to allow us to sell shares of our common stock under that program from time to time through Maxim Group LLC (“Maxim”) as agent in an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $10.0 million (the “ATM Program”). The ATM Program was amended in January 2026 to increase the amount that may be sold under the ATM Program to $50.0 million (subject to any limitations imposed under SEC rules). The Equity Distribution Agreement provides that Maxim is entitled to compensation for its services at a commission rate of 3.0% of the gross sales price per share of common stock sold. During the six months ended June 30, 2026, we sold shares of our common stock under the ATM Program for aggregate gross proceeds of approximately $27.7 million and net proceeds of approximately $26.9 million after commissions and sale expenses. Sales under the ATM Program were a principal source of the increase in the Company’s shares of common stock outstanding during the period. See Note 10 (Subsequent Events) for additional shares issued after June 30, 2026. We expect to continue to utilize the ATM Program to fund a portion of our obligations and working capital needs.

Share Purchase Agreement

The Company entered into a Share Purchase Agreement on August 4, 2022, with GEM Yield LLC SCS and GEM Yield Bahamas Limited (together, “GEM”), which provides for potential future equity purchases of up to $40 million, subject to certain conditions. The agreement expires on August 11, 2026. Through early 2024, the Company drew down $2.6 million under this facility and has not utilized it since. In consideration for GEM’s commitment, the Company paid GEM a commitment fee equal to $800,000 in shares of common stock. In October 2024, the Company issued 184 shares of common stock to satisfy in full the outstanding commitment fee payable discussed in Note 5 to the consolidated financial statements in this report and 292 shares of common stock under the Share Purchase Agreement with GEM for total consideration of $2.5 million.

On August 10, 2023, the Company issued GEM a warrant (as subsequently amended, the “GEM Warrant”) granting it the right to purchase up to 6% of the outstanding common stock of the Company on a fully diluted basis as of the date of listing of our common stock on Nasdaq. Accordingly, the warrant exercise price was $42.23 per share as of June 30, 2026. The warrant may be exercised by payment of the per share amount in cash or through a cashless exercise.

The Company did not effect any draw downs under this agreement in 2025 or in the six months ended June 30, 2026, and does not expect to effect any drawdowns in the remainder of 2026.

Cash Flows for the Six Months Ended June 30, 2026 and 2025

As of June 30, 2026, the Company’s cash and equivalents were approximately $10.6 million.

The following table summarizes our cash flows for the six months ended June 30, 2026 and 2025:

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Cash Flow from Operating Activities

Net cash used in operating activities for the six months ended June 30, 2026 was approximately $5.7 million compared to approximately $5.0 million for the six months ended June 30, 2025. The cash outflow from operating activities in the 2026 period primarily consisted of our net loss, net of non-cash charges, and changes in operating assets and liabilities associated with the wind-down of the Company’s aviation operations.

Cash Flow from Investing Activities

Net cash used in investing activities for the six months ended June 30, 2026 was approximately $8.4 million, primarily relating to $3.1 million of contributions to the joint venture and $5.3 million for the Verso equity certificates investment, as compared to net cash used in investing activities of approximately $1.7 million for the six months ended June 30, 2025, which primarily related to a deposit on our aircraft purchase agreement with Textron.

Cash Flow from Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2026 was approximately $22.8 million, primarily driven by gross proceeds of approximately $27.7 million from the sale of common stock under the At the Market Program, partially offset by offering costs of $4.9 million. Net cash provided by financing activities for the six months ended June 30, 2025 was approximately $9.1 million.

Aircraft Financing Arrangements

In November 2021 and April 2022, the Company entered into two separate five-year leasing arrangements for the acquisition of two of its HondaJet Elite aircraft. At any time during their term, the Company had the option to purchase either aircraft from the lessor at the aircraft’s fair market value at that time. The leasing arrangements also required the Company to hold a combined liquidity reserve of $500,000 in a separate bank account pledged as security to the lessor, which the Company recorded as restricted cash on its balance sheet, as well as a maintenance reserve of approximately $690,000 for each leased aircraft, which was held by the lessor in the event the lessor determines that the relevant aircraft is not being maintained in accordance with the lease requirements or to prevent deterioration of the aircraft. Events of default under the leasing arrangements included, among other things, failure to make the monthly payments (with a 10-day cure period), default on other indebtedness, breaches of covenants related to insurance and maintenance requirements, change of control or merger, insolvency and a material adverse change in the Company’s business, operations or financial condition. Please see Note 5 to the Company’s financial statements for the six months ended June 30, 2026 for a further description of these leasing arrangements.

In May 2026, in connection with the sale of the N211PJ HondaJet aircraft, the Company exercised its purchase option under the November 23, 2021 aircraft lease, and the related operating lease was terminated and the associated right-of-use asset and lease liability were derecognized. In addition, the Company received a refund of $690,000 in maintenance deposits, and $500,000 of restricted cash was released from restriction. As of June 30, 2026, future minimum lease payments under the Company’s remaining operating leases totaled $0.

Critical Accounting Estimates

Going Concern and Management Plans

The Company has limited operating history and has incurred losses from operations since its inception. These matters raise concern about the Company’s ability to continue as a going concern.

During the next twelve months, the Company intends to fund its operations with funds from its operations that were retained after the Spin-Off, cash on-hand, as well as proceeds from other prospective financing arrangements. The Company also has the ability to reduce cash burn to preserve capital. There are no assurances, however, that management will be able to raise capital on terms acceptable to the Company. If the Company is unable to obtain sufficient amounts of additional capital, the Company may be required to reduce the near-term scope of its planned development and operations, which could delay implementation of the Company’s business plan and harm its business, financial condition and operating results. The consolidated balance sheets do not include any adjustments that might result from these uncertainties.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of expenses during the reporting period. Making estimates requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

Material estimates that are particularly susceptible to significant change in the near-term relate to the fair value of the Sponsor Equity Interest and the fair value of options and warrants granted. Although considerable variability is likely to be inherent in these estimates, management believes that the amounts provided are reasonable.

Revenue Recognition

In applying the guidance of ASC 606, the Company determines revenue recognition through the following steps:

• Identification of the contract, or contracts, with a customer;
• Identification of the performance obligations in the contract;
• Determination of the transaction price;
• Allocation of the transaction price to the performance obligations in the contract; and
• Recognition of revenue when, or as, a performance obligation is satisfied.

Revenue is derived from a variety of sources including, but not limited to, (i) fractional/whole aircraft sales, (ii) fractional ownership and jet card programs, (iii) ad hoc charter through CharterGPT and Ava, (iv) direct chartering of its HondaJet Elite aircraft by Cirrus and (v) aircraft management.

Stock-Based Compensation

The Company accounts for stock awards under ASC 718, Compensation – Stock Compensation. Under ASC 718, stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite vesting period or over the nonemployee’s period of providing goods or services. The fair value of each stock option or warrant award is estimated on the date of grant using the Black-Scholes option valuation model. As of June 30, 2026, there was approximately $63,000 in unrecognized stock-based compensation.

Trend Information

The Company’s business and operations are sensitive to general business and economic conditions in the U.S. and worldwide along with local, state, Federal and foreign governmental policy decisions. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse conditions may include but are not limited to: changes in the private aviation industry, fuel and operating costs, changes to corporate governance best practices for executive flying, general demand for private jet travel, regulations on carbon emissions from aviation, competition and other barriers to entry in the data center industry, and market acceptance of the Company’s business model. These adverse conditions could affect the Company’s financial condition and the results of operations.

In May 2025, the Company entered into the Merger Agreement with flyExclusive for the sale of the Company’s aviation business assets in an all-stock transaction, which closed on July 13, 2026. Following the closing, the Company’s continuing focus is on high-performance GPU infrastructure and AI cloud services, its data center joint venture and its beneficial interest in AI Acquisition. The Company’s near-term prospects will also be materially influenced by the proposed reverse takeover transaction and contemplated spin-off described under “Subsequent Events” below. This strategic transition is expected to materially change the Company’s revenue composition, cost structure, and operating profile in future periods.

Subsequent Events

flyExclusive Transaction

On July 13, 2026, the Company completed the merger transaction with flyExclusive following stockholder approval at the Company’s July 2, 2026 reconvened Special Meeting of Stockholders and the satisfaction of the remaining closing conditions. Jet.AI stockholders of record as of the close of business on July 6, 2026 were entitled to receive, on a pro rata basis, all of the outstanding shares of SpinCo, at a ratio of one share of SpinCo common stock for each share of the Company’s common stock. The distribution was completed on July 13, 2026, immediately prior to the Merger, and the distributed SpinCo shares converted into the right to receive the merger consideration, while holders retained their existing shares of the Company’s common stock.

At the effective time of the Merger, the outstanding shares of SpinCo common stock were automatically converted into the right to receive an aggregate of 7,096,115 shares of flyExclusive Class A common stock (the “Merger Consideration Shares”), consisting of (i) 5,676,892 shares issued at closing, based on an exchange ratio of approximately 2.9002 shares of flyExclusive Class A common stock for each share of SpinCo common stock (the “Closing Shares”), and (ii) 1,419,223 shares, based on an exchange ratio of approximately 0.7251 shares of flyExclusive Class A common stock for each share of SpinCo common stock (the “Reserve Shares”), representing approximately 80% and 20% of the Merger Consideration Shares, respectively. The aggregate number of Merger Consideration Shares was determined based on an initial purchase price at closing of $16,175,595, which reflects an Applicable Premium Percentage of 115%.

In connection with the closing, on July 13, 2026 the parties entered into Amendment No. 5 to the Merger Agreement, which provides for certain adjustments to the calculation of the final purchase price in connection with a potential post-closing disposition by flyExclusive of certain SpinCo assets. The Reserve Shares are being held in reserve by flyExclusive until the final purchase price is determined following the closing, which is expected to occur within 120 days after the closing. If the final purchase price is greater than or equal to the initial purchase price, all of the Reserve Shares will be issued to the Company’s stockholders on a pro rata basis with such issuance intended to be delivered to holders of record as of July 6, 2026; if the final purchase price is less than the initial purchase price, a portion of the Reserve Shares (valued at $2.2795 per share, representing the volume-weighted average closing price of the flyExclusive Class A common stock for the 30 consecutive trading days ended July 8, 2026) equal to the shortfall will be forfeited. In addition, if the final purchase price exceeds the initial purchase price by at least $50,000, flyExclusive will issue additional shares of flyExclusive Class A common stock of up to 20% of the Merger Consideration Shares.

Unaudited pro forma condensed consolidated financial information giving effect to the Separation and the Distribution, prepared in accordance with Article 11 of Regulation S-X and giving effect to the transactions as if they had occurred on March 31, 2026 (for balance sheet purposes) and as of January 1, 2025 (for statement of operations purposes), is filed as Exhibit 99.3 to the Company’s Current Report on Form 8-K filed with the SEC on July 17, 2026.

Reverse Takeover Letter of Intent

On July 15, 2026, the Company announced that it had entered into the non-binding LOI to effect a reverse takeover transaction (the “Transaction”) with a privately held operating company (the “Counterparty”), valuing the Counterparty at approximately $300 million. Upon completion of that transaction, the LOI contemplates that the combined company would be valued at approximately $320 million, with the Company’s stockholders expected to receive approximately $20 million of cash and stock consideration, representing approximately $10 per share of additional value based on the Company’s shares outstanding as of July 15, 2026. The identity of the Counterparty and additional commercial terms remain confidential pending completion of due diligence and the negotiation and execution of definitive transaction documents.

As a condition of the Transaction, the Company would spin off its data center joint venture and its beneficial ownership interest in AI Acquisition into a newly formed, independent public company, the shares of which would be distributed to the Company’s existing shareholders through a distribution expected to be registered with the SEC. The parties are striving to announce a definitive agreement within approximately 90 days of the LOI and to target a closing before the end of 2026.

The LOI is non-binding and does not obligate either party to consummate the Transaction. Completion of the Transaction remains subject to, among other things, the satisfactory completion of due diligence, the negotiation and execution of definitive agreements, and the receipt of all required board, stockholder and regulatory approvals, including compliance with applicable Nasdaq listing requirements. There can be no assurance that definitive agreements will be executed or that the Transaction, or the contemplated spin-off, will be completed on the terms described, or at all.

Equity Issuances

Subsequent to June 30, 2026 and through July 30, 2026, the Company issued an aggregate of 1,831,730 additional shares of common stock, primarily through sales under the ATM Program and, to a lesser extent, in satisfaction of certain advisory fees and equity awards. As a result, the total number of shares of common stock outstanding increased to 3,557,521 as of July 30, 2026. The Company expects to continue to issue shares under the ATM Program following the date of this Quarterly Report.

The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Interim Chief Executive Officer and Interim Chief Financial Officer, to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Interim Chief Executive Officer and Interim Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2026. Based on that evaluation, our Interim Chief Executive Officer and our Interim Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the periods covered by this Quarterly Report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended on June 30, 2026 covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Except as set forth below, as of the date of this Quarterly Report, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 6, 2026 (the “Annual Report”), and subsequent reports we have filed with the SEC since that date. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.

With the Spin-Off having been effected on July 13, 2026, and the closing of the Merger effected shortly thereafter, the Company no longer owns or operates its former fractional and jet card business. As a result, the risk factors identified under the subheading “Risks Related to Our Legacy Charter Business Operating Environment” in Item 1A of the Annual Report are not expected to apply the Company and its business plan on a go-forward basis.

Future business combinations and acquisition transactions, if any, as well as the recently closed Merger with flyExclusive, may not succeed in generating the intended benefits and may adversely affect our business.

Particularly after effecting the Spin-Off in July 2026 and closing the Merger, a component of our strategy is to evaluate strategic transactions or relationships from time to time. The inability of the Company to successfully identify and execute on a strategic transaction, or otherwise integrate acquired businesses or technologies, and any related diversion of management’s attention, could have a material adverse effect on our business, operating results and financial condition. Executing on any acquisitions or strategic transactions may require various closing conditions on the parties and may be subject to regulatory review and approval requirements by governmental entities, or ultimately be prohibited. There is no assurance that we will be able to complete the transactions contemplated by the non-binding LOI we entered into in July 2026, or otherwise execute on other strategic transactions of a similar nature.

Business combinations and other strategic transactions may have a direct adverse effect on our financial condition, results of operations, liquidity or stock price. To complete acquisitions, strategic transactions or other business combinations, we may have to use cash, issue new equity securities with dilutive effects on existing stockholders, take on new debt, assume contingent liabilities or amortize assets or expenses in a manner that might have a material adverse effect on our balance sheet, results of operations or liquidity. These and other potential negative effects of an acquisition transaction could prevent us from realizing the benefits of such transaction and have a material adverse impact on our stock price, financial condition, results of operations and liquidity.