SURF AIR MOBILITY INC.

ITEM 1A. RISK FACTORS

Except for the risk factors below, there have been no material changes to the r and those discussed in Part II, Item 1A Risk fFactors disclosed in of our AnnualQuarterly Report on Form 10-KQ for the fiscal yeaquarter ended DecemberMarch 31, 2025:

We, as well as our strategic partners,6, there have limited experience to date in the development,been no manufacturing and operation at scale of fully-electric and hybrid-electric powertrains, and we may fail terial changes to realize the desired return on our investments with respect to fully-electric and hybrid-electric powertrains.

In March 2026 we announced that we had entered into an aircraft purchase agreement with BETA Technologies for the purchase of 25 all-electric aircraft, with an option to add an additional 75 aircraft, and in April 2026 we announced that we had eliminated up to $100 million in planned Cessna Caravan electrification spending as we continue to explore partner paths to advance risk factors disclosed in our Annual Report on Form 10-K for the electrification of the Caravan. 

If we fail to execute our plans to develop, acquire, implement and service fully-electric and hybrid-electric powertrain solutions in our fleet then we fiscal year ended December 31, 2025.

We may not be able to generate sufficient revenue to achieve the desired return on our investment. Our and our strategic partners ability to develop and produce fully-electric and hybrid-electric powertrain solutions of sufficient quality and appeal to customers on schedule and at scale is unproven. There can be no assurance as to whether our current or future third-party strategic partners will be able to develop efficient, automated, low-cost production capabilities and processes and/or obtain reliable sources of component supply to allow fail to qualify for continued listing on the NYSE, which could make it more difficult for the quality, price, engineering, design and volumes necessary to successfully develop, deploy and implement fully-electric and hybrid-electric powertrains within our fleet. Moreover, unlike the market for electric automobiles, the commercialization of electric and hybrid-electric aircraft remains unproven. Although we believe that the our stockholders to sell their shares.

Our component technology to electrify small aircraft exists today, any delay in the development, manufacture and launch of electrificatiomon stock is listed on technology could adversely affect our brand, operations and he NYSE under the delivery of our growth strategy, particularly if it results in a failure to expand our market share in the regional air mobility market as anticipated and could symbol SRFM. We are require us to incur additional costs, or impacts the development and attractiveness of our software solutions, such as SurfOS. Even if our strategic partners are successful in developing fully-electric and hybrid-electric powertrains and reliably sourcing compond to satisfy the continued listing requirement supply, we do not know whether they will be able s of the NYSE to do so in a manner that avoids significant delays and cost overrunsmaintain such listing, including as a result of factors beyond our or , among otheir control such as problems with suppliers and vendors, regulatory approval delays, force majeure events, delays r things, the maintenance of a certain meeting commerciarket capitalization schedules, or failure to satisfy the requirements of customers and potential customers. Any such failure could have a material adverse effect on oand average closing price of our business, financial conditicommon and results of operations. 

As a new entrant into the nascent market of operating hybrid-electric and battery electric aircraftstock.

On April 2, 2024, we anticipate that we will face risks and significant challenges that would impact our ability to, among other things: 

deploy or incorporate safe, reliable and quality fully-electric and hybrid-electric aircraft into our fleet on an ongoing basis;

obtain necessary regulatory approvals in a timely manner, or at all;

build a well-recognized and respected brand;

attract and maintainreceived formal notice from the NYSE indicating that we were not in core commercial partnerships;

establish and expand our customer base;

successfully service electrified aircraft after incorporampliance with Section into our fleet and maintain a good flow of spare parts and customer goodwill;

improve and maintain our operational efficiency;

predict our future revenues and appropriately budget for our expenses;

attract, retain and motivate talented employees;

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anticipate t802.01C of the NYSE Listed Company Manual because the averends that may emerage and affect our buclosiness;

anticipate and adapt to changing market conditions, including technological developments and changes in g price of our competitive landscape; and

navigate an evolving and complex regulatory environment.

If we fail to adequately addrmon stock was less any or all of these risks and challenges, our business, financial condition and results of operations mthan $1.00 over a consecutive 30 trading-day be materially and adversely affected.

Our competitors may incorporate electrperiod. We subsequently notified aircraft before us, either in general or in specific markets, or we may otherwise not be able to fully capture a first mover advantage. 

While we strive to be the first to market providing air mobility servicesthe NYSE of our intent to regain compliance with electrified aircraft, we expect this industry to be increasingly competitive and it is possible that our competitors could get to market before us, either generally or in specific markets. The timing for providing air mobility services with electrified aircraft is dependent on our third-party strategic partners abilitythe requirements of Section 802.01C. We were able to finalize certain aspects of the design, engineering,regain component procurement, testing, build out and manufacturing plans in a liance at any timely manner and on their ability to execute these plans  within the current timeline and upon regulatory approval by the FAA, which can be a lengthy and unpredictable process.

Even if we are first to provide air mobility services with electrified aircraft, we may not fully realize the benefits we anticipate, and we may not six-month period following receive any competitive advantage or may be overcome by opt of ther competitors. New companies or existing aerospa notice companies may launch different products from those offered by our strategic partners and suppliers, which may result in new enif, on the last trants into our markets or improved services by our competitors. 

Additionally, our competitors may benefit from our efforts in developing consumer and community acceptance for electrified aircraft and aiding day of any calendar mobility, making it easier for them to obtain the permits and authorizations required to onth during this cure perate an air mobility service in iod (or the markets in which we intend to launch or in other markets. If our competitors get to market before us, or we are overcome blast trading day other competitors, it could have a material adverse effect on our business, financial condition, results of of this cure perations and prospects. 

The planned fully-electric and hybrid-electric powertrain solutions may not result in the operating cost savings we anticipate, which could negatively impact the future economics of our network operations as well as our ability to successfully sell and market our planned future Aircraft-as-a-Service strategy. 

In developing our business strategy for future aircraft electrification and network expansion, we hiod), we had a closing share price of at least $1.00 and an ave assumed implementing fully-electric technology will result in operating cost savings of approximately 50% compared to current combustion powertrain technologies, with more limited range and payload characteristics, and hybrid-electric technology will result in operating cost savings of approximately 25% compared to current internal combustion powertrain technologies, while maintaining similar rage closing share price of at least $1.00 over the prior 30 trading-day performance characteristics. If these assumptions change by a material amount, our network expansion plans could be negatively impacted and we would be unlikely to be able to develop significant future revenues and earnings from our planned Aircraft-as-a-Service initiative. 

Our fully-electric and hybrid-electric aircraft may riod. The Company regained compliance with the require maintenance at frequenciements or at costs which are unexpected and could adversely affect our business and operationsf Section 802.01C as of September 30, 2024.

Our fully-electric and hybrid-electric aircraft will be highly technical products that will require maintenance and support. We are still developing our understanding of n July 24, 2026, we received anothe long-term maintenanr formal notice profile of from the fully-electric and hybrid-electric aircraft, and if useful lifetimes are shorter than expected, this may lead to greater maintenanceNYSE indicating that we were not in costs than previously anticipated. If our future fully-electric and hybrid-electric aircraft and related equipment require maintenance more frequentlympliance with Section 802.01C of than we plan for or at costs that exceed our estimates, that would disrupt the operation of our service and could have a material adverse effect on our business, financial condition and results of operations.

Crashes, accidents or incidents of aircraft involving us or our competitors could have a material adverse effect on our bue NYSE Listed Company Manual because the average closiness, financial condition and results of operations. 

Thg price operation of aircraft is subject to various risks, and we expect demand for our air mobility services to be impacted by accidents or other safety issues regardf our common stock was less of whether such accidents or issues involve outhan $1.00 over aircraft. 

Crashes, accidents or incidents involving our aircraft, or involving aircraft operating our power consecutive 30 trains, once developed, are possible. Any such occurrence would negatively impact our business, financial condition and results of operations in a number of ways. An 

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accidding-day period. We subsent or incidquent involving an aircraft operated by us or by a third-party operator on our behally notified the NYSE of or using our powertrains, could result in significant potur intential claims of injured passengers and others, as well as repair or replacement of a damaged aircraft and its cons to regain compliance with the requential temporary or permanirement loss from service. For example, in January 2024, a Southern flight was forced to make an emergency landing following take-off in severe weather from Dulles International Airport in Virginia. Substantial claims resulting from an accident in excess of our related insurances of Section 802.01C. We are able to regain coverage would harm our operational and finmpliancial results. Moreover, any aircrafe at accident or incident, even if fully insured or due to reasons not attributable to us or our operations or products, could result ny time within negative public perception that our othe six-month perations are less safe or reliable than other providers and have a material adverse effect on our reputation, business and results iod following receipt of operations. Safety issues experienced by a parthe noticular model of aircraft could impact consumer confidence in that particular aircraft type or the air transportation services industry as a whole, or result in a regulatory body grounding that particular aircraft model. If we or other operators experience accidents with aircrafte if, on the last trading day of any calendar models that we operate, obligatinth during us to take such aircraft out of service until the cause of such accidents is determined and rectified, we might lose revenues and might lose customers. The value of this cure period (or the aircraft model might also be permanently reduced in the secondary market ilast trading day of the model were to be considered less desirable for futuis cure service.

Moreover, such accidents or incidents could also period), we have a material impact on our ability to obtain or maintain FAA certification for our aircraft in a timely manner, or at all.

If our personnel, third-party contractors with whom we have arrangements, our aircraft, other types closing share price of aircraft or other companies in the industry are involved in a public incident, accident, catastrophe or regulatory enforcement action, we could be exposed to significant reputational harm and/or potential legal liability. The insurance we carry may be inapplicablt least $1.00 and an average closing share price or inadequate to cf at least $1.00 over any such incident, accident, catastropthe or action. In the event that our insurance is inapplicable or inadequate, we may be forced to bear substantial losses from an incident or accident.

Further, asprior 30 trading-day period. If we deploy and incorporate fully-electric and hybrid-electric aircraft in our fleet we may be exposed to additional risks, including that demand for our products and serviceso not regain compliance will be negatively impacted by accidents or incidents involvingth Section 802.01C within such powertrains (including during test flights of prototypes). Such events could impactcure period, the NYSE may confidmmence in not just our delisting products and services, but the development of electrification technology as a whole. This could have a material adverse effect on our future growth, financial condiceedings.

Addition and results of operations.

We are substantially dependent upally, on our relationships with our strategic partners, and May 20, 2024, we are or may be subject to risks associated with such strategic alliances. Our reliance on these arrangements, and the loss of any such alliances or arrangements or failure to identify future opportunities could affect our growth plans.

In March 2026 we announced that we had entered into an aircraft purchase agreement with BETA Technologies for the purchase of 25 all-electric aircraft, with an option to add an additional 75 aircraft, and in April 2026 we announced that we had eliminated up to $100 million in planned Cessna Caravan electrification spending as we continue to explore partner paths to advanreceived formal notice from the NYSE indicating that we were no longer in compliance the electrificatiwith Section 802.01B of the Caravan. We have also entered into collaborations with third parties for the development of SurfOS, as more fully described in Risks Related to the Development of the SurfOS Software Platform - ONYSE Listed Company Manual because our collaborations to develop SurfOS create risks through technology dependence, potentiaverage total collaborator misalignment, relationship challenges, and funding uncertainties that could significantly impact the Companys business.

Such strategic business relatimarket capitalization over a conships will be a critical component in the growth and success of our business and, in particular, our ability to develop and commercialize SurfOS and deploy fully-electric and hybrid-electric powertrains and related aircraft within our fleet. However, there are no assurancesecutive 30 trading-day period was less that we wn $50 mill be able to timely meet all of the conditions of these agreements, if ion and, at all, maintain these relationships or continue to identify or secure suitable business relationship opportunities in the futurethe same time, or that our competitors will not capitalize on such opportunities before we do. Moreover, identifying such opportunities could restockholders equire substantial management time and resources, and negotiating and financing relationships involves significant costs and uncertainties. 

If any conflicts arise between our strategic partners and us, the other party may act in a manner adverse to us and could limit our ability to implement our business strategies, which could impact our projected business timelines. Our strategic partners may also develop, eity was less than $50 million. We subsequently submitted a plan within 45 days of ther alone or with others, products in related fields that are competitive with our products. Specifically, conflicts with our key strategic partners could adversely imp notice advising the NYSE of definitive act our ability to develop and commercialize SurfOS or incorporate electrified aircraft into our fleet, which, in turn could have a material adverse effect on our prospects, business, financialion we have taken or will take to be in condition and results of operation. 

If we are unable to successfully maintain, source and execute on strategic relationship opportunities in the future related to electrification or other technologies relevant to our competitive position, or if any of our agreements with our strategic partners were to be terminated, our overall growth could be impaired, and there could be a material adverse effect on our business, financial condition and results of operations. 

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Aimpliance with Section 802.01B within 18 months of receipt of the notice. We regained compliance with the requircraft purchase agreeements are often subjof Sect to indexed price escalation clauses which could subject us to unanticipated expenses. 

Commercial aircraft sales contracts are often entered into years beforeion 802.01B as of November 20, 2025. However, if the aircraft are delivered. In order Company were to help account for economic fluctuationsagain fall betweenlow the contract date and delivery date, aircraft priciinued listing generally consists of a fixed amount as modified by price escalation formulas derived from labor, commodity and othcriteria within 12 months of November price indices20, 2025, the actual escalation amounts of which are outside of NYSE may eithe purchasers control. Escalation factors can fluctuate significantly from period to period and changes in escalation amounts can significantly impact expenses and operating margins. The terms and conditions of the aircraft purchase agreements may contain price escalation clauses and future purchase orders with other suppliers may also containr truncate the compliance procedures or immediately initiate delisting price escalation clauses yet to be determined, and there is ocedures.

There can be no assurance that they will be determined in a manner that we will mitigate the risks described above.

If we fail to adequately protect our intellectual property rights, our aintain competitive position could be impaired and we may lose market share, generate reduced revenue and incur costly litigation to protect our rights. 

Our success depends in part on our ability to protect our intellectual property rights, including trademarks and service marks applicable to our operating entities and, in liance with the NYSEs continued listing requirements. In the future once developed, certain technologies and software tevent that we expect to be deployed in our aircraft or that we expect to utilize in arranging air transportation. To date, we have relied primarily on trademarks to distinguish us from our do not maintain competitors, and trade secrets and other forms of legal protection andliance with the NYSE contractual agreements to establish and protect our proprietary rights. 

We expect that in the future we will rely on patents, copyrights, inued listing stand trade secrets to protectards, we any proprietary technology we develop. We routinely enter into agreements with employees, consultd our stockholders could face significants, third parties and other relevant persons and take other measures to protect our intellectual property right material adverse consequences, such as limiting access to our trade secrets and oincluding: 

being delisted from ther confidential NYSE;

being inform violation. However, we cannot guarantee that we have entered into or will enter into such an agreement with each person that has access to such information or that the steps we take to protect our intellectual property will otherwise be adequate. For example, unauthorized parties may attempt to obtain and use information that we regar of restrictive covenants in the Companys debt agreements;

a limited as proprietary and, if successful, may potentially harm our availability to compete, accelerate the development programs of our competitors, and/of market quotations for our competitive position in the market. Moreover, our agreements do not prevent our competitors from independently developing technologies that are substantially equivalent or superior to ours, and there can be no assurance that mon stock;

an adverse effect on the market price of our counterparties will comply with the terms of these agreements, or that we will be able to successfully enforce such agreements or obtain sufficient remedies if they are breached. There can be no assurance that the intellectual property rights we own or license will offer us meaningful protection for our business, provide competitive advantages or will not be challenged or circumvented by our competitors. 

Further, obtaining and maintaining pammon stock;

loss of confidence from stakeholders, employees and potent, copyright, and trademark protection can be costly, and we may choose not to, or may fail to, pursue or maintain such forms of protection for our technology, proial business partners;

reducts or services in the United States or foreign jurisdictions, which could harm our ability to obtain or maintain a competitive advantage in such jurisdictions. It is also possible that we will fail to identify patentable aed liquidity with respects of to our technology before it is too late to obtain patent protection, thcommon stock;

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at we will be unable to devote the resources needed to file and prosecute patent applications for such technology, or th determination that we will inadvertently abandon them by failing to comply with all procedural, documentary, payment, and similar obligations during the patent prosecution process. Even if we obtain patent protection in futureour shares are a penny stock, we cannot assure you that suhich patents would be sufficiently broad to protect our proprietary technology to prevent competitowill require brokers or other third parties from using the same otrading in our similar technologies. Failure hares to comply with legal requirementsadhere to maintain a patent, copyright, or trademark regiore stration can result in lapse or cancellation of the patent, copyright, or trademark registration, ingent rules, and which could result in the loss of patent or tramay limit demark rights. If this occurs, we may not be able to exclude ound for our competitors from using patented technology that we have developed or our trademarks. Also, patents, copyrights, and trademark registrations may be challenged in court or administrative proceedings. 

The laws of some cmon stock among certain investors;

a limited amountries do not protect proprietary rights to the same extent as the laws , or complete absence, of the United States,news and mechanisms for enforcement of intellectual property rights in some foreign countries may be inadequate to prevent other parties from infringinganalyst coverage for our proprietary technology. To the extent we expcompany; and our international activities, our exposure to unauthorized use of our technologies and proprietary information may increase. We may also fail to detect unauthorized use of our intellectual propert

a decreased ability, or be required to expend significant resources to monitor and protect our intellectual property rights, including engaging in litigation, which may be costly, time-consuming, and divert the attentinability, to issue addition of management and resources, and may not ultimately be successful. If we fail to meaningfully establish, maintain, protect and enforce our intellectual property rights, there could be a material adverse effect on our business, financial condal securities or obtain addition and results of operations. 

We may enter into strategic partnerships ial financing in the future with respect to electrification of aircraft, including the Cessna Caravan, that do not give us any intellectual property rights or exclusivity of such technology.

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