Volato(SOAR) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements The company's financial statements reflect a significant operational transformation, shifting from a net loss to net income driven by a strategic focus on aircraft sales Consolidated Balance Sheets Total assets and liabilities decreased substantially due to the discontinuation of aircraft fleet operations, while the shareholders' deficit narrowed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash | $4,707 | $2,161 | | Total current assets | $10,686 | $43,314 | | Total assets | $13,048 | $46,299 | | Liabilities & Shareholders' Deficit | | | | Total current liabilities | $20,005 | $62,200 | | Total liabilities | $20,112 | $62,633 | | Total shareholders' deficit | $(7,064) | $(16,334) | | Total liabilities and shareholders' deficit | $13,048 | $46,299 | Consolidated Statements of Operations The company achieved a significant turnaround, with revenue from continuing operations soaring to $50.3 million, resulting in a total net income of $4.1 million Statement of Operations Summary (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $50,338 | $229 | | Operating income (loss) | $3,398 | $(7,985) | | Net income (loss) from continuing operations | $3,043 | $(13,192) | | Net income (loss) | $4,057 | $(34,308) | | Net income (loss) per share, basic | $1.82 | $(29.34) | | Net income (loss) per share, diluted | $1.08 | $(29.34) | Quarterly Performance (Q2 2025 vs Q2 2024, in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | $24,855 | $181 | | Operating income (loss) | $872 | $(3,651) | | Net income (loss) | $3,602 | $(16,918) | Consolidated Statements of Changes In Shareholders' Deficit The shareholders' deficit improved to $(7.1) million from $(16.3) million, driven by net income and an increase in paid-in capital from stock issuances - The total shareholders' deficit decreased from $16.3 million at December 31, 2024, to $7.1 million at June 30, 2025[18] - Key drivers for the improvement in shareholders' deficit during the first six months of 2025 were net income of $4.1 million and the issuance of 2,778,885 shares of common stock, which increased additional paid-in capital[18] Consolidated Statements of Cash Flows The company generated positive operating cash flow of $0.5 million, a significant improvement from the prior year, increasing total cash to $4.7 million Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $536 | $(7,367) | | Net cash provided by (used in) investing activities | $30 | $(113) | | Net cash provided by (used in) financing activities | $141 | $(1,994) | | Net increase (decrease) in cash | $707 | $(9,474) | | Cash and restricted cash, end of period | $4,707 | $7,249 | Notes to Consolidated Financial Statements The notes detail a strategic transition to flyExclusive, a subsidiary sale, a reverse stock split, and a planned merger, while acknowledging going concern doubts - The company transitioned its aircraft ownership fleet operations to flyExclusive in September 2024 to focus on high-growth areas like aircraft sales and proprietary software[25] - On March 20, 2025, the company sold its subsidiary GC Aviation, Inc, which held the FAA Part 135 certificate, for $2.0 million[26] - The company has a working capital deficit of $9.3 million and an accumulated deficit of $100.3 million as of June 30, 2025, which raises substantial doubt about its ability to continue as a going concern[27] - Subsequent to the quarter end, on July 29, 2025, the company entered into a merger agreement with M2i Global, where M2i would become a wholly-owned subsidiary of Volato[158] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the dramatic financial improvement to its strategic shift towards aircraft sales and software, highlighted by the sale of two Gulfstream G280 aircraft - The company's business model has shifted to focus on aircraft sales and proprietary software (like the Vaunt platform) after transitioning its fleet operations to flyExclusive in September 2024[161] - The company delivered and sold its second and third Gulfstream G280 aircraft in February and June 2025, respectively, which was the primary driver of revenue growth[164] - On July 29, 2025, the company entered into a merger agreement with M2i Global, a company specializing in the global value supply chain for critical minerals; post-merger, M2i stockholders are expected to own approximately 85% of the combined company[163] Financial Highlights for Six Months Ended June 30, 2025 | Metric | H1 2025 | Change vs H1 2024 | | :--- | :--- | :--- | | Total Revenue | $50.3 million | +$50.1 million | | Net Income from Continuing Operations | $3.0 million | +$16.2 million | | Total Net Income | $4.1 million | +$38.4 million | Quantitative and Qualitative Disclosures about Market Risk As a "smaller reporting company," the company is not required to provide market risk disclosures - As a smaller reporting company, Volato Group, Inc is exempt from providing quantitative and qualitative disclosures about market risk[207] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls during the quarter - Based on an evaluation as of the end of the reporting period, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[210] - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[211] PART II OTHER INFORMATION Legal Proceedings The company is defending a lawsuit from former employees alleging WARN Act violations but does not expect a material adverse effect from current litigation - The company is a defendant in a lawsuit filed by former employees alleging violations of the WARN Act following the termination of 230 employees; the plaintiffs are seeking unpaid wages and benefits[150] - Management does not currently believe that its outstanding litigation will have a material adverse effect on its financial statements, but acknowledges the uncertainty of litigation[149] Risk Factors The company highlights new risks associated with its planned merger with M2i Global, including potential completion failure and business disruption - The company has entered into a merger agreement with M2i Global, Inc, which introduces new and additional risk factors[215] - Specific risks related to the merger include the potential for the merger not to be completed, failure to satisfy closing conditions, the effect of the announcement on business relationships, and risks related to diverting management's attention[215] Unregistered Sales of Equity Securities and Use of Proceeds During the quarter, the company issued over 2.5 million shares to convert a $4.5 million note and issued a new $1.5 million convertible note - In June 2025, the company issued 2,538,939 shares of common stock upon the full conversion of a $4.5 million convertible note[217] - On June 13, 2025, the company issued a new convertible promissory note in the principal amount of $1.5 million[217] Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[220] Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[222] Other Information No information required to be disclosed on a Form 8-K was omitted during the quarter - No material information was omitted from required Form 8-K filings during the quarter[225] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications