UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number: 001-40725

Jet.AI Inc.

(Exact Name of Registrant As Specified In Its Charter)

Delaware		93-2971741
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

10845 Griffith Peak Dr.

Suite 200

Las Vegas, NV

89135

(Address of Principal Executive Offices)

(ZIP Code)

(702) 747-4000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities to be registered under Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		JTAI		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☒

If an emerging growth company, indicate by check mark if the Company has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 14, 2025, there were 3,261,256 shares of the Company’s common stock, par value $0.0001, issued and outstanding.

TABLE OF CONTENTS

		Page
PART 1	FINANCIAL INFORMATION	1
Item 1	Financial Statements	1
	Consolidated Balance Sheets at June 30, 2025 (unaudited) and December 31, 2024	1
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)	2
	Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)	3
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (unaudited)	4
	Notes to Consolidated Financial Statements	5
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4	Controls and Procedures	38

PART II	OTHER INFORMATION	39
Item 1	Legal Proceedings	39
Item 1A	Risk Factors	39
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3	Defaults Upon Senior Securities	39
Item 4	Mine Safety Disclosures	39
Item 5	Other Information	40
Item 6	Exhibits	40
	Signatures	41

In this Form 10-Q, unless otherwise specified, the term “Jet.AI”, “we”, “us”, “our”, or “the Company” refers to Jet.AI Inc. and our subsidiaries on a consolidated basis.

THIS QUARTERLY REPORT ON FORM 10-Q MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THIS QUARTERLY REPORT, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS OF A FUTURE OR FORWARD-LOOKING NATURE ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

PART I FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

JET.AI, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30,			December 31,
	2025			2024

Assets
Current assets:
Cash and cash equivalents	$	8,265,732		$	5,872,627
Accounts receivable		112,079			132,230
Note receivable - related party		35,995			-
Deferred offering costs		45,000			-
Other current assets		199,706			357,751
Total current assets		8,658,512			6,362,608

Property and equipment, net		3,780			5,055
Intangible assets, net		86,745			86,745
Right-of-use lease asset		780,499			1,048,354
Investment in joint venture		100,000			100,000
Deposit on aircraft		4,050,000			2,400,000
Deposits and other assets		785,561			794,561
Total assets	$	14,465,097		$	10,797,323

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	367,361		$	280,450
Accrued liabilities		1,362,654			1,663,338
Deferred revenue		647,857			1,319,746
Operating lease liability		533,480			525,547
Total current liabilities		2,911,352			3,789,081

Lease liability, net of current portion		227,044			495,782
Total liabilities		3,138,396			4,284,863

Commitments and contingencies (Note 2 and 6)		-			-

Stockholders’ Equity
Preferred Stock, 4,000,000 shares authorized, par value $0.0001, 0 issued and outstanding		-			-
Series B Convertible Preferred Stock, 5,000 shares authorized, par value $0.0001, 989 and 250 issued and outstanding		-			-
Preferred Stock, value		-			-
Common stock, 200,000,000 shares authorized, par value $0.0001, 3,261,701 and 1,629,861 issued and outstanding		326			162
Subscription receivable		(6,724	)		(6,724	)
Additional paid-in capital		69,434,004			59,065,100
Accumulated deficit		(58,100,905	)		(52,546,078	)
Total stockholders’ equity		11,326,701			6,512,460
Total liabilities and stockholders’ equity	$	14,465,097		$	10,797,323

See accompanying notes to consolidated financial statements

JET.AI, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	2025			2024			2025			2024
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2025			2024			2025			2024

Revenues	$	2,225,900		$	3,083,884		$	5,700,538		$	6,932,482

Cost of revenues		2,336,200			3,500,880			5,926,352			7,473,834

Gross loss		(110,300	)		(416,996	)		(225,814	)		(541,352	)

Operating Expenses:
General and administrative (including stock-based compensation of $763,132, $1,201,728, $1,314,068, and $2,401,046, respectively)		2,246,980			2,663,753			4,899,407			5,210,047
Sales and marketing		81,601			102,470			376,009			549,070
Research and development		41,044			37,396			149,968			69,942
Total operating expenses		2,369,625			2,803,619			5,425,384			5,829,059

Operating loss		(2,479,925	)		(3,220,615	)		(5,651,198	)		(6,370,411	)

Other (income) expense:
Interest expense		-			-			-			79,314
Other (income) expense		(94,902	)		(59	)		(96,371	)		(120	)
Total other (income) expense		(94,902	)		(59	)		(96,371	)		79,194

Loss before provision for income taxes		(2,385,023	)		(3,220,556	)		(5,554,827	)		(6,449,605	)

Provision for income taxes		-			-			-			-

Net Loss	$	(2,385,023	)	$	(3,220,556	)	$	(5,554,827	)	$	(6,449,605	)

Cumulative preferred stock dividends		-			29,727			-			59,455

Net Loss to common stockholders	$	(2,385,023	)	$	(3,250,283	)	$	(5,554,827	)	$	(6,509,060	)

Weighted average shares outstanding - basic and diluted		2,583,667			57,362			2,315,946			54,331
Net loss per share - basic and diluted	$	(0.92	)	$	(56.66	)	$	(2.40	)	$	(119.80	)

See accompanying notes to consolidated financial statements

JET.AI, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024

(UNAUDITED)

	Shares			Amount		Shares		Amount		Receivable			Capital			Deficit			(Deficit)
	Series B Preferred Stock					Common Stock				Subscription			Additional Paid-in			Accumulated			Total Stockholders’ Equity
	Shares			Amount		Shares		Amount		Receivable			Capital			Deficit			(Deficit)
Balance at December 31, 2024		250		$	-		1,629,861	$	162	$	(6,724	)	$	59,065,100		$	(52,546,078	)		6,512,460
Stock-based compensation		-			-		25,485		3		-			550,933			-			550,936
Issuance of Series B Convertible Preferred Stock upon exercise of warrants		1,100			-		-		-		-			11,000,000			-			11,000,000
Series B Preferred Stock conversion		(50	)		-		532,100		53		-			(53	)		-			-
Offering costs		-			-		-		-		-			(1,270,000	)		-			(1,270,000	)
Net loss		-			-		-		-		-			-			(3,169,804	)		(3,169,804	)
Balance at March 31, 2025 (unaudited)		1,300		$	-		2,187,446	$	218	$	(6,724	)	$	69,345,980		$	(55,715,882	)	$	13,623,592
Stock-based compensation		-			-		145,000		15		-			763,117			-			763,132
Series B Preferred Stock conversion		(311	)		-		929,255		93		-			(93	)		-			-
Offering costs		-			-		-		-		-			(675,000	)		-			(675,000	)
Net loss		-			-		-		-		-			-			(2,385,023	)		(2,385,023	)
Balance at June 30, 2025 (unaudited)		989		$	-		3,261,701	$	326	$	(6,724	)	$	69,434,004		$	(58,100,905	)	$	11,326,701

	Series B Preferred Stock				Common Stock				Subscription			Additional Paid-in			Accumulated			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount		Receivable			Capital			Deficit			(Deficit)
Balance at December 31, 2023		-	$	-		43,353	$	4	$	(6,724	)	$	35,343,069		$	(39,272,388	)	$	(3,936,039	)
Stock-based compensation		-		-		-		-		-			1,199,318			-			1,199,318
Sale of Series B Convertible Preferred Units		150		-		1,111		-		-			1,500,025			-			1,500,025
Offering costs		-		-		-		-		-			(155,000	)		-			(155,000	)
Issuance of Common Stock upon exercise of warrants		-		-		6,892		1		-			742,473			-			742,474
Sale of Common Stock for cash		-		-		4,444		-		-			1,110,000			-			1,110,000
Net loss		-		-		-		-		-			-			(3,229,049	)		(3,229,049	)
Balance at March 31, 2024 (unaudited)		150	$	-		55,800	$	5	$	(6,724	)	$	39,739,885		$	(42,501,437	)	$	(2,768,271	)
Balance		150	$	-		55,800	$	5	$	(6,724	)	$	39,739,885		$	(42,501,437	)	$	(2,768,271	)
Stock-based compensation		-		-		-		-		-			1,201,728			-			1,201,728
Sale of Common Stock for cash		-		-		9,778		1		-			617,278			-			617,279
Net loss		-		-		-		-		-			-			(3,220,556	)		(3,220,556	)
Balance at June 30, 2024 (unaudited)		150	$	-		65,578	$	6	$	(6,724	)	$	41,558,891		$	(45,721,993	)	$	(4,169,820	)
Balance		150	$	-		65,578	$	6	$	(6,724	)	$	41,558,891		$	(45,721,993	)	$	(4,169,820	)

See accompanying notes to consolidated financial statements

JET.AI, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	2025			2024
	Six Months Ended
	June 30,
	2025			2024

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(5,554,827	)	$	(6,449,605	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation		1,275			67,626
Amortization of debt discount		-			80,761
Stock-based compensation		1,314,068			2,401,046
Non-cash operating lease costs		267,855			260,157
Changes in operating assets and liabilities:
Accounts receivable		20,151			(439,436	)
Other current assets		158,045			117,302
Deferred offering costs		(45,000	)		-
Accounts payable		86,911			(141,764	)
Accrued liabilities		(300,684	)		331,915
Deferred revenue		(671,889	)		(680,328	)
Operating lease liability		(260,805	)		(253,107	)
Net cash used in operating activities		(4,984,900	)		(4,705,433	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Advances under related party promissory note		(35,995	)		-
Purchase of intangible assets		-			(12,921	)
Deposit on aircraft		(1,650,000	)		-
Deposits and other assets		9,000			(100	)
Net cash used in investing activities		(1,676,995	)		(13,021	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of notes payable		-			(371,250	)
Repayments of related party notes payable		-			(297,500	)
Offering costs		(1,945,000	)		(155,000	)
Proceeds from exercise of common stock warrants		-			742,474
Proceeds from exercise of Series B Convertible Preferred Stock warrants		11,000,000			-
Proceeds from sale of Series B Preferred Stock		-			1,500,025
Proceeds from sale of Common Stock		-			1,727,279
Net cash provided by financing activities		9,055,000			3,146,028

Increase (decrease) in cash and cash equivalents		2,393,105			(1,572,426	)
Cash and cash equivalents, beginning of period		5,872,627			2,100,543
Cash and cash equivalents, end of period	$	8,265,732		$	528,117

Supplemental disclosures of cash flow information:
Cash paid for interest	$	-		$	79,314
Cash paid for income taxes	$	-		$	-

Non-cash financing activities:
Issuance of Common Stock for Series B Preferred Stock conversion	$	146		$	-

See accompanying notes to consolidated financial statements

JET.AI, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS

Jet.AI Inc., formerly known as Oxbridge Acquisition Corp. (“Jet.AI” or the “Company”), was incorporated as a Cayman Islands exempted company on April 12, 2021. The Company was incorporated for the purpose of effecting a merger, capital stock or share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Jet Token, Inc. was formed on June 4, 2018 in the State of Delaware and is headquartered in Las Vegas, Nevada.

On August 10, 2023, the Company consummated the business combination transaction (“Business Combination”) pursuant to the Business Combination Agreement and Plan of Reorganization (the “Business Combination Agreement”) with OXAC Merger Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of the Company (“First Merger Sub”), Summerlin Aviation LLC (f/k/a OXAC Merger Sub II, LLC), a Delaware limited liability company and a direct wholly owned subsidiary of the Company (“Second Merger Sub”), and Jet Token, Inc., a Delaware corporation (“Jet Token”). Pursuant to the terms of the Business Combination Agreement, a business combination between the Company and Jet Token was effected through the merger of First Merger Sub and Jet Token, with Jet Token emerging as the surviving company, followed by a merger between Jet Token and Second Merger Sub, with Second Merger Sub emerging as the surviving company as a wholly owned subsidiary of the Company. In connection with the Business Combination, the Company was domesticated and continues as a Delaware corporation and immediately changed its name to “Jet.AI Inc.”

Following the closing of the Business Combination, the Company’s common stock, par value $0.0001 per share, was listed on the Nasdaq Stock Market LLC under the ticker symbol “JTAI” and Jet Token was determined to be the accounting acquirer in the Business Combination. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Jet Token issuing stock for the net assets of the Company, accompanied by a recapitalization. The Company is now a holding company for several wholly owned subsidiaries, including Second Merger Sub.

The Company, directly and indirectly through its subsidiaries, is principally involved in (i) the sale of fractional and whole interests in aircraft, (ii) the sale of jet cards, which enable holders to use certain aircraft at agreed-upon rates, (iii) the operation of a proprietary booking platform (the “App”), which functions as a prospecting and quoting platform to arrange private jet travel with third-party carriers as well as via the Company’s leased and managed aircraft, (iv) direct chartering of its HondaJet Elite aircraft by Cirrus Aviation Services (“Cirrus”), (v) aircraft brokerage and (vi) service revenue from the monthly management and hourly operation of customer aircraft.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going Concern and Management Plans

The Company has limited operating history and has incurred losses from operations since inception. These matters raise concern about the Company’s ability to continue as a going concern.

During the next twelve months, the Company intends to fund its operations with capital from its operations, and proceeds from sales of debt or equity securities. The Company could, if necessary, reduce cash burn to preserve capital. There are no assurances, however, that management will be able to raise capital on terms acceptable to the Company. If the Company is unable to obtain sufficient amounts of additional capital, the Company may be required to reduce the near-term scope of its planned development and operations, which could delay implementation of the Company’s business plan and harm its business, financial condition and operating results. The consolidated balance sheets do not include any adjustments that might result from these uncertainties.

Basis of Presentation

The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP, whereby the Company is treated as the acquired company and Jet Token is treated as the acquirer (the “Reverse Recapitalization”). Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Jet Token issuing stock for the net assets of the Company, accompanied by a recapitalization. The net assets of the Company were stated at historical cost, with no goodwill or other intangible assets recorded.

Jet Token was determined to be the accounting acquirer in the Business Combination based on the following predominate factors:

	●	Jet Token’s former stockholders had the greatest voting interest in the combined entity;
	●	Jet Token’s former stockholders had the ability to nominate a majority of the initial members of the combined entity board of directors;
	●	Jet Token’s senior management is the senior management of the combined entity;
	●	Jet Token is the larger entity based on historical operating activity and has the larger employee base; and
	●	The post-combination company has assumed a Jet Token branded name: “Jet.AI Inc.”

Unaudited Interim Financial Statements

Certain information and disclosures normally included in the annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these unaudited consolidated interim financial statements have been included. Such adjustments consist of normal recurring adjustments. The results of operations for the six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the full year.

Reverse Stock Split

On November 12, 2024, the Company effected a reverse common stock split of the Company’s issued and outstanding shares of common stock at a ratio of 1-for-225. On the effective date, every 225 shares of common stock issued and outstanding were combined into one issued share of common stock. In addition, the aggregate number of equity-based awards that remain available to be granted under the Company’s equity compensation plans was decreased proportionately and proportionate adjustments were made to the per-share exercise price and the number of shares issuable upon the exercise of outstanding stock options, as applicable, as well as to the number of shares that would be owned upon vesting and settlement of restricted stock units and other equity-based awards, as applicable. Similar proportionate adjustments were also made to the outstanding warrants. No fractional shares were issued as a result of the reverse stock split and any fractional shares resulting from the reverse stock split were rounded down to the nearest number of whole shares so that the Company issued cash in lieu of any fractional shares that such stockholder would have received as a result of the reverse stock split. In accordance with Accounting Standards Codification (“ASC”) 260-10-55-12, the Company has adjusted the number of shares, per-share computations and the computations of basic and diluted loss per share (“EPS”) retroactively for all periods presented in the consolidated financial statements and related notes.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Jet.AI Inc. and its wholly owned subsidiaries, Summerlin Aviation LLC, Jet Token Software Inc., Jet Token Management Inc., Galilee LLC, and Galilee 1 SPV LLC. All intercompany accounts and transactions have been eliminated in consolidation.

The consolidated assets, liabilities, and results of operations prior to the Reverse Recapitalization are those of Jet Token. The shares and corresponding capital amounts and losses per share, prior to the Reverse Recapitalization, have been retroactively restated based on shares reflecting the exchange ratio established in the Business Combination.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Making estimates requires management to exercise significant judgement. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

Fair Value of Financial Instruments

Fair value is defined by ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Risks and Uncertainties

The Company has limited operating history and has incurred losses from operations since inception. The Company’s business and operations are sensitive to general business and economic conditions in the United States and worldwide along with local, state, and federal governmental policy decisions. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse conditions may include but are not limited to: changes in the private airline industry, fuel and operating costs, changes to corporate governance best practices for executive flying, general demand for private jet travel, regulations on carbon emissions from aviation and market acceptance of the Company’s business model. These adverse conditions could affect the Company’s financial condition and the consolidated results of its operations.

Cash and Cash Equivalents

For purpose of the consolidated statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Included within cash and cash equivalents is restricted cash of $500,000 at June 30, 2025 and December 31, 2024.

Offering Costs

The Company complies with the requirements of ASC 340-10-S99-1 with regards to offering costs. Prior to the completion of an offering, offering costs will be capitalized as deferred offering costs on the consolidated balance sheet. The deferred offering costs will be charged to stockholders’ equity upon the completion of an offering or to expenses if the offering is not completed.

Other Current Assets

Other current assets include security deposits, which relate primarily to contractual prepayments to third parties for future services, prepaid expenses and customer receivables for additional expenses incurred in their charter trips.

Property and Equipment

Property and equipment are recorded at cost, less accumulated depreciation. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. As of June 30, 2025 and December 31, 2024, property and equipment consisted entirely of equipment which is being depreciated over a 3 three-year period.

Internal-Use Software

The Company incurs software development costs to develop software programs to be used solely to meet its internal needs and cloud-based applications used to deliver its services. In accordance with ASC 350-40, Internal-Use Software, the Company capitalizes development costs related to these software applications once a preliminary project stage is complete, funding has been committed, and it is probable that the project will be completed, and the software will be used to perform the function intended. As of June 30, 2025 and December 31, 2024, the Company has capitalized approximately $398,000 of internal software related costs, which is included in intangible assets in the accompanying consolidated balance sheets and was fully amortized as of June 30, 2025 and December 31, 2024.

Investments in Joint Ventures

In January 2023, the Company formed a 50/50 joint venture subsidiary with Great Western Air LLC (dba Cirrus Aviation Services) called 380 Software LLC, a Nevada limited liability company. Costs and profits are to be shared equally between the Company and Cirrus. The Company accounts for these investments using the equity method whereby the initial investment is recorded at cost and subsequently adjusted by the Company’s share of income or loss from the joint venture. There is currently no financial activity or material assets to report for this joint venture beyond this initial investment.

Allowance for Credit Losses

The Company recognizes an expected allowance for credit losses with respect to its accounts receivable. In addition, also at each reporting date, this estimate is updated to reflect any changes in credit risk since the receivable was initially recorded. Accounts receivable are evaluated individually for impairment. This estimate is adjusted for management’s assessment of current conditions, reasonable and supportable forecasts regarding future events, and any other factors deemed relevant by the Company. The Company believes historical loss information is a reasonable starting point in which to calculate the expected allowance for credit losses. The Company writes off receivables when there is information that indicates the debtor is facing significant financial difficulty and there is no possibility of recovery. If any recoveries are made from any accounts previously written off, they will be recognized in operations or an offset to credit loss expense in the year of recovery, in accordance with the entity’s accounting policy election. No allowance for credit losses was considered necessary at June 30, 2025 and December 31, 2024.

Leases

The Company determines if an arrangement is a lease at inception on an individual contract basis. Operating leases are included in operating lease right-of-use assets, current operating lease liabilities, and non-current operating lease liabilities on the consolidated balance sheets. Operating lease right-of-use assets represent the right to use an underlying asset for the lease term. Operating lease right-of-use assets are recognized at lease commencement date based on the present value of the future minimum lease payments over the lease term. The interest rate implicit in each lease was readily determinable to discount lease payments.

The operating lease right-of-use assets include any lease payments made, including any variable amounts that are based on an index or rate, and exclude lease incentives. Lease terms may include options to extend or terminate the lease. Renewal option periods are included within the lease term and the associated payments are recognized in the measurement of the operating right-of-use asset when they are at the Company’s discretion and considered reasonably certain of being exercised. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company has elected the practical expedient not to recognize leases with an initial term of 12 months or less on the Company’s consolidated balance sheets and lease expense is recognized on a straight-line basis over the term of the short-term lease.

Impairment of Long-Lived Assets

The Company follows ASC 360-10, Impairment or Disposal of Long-Lived Assets. ASC 360-10 requires that if events or changes in circumstances indicate that the carrying value of long-lived assets or asset groups may be impaired, an evaluation of recoverability would be performed by comparing the estimated future undiscounted cash flows associated with the asset to the asset’s carrying value to determine if a write-down to market value would be required. Long-lived assets or asset groups that meet the criteria in ASC 360-10 as being held for sale are reflected at the lower of their carrying amount or fair market value, less costs to sell.

Revenue Recognition

In applying the guidance of ASC 606, Revenue from Contracts with Customers, the Company determines revenue recognition through the following steps:

	●	Identification of the contract, or contracts, with a customer;
	●	Identification of the performance obligations in the contract;
	●	Determination of the transaction price;
	●	Allocation of the transaction price to the performance obligations in the contract; and
	●	Recognition of revenue when, or as, a performance obligation is satisfied.

Revenue is derived from a variety of sources including, but not limited to, (i) fractional/whole aircraft sales, (ii) fractional ownership and jet card programs, (iii) ad hoc charter through the Company’s App and (iv) aircraft management.

Under the fractional ownership program, a customer purchases an ownership share in a jet which guarantees the customer access to the jet for a preset number of hours per year. The fractional ownership program consists of a down payment, one or more progress payments, a payment on delivery, a monthly management fee and an occupied hourly fee. Revenues from the sale of fractional or whole interests in an aircraft are recognized at the time title to the aircraft is transferred to the purchasers, which generally occurs upon delivery or ownership transfer.

The jet card program provides the customer with a preset number of hours of guaranteed private jet access over the agreement term (generally a year) without the larger hourly or capital commitment of purchasing an ownership share. The jet card program consists of a fixed hourly rate for flight hours typically paid 100% up front.

Revenue is recognized upon transfer of control of the Company’s promised services, which generally occurs upon the flight hours being used. Any unused hours for the fractional jet and jet card programs are forfeited at the end of the contract term and are thus immediately recognized as revenue at that time.

Deferred revenue is an obligation to transfer services to a customer for which the Company has already received consideration. Upon receipt of a prepayment from a customer for all or a portion of the transaction price, the Company initially recognizes a contract liability. The contract liability is settled, and revenue is recognized when the Company satisfies its performance obligation to the customer at a future date. As of June 30, 2025 and December 31, 2024, the Company deferred $500,859 and $1,091,235, respectively, related to prepaid flight hours under the jet card program for which the related travel had not yet occurred.

The Company also generates revenues from individual ad hoc charter bookings processed through the Company’s App, whereby the Company sources, negotiates, and arranges travel on a charter basis for a customer based on pre-selected options and pricing provided by the Company to the customer through the App. In addition, Cirrus Aviation Services markets charters on the Company’s aircraft for the Company’s benefit. Deferred revenue with respect to the App was $130,765 and $212,278 as of June 30, 2025 and December 31, 2024, respectively.

The Company utilizes certificated independent third-party air carriers in the performance of a portion of flights. The Company evaluates whether there is a promise to transfer services to the customer, as the principal, or to arrange for services to be provided by another party, as the agent, using a control model. The nature of the flight services the Company provides to members is similar regardless of which third-party air carrier is involved. The Company directs third-party air carriers to provide an aircraft to a member or customer. Based on evaluation of the control model, it was determined that the Company acts as the principal rather than the agent within all revenue arrangements. Owner charter revenue is recognized for flights where the owner of a managed aircraft sets the price for the trip. The Company records owner charter revenue at the time of flight on a net basis for the margin we receive to operate the aircraft. If the Company has primary responsibility to fulfill the obligation, then the revenue and the associated costs are reported on a gross basis in the consolidated statements of operations. Deferred revenue with respect to the management of aircraft was $16,233 as of June 30, 2025 and December 31, 2024.

The following is a breakout of revenue components by subcategory for the three and six months ended June 30, 2025 and 2024.

	2025		2024		2025		2024
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024

Software App and Cirrus Charter	$	1,271,695	$	1,610,899	$	3,121,645	$	3,981,990
Jet Card and Fractional Programs		421,306		558,560		764,651		1,235,880
Management and Other Services		532,899		914,425		1,814,242		1,714,612
Total revenues	$	2,225,900	$	3,083,884	$	5,700,538	$	6,932,482

Flights

Flights and flight-related services, along with the related costs of the flights, are earned and recognized as revenue at the point in time in which the service is provided. For round-trip flights, revenue is recognized upon arrival at the destination for each flight segment.

Fractional and jet card members pay a fixed quoted amount for flights based on a contractual capped hourly rate. Ad hoc charter customers primarily pay a fixed rate for flights. In addition, flight costs are paid by members through the purchase of dollar-denominated prepaid blocks of flight hours (“Prepaid Blocks”), and other incidental costs such as catering and ground transportation are billed monthly as incurred. Prepaid Blocks are deferred and recognized as revenue when the member completes a flight segment.

Aircraft Management

The Company manages aircraft for owners in exchange for a contractual fee. Revenue associated with the management of aircraft also includes the recovery of owner-incurred expenses including maintenance coordination, cabin crew and pilots, as well as recharging of certain incurred aircraft operating costs and expenses such as maintenance, fuel, landing fees, parking and other related operating costs. The Company passes the recovery and recharge costs back to owners at either cost or a predetermined margin.

Aircraft management-related revenue contains two types of performance obligations. One performance obligation is to provide management services over the contract period. Revenue earned from management services is recognized over the contractual term, on a monthly basis. The second performance obligation is the cost to operate and maintain the aircraft, which is recognized as revenue at the point in time such services are completed.

Aircraft Sales

The Company from time to time acquires aircraft from vendors and various other third-party sellers in the private aviation industry. The Company’s classifies the purchase as aircraft inventory on the consolidated balance sheets. Aircraft inventory is valued at the lower of cost or net realizable value. Sales are recorded on a gross basis within revenues and cost of revenue in the consolidated statements of operations. The Company recorded no aircraft sales for the six months ended June 30, 2025 and 2024.

Pass-Through Costs

In applying the guidance of ASC 606, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are distinct performance obligations. The Company then assesses whether it is acting as an agent or a principal for each identified performance obligation and includes revenue within the transaction price for third-party costs when the Company determines that it is acting as the principal.

Cost of Sales

The cost of sales expenses includes costs incurred in providing air transportation services, such as chartering third-party aircraft, aircraft lease expenses, pilot training and wages, aircraft fuel, aircraft maintenance, and other aircraft operating expenses, each of which is discussed below.

	1.	Chartering Third-Party Aircraft: The cost of chartering third-party aircraft is recorded as a part of the cost of sales expense. These expenses include the fees paid to third-party operators for providing aircraft services on behalf of the Company. Expenses are recognized in the statements of operations in the period when the service is rendered and are reported on an accrual basis.

	2.	Aircraft Lease Expenses: Aircraft lease expenses include the cost of leasing aircraft for the Company’s operations. The lease expenses are recognized as an operating expense in the statements of operations over the lease term on a straight-line basis.

	3.	Pilot Training and Wages: Pilot training costs are expensed as incurred and are included in the cost of sales expenses. This encompasses expenses related to initial pilot training, recurrent training, and any additional required training programs. Pilot wages, including salaries, bonuses, and benefits, are also recognized as a part of the cost of sales expenses and are reported on an accrual basis.

	4.	Aircraft Fuel: The cost of aircraft fuel is recognized as an expense in the cost of sales category based on the actual consumption during flight operations. Fuel costs are recorded in the statements of operations in the period when the fuel is consumed and are reported on an accrual basis.

	5.	Aircraft Maintenance: Aircraft maintenance expenses include both routine and non-routine maintenance. Routine maintenance costs are expensed as incurred and are recorded as a part of the cost of sales expense. Non-routine maintenance expenses, such as major repairs and overhauls, are capitalized and amortized over their expected useful life. The amortization expense is included in the cost of sales expense and is recognized in the statements of operations on a straight-line basis over the asset’s useful life.

	6.	Other Aircraft Operating Expenses: Other aircraft operating expenses include costs such as insurance, landing fees, navigation charges, and catering services. These expenses are recognized in the statements of operations as part of the cost of sales expenses in the period when they are incurred and are reported on an accrual basis.

Advertising Costs

The Company expenses the cost of advertising and promoting the Company’s services as incurred. Such amounts are included in sales and marketing expense in the consolidated statements of operations and totaled $376,009 and $549,070 for the six months ended June 30, 2025 and 2024, respectively.

Research and Development

The Company incurs research and development costs during the process of researching and developing its technologies and future offerings. The Company’s research and development costs consist primarily of payments for third-party software development that is not capitalizable. The Company expenses these costs as incurred until the resulting product has been completed, tested, and made ready for commercial use.

Stock-Based Compensation

The Company accounts for stock awards under ASC 718, Compensation – Stock Compensation. Under ASC 718, stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite vesting period or over the nonemployee’s period of providing goods or services. The fair value of each stock option or warrant award is estimated on the date of grant using the Black-Scholes option valuation model.

Income Taxes

The Company applies ASC 740, Income Taxes. Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial statement reported amounts at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax expense for the period, if any and the change during the period in deferred tax assets and liabilities.

ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. A tax benefit from an uncertain position is recognized only if it is “more likely than not” that the position is sustainable upon examination by the relevant taxing authority based on its technical merit.

The Company is subject to tax in the United States and files tax returns in the U.S. Federal jurisdiction and Nevada state jurisdiction. The Company is subject to U.S. Federal, state, and local income tax examinations by tax authorities for all periods since inception. The Company currently is not under examination by any tax authority.

Loss per Common Share

The Company presents basic EPS and diluted EPS on the face of the consolidated statements of operations. Basic EPS is computed as net loss divided by the weighted average number of common shares outstanding for the period. For periods in which the Company incurs a net loss, the effects of potentially dilutive securities would be antidilutive and would be excluded from the diluted EPS calculations. For the six months ended June 30, 2025 and 2024, there were (i) 22,668 and 16,268 options, (iii) 9,686 and 112,095 warrants to purchase common stock, and (iii) 2,715,925 and 17,103 common shares issuable upon conversion of Series B Convertible Preferred Stoc

SEC Form 10-Q filed by Jet.AI Inc.