Company Overview - Jet.AI is a provider of high-performance GPU infrastructure and AI cloud services, founded in 2018 and based in Las Vegas, NV [3] - The company operates in two segments: Software and Aviation, and is transitioning to a pure-play AI data center company [3] - Jet.AI aims to build scalable, high-performance infrastructure to meet the increasing computational demands of artificial intelligence [3] Upcoming Conference - Jet.AI is scheduled to present at the 2025 Annual Gateway Conference on September 3 at 11:30 a.m. Pacific Time [2] - The presentation will be webcast live and available for replay, with executives available for one-on-one meetings throughout the conference [2] Conference Details - The Gateway Conference provides a platform for public and private companies to connect with investors, analysts, and partners [4] - Attendees will have access to presentations and one-on-one meetings with senior executives from over 75 companies across various sectors [5]

Core Viewpoint - Jet.AI reported a decline in revenues for the second quarter of 2025, primarily due to reduced charter and jet card revenues as clients anticipated the sale of its aviation business to flyExclusive, despite an increase in software application revenue [3][4][5]. Financial Results Summary Second Quarter 2025 - Revenues were $2.2 million, down from $3.1 million in the same period last year, reflecting a decrease in Cirrus Charter and Jet Card revenue [3]. - Software App and Cirrus Charter revenue was $1.3 million compared to $1.6 million in the same period last year [4]. - Management and Other Services revenue totaled $533,000, down from $914,000 year-over-year [4]. - Jet Card and Fractional Programs revenue was $421,000, compared to $559,000 in the same period last year [5]. - Cost of revenues decreased to $2.3 million from $3.5 million, attributed to reduced charter flight activity [5]. - Gross loss was approximately $110,000, improved from a loss of $417,000 in the same period last year [6]. - Operating expenses totaled $2.4 million, down from $2.8 million, mainly due to lower general and administrative and sales and marketing expenses [6]. - Operating loss was approximately $2.5 million, compared to a loss of $3.2 million in the same period last year [7]. - As of June 30, 2025, cash and cash equivalents were approximately $8.3 million [7]. Six Months 2025 - Revenues for the six months ended June 30, 2025, were $5.7 million, down from $6.9 million in the same period last year [8]. - Software App and Cirrus Charter revenue for the six months was $3.1 million, compared to $4.0 million in the same period last year [8]. - Management and Other Services revenue totaled $1.8 million, slightly up from $1.7 million year-over-year [10]. - Jet Card and Fractional Programs revenue was $765,000, down from $1.2 million in the same period last year [10]. - Cost of revenues for the six months totaled $5.9 million, down from $7.5 million, due to decreased payments for aircraft management and operations [11]. - Gross loss for the six months was approximately $226,000, improved from $541,000 in the same period last year [12]. - Operating expenses totaled $5.4 million, down from $5.8 million, primarily due to lower general and administrative expenses [13]. - Operating loss for the six months was approximately $5.7 million, compared to a loss of $6.4 million in the same period last year [14]. Operational Highlights - The company announced a capital contribution to AIIA Sponsor Ltd., which is associated with a SPAC focusing on AI and data center opportunities [9]. - A joint venture with Consensus Core Technologies Inc. was formed to develop two hyperscale data-center campuses in Canada [9]. - The transaction with flyExclusive is on track to close by October 31, 2025 [9][16]. Company Overview - Jet.AI, founded in 2018, is transitioning to a pure-play AI data center company, leveraging expertise in data center development and AI technologies [17].

[PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section details Jet.AI Inc.'s unaudited consolidated financial statements and management's analysis for H1 2025 and 2024 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) This section presents Jet.AI Inc.'s unaudited consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows for the periods ended June 30, 2025 and 2024, along with detailed notes explaining the company's organization, significant accounting policies, and various financial commitments and transactions [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section presents Jet.AI Inc.'s assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :-------------- | :---------------- | | Total Assets | $14,465,097 | $10,797,323 | | Total Liabilities | $3,138,396 | $4,284,863 | | Total Stockholders' Equity | $11,326,701 | $6,512,460 | - Total assets increased by approximately **$3.67 million**, primarily driven by an increase in cash and cash equivalents and deposits on aircraft[9](index=9&type=chunk) - Total liabilities decreased by approximately **$1.15 million**, mainly due to reductions in deferred revenue and accrued liabilities[9](index=9&type=chunk) - Total stockholders' equity significantly increased by approximately **$4.81 million**, reflecting new capital contributions[9](index=9&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This section details Jet.AI Inc.'s revenues, expenses, and net loss for the three and six months ended June 30, 2025 and 2024 | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $2,225,900 | $3,083,884 | $5,700,538 | $6,932,482 | | Gross loss | $(110,300) | $(416,996) | $(225,814) | $(541,352) | | Operating loss | $(2,479,925) | $(3,220,615) | $(5,651,198) | $(6,370,411) | | Net Loss | $(2,385,023) | $(3,220,556) | $(5,554,827) | $(6,449,605) | | Net Loss to common stockholders | $(2,385,023) | $(3,250,283) | $(5,554,827) | $(6,509,060) | | Net loss per share - basic and diluted | $(0.92) | $(56.66) | $(2.40) | $(119.80) | - Revenues decreased by **$857,984 (27.8%)** for the three months ended June 30, 2025, and by **$1,231,944 (17.8%)** for the six months ended June 30, 2025, compared to the respective prior-year periods[11](index=11&type=chunk) - Gross loss improved for both periods, decreasing by **$306,696** for the three months and **$315,538** for the six months ended June 30, 2025, indicating better cost management relative to revenue[11](index=11&type=chunk) - Net loss to common stockholders decreased by **$865,260** for the three months and **$954,233** for the six months ended June 30, 2025, reflecting reduced losses[11](index=11&type=chunk) - Net loss per share significantly improved from **$(56.66)** to **$(0.92)** for the three months and from **$(119.80)** to **$(2.40)** for the six months ended June 30, 2025, largely due to an increase in weighted average shares outstanding[11](index=11&type=chunk) [Consolidated Statements of Stockholders' Equity (Deficit)](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) This section presents changes in Jet.AI Inc.'s stockholders' equity, including capital contributions and net loss, for H1 2025 and 2024 | Item | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :----------------------------------- | :----------------------------- | :----------------------------- | | Balance at December 31 | $6,512,460 | $(3,936,039) | | Stock-based compensation | $1,314,068 | $2,401,046 | | Issuance of Series B Convertible Preferred Stock upon exercise of warrants | $11,000,000 | - | | Series B Preferred Stock conversion | - | - | | Offering costs | $(1,945,000) | $(155,000) | | Net loss | $(5,554,827) | $(6,449,605) | | Balance at June 30 | $11,326,701 | $(4,169,820) | - Total stockholders' equity increased from **$6,512,460** at December 31, 2024, to **$11,326,701** at June 30, 2025, primarily due to the issuance of Series B Convertible Preferred Stock upon warrant exercise[12](index=12&type=chunk) - Stock-based compensation was **$1,314,068** for the six months ended June 30, 2025, a decrease from **$2,401,046** in the prior-year period[12](index=12&type=chunk) - The company incurred **$1,945,000** in offering costs during the first six months of 2025[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section analyzes Jet.AI Inc.'s cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(4,984,900) | $(4,705,433) | | Net cash used in investing activities | $(1,676,995) | $(13,021) | | Net cash provided by financing activities | $9,055,000 | $3,146,028 | | Increase (decrease) in cash and cash equivalents | $2,393,105 | $(1,572,426) | - Net cash used in operating activities increased to **$4.98 million** in H1 2025 from **$4.71 million** in H1 2024[15](index=15&type=chunk) - Net cash used in investing activities significantly increased to **$1.68 million** in H1 2025, primarily due to **$1.65 million** in aircraft deposits[15](index=15&type=chunk) - Net cash provided by financing activities substantially increased to **$9.06 million** in H1 2025, driven by **$11.0 million** from Series B Convertible Preferred Stock warrant exercises[15](index=15&type=chunk) - Overall cash and cash equivalents increased by **$2.39 million** in H1 2025, a reversal from a decrease of **$1.57 million** in H1 2024[15](index=15&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section details Jet.AI Inc.'s accounting policies, financial commitments, and significant transactions supporting the consolidated financial statements [NOTE 1 – Organization and Nature of Operations](index=9&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION%20AND%20NATURE%20OF%20OPERATIONS) This note details Jet.AI Inc.'s formation through a business combination and outlines its diverse private aviation and software operations - Jet.AI Inc. (formerly Oxbridge Acquisition Corp.) completed a business combination with Jet Token, Inc. on **August 10, 2023**, with Jet Token identified as the accounting acquirer[17](index=17&type=chunk)[18](index=18&type=chunk) - The Company's operations include fractional/whole aircraft sales, jet card programs, a proprietary booking platform (App), direct chartering of HondaJet Elite aircraft, aircraft brokerage, and aircraft management services[19](index=19&type=chunk) [NOTE 2 – Summary of Significant Accounting Policies](index=9&type=section&id=NOTE%202%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines Jet.AI Inc.'s critical accounting policies, including going concern, business combination accounting, and revenue recognition principles - The Company has incurred losses since inception, raising going concern doubts, and plans to fund operations through capital from operations and debt/equity sales, with potential for cash burn reduction[20](index=20&type=chunk)[21](index=21&type=chunk) - The Business Combination was accounted for as a reverse recapitalization, with Jet Token as the accounting acquirer, and financial statements retroactively restated for a **1-for-225** reverse stock split effective **November 12, 2024**[22](index=22&type=chunk)[24](index=24&type=chunk) - Revenue is recognized based on a five-step model, with sources including fractional/whole aircraft sales, jet card programs, ad hoc charter via the App, and aircraft management, with deferred revenue for prepaid flight hours[43](index=43&type=chunk)[47](index=47&type=chunk)[49](index=49&type=chunk) Revenue Components by Subcategory (Three and Six Months Ended June 30) | Revenue Category | 3 Months Ended June 30, 2025 ($) | 3 Months Ended June 30, 2024 ($) | 6 Months Ended June 30, 2025 ($) | 6 Months Ended June 30, 2024 ($) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Software App and Cirrus Charter | $1,271,695 | $1,610,899 | $3,121,645 | $3,981,990 | | Jet Card and Fractional Programs | $421,306 | $558,560 | $764,651 | $1,235,880 | | Management and Other Services | $532,899 | $914,425 | $1,814,242 | $1,714,612 | | **Total Revenues** | **$2,225,900** | **$3,083,884** | **$5,700,538** | **$6,932,482** | - Cost of sales includes chartering third-party aircraft, aircraft lease expenses, pilot training and wages, aircraft fuel, maintenance, and other operating expenses, recognized as incurred or amortized[60](index=60&type=chunk)[62](index=62&type=chunk) - The Company operates in a single segment: private aviation services, with all long-lived assets and substantially all revenue in the U.S[70](index=70&type=chunk) [NOTE 3 – Other Assets](index=17&type=section&id=NOTE%203%20%E2%80%93%20OTHER%20ASSETS) This note details Jet.AI Inc.'s other assets, including deposits and lease maintenance reserves, as of June 30, 2025, and December 31, 2024 | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------- | :-------------- | :---------------- | | Deposits | $95,811 | $104,811 | | Lease Maintenance Reserve | $689,750 | $689,750 | | **Total Other Assets** | **$785,561** | **$794,561** | [NOTE 4 – Notes Receivable](index=17&type=section&id=NOTE%204%20%E2%80%93%20NOTES%20RECEIVABLE) This note describes Jet.AI Inc.'s unsecured, non-interest-bearing promissory note receivable from an affiliated entity as of June 30, 2025 - As of June 30, 2025, the Company had advanced **$35,995** under an unsecured, non-interest-bearing promissory note with an affiliated entity, repayable by **November 30, 2025**, or upon the Maker's IPO[73](index=73&type=chunk) [NOTE 5 – Notes Payable](index=17&type=section&id=NOTE%205%20%E2%80%93%20NOTES%20PAYABLE) This note details the repayment of Jet.AI Inc.'s Bridge Agreement senior secured promissory notes during the six months ended June 30, 2024 - The Bridge Agreement, entered into on **September 11, 2023**, for **$625,000** in senior secured promissory notes (including **$281,250** from related parties), was fully repaid during the six months ended June 30, 2024[74](index=74&type=chunk)[76](index=76&type=chunk) - Interest expense related to the Bridge Notes was **$79,314** for the six months ended June 30, 2024, with a debt discount of **$168,250**, of which **$90,625** was amortized[75](index=75&type=chunk) [NOTE 6 – Commitments and Contingencies](index=18&type=section&id=NOTE%206%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines Jet.AI Inc.'s various commitments and contingencies, including lease obligations, purchase agreements, and joint venture investments - The Company has an operating lease for an aircraft expiring **November 2026**, requiring a **$500,000** liquidity reserve (restricted cash) and a **$690,000** maintenance reserve[78](index=78&type=chunk)[79](index=79&type=chunk) Operating Lease Liabilities and Future Minimum Payments | Item | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------------- | :-------------- | :---------------- | | Operating lease right-of-use asset (net) | $780,499 | $1,048,354 | | Lease liability, current portion | $533,480 | $525,547 | | Lease liability, long-term | $227,044 | $495,782 | | **Total operating lease liabilities** | **$760,524** | **$1,021,329** | **Future Minimum Required Lease Payments (as of June 30, 2025):** | Year | Amount ($) | | :--- | :----- | | 2025 (six months) | $274,500 | | 2026 | $503,250 | | **Total** | **$777,750** | - Under the GEM Share Purchase Agreement, the Company can sell up to **$40 million** in common stock to GEM, with **14,222 shares** sold for **$1.7 million** in H1 2024. The GEM Warrant exercise price was reduced to **$9.07** per share as of June 30, 2025[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - The Company accrued **$300,000** as of June 30, 2025, for a penalty related to the delayed effectiveness of a registration statement for GEM[86](index=86&type=chunk) - Jet.AI entered into an aircraft purchase agreement with Textron Aviation Inc. for three Cessna Citation CJ4 aircraft, with expected delivery in Q3 and Q4 2026. Deposits totaling **$4.1 million** were made through June 30, 2025, with an additional **$1.6 million** due in H2 2025[88](index=88&type=chunk) - The Company engaged Maxim Group LLC as financial advisor for potential business combinations (**December 2024**) and a spin-out transaction (**February 2025**), issuing **150,000 shares** of common stock as non-refundable stock fees (valued at **$625,000**)[89](index=89&type=chunk)[91](index=91&type=chunk)[93](index=93&type=chunk) - Jet.AI formed a joint venture with Consensus Core Technologies Inc. to develop data centers, contributing **$300,000** for a **0.5%** equity interest in Convergence Compute LLC, with plans for up to **$20 million** in contributions for a total of **2.5%** equity[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) [NOTE 7 – Stockholders' Equity](index=21&type=section&id=NOTE%207%20%E2%80%93%20STOCKHOLDERS'%20EQUITY) This note details Jet.AI Inc.'s authorized and outstanding capital stock, including common and preferred shares, and significant equity transactions - The Company is authorized to issue **200,000,000 shares** of common stock and **4,000,000 shares** of preferred stock, with **989 shares** of Series B Convertible Preferred Stock outstanding as of June 30, 2025[97](index=97&type=chunk) - Jet.AI entered into a Merger Agreement with flyExclusive, Inc. to spin out its jet charter business into SpinCo, which will then merge with a flyExclusive subsidiary. Jet.AI stockholders will receive flyExclusive Class A common stock for their SpinCo shares[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - The flyExclusive merger is subject to shareholder approval and is expected to close in Q3 2025, with an amendment extending the deadline to **October 31, 2025**[103](index=103&type=chunk)[104](index=104&type=chunk) - The Company sold **150 shares** of Series B Preferred Stock and warrants to Ionic Ventures, LLC for **$1.35 million** in **March 2024**. In H1 2025, **1,100 Series B Preferred Stock warrants** were exercised for **$11.0 million**, and **361 shares** of Series B Preferred Stock were converted into **1,461,355 shares** of common stock[105](index=105&type=chunk)[110](index=110&type=chunk) - A share repurchase program for up to **$2 million** of common stock was authorized through **December 31, 2025**, but no shares had been repurchased as of June 30, 2025[112](index=112&type=chunk) - Stock-based compensation expense was **$1,314,068** for H1 2025, with approximately **$500,000** in unrecognized compensation remaining as of June 30, 2025[118](index=118&type=chunk) Stock Option Activity (Six Months Ended June 30) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Outstanding at December 31 | 22,668 | 16,268 | | Granted | - | - | | Exercised | - | - | | Expired/Cancelled | - | - | | Outstanding at June 30 | 22,668 | 16,268 | | Exercisable at June 30 | 20,066 | N/A | - As of June 30, 2025, there were **9,686 GEM Common Stock Warrants** outstanding with an exercise price of **$9.07** and an expiration date of **August 11, 2026**[120](index=120&type=chunk) [NOTE 8 – Related Party Transactions](index=24&type=section&id=NOTE%208%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) This note identifies Jet.AI Inc.'s transactions with related parties, including a promissory note receivable and engagement letters with Maxim - Related party transactions include a promissory note receivable (Note 4), engagement letters with Maxim (Note 6), and a placement agent agreement with Maxim (Note 7)[121](index=121&type=chunk) [NOTE 9 – Fair Value of Financial Instruments](index=24&type=section&id=NOTE%209%20%E2%80%93%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This note states that the carrying amounts of Jet.AI Inc.'s financial instruments approximate fair value due to their short-term nature - The carrying amounts of the Company's financial instruments (cash, receivables, payables) approximate fair value due to their short-term nature[122](index=122&type=chunk) [NOTE 10 – Deferred Revenue](index=25&type=section&id=NOTE%2010%20%E2%80%93%20DEFERRED%20REVENUE) This note details the changes in Jet.AI Inc.'s deferred revenue balance for the six months ended June 30, 2025 Changes in Deferred Revenue (Six Months Ended June 30, 2025) | Item | Amount ($) | | :---------------------------------------------------- | :------- | | Deferred revenue as of December 31, 2024 | $1,319,746 | | Amounts deferred during the period | $1,768,623 | | Revenue recognized from amounts included in beginning balance | $(1,070,110) | | Revenue from current year sales | $(1,370,402) | | **Deferred revenue as of June 30, 2025** | **$647,857** | [NOTE 11 – Subsequent Events](index=25&type=section&id=NOTE%2011%20%E2%80%93%20SUBSEQUENT%20EVENTS) This note discloses significant events that occurred after June 30, 2025, including a data center joint venture agreement and a capital contribution to a SPAC - On **July 2, 2025**, the Company entered into a Contribution Agreement related to its data center joint venture (Note 6)[124](index=124&type=chunk) - In **July 2025**, the Company made a refundable capital contribution to AIIA Sponsor Ltd., a SPAC focused on AI and data center infrastructure, founded by certain of the Company's executive officers and directors[125](index=125&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Jet.AI's financial condition and operational results for H1 2025 and 2024 [Overview](index=26&type=section&id=Overview) This section introduces Jet.AI Inc.'s business, including its private aviation services, software offerings, and the impact of its Nasdaq listing - Jet.AI Inc., founded in **2018**, is involved in fractional/whole aircraft sales, jet cards, a proprietary booking platform, direct chartering, aircraft brokerage, and management[130](index=130&type=chunk) - The company offers SaaS software like Reroute AI and DynoFlight, and launched AI-enhanced booking apps CharterGPT and Ava in **2024** and **2025**[131](index=131&type=chunk)[134](index=134&type=chunk) - The Business Combination on **August 10, 2023**, resulted in Jet.AI Inc. being listed on Nasdaq (JTAI), with Jet Token treated as the accounting acquirer in a reverse recapitalization[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) [Potential Sale of Aviation Business Assets](index=28&type=section&id=Potential%20Sale%20of%20Aviation%20Business%20Assets) This section details Jet.AI's plan to spin out its jet charter business into SpinCo, which will merge with a flyExclusive subsidiary - Jet.AI entered a Merger Agreement with flyExclusive, Inc. on **February 13, 2025**, to spin out its jet charter business (fractional and jet card) into SpinCo, which will then merge with a flyExclusive subsidiary[136](index=136&type=chunk)[137](index=137&type=chunk) - Jet.AI stockholders will receive flyExclusive Class A common stock for their SpinCo shares, while retaining their existing Jet.AI common stock[136](index=136&type=chunk) - After the transaction, Jet.AI will retain its software and intellectual property assets and focus on AI and data-center enterprise sectors[138](index=138&type=chunk) - The transaction is subject to shareholder approval and is expected to close in Q3 2025[138](index=138&type=chunk) [Joint Venture](index=28&type=section&id=Joint%20Venture) This section outlines Jet.AI's joint venture with Consensus Core Technologies Inc. to develop data centers, detailing capital contributions - On **June 26, 2025**, Jet.AI formed a joint venture with Consensus Core Technologies Inc. to develop data centers, with Jet.AI contributing **$300,000** for a **0.5%** equity interest in Convergence Compute LLC[139](index=139&type=chunk)[140](index=140&type=chunk) - Jet.AI plans to contribute up to an aggregate of **$20 million** in five tranches, tied to project development milestones, potentially acquiring up to a **2.5%** equity interest in Convergence Compute[141](index=141&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of Jet.AI Inc.'s financial performance, including revenue, cost of revenues, and operating expenses [Three Months Ended June 30, 2025 and 2024](index=29&type=section&id=Three%20Months%20Ended%20June%2030,%202025%20and%202024) This section analyzes Jet.AI Inc.'s financial performance for the three-month periods, highlighting revenue, cost of revenues, and net loss | Metric | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :--------- | | Revenues | $2,225,900 | $3,083,884 | $(857,984) | -27.8% | | Cost of revenues | $2,336,200 | $3,500,880 | $(1,164,680) | -33.3% | | Gross loss | $(110,300) | $(416,996) | $306,696 | -73.5% | | Total operating expenses | $2,369,625 | $2,803,619 | $(433,994) | -15.5% | | Operating loss | $(2,479,925) | $(3,220,615) | $740,690 | -23.0% | | Net Loss | $(2,385,023) | $(3,220,556) | $835,533 | -25.9% | | Net Loss to common stockholders | $(2,385,023) | $(3,250,283) | $865,260 | -26.6% | | Net loss per share - basic and diluted | $(0.92) | $(56.66) | $55.74 | -98.4% | - Revenue declined by **$0.9 million (27.8%)** due to reductions in Cirrus Charter (**$488,000**), service revenue (**$382,000**), and Jet Card revenue (**$137,000**), partially offset by a **$149,000** increase in Software App revenue[143](index=143&type=chunk)[145](index=145&type=chunk) - The decrease in Cirrus Charter and Jet Card revenue was attributed to clients anticipating the sale of aviation business assets[143](index=143&type=chunk)[148](index=148&type=chunk) - Cost of revenues decreased by **$1.1 million (33.3%)**, leading to an improved gross loss of **$110,000**, primarily due to scale-back in operations[154](index=154&type=chunk)[156](index=156&type=chunk) - Operating expenses decreased by **$434,000 (15.5%)**, mainly from a **$417,000** decrease in general and administrative expenses (excluding stock-based compensation, G&A rose by **$22,000** due to D&O insurance, travel, and Board payments, offset by reduced professional services)[157](index=157&type=chunk) - Research and development expenses increased by **$4,000** to **$41,000**, reflecting continued refinement of the App and development of new software offerings[159](index=159&type=chunk) - The operating loss decreased by **$0.7 million** to **$2.5 million**, driven by reduced operating loss and lower general and administrative expenses[160](index=160&type=chunk) [Six Months Ended June 30, 2025 and 2024](index=32&type=section&id=Six%20Months%20Ended%20June%2030,%202025%20and%202024) This section analyzes Jet.AI Inc.'s financial performance for the six-month periods, detailing revenue, cost of revenues, and net loss | Metric | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :--------- | | Revenues | $5,700,538 | $6,932,482 | $(1,231,944) | -17.8% | | Cost of revenues | $5,926,352 | $7,473,834 | $(1,547,482) | -20.7% | | Gross loss | $(225,814) | $(541,352) | $315,538 | -58.3% | | Total operating expenses | $5,425,384 | $5,829,059 | $(403,675) | -6.9% | | Operating loss | $(5,651,198) | $(6,370,411) | $719,213 | -11.3% | | Net Loss to common stockholders | $(5,554,827) | $(6,509,060) | $954,233 | -14.7% | | Net loss per share - basic and diluted | $(2.40) | $(119.80) | $117.40 | -98.0% | - Revenues for H1 2025 decreased by **$1.2 million (17.8%)** due to reduced Software App and Cirrus Charter revenue (**$511,000**), and Jet Card revenue (**$471,000**), partially offset by increased Management and Other Services revenue (**$100,000**)[162](index=162&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - Jet Card flight hours sold decreased from **110 hours ($652,000)** in H1 2024 to **20 hours ($116,000)** in H1 2025, reflecting reduced sales in anticipation of the aviation business sale[166](index=166&type=chunk)[167](index=167&type=chunk) - Cost of revenues decreased by **$1.5 million (20.7%)**, primarily due to reduced payments to Cirrus for aircraft management and operations (**$538,000** decrease) and lower third-party charter costs (**$0.6 million** decrease)[172](index=172&type=chunk) - Gross loss improved by **$315,000** to **$226,000**, reflecting lower maintenance costs, pilot wages, and reduced HondaJet Elite utilization, despite stable fixed costs[174](index=174&type=chunk) - Total operating expenses decreased by **$404,000 (6.9%)**, driven by a **$311,000** reduction in general and administrative expenses (excluding stock-based compensation, G&A rose by **$776,000** due to professional fees and wages) and a **$173,000** decrease in sales and marketing[175](index=175&type=chunk)[176](index=176&type=chunk) - Research and development expenses increased by **$80,000** to **$150,000**, due to enhanced development for new software offerings[176](index=176&type=chunk) - Net loss to common stockholders improved by **$954,000** to **$5.6 million**, primarily due to a **$1.1 million** reduction in stock-based compensation, absence of preferred stock dividends, and elimination of interest expense[180](index=180&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses Jet.AI Inc.'s cash position, funding strategies, and ability to meet short-term and long-term financial obligations - As of **June 30, 2025**, cash and cash equivalents totaled **$8.3 million**, with current assets exceeding current liabilities by **$5.8 million**[181](index=181&type=chunk) - The Company raised **$11.0 million** in H1 2025 through Series B Preferred Stock issuance, significantly increasing cash and current assets[182](index=182&type=chunk) - Jet.AI anticipates continued operating losses for at least the next **12 months** and plans to fund operations through share issuances (Share Purchase Agreement) and potential equity/debt sales[183](index=183&type=chunk) - A non-binding term sheet for a proposed **$50 million** financing transaction with Hexstone Capital LP for Series C Convertible Preferred Stock is in progress[183](index=183&type=chunk)[184](index=184&type=chunk) - Ionic Ventures, LLC fully exercised its warrant for **1,500 shares** of Series B Preferred Stock, generating **$15.0 million** in gross proceeds for the Company[193](index=193&type=chunk) - The Company has access to up to **$40 million** from the GEM Share Purchase Agreement, with **$2.55 million** drawn to date. GEM's beneficial ownership is limited to **9.99%**[201](index=201&type=chunk)[202](index=202&type=chunk) Cash Flows (Six Months Ended June 30) | Cash Flow Activity | 2025 ($) | 2024 ($) | | :-------------------------------- | :------------- | :------------- | | Net cash used in operating activities | $(4,984,900) | $(4,705,433) | | Net cash used in investing activities | $(1,676,995) | $(13,021) | | Net cash provided by financing activities | $9,055,000 | $3,146,028 | | **Increase (decrease) in cash and cash equivalents** | **$2,393,105** | **$(1,572,426)** | - Net cash used in investing activities increased significantly in H1 2025 to **$1.7 million**, primarily due to **$1.7 million** in aircraft deposits to Textron[208](index=208&type=chunk) - Net cash provided by financing activities increased to **$9.1 million** in H1 2025, mainly from **$11.0 million** in Series B Preferred Stock warrant exercises, partially offset by **$1.9 million** in note repayments[209](index=209&type=chunk) [Critical Accounting Estimates](index=40&type=section&id=Critical%20Accounting%20Estimates) This section discusses key accounting judgments and estimates that significantly impact Jet.AI Inc.'s financial statements - The Company's limited operating history and accumulated losses raise substantial doubt about its ability to continue as a going concern, necessitating future capital raises or cash burn reduction[211](index=211&type=chunk)[212](index=212&type=chunk) - The Business Combination was accounted for as a reverse recapitalization, with Jet Token as the accounting acquirer based on factors like voting interest, board nomination, management, and historical operating activity[213](index=213&type=chunk)[214](index=214&type=chunk) - Revenue recognition follows ASC 606's five-step model, with revenue derived from fractional/whole aircraft sales, jet card programs, ad hoc charter via the App, and aircraft management[216](index=216&type=chunk)[218](index=218&type=chunk) - Cost of sales includes expenses for chartering third-party aircraft, aircraft leases, pilot training/wages, fuel, maintenance, and other operating costs, recognized as incurred or amortized[231](index=231&type=chunk) [Trend Information](index=43&type=section&id=Trend%20Information) This section outlines external factors and industry trends that could influence Jet.AI Inc.'s future financial performance and operational stability - The Company's business is sensitive to general economic conditions, changes in the private airline industry, fuel/operating costs, corporate governance, demand for private jet travel, carbon emission regulations, and market acceptance of its business model[233](index=233&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that Jet.AI Inc. is exempt from providing quantitative and qualitative disclosures about market risk as a smaller reporting company - The Company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a "smaller reporting company"[234](index=234&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of Jet.AI Inc.'s disclosure controls and procedures as of June 30, 2025, with no material changes to internal controls - The Interim CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of **June 30, 2025**[236](index=236&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended **June 30, 2025**[237](index=237&type=chunk) [PART II OTHER INFORMATION](index=44&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms that Jet.AI Inc. has no legal proceedings to disclose for the quarter ended June 30, 2025 - The Company has no legal proceedings to disclose[239](index=239&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) This section states no material changes to risk factors have occurred since the Annual Report on Form 10-K for December 31, 2024 - No material changes to risk factors were reported since the Annual Report on Form 10-K for the year ended **December 31, 2024**[240](index=240&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the issuance of 125,000 common stock shares to Maxim and confirms no equity repurchases during the quarter - On **June 30, 2025**, the Company issued **125,000 shares** of common stock to Maxim in satisfaction of cash fees, relying on the Section 4(a)(2) exemption from registration[241](index=241&type=chunk) - No purchases of equity securities were made by the Company or its affiliates during the quarter ended **June 30, 2025**[242](index=242&type=chunk) [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms no defaults upon senior securities occurred during the quarter ended June 30, 2025 - No defaults upon senior securities were reported[243](index=243&type=chunk) [Item 4. Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to Jet.AI Inc - This item is not applicable to the Company[244](index=244&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) This section confirms no omitted Form 8-K information, material changes to director nominations, or Rule 10b5-1 trading arrangements - No information required for Form 8-K was undisclosed[245](index=245&type=chunk) - No material changes to procedures for stockholder director nominations occurred[245](index=245&type=chunk) - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements[246](index=246&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or incorporated by reference into this Quarterly Report on Form 10-Q - The report includes exhibits such as the Amended and Restated Agreement and Plan of Merger and Reorganization, Certificate of Incorporation, Certificate of Designations for various preferred stock series, Bylaws, Joint Venture Agreement, and certifications[248](index=248&type=chunk) [Signatures](index=46&type=section&id=Signatures) This section confirms the report's official signing by George Murnane, Interim Chief Financial Officer, on August 14, 2025 - The report was signed by George Murnane, Interim Chief Financial Officer, on **August 14, 2025**[252](index=252&type=chunk)

Core Viewpoint - Jet.AI Inc. has made a capital contribution to AIIA Sponsor Ltd., which is sponsoring AI Infrastructure Acquisition Corp., a special purpose acquisition company aiming for an initial public offering (IPO) focused on AI and machine learning technology companies [1][2]. Group 1: Company Overview - Jet.AI Inc. is a provider of high-performance GPU infrastructure and AI cloud services, transitioning to a pure-play AI data center company [5]. - The company was founded in 2018 and is based in Las Vegas, NV, operating in two segments: Software and Aviation [5]. - Jet.AI aims to build scalable, high-performance infrastructure to meet the growing computational demands of artificial intelligence [5]. Group 2: IPO Details - AI Infrastructure Acquisition Corp. plans to conduct an IPO with a base offering size of $100 million, potentially increasing to $115 million if the underwriters fully exercise their over-allotment option [2]. - The IPO will focus on high-impact private technology companies that advance AI and machine learning capabilities, as well as those involved in next-generation data center infrastructure [2]. - Maxim Group LLC is acting as the sole book-running manager for the IPO [3].

Core Insights - Jet.AI Inc. and Consensus Core Technologies Inc. have entered into a definitive agreement to develop a phased hyperscale data center campus in Midwestern Canada, addressing critical infrastructure shortages in the AI market [1][2] - The project aims to utilize Canada's low-cost energy resources, leveraging proximity to major natural gas pipelines and electrical transmission lines to meet the growing demand for AI infrastructure [2][3] Project Details - The Midwestern Project will have an initial capacity of 500 megawatts (MW), with plans to achieve the first 100 MW through defined milestones [3] - Jet.AI will invest up to $20 million in the joint venture, receiving a 17.5% equity promote upfront and additional equity interests tied to specific project milestones [4] Milestones and Contributions - The project includes five key milestones, with initial contributions starting at $300,000 and increasing to $12 million for the final milestone [4][5] - Milestones involve various stages such as signing agreements, environmental permits, and securing power supply agreements [6] Strategic Partnership - The partnership with Consensus Core enhances the project through their expertise in GPU infrastructure and AI cloud services, positioning the project to meet next-generation computing demands [7][8] - Consensus Core's leadership team has extensive experience in building data center infrastructure and managing large-scale operations, which is crucial for the project's success [9][10] Company Background - Jet.AI, founded in 2018, is transitioning to a pure-play AI data center company, focusing on scalable, high-performance infrastructure to support AI computational demands [11] - Consensus Core specializes in high-performance GPU infrastructure and is an NVIDIA Certified Cloud Partner, with a strong track record in data center projects exceeding $10 billion [12][13]

Core Insights - Jet.AI Inc. is transitioning to a pure-play AI data center company, focusing on AI-driven infrastructure and has signed a letter of intent with Consensus Core to develop two large-scale data center campuses in Canada [3][4][10] Financial Performance - For Q1 2025, revenues were $3.5 million, a decrease from $3.8 million in the same period last year, primarily due to reduced software app and charter revenue [6][10] - Software App and Cirrus Charter revenue decreased to $1.8 million from $2.4 million, attributed to lower marketing efforts and a decline in private jet travel demand [7] - Management and Other Services revenue increased by 60% to $1.3 million, driven by a new management agreement and an additional managed aircraft [8] - Jet Card and Fractional Programs revenue fell to $0.3 million from $0.7 million, impacted by a challenging economic environment and a revised pricing strategy [9] - Cost of revenues decreased to $3.6 million from $4.0 million, leading to a gross loss of approximately $116,000, an improvement from a loss of $124,000 in the previous year [10] - Operating expenses totaled $3.1 million, slightly up from $3.0 million, with an operating loss of $3.2 million compared to a loss of $3.1 million in the same period last year [11] Cash Position - As of March 31, 2025, the company had a cash balance of $12.2 million and no debt, showing a significant increase from $5.9 million at the end of 2024 [12][16] Strategic Initiatives - The company is moving towards a definitive agreement with Consensus Core for the joint development of data centers, which are expected to have a capacity of 1.5 gigawatts [5][10] - A definitive agreement has been entered into with flyExclusive to divest the jet card and fractional aviation business in a spin-merge transaction expected to close in Q2 2025 [10] Company Overview - Jet.AI, founded in 2018, is based in Las Vegas and is transitioning to focus solely on AI data center operations, leveraging expertise in data center development and AI technologies [13]

PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for the quarter ended March 31, 2025, show a significant increase in total assets to $18.5 million and stockholders' equity to $13.6 million, primarily driven by financing activities, while the company continues to report a net loss of $3.2 million, consistent with the prior year period, and revenues decreased slightly to $3.5 million [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to $18.5 million from $10.8 million at year-end 2024, mainly due to a rise in cash and cash equivalents from $5.9 million to $12.2 million, with total liabilities increasing moderately to $4.8 million and stockholders' equity growing substantially to $13.6 million from $6.5 million, reflecting recent financing activities Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $12,245,419 | $5,872,627 | | Total current assets | $12,980,984 | $6,362,608 | | Total assets | $18,458,622 | $10,797,323 | | **Liabilities & Equity** | | | | Total current liabilities | $4,473,114 | $3,789,081 | | Total liabilities | $4,835,030 | $4,284,863 | | Total stockholders' equity | $13,623,592 | $6,512,460 | | Total liabilities and stockholders' equity | $18,458,622 | $10,797,323 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, revenues decreased to $3.5 million from $3.8 million in the prior-year period, resulting in a gross loss of $115,514 and a net loss of $3.2 million, comparable to Q1 2024, while net loss per share significantly improved to $(1.85) from $(64.08) due to increased weighted average shares outstanding Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Revenues | $3,474,638 | $3,848,598 | | Gross loss | $(115,514) | $(124,356) | | Operating loss | $(3,171,273) | $(3,149,796) | | Net Loss | $(3,169,804) | $(3,229,049) | | Net loss per share - basic and diluted | $(1.85) | $(64.08) | - Stock-based compensation, a major component of general and administrative expenses, decreased significantly to **$550,936** in Q1 2025 from **$1,199,318** in Q1 2024[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash used in operating activities was $2.2 million, investing activities used $1.2 million primarily for an aircraft deposit, and financing activities provided a significant inflow of $9.7 million, mainly from the exercise of Series B Preferred Stock warrants, resulting in a net increase in cash and cash equivalents of $6.4 million for the quarter Consolidated Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,180,208) | $(2,520,790) | | Net cash used in investing activities | $(1,177,000) | $(12,922) | | Net cash provided by financing activities | $9,730,000 | $1,028,724 | | **Increase (decrease) in cash** | **$6,372,792** | **$(1,504,988)** | - The primary source of financing cash flow in Q1 2025 was **$11.0 million** from the proceeds from the exercise of Series B Convertible Preferred Stock warrants[16](index=16&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's business operations, significant accounting policies, and key events, highlighting going concern uncertainty due to historical losses, the planned spin-off of the charter business to flyExclusive, and significant financing activities through convertible preferred stock and warrants, alongside key commitments including an aircraft purchase agreement with Textron and an operating lease for an aircraft - The company's principal business activities include the sale of fractional/whole aircraft interests, jet cards, a proprietary booking platform, aircraft chartering, brokerage, and management services[20](index=20&type=chunk) - The company has incurred losses since inception, raising concerns about its ability to continue as a going concern, with management planning to fund operations through capital from operations, its Share Purchase Agreement with GEM, proceeds from warrant exercises, and other potential financing[21](index=21&type=chunk)[22](index=22&type=chunk) - On February 13, 2025, the company entered into a merger agreement with flyExclusive, which involves spinning off its jet charter business (SpinCo) and merging it with a flyExclusive subsidiary, with Jet.AI stockholders receiving flyExclusive shares while retaining their Jet.AI stock post-transaction[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - In Q1 2025, the company issued 1,100 shares of Series B Preferred Stock upon the exercise of warrants, generating gross proceeds of **$11.0 million**[102](index=102&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 9.7% decrease in Q1 2025 revenue to $3.5 million, attributed to reduced software-related and jet card sales, though partially offset by a 60% increase in aircraft management revenue, highlighting its strategic plan to spin off its aviation business to flyExclusive and pivot to AI and data-center sectors, with liquidity significantly improved by an $11.0 million financing in the quarter, despite continued operating losses, and exploration of further funding options, including a potential $50 million transaction with Hexstone Capital [Overview and Strategic Direction](index=24&type=section&id=Overview%20and%20Strategic%20Direction) Jet.AI operates in private aviation through fractional/whole aircraft sales, jet cards, a proprietary booking platform, and aircraft management, but a significant strategic shift is underway with the planned sale of its aviation business to flyExclusive, after which Jet.AI will retain its software and IP assets and focus on opportunities in the AI and data-center enterprise sectors - The company is planning to sell its aviation business assets (fractional, jet card, and management) to flyExclusive via a spin-off and merger transaction[127](index=127&type=chunk)[128](index=128&type=chunk) - Following the transaction, Jet.AI will continue as a public company, retaining its software and intellectual property, and intends to pursue business opportunities in the AI and data-center sectors[129](index=129&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Q1 2025 revenue decreased 9.7% year-over-year to $3.5 million, primarily due to a 39% decline in software-related revenue from reduced marketing and an industry-wide demand slowdown, though aircraft management revenue saw a strong 60% increase, while the gross loss slightly improved to $116,000 and the operating loss widened marginally to $3.2 million, driven by higher G&A expenses excluding stock-based compensation Revenue Breakdown by Subcategory | Revenue Source | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Software App and Cirrus Charter | $1,849,950 | $2,371,091 | | Jet Card and Fractional Programs | $343,345 | $677,320 | | Management and Other Services | $1,281,343 | $800,187 | | **Total Revenue** | **$3,474,638** | **$3,848,598** | - Software-related revenue declined **39%** due to reduced marketing and an industry-wide decline in private jet travel demand[133](index=133&type=chunk) - Aircraft management service revenue increased by **60%**, driven by a new management agreement from Q4 2023 and the addition of a second managed aircraft in April 2024[134](index=134&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company held $12.2 million in cash, a substantial increase from year-end 2024 due to raising $11.0 million from the Ionic Transaction, and despite a history of operating losses and an accumulated deficit of $55.7 million, management believes it has sufficient capital for the next 12 months, supported by existing funds, access to the GEM Share Purchase Agreement, and a non-binding term sheet for a potential $50 million financing with Hexstone Capital - The company raised **$11.0 million** in Q1 2025 through the issuance of 1,100 shares of Series B Preferred Stock from warrant exercises[150](index=150&type=chunk) - The company has a history of negative cash flows and an accumulated deficit of **$55.7 million** as of March 31, 2025[151](index=151&type=chunk) - In February 2025, the company entered into a non-binding term sheet with Hexstone Capital LP for a proposed private placement of up to **$50 million** in Series C Convertible Preferred Stock[170](index=170&type=chunk)[171](index=171&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "smaller reporting company," Jet.AI Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a "smaller reporting company" and is therefore not required to provide the information for this item[205](index=205&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of March 31, 2025, the company's Interim Chief Executive Officer and Interim Chief Financial Officer concluded that the disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - Management, including the Interim CEO and Interim CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[207](index=207&type=chunk) - No changes occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[208](index=208&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no legal proceedings - None[210](index=210&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[211](index=211&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Since January 1, 2025, the company issued 1,100 shares of Series B Preferred Stock from the exercise of the Ionic Warrant, resulting in gross proceeds of $11.0 million, with these securities sold in a private placement exempt from registration under Section 4(a)(2) of the Securities Act and Rule 506(b), and no equity securities repurchased by the company during the quarter - From January 1, 2025, the Company issued 1,100 shares of Series B Preferred Stock from exercises of the Ionic Warrant for gross proceeds of **$11.0 million**, with the sale exempt from registration under Section 4(a)(2) of the Securities Act[212](index=212&type=chunk) - There were no purchases of equity securities by the Company or its affiliates during the quarter ended March 31, 2025[214](index=214&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) During the quarter, there was no information required to be disclosed on a Form 8-K that was not already reported, no material changes to the procedures for stockholder director nominations, and no directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement - No directors or officers adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the quarter[218](index=218&type=chunk)

Core Viewpoint - Jet.AI Inc. is forming a joint venture with Consensus Core Technologies Inc. to develop two hyperscale data-center campuses in Canada, aiming to meet the growing demand for AI compute power [1][4] Investment and Financials - Jet.AI plans to invest US $2 million initially, securing a 20% general partner interest and an 8% equity stake in the joint venture, with the option to increase its total commitment to US $20 million [3] - The Midwestern Project currently has 2 MW of capacity, with plans to expand to 100 MW within 12 months, potentially generating an additional $100 million in annual Net Operating Income (NOI) once stabilized [2][4] - The total projected capacity of the joint venture is approximately 1.5 gigawatts, which could equate to around $1.5 billion in NOI as the data centers are constructed and stabilized [4] Project Details - The Midwestern Project is strategically located with a 115 kV transmission line and adjacent to a natural gas pipeline, allowing for immediate power generation capabilities [5] - The Maritime Project has access to high-voltage power and hydro sources, with plans to scale capacity from 40 MW to over 1 gigawatt in the future [6] Strategic Positioning - The joint venture combines Jet.AI's capital markets expertise with Consensus Core's infrastructure development capabilities, positioning it to become a significant player in the AI compute landscape [9] - Consensus Core's experience in developing large-scale infrastructure projects enhances the joint venture's potential to meet the increasing demand for AI data centers [7][8]

Core Insights - Jet.AI Inc. reported financial results for the full year ended December 31, 2024, with revenues of $14.0 million, an increase of $1.8 million from the previous year, primarily driven by software app and charter revenues [4][21] - The company is transitioning towards AI data centers and has signed a letter of intent for a 50-megawatt data center project, which is part of a larger 120-acre campus with potential for a full gigawatt capacity [3][5] - Jet.AI has entered into a definitive agreement to divest its aviation segment to flyExclusive through an all-stock spin-off transaction, expected to close in Q2 2025 [3][5] Financial Performance - Revenues for 2024 were $14.0 million, up from $12.2 million in 2023, with software app and Cirrus charter revenues contributing $8.1 million, an increase of $1.0 million [4][21] - Cost of revenues increased to $15 million from $12.4 million, leading to a gross loss of approximately $965,000 compared to a loss of $179,000 in the previous year [7][8][21] - Operating loss was $12.6 million, slightly higher than the $12.5 million loss in 2023, with total operating expenses decreasing to $11.6 million from $12.3 million [9][21] Cash Position and Assets - As of March 25, 2025, the company had a cash balance of $12.5 million and no debt, along with $4.2 million in aircraft-related deposits, totaling $16.7 million [9] - Total assets increased to $10.8 million in 2024 from $5.7 million in 2023, with significant growth in cash and cash equivalents [19] Strategic Initiatives - The company launched "Ava," an agentic AI model for private jet booking, and commenced pre-sales for fractional ownership interests in its upcoming Cessna Citation CJ4 Gen2 aircraft [5] - Jet.AI has authorized a $2 million share repurchase program and completed a reverse stock split at a ratio of 1-for-225 [5][9] - The leadership team is focused on building AI infrastructure and evaluating acquisitions and strategic partnerships to maintain growth momentum [3][5]

Financial Performance and Compliance - The company's stockholders' deficit as of December 31, 2023, was $(3,963,039), indicating a significant financial challenge[26] - The company received a notification from Nasdaq on December 1, 2023, regarding non-compliance with the minimum stockholders' equity requirement of $10 million[26] - The minimum bid price of the company's common stock was below $1.00 for 30 consecutive business days, leading to a second notification from Nasdaq[27] - The Company received a notification from Nasdaq on May 30, 2024, indicating non-compliance with the Minimum Stockholders' Equity Requirement, leading to a hearing request to appeal the delisting notice[29] - A reverse stock split at a ratio of 225-for-1 was executed on November 12, 2024, resulting in regained compliance with both the Minimum Stockholders' Equity Requirement and Minimum Bid Price Requirement as of November 26, 2024[30] - The Company is subject to a Mandatory Panel Monitor for one year starting November 26, 2024, which could lead to delisting if non-compliance recurs[30] - The company's stockholders' deficit as of December 31, 2023, was $(3,963,039), falling below the $10 million minimum required for continued listing on Nasdaq[26] AI and Technology Initiatives - The company launched two AI-enhanced booking apps, CharterGPT and Ava, in 2023 and 2024, respectively, to improve its service offerings[23] - The company is focusing on enhancing the AI functionality of its platforms, including CharterGPT and Ava, as part of its growth strategy[25] - The company has established a B2B software platform, Jet.AI Operator Platform, to provide SaaS products to aircraft owners and operators[24] - The company launched the CharterGPT app in 2023, automating charter bookings and enhancing user experience through an API connection with Avinode[43] - The AI model "Ava" was launched in late 2024, allowing customers to book private jets via a toll-free number or SMS, providing real-time availability and pricing[44] - Reroute AI was launched in 2024, enabling FAA Part 135 operators to earn revenue on empty flight legs through a web-based platform[45] - DynoFlight, launched at the end of 2023, allows operators to track emissions and purchase carbon offset credits, with integration plans with FL3XX announced in February 2024[46] - The Flight Club API enables FAA Part 135 operators to sell private jet services by the seat, automating ticketing and compliance processes[47] - The company aims to enhance the AI functionality of its existing platforms, including Reroute AI and DynoFlight[25] - The company is developing AI-powered features for CharterGPT, including Predictive Destination Optimization, which utilizes historical traffic patterns and traveler preferences to recommend optimal private airports[59] - CharterGPT will analyze historical pricing data to predict the best departure date for the lowest charter flight prices, considering approximately 35 blackout days annually[60] Strategic Transactions and Business Focus - The company is exploring strategic transactions, including a potential merger, to maximize stakeholder value[16] - The Company entered into a Merger Agreement with flyExclusive on February 13, 2025, involving the distribution of shares of SpinCo to stockholders and the merger of SpinCo into flyExclusive[33] - Following the Transactions, the Company will cease operations in the fractional and jet card business and focus on AI sector opportunities[35] - The company plans to divest substantially all of its fractional and jet card business and related assets in a proposed transaction with flyExclusive[33] - Following the proposed transaction, the company will focus on expanding its AI operations and developing new services and platforms[35] Market Competition and Industry Landscape - The company faces significant competition in the aviation industry, which may impact its market position and financial performance[19] - The private air travel industry is highly competitive, with established players like NetJets, FlexJet, and WheelsUp competing for passengers through various pricing plans and services[75] - Competitors have larger fleets and greater financial resources, allowing them to respond quickly to market changes, which poses a disadvantage for the company[77] - In 2018 and 2019, VistaJet acquired XOJET and JetSmarter, indicating increased consolidation in the industry that could intensify competition[78] - The competitive landscape includes established players like NetJets and FlexJet, with significant consolidation in the industry potentially intensifying competition[75][78] Operational and Regulatory Environment - The company is subject to strict regulations from the DOT and FAA, which govern air transportation and safety standards[82][84] - The company’s operations are influenced by a highly regulated environment, which includes compliance with TSA mandates for passenger screening[86] - The company’s financial performance and market opportunities are subject to numerous risks and uncertainties, including economic downturns and regulatory changes[16] Marketing and Customer Focus - The company is focused on high-net-worth individuals for marketing, utilizing online, television, and event marketing strategies to expand its reach[63] - The company believes that combining private jet on-demand services with commercial airline availability will provide optimum flexibility and cost efficiency for clients[65] - The company estimates that 30 days per year are extremely difficult for private flying without guaranteed access, highlighting the importance of its jet membership program[70] Fleet and Aircraft Management - The company aims to expand its fleet with larger aircraft capable of longer distances as part of its historical strategy[25] - The company plans to gradually expand its fleet with larger light jets and super-mid-size aircraft, having entered into a purchase agreement for three Citation CJ4 Gen 2 aircraft, expected for delivery in 2026[50] - The company’s aircraft fleet consists of five aircraft, including three HondaJet Elites and one Citation CJ4 Gen 2, with a focus on cost efficiency and spacious interiors[66] - Cirrus, the largest private jet charter company in Las Vegas, provides management services for the company's aircraft, ensuring compliance with FAA regulations[72] - The company has entered into agreements with Cirrus for Executive Aircraft Management and Charter Services, leveraging Cirrus's 40 years of experience in managing and operating aircraft[71][72]