Item 1A Risk Factors
Investing in our securities involves a high degree of risk. Our business, financial condition or results of operations could be harmed by any of these risks. The risks and uncertainties described below are not the only ones we face. Additional risks not currently known to us or other factors not perceived by us to present significant risks to our business at this time also may impair our business operations.
Risks Related to Our Business
We may not have sufficient funds to sustain our business until (if ever) we become profitable (if ever) and may not be able to obtain additional capital when desired, on favorable terms or at all. If we are unsuccessful in securing additional sources of capital, we may not be able to continue as a going concern.
We depend on funds from our operations, proceeds from our financing arrangements and additional fundraising in order to sustain our ongoing operations. To date, we have suffered recurring losses from operations and have a significant accumulated deficit. As a result of these recurring losses from operations and the need for additional capital, there is substantial doubt about our ability to continue as a going concern. Therefore, our independent registered public accounting firm included an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern in our report on our audited financial statements for the year ended December 31, 2025. Note 2 to the consolidated financial statements included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, included a similar qualification regarding our ability to continue as a going concern. Our financial statements have been prepared in accordance with GAAP, which contemplates that we will continue to operate as a going concern. Our financial statements do not contain any adjustments that might result if we are unable to continue as a going concern.
The industry and markets in which we focus and intend to focus make are difficult to evaluate, enter, and remain competitive. We expect that we will need to make continued investments in our projects, as well as in equipment, facilities and technology. We also anticipate that we will need to invest substantial capital to pursue certain business opportunities in sectors that are complementary to AI-focused business operations, continue technology and product development, and fund working capital for anticipated growth. If we do not generate sufficient cash flow from operations or otherwise have the capital resources to meet our future capital needs, we may need additional financing to implement our business strategy.
We expect that we will need to raise additional capital in the future to continue to operate, fund expansion, respond to competitive pressures, potentially acquire complementary assets, businesses or technologies, or take advantage of unanticipated opportunities. We may seek to do so through public or private financing, strategic relationships or other arrangements. Our ability to secure any required financing will depend in part upon prevailing capital market conditions and business success. There can be no assurance that we will be successful in our efforts to secure any additional financing on terms satisfactory to us or at all. If we are unable to obtain sufficient amounts of additional capital, we may need to reduce the near-term scope of our planned development and operations, which could delay implementation of our business plan—thereby harming our business, financial condition and operating results. In such circumstances, we may have to significantly reduce our operations or delay, scale back or the development of one or more of our products or services, seek alternative financing arrangements, declare or our operations entirely.
In addition, even if we are able to obtain additional financing on satisfactory terms, we cannot predict the size of future issuances of shares of our common stock or securities convertible into shares of our common stock or the effect, if any, that future issuances and sales of shares of our common stock will have on the price of our shares of common stock. We may not accurately anticipate how quickly we may use our funds and whether these funds are sufficient to bring the business to profitability. Furthermore, raising additional capital through the issuance of equity securities may reduce the percentage ownership of our existing stockholders and such existing stockholders may experience additional dilution in net book value per share. Any such newly-issued equity securities may also have rights, preferences or privileges senior to those of the holders of shares of our common stock.
If we raise additional funds through the incurrence of indebtedness, such indebtedness may involve restrictive covenants that impair our ability to pursue our growth strategy and other aspects of our business plan, expose us to greater interest rate risk and volatility, and require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital and capital expenditures, increasing our vulnerability to general adverse economic and industry conditions, placing us at a competitive disadvantage compared to our competitors that have less debt, and limiting our ability to borrow additional funds. In connection with any such future capital raising transactions, whether involving the issuance of equity securities or the incurrence of indebtedness, we may be required to accept terms that restrict our ability to raise additional capital for a period of time, which may limit or prevent us from raising capital at times when it would otherwise be opportunistic to do so.
We are an early-stage company with a limited operating history.
We have a limited history upon which to evaluate our performance and future prospects. Our current and proposed operations are subject to all business risks associated with newer enterprises. These include likely fluctuations in operating results as we react to developments in our markets, difficulty in managing our growth, and the entry of competitors into our markets. We have incurred net losses to date and anticipate continuing net losses for the foreseeable future. We cannot assure you that we will be profitable in the foreseeable future or generate sufficient profits to pay dividends. If we achieve profitability, we cannot be certain that we will be able to sustain or increase such profitability. We have not consistently generated positive cash flow from operations and cannot be certain that we will be able to generate positive cash flow from operations in the future. To and sustain , we must numerous objectives, including broadening and our sources of revenue. these objectives may require significant capital investments. We cannot the of these objectives.
We may not be able to successfully implement our growth strategies.
Our growth strategies include, among other things, expanding our addressable market by opening up private aviation to non-members through our marketplace, expanding into new domestic markets, pursuing new opportunities in the AI sector, and developing adjacent (or complementary) businesses, including, but not limited to, developing and operating AI data centers. We face numerous challenges in implementing our growth strategies, including our ability to execute on market, business, product/service and geographic expansions. Our strategies for growth are dependent on, among other things, our ability to expand existing products and service offerings and launch new products and service offerings. Although we devote significant financial and other resources to the expansion of our products and service offerings, our efforts may not be commercially successful or achieve the desired results. Our financial results and our ability to maintain or improve our competitive position will depend on our ability to effectively gauge the direction of our key marketplaces and successfully identify, develop, market and sell new or improved products and services in these changing marketplaces. Our to implement our growth strategies could have a material effect on our business, financial condition and results of operations and any assumptions underlying estimates of expected cost savings or expected revenues may be .
Our operating results have been, and are expected to continue to be, difficult to continue to predict based on a number of factors that also will affect our long-term performance.
We expect our operating results to fluctuate significantly in the future based on a variety of factors, many of which are outside our control and difficult to predict. As a result, period-to-period comparisons of our operating results may not be a good indicator of our future or long-term performance. The following factors may affect us from period-to-period and may affect our long-term performance:
we may fail to successfully execute our business, marketing and other strategies;
our ability to grow complementary products and service offerings may be limited, which could negatively impact our growth rate and financial performance;
we may be unable to attract new customers and/or retain existing customers;
we will require additional capital to finance strategic investments and operations, pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances, and we cannot be sure that additional financing will be available;
our historical growth rates may not be reflective of our future growth;
our business and operating results may be significantly impacted by general economic conditions, the health of the U.S. aviation and data center industries and associated risks;
litigation or investigations involving us could result in material settlements, fines or penalties and may adversely affect our business, financial condition and results of operations;
existing or new adverse regulations or interpretations thereof applicable to the aviation and data center industries may restrict our ability to expand or to operate our business as intended and may expose us to fines and other penalties;
the occurrence of geopolitical events such as war, terrorism, civil unrest, political instability, environmental or climatic factors, natural disaster, pandemic or epidemic outbreak, public health crisis and general economic conditions may have an adverse effect on our business;
some of our potential losses may not be covered by insurance, and we may be unable to obtain or maintain adequate insurance coverage; and
we are potentially subject to taxation-related risks in multiple jurisdictions, and changes in tax laws could have a material adverse effect on our business, cash flow, results of operations or financial condition.
Our business is primarily focused on certain targeted geographic regions, making it vulnerable to risks associated with having geographically concentrated operations.
Our historic customer base is primarily concentrated in the southwestern region of the United States. As a result, our business, financial condition and results of operations are susceptible to regional economic downturns and other regional factors, including state regulations and budget constraints and severe weather conditions, catastrophic events or other disruptions. As we seek to expand in our existing markets, opportunities for growth within these regions will become more limited and the geographic concentration of our business may increase.
Our business and reputation rely on, and will continue to rely on, third parties.
We have relied on a third-party app developer to develop the initial versions of our app and we may continue to rely on third parties for future development of portions of any new or revised app. In place of a third-party app developer, we rely both on internal development and freelance contractors supervised by our Chief Technology Officer. We intend to continue to build our internal development team and to gradually decrease our reliance on external contractors for app development. If there were delays or complications in the further development of our app, this might result in difficulties that include, but are not limited to, the following:
Increased Development Costs: Extended development timelines can result in higher costs associated with personnel, software licenses, hardware, and other development resources. Delays may require additional investments to address technical issues, hire more personnel, or acquire additional technology or expertise to expedite the development process. These increased costs may negatively impact our financial performance and profitability.
Missed Time-to-Market Opportunities: Delays in app development may cause us to miss strategic market windows, limiting our ability to capture early adopters and gain a competitive advantage. Competitors may seize the opportunity to launch similar apps, potentially eroding our market share and diminishing our growth prospects. Our ability to generate revenue and establish a strong market presence may be compromised as a result.
Customer Dissatisfaction and Loss of Trust: If delays or complications prolong the release of new versions of our app, it may lead to customer frustration and disappointment. Use of the app may diminish, and users may turn to alternative solutions or competitors. Customer dissatisfaction can harm our reputation and brand image, resulting in a loss of trust and reducing customer loyalty and engagement with our products and services.
Negative Impact on Revenue and Financial Performance: A delay in launching revisions of our app or other software products may impact our revenue projections, financial forecasts, and investment plans. The inability to generate expected revenue streams can adversely affect our cash flow, profitability, and ability to meet financial obligations or raise additional capital. Our valuation and attractiveness to investors may also be negatively impacted.
Opportunity Costs and Competitive Disadvantage: Time spent on addressing delays and complications diverts management’s attention and resources away from other strategic initiatives or product developments. We may miss out on potential partnership opportunities, market expansions, or product enhancements, resulting in missed revenue and growth opportunities. Competitors may gain a competitive advantage over us.
Loss of Investor Confidence: Extended delays or ongoing complications may erode investor confidence in our ability to execute our business plan successfully. Investors may question our management’s capability, resulting in reduced investor interest, difficulty in raising funds, and a potential decline in our stock price. The loss of investor confidence can have broader implications for our overall financial stability and long-term viability.
We also rely heavily on our existing operating partner, Cirrus, to maintain and operate our aircraft for charter services and we rely on third party operators when our clients book flights through our platform with those operators. The failure of these third parties to perform these roles properly may result in damage to our reputation, loss of clients, potential litigation and other costs. We may also experience delays, defects, errors, or other problems with their work that could have an adverse effect on our results and our ability to achieve profitability.
We rely on third-party Internet, mobile, and other products and services to deliver our mobile and web applications and flight management system offerings to customers, and any disruption of, or interference with, our use of those services could adversely affect our business, financial condition, results of operations, and customers.
Our technology platform’s continuing and uninterrupted performance has been critical to our success. That platform is dependent on the performance and reliability of Internet, mobile, and other infrastructure services that are not under our control. While we have engaged reputable vendors to provide these products or services, we do not have control over the operations of the facilities or systems used by third-party providers. These facilities and systems may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, human error, terrorist attacks, power outages, pandemics, and similar events or acts of misconduct. In addition, any changes in one of our third-party service provider’s service levels may adversely affect our ability to meet the requirements of our customers. While we believe we have implemented reasonable backup and disaster recovery plans, we have experienced, and expect that in the future we will experience, , and in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software , website hosting , capacity constraints, or external factors beyond our control. Sustained or repeated system would reduce the of our offerings and could our customers’ businesses. It may become increasingly to maintain and our performance, especially during peak usage times, as we expand our products and service offerings. Any publicity or user arising from these could our reputation and brand, may affect the usage of our offerings, and could our business, financial condition and results of operation.
We rely on third parties maintaining open marketplaces to distribute our mobile and web applications.
The success of CharterGPT relies in part on third parties maintaining open marketplaces, including the Apple App Store and Google Play, which make our app available for download. We cannot be assured that the marketplaces through which we distribute CharterGPT will maintain their current structures or that such marketplaces will not charge us fees to list CharterGPT for download.
We may be unable to adequately protect our intellectual property interests or may be found infringing on the intellectual property interests of others.
Our intellectual property may include trademarks, domain names, website, mobile and web applications, software (including our proprietary algorithms and data analytics engines), copyrights, trade secrets, and inventions (whether or not patentable). We believe that our intellectual property plays an important role in protecting our brand and the competitiveness of our business. If we do not adequately protect our intellectual property, our brand and reputation may be adversely affected and our ability to compete effectively may be impaired.
We protect our intellectual property through a combination of trademarks, domain names and other measures. We have registered our trademarks and domain names that we currently use in the United States. Our efforts may not be sufficient or effective. Further, we may be unable to prevent competitors from acquiring trademarks or domain names that are similar to or diminish the value of our intellectual property. In addition, it may be possible for other parties to copy or reverse engineer our applications or other technology offerings. Moreover, our proprietary algorithms, data analytics engines, or other software or trade secrets may be compromised by third parties or our employees, which could cause us to lose any competitive advantage we may have from them.
In addition, our business is subject to the risk of third parties infringing our intellectual property. We may not always be successful in securing protection for, or identifying or stopping infringements of, its intellectual property and we may need to resort to litigation in the future to enforce our rights in this regard. Any such litigation could result in significant costs and a diversion of resources. Further, such enforcement efforts may result in a ruling that our intellectual property rights are unenforceable.
Moreover, companies in the aviation and technology industries are frequently subject to litigation based on allegations of intellectual property infringement, misappropriation, or other violations. As we expand and raise our profile, the likelihood of intellectual property claims being asserted against us grows. Further, we may acquire or introduce new technology offerings, which may increase our exposure to patent and other intellectual property claims. Any intellectual property claims asserted against us, whether or not having any merit, could be time-consuming and expensive to settle or litigate. If we are unsuccessful in defending such a claim, we may be required to pay substantial damages or could be subject to an or agree to a settlement that may prevent us from using our intellectual property or making our offerings available to customers. Some intellectual property may require us to seek a license to continue our operations, and those licenses may not be available on commercially reasonable terms or may significantly increase our operating expenses. If we are to procure a license, we may be required to develop non- technological alternatives, which could require significant time and expense. Any of these events could affect our business, financial condition, or operations.
A delay or failure to identify and devise, invest in and implement certain important technology, business, and other initiatives could have a material impact on our business, financial condition and results of operations.
In order to operate our business, achieve our goals, and remain competitive, we continuously seek to identify and devise, invest in, implement and pursue technology, business and other important initiatives, such as those relating to aircraft fleet structuring, data centers, business processes, information technology, initiatives seeking to ensure high quality service experience, and others.
Our legacy business, and intended future business, is characterized by changing technology, introductions and enhancements of products and services, and shifting customer demands, including technology preferences. Our future growth and financial performance will depend in part upon our ability to develop, market and integrate new services and to accommodate the latest technological advances and customer preferences. In addition, the introduction of new technologies or services that compete with our products and services could result in our revenues decreasing over time. If we are unable to upgrade the products and services we offer with the latest technological advances in a timely manner, or at all, our business, financial condition and results of operations could suffer.
We are dependent on our information systems which may be vulnerable to cyber-attacks or other events.
Our operations are dependent on our information systems and the information collected, processed, stored, and handled by these systems. We rely heavily on our computer systems to manage our client account balances, booking, pricing, processing and other processes. We receive, retain, and transmit certain confidential information, including personally identifiable information that our clients provide. In addition, for these operations, we depend in part on the secure transmission of confidential information over public networks to charter operators. Our information systems are subject to damage or interruption from power outages, facility damage, computer and telecommunications failures, computer viruses, security breaches, including credit card or personally identifiable information breaches, coordinated cyber-attacks, vandalism, catastrophic events and human error. If our platform is hacked, these funds could be at risk of being stolen which would damage our reputation and, likely, our business. Any significant or cyber-attacks on our information systems, particularly those involving confidential information being accessed, obtained, , or used by or persons, could our reputation and us to regulatory or legal actions and affect our business and financial results.
Because our software could be used to collect and store personal information, privacy concerns in the jurisdictions in which we operate could result in additional costs and liabilities to us or inhibit sales of our software.
The regulatory framework for privacy issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Many government bodies and agencies have adopted or are considering adopting laws and regulations regarding the collection, use, storage and disclosure of personal information and breach notification procedures. We are also required to comply with laws, rules and regulations relating to data security. Interpretation of these laws, rules and regulations and their application to our products and services in applicable jurisdictions is ongoing and cannot be fully determined at this time. In the United States, for example, rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act of 2018 (the “ CCPA ”) and other state and federal laws relate to privacy and data security. By way of example, the CCPA requires covered businesses to provide new disclosures to California residents, provide them new ways to opt-out of certain disclosures of personal information, and allows for a new cause of action for data breaches. It includes a framework that includes potential statutory damages and private rights of action. There is some uncertainty as to how privacy laws could impact our business as such laws are interpreted. In expanding our operations, compliance with privacy laws may increase our operating costs.
Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our business and future profitability.
We are a U.S. corporation and thus subject to U.S. corporate income tax on our worldwide income. Further, since our operations and customers are located throughout the United States, we are subject to various U.S. state and local taxes. U.S. federal, state, local and non-U.S. tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us and may have an adverse effect on our business and future profitability.
For example, several tax proposals have been set forth that would, if enacted, make significant changes to U.S. tax laws. Congress may consider, and could include, some or all of these proposals in connection with tax reform that may be undertaken. It is unclear whether these or similar changes will be enacted and, if enacted, how soon any such changes could take effect. The passage of any legislation as a result of these proposals and other similar changes in U.S. federal income tax laws could adversely affect our business and future profitability.
In the event that our business expands domestically or internationally, including to jurisdictions in which tax laws may not be favorable, our obligations may change or fluctuate, become significantly more complex or become subject to greater risk of examination by taxing authorities, any of which could adversely affect our after-tax profitability and financial results.
In the event that our business expands domestically or internationally, our effective tax rates may fluctuate widely in the future. Future effective tax rates could be affected by operating losses in jurisdictions where no tax benefit can be recorded under U.S. GAAP, changes in deferred tax assets and liabilities, or changes in tax laws. Factors that could materially affect our future effective tax rates include, but are not limited to: (a) changes in tax laws or the regulatory environment, (b) changes in accounting and tax standards or practices, (c) changes in the composition of operating income by tax jurisdiction and (d) pre-tax operating results of our business.
Additionally, we may be subject to significant income, withholding, and other tax obligations in the United States and may become subject to taxation in numerous additional U.S. state and local and non-U.S. jurisdictions with respect to income, operations and subsidiaries related to those jurisdictions. Our after-tax profitability and financial results could be subject to volatility or be affected by numerous factors, including (a) the availability of tax deductions, credits, exemptions, refunds and other benefits to reduce tax liabilities, (b) changes in the valuation of deferred tax assets and liabilities, if any, (c) the expected timing and amount of the release of any tax valuation allowances, (d) the tax treatment of stock-based compensation, (e) changes in the relative amount of earnings subject to tax in the various jurisdictions, (f) the potential business expansion into, or otherwise becoming subject to tax in, additional jurisdictions, (g) changes to existing intercompany structure (and any costs related thereto) and business operations, (h) the extent of intercompany transactions and the extent to which taxing authorities in relevant jurisdictions respect those intercompany transactions, and (i) the ability to structure business operations in an efficient and competitive manner. Outcomes from audits or examinations by taxing authorities could have an adverse effect on our after-tax profitability and financial condition. Additionally, the IRS and several foreign tax authorities have increasingly focused attention on intercompany transfer pricing with respect to sales of products and services and the use of intangibles. Tax authorities could with our intercompany charges, cross-jurisdictional transfer pricing or other matters and assess additional taxes. If we do not prevail in any such , our may be affected.
Our after-tax profitability and financial results may also be adversely affected by changes in relevant tax laws and tax rates, treaties, regulations, administrative practices and principles, judicial decisions and interpretations thereof, in each case, possibly with retroactive effect.
Our ability to utilize net operating loss and tax credit carryforwards to offset future taxable income may be subject to certain limitations.
In general, under Section 382 of the Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change” is subject to limitations on its ability to use its pre-change net operating loss carryforwards (“ NOLs ”) to offset future taxable income. The limitations apply if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 percentage point change (by value) in our equity ownership by certain stockholders over a three year period. If we experience such an ownership change, we may be subject to limitations on our ability to utilize our existing NOLs and other tax attributes to offset taxable income or tax liability. In addition, future changes in our stock ownership, which may be outside of our control, may trigger an ownership change. Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes. As a result, even if we earn net taxable income in the future, our ability to use our pre-change NOL carryforwards and other tax attributes to offset such taxable income or tax liability may be subject to limitations, which could potentially result in increased future income tax liability.
Our primary assets include our direct and indirect interests in our subsidiaries and, accordingly, we are dependent upon distributions from our subsidiaries to pay taxes and cover our corporate and other overhead expenses.
We have historically operated as holding company with minimal assets other than our direct and indirect equity interests in our subsidiaries. We currently do not have any independent means of generating revenue. To the extent our operating subsidiaries have available cash, we cause our subsidiaries to make distributions of cash to pay taxes, cover our corporate and other overhead expenses, and otherwise fund our commitments. To the extent that we need funds and our subsidiaries fail to generate sufficient cash flow to distribute funds to us or are restricted from making such distributions or payments under applicable law or regulation or under the terms of their financing arrangements, or are otherwise unable to provide such funds, our liquidity and financial condition could be materially adversely affected.
We have made a significant investment in the sponsor of a blank check company commonly referred to as a special purpose acquisition company (“SPAC”) and will suffer the loss of all of our investment if the SPAC does not complete an initial business combination by April 6, 2027.
In July 2025, we made a capital contribution of approximately $2.7 million in AIIA Sponsor Ltd. (“Sponsor”), that served as the sponsor of AI Acquisition. The capital contribution was made to fund, in part, Sponsor’s purchase of private placement units comprised of Class A ordinary shares and rights to receive additional Class A ordinary shares of AI Acquisition as part of the sponsorship of AI Acquisition. We own an approximate 49.9% interest in the Sponsor, and in turn the Sponsor owns approximately 25% of the outstanding ordinary shares of AI Acquisition.
There is no assurance that AI Acquisition will be successful in completing a business combination or that any business combination will be successful. We could lose our entire investment in Sponsor if a business combination is not completed by April 6, 2027 (unless AI Acquisition receives shareholder approval of an extension to the business combination deadline), or if the business combination is not successful, which would materially adversely impact our shareholder value.
Our use of fair value accounting of our indirect investment in AI Acquisition could result in income statement volatility, which in turn, could cause significant market price and trading volume fluctuations for our common stock.
Our beneficial interest in AII Acquisition is recorded at fair value with changes in fair value being recorded in the consolidated statement of operations during the period of change. Our management makes a significant judgment and assumption that a business combination is more than likely to occur, on the premise that historical statistical data indicates a significant percentage of special purpose acquisition companies accomplishes a business combination. The fair value calculation of our beneficial interest in AI Acquisition ordinary shares and rights is dependent on company-specific adjustments applied to the observable trading prices of AI Infrastructure’s ordinary shares and public rights. We rely on an independent valuation specialist who estimates that a discount of 25% sufficiently captures the risk or profit that a market participant would require as compensation for assuming the inherent risk of forfeiture if a business combination does not occur and the lack of marketability of our beneficial interest in Sponsor. We classify the investment in AI Acquisition as Level 3 in the fair value hierarchy due to the unobservable input of the company-specific adjustment. However, we can lose our entire investment if a business combination is not completed by April 6, 2027 (unless AI Acquisition receives shareholder approval of an extension to the business combination deadline), or if the business combination is not . Additionally, the fair value of the investment must be remeasured quarterly. Because of this, our earnings may experience in the future as a in the fair value of our investment in AI Acquisition could significantly reduce both our earnings and shareholders’ equity, which in turn, could cause significant market price and trading volume fluctuations for our securities.
Our failure to attract and retain highly qualified personnel in the future could harm our business.
We believe that our future success will depend in large part on our ability to retain or attract highly qualified management, technical and other personnel. We may not be successful in retaining key personnel or in attracting other highly qualified personnel. If we are unable to retain or attract significant numbers of qualified management and other personnel, we may not be able to grow and expand our business.
Risks Related to Our Legacy Charter Business Operating Environment
Demand for our aviation services may decline due to factors beyond our control.
Like other charter aviation companies, our business is affected by factors beyond our control, including air traffic congestion at airports, airport slot restrictions, air traffic control inefficiencies, fuel costs, availability of pilots, maintenance costs, natural disasters, adverse weather conditions, increased and changing security measures, changing regulatory and governmental requirements, new or changing travel-related taxes, terrorism or the outbreak of disease. Demand for private jet charters may be negatively impacted by any of these or other factors affecting air travel generally. If charter travel remains in a general decline for a significant period of time, we may be unable to compete with more established operators and may not be able to achieve profitability in the medium term or at all.
More broadly, business jet travel is highly correlated to the performance of the economy, and an economic downturn, such as the current economic environment, which has been adversely affected by high rates of inflation, increasing interest rates, and low consumer sentiment, is likely to have a direct impact on the use of business jets. Our clients may consider private air travel to be a luxury item, especially when compared to commercial air travel. As a result, any economic downturn that has an adverse effect on consumer spending habits could cause them to travel less frequently and, to the extent they travel, to travel using commercial air carriers or other means considered to be more economical than private air charter travel.
In the United States, the federal government singularly controls all U.S. airspace, and aviation operators are dependent on the FAA to operate that airspace in a safe, efficient and affordable manner. The air traffic control system, which is operated by the FAA, faces challenges in managing the growing demand for U.S. air travel. U.S. air-traffic controllers often rely on outdated technologies that routinely overwhelm the system and compel aviation operators to fly inefficient, indirect routes resulting in delays and increased operational cost. In addition, Congress has previously considered implementing regulations that could potentially lead to the privatization of the United States’ air traffic control system, which could adversely affect our business.
Any factors that cause the demand for private jet travel to decline may also result in delays that could reduce the attractiveness of private air charter travel versus other means of transportation, particularly for shorter distance travel, which represents our primary market currently. Delays increase operating costs and decrease revenues in addition to frustrating passengers, which could affect our reputation and potentially reduce fleet utilization and charter bookings as a result of flight cancellations. We may experience decreased demand, as well as a loss of reputation, in the event of an accident involving an aircraft booked through our platform or any actual or alleged misuse of our platform by customers in violation of law. Demand for our services may also decline due to actions that increase the cost of private air charter travel versus other forms of transportation, particularly efforts aimed at addressing climate change such as carbon tax initiatives or other actions. Any of the foregoing circumstances or events which reduced the demand for private jet charters could impact our ability to establish our business and . These circumstances or events may affect us to a degree than our competitors, who may be to recover more quickly. Any general reduction in passenger traffic could have a material effect on our business, results of operations and financial condition.
We face a high level of competition with numerous market participants with greater financial resources and operating experience.
The private air travel industry is extraordinarily competitive. Factors that affect competition in this industry include price, reliability, safety, regulations, professional reputation, aircraft availability, equipment and quality, consistency and ease of service, willingness and ability to serve specific airports or regions, and investment requirements. We compete against private jet charter and fractional jet companies as well as business jet charter companies. Both the private jet charter companies and the business jet charter companies have numerous competitive advantages that enable them to attract customers. Our access to a smaller aircraft fleet and regional focus puts us at a competitive disadvantage, particularly with respect to our appeal to business travelers who want to travel overseas.
Generally, fractional private jet companies and many business jet charter companies have access to larger fleets of aircraft and have greater financial resources, which would permit them to more effectively service customers. Due to our relatively small size, we are more susceptible to their competitive activities, which could prevent us from attaining the level of business required to sustain profitable operations.
Prior consolidation in the industry, and increased consolidation in the future could further intensify the competitive environment we face. There can be no assurance that our competitors will not be successful in capturing a share of our present or potential customer base. The materialization of any of these risks could adversely affect our business, financial condition and results of operations.
The operation of aircraft is subject to various risks, and failure to maintain an acceptable safety record may have an adverse impact on our ability to obtain and retain customers.
The operation of aircraft is subject to various risks, including catastrophic disasters, crashes, mechanical failures and collisions, which may result in loss of life, personal injury and/or damage to property and equipment. Private charters booked utilizing our services may experience accidents in the future. These risks could endanger the safety of our customers, personnel, third parties, equipment, cargo and other property, as well as the environment. If any of these events were to occur, we could experience loss of revenue, termination of customer contracts, higher insurance rates, litigation, regulatory investigations and enforcement actions (including potential grounding of the fleet we utilize and suspension or of operating authorities) and to our reputation and customer relationships. In addition, to the extent an occurs with an aircraft we charter, we could be held liable for resulting , which may involve from passengers and survivors of passengers. There can be no assurance that the amount of our insurance coverage available in the event of such would be adequate to cover such , or that we would not be to bear substantial from such events, regardless of our insurance coverage.
Moreover, any aircraft accident or incident, even if fully insured, and whether involving us or other private aircraft operators, could create a public perception that we offer less safe or less reliable charter options than other private aircraft operators, which could cause customers to lose confidence and switch to other private aircraft operators or other means of transportation. In addition, any aircraft accident or incident, whether involving us or other private aircraft operators, could also affect the public’s view of industry safety, which may reduce the amount of trust by customers.
We incur considerable costs through the monthly management fee paid to Cirrus to maintain the quality of safety and programs training programs as well as the aircraft fleet we utilize. We cannot guarantee that these costs will not increase. Likewise, we cannot guarantee that our efforts will provide an adequate level of safety or an acceptable safety record. If the fleet we utilize does not maintain an acceptable safety record, we may not be able to retain existing customers or attract new customers, which could have a material adverse effect on our business, financial condition and results of operations.
If efforts to continue to build a strong brand identity and improve member satisfaction and loyalty are not successful, we may not be able to attract or retain members, and our operating results may be adversely affected.
We must continue to build and maintain strong brand identity for our products and services, which have expanded over time. We believe that strong brand identity will continue to be important in attracting members. If our efforts to promote and maintain our brand are not successful, our operating results and our ability to attract customers may be adversely affected. From time to time, our customers may express dissatisfaction with our products and service offerings, in part due to factors that could be outside of our control, such as the timing and availability of aircraft and service interruptions driven by prevailing political, regulatory, or natural conditions. To the extent dissatisfaction with our products and services is widespread or not adequately addressed, our brand may be adversely impacted and our ability to attract and retain customers may be adversely affected. With respect to our planned expansion into additional markets, we will also need to establish our brand and, to the extent we are not , our business in new markets may be impacted.
Any failure to offer high-quality customer support may harm our relationships with our customers and could adversely affect our reputation, brand, business, financial condition and results of operations.
Through our marketing, advertising, and communications with our customers, we strive to set the tone for our brand as aspirational but also within reach. We strive to create high levels of customer satisfaction through the experience provided by our team and representatives. The ease and reliability of our offerings, including our ability to provide high-quality customer support, helps us attract and retain customers. Our ability to provide effective and timely support is largely dependent on our ability to attract and retain skilled employees who can support our customers and are sufficiently knowledgeable about our products and services. As we continue to grow our business and improve our platform, we will face challenges related to providing quality support at an increased scale. Any failure to provide efficient customer support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation, brand, business, financial condition and results of operations.
Changes in laws or regulations affecting the aviation industry, or a failure to comply with any such laws or regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. Our business is subject to significant regulation by the FAA, the TSA as well as “know your customer” obligations and other laws and regulations. The laws and regulations concerning the selling of our products or services may change. If such changes occur, then our products or services may no longer be profitable. In addition, we are required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and our results of operations.
Risks Related to the flyExclusive Transactions and Us after the Closing of the Transactions
The proposed Transactions with flyExclusive may not be completed on the terms or timeline currently contemplated, or at all.
The consummation of the proposed Transactions is subject to numerous conditions, including (1) the effectiveness of the registration statement on Form S-4 filed by flyExclusive with the SEC in connection with the Transactions, (2) the approval by our stockholders of the Transactions, and (3) other customary closing conditions. There can be no assurance that the Transactions will be consummated. If the Transactions are not completed for any reason, the price of shares of our common stock may decline to the extent that the market price of shares of our common stock reflects, or previously reflected positive market assumptions that the Transactions would be completed, and the related benefits would be realized. In addition, we have expended and will continue to expend significant management time and resources and have incurred and will continue to incur significant expenses due to legal, advisory, printing and financial services fees related to the Transactions. These expenses must be paid regardless of whether the Transactions are consummated.
In the proposed Transactions with flyExclusive, we will divest substantially all of our fractional and jet card business and related assets, together with associated working capital and thereafter adopt a business strategy that focuses on expanding our AI data-center operations. Any or all of these decisions if incorrect may have a material adverse effect on the results of our operations, financial position and cash flows, and pose further risks to the successful operation of our business over the short and long-term.
There are substantial risks associated with divesting a portion of our legacy assets and operations in the proposed Transactions with flyExclusive and thereafter focusing primarily upon on opportunities in the AI sector, including the loss of working capital and the loss of revenue associated with divesting our aviation centric assets. After the proposed Transactions are consummated, our management expects to focus on opportunities in the AI data center sector, or that are complementary to that sector, and leverage our remaining assets in that process. While our management team has experience in the software development and artificial intelligence sectors (including from our existing booking platform app) there is no guarantee that our chosen strategy will be successful. Further, our business operations after the Transactions will be significantly dependent on our ability to further penetrate the AI data center sector and identify and execute upon business opportunities that are complementary to that sector, and the future market acceptance and sale of our existing or new AI data center-focused applications, and implementing our business model, which, in some cases are neither fully developed nor in qualification stages. There can be no assurance that we will be in addressing these or any other significant risks we may encounter after the of certain assets to flyExclusive or the expansion of our AI data center-focused strategy.
The AI data center sector in which we expect to primarily focus after the Transactions is subject to significant risks, including rapid growth and volatility, capital requirements, dependence on rapidly changing underling technologies, market and political risks and uncertainties and extreme competition. We cannot guarantee that we will be able to anticipate or overcome any or all of these risks and uncertainties, especially as a small company operating in an environment that includes many large, well-capitalized competitors with substantially more resources.
Developing and then commercializing AI data center-focused technologies, services and products is subject to significant barriers to entry and operational fluctuations. In order to become and then remain competitive, we will incur substantial costs associated with research and development, qualification, prototype production capacity and sales and marketing activities in connection with our products and services. We may also need to acquire new assets, or enter new agreements, to facilitate our entry into certain opportunities in the greater AI data center sector. In addition, the rapidly changing industry, the length of time between developing and introducing a product to market, frequent changing customer (or market driven) specifications for apps and products, customer cancellations of products and general down cycles in the industry, among other things, make our future prospects difficult to evaluate. As a result of these factors, it is possible that we may not (i) generate sufficient positive cash flow from operations; (ii) raise funds through the issuance of equity, equity-linked or convertible debt securities; or (iii) otherwise have sufficient capital resources to meet our future capital or liquidity needs. There are no guarantees we will be able to generate additional financial resources beyond our existing balances.
We may not achieve some or all of the expected benefits of the Transactions, and the Transactions may adversely impact our business.
We may not realize the strategic, financial, operational or other benefits from the Transactions that we hope to achieve. We are seeking to divest certain assets and operations that have historically operated at a net loss, and thereafter primarily focus on the AI data center sector while leveraging certain remaining intellectual property and software assets and expertise. We cannot predict with certainty if or when anticipated benefits from the Transactions will occur or the extent to which they will be achieved. Following the completion of the Transactions, our operational and financial profile will change, and we will face new risks. Following the completion of the Transactions, we will initially be a smaller and less-diversified company compared to our company prior to the Transactions, and, may be more vulnerable to changing market conditions. The business opportunities that we expect to pursue will likely require us to identify and execute on additional sources of liquidity and are in industries or business sectors where we face barriers to entry and competition. While we believe that the Transactions will allow us to focus on business opportunities on which we can more readily scale and capitalize, we cannot you that following the Transactions we will be to identify any such or effect and capitalize on those business .
Particularly after the Transactions, our success will be dependent on our ability to successfully develop (or acquire interests in) new services, platforms and solutions that utilize AI and enhance or complement our existing services, platforms and solutions, and market acceptance of these offerings.
Although we will retain various software and intellectual property assets after the Transactions and continue to offer our existing apps that utilize AI, the software and AI industries are characterized by rapid technological change, evolving industry standards, changing customer preferences, new product and service introductions and the emergence of new developers and vendors with lean cost and flexible cost models. Our future success will depend on our ability to successfully develop services, platforms and solutions that utilize AI and/or attract AI-oriented businesses that build upon or differ from our legacy aircraft fractional, jet card and management operations and keep pace with changes in our addressable markets, and the acceptance of these services, platforms and solutions by existing and target customers. We cannot guarantee that we will be successful in developing new applications, services, platforms and solutions, addressing evolving technologies on a timely or cost-effective basis or, if these services, platforms and solutions are developed, that we will be successful in the marketplace. We also cannot guarantee that we will be able to compete effectively with new developers or vendors offering lean cost and flexible cost models, or that products, services or technologies developed by others will not render our services, platforms and solutions non-competitive or . Our to address these developments could have a material effect on our business, results of operations and financial condition.
The Transactions could give rise to disputes or other unfavorable effects, which could materially and adversely affect our business, financial position or results of operations.
After the Transactions, we will have decreased working capital and will have divested certain of our revenue producing assets and operations. However, we will continue to own and operate certain other of our legacy assets and continue to have operational expenses and overhead (including the costs and expenses associated with being a publicly reporting company with a class of securities listed on Nasdaq), of both a nonrecurring and a recurring nature, and certain of these expenses and costs are related to arrangements made between us and certain of our existing vendors and strategic partners. Disputes with third parties could also arise out of these transactions, and we could experience unfavorable reactions to any separation from employees, financing partners or other interested parties. These increased expenses, changes to operations, disputes with third parties or other effects could materially and adversely affect our business, financial position or results of operations.
Risks Related to Our Anticipated Data Center Operations
Our focus on the development of data centers, and provision of AI data center services represents an evolving business model and strategy.
We began transitioning our focus into the AI data center market in the second quarter of 2025, which represents a significant evolution in our business strategy. As AI solutions become more widely available, we expect services and products related to such assets to continue to evolve, and we expect that our business model will also need to evolve. Our expansion and focus on the AI data center industry may take longer or be more expensive than we currently anticipate as a result of evolving market conditions, technological developments, customer requirements, our evolving business model or otherwise, and any such expansion may also have an impact on our ongoing private charter business. Factors including inflation, tariffs, and interest rates may all impact the amount of capital required and the terms upon which we can obtain such capital. We will continue to review our expansion plans in light of such factors, and our expansion plans may be delayed or may change as a result. There is no assurance that our expansion into AI data center operations, and any other changes in our business model or modifications to our strategy, will be successful or that they will not result in harm to our business. Even if successful, such changes and modifications may increase the complexity of our business and place significant strain on our management, personnel, operations, systems, technical performance, financial resources and internal financial control and reporting functions.
Moreover, we may not be able to manage growth effectively, which could damage our reputation, limit our growth and adversely affect our operating results. As a result, we are subject to many risks common to growing companies, including under-capitalization, cash shortages, limitations concerning personnel, financial and other resources and lack of revenues and limited profitability or losses. Further, we cannot provide any assurance that we will successfully identify all emerging trends and growth opportunities within the AI data center market or other markets we seek to expand into, and we may lose out on such opportunities. Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition.
Our AI data center services strategy may take significant time and expenditure to implement, and our efforts may not be successful
Our growth strategy includes expanding and diversifying our revenue sources into new markets, and we are continuing to attempt to diversify into the AI data center market pursuant to that strategy. The continued development of our existing projects and planned facilities to implement that strategy is subject to various factors beyond our control. There may be difficulties in integrating new equipment into existing infrastructure, constraints on our ability to connect to or procure the expected electricity supply capacity at facilities, defects in design, construction or installed equipment, diversion of management resources, insufficient funding or other resource constraints. Actual costs for development may exceed our planned budget. In particular, our ability to utilize existing data centers could be challenging and may require retrofits, alterations or other custom designed solutions to enable the operating environment to function for our requirements, which may not be possible or may be cost prohibitive.
We intend to execute on our growth strategy in part by acquiring and developing data center sites, taking into account a number of important characteristics such as availability of energy, electrical infrastructure and related costs, geographic location and the local regulatory environment. We may have difficulty finding sites that satisfy our requirements at a commercially viable price or our timing requirements. Furthermore, there may be significant competition for suitable data center sites, and government regulators, including local permitting officials, may restrict our ability to set up data center operations in certain locations.
In addition, our ability to complete the purchase of sites may ultimately fail due to factors beyond our control (for example, due to non-fulfilment of contractual conditions precedent and default or non-performance by counterparties). In addition, estimated power availability at sites secured could be materially less than initially expected, available too late, delayed, or not available in each case whether at sustainable cost or at all. Furthermore, the ability to secure connection agreements to access such power sources and permits, approvals and/or licenses to construct and operate our facilities could be delayed by regulatory approval processes, may not be successful or may be cost prohibitive.
Development and construction delays, increased development and construction costs, cost overruns, changes in market circumstances, availability and cost of construction materials, environmental or community constraints, an inability to find suitable and feasible data center locations as part of our expansion and other factors may adversely affect our growth plans as well as our operations, financial position and financial performance. We will continue to review our growth strategy expansion plans in light of evolving market conditions. Any such delays, and any failure to execute on our growth strategy and expansion plans, could adversely impact our business, financial condition, cash flows and results of operations.
In the AI and data center sector our business model is expected to rely significantly on other companies to enter into joint ventures with us for data center projects. Therefore, our results are subject to the additional risks associated with the financial condition, operational expertise and priorities of our joint venture partners.
The success of projects held under joint ventures that are not operated by us are substantially dependent on the joint venture partner, over which we have limited or no control. Our interests in the Midwest data center project and the Maritime data center project are subject to our joint venture arrangement with Consensus Core and we do not have full management control over those projects. We expect that other projects that we pursue will also be with joint venture partners. Although our joint venture agreement provides certain voting rights and other minority-interest safeguards, the majority partner and/or operator not only manages operations, but controls most decisions, including budgets and scope and pace of exploration and other activities. Consequently, we are dependent on the operational expertise and financial condition of our joint venture partners, as well as their priorities. Therefore, as it relates to the data center projects that we joint venture, our results are (and will be) subject to the additional risks associated with the financial condition, operational expertise and priorities of our joint venture partners, which could have a material adverse effect on our financial position or results of operations.
Our increased focus on the AI data center market may not be successful and may result in adverse consequences to our business, results of operations and financial condition.
Our growth strategy includes expanding and diversifying our revenue sources into new markets, and we are continuing to attempt to diversify into the broader AI data center market sector pursuant to that strategy. In particular, we are utilizing certain existing infrastructure and intend to build out new infrastructure to develop and offer data center services to a broad range of customers for a variety of applications, which may include scientific research, engineering, rendering, machine learning, and other AI cloud service providers. We believe our future success will depend in part on our ability to execute on our growth strategy and expand into new markets.
We have limited experience in developing and offering AI data center services, or acquiring the relevant components to develop an offering of such services for customers in various industries and markets. We may experience difficulties with infrastructure development or modification, engineering, product design, product development, marketing or certification, which could result in excessive research and development expenses and capital expenditure, delays or prevent us from developing and offering data center services at all. For example, we may need to make modifications to existing data centers, or modify the design of new data centers, in order to meet customer requirements for services or provide a competitive offering of services. Any such modifications (if possible at all) may involve significant capital expenditures, and may result in increased cost of our facilities, delays in our development and construction schedules for our new facilities, or outages at existing data centers. Further, any such modifications could adversely impact the performance of our data centers, including cooling systems and electrical performance, among others. Our focus on developing and offering AI data center services may also disrupt our business, our resources, and require significant management attention that would otherwise be available for utilization within and development of our existing business. It may also impact our energy strategy, including limiting our ability to energy use and require a different strategy for hedging in the electricity markets in which we operate. Additionally, our ability to develop and offer AI data center services relies on third-party components for which there are limited suppliers, which require significant capital expenditure and may be to procure given the current elevated demand. We may be to raise the required capital for the development and offer of AI data center services.
The market for AI data center services is driven in large part by demand for data center space capable of supporting graphics processing units (“ GPUs ”), server clusters, specialized or high-performance applications, and hosted software solutions which require fast and efficient data processing, and is characterized by rapid advances in technologies. It is difficult to predict the development of demand for AI data center services, the size and growth rate for this market, the entry of competitive products, or the success of any existing or future products that may compete with any services we may develop. There has been an increasing number of competitors providing AI data center services, which has resulted in increasing competition and pricing pressure that may cause us to reduce our pricing in order to remain competitive. Meanwhile, if there is a reduction in demand for any of these services, whether caused by a lack of customer acceptance, a slowdown in demand for computational power, an overabundance of unused computational power, advancements in technology, technological challenges, competing technologies and solutions, decreases in corporate and customer spending, economic conditions or otherwise, it could result in reduced customer orders, early order , the of customers, or decreased sales, any of which would affect our business, results of operations and financial condition.
Expansion of our business strategy into the AI data center market could increase competitive, operational, legal and regulatory risks to our business in ways we cannot predict.
As we continue to enter into the AI data center market, competitive, operational, legal and regulatory risks may be exacerbated as there is substantial uncertainty about the extent to which AI will result in changes that come with risks that we may not be able to anticipate, prevent, mitigate or remediate.
We will face new sources of competition, new business models and new customer relationships, and our competitors may be larger, have longer operating histories and significantly greater resources than we do. In order to be successful, we will need to cultivate new industry relationships and strengthen existing relationships to bring any new solutions and offerings to market, and the success of any services we develop will depend on many factors, including demand for those solutions, our ability to win and maintain customers, and the cost, performance and perceived value of any such services. As a result, there can be no assurance that any AI data center services we develop will be adopted by the market, or be profitable or viable. Our limited experience with respect to the provision of data center services could limit our ability to successfully execute on this growth strategy or adapt to market changes. If we are unsuccessful in continuing to develop and offer AI data center services, our business, results of operations and financial condition could be adversely affected. Further, an increased focus on AI data center services could or reduce our existing aircraft operations, which may affect our business, results of operations and financial condition.
Our investments in developing and offering AI data center services may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks, ethical concerns or other complications that could adversely affect our business, reputation, results of operations or financial condition. The increasing focus on the risks and strategic importance of certain AI services, such as AI cloud services, and AI or machine learning technologies, has already resulted in regulatory restrictions that target products and services capable of enabling or facilitating AI and machine learning, and may in the future result in additional restrictions impacting any offerings we may develop, including AI cloud services and other solutions. Complying with multiple evolving laws, rules and regulations from different jurisdictions related to new solutions that we develop could increase our cost of doing business or may change the way that we operate in certain jurisdictions. We may not be able to adequately anticipate or respond to these evolving laws and regulations, and we may need to expend additional resources to adjust our offerings in certain jurisdictions if applicable legal frameworks are across jurisdictions.
For example, the U.S. Federal Trade Commission, Department of Justice, Consumer Financial Protection Bureau and Equal Employment Opportunity Commission issued a joint statement on AI, demonstrating their interest in monitoring the development and use of automated systems and enforcement of their respective laws and regulations. Such regulatory frameworks, as well as developing regulatory guidance and judicial decisions in this area, may affect our use of AI and our ability to provide and to improve our products and solutions, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us and could adversely affect our business, financial condition and results of operations.
Furthermore, concerns regarding third-party use of AI for purposes contrary to governmental and societal interests, including concerns relating to the misuse of AI applications, models, and solutions, could result in restrictions on AI products. Any such restrictions could reduce the demand for our intended AI data center services, and negatively impact our business, financial condition and operating results, and damage our reputation.
It is also unclear how our status as an infrastructure provider for customers developing and deploying AI applications, as opposed to developing such applications ourselves, could affect the applicability of these existing or proposed regulatory frameworks and other restrictions with respect to any services we may offer from time to time. However, it is possible that such regimes will impose obligations on infrastructure providers, such as us, to oversee, monitor or restrict the use of AI systems that are trained or deployed on their systems, and/or to ensure compliance with such regulatory frameworks and other restrictions. If our customers violate existing or proposed regulatory regimes or other restrictions, or if they use our services for unlawful, harmful or non-compliant purposes, we could be subject to regulatory investigations, regulatory fines, reputational damage or contractual liability for any such actions, even if we do not control the customer applications. Further, AI data center customers increasingly are looking to pass through their regulatory obligations and other liabilities to their outsourced data center providers, and we may not be able to limit our liability or in an event of by such customers whether as a result of our of an agreement or otherwise.
These competitive, operational, legal and regulatory risks are evolving and uncertain and could impact our business in ways we cannot predict. Any of the foregoing could limit our ability to expand our offering of AI data center services and continue to grow our business, which could have a material adverse effect on prospects, results of operations and financial condition.
Changing political and geopolitical conditions, including changing international trade policies and the implementation of wide-ranging, reciprocal and retaliatory tariffs, surtaxes and other similar import or export duties, or trade restrictions, could adversely impact our business, prospects, operations and financial performance, specifically as it relates to the development and provision of AI data center services.
Changes in political and geopolitical conditions may be difficult to predict and may adversely affect our business, prospects, operations and financial performance. For example, changes in political and geopolitical conditions may lead to changes in governmental policies, laws and regulations, including with respect to sanctions, taxes, tariffs, surtaxes and other similar import or export duties, import and export controls or restrictions, tariff rate quotas, and the general movement of goods, materials, services and capital, or may lead to uncertainty as to the potential for such changes. Our joint venture with Consensus Core involves our acquisition of equity interests in data centers located in Canada. Accordingly, our business, prospects, operations and financial condition may be significantly impacted by such changes in political and geopolitical conditions, and in particular by changes in international trade policies, including the imposition of tariffs, surcharges and other similar import or export duties, or trade restrictions including tariff rate quotas, as well as by uncertainty with respect to the potential for such changes.
Our anticipated data center business is expected to have significant customer concentration.
We believe that we will generate a large portion of our revenue from our AI data center interests and operations from a small number of customers. There are inherent risks whenever a large percentage of total revenue is concentrated with a limited number of customers. If we were to lose one or more of our customers, our operating results could be materially adversely affected.
We expect that the limited number of customers will account for a high percentage of our revenue in the future. In addition, demand for our services generated by these customers may fluctuate significantly from quarter to quarter. The anticipated concentration of our customer base increases risks related to the financial condition of our customers, and the deterioration in financial condition of a single customer or the failure of a single customer to perform its obligations could have a material adverse effect on our results of operations and cash flow. In the event that any of our future customers experience a decline in their equipment usage for any reason, or decide to discontinue the use of our facilities, we may be compelled to lower our prices or risk losing a significant customer. Such developments could adversely affect our profit margins and financial position, leading to a negative impact on our revenue and operational results.
We may be unable to raise additional capital needed to fulfill our capital or liquidity needs or grow our business and achieve the expansion plans we have for the development and provision of AI data center services.
We will need to raise additional capital to pursue our planned and potential growth strategies (such as our expansion into the AI data center market), including to fund additional construction at existing or new sites / projects, to develop new sites to increase our data center capacity, and to fund the purchase of additional equipment to increase operating capacity, continue our development of AI data center services and potentially expand into new markets. In particular, constructing data center facilities for AI services requires significant capital expenditures when compared to capital expenditures for our legacy aircraft charter business.
We may seek to raise additional capital through future offerings of securities (including potentially convertible debt securities) that could rank senior to our shares of Common Stock upon our bankruptcy or liquidation or have various dividend preferences. An issuance of additional equity securities or securities with a right to convert into equity, such as convertible bonds or warrant bonds, could adversely affect the market price of our shares of Common Stock and would dilute the economic and voting interests of shareholders. We may be required to accept terms that restrict our ability to incur additional indebtedness or to take other actions including terms that require us to maintain specified liquidity or other ratios that could otherwise not be in the interests of our shareholders. As the timing and nature of any future offering would depend on market conditions and other factors beyond our control, it is not possible to predict or estimate the amount, timing, or nature of future offerings. Ultimately, we may not be able to obtain additional debt, equity or equity-linked financing, or other forms of financing, on favorable terms, if at all, which could impair our growth and our development of AI data center services, affect our existing operations and requiring us to seek additional capital, sell assets or or refinance our indebtedness. In addition, if the terms of additional financing are less or require us to comply with more covenants or restrictions, our business operations could be restricted. Any of the foregoing could impact our financial condition, cash flows and results of operations.
We expect to continue to incur substantial capital expenditures to grow our AI data center services business.
Our growth strategy includes expanding and diversifying our revenue sources, including by entering the AI data center services market, as well as aiming to develop new products and services leveraging our eventual data center capacity and access to power.
As a result, we expect eventually to incur capital expenditures to acquire the hardware necessary to provide services related to our AI data center operations and to implement our growth plans. These costs may be substantial, and in some cases may also be unexpected. If we do not generate sufficient revenue from customers of our AI data center services, we may not realize the benefit of these capital expenditures. Further, there is no guarantee that such technology will be available to us, available on commercially acceptable terms, successfully implemented in our operations or achieve the expected operational performance. If we fail, this will hinder the ability to maintain competitive performance in compute-intensive applications and may have significant adverse impact on our results of operations and may delay or prevent the timely completion of our growth strategies and anticipated increases in data center capacity.
Further, the price of new equipment and hardware, including GPUs, is subject to market fluctuations. Such fluctuations are influenced by factors including, supply and demand for such equipment. In the case of GPUs for AI services, current demand for NVIDIA GPUs and certain networking equipment far exceeds supply, impacting the price and availability of such hardware. As a result, the cost of new equipment has been and may in the future be unpredictable, and may also be significantly higher than our historical costs.
Supply chain and logistics issues for us, our contractors or our suppliers may frustrate or delay our expansion plans into the AI data center services market or increase the cost of constructing our infrastructure.
The equipment that we intend to use in developing and providing our AI data center operations is generally manufactured by third parties using a large amount of commodity inputs (for example, steel, copper, aluminum). Many manufacturing businesses globally are currently experiencing supply chain issues and increased costs with respect to such commodities and other materials and labor used in their production processes, which is due to a complex array of factors including increased demand from AI services, data center and other industries, and which can occur from time to time. Procurement from suppliers which manufacture equipment outside of North America is also exposed to additional risks such as regulatory changes (for example, a tariff or ban on equipment imported or exported from certain jurisdictions) and global freight disruptions. Additionally, shortages in global semiconductor chip supply may impact procurement timelines for equipment. Such issues may cause delays in the delivery of, or increases in the cost of, the equipment used in our operations, which could materially impact our operating results and may delay our expansion plans.
The delivery of equipment is subject to the fluctuations of supply and demand for air and sea freight, as well as the availability of local logistics companies, coupled with possible local congestion at key processing locations, such as airports or pickup warehouses. Additionally, there are inherent risks associated with transit, including potential damage, loss or theft of equipment. These logistical challenges could materially impact our operations, causing delays or losses in equipment delivery and potentially hindering our expansion plans.
In addition, public health crises, including an outbreak of an infectious disease, terrorist acts, and political or military conflict, such as the conflict in Ukraine, have increased the risks and costs of doing business abroad. Many of the manufacturers of the equipment we need to develop and expand our AI data center operations are located outside of the jurisdictions in which we have facilities and sites, necessitating international shipping to enable us to incorporate the equipment into our facilities. Political and economic instability have caused many businesses to experience logistics issues in the past resulting in delayed deliveries of equipment, which could occur again in the future. Supply chain disruptions may also occur from time to time due to a range of factors beyond our control, including, but not limited to, climate-related risks, seasonal and unseasonal weather events, shipping constraints (for example, blocked shipping canals or closure of shipyards), increased costs of labor, inflationary pressure, freight costs, industrial disputes, political or military blockades and raw material prices along with a of qualified workers. Such supply chain can potentially cause material impacts to our operating performance and financial position if delivery of equipment for our facilities is .
Any electricity outage, non-supply or limitation of electricity supply, including as a result of political pressures or regulations, or increase in electricity costs may result in material impacts to our AI data center services operations and financial performance.
The primary input of our AI data center operations will be electricity and we will rely on third parties, including utility providers, for the reliable and sufficient supply of electricity to our infrastructure. Our growth strategy includes the development and operation of AI data centers. There can be no assurance that utility providers will have the necessary infrastructure to deliver power that we may require to implement our development plans, or that we will be able to procure power from or contract with these third parties on commercially acceptable terms. Further, we may experience delays in procuring power due to various factors outside of our control. Even if we are able to procure the power that we may require to implement our development plans, the relevant utility providers may impose onerous conditions that may adversely impact the feasibility or economics of our facilities. Any of the foregoing could adversely impact our growth plans, result in delays, and/or result in additional capital expenditure and other costs with respect to the development of our facilities, which could have a material adverse impact on our business, financial performance, financial condition and results of operations.
Further, we cannot guarantee that the third parties, including utility providers, that we rely on for the supply of electricity will be able to provide any electrical power at sufficient levels and consistently. As we increase our focus on and expand our AI data center services, we may add alternative sources of backup power supply in response to customer requirements or otherwise. These backup power supply arrangements may be costly to install and any use of such backup power supplies could also be costly. Non-supply or restrictions on the supply of, or our failure to procure sufficient electricity to ensure sufficient backup generation sources for our data centers, could adversely affect our operating performance and revenue by constraining the number of hardware that we can operate at any one time. This may adversely impact customers of the services we offer, for example by adversely impacting our ability to meet contractual requirements in respect of uptime, availability or performance. If we fail to meet such contractual requirements, our customers may have the right to terminate their contracts with us, which could lead to the of such customers and impact business, financial performance, financial condition and results of operations. Moreover, electricity , or the perception that our data centers do not have adequate backup electricity generation, could impact our ability to compete in the AI data center services market.
Our access to electricity, or sufficient electricity, may be affected by climate-related risks, severe weather, acts of God, natural and man-made disasters, political or market operator interventions, utility equipment failure or scheduled and unscheduled maintenance that results in electricity outages to the utility or broader electrical network facilities. These electricity outages may occur with little or no warning and be of unpredictable duration. Further, our counterparties may be unable to deliver the required amount of power for various technical, economic or political reasons. As the operation of data centers generally are energy-intensive and backup power generation may be expensive to procure, any backup electricity supplies may not be available or may not be available on commercially acceptable terms, or be sufficient to power some or all of our hardware in an affected location for the duration of the outage. Any such events, including any significant nonperformance by counterparties, could have a material impact on our business, financial performance, financial condition and results of operations.
We may be affected by price fluctuations in the wholesale and retail power markets.
Our power arrangements may vary depending on the markets in which we operate, and comprise fixed and variable power prices, including arrangements that may contain price adjustment mechanisms in case of certain events. Furthermore, some portion of our power arrangements may be priced by reference to published index prices and, thus, reflect market movements outside of our control. A substantial increase in electricity costs could render the AI data center services we offer ineffective or not viable for us. Market prices for power, generation capacity and ancillary services are unpredictable. An increase in market prices for power, generation capacity or ancillary services may adversely affect our business, prospects, financial condition, and operating results. Long-term and short-term power prices may fluctuate substantially due to a variety of factors outside of our control, including, but not limited to:
increases and decreases in the supply and type of generation capacity;
instantaneous supply and demand balances;
changes in network and/or market regulator fees, programs and charges;
fuel costs;
commodity prices;
new generation technologies;
changes in power transmission constraints or inefficiencies;
climate-related risks and volatile weather conditions, particularly unusually hot or mild summers or unusually cold or warm winters, and other natural or man-made disasters, including the impacts of such on the demand or power;
technological shifts resulting in changes in the demand for power or in patterns of power usage, due to factors including increasing demand from data center operations as an industry, as well as the potential development of demand-side management tools, expansion and technological advancements in power storage capability and the development of new fuels or new technologies for the production or storage of power;
federal, state, local and foreign power, market and environmental policy, regulation and legislation;
changes in capacity prices and capacity markets; and
power market structure (for example, energy-only versus energy and capacity markets).
Periodically, state legislatures may pass new laws that could affect our business—including through the regulation of energy prices. While we will aim to mitigate price disruptions (for example, we may, from time to time, seek to purchase electricity market derivatives or hedges to minimize wholesale price volatility), there is no guarantee that any such arrangements would be successful in mitigating volatility or increases in wholesale market prices. Increases and fluctuations in the cost of electricity we purchase could have a material adverse effect on our business, financial performance, financial condition and results of operations.
Any delays or unexpected costs in the development of any new properties acquired for development may delay and harm our growth prospects, future operating results and financial condition.
We intend to build out data centers in the future at significant cost. Our successful development of these and future projects is subject to many risks, including those associated with:
delays in construction, or changes to the plans or specifications;
budget overruns, increased prices for raw materials or building supplies, or lack of availability and/or increased costs for specialized data center components, including long lead time items such as generators;
construction site accidents and other casualties;
financing availability, including our ability to obtain construction financing and permanent financing, or increases in interest rates or credit spreads;
labor availability, costs, disputes and work stoppages with contractors, subcontractors or others that are constructing the project;
failure of contractors to perform on a timely basis or at all, or other misconduct on the part of contractors;
access to sufficient power and related costs of providing such power to our customers;
environmental issues;
supply chain constraints;
fire, flooding, earthquakes and other natural disasters;
pandemics;
geological, construction, excavation and equipment problems; and
delays or denials of entitlements or permits, including zoning and related permits, or other delays resulting from requirements of public agencies and utility companies.
In addition, development activities, regardless of whether they are ultimately successful, also typically require a substantial portion of our management’s time and attention. This may distract our management from focusing on other operational activities of our business. If we are unable to complete development projects successfully and on a timely basis, our business may be adversely affected.
Government regulators and utilities may potentially restrict the ability of electricity suppliers to provide electricity to AI data centers or AI services generally.
The supply of electricity for our existing or future operations, and the interconnection to the transmission system of any facilities we are currently developing or may develop in the future, could be limited or otherwise adversely impacted as a result of political pressure or regulation. Government and regulatory scrutiny related to AI services and their energy consumption and impact on the environment has increased and may continue to increase. Some governments and regulators are increasingly focused on the energy and environmental impact of data centers in particular, including the impact on the electricity market that may arise from price responsiveness. This has led to new governmental measures regulating, restricting or prohibiting the use of electricity for data centers generally in any of the jurisdictions in which we operate from time to time.
For example, in December 2022, the Government of British Columbia announced a temporary 18-month suspension on new and early-stage BC Hydro connection requests from cryptocurrency mining projects, which was subsequently extended for another 18-months in June 2024. The suspension was challenged in court, but subsequently upheld by the British Columbia Court of Appeal. Additionally, in May 2024, the Government of British Columbia amended the BC Utilities Commission Act to enable the government to enact regulations regarding public utilities’ provision of electricity service to cryptocurrency miners. These events demonstrate that potential policy-driven actions and future actions by governments, or the issuance of any new legislation, government orders of regulations, may reduce the availability and/or increase the cost of electricity in the geographic locations in which our operating facilities could be located, or could otherwise adversely impact our business.
We may fail to anticipate or adapt to technology innovations in a timely manner, or at all.
The AI data center market is experiencing rapid technological changes. In addition, use of AI is becoming more prevalent. Failure to anticipate technology innovations or adapt to such innovations in a timely manner, or at all, may result in our current and future capabilities becoming obsolete. The process of developing and marketing new products, services, solutions or capabilities, and implementing the use of new technologies in our business, is inherently complex and involves significant uncertainties. There are a number of risks, including the following:
our product or service planning efforts may fail in resulting in the development or commercialization of new technologies or ideas;
our research and development efforts may fail to translate new product plans into commercially feasible solutions;
our new products or solutions that we offer (including AI data center services) may not be well received by consumers or otherwise may fail to achieve their intended purpose or functionality;
we may not have adequate funding and resources necessary for continual investments in product planning and research and development;
to the extent that we do not have sufficient rights to use the data or other material or content used in or produced by AI tools that we may use in our business, or if we experience cybersecurity incidents in connection with our use of AI, it could adversely affect our reputation and expose us to legal liability or regulatory risk, including with respect to third-party intellectual property, privacy, publicity, contractual or other rights;
in the United States, a number of civil lawsuits have been initiated related to the use of AI, which may, among other things, require us to limit the ways in which our AI systems in our business;
our products or solutions may become obsolete due to rapid advancements in technology and changes in consumer preferences; and
high level of competition in the digital asset, data center, and AI services markets means that competitors may introduce superior products or services before we can develop or market our own innovations.
Any failure to anticipate the next generation technology roadmap or changes in customer preferences or to timely develop new or enhanced products or implement use of new technologies in our business, including AI, in response could result in decreased revenue and market share. An inability to adapt could tarnish our reputation as an innovator and leader in our industry, further affecting our competitive position and long-term viability. In addition, as the utilization of AI becomes more prevalent, we anticipate that it will continue to present new or unanticipated ethical, reputational, technical, operational, legal, competitive, and regulatory issues, among others. As a result, the challenges presented with our use of AI could adversely affect our business, financial condition and results of operations.
Risks Related to Ownership of our Common Stock
We have never paid cash dividends on our common stock, and we do not anticipate paying dividends in the foreseeable future.
We have never paid cash dividends on our capital stock and currently intend to retain any future earnings to fund the growth of our business, other than mandatory dividend payments on our preferred stock, subject to Delaware law. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant. As a result, capital appreciation, if any, of shares of our common stock will be the sole source of gain for the foreseeable future.
Anti-takeover provisions contained in our governing documents and applicable laws could impair a takeover attempt.
Our Certificate of Incorporation and certain rules and regulations provide certain rights and powers to our board of directors that could contribute to the delay or prevention of an acquisition that we deem undesirable. These include, but are not limited to:
authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to shares of our common stock;
limiting the liability of, and providing indemnification to, our directors and officers;
limiting the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting;
requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our Board;
controlling the procedures for the conduct and scheduling of Board and stockholder meetings;
providing an exclusive forum selection provision;
providing our board of directors with the express power to postpone previously scheduled annual meetings and to cancel previously scheduled special meetings;
establishing a classified board of directors so that not all members of our board are elected at one time;
limiting the determination of the number of directors on our Board and the filling of vacancies or newly created seats on the board to our Board then in office; and
providing that directors may be removed by stockholders only for cause.
Any of the foregoing provisions and terms that have the effect of delaying or deterring a change in control could limit the opportunity for stockholders to receive a premium for their shares of our securities, and could also affect the price that some investors are willing to pay for our securities.
As permitted by our governing documents, in February 2026 the Company entered into a Rights Agreement with its transfer agent and our Board declared a dividend distribution of one right for each outstanding share of Common Stock. Each right, when and if it becomes exercisable, would allow the holder to purchase one one-thousandth of a share of the Company’s Series C Junior Participating Preferred Stock. In the event of a takeover attempt, this preferred stock would give holders of the rights (other than the potential acquirer) the ability to acquire additional shares of common stock at a discount, leading to the dilution of the potential acquirer’s stake. The distribution of the rights and the adoption of the corresponding Rights Agreement can have negative effects such as those described above.
Our stock price may be volatile, and you may not be able to sell shares of our common stock at or above the price at which you purchased such shares.
Fluctuations in the price of shares of our common stock could contribute to the loss of all or part of your investment. If an active market for our securities develops and continues, the trading price of shares of our common stock could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control.
Factors affecting the trading price of our common stock may include:
actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public;
issuance of new or updated research or reports by securities analysts or changed recommendations for our industries in general;
announcements of significant acquisitions, strategic partnerships, joint ventures, collaborations, financings, or capital commitments;
the volume of shares of our common stock available for public sale;
operating and stock price performance of other companies that investors deem comparable to us;
our ability to market new and enhanced products and technologies on a timely basis;
changes in laws and regulations affecting our business;
our ability to meet compliance requirements;
commencement of, or involvement in, litigation involving us;
changes in financial estimates and recommendations by securities analysts concerning us or the market in general;
the timing and magnitude of investments in the growth of the business;
actual or anticipated changes in laws and regulations;
additions or departures of key management or other personnel;
increased labor costs;
disputes or other developments related to intellectual property or other proprietary rights, including litigation;
the ability to market new and enhanced solutions on a timely basis;
sales of substantial amounts of shares of our common stock by our directors, executive officers, significant stockholders or the perception that such sales could occur;
trading volume of shares of our common stock, including as a result of transactions we may execute pursuant to existing financing arrangements;
changes in capital structure, including future issuances of securities or the incurrence of debt and the terms thereof; and
general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general and Nasdaq have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.
If we fail to comply with the continued listing requirements of Nasdaq, we would face possible delisting, which would result in a limited public market for our shares, limit our ability to access existing liquidity facilities and make obtaining future financing more difficult for us.
Shares of our common stock are currently listed on Nasdaq under the symbol “JTAI”. In order to continue listing our securities on Nasdaq, we must maintain certain financial, distribution and stock price levels. We cannot assure you that we will be able to continue to meet those listing requirements.
On February 6, 2026, we received the Notice Letter from the Nasdaq Listing Qualifications Department of Nasdaq stating that we are not in compliance with Nasdaq Listing Rule 5450(a)(1), the Minimum Bid Price Requirement, as the minimum bid price of our common stock had been below $1.00 per share for 30 consecutive business days. The Notice Letter has no immediate effect on the listing or trading of our common stock. We have 180 calendar days, or until August 5, 2026, to regain compliance with the Minimum Bid Price Requirement. In the event we do not regain compliance with the Minimum Bid Price Requirement during the Initial Compliance Period, we may be eligible for an additional 180-calendar day compliance period if, at that time, we meet the continued listing requirement for the market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement.
At the 2025 annual meeting of stockholders, we received stockholder approval to effect a reverse stock split of our issued and outstanding shares of common stock at a ratio of up to 1-for-250. Should we not regain compliance with the Minimum Bid Price Requirement during the Initial Compliance Period or the Additional Compliance Period, if applicable, we expect to effect such a reverse stock split in a sufficient ratio so as to cause us to regain compliance with the Minimum Bid Price Requirement. Although we believe that we will be able to regain compliance with the Minimum Bid Price Requirement, there can be no assurance that we will be able to regain compliance with the Minimum Bid Price Requirement, satisfy the requirements necessary for eligibility for an Additional Compliance Period, or maintain compliance with any other listing requirements. Failure to meet the continued listing standards of Nasdaq may result in shares of our common stock being delisted from Nasdaq.
If Nasdaq were to delist shares of our common stock from trading and we are unable to list shares of our common stock on another national securities exchange, we expect shares of our common stock could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
a limited availability of market quotations for shares of our common stock;
reduced liquidity for shares of our common stock;
a determination that our common stock qualifies as a “penny stock,” requiring brokers trading in shares of our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for shares of our common stock;
a limited amount of news and analyst coverage; and
a decreased ability to issue additional securities or obtain additional financing in the future.
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Since shares of our common stock are listed on Nasdaq, they qualify as a covered security. Although the states are preempted from regulating the sale of our securities, the federal statute allows the states to investigate companies if there is a suspicion of fraud. If there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. Further, if we were no longer listed on a securities exchange, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities.
Stockholders may experience dilution of their ownership interest due to the issuance of shares of our common stock.
In order to raise additional capital, we may at any time (but subject to applicable limitations imposed under SEC rules or Nasdaq rules), offer, sell, and issue additional shares of our common stock (or other securities) under an effective Registration Statement on Form S-3 (File No. 333-289982 and/or File No. 333-293011). These sales may be made from time to time pursuant to the Equity Distribution Agreement with Maxim Group LLC dated November 21, 2025, as amended, or otherwise. If we raise capital through the issuance of equity securities, the percentage ownership of our existing stockholders may be reduced, and such existing shareholders may experience dilution in net book value per share. Any such newly-issued equity securities may also have rights, preferences or privileges senior to those of the holders of the common shares. If we raise additional funds through the incurrence of indebtedness, such indebtedness may involve restrictive covenants that impair our ability to pursue our growth strategy and other aspects of its business plan, expose us to greater interest rate risk and volatility, require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital and capital expenditures, increase our to general economic and industry conditions, place us at a competitive compared to our competitors that have less debt, and limit our ability to borrow additional funds. In connection with any such future capital raising transactions, whether involving the issuance of equity securities or the incurrence of indebtedness, we may be required to accept terms that restrict our ability to raise additional capital for a period of time, which may limit or prevent us from raising capital at times when it would otherwise be to do so.
Sales of shares of our common stock, or the perception of such sales, by us or our significant stockholders in the public market or otherwise could cause the market price for shares of our common stock to decline.
The sale of shares of common stock in the public market or otherwise, particularly sales by our officers or directors, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that is deemed appropriate. Resales of shares of our common stock may cause the market price of shares of our common stock to drop significantly, even if our business is doing well.
We have an effective Registration Statement on Form S-3 (File No. 333-281578 and File No. 333-292836) providing for the initial sale and issuance of our securities in an amount up to approximately $55.8 million. We also have an effective Registration Statement on Form S-3 (File No. 333-293011) providing for the initial sale and issuance of our securities in an amount up to $250 million. Given the substantial number of shares of common stock registered under these Registration Statements on Form S-3, the issuance of sales of our common stock or the sale of shares of our common stock by existing stockholders, or the perception of any such issuance or sale, could increase the volatility of the market price of shares of our common stock or result in a significant decline in the public trading price of shares of our common stock. Some of our existing stockholders have or may acquire their shares at a significant discount to the market price of shares of our common stock. This may create an incentive for such stockholders to sell shares of our common stock because such stockholders purchased the shares of our common stock at prices lower than the then-current trading price of shares of our common stock.
Stockholder activism could disrupt our business and harm our stock price.
We may face actions or proposals from activist stockholders that conflict with our business strategy, contemplated transactions, and other stockholders’ interests. Responding to these activities can be costly, time-consuming, and distract management and the Board from running our business. Activism may also create uncertainty about our future direction, which could harm relationships with customers, strategic partners, counterparties to prospective transactions, suppliers, and employees, and make it harder to implement our business strategy. If a proxy contest occurs, we could incur significant legal and solicitation expenses and management attention could be diverted. Activist campaigns may also lead to litigation, further increasing costs and disruption. These activities could negatively affect our ability to execute our strategic plan and cause our stock price to fluctuate. In February 2026 we adopted, and may again in the future choose to adopt, a rights agreement, which when in place, could have certain anti-takeover effects.
