Harbor Diversified, Inc. - 10-K

ITEM 1A.       RISK FACTORS

Our short- and long-term success is subject to numerous risks and uncertainties, many of which involve factors that are difficult to predict or beyond our control. As a result, investing in Harbor’s common stock involves substantial risk. Before deciding to purchase or sell Harbor’s common stock, stockholders should carefully consider the risks and uncertainties described below, in addition to the other information contained in or incorporated by reference into this Annual Report, as well as the other information we file with the SEC from time to time. If any of these risks are realized, our business, financial condition, results of operations, liquidity and prospects could be materially and adversely affected. In that case, the value of Harbor’s common stock could decline, and stockholders may lose all or part of their investment. Furthermore, additional risks and uncertainties of which we are currently unaware, or which we currently consider to be immaterial, could have a material adverse effect on our business.

After giving effect to the Aviation Disposition, we no longer have any material operating assets and, in particular, no longer confronts the risks of operating an airline. Therefore, the risk factors set forth below are limited to those we believe to be relevant from and after the date on which this Annual Report was filed, and we have not restated the risk factors related to our business and industry as they existed during the historical reporting periods covered by this Annual Report. For a discussion of the risks and uncertainties that were relevant to our business and industry during the historical reporting periods covered by this Annual Report, please refer to the section titled "Risk Factors" included in our prior SEC filings, including our 2023 Annual Report and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, which are incorporated herein by reference.

Certain statements made in this section constitute “forward-looking statements,” which are subject to numerous risks and uncertainties including those described in this section. For additional information, please refer to “Cautionary Note Regarding Forward-Looking Statements” in this Annual Report.

Regulatory and Legal Risks

If Harbor is deemed to be an “investment company” under the Investment Company Act, it would need to register as an investment company and would become subject to substantial regulatory requirements.

As a result of the Aviation Disposition, we no longer have any material operating assets, are not engaged in any operating business, and do not have any source of revenue from operations. Its primary assets consist of cash and cash equivalents, restricted cash and marketable securities. As such, we may be deemed to be an “investment company” under the Investment Company Act.

A company may be deemed to be an investment company under Section 3(a)(1)(C) of the Investment Company Act ("Section 3(a)(1)(C)") if the value of its investment securities is more than 40% of its total assets (exclusive of government securities and cash items) on an unconsolidated basis. The activities of investment companies are restricted, including by restrictions on the nature of investments and the issuance of securities. In addition, investment companies may

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be subject to burdensome requirements, including registration as an investment company, adoption of a specific form of corporate structure, and reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations, compliance with which can be expensive and time-consuming. Additionally, the business activities of a registered investment company are significantly constrained, which could limit the company’s ability to pursue certain strategic alternatives, including investments, acquisitions or other strategic transactions. If we were to determine that becoming an investment company was preferable to other options available to us, we would become subject to all of those restrictions and burdens. If we meet the definition of an investment company but fail to register when required, we could be subject to regulatory sanctions and civil or criminal penalties. The consequences of being deemed an investment company would have a material adverse effect on our business, financial condition, and prospects.

We intend to rely on the transient investment company exemption under Rule 3a-2 of the Investment Company Act, which provides only temporary relief and is subject to significant conditions and limitations.

Rule 3a-2 under the Investment Company Act ("Rule 3a-2") temporarily relieves certain issuers that are in transition to a non-investment company business due to the occurrence of an extraordinary event, such as the sale of all or substantially all of its operating assets, from the registration and other requirements of the Investment Company Act. Rule 3a-2 allows a “transient investment company” a grace period of one year from the earlier of (a) the date on which the company owns securities and/or cash having a value exceeding 50% of the its total assets on either a consolidated or unconsolidated basis and (b) the date on which it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of government securities and cash items) on an unconsolidated basis (the "Transient Period") to become compliant with Section 3(A)(1)(C) or otherwise find another exemption or exclusion from the definition of "investment company" (the “Transient Investment Company Exemption”).

For Harbor to avail itself of the Transient Investment Company Exemption, it must, among other things, have a bona fide intent to be engaged, as soon as reasonably possible, and in any event within one year of becoming a transient investment company, in a business other than that of investing, reinvesting, owning, holding or trading in securities, and that intent is required to be evidenced by an appropriate board resolution and the company’s business activities during the Transient Period. If Harbor is deemed to be an investment company, we intend to qualify for the Transient Investment Company Exemption and believe we have met, and will continue to meet, the requirements of the exemption. Harbor's board of directors has adopted a resolution confirming our intention to rely on the Transient Investment Company Exemption and confirming that we have met the requirements of the exemption. In furtherance of this determination, Harbor's board of directors has adopted an investment policy with the primary objectives of (1) ensuring the safety of capital and preservation of purchasing power, (2) preserving liquidity, (3) maintaining short-term maturities, and (4) managing towards reasonable rates of return in light of the other investment objectives. Consistent with the investment policy, our Liquid Assets are primarily invested in deposit accounts, money market funds, government-backed securities and similar investments.

The Transient Investment Company Exemption provides only a temporary exemption during the Transient Period and may only be relied upon once during any three-year period. If we are unable to complete a qualifying transaction within the Transient Period, we would no longer be able to rely on the Transient Investment Company Exemption and would need to either: (i) register as an investment company under the Investment Company Act, (ii) qualify for another exemption from registration, (iii) restructure our assets and business to avoid meeting the definition of an investment company, or (iv) liquidate.

There can be no assurance that we will satisfy the subjective bona fide intent requirement of the Transient Investment Company Exemption, that we will be able to consummate a strategic transaction within the Transient Period, or that we will be able to qualify for another exemption. Reliance on the Transient Investment Company Exemption may constrain our flexibility to make investments, pursue acquisitions or engage in joint ventures that involve securities as such actions could affect our investment asset ratios and jeopardize our ability to meet the exemption's conditions. Any actions taken to maintain an exemption from registration under the Investment Company Act, including any adjustment in our strategy, investments or assets could be costly and burdensome. If we are deemed to be an investment company and fail to comply with the registration requirements of the Investment Company Act, and are unable to avail ourselves of an applicable exemption, we could be subject to enforcement actions, regulatory sanctions, civil or criminal penalties and reputational harm.

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We may have difficulty establishing that we qualify for a different exemption from registration under the Investment Company Act.

In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exemption, we must ensure that we are not, and do not hold ourselves out as being, engaged primarily, or propose to engage primarily, in the business of investing, reinvesting or trading in securities, and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Other than the Transient Investment Company Exemption, there are limited exemptions under the Investment Company Act that may apply to a company in our situation. The primary alternative to the Transient Investment Company Exemption would be Section 3(b)(1) of the Investment Company Act ("Section 3(b)(1)"), which provides an exemption for any issuer primarily engaged in a business other than that of investing, reinvesting, owning, holding, or trading in securities. To qualify under Section 3(b)(1), we would need to demonstrate that we are primarily engaged in a non-investment company business. If we are unable to complete a strategic transaction that results in our primary engagement in a non-investment company business, we may not be able to qualify for an exemption from registration under the Investment Company Act.

If we consummate a strategic transaction that allows us to cease to be deemed an investment company, our ability to invest our cash and cash equivalents will be restricted due to the need to avoid being deemed an investment company.

If we consummate a strategic transaction and cease to be deemed an investment company, then in order to avoid being required to register as an investment company under the Investment Company Act in the future, we must carefully manage the composition of our assets. Specifically, we must ensure that we do not own "investment securities" having a value exceeding 40% of the value of our total assets (exclusive of government securities and cash items). The term "investment securities" is broadly defined under the Investment Company Act and includes most securities other than securities issued by the U.S. government and securities issued by majority-owned subsidiaries that are not themselves investment companies. These restrictions will limit our ability to invest our cash and cash equivalents in a manner that could generate higher returns, and we may be required to hold assets in lower-yielding investments such as bank deposits, money market funds, and government securities. This limitation may result in lower returns on our assets compared to what might otherwise be achievable if we were not subject to these restrictions.

Investment Risks

We currently have no material operating assets and no operating business, and we may not be able to identify or successfully complete a suitable acquisition or other strategic transaction.

As a result of the Aviation Disposition, we currently have no material operating assets, are not engaged in any operating business, and do not have any source of revenue from operations. Our future success largely depends on our ability to identify and execute a strategic alternative that creates value for our stockholders, which may include investments in or acquisitions of one or more businesses, assets, technologies, joint ventures, or other strategic opportunities. Any such transactions could involve one or multiple investments or acquisitions, be in any number of industries or lines of business (which may or may not include the airline industry), and involve the use of cash, equity securities, or a combination thereof.

The process of identifying and evaluating investment and acquisition opportunities, conducting due diligence, negotiating transaction terms, and integrating acquired businesses, assets or technologies is time-consuming and expensive and involves significant uncertainty. We may face significant competition for investments or acquisition targets from other potential acquirers, some of which may have greater resources and experience than we do. We may not be successful in identifying suitable acquisition targets on acceptable terms, or at all. If we do identify an acquisition target, we may not be able to negotiate terms that are favorable to us or complete the transaction due to regulatory, financing, or other obstacles. Even if we complete an acquisition, we may not be able to successfully integrate the acquired business or realize the anticipated benefits of the transaction, which could result in impairment charges or other losses.

In addition, we may pursue other strategic alternatives, which could include, without limitation, the issuance of one or more cash dividends to stockholders, share repurchases, tender offers, registering as an investment company, a liquidation, or other potential transactions. No decision has been made regarding the pursuit of any particular strategic alternative, and we cannot predict when a decision will be made. There can be no assurance we will be successful in identifying, pursuing, or executing any particular strategic transaction or alternative, or that any such action will result in enhanced stockholder value.

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Investments, acquisitions and other strategic transactions present many risks, and our failure to successfully integrate any acquired business or assets into our operations could have a material adverse effect on our results of operations and financial condition.

We may evaluate and consider potential strategic transactions, including acquisitions of, or investments in, one or more businesses, assets, technologies, alliances, and joint ventures or other strategic opportunities. Our ability to do so largely depends on our ability to identify and successfully pursue suitable investment and acquisition opportunities. Such investments and acquisitions involve numerous risks, challenges, and uncertainties, including:

• the potential to expose us to risks inherent in entering into a new industry, market or geographic region;

• our ability to negotiate favorable contractual terms;

• our ability to comply with applicable regulations and receive necessary consents, clearances and approvals (including regulatory and antitrust clearances and approvals);

• our ability to successfully integrate separate businesses, operations, technology and personnel;

• our ability to realize the full extent of the benefits, cost savings or synergies presented by strategic transactions;

• our ability to minimize potential losses of customers, business partners and key personnel;

• our ability to recover costs incurred relating to a potential acquisition that we fail to consummate; and

• our ability to minimize indemnities and potential disputes with buyers, sellers and strategic partners.

In addition, execution or oversight of strategic transactions may result in the diversion of management’s time and attention away from other aspects of our business and may present financial, managerial and operational risks, including disruptions in our business because of the allocation of resources to consummate these transactions.

With respect to acquisitions in particular, our failure to successfully structure or manage the transactions could have a material adverse effect on our financial condition and results of operations. The expected benefits of any acquisition may not be realized. In connection with any future acquisitions, we could face additional financial and operational risks beyond those described above, including, among other things, the dilution of our stockholders, if we issue equity to fund these transactions; reduced liquidity; increased debt and higher amortization expenses; assumption of operating losses, increased expenses and liabilities; discovery of unanticipated issues and liabilities; failure to meet expected returns; and difficulty in maintaining financial reporting and internal control processes.

Our cash and investments may decline in value, and we may not be able to generate sufficient returns to offset our ongoing expenses.

Our primary assets consist of cash and cash equivalents, restricted cash and marketable securities. Consistent with our investment policies, the Liquid Assets are primarily invested in deposit accounts, money market funds, government-backed securities, and similar investments, with the primary objectives of maintaining liquidity and preserving principal balances. These investments are subject to various risks. The value of our investments could decline due to changes in market conditions, rising or falling interest rates, defaults by issuers, or other factors beyond our control. Additionally, the returns on our investments may not be sufficient to offset our ongoing corporate expenses, including costs associated with maintaining our public company status, pursuing strategic alternatives, and compensating our management team. If our expenses exceed our investment returns over an extended period, the value of our Liquid Assets will decline, which would reduce the amount available for strategic transactions or pursuing other strategic opportunities, including the issuance of cash dividends to stockholders or share repurchases. Our investments will be subject to the following standard investment risks:

Market volatility : the value of our investment portfolio may fluctuate significantly due to market conditions, economic trends, geopolitical events or changes in investor sentiment;

Concentration risk : our investment portfolio could be negatively impacted if our assess are concentrated in a limited number of issuers, sectors or asset classes;

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Interest rate risk : changes in interest rates may adversely affect interest income and the value of fixed-income investments we hold;

Credit risk : issuers of securities we hold may default on their obligations, causing losses or reduced income; and

Liquidity risk : we may be unable to sell certain portfolio holdings at desirable prices or in a timely manner, especially during periods of market uncertainty or volatility.

We have limited personnel and resources to evaluate and execute strategic alternatives.

After giving effect to the Aviation Disposition, we have only a small number of employees, executive officers and advisors who manage our day-to-day affairs, oversee our remaining assets and obligations, evaluate strategic alternatives, and execute any transactions we may pursue. The loss of any of these key individuals could impair our ability to operate effectively and pursue our strategic objectives. Our limited personnel and resources may also limit the scope of opportunities we are able to evaluate and pursue. Additionally, potential acquisition targets or business partners may have concerns about our limited operational infrastructure and personnel, which could make it more difficult for us to consummate strategic transactions.

Our stockholders may not agree with the strategic alternatives we pursue, and we may be unable to satisfy all stockholder expectations or enhance stockholder value.

Our stockholders may have different views on what strategic alternatives would best serve their interests. Some stockholders may prefer that we return capital through cash dividends, share repurchases or tender offers, while others may prefer that we pursue acquisitions or other investments to grow our business. We may not be able to satisfy the expectations of all stockholders. Additionally, certain strategic alternatives, such as a sale of the Company, registration as an investment company, liquidation, or a significant acquisition, may require stockholder approval. There can be no assurance that our stockholders would approve any particular transaction. There can also be no assurance that any particular strategic transaction we pursue will result in enhanced stockholder value.

A liquidation of the Company may result in distributions to stockholders that are less than expected or significantly delayed.

One strategic alternative that we may consider is a liquidation of the Company and distribution of its remaining assets to stockholders. If we were to pursue a liquidation, the amount and timing of distributions to stockholders would be subject to significant uncertainty. We may be required to establish reserves for known and contingent liabilities, including potential claims that may arise after we announce or commence a liquidation. The amount of any such reserves would be determined by Harbor's board of directors in the exercise of its business judgment and may be more than is ultimately required, resulting in delayed or reduced distributions. Additionally, the process of liquidating our assets and winding down our affairs could take a significant period of time, during which we would continue to incur expenses that would reduce the amount available for distribution. Stockholders may not receive any distributions from a liquidation for an extended period, and the ultimate amount of distributions may be materially less than anticipated. Finally, any distribution could be subject to significant federal, state or local tax, depending upon a stockholder’s personal financial situation. The tax consequences of any potential liquidation and distribution would likely be a significant consideration in determining whether to pursue a potential liquidation transaction.

General Risk Factors

Information technology security breaches, hardware or software failures, or other information technology infrastructure disruptions may negatively impact our business, operations and financial condition.

The performance and reliability of our and our third-party service providers’ technology is critical to our success. Any internal technological error, failure or large-scale external interruption in the information systems, networks, hardware, software and technological infrastructure we depend on, such as power, telecommunications or the internet (collectively, “IT Systems”), may disrupt our internal network, impact our ability to conduct our business, and result in increased costs or penalties. Our IT Systems (including systems provided by third parties) may be vulnerable to a variety of sources of interruption due to events beyond our control, including natural disasters, terrorist attacks, telecommunications or IT System failures, computer viruses, cyber criminals and other security issues.

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In addition, we face numerous and evolving cybersecurity risks that threaten the security, confidentiality, integrity and availability of our IT Systems, including from diverse threat actors such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as through diverse attack vectors, such as social engineering/phishing, security breaches, malfeasance by insiders, human or technological error, computer viruses, malicious or destructive code, misconfigurations, “bugs” or other vulnerabilities in commercial software that is integrated into our or our third-party service providers’ IT Systems, products or services, malware (including ransomware) and other attacks, including through fraud or other means of deception. The methods used to obtain unauthorized access, disable or degrade service or attack or sabotage systems are constantly evolving, and threat actors are becoming increasingly sophisticated in using techniques and tools – including artificial intelligence – that circumvent security controls, evade detection and remove forensic evidence. As a result we may be unable to anticipate or to detect, investigate, remediate or recover from attacks or incidents for long periods of time. Further, we may not be able to prevent all data breaches, misuses of data or other cybersecurity incidents.

There can be no assurance that our cybersecurity risk management program and processes will be fully implemented, complied with or effective in protecting our IT Systems. Because we rely on third-party vendors and service providers for functions critical to our business, including information technology infrastructure and services, successful cyberattacks that disrupt or result in unauthorized access to third-party IT Systems can materially impact our operations and financial results. Our remote and hybrid working arrangements (and at many third-party service providers) also increase cybersecurity risks due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.

Our third-party service providers may experience cybersecurity incidents in varying degrees. While to date no incidents have had a material impact on our operations or our financial results, we cannot guarantee that material incidents will not occur in the future. Any cybersecurity incident or other adverse impact to the availability, integrity or confidentiality of our IT Systems could compromise our technology systems, result in legal claims or proceedings, regulatory investigations and enforcement actions, liability or regulatory penalties, disruption to our operations, damage to our reputation, and/or significant system restoration or remediation and future compliance costs. Any or all of the foregoing could adversely affect our business, results of operations and financial condition.

Laws, regulations and other requirements relating to the privacy, security and handling of information about individuals, and the application and interpretation of those requirements, are constantly evolving. There has been heightened legal and regulatory focus on data privacy and security, including in relation to cybersecurity incidents, and it is possible that new laws or regulations or interpretations may require us to incur significant costs, implement new processes or change our handling of information and business operations. Any failure or perceived failure to comply with laws, regulations and other requirements relating to the privacy, security and handling of information could result in legal claims or proceedings, regulatory investigations or enforcement actions. We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. If any of these events were to occur, our business, results of operations, and financial condition could be materially adversely affected.

Because the trading market for Harbor’s common stock is limited, the common stock may continue to be illiquid.

Harbor has not listed, and does not currently intend to list, its common stock for trading on any national securities exchange. Although Harbor’s common stock is traded under the symbol “HRBR” on the OTC Market, the trading volume for the common stock has historically been limited. Trading on the OTC Market has been further limited due to the fact that Harbor is not currently in compliance with its reporting obligations under Section 15(d) of the Exchange Act because it has not timely filed all required periodic reports with the SEC. As a result of these and other factors, we expect Harbor's common stock to continue to be highly illiquid for the foreseeable future.

Investors should be aware that an active trading market for the common stock may never develop or be sustained, and that the delay in filing certain required periodic reports with the SEC could have a prolonged negative impact on the trading volume of the common stock. The absence of an active trading market for the common stock could result in additional volatility with respect to, and a further decline in, the trading price of the common stock. Investors should also be aware that they may lose all or part of their investment.

The trading price of Harbor’s common stock has been and may continue to be volatile.

The trading price of Harbor’s common stock has been, and may continue to be, volatile. We believe Harbor’s stock price will be subject to wide fluctuations in response to a variety of factors, including the following:

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• failing to meet the conditions of the Transient Investment Company Exemption or being required to register as an investment company;

• actual or anticipated fluctuations in our financial condition, results of operations and liquidity position from period to period;

• actual or potential changes in economic conditions, recessionary concerns, interest rates, inflation and tariffs;

• completion of significant investments, acquisitions or other strategic transactions by us;

• threatened or actual litigation, regulatory inquiries or government investigations, including as a result of the restatement of our previously issued consolidated financial statements;

• purchases or sales of shares of Harbor’s common stock pursuant to Harbor’s publicly announced stock repurchase program, pursuant to one or more tender offers or otherwise;

• issuances of one or more cash dividends to Harbor's stockholders;

• the illiquidity of Harbor’s common stock;

• speculative trading practices of Harbor’s stockholders and other market participants;

• perceptions about securities that are traded on the OTC Market;

• Harbor’s ability to regain compliance with its reporting obligations under SEC rules and the related timing;

• the impact of the application of accounting guidance; and

• actual or potential changes in geopolitical conditions, including wars, outbreak of hostilities, terrorism, or government sanctions.

In recent years, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by companies across industries. These changes may occur without regard to the financial condition or operating performance of the affected companies. Accordingly, the price of Harbor’s common stock could fluctuate based upon factors that have little or nothing to do with Harbor, and these fluctuations could materially reduce the trading price and trading volume of Harbor’s common stock.

The concentration of ownership of Harbor’s common stock among a small number of stockholders could allow such stockholders to exert significant influence over our business plans and strategic objectives, control all matters submitted to Harbor’s stockholders for approval, or deter a liquidation or change in control transaction, any of which could negatively affect the trading price or trading volume of its common stock.

As of March 11, 2026 Harbor had 58,429,836 shares of common stock outstanding. As of the same date, Amun LLC (“Amun”) held 20,000,000 shares of Harbor’s common stock, representing approximately 34.2% of outstanding shares of Harbor's common stock, and Southshore Aircraft Holdings, LLC, through its affiliates (together, “Southshore”), held 16,500,000 shares of common stock, representing approximately 28.2% of the outstanding shares of Harbor's common stock. As a result, Amun and Southshore collectively control a majority of the voting power of Harbor’s outstanding common stock and, therefore, are able to exercise significant influence over the establishment and implementation of our business plans and strategic objectives, as well as to control all matters submitted to Harbor’s stockholders for approval. These stockholders may manage our business in ways with which certain investors may disagree and may be adverse to their interests. This concentration of ownership may also have the effect of delaying, deterring or preventing a liquidation or change in control transaction, depriving Harbor’s stockholders of an opportunity to receive a premium for their investment, or otherwise negatively affecting the trading price or trading volume of Harbor’s common stock.

Mr. Bartlett, one of Harbor’s directors, may be deemed to be the beneficial owner of the shares of Harbor’s common stock held by Amun due to his status as a member of the board of managers of Amun and his ownership of equity interests in Amun. In addition, Mr. Bartlett may be deemed to be the beneficial owner of the shares of Harbor's common stock held by Southshore due to his status as a member of the board of managers of Southshore and his ownership of equity interests in Southshore. Accordingly, Mr. Bartlett may be able to exercise influence over decisions involving the voting or disposition of shares of Harbor’s common stock. However, Mr. Bartlett does not control voting or investment decisions made by either Amun or Southshore.

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Harbor may suspend its obligation to comply with SEC filing requirements in future periods and thereby cease filing

reports and other information with the SEC, which could have the effect of reducing the trading volume and trading price of Harbor’s common stock.

In February 2012, Harbor’s predecessor, Harbor Biosciences, Inc., filed a Form 15 with the SEC to deregister its common stock pursuant to Section 12(g) of the Exchange Act. The filing of the Form 15 had the effect of suspending Harbor’s obligation, pursuant to Section 15(d) of the Exchange Act, to file reports and other information with the SEC. As a result, prior to the filing of our Annual Report on Form 10-K for the year ended December 31, 2019, the last periodic report filed by Harbor was the Annual Report on Form 10-K for the year ended December 31, 2011. As of January 1, 2020, Harbor no longer met the eligibility criteria under Rule 12h-3 of the Exchange Act to suspend its reporting obligations under Section 15(d) of the Exchange Act, requiring Harbor to resume filing reports and other information with the SEC pursuant to the Exchange Act.

We have incurred, and expects to continue to incur, significant direct and indirect costs, and diversion of management’s time and resources, as a result of the requirement to comply with certain reporting obligations under the Exchange Act, including those incurred in connection with the preparation and filing of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, the audit of the consolidated financial statements contained in its Annual Reports in accordance with SEC rules and Public Company Accounting Oversight Board (United States) standards, and compliance with certain provisions of the Sarbanes-Oxley Act of 2002 (“SOX”).

Harbor would again become eligible to suspend its public reporting obligations if it: (i) determines in accordance with applicable SEC rules it has fewer than 300 stockholders of record as of certain points in time, (ii) does not file registration statements pursuant to the Securities Act (which it does not currently intend to do), and (iii) meets certain other requirements under applicable SEC rules. If Harbor becomes eligible to suspend its public reporting obligations in future periods, it may elect to take the actions necessary to suspend those obligations, which would result in Harbor no longer being required to file SEC reports. If Harbor ceases filing reports and other information with the SEC, it would significantly reduce the amount of publicly available information about us and our business and operations, which could have the effect of reducing the trading volume and price of Harbor’s common stock.

Further, notwithstanding that Harbor is currently required to file certain reports and information with the SEC pursuant to Section 15(d) of the Exchange Act, Harbor does not have a class of securities registered pursuant to Section 12(b) or Section 12(g) of the Exchange Act. As a result, Harbor is not required to comply with, and does not intend to follow, certain disclosure requirements typically applicable to public reporting companies, including the requirement to file proxy statements, information statements, tender offer disclosures, and beneficial ownership filings. Accordingly, we expect there will continue to be significantly less information available about us, including our governance policies and ownership structure, than is available for many other public reporting companies, which could have the effect of further limiting the trading volume, and further reducing the trading price, of Harbor’s common stock.

We are not current with our reporting obligations under the Exchange Act, which could have adverse consequences for Harbor and its stockholders.

Harbor is not currently in compliance with its reporting obligations under Section 15(d) of the Exchange Act because it has not timely filed all required periodic reports with the SEC. While Harbor currently intends to file all required periodic reports with the SEC and regain compliance with its reporting obligations, there can be no assurance as to the timing of making these required filings. Harbor’s failure to timely file all required periodic reports with the SEC, or to regain compliance with its reporting obligations, could have a number of adverse consequences, any of which could harm our business and financial results, including:

• Our common stock may not be eligible for "regular way" trading on the OTC Markets or other trading venues, which would significantly limit the liquidity and trading activity in our stock;

• We may be unable to use short-form registration statements for securities offerings, which could increase the cost of, and delay, future capital-raising activities;

• Potential acquisition targets, business partners, or counterparties may be reluctant to enter into transactions with us due to concerns about our compliance with securities laws;

• We could be subject to SEC enforcement actions or civil litigation for failure to comply with our reporting obligations;

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• We may experience reputational harm that negatively impacts investor confidence in us; and

• We may be subject to delisting from any securities exchange or marketplace on which our common stock may be listed or quoted.

In addition, as discussed above, Harbor’s failure to timely file all required reports with the SEC has resulted in a significant reduction in the trading volume of Harbor’s common stock, which may have contributed to a decline in the trading price of the common stock.

Provisions in Harbor’s governing documents might delay or prevent a change of control of Harbor, which could adversely affect the value of Harbor’s common stock.

Harbor’s certificate of incorporation and bylaws contain provisions that, among other things:

• prohibit the transfer of any shares of Harbor’s capital stock that would result in: (i) any person or entity becoming a “Five-Percent Stockholder” (as defined under Treasury Regulation Section 1.382-T(g)) of Harbor’s then-outstanding capital stock, or (ii) an increase in the percentage ownership of any person or entity who is already a “Five-Percent Stockholder” of Harbor’s then-outstanding capital stock;

• authorize the board of directors, without stockholder approval, to authorize and issue preferred stock with powers, preferences and rights that may be senior to Harbor’s common stock, that could dilute the interest of, or impair the voting power of, holders of Harbor’s common stock and could also have the effect of discouraging, delaying or preventing a change of control;

• establish advance notice procedures that stockholders must comply with in order to nominate candidates to the board of directors and propose matters to be brought before an annual or special meeting of Harbor’s stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company;

• give the board of directors exclusive authority to set the number of directors and increase or decrease the number of directors by one or more resolutions, which may prevent stockholders from being able to fill vacancies on the board of directors;

• authorize a majority of the board of directors to appoint a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which may prevent stockholders from being able to fill vacancies on the board of directors; and

• restrict the ability of stockholders to call special meetings of stockholders.

These provisions may have the effect of delaying or preventing a change in control of the Company, creating a perception that a change in control cannot occur, or otherwise discouraging takeover attempts that some stockholders may consider beneficial, any of which could also adversely affect the trading price of Harbor’s common stock.

Harbor’s certificate of incorporation and bylaws limit certain transfers of Harbor’s stock in order to preserve Harbor’s ability to use net operating loss carryforwards, which could adversely affect the trading price of its common stock.

To reduce the risk of a potential adverse effect on Harbor’s ability to use net operating loss carryforwards for federal income tax purposes, Harbor’s certificate of incorporation and bylaws prohibit certain transfers of shares of Harbor’s capital stock that could result in adverse tax consequences by impairing Harbor’s ability to utilize net operating loss carryforwards. These transfer restrictions are subject to a number of rules and exceptions, and generally may only be repealed or amended by the affirmative vote of the holders of at least two-thirds of the outstanding shares of Harbor’s capital stock. These transfer restrictions apply to the beneficial owners of the shares of Harbor’s capital stock. The transfer restrictions contained in Harbor’s certificate of incorporation and bylaws may limit demand for Harbor’s common stock, which may adversely affect the trading price. In addition, this limitation may have the effect of delaying or preventing a change in control of the Company, creating a perception that a change in control cannot occur, or otherwise discouraging takeover attempts that some stockholders may consider beneficial.

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Harbor currently does not intend to pay dividends on its common stock and, consequently, the only opportunity to achieve a return on an investment in Harbor’s common stock may be the appreciation in value of Harbor’s common stock.

Harbor has not historically paid dividends on shares of its common stock and does not expect to pay dividends in the foreseeable future. Any future determination by Harbor to pay dividends will be at the discretion of Harbor’s board of directors and will depend on our business strategy, financial condition, liquidity position, capital requirements, restrictions in commercial agreements, business prospects and such other factors as Harbor’s board of directors deems relevant. Harbor is currently in the process of evaluating potential strategic alternatives, which could include the issuance of one or more cash dividends. However, no decision has been made regarding the pursuit of any particular strategic alternative, and we cannot predict when a decision will be made. Consequently, investors should consider that their only opportunity to achieve a positive return on their investment in Harbor’s common stock may be the appreciation in value of the common stock. However, as a result of numerous risks and uncertainties described in this Annual Report, the trading price may not appreciate and may decline significantly.

As a “smaller reporting company,” Harbor has availed itself of reduced disclosure requirements, which may make Harbor’s common stock less attractive to investors.

Harbor is a “smaller reporting company” under applicable SEC rules, and it will continue to be a “smaller reporting company” for so long as either: (i) the market value of Harbor’s common stock held by non-affiliates as of the end of its most recently completed second quarter is less than $250 million; or (ii) the market value of Harbor’s common stock held by non-affiliates is less than $700 million and the annual revenues of Harbor are less than $100 million during the most recently completed fiscal year. Because Amun and Southshore, both of which are affiliates of Harbor, collectively hold a significant percentage of the outstanding shares of Harbor's common stock, it would require a significant increase in the market value of the common stock for Harbor to no longer qualify as a “smaller reporting company.”

As a “smaller reporting company,” Harbor has relied on exemptions from certain disclosure requirements that are applicable to other public reporting companies. These exemptions include reduced financial disclosure and disclosure regarding executive compensation. Investors may find Harbor’s common stock less attractive because it relies on these exemptions, which could lead to a less active trading market for Harbor’s common stock and negatively impact the trading price. In addition, as previously discussed, Harbor does not have a class of securities registered pursuant to Section 12(b) or 12(g) of the Exchange Act, which further reduces its disclosure obligations.

Complying with public reporting requirements under the Exchange Act is expensive and diverts management’s attention from evaluating and executing our business strategies.

We are subject to the reporting requirements of Section 15(d) of the Exchange Act, which requires that we file annual, quarterly, and current reports with the SEC. In addition, pursuant to SOX, we are required to regularly assess the effectiveness of our disclosure controls and procedures and our internal control over financial reporting.

Compliance with these various reporting and compliance obligations is expensive and places significant demands on our management team. Additional resources and management oversight may be required to maintain and enhance our disclosure controls and procedures and internal control over financial reporting, which could have an adverse impact on our business and results of operations. However, after giving effect to the Aviation Disposition, we have a limited number of employees with expertise in financial and accounting matters, developing and maintaining a system of internal controls, and remediating material weaknesses or significant deficiencies in internal control over financial reporting, which increases the risk that our internal control over financial reporting may not be effective in future periods. In addition, the risks associated with being a public reporting company could make it more difficult for us to attract and retain qualified members of the board of directors and executive officers, increase the cost of their services, and increase the cost of premiums for director and officer liability insurance.

The restatement of our previously issued consolidated financial statements may continue to subject us to risks and uncertainties, including the increased possibility of litigation, regulatory inquiries, and loss of investor confidence.

We restated our audited consolidated financial statements as of and for the year ended December 31, 2022 and our interim unaudited consolidated financial statements for the first three quarters of the years ended December 31, 2022 and December 31, 2023. Our management dedicated significant time and resources to complete the restatement, and we incurred substantial costs for accounting and legal fees. The prior restatement may continue to subject us to risks and uncertainties, as well as additional costs. For example, several lawsuits were filed relating to facts arising in connection

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with the restatement, and we could become subject to additional litigation or regulatory inquiries in the future. In addition, the prior restatement may affect investor confidence in the accuracy and completeness of our financial statements, prevent us from completing acquisitions or entering into other strategic alternatives, restrict our access to the capital markets, or raise reputational risks for our business, any of which could harm our business and financial results.

We previously identified a material weakness in our internal control over financial reporting and there is a risk that our internal control over financial reporting may not be effective going forward.

As discussed in the 2023 Annual Report, our management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2023, due to a material weakness. Remediation of the material weakness will require further validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles, and we concluded that the identified material weakness had not been fully remediated as of December 31, 2024. We cannot provide assurance that the remediation efforts we are implementing will be sufficient to remediate the identified material weakness or to avoid potential future material weaknesses or significant deficiencies. Because of its inherent limitations, our system of internal control over financial reporting may not prevent or detect every material misstatement in our financial statements. For additional information, please refer to Part I, Item 4, Controls and Procedures , in this Annual Report.

Our conclusion that we did not maintain effective internal control over financial reporting as of December 31, 2023, as well as a determination in any future period that our internal control over financial reporting is not effective, could cause investors to lose confidence in the accuracy and completeness of our financial reports, result in sanctions by the SEC or other regulatory authorities, and cause the trading price or volume of Harbor's common stock to decline. Any failure to achieve or maintain effective internal control over financial reporting could inhibit our ability to accurately report our financial condition or operating results, which could prevent us from completing acquisitions or entering into other strategic alternatives, restrict our access to the capital markets, and increase the risk of regulatory actions or litigation. We also face risks associated with the cost of establishing and maintaining effective internal control over financial reporting. Ensuring we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis is a costly and time-consuming effort.

After giving effect to the Aviation Disposition, we have a small number of employees, executive officers and advisors who manage our day-to-day affairs, oversee our remaining assets and obligations, evaluate strategic alternatives and execute any transaction we may pursue. As a result, we have a limited number of employees with expertise in financial and accounting matters, and with developing and maintaining a system of internal controls and remediating material weaknesses or significant deficiencies in internal control over financial reporting. This dynamic creates additional risk that our internal control over financial reporting may not be effective in future periods.

Stock repurchases could increase the volatility or decrease the trading price of Harbor’s common stock, and we cannot guarantee that our stock repurchase program will enhance long-term stockholder value.

Harbor's board of directors has adopted a stock repurchase program pursuant to which Harbor may repurchase shares of its common stock from time to time. From the inception of the program through March 31, 2025, Harbor has purchased approximately 12.9 million shares of its common stock pursuant to the program. No shares have been purchased after that date. Although the board of directors has authorized the repurchase program, and Harbor has completed the purchase of shares of common stock, it does not obligate us to repurchase any additional dollar amount or number of shares, and the program may be modified, suspended or terminated at any time and for any reason. The additional number of shares to be repurchased, and the timing of any such repurchases, depends on a number of factors, including the trading price and volume of the common stock, our business strategy, financial performance, liquidity position and capital requirements, restrictions in commercial agreements, general market conditions, applicable legal requirements and other factors.

Repurchases of Harbor’s common stock could increase the volatility of the trading price and reduce the trading volume of the common stock, either of which could have a negative impact on the trading price. Similarly, the future announcement of the termination or suspension of the repurchase program, or our decision not to utilize the full authorized repurchase amount under the repurchase program, could result in a decrease in the trading price. Further, the trading volume of Harbor’s common stock has been limited due to the fact that Harbor is not currently in compliance with its reporting obligations under Section 15(d) of the Exchange Act, which has severely limited our ability to utilize the repurchase program and may result in further downward pressure on the trading price.

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There can be no assurance that any repurchases we do elect to make will enhance stockholder value because the market price of Harbor’s common stock may decline below the levels at which we repurchased shares. We cannot guarantee that the repurchase program will enhance long-term stockholder value.

Harbor continues to be at risk of future securities class actions or other litigation.

Securities class action litigation may be instituted against public reporting companies following a decline in the price of a company’s securities, or as a result of declines in the value of securities within the market generally. As a result of our requirement to comply with Exchange Act reporting obligations, a significant amount of information is publicly available regarding our historical business and operations, financial condition and results of operations, and consideration of strategic alternatives. The availability of this information increases the risk of threatened or actual litigation, or other disputes, with our stockholders, current or former employees, or other constituents. For example, several class action lawsuits were filed against us relating to facts arising in connection with the restatement of our previously issued consolidated financial statements, and similar claims could be filed in the future. While the existing lawsuits were generally resolved in our favor, they resulted in the payment of significant legal fees. Future lawsuits could be filed against us relating to the Aviation Disposition or our decision to pursue certain strategic alternatives. If future lawsuits are filed against us, it may result in us being required to pay damages or settlement fees, incur significant defense costs, and experiencing a diversion of management's attention, any of which could harm our business, financial condition and results of operations.

If securities or industry analysts do not publish reports about our business, or we do not issue press releases, an active trading market for Harbor’s common stock may not develop.

The extent of any trading market for Harbor’s common stock will depend, in part, on the content of any reports that securities or industry analysts publish about our business, as well as any press releases or other publications issued by us. Analyst coverage of the Company has been extremely limited, and we are not aware of any reputable analysts that cover us. In addition, we do not intend to regularly issue press releases in the future. Investors should not purchase Harbor’s common stock with the expectation that we will have analyst coverage or that we will publish press releases, and should be aware that the information available about our business may be significantly less than information about other public companies. In the absence of these reports or other publications, an active trading market for Harbor’s common stock may not develop or be sustained.

Moreover, as discussed above, Harbor is not current in filing certain reports with the SEC as required pursuant to Section 15(d) of the Exchange Act. Harbor’s failure to be timely in its SEC reporting obligations has had, and may continue to have, a material adverse impact on the trading volume and trading price of its common stock.

ITEM 7.          MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our audited consolidated financial statements, accompanying notes, and other financial information included in this Annual Report on Form 10-K for the year ended December 31, 2024 (this “Annual Report”). The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those expressed or implied by the forward-looking statements below. Factors that could cause or contribute to those differences in our actual results include, but are not limited to, those discussed below and elsewhere in this Annual Report, particularly in “Cautionary Note Regarding Forward-Looking Statements” and Part I, Item 1A.“Risk Factors,” in this Annual Report.

General

Harbor Diversified, Inc. (“Harbor”) is a non-operating holding company that is the parent of a consolidated group of subsidiaries, including AWAC Aviation, Inc. (“AWAC”), which, until January 9, 2026, was the sole member of Air Wisconsin Airlines LLC (“Air Wisconsin”), which had historically operated as an independent air carrier. Harbor is also the direct parent of three other subsidiaries: (1) Lotus Aviation Leasing, LLC (“Lotus”), which leased flight equipment to Air Wisconsin, (2) Air Wisconsin Funding LLC (“AWF”), which provided flight equipment financing to Air Wisconsin, and (3) Harbor Therapeutics, Inc. (“Therapeutics”), which is a non-operating entity with no material assets.

Following the Aviation Disposition (as defined below), neither Harbor nor any of its remaining subsidiaries has any material operating assets or active airline operations. Our remaining assets consist primarily of cash and cash equivalents, restricted cash and marketable securities.

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Because Harbor consolidated Air Wisconsin for financial statement purposes prior to the Aviation Disposition, for purposes of this Annual Report, disclosures relating to activities of Air Wisconsin also apply to Harbor, unless otherwise noted. Where reference is made only to Harbor Diversified, Inc. (such as when referring to the outstanding shares of common stock), it is referred to as “Harbor.” Where reference is made only to Air Wisconsin (such as where it is named specifically for its historical contractual obligations and operations), it is referred to as "Air Wisconsin." Where reference is intended to include Harbor and its consolidated subsidiaries, they are jointly referred to as the “Company,” “we,” “us,” or “our.”

Unless otherwise indicated, the discussion below reflects our historical financial condition and results of operations for the year ended December 31, 2024, during which Air Wisconsin conducted airline operations. Our business operations and financial condition following the Aviation Disposition are materially different from our historical operations and financial condition reflected in the periods presented, and historical results should not be viewed as indicative of future performance.

Restatement of Previously Issued Condensed Consolidated Financial Statements

We restated our audited consolidated financial statements as of and for the year ended December 31, 2022, as well as the interim unaudited condensed consolidated financial statements for the first three quarters of the years ended December 31, 2022 and December 31, 2023.

Please refer to the “ Explanatory Note ” in the 2023 Annual Report, and Note 2, Restatement of 2022 Consolidated Financial Statements , and Note 20, Restatement of Prior Quarterly 2023 and 2022 Condensed Consolidated Financial Statements (Unaudited) , to the audited consolidated financial statements included in the 2023 Annual Report, for additional information on the restatement of, and the related effects on, our consolidated financial statements.

The prior restatement required significant management attention and resulted in substantial accounting and legal costs. Although we have completed the restatement process, this historical financial information discussed below reflects the effects of those restatements, and investors should consider the impact of the restatement when evaluating the period-to-period comparisons.

Business Overview and Recent Developments

Aviation Disposition

As previously disclosed, on January 9, 2026, Harbor completed the last in a series of transactions pursuant to which it disposed of all of its aviation assets, including its membership interests in Air Wisconsin (the completion of all such transactions, collectively, the "Aviation Disposition"). The aggregate consideration received in connection with the Aviation Disposition was approximately $125.9 million, subject to certain customary purchase price adjustments and the impact of required tax obligations.

After giving effect to the Aviation Disposition, neither Harbor nor any of its remaining subsidiaries has any material operating assets or infrastructure to support an airline, provided that the Company did retain certain non-operating assets, which primarily relate to lease payments for a single aircraft, insurance claims, and state and federal tax refunds.

The Company currently does not have any material operating assets, is not engaged in any operating business, and does not have any source of revenue from operations.

Historical Regional Airline Services and Supplemental Operations

Prior to the Aviation Disposition, our primary business strategy consisted of providing regional airline services under capacity purchase agreements with major airlines and certain other supplemental operations including charter flights. As of December 31, 2024, Air Wisconsin owned a fleet of 63 CRJ-200 regional jets. all of which were manufactured by Bombardier, Inc. Following the Aviation Disposition, the Company has no material operating assets.

American Capacity Purchase Agreement

In August 2022, Air Wisconsin entered into a capacity purchase agreement (the "American capacity purchase agreement") with American Airlines, Inc. ("American"), pursuant to which Air Wisconsin agreed to provide regional airline services for American. Air Wisconsin commenced flying operations for American in March 2023. American became Air Wisconsin’s sole airline partner in early June 2023 when all of Air Wisconsin’s aircraft were removed from the

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capacity purchase agreement that Air Wisconsin had entered into with United Airlines, Inc. ("United") in February 2017 (the "United capacity purchase agreement"). As of December 31, 2024, Air Wisconsin had 45 aircraft in service for American. For the year ended December 31, 2024, substantially all of our operating revenues were derived from operations associated with the American capacity purchase agreement. For the year ended December 31, 2023, approximately 63.8% of our operating revenues were derived from operations associated with the American capacity purchase agreement.

Under the American capacity purchase agreement Air Wisconsin was entitled to receive certain payments based on the number of aircraft covered under the agreement, block hours, departures and certain performance metrics. Air Wisconsin was also eligible to receive bonus compensation, and was required to pay rebates, upon the achievement of, or failure to achieve, certain pre-established performance criteria.

Air Wisconsin was responsible for certain customary costs relating to the flight operation and maintenance of the covered aircraft along with other customary controllable expenses, including expenses associated with flight crews, line maintenance and overhead. American reimbursed Air Wisconsin for certain customary costs and expenses incurred in connection with Air Wisconsin’s flight operations, including fuel, landing and air traffic control, changes to livery and branding, aircraft and passenger liability insurance, property taxes and systems support. American had the right to schedule all aircraft covered by the agreement, including determining route selection and frequency, and the timing of scheduled arrivals and departures, in each case subject to certain scheduling parameters. American also had the right to determine and publish fares and to establish seat inventories, overbooking levels, and allocation of seats among fare categories. American provided all ground handling services, including gate and ticket counter services, baggage handling, cargo handling, aircraft loading/unloading services, passenger ticketing, and aircraft cabin cleaning. American had the right to all revenues resulting from the sale of passenger tickets associated with the covered aircraft and all other sources of revenue associated with the operation of the covered aircraft, including revenues relating to baggage charges, food and beverage sales and ticket change fees. The American capacity purchase agreement protected Air Wisconsin, to an extent, from many of the elements that typically cause volatility in airline financial performance, including fuel prices, variations in ticket prices, and fluctuations in the number of passengers.

On January 3, 2025, in accordance with the American capacity purchase agreement, American delivered to Air Wisconsin notice of termination of the agreement, effective April 3, 2025. On that date, all remaining Air Wisconsin aircraft covered by that agreement were withdrawn from service under the agreement.

For additional information, please refer to the section titled " American Capacity Purchase Agreement " in Part I, Item 1, “ Business,” and Part I, Item 1A, Risk Factors , in this Annual Report, and Note 1, Summary of Significant Accounting Policies — Contract Revenues , Note 2, Capacity Purchase Agreements with United and American , and Note 15, Subsequent Events , in the notes to the audited consolidated financial statements in this Annual Report.

United Capacity Purchase Agreement

Prior to early June 2023, Air Wisconsin provided regional airline services to United pursuant to the United capacity purchase agreement, which was entered into in February 2017 and which terminated in early June 2023. Approximately 36.0% of our operating revenues for the year ended December 31, 2023, was derived from operations associated with the United capacity purchase agreement. None of our operating revenues for the year ended December 31, 2024, were derived from operations associated with the United capacity purchase agreement. For additional information, please refer to Note 1, Summary of Significant Accounting Policies — Contract Revenues , and Note 3, Capacity Purchase Agreements with United and American, in the notes to the audited consolidated financial statements in this Annual Report.

Prior Dispute with United

Prior to its termination, a dispute arose under the United capacity purchase agreement which was resolved by arbitration and the issuance of a decision and award in February 2024 (the "United Arbitration Award"). The United Arbitration Award held, among other things, that Air Wisconsin was not entitled to the payments from United that were at issue in the arbitration and denied United’s claim that Air Wisconsin breached the agreement by terminating it and its claim that Air Wisconsin owed it damages for the alleged wrongful termination. As a result, neither party owed to the other party any amounts claimed in the arbitration.

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Federal and State Tax Refunds

We determined that, as a result of the United Arbitration Award, we would amend our 2021 and 2022 federal and state income tax returns to recover federal and state income taxes previously paid related to the disputed amounts. As a result, we recorded federal and state tax assets of approximately $7.4 million in the aggregate related to the amendment of our 2021 and 2022 federal and state income tax returns. As of December 31, 2024, we had yet to receive $7.4 million related to the 2022 and 2021 amended tax returns. The decrease in revenues and interest income also resulted in federal and state net operating losses as of December 31, 2022 and much of these losses remain as of December 31, 2024. While we established valuation allowances against our deferred tax assets beginning with the year ended December 31, 2022 and continuing through the year ended December 31, 2024, the federal and state net operating losses are available to reduce future taxable income. For additional information, please refer to Note 3, Income Taxes, in the notes to the audited consolidated financial statements in this Annual Report.

As of the date of this Annual Report, we continue to pursue collection of the anticipated federal and state income tax refunds described above. However, the timing and receipt of such funds remains subject to review by the applicable taxing authorities.

Alternative Business Strategies

On January 3, 2025, American gave notice to Air Wisconsin of the termination of the American capacity purchase agreement, effective April 3, 2025. Given the dynamics in the airline industry, including the decision by multiple major airlines to eliminate from their fleets single class 50-seat aircraft, such as those owned by Air Wisconsin, the Company realized that it was unlikely Air Wisconsin would be able to enter into a new capacity purchase agreement with a major airline to provide regional airline service. As a result, on January 10, 2025, Air Wisconsin announced a strategic realignment of its business strategies. As part of that contemplated realignment, Air Wisconsin began exploring various business opportunities, including (1) expanding its charter operations; (2) focusing on Essential Air Service Program (“EAS”) markets; and (3) transitioning its relationship with American to a codeshare and interline relationship. These efforts did not lead to sustainable operations or positive financial results.

In the second and third quarters of 2025, Air Wisconsin began exploring other strategic alternatives, including the sale of its business or of substantially all of its assets, either in one transaction or a series of multiple transactions. Management had discussions with several different parties and considered various proposals from interested parties, some of which were interested in acquiring Air Wisconsin’s DOT operating certificate and others of which were interested in acquiring some of Air Wisconsin’s aircraft. The primary factors Air Wisconsin considered in analyzing various proposals included anticipated deal consideration, legal structure, expected tax implications, regulatory timing and impacts, and certainty of closing. The strategic review process culminated in the Aviation Disposition.

Following the Aviation Disposition, we are evaluating potential strategic alternatives that may include investments in, or acquisitions of, one or more businesses, assets, technologies, joint ventures, or other strategic opportunities. Any such transactions could involve one or multiple investments or acquisitions, be in any number of industries or lines of business and involve the use of cash, equity securities, or a combination thereof. In addition, the Company may pursue other strategic alternatives, which could include, without limitation, the issuance of one or more cash dividends, share repurchases, tender offers, registration as an investment company, a liquidation of the Company, or other potential transactions. Until a strategic alternative is identified and completed, if at all, we expect our business to remain focused primarily on investment management, capital preservation, liquidity and the evaluation of potential opportunities.

Additionally, since our remaining assets are predominantly comprised of cash and cash equivalents, restricted cash and marketable securities, the Company could potentially be deemed an “investment company” pursuant to the Investment Company Act of 1940, as amended, and the rules promulgated thereunder (the “Investment Company Act”). Becoming an investment company would impose on the Company additional regulatory and disclosure requirements, compliance with which could be expensive and time-consuming. The Investment Company Act provides a number of exemptions, including a one-year safe harbor for companies that are seeking to acquire an operating business. The Company intends to avail itself of this exemption. If the Company is not able to meet the requirements of the exemption, it may be required to register as an investment company, seek the availability of a different exemption, or pursue an alternative strategy.

Dependence on Investment Income

Following the Aviation Disposition, our primary assets consist of cash and cash equivalents, restricted cash and marketable securities. Consistent with our investment policies, those assets are primarily invested in deposit accounts,

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money market funds, government-backed securities, and similar investments, with the primary objectives of maintaining liquidity and preserving principal. Since we are no longer engaged in any operating business, and do not have any source of revenue from operations, our primary source of earnings for the foreseeable future is expected to be investment income generated from those assets. Accordingly, our future results of operations and cash flows are expected to be materially influenced by factors such as prevailing interest rates, the credit quality of counterparties, the composition and maturity of our investment portfolio, and broader macroeconomic conditions. Further, our investment returns must be sufficient to offset our ongoing corporate expenses, including costs associated with maintaining our public company status, pursuing strategic alternatives, and compensating our management team. To the extent our operating expenses exceed investment income over an extended period, our assets would decline, reducing the capital available for strategic transactions or other strategic opportunities.

2024 Financial Highlights

The following financial highlights relate solely to our historical performance inclusive of our airline operations for the year ended December 31, 2024, and do not reflect our financial position following the Aviation Disposition on January 9, 2026.

For the year ended December 31, 2024, we had total operating revenues of $202.4 million, a 1.6% increase, compared to $199.2 million for the year ended December 31, 2023. Net loss for the year ended December 31, 2024 was $17.2 million, or net loss of $0.36 per basic and diluted share, compared to net loss of $16.0 million, or net loss of $0.39 per basic and diluted share, for the year ended December 31, 2023. For additional information, please refer to Note 11, Earnings per Share and Equity , in the notes to the audited consolidated financial statements in this Annual Report.

Revenue

Because our flights under our capacity purchase agreements provided distinct services that had the same pattern of transfer to the customer, which were satisfied over time with the measure of progress for each flight deemed to be substantially the same, the flight services provided under the American capacity purchase agreement and the United capacity purchase agreement represented a series of services that have been accounted for as a single performance obligation. Therefore, our contract revenues were recognized when service was provided, and our performance obligation was met on a per completed flight basis. The performance obligation of each completed flight was measured using departures.

The United capacity purchase agreement terminated in early June 2023 and contract revenues have not been recorded under that agreement since then. In March 2023, Air Wisconsin commenced flying operations for American under the American capacity purchase agreement, at which time Air Wisconsin began recording contract revenues under that agreement. Contract revenues could take the form of fixed or variable receipts as further described below. Amounts Air Wisconsin received for completing its performance obligation in a particular period have been recorded as contract revenues in that period and were generally variable in nature, such as revenues based on departures and block hours or the number of aircraft for which it received compensation on a daily basis. Other amounts received have been recognized in contract revenues in proportion to the number of flights actually completed in the period relative to the number of flights that were expected to be completed in subsequent periods during the remaining term of the agreement. The capacity purchase agreements also provided for the reimbursement to Air Wisconsin of certain direct operating expenses, such as certain insurance premiums and property taxes.

The number of aircraft we had in scheduled service and the number of block hours and departures we generated from our flights were the primary drivers of our contract revenues under both the United capacity purchase agreement and the American capacity purchase agreement. Primarily as a result of the pilot shortage, block hours decreased from 87,011 during the year ended December 31, 2023 to 74,742 during the year ended December 31, 2024, or by 14.1%, and departures decreased from 61,769 in 2023 to 54,001 in 2024, or by 12.6,%.

Although a decrease in block hours and departures during the year ended December 31, 2024, compared to the year ended December 31, 2023, resulted in a decrease in variable revenues for the year ended December 31, 2024, compared to the year ended December 31, 2023, the decrease was offset by increased revenues in the fourth quarter 2024 as a result of Amendment No 4 ("Amendment No. 4") to the American capacity purchase agreement. Amendment No. 4, executed in November 2024, increased fixed and incentive revenues available to Air Wisconsin, and shortened the period over which any remaining deferred revenues would be recognized due to the termination of the capacity purchase agreement in April 2025. As a result, overall contract revenues increased $3.6 million, or 1.8%, to $202.4 million for the year ended December 31, 2024 compared to $198.8 million for the year ended December 31, 2023. Total contract revenues for the

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year ended December 31, 2024 included $2.9 million of contract revenues that were previously deferred under the American capacity purchase agreement, compared to $13.6 million of contract revenues recognized during the year ended December 31, 2023 that were previously deferred under the United capacity purchase agreement. Air Wisconsin began flying operations for American in March 2023 and primarily all of our operating revenues since that time through the year ended December 31, 2024 were generated under the American capacity purchase agreement.

Under the American capacity purchase agreement, Air Wisconsin was also entitled to be reimbursed for certain startup costs ("non-refundable upfront fee revenue"), such as livery changes to the aircraft, to prepare the aircraft for American flight services. Through December 31, 2024, Air Wisconsin incurred $4.0 million in reimbursable startup costs. In accordance with accounting principles generally accepted in the United States of America ("GAAP"), the Company recognized contract revenues related to the total estimated non-refundable upfront fee revenue of $4.0 million on a proportional basis taking into account the number of flights actually completed in the period relative to the number of flights that were expected to be completed in subsequent periods during the remaining term of the agreement. Accordingly, during the year ended December 31, 2024 Air Wisconsin recognized $2.7 million of non-refundable upfront fee revenues with $0.8 million deferred as of December 31, 2024. Air Wisconsin’s deferred revenues related to the non-refundable upfront fee revenues under the American capacity purchase agreement were adjusted over the remaining term of the agreement and were recognized as part of future contract revenues relative to future flights completed or estimated to be completed over the remaining term of the agreement.

Additionally, Air Wisconsin received certain support fees and increased rates and was reimbursed for heavy maintenance expenses based on the fixed daily amount for each aircraft covered under the agreement. In accordance with GAAP, the Company recognized revenue related to the monthly support fee, heavy maintenance revenue, and a pilot compensation assistance payment (collectively, the "maintenance and support payments") on a proportional basis taking into account the number of flights actually completed in the period relative to the number of flights expected to be completed in subsequent periods during the remaining term of the agreement. The recognition of both the non-refundable upfront fees and the maintenance and support payments were modified due to changes in contractual terms under Amendment No. 4.

During the fourth quarter 2024, Air Wisconsin began to provide on-demand charter service within the contiguous United States. Under this service, Air Wisconsin negotiated a fare for the charter operations with the customer. The performance obligation was met and revenue was recognized upon completion of the flight. For the year ended December 31, 2024, charter revenues were $2,187 and represented 1.1% of the Company's contract revenues.

As of December 31, 2024, the Company had Contract liabilities, net of $4.2 million and Long-term contract liabilities, net of $0 on its consolidated balance sheet. As of December 31, 2023, the Company had a Contract liabilities, net of $0.1 million and Long-term contract liabilities, net of $3.0 million on its consolidated balance sheet.

Other revenue is immaterial and primarily consists of aircraft rental revenue and the sales of parts to other airlines. These parts are sold at fair market value.

For additional information, please refer to the section titled "Critical Accounting Policies and Estimates — Revenue Recognition," in Note 1, Summary of Significant Accounting Policies — Contract Revenues , and Note 2, Capacity Purchase Agreements with United and American in the notes to the audited consolidated financial statements in this Annual Report.

Operating Expenses

Our total operating expenses decreased $9.5 million, or 4.0%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease in operating expenses was primarily related to decreases in expenses associated with legal fees of $7.1 million, or 82.9%, due to the cessation of the United arbitration, and aircraft maintenance, materials, and repairs of $2.3 million, or 3.8%, and insurance expense of $0.7 million, or 28.1%, as a result of decreased flying in the year ended December 31, 2024 when compared to the year ended December 31, 2023. These decreases were partially offset by increases in depreciation expense of $0.5 million, or 2.1%, and rent expense $0.5 million, or 7.9%, primarily related to simulator rent. For additional information, please refer to the section titled “– Results of Operations—Operating Expenses ” in this Annual Report.

Economic Conditions, Challenges and Risks Impacting Financial Results

Although our capacity purchase agreements tended to have the effect of reducing Air Wisconsin’s exposure to certain risks and uncertainties, its operating and business performance during the years ended December 31, 2024 and

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December 31, 2023 were driven by various factors that typically affect regional airlines and the markets in which they operate, including factors that affect the broader airline and travel industries. The following key factors have materially affected operating performance and financial results. Following the Aviation Disposition on January 9, 2026, these factors are no longer directly relevant to our business.

Pilot Shortage. An industry-wide pilot shortage has existed for many years, which is the result of a number of factors, including personnel seeking opportunities with larger airlines where compensation may be substantially higher, the number of pilots at major airlines reaching retirement age, upward pressure on wages and bonuses at regional and other carriers and within other industries, and the proliferation of cargo and low-cost carriers that have increased demand for pilots. As a result, Air Wisconsin, like most of its peers, during the years ended December 31, 2024 and December 31, 2023, was not able to hire and retain a sufficient number of pilots to crew all of its aircraft. This limited the number of flights it was able to fly under the United capacity purchase agreement and the American capacity purchase agreement. Following the Aviation Disposition, we no longer incur airline personnel costs.

Industry Volatility . The airline industry has historically been volatile and affected by numerous factors, such as tourist activity, consumer confidence, discretionary spending, fare initiatives, fuel prices, labor costs, labor actions, global pandemics, outbreak of war or hostilities, changes in governmental regulations, government sanctions, natural disasters, and changes in weather patterns. Historically, Air Wisconsin's capacity purchase agreements sheltered it from some of these factors; however, because we no longer operate an airline, we are no longer directly exposed to these industry-specific risks.

Competition . Air Wisconsin historically operated as a regional airline and faced competition from larger carriers with greater financial and operational resources, which contributed to the difficulties Air Wisconsin faced in seeking to enter into these markets. Following the Aviation Disposition, these competitive dynamics are no longer relevant to us.

Maintenance Contracts, Costs and Timing . Historically, Air Wisconsin's results were affected by aircraft maintenance costs and the timing of major maintenance activities, which were subject to variables such as aircraft utilization, regulatory requirements, and unscheduled maintenance events. Air Wisconsin’s employees performed routine airframe and engine maintenance along with periodic inspections of equipment at its maintenance facilities. Air Wisconsin also used third-party vendors for certain heavy airframe and engine maintenance work, along with parts procurement and component overhaul services for Air Wisconsin’s aircraft. Since the maintenance program remained with Air Wisconsin, we no longer incur aircraft maintenance expenses following the Aviation Disposition.

Unionized Labor . The airline industry is heavily unionized, and the wages, benefits and work rules of unionized airline industry employees are determined by collective bargaining agreements. As of December 31, 2024, Air Wisconsin had approximately 944 employees, of which 666 were represented by unions. Because the unionized workforce and related labor agreements remained with Air Wisconsin following the Aviation Disposition, labor relations and collective bargaining agreements are no longer relevant to the Company.

Please refer to Part I, Item 1A, Risk Factors, in this Annual Report for a discussion of the significant risks and uncertainties affecting our business and results of operations, and the trading price of Harbor's common stock.

Components of Our Results of Operations

The following discussion summarizes the key components of our consolidated statements of operations and reflects Air Wisconsin's airline operations prior the Aviation Disposition. Following the Aviation Disposition, the airline-specific operating components are no longer directly relevant.

Operating Revenues

Our consolidated operating revenues consisted primarily of contract revenues from flight services for the year ended December 31, 2024.

Contract Revenues . Contract revenues during the twelve months ended December 31, 2024, and December 31, 2023, consisted of fixed monthly amounts per aircraft pursuant to both the American and United capacity purchase agreements, along with the additional amounts received based on the number of departures and block hours flown. Each of these agreements provided for provisional cash payments each month based on a projected level of flying each month. Commencing in September 2023, the American capacity purchase agreement further provided for performance bonuses and rebates. Air Wisconsin subsequently reconciled these payments to the actual completed flight activity on a monthly basis. Flying operations with United ceased in early June 2023 and all amounts were subsequently reconciled. Flight

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operations began for American in March 2023 and ceased in April 2025, and all payments were subsequently reconciled to the actual completed flight activity.

Contract Services and Other . Contract services and other revenue are not material and primarily consist of aircraft rental revenue and the sale of parts.

Operating Expenses

Our consolidated operating expenses consisted of the following items:

Payroll and Related Costs . Payroll and related costs primarily relate to wages, benefits and payroll taxes for all of Air Wisconsin’s employees, as well as costs related to lodging of our flight crews and crew training expenses.

Aircraft Fuel and Oil . Substantially all aircraft fuel and related fueling costs for flying under both the American and United capacity purchase agreements were directly paid and supplied by American or United, as applicable, and we did not record any revenue or expense for such fuel. Under the American capacity purchase agreement, we were reimbursed for certain startup expenses, including fuel, to prepare our aircraft for American flight services. We were responsible for the cost of aircraft oil under the capacity purchase agreements, although that expense was not material.

Aircraft Maintenance, Materials and Repairs . Aircraft maintenance, materials and repairs include costs related to airframe and rotable overhauls, normal recurring maintenance and the cost of aircraft materials and parts related to Air Wisconsin’s CRJ-200 regional jets and the cost of engine maintenance by Lotus. With the exception of engine overhauls by Air Wisconsin, we recorded these costs using the direct expense method of accounting, pursuant to which component repair work was expensed when parts were shipped for repair, while airframe and engine overhauls were expensed when the maintenance work was completed. As a result of using the direct expense method, the timing of maintenance expense reflected in the financial statements may vary from period to period. We capitalized Air Wisconsin’s engine overhaul costs, and the amortization expense is included in aircraft maintenance, materials and repairs using the deferral method of accounting; Air Wisconsin’s engine overhaul costs were amortized over the estimated useful life of the overhaul measured in engine cycles remaining until the next scheduled shop visit.

Other Rents . Other rents include expenses related to leased engines, costs related to leased flight simulators used to train Air Wisconsin’s pilots, and building rents such as crew and maintenance bases and corporate office space.

Depreciation, Amortization and Obsolescence . Depreciation expense is a periodic non-cash charge primarily related to aircraft, engine and rotable parts depreciation. Amortization expense is a periodic non-cash charge primarily related to capitalized engine overhauls. Obsolescence expense is a periodic non-cash charge primarily related to the provision for obsolescence of our expendable aircraft parts.

Purchased Services and Other . Purchased services and other expense primarily includes information technology system costs, legal fees, professional and technical fees, gains and losses on disposals of fixed assets, insurance premiums, property taxes and other administrative expenses. The majority of insurance premiums and property taxes were pass-through costs to United and American prior to the termination of the respective capacity purchase agreements.

Other (Expense) Income, Net

Interest and Dividend Income . Interest and dividend income primarily includes interest and dividends earned on our cash and cash equivalents and our investments in marketable securities.

Interest Expense . Interest expense in the year ended December 31, 2024 was immaterial.

Gain (Loss) on Marketable Securities and Long-term Restricted Investments . The gain or loss reflects the change in the market value of our Marketable securities and Long-term restricted investments and any gains or losses associated with their sales for the year ended December 31, 2024. For the year ended December 31, 2024, the Company recorded a gain on its Marketable securities of $1.0 million and a gain of $0.6 million on its Long-term restricted investments that are contained within the Supplemental Executive Savings Plan. The combined gain of $1.6 million is recorded as Gain on marketable securities and long-term restricted investments in the consolidated statements of operations. For the year ended December 31, 2023, the Company recorded a gain on its Marketable securities and Long-term restricted investments of $5.9 million, of which $2.2 million related to the Company's Long-term restricted investments. For additional information, please refer to Note 8, Retirement and Other Benefit Plans , in the notes to the audited consolidated financial statements in this Annual Report.

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Gain on Extinguishment of Debt. In 2018, Air Wisconsin entered into a debt restructuring agreement with a lender which was classified as a troubled debt restructuring. As such, the future undiscounted interest payments were capitalized as part of the carrying value of the debt. The prepayment of a portion of this debt during the year ended December 31, 2023, resulted in the abatement of the future interest amounts that were previously capitalized as part of the 2018 debt restructuring and were recognized as a gain on extinguishment of debt. Similarly, a repayment of the debt at a discount during the year ended December 31, 2023 was also recognized as gain on extinguishment of debt to the extent of the discount realized. As a result of the debt repayments, as of December 31, 2023 and December 31, 2024, Air Wisconsin no longer had any debt outstanding or debt service obligations. For additional information, please refer to Note 4, Debt , in the notes to the audited consolidated financial statements in this Annual Report.

Other, Net . Other expenses include income (expense) derived from activities not classified in any other area of the consolidated statements of operations.

Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker ("CODM"), who for the year ended December 31, 2024, was the President and Chief Executive Officer of Air Wisconsin, in deciding how to allocate resources and in assessing operating performance. Under Accounting Standards Codification Topic 280, Segment Reporting , for the year ended December 31, 2024, the Company has one reportable segment that is managed on a consolidated basis providing scheduled flight services for American under the American capacity purchase agreement and on-demand charter service within the contiguous United States and Canada.

Our CODM evaluated the Company's financial information and resources on a consolidated net loss basis. Significant expenses that are regularly provided to the CODM for the Company's one reportable segment are presented on the consolidated statements of operations and are included within the reported measure of consolidated Net loss. Additionally, the measure of segment assets is reported on the consolidated balance sheets as Total assets.

Results of Operations

The following discussion reflects Air Wisconsin's airline operations prior to the Aviation Disposition. Our business operations and financial condition following the Aviation Disposition are materially different from our historical business operations and financial condition, and historical results should not be viewed as indicative of future performance.

Comparison of the Years Ended December 31, 2024 and December 31, 2023

We had an operating loss of $24.2 million for the year ended December 31, 2024, compared to an operating loss of $36.9 million for the year ended December 31, 2023. For the year ended December 31, 2024, we had a net loss of $17.2 million compared to a net loss of $16.0 million for the year ended December 31, 2023.

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The following table sets forth our major operational statistics and the associated percentage changes for the periods presented:

Year Ended

December 31,

Change

Operating Data:

Available Seat Miles (“ASMs”) (in thousands)

Actual Block Hours

Actual Departures

Revenue Passenger Miles (“RPMs”) (in thousands)

Average Stage Length (in miles)

Contract Revenue Per Available Seat Mile (in cents)

Passengers

The decrease in ASMs, block hours, departures, passengers and RPMs during the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to the industry-wide pilot shortage which resulted in a significantly lower number of flights and the transition from flying for United to flying for American. During the transition period aircraft were removed from flight services for United and prepared for service for American. During this time, the transitioned aircraft did not generate revenue (other than with respect to the reimbursement of certain costs which were then recognized over the term of the American capacity purchase agreement on a proportional basis taking into account the number of flights actually completed relative to the number of flights expected to be completed in subsequent periods during the remaining term of the agreement) and thus contributed to lower ASMs, block hours, departures, RPMs and passengers. The increase in contract revenue per available seat mile during the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily attributable to increased rates in the American capacity purchase agreement, when compared to the United capacity purchase agreement, along with a shorter average stage length.

Operating Revenues

The following table sets forth our operating revenues and the associated dollar and percentage changes for the periods presented:

Year Ended

December 31,

Change

Operating Revenues ($ in thousands):

Contract Revenues

Contract Services and Other

Total Operating Revenues

Although a decrease in block hours and departures during the year ended December 31, 2024, compared to the year ended December 31, 2023, resulted in a decrease in variable revenues for the year ended December 31, 2024, compared to the year ended December 31, 2023, Amendment No 4 ("Amendment No. 4") to the American capacity purchase agreement, executed in November 2024, resulted in additional fourth quarter 2024 revenues. Amendment No. 4 increased fixed and incentive revenues available to Air Wisconsin, and shortened the period over which any remaining deferred revenues would be recognized due to the termination of the capacity purchase agreement in April 2025. As a result, overall contract revenues increased $3.6 million, or 1.8%, to $202.4 million for the year ended December 31, 2024 compared to $198.8 million for the year ended December 31, 2023. Overall, total operating revenues increased $3.2 million, or 1.6%, during the year ended December 31, 2024, compared to the year ended December 31, 2023. For additional information, please refer to

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Note 1, Summary of Significant Accounting Policies , in the notes to the audited consolidated financial statements in this Annual Report.

Operating Expenses

The following table sets forth our operating expenses and the associated dollar and percentage changes for the periods presented:

Year Ended

December 31,

Change

Operating Expenses ($ in thousands):

Payroll and Related Costs

Aircraft Fuel and Oil

Aircraft Maintenance, Materials and Repairs

Other Rents

Depreciation, Amortization and Obsolescence

Purchased Services and Other

Total Operating Expenses

Our total operating expenses consist of the following items:

Payroll and Related Costs . Payroll and related costs increased $0.4 million, or 0.3%, to $122.1 million for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase was primarily driven by increases in pilot wages due to pay rate increases of $4.0 million, offset by reduced pilot bonuses of $2.8 million, maintenance employee wages of $1.6 million, and payroll benefits of $0.7 million. These increases were offset by decreases to management wages of $0.9 million inclusive of a non-cash adjustment of $0.6 million related to the supplemental executive savings plan, flight attendant wages of $0.4 million, per diem of $0.4 million and a net decrease in other personnel expenses of $1.1 million.

Aircraft Fuel and Oil . Substantially all of the fuel costs incurred as a result of flying pursuant to the American capacity purchase agreement during the year ended December 31, 2024 and the American and United capacity purchase agreements during the year ended December 31, 2023 were directly paid to suppliers by American and United. During the year ended December 31, 2024, Air Wisconsin had a decrease of $0.2 million, or 34.2%, in fuel costs related to maintenance flights and preparing its aircraft for flight services pursuant to the American capacity purchase agreement primarily as a result of lower departures and block hours. We were responsible for the cost of aircraft oil under both the United capacity purchase agreement and the American capacity purchase agreement, although this expense was not material.

Aircraft Maintenance, Materials and Repairs . Aircraft maintenance, materials and repairs costs decreased $2.3 million, or 3.8%, to $58.5 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily as a result of reduced flying levels during the year ended December 31, 2024 when compared to year ended December 31, 2023. The decrease was primarily driven by decreases in airframe repairs of $5.5 million, net scraps of $0.2 million, and overhaul amortization of $0.7 million due to lower departures. These decreases were partially offset by an increase in materials used of $2.9 million, engine repairs of $0.6 million, shop supplies and tools of $0.2 million, freight expenses of $0.2 million, and a decrease in rebates of $0.2 million.

Other Rents . Other rents expense increased $0.5 million, or 7.9%, to $6.7 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily as a result of increases in flight simulator rent of $0.4 million.

Depreciation, Amortization and Obsolescence . Depreciation, amortization and obsolescence expense increased $0.5 million, or 2.1%, to $26.1 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.

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This was primarily due to $0.3 million increase in rotable depreciation expense for the year ended December 31, 2024 when compared to the year ended December 31, 2023.

Purchased Services and Other . Purchased services and other expense decreased $8.4 million, or 39.5%, to $12.9 million for the year ended December 31, 2024, compared to the year ended December 31, 2023. The decrease was primarily due to a decrease in legal expenses of $7.1 million related to the United arbitration, along with decreases in insurance expense of $0.7 million, landing fees of $0.3 million, uncollectible accounts of $0.2 million, and advertising expense of $0.1 million.

Other (Expense) Income

Interest and Dividend Income . Interest and dividend income decreased $1.2 million for the year ended December 31, 2024, compared to the year ended December 31, 2023. The decrease was primarily due to a decrease in investment income earned on marketable securities and other investments of $1.4 million primarily as a result of decreasing interest rates, which was partially offset by an increase of $0.2 million for aircraft sales-lease interest.

Interest Expense . Interest expense was immaterial and remained relatively unchanged for the year ended December 31, 2024, compared to the year ended December 31, 2023.

Gain on Marketable Securities and Long-term Restricted Investments . Gain on marketable securities and long-term restricted investments decreased $4.3 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily as a result of a decrease in the market value of our marketable securities and a non-cash gain adjustment in the amount of $0.5 million related to Long-term restricted investments within the SESP. The value of the Marketable securities decreased primarily as a result of decreasing interest rates during the year ended December 31, 2024.

Gain on Extinguishment of Debt . Gain on extinguishment of debt decreased $6.2 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily as a result of the prepayment of Air Wisconsin's outstanding debt obligations during the year ended December 31, 2023. For additional information, please refer to Note 4, Debt , in notes to the audited consolidated financial statements in this Annual Report.

Other, Net . Other income and expense was immaterial and relatively unchanged for the year ended December 31, 2024, compared to the year ended December 31, 2023.

Net Loss

Net loss for the year ended December 31, 2024 was $17.2 million, or $0.36 per basic and diluted share, compared to net loss of $16.0 million, or $0.39 per basic share and diluted share, for the year ended December 31, 2023. For additional information, please refer to Note 11, Earnings Per Share and Equity , in the notes to the audited consolidated financial statements in this Annual Report.

The net loss for the year ended December 31, 2024, was similar when compared to the net loss for the year ended December 31, 2023. Slightly higher revenues and lower operating expenses for the year ended December 31, 2024 when compared to the year ended December 31, 2023 resulted in an improved operating loss of $12.7 million. However, this was offset by $13.9 million due to lower gains on Marketable securities and Long-term restricted investments, no further gains on the extinguishment of debt, and a lower tax benefit as a result of increases to valuation allowances on deferred tax assets.

Income Taxes

In the year ended December 31, 2024, our effective tax rate was 6.4%, compared to 17.4% in the year ended December 31, 2023. Our tax rate can vary depending on changes in tax laws, adoption of accounting standards, the amount of income we earn in each state and t he state tax rate applicable to such income, as well as any valuation allowance required on our deferred tax assets. The primary driver of the effective tax rate difference between 2024 and 2023 was the higher rate at which the valuation allowances increased in 2024 compared to 2023 on deferred tax assets that are ordinary in nature.

We recorded an income tax benefit of $1.2 million and $3.4 million for the years ended December 31, 2024 and December 31, 2023, respectively.

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The income tax benefit for the year ended December 31, 2024 resulted in an effective tax rate of 6.4%, which differed from the U.S. federal statutory rate of 21.0%, primarily due to the impact of state income taxes, permanent differences between financial statement and taxable income, and an increase in the valuation allowances recorded against federal and state deferred tax assets that were ordinary in nature, partially offset by a decrease in valuation allowances recorded against deferred tax assets that are capital in nature. In addition to the state effective tax rate impact, other state impacts include changes in state apportionment and statutory rates.

The income tax provision for the year ended December 31, 2023 resulted in an effective tax rate of 17.4%, which differed from the U.S. federal statutory rate of 21.0% primarily due to the impact of state income taxes, permanent differences between financial statement and taxable income, and valuation allowances recorded against federal and state deferred tax assets that were ordinary in nature, partially offset by a decrease in valuation allowances recorded against deferred tax assets that were capital in nature. In addition to the state effective tax rate impact, other state impacts included changes in state apportionment and statutory rates.

As of December 31, 2024, and December 31, 2023 we had federal net operating loss carryforwards of approximately $25.5 million and $31.6 million, respectively, and state net operating loss carryforwards of approximately $26.0 million and $28.7 million, respectively. The state net operating losses expire beginning in 2032, with some states having either longer expiration periods or none at all.

With the exception of two states requiring the processing of the amended federal return before the filing of the state amended return, the Company has filed amended 2021 and 2022 federal and state income tax returns as a result of the United Arbitration Award and the restatement of the previously issued consolidated financial statements for the year ended December 31, 2022, as well as the interim unaudited condensed consolidated financial statements for the first three quarters of the years ended December 31, 2022 and December 31, 2023. The 2021 amended income tax returns are expected to result in federal and state tax refunds of approximately $0.3 million and $0.1 million, respectively. The 2022 amended income tax returns are expected to result in federal and state tax refunds of approximately $6.5 million and $0.6 million, respectively. The anticipated 2021 federal tax refund is recorded in Receivables, net, while the 2022 federal tax refund is reflected in Other assets in the long-term section in the consolidated balance sheets for the year ended December 31, 2024. Meanwhile, the remaining anticipated state tax refunds are divided between Receivables, net and Other (long-term assets) in the amounts of $0.3 million and $0.3 million, respectively, in the consolidated balance sheets. The classification of these amounts is dependent on when the Company expects to receive the anticipated tax refund amounts. The filing of the 2022 federal amended tax return also resulted in a net operating loss carryforward to 2023 of approximately $14.9 million, and various state net operating loss carryforwards to 2023 totaling approximately $14.2 million.

For additional information, please refer to Note 3, Income Taxes, in the notes to the audited consolidated financial statements in this Annual Report.

Liquidity and Capital Resources

Historical Operational Performance

During the year ended December 31, 2024, our liquidity was primarily driven by Air Wisconsin's airline operations. Air Wisconsin’s departures and block hours in the year ended December 31, 2024 and the year ended December 31, 2023 were below pre-COVID-19 levels, generally due to the industry-wide pilot shortage. For the year ended December 31, 2023, departures and block hours were also negatively affected by the transition in flying from United to American. Our operational performance near the end of 2024 was also impacted by Amendment No. 4 to the American capacity purchase agreement which provided for fewer block hours than our crew capabilities. In January 2025, American provided notice to Air Wisconsin of its intent to terminate the American capacity purchase agreement effective April 2025. On January 9, 2026, we consummated the Aviation Disposition. As a result, we no longer conduct airline operations and our future liquidity is materially different from the historical operating periods discussed below.

Historical Sources and Uses of Liquidity

Historically, our principal sources of liquidity were our cash and cash equivalents balance, our marketable securities balances, and Air Wisconsin’s cash flows from operations. As of December 31, 2024, our cash and cash equivalents balance was $15.0 million and we held $97.0 million of Marketable securities. This compares to cash and cash equivalents of $20.8 million and Marketable securities of $92.7 million as of December 31, 2023. For the year ended December 31,

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2024, cash provided by operations was $13.3 million, and for the year ended December 31, 2023, cash used in operations was $12.0 million.

In December 2023, Air Wisconsin prepaid all of the outstanding principal balance and accrued interest on its third-party secured debt with a payment of $46.4 million. This reflected a 5.5% discount to the outstanding principal balance of that debt and resulted in the abatement of the future undiscounted interest payments that, as a result of a prior restructuring, had been capitalized as part of the $52.1 million carrying value of the debt. As a result, since December 31, 2023 Air Wisconsin has not had any debt service requirements.

We received aggregate gross consideration of approximately $125.9 million as a result of the Aviation Disposition, , subject to certain customary purchase price adjustments and the impact of required tax obligations. As a result, our primary sources of liquidity now consist of cash, cash equivalents, and marketable securities, and we no longer generate operating cash flows from airline activities.

Restricted Cash

As of December 31, 2024, in addition to cash and cash equivalents and marketable securities, the Company had $0.7 million in restricted cash, which related to a credit facility used for the issuance of cash collateralized letters of credit supporting Air Wisconsin's obligations under certain lease agreements, airport agreements and insurance policies, as well as cash held for the repurchase of shares under Harbor’s stock repurchase program. Restricted cash includes amounts escrowed in an interest-bearing account that secures the credit facility. The obligations supported by these letters of credit remained with Air Wisconsin following the Aviation Disposition.

Operating Expenses and Capital Expenditures

Historically, Air Wisconsin required cash to fund its operating expenses and working capital requirements, which included outlays for capital expenditures, labor, and maintenance costs. During the ordinary course of business, we would evaluate our cash requirements and, if necessary, adjust operating and capital expenditures to reflect changes in labor costs, projected demand for our flying services, required maintenance events and current market conditions. Our capital expenditures were typically used to acquire or maintain aircraft and flight equipment for Air Wisconsin. During the year ended December 31, 2024, we incurred $2.9 million in capital expenditures primarily related to purchases of rotable parts. Because the airline operations and related maintenance programs remained with Air Wisconsin after the Aviation Disposition, we do not anticipate incurring any airline-operating related costs going forward.

Ongoing Liquidity Considerations

After giving effect to the Aviation Disposition, our primary sources of liquidity now consist of our cash, cash equivalents and marketable securities balances (collectively, the “Liquid Assets”). Since we are no longer engaged in any operating business, and do not have any source of revenue from operations, our primary source of earnings for the foreseeable future is expected to be investment income generated from the Liquid Assets. Our investment returns must be sufficient to offset our ongoing corporate expenses, including costs associated with maintaining our public company status, pursuing strategic alternatives, and compensating our management team. We believe the Liquid Assets are sufficient to meet our liquidity requirements for at least the next 12 months from the date of this filing.

Our stockholders should be aware that, following the Aviation Disposition, we are not engaged in an operating business and our ability to create stockholder value will depend to a large extent on our ability to generate investment income and our execution of strategic alternatives.

For additional information, please refer to Part I, Item 1A, Risk Factors, in this Annual Report.

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Cash Flows

The following table presents information regarding our cash flows for each of the periods presented ($ in thousands):

Year Ended

December 31,

Change

Net cash provided by (used in) operating activities

Net cash (used in) provided by investing activities

Net cash used in financing activities

Net Cash (Used in) Provided by Operating Activities

During the year ended December 31, 2024, net cash provided by operating activities was $13.3 million. We had a net loss during the period of $17.2 million. Net cash flows were further adjusted for increases in cash primarily related to depreciation, amortization and obsolescence of $29.6 million, accounts payable of $2.5 million, contract liabilities of $1.1 million, accrued payroll and employee benefits of $0.9 million, and prepaid expenses and other of $0.6 million, which were offset by decreases for accounts receivable of $1.8 million, deferred income taxes of $1.4 million, gain on Marketable securities and Long-term restricted investments of $1.0 million, gain on the disposition of property of $0.6 million, spare parts and supplies of $0.6 million, sale-lease receivable of $0.4 million.

During the year ended December 31, 2023, net cash used in operating activities was $12.0 million. We had a net loss during the period of $16.0 million. Net cash flows were further adjusted for increases in cash primarily related to depreciation, amortization and obsolescence of $29.7 million, accounts receivable of $5.6 million, contract liabilities of $1.1 million, and prepaid expenses and other of $1.8 million, which were offset by decreases for deferred revenue of $11.6 million, accounts payable of $7.8 million, gain on extinguishment of debt of $6.2 million, gain on marketable securities of $3.7 million, deferred income taxes of $3.3 million, accrued payroll and employee benefits of $1.5 million, gain on disposition of property of $0.5 million, and sales lease receivable of $0.2 million.

Net Cash (Used in) Provided by Investing Activities

During the year ended December 31, 2024, net cash used in investing activities was $5.3 million, of which approximately $6.0 million was from sales of marketable securities and $0.8 million was from the disposition of property and equipment, offset by $9.2 million for purchases of marketable securities and $2.9 million for additions to property and equipment.

During the year ended December 31, 2023, net cash provided by investing activities was $60.2 million, of which approximately $99.9 million was from sales of marketable securities, offset by $35.1 million for purchases of marketable securities and $4.5 million for Additions to property and equipment.

Net Cash Used in Financing Activities

During the year ended December 31, 2024, net cash used in financing activities was $13.9 million, reflecting $10.7 million for the redemption of the Series C Preferred (as defined below), $2.1 million for the repurchase of Harbor's common stock and $1.1 million of dividends paid on the Series C Preferred.

During the year ended December 31, 2023, net cash used in financing activities was $60.9 million, reflecting $55.0 million in prepayments of long-term debt, $1.3 million of dividends paid on the Series C Preferred and $4.5 million to repurchase shares of Harbor's common stock.

Commitments and Contractual Obligations

In December 2023, Air Wisconsin prepaid at a discount all of its outstanding third-party secured debt and accrued interest. This prepayment resulted in a $6.2 million gain on extinguishment of debt due to a 5.5% discount on the outstanding principal balance negotiated by Air Wisconsin and a decrease in previously expected future undiscounted cash

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flows used in determining the carrying value of the debt. As a result, as of December 31, 2024 and December 31, 2023, the carrying value of the debt was $0 and Air Wisconsin no longer had any debt service requirements.

Operating Leases

As of December 31, 2024, Air Wisconsin had $4.6 million of operating lease obligations primarily related to certain training simulators and facilities.

The following table summarizes the future minimum rental payments required under operating leases that had initial or remaining non-cancelable lease terms greater than twelve months as of December 31, 2024:

Fiscal Year

Amount

Thereafter

Total lease payments

These operating leases remained with Air Wisconsin following the Aviation Disposition and we do not expect to have ongoing airline-related lease commitments. Following the Aviation Disposition, we have a single lease for approximately 1,000 square feet of office space located in Appleton, WI.

For additional information, please refer to Note 5, Lease Obligations , in the notes to the audited consolidated financial statements in this Annual Report.

Series C Convertible Redeemable Preferred Stock

In January 2020, Harbor completed an acquisition from Southshore Aircraft Holdings, LLC (together with its affiliates, "Southshore") of three CRJ-200 regional jets, each having two General Electric (“GE”) engines, plus five additional GE engines, in exchange for the issuance of 4,000,000 shares of Harbor’s Series C Convertible Redeemable Preferred Stock (the “Series C Preferred”) with an aggregate value of $13.2 million, or $3.30 per share (the “Series C Issue Price”). Air Wisconsin had leased each of these CRJ-200 regional jets and GE engines from Southshore. In January 2020, Harbor filed a Certificate of Designations, Preferences, and Rights of Series C Convertible Redeemable Preferred Stock (“Certificate of Designations”) with the Secretary of State of the State of Delaware, which established the rights, preferences, privileges, qualifications, restrictions and limitations relating to the Series C Preferred.

Each share of Series C Preferred was initially convertible at the election of the holders, at any time after issuance, into that number of shares of common stock determined by dividing the then applicable Series C Liquidation Amount (as defined below) by $0.80, subject to certain adjustments set forth in the Certificate of Designations (“Conversion Price”). The Conversion Price was subsequently adjusted to be $0.15091.

On March 28, 2024, the board of directors declared aggregate dividends in the amount of $466 on the Series C Preferred, which was paid on March 29, 2024. On June 28, 2024, the board of directors declared aggregate dividends in the amount of $519 on the Series C Preferred, which was paid on June 28, 2024.

On June 28, 2024, certain shares of Series C Preferred were converted into 16,500,000 shares of Harbor's common stock, and all remaining shares of Series C Preferred were redeemed for $10.7 million. After giving effect to such conversion and redemption, no shares of Series C Preferred remained outstanding.

Based on the applicable accounting guidance, Harbor was required to apply the “if-converted” method to the Series C Preferred to determine the weighted average number of shares outstanding for purposes of calculating the net loss per share of common stock. However, conversion was not assumed during the portion of the year the Series C Preferred was outstanding, for purposes of computing diluted loss per share, since the effect would have been anti-dilutive due to the net loss position for the year ended December 31, 2024.

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Debt and Credit Facilities

Aircraft Credit Agreements

In December 2018, Air Wisconsin entered into a debt restructuring agreement with a lender, which held certain senior aircraft notes and subordinated aircraft notes. The senior aircraft notes were exchanged for notes in an aggregate principal amount of $70,000 (“Aircraft Notes”) and the principal and accrued interest on the subordinated aircraft notes were forgiven and deemed paid in full . In December 2023, Air Wisconsin prepaid at a discount the entire outstanding principal balance of the Aircraft Notes together with all accrued interest. As a result of the prepayment, as of December 31, 2024 and December 31, 2023, Air Wisconsin no longer had any debt outstanding or debt service obligations, the liens and security interests securing the Aircraft Notes were released, and it ceased being subject to the restrictive covenants contained in the credit agreements.

Payroll Support Program

In April 2020, Air Wisconsin entered into a Payroll Support Program Agreement ("PSP-1 Agreement") with the U.S. Department of Treasury("Treasury") for payroll support and received approximately $42.2 million. In March 2021, Air Wisconsin entered into a Payroll Support Program Extension Agreement ("PSP-2 Agreement") with the Treasury for payroll support and received approximately $33.0 million. In June 2021 Air Wisconsin entered into a Payroll Support Program 3 Agreement ("PSP-3 Agreement", and together with the PSP-1 Agreement and the PSP-2 Agreement, the "PSP Agreements") with the Treasury for payroll support and received approximately $33.3 million.

In September 2020, the Treasury’s Office of Inspector General (“OIG”) commenced a routine audit of Air Wisconsin’s compliance with the terms of the PSP-1 Agreement. Air Wisconsin received preliminary results from the OIG of the audit in June 2023. Those results are subject to Air Wisconsin’s opportunity to contest the findings and the OIG releasing its final determination. In August 2025, Air Wisconsin received draft comments from the OIG indicating that it had overstated its awardable amount on its PSP-1 application. Air Wisconsin responded that the overstatement was corrected in its PSP-1 recertification submitted in connection with its PSP-2 Agreement. Air Wisconsin also indicated it may be due additional funds under PSP-2; however, Air Wisconsin does not believe that it will be required to repay any amount to the Treasury or that it will receive any further funds under the program. Air Wisconsin received follow-up communication in November 2025 from the OIG that it was still processing its final comments. No audits have been initiated by the Treasury under the PSP-2 Agreement or PSP-3 Agreement as of the date of this filing. For additional information, please refer to Note 7, Commitments and Contingencies, in the notes to the audited consolidated financial statements in this Annual Report.

Maintenance Commitments

As of December 31, 2024, Air Wisconsin was party to a non-exclusive heavy maintenance services agreement for certain maintenance, repair and modification services with respect to airframes owned or operated by Air Wisconsin. Since the maintenance program and related agreements remained with Air Wisconsin following the Aviation Disposition, we do not anticipate incurring any ongoing airline maintenance costs.

Off-Balance Sheet Arrangements

An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has (i) made guarantees, (ii) a retained or a contingent interest in transferred assets, (iii) an obligation under derivative instruments classified as equity or (iv) any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development arrangements with us.

We have no off-balance sheet arrangements that would have or are reasonably likely to have a material current or future effect on our financial condition, results of operations or liquidity.

Seasonality

Our results of operations during the year ended December 31, 2024, and for any interim period were not necessarily indicative of our results for the entire year because the airline industry is subject to seasonal fluctuations, including those relating to holiday and summer travel schedules, changes in weather patterns and natural disasters, as well as fluctuations associated with changes in general economic conditions, including fuel prices, interest rates, inflation, discretionary

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spending and consumer confidence. Following the Aviation Disposition, we are no longer engaged in airline operations and do not expect our future results to be subject to related seasonal trends.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with generally accepted accounting principles. Critical accounting policies are those policies that are most important to the preparation of our consolidated financial statements and require management’s subjective and complex judgments due to the need to make estimates about the effect of matters that are inherently uncertain. In doing so, we must make estimates and assumptions that affect our reported amounts of assets, liabilities, revenues and expenses, as well as related disclosure of contingent assets and liabilities. To the extent there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on past experience, existing and known circumstances, authoritative accounting guidance, and other factors and assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. For the years presented, our critical accounting policies relate to revenue recognition, long-lived assets, and income taxes. The application of these accounting policies involves the exercise of judgment and the use of assumptions as to the future uncertainties and, as a result, actual results will likely differ, and may differ materially, from such estimates.

We have identified the accounting policies discussed below as critical to us. The discussion below is not intended to be a comprehensive list of our accounting policies. Our significant accounting policies are more fully described in Note 1, Summary of Significant Accounting Policies , in the notes to the audited consolidated financial statements in this Annual Report.

Revenue Recognition

Historically, we derived substantially all of our revenue from capacity purchase agreements with major airlines. In performing an analysis of the American and United capacity purchase agreements within the framework of Accounting Standards Update (“ASU”) No. 2016-02, Leases (“ASC 842”) and Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”) , each issued by the Financial Accounting Standards Board ("FASB"), we determined that a portion of the payments we received under the agreements that was designed to reimburse Air Wisconsin for use of a certain number of aircraft, which is referred to as “right of use,” was considered lease revenue. All other revenue received by Air Wisconsin under the capacity purchase agreements was considered non-lease revenue. After consideration of the lease and non-lease components, within the context of ASC 842, we determined the non-lease component to be the predominant component of each capacity purchase agreement and elected a practical expedient to not separate the lease and non-lease components. Therefore, all compensation received by Air Wisconsin pursuant to the American capacity purchase agreement and the United capacity purchase agreement has been accounted for under ASC 606.

Because our flights under the United and American capacity purchase agreements provided distinct services that had the same pattern of transfer to the customer, which were satisfied over time with the measure of progress for each flight deemed to be substantially the same, the flight services provided under the American and United capacity purchase agreements represented a series of services that were accounted for as a single performance obligation. Therefore, our contract revenues were recognized when service was provided and our performance obligation was determined on a per completed flight basis. The performance obligation of each completed flight was measured using departures.

Under each agreement, Air Wisconsin was entitled to receive certain payments based on the number of aircraft covered under the agreement, block hours, departures and certain performance metrics. Each agreement also provided for the reimbursement to Air Wisconsin of certain direct operating expenses, such as certain insurance premiums and property taxes.

As discussed above, under both the American capacity purchase agreement and the United capacity purchase agreement, Air Wisconsin was paid a fixed amount per aircraft per day for each month during the term of the agreement. Previously, under the United capacity purchase agreement, in accordance with GAAP, the Company recognized revenue related to the fixed payments on a proportional basis taking into account the number of flights actually completed in that period relative to the number of flights expected to be completed in subsequent periods during the remaining term of the agreement. Air Wisconsin deferred fixed revenues between April 2020 and June 2021 due to the significant decrease in its completed flights as a result of the COVID-19 pandemic. Beginning in July 2021, due to an increase in completed flights and based on projected future completed flight activity, Air Wisconsin began reversing this deferral of fixed revenues and

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continued to do so through June 1, 2023, the end of the contract period. Accordingly, during the year ended December 31, 2024, Air Wisconsin recognized $2.9 million of fixed revenues that were previously deferred, compared to recognition of $11.6 million of fixed revenues that were previously deferred in the year ended December 31, 2023. Air Wisconsin’s deferred revenues related to the fixed portion of revenue under the United capacity purchase agreement adjusted over the contract term based on the number of flights completed in each reporting period relative to the number of flights that had been expected to be completed over the remaining contract term.

Following the Aviation Disposition on January 9, 2026, we do not have any material operating assets and are not engaged in any operating business. Revenue recognition considerations related to airline operations are no longer applicable to our financial condition.

Long-Lived Assets

As of December 31, 2024, we had approximately $48.2 million of property and equipment and related assets net of accumulated depreciation. In accounting for these long-lived assets, we made estimates about the expected useful lives of the assets, the expected residual values of these assets, and the potential for impairment based on the fair value of the assets and the cash flows they are expected to generate. We also made a determination as to the asset group to be tested and whether the enterprise level is the appropriate level for such testing. Factors indicating potential impairment include, but are not limited to, significant decreases in the market value of the long-lived assets, a significant change in the condition of the long-lived assets, a significant adverse change in the extent or manner in which long-lived assets (asset group) are being used, and operating cash flow losses associated with the use of the long-lived assets. When considering whether or not impairment of long-lived assets exists, we group similar assets together at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and compare the undiscounted cash flows for each asset group to the net carrying amount of the assets supporting the asset group. In the Company's situation the lowest level for which identifiable cash flows are available is at the enterprise level. Substantially all of our operating long-lived assets remained with Air Wisconsin following the Aviation Disposition, and impairment considerations related to airline operations are no longer applicable to our financial condition.

Income Taxes

The Company utilizes the asset and liability method for accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are determined based upon the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities, as measured by the current enacted tax rates. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. Deferred tax expense represents the result of changes in deferred tax assets and liabilities. Estimating our tax assets and liabilities involves judgments related to uncertainties in the application of complex federal and state tax regulations. Determining whether deferred tax assets are realizable requires significant judgment, including but not limited to, forecasting the reversal of temporary differences. A valuation allowance is provided for those deferred tax assets for which we cannot conclude that it is more likely than not that such deferred tax assets will be realized. In determining the amount of any valuation allowance, in addition to the reversal of temporary differences, estimated future taxable income as well as feasible tax planning strategies for each taxing jurisdiction, are considered. If we determine it is more likely than not that all or a portion of the remaining deferred tax assets will not be realized, the valuation allowance will be increased with a charge to income tax expense. Conversely, if we determine we are more likely than not to be able to utilize all or a portion of the deferred tax assets for which a valuation allowance was previously provided, the related portion of the valuation allowance will be recorded as a reduction to income tax expense. In addition to our assessment of the need for valuation allowances, we make certain estimates and judgments to determine tax expense for financial statement purposes as we evaluate the effect of tax credits, tax benefits, and deductions, some of which result from differences in the timing of recognition of revenue or expense for tax and financial statement purposes. Changes to these estimates may result in significant changes to our tax provision in future periods. Each fiscal quarter we re-evaluate our tax provision and reconsider our estimates and assumptions related to specific tax assets and liabilities, making adjustments as circumstances change.

As required by the uncertain tax position guidance, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company has applied the uncertain tax position guidance to all tax positions for which the statute of limitations remains open.

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The Company is subject to federal, state and local income taxes in the United States. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require the application of significant judgment. The Company is no longer subject to U.S. federal income tax examinations for the years prior to 2021. With a few exceptions, the Company is no longer subject to state or local income tax examinations for the years prior to 2020. As of December 31, 2024, the Company had no outstanding tax examinations.

Upcoming Accounting Pronouncements

For information about upcoming accounting pronouncements, please refer to Note 1, Summary of Significant Accounting Policies , in the notes to the audited consolidated financial statements in this Annual Report.

Stock Repurchase Program

In March 2021 Harbor’s board of directors adopted a stock repurchase program pursuant to which Harbor could initially repurchase up to $1.0 million of shares of its common stock during the first calendar month of the program, subject to an automatic increase of $1.0 million per calendar month thereafter. The number of shares to be repurchased, and the timing of any such repurchases, depend on a number of factors, including the trading price and volume of the common stock, the Company’s business strategy, financial performance, liquidity position and capital requirements, restrictions in commercial agreements, general market conditions, applicable legal requirements and other factors. Repurchases may be effected through open market transactions, privately negotiated transactions, or any other lawful means. Harbor may, but is not required to, effect repurchases under a trading plan adopted pursuant to Rule 10b5-1 under the Exchange Act, or subject to Rule 10b-18 under the Exchange Act. Harbor is not obligated under the program to acquire any particular dollar amount or number of shares, and the program may be modified, suspended or terminated at any time and for any reason. Harbor acquired an aggregate of 1,132,594 shares of its common stock pursuant to the stock repurchase program during the year ended December 31, 2024. From the inception of the program through March 31, 2025, Harbor has purchased approximately 12.9 million shares of its common stock pursuant to the program. No shares have been purchased since that date.