PROOF Acquisition I(PACI) - 2024 Q4 - Annual Report

Part I Business Volato Group, Inc. transitioned from capital-intensive aircraft ownership to asset-light aircraft sales and proprietary software, including the Vaunt app and Mission Control, while also developing patent-pending cryptocurrency mining technology - In September 2024, Volato transitioned its aircraft ownership program fleet operations to flyExclusive, Inc. to reduce operational costs and focus on high-growth areas like aircraft sales and software[19] - The company developed two proprietary software platforms: "Mission Control," a flight management system for Part 135 operators, and "Vaunt," a consumer subscription app for empty-leg flights which has surpassed 100,000 downloads and generated over $1.5 million in Annual Recurring Revenue (ARR)[14][17][18] - Volato expects to take delivery of three Gulfstream G280 aircraft in 2025, anticipating a gross profit of $4.0 million to $5.0 million from the sale of each aircraft[44] - The company has a new patent-pending technology filed in 2023 to repurpose underutilized aircraft resources for cryptocurrency mining[14][54] Risk Factors The company faces substantial risks from its limited operating history, recurring losses, negative cash flows, and a going concern warning, compounded by capital dependency, supplier reliance, potential dilution, and NYSE delisting risk - The company has a history of recurring losses and negative cash flows, prompting its independent registered public accounting firm to include an explanatory paragraph expressing substantial doubt about its ability to continue as a going concern[65] - In June 2024, the company was notified by the NYSE American for non-compliance with minimum stockholders' equity requirements and must regain compliance by December 18, 2025, to avoid delisting proceedings[113] - The company is dependent on securing additional financing to sustain operations, and failure to do so could require a reduction in operations or ceasing business entirely[65][73] - The issuance of convertible promissory notes in December 2024, with conversion rates tied to market prices, could result in significant dilution to existing stockholders[103] Unresolved Staff Comments The company reports no unresolved staff comments - The company reports no unresolved staff comments[146] Cybersecurity Cybersecurity risks are managed through a multi-layered process overseen by senior leadership and the Audit Committee, utilizing recognized frameworks, third-party monitoring, and employee training, with no material breaches in the last three years - Cybersecurity governance is handled by senior leadership and the Audit Committee, with the COO overseeing IT and security risk assessments[148][149] - The company's risk management strategy includes using established frameworks (Microsoft Azure CSPM, SOC 2), third-party threat monitoring, and employee training programs[150][155] - No material information security breaches, penalties, or related settlements have occurred in the last three years[152] Properties Volato operates as a remote-first company, with all physical facilities located on leased land that management believes are adequate for current and anticipated future needs - The company is a remote-first organization[154] - All facilities are on leased land and are considered sufficient for the company's needs[154] Legal Proceedings The company is involved in various legal proceedings, including a September 2024 WARN Act lawsuit filed by former employees, which it denies and for which it cannot estimate potential loss - The company is a defendant in a lawsuit filed by former employees on September 12, 2024, alleging violations of the Worker Adjustment and Retraining Notification (WARN) Act related to terminations on August 30, 2024[419] - The company denies all allegations in the WARN Act lawsuit and states that the current range of loss cannot be estimated[419] Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the company[159] Part II Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The company's Class A Common Stock is listed on NYSE American under "SOAR" and Public Warrants on OTC pink under "SOARW", with approximately 483 record holders as of March 10, 2025, and no plans for future cash dividends - The Common Stock is listed on NYSE American under the symbol "SOAR"[162] - Public Warrants are quoted on the OTC pink market under the symbol "SOARW"[162] - As of March 10, 2025, there were approximately 483 holders of record of Common Stock[163] - The company has not paid any cash dividends and does not expect to in the foreseeable future[164] Management's Discussion and Analysis of Financial Condition and Results of Operations For fiscal year 2024, Volato's revenue increased, primarily from aircraft sales, while managed aircraft revenue declined due to a strategic shift, leading to an increased net loss from continuing operations, with liquidity managed through sales and financing despite a going concern warning Results of Operations For 2024, total revenue grew, primarily from aircraft sales, partially offset by decreased managed aircraft revenue due to an operational shift, resulting in a wider operating loss and increased net loss from continuing operations For the Years Ended December 31, | | 2024 | | 2023 | $ | % | |---|---|---|---|---|---| | Revenue | $ 46,288 | | $ 35,573 | $ 10,715 | 30 % | | Operating Loss | (9,365) | | (4,440) | (4,925) | 111 % | | Net loss from continuing operations | (21,926) | | (20,636) | (1,290) | 6 % | | Net loss | $ (40,645) | | $ (52,822) | $ 12,177 | (23)% | Year Ended December 31, | | 2024 | 2023 | $ | % | |---|---|---|---|---| | Aircraft sales | $ 38,150 | $ 21,443 | $ 16,707 | 78 % | | Managed Aircraft | 7,224 | 14,107 | (6,883) | (49)% | | Subscription | 914 | 23 | 891 | 3874 % | | Total | $ 46,288 | $ 35,573 | $ 10,715 | 30 % | - Selling, general and administrative expenses increased by $7.6 million (83%) in 2024, primarily due to higher professional fees, public company costs ($2.3 million), and increased advertising for the Vaunt platform ($1.3 million)[180] Liquidity and Capital Resources As of December 31, 2024, the company had limited cash and a working capital deficit, relying on financing, aircraft sales, and customer deposits, with significant future aircraft commitments, while management believes current resources are sufficient for 12 months despite going concern uncertainty - As of December 31, 2024, the company had $2.2 million in cash and cash equivalents and a working capital deficit of approximately $18.9 million[185][195] - In December 2024, the company secured a new financing facility through a Securities Purchase Agreement for up to $36.0 million in convertible promissory notes, with an initial $4.5 million tranche issued[185] Year Ended December 31, | | 2024 | 2023 | |---|---|---| | Net cash used in operating activities | (16,919) | (30,393) | | Net cash (used in) provided by investing activities | (115) | 1,776 | | Net cash provided by financing activities | 4,311 | 37,461 | - The company has contractual commitments to acquire three additional Gulfstream G-280 aircraft for a total consideration of $62.6 million, with expected deliveries in 2025[209] Critical Accounting Policies and Estimates The company's critical accounting policies involve significant judgment, covering revenue recognition for aircraft sales and management services, capitalization of software costs, impairment testing for goodwill, stock-based compensation valuation, and utilizing the JOBS Act's extended transition period - Revenue from aircraft sales is recognized upon delivery of the aircraft to the customer[218] - For aircraft management services, the company acts as the principal and recognizes revenue on a gross basis, including reimbursements for third-party costs[217] - Goodwill and indefinite-lived intangible assets are tested for impairment annually during the fourth quarter or more frequently if impairment indicators exist[221][223][305] - The company is an "emerging growth company" and has elected to use the extended transition period for complying with new or revised accounting standards under the JOBS Act[227] Quantitative and Qualitative Disclosures about Market Risk The company is primarily exposed to market risks from interest rates on variable-rate debt and aircraft fuel prices, and does not currently use derivative instruments for hedging - The company's principal market risks are related to interest rates and aircraft fuel[230] - The company is subject to market risk from changing interest rates on its variable-rate debt and does not use derivative instruments for hedging[231] Financial Statements and Supplementary Data This section presents the audited consolidated financial statements for FY2024 and FY2023, including the auditor's going concern warning, reflecting a net loss, changes in assets and liabilities, and detailed notes on business combination, discontinued operations, and debt Report of Independent Registered Public Accounting Firm The independent auditor issued a fair opinion on the financial statements but included an explanatory paragraph expressing substantial doubt about the company's ability to continue as a going concern due to significant losses and negative cash flows - The auditor's report includes an "Explanatory Paragraph – Going Concern," which raises substantial doubt about the Company's ability to continue as a going concern[236] Consolidated Financial Statements The consolidated financial statements for FY2024 show decreased total assets, increased total liabilities, a shift to a shareholders' deficit, and a total net loss, which includes losses from both continuing and discontinued operations December 31, | | 2024 | 2023 | |---|---|---| | Total assets | $ 46,299 | $ 71,712 | | Total liabilities | $ 62,633 | $ 56,961 | | Total shareholders' equity (deficit) | (16,334) | 14,751 | For the Years Ended December 31, | | 2024 | 2023 | |---|---|---| | Net loss from continuing operations | (21,926) | (20,636) | | Net loss from discontinued operations | (18,719) | (32,186) | | Net loss | $ (40,645) | $ (52,822) | For the Years ended December 31, | | 2024 | 2023 | |---|---|---| | Net cash used in operating activities | (16,919) | (30,393) | | Net cash provided by financing activities | 4,311 | 37,461 | Notes to Consolidated Financial Statements The notes detail the accounting for the 2023 business combination, reclassification of the aircraft ownership program as discontinued operations, significant debt and future aircraft purchase commitments, a WARN Act lawsuit contingency, and a subsequent reverse stock split - The business combination in December 2023 was accounted for as a reverse recapitalization, with Legacy Volato as the accounting acquirer[254][317] - The aircraft ownership program was transitioned to flyExclusive and is reported as discontinued operations, and as part of the deal, flyExclusive assumed certain liabilities, resulting in a $10.0 million gain for Volato[324][325] - The company has future minimum payments of $26.3 million due in 2025 for its remaining Gulfstream G280 aircraft purchase commitments[406] - A 1-for-25 reverse stock split became effective on February 24, 2025, and all share amounts in the report have been retroactively adjusted[258][376][420] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with accountants on accounting and financial disclosure - The company reports no changes in or disagreements with accountants on accounting and financial disclosure[422] Controls and Procedures As of December 31, 2024, management concluded that both disclosure controls and internal control over financial reporting were effective, with no material changes during the fourth quarter - Management concluded that disclosure controls and procedures were effective as of December 31, 2024[425] - Management concluded that internal control over financial reporting was effective as of December 31, 2024, based on the "Internal Control – Integrated Framework 2013" issued by COSO[427] - No material changes in internal control over financial reporting occurred during the quarter ended December 31, 2024[429] Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the fourth quarter of 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement in the fourth quarter of 2024[432] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - This item is not applicable to the company[433] Part III Directors, Executive Officers, Corporate Governance, Compensation, Security Ownership, and Accountant Fees Information for Items 10 through 14, covering directors, executive officers, corporate governance, compensation, security ownership, and accountant fees, is incorporated by reference from the definitive 2025 Proxy Statement - Information for Items 10, 11, 12, 13, and 14 will be incorporated by reference from the company's definitive Proxy Statement for the 2025 Annual Meeting of Stockholders[435][438][439] Part IV Exhibit and Financial Statement Schedules This section references the financial statements and provides a detailed index of all exhibits filed with the Form 10-K, including key agreements and officer certifications - This section contains the index of exhibits filed with the Form 10-K[446][447] Form 10-K Summary The company provides no summary under this item - The company provides no summary under this item[449]