ITEM 1A. RISK FACTORS.
Except as set forth below, as of the date of this Quarterly Report, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 6, 2026 (the Annual Report), and subsequent reports we have filed with the SEC since that date. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
Our $5,250,000 investment in equity certificates issued by Verso Capital 2 SCSP, which track sharesWith the Spin-Off having been effected on July 13, 2026, and the closing of SpaceX preferrthe Merger effected stock heldhortly thereafter, through a captable fund, exposes us to substantiale Company no longer owns or operates its former fractional and jet card business. As a result, the risks, including factors identified under the potential loss of osubheading Risks Related to Our entire investLegacy Charter Business Operating Environment.
In April 2026, we entered in in Item 1A of the Annual Report are not expected to an Equity Certificates Subscriptipply the Company and its business plan on Agreement (the Subscripa go-forward basis.
Future business combinations and acquisition Agreement) with VERSO Capital 2 SCSP (Verso) to subscribe for 8,347 equity certificates (the Certificates) for an aggregate subscription price of $5,250,000 (inclusive of a subscription fee)transactions, if any, as well as the recently closed Merger with flyExclusive, may not succeed in generating the intended benefits and may adversely affect our business.
Particularly after effecting the Spin-Off in July 2026 and closing the Merger, and, completed the subscriptonent of our strategy is to evaluate strategic transaction shortly thereafters or relationships from time to time. The Certificates were issued by Versoinability of the Company to successfully identify and track shares of SpaceX Exploration Texecute on a strategic transaction, or otherwise integrate acquired businesses or technologies Corp. (SpaceX) preferred stock that are he, and any related diversion of managements attention, could byhave a captable fund, with each Certificatematerial adverse effect on our business, operating results and financial corresponding to one share of SpaceX preferred stock. Our investment in tion. Executing on any acquisitions or strategic transactions may require various closing conditions on the Cepartificates,es and the multi-layered cross-border structure through which they are held, present a number of may be subject to regulatory review and approval requirements by governmental entities, or ultimaterial risks, including not only risks relatedly be prohibited. There is no assurance that we will be able to SpaceX, its business, key personnel and complete the transactions contemplated by the non-bindustry, aning LOI we entered its ability to ento in July 2026, or otherwise execute on its buother strategic transactions of a similar nature.
Business plan or ccombinations and other strategic transactionsummat may have an initi direct adverse effect on our financial publiccondition, results offering ( operations, liquidity or other ststock price. To complete acquisitions, strategic transaction), but also risks specific to the Certificates includis or other business combinations, we may have to use cash, issue new equity securities with dilutive effects on existing the following.
| | Indirect, multi-layered exposure with no direct ownership of the underlying securities. The Certificates do not represent a direct ownership interest in SpaceX or in any other underlying issuer. Our economic exposure is dependent on, among other things, the continued existence and solvency of Verso, the captable fund through which the underlying SpaceX preferred shares are held, and the consummation of certain conversion and transfer mechanics described in the Subscription Agreement on the contemplated terms. A failure, delay, dispute, or adverse development at any layer of this structure could materially impair, or entirely eliminate, the value of our investment, and we generally have no direct contractual relationship with, or legal recourse against, SpaceX or the captable fund.
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| | Limited recourse and risk of total loss. The Certificates are direct and limited recourse obligations of Verso, recoverable only from a portion of the proceeds of the underlying assets. If those proceeds prove ultimately insufficient, our claims, together with the relevant Certificates, will be fully extinguished, and we will have no further recourse against Verso or any of its affiliates, directors, officers, or service providers. The redemption amount of the Certificates could ultimately be zero, and in such a case we could lose all of our invested capital.
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| | Illiquidity, transfer restrictions, and absence of any public trading market. SpaceX is not currently a publicly traded company, and the Certificates themselves are restricted securities. Any proposed transfer of Certificates is also subject to subject to contractual restrictions and limitations. As a result, we may be unable to sell or otherwise liquidate our position in the Certificates on a timely basis, at a desired price, or at all. Redemption of the Certificates occurs in cash or in kind in Versos sole discretion upon a Redemption Event (as defined in the Subscription Agreement), and there can be no assurance that an initial public offering or other liquidity event with respect to the underlying SpaceX preferred stock will occur on terms that produce a positive return, or at all.
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| | Valuation uncertainty and limited information rights. The Certificates are not rated. In the absence of a public market, fair market value of the underlying assets is determined by agreement of the parties or, in the event of disagreement, by an independent statutory auditor. Versos monitoring and reporting obligations with respect to the underlying investment are on a best effort basis and are subject to the availability of information from the underlying company. As a result, we may be unable to independently verify the value, status, or performance of the underlying assets on a timely basis, which could affect the accuracy of our financial reporting, including the fair value measurement of the investment under applicable U.S. GAAP, and could result in subsequent fair value adjustments or impairments.
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| | Lack of direct voting and enforcement rights. Under the Subscription Agreement, we granted Versos arranger an unconditional and irrevocable power of attorney to represent us at any meeting of holders of the Certificates, including authority to waive convening notice formalities and to vote in favor of any agenda item. Certificates holders (such as the Company) may not individually exercise the rights attached to the Certificates against Verso. As a result, we have limited direct control over corporate actions affecting the Certificates and must rely substantially on Versos arranger to act in our interests.
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| | Foreign jurisdiction and counterparty risk. The Subscription Agreement is governed by the laws of the Grand Duchy of Luxembourg, and the courts of the City of Luxembourg have exclusive jurisdiction over any dispute. Verso is organized as a Luxembourg special limited partnership, and Versos arranger is a British Virgin Islands limited liability company. Enforcing our rights, obtaining injunctive relief, or recovering assets in the event of a dispute, insolvency, or fraud involving any of these counterparties may be more difficult, costly, and time-consuming than enforcement in U.S. courts against U.S. counterparties. We also agreed not to initiate or join any insolvency proceedings against Verso until two years and one day after the last Certificate has been redeemed, and any claims against Verso under the Certificates will be time-barred ten years after the final redemption date.
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| | Exclusivity undertaking. We granted Versos arranger exclusive and non-transferable rights with respect to any financing, negotiation, investment, or transaction involving the underlying company, effective from April 7, 2026, until one year after the Final Redemption Date. A breach of this exclusivity obligation would obligate us to pay the arranger the fees that would otherwise have been due to it. This restriction may limit our ability to pursue alternative strategic transactions or investments involving the underlying company on potentially more favorable terms.
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Anystockholders, take on one or anew debt, assume combination of the foregoing risks could resultntingent liabilities or amortize assets or expenses in the loss of all or a substantial pora manner that might have a material adverse effect on our balance sheet, results of operation of our $5,250,000 investment in s or liquidity. These and othe Certificates, require us to record material impairments or fair value write-downs, or otherwise r potential negative effects of an acquisition transaction could prevent us from realizing the benefits of such transaction and have a material adverse effeimpact on our businessstock price, financial condition, results of operations, and cash flowsliquidity.