{"url_path":"/sec/jetbf/10-k/2026/item-1a","section_key":"item-1a","section_title":"Item 1A RISK FACTORS","topic":"sec","document":{"doc_type":"10-K/A","doc_date":"2026-06-10","source_url":"https://www.sec.gov/Archives/edgar/data/1846084/0001193125-26-265739-index.html","accession_number":"0001193125-26-265739","cik":"0001846084","ticker":"JETBF","issuer_name":"Global Crossing Airlines Group Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1846084/0001193125-26-265739-index.html","primary_entity_key":"0001846084","primary_entity_name":"Global Crossing Airlines Group Inc."},"word_count":9397,"has_tables":true,"body_markdown":"ITEM 1A. RISK FACTORS\n\nRisk Factors Relating to Our Business\n\n \n\nWe have a limited operating history, which makes it difficult to forecast our revenue and evaluate our business and future prospects.\n\n \n\nGlobalX has been in the build-out stage of the airline and as a result, investors are unable and may be unable for the next several years to review and consider any significant operational history to evaluate future viability or profitability. GlobalX will be subject to the risks, difficulties and uncertainties associated with a start-up airline. The likelihood of GlobalX’s success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the expansion of a business operation in a competitive industry and the development of a customer base. GlobalX could also sustain material losses in the future. GlobalX’s future performance will depend upon a number of factors, including its ability to:\n\n•\nmaintain the safety and security of operations;\n\n•\ncapitalize on its business strategy;\n\n•\nimplement its growth strategy;\n\n•\nprovide the intended services at the prices anticipated;\n\n•\nmaintain adequate control of expenses;\n\n•\nattract, retain and motivate qualified personnel;\n\n•\nreact to customer and market demands; and\n\n•\ngenerate operating revenue.\n\n6\n\n \n\n \n\nWe have a history of net losses, we anticipate increasing operating expenses in the future, and we may not be able to achieve and, if achieved, maintain profitability.\n\n \n\nGlobalX has historically had and continues to have negative cash flow from operating activities. It is anticipated that GlobalX will continue to have negative cash flow for the foreseeable future. If our revenue does not increase to offset the expected increases in our operating expenses or if our operating expenses are not contained, then we will not be profitable in future periods. Continued losses may have the following consequences:\n\n•\nincreasing GlobalX’s vulnerability to general adverse economic and industry conditions;\n\n•\nlimiting GlobalX’s ability to obtain additional financing to fund future working capital, capital expenditures, operating costs and other general corporate requirements; and\n\n•\nlimiting GlobalX’s flexibility in planning for, or reacting to, changes in its business.\n\n \n\nOur ability to purchase or lease aircraft on favorable terms will have a significant impact on our operating performance, need for capital and profitability.\n\n \n\nTo operate in accordance with its business plan, GlobalX will need to acquire or lease additional aircraft. While GlobalX does not anticipate any difficulties in entering into satisfactory leasing arrangements or purchase agreements for additional aircraft, there is no guarantee that we will be able to enter into agreements for additional aircraft on terms satisfactory to us, or at all.\n\n \n\nThe terms of GlobalX’s leasing arrangements and purchase agreements will impact the potential profitability of GlobalX’s business. If we are unable to acquire or lease additional aircraft on satisfactory terms, then we will be unable to operate in accordance with its business plan. GlobalX’s ability to pay any fixed costs associated with aircraft lease or purchase contractual obligations will depend on GlobalX’s operating performance, cash flow, its ability to secure adequate financing, whether fuel prices continue at current price levels and/or further increase or decrease, further weakening or improvement in the United States economy, as well as general economic and political conditions and other factors that are, to a large extent, beyond GlobalX’s control.\n\n \n\nOur business has grown rapidly, and we may fail to manage our growth effectively.\n\n \n\nGlobalX may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls. The ability of GlobalX to manage growth effectively will require it to continue to implement and improve its operations and financial systems and to expand, train, and manage its employee base. The inability of GlobalX to deal with potential growth could result in a material adverse effect.\n\n \n\nAny expansion of operations GlobalX may undertake will entail risks; such actions may involve specific operational activities, which may negatively impact the profitability of GlobalX. Consequently, shareholders must assume the risk that: (i) such expansion may ultimately involve expenditures of funds beyond the resources available to GlobalX at that time; and (ii) management of such expanded operations may divert management’s attention and resources away from any other operations, all of which factors may result in a material adverse effect.\n\n \n\nIf we fail to implement our business strategy successfully, our business, results of operations and financial condition will be materially adversely affected.\n\n \n\nThe viability of GlobalX’s business model and its ability to implement this model is dependent on a number of inputs and assumptions, including:\n\n•\nthe timing and receipt of all regulatory approvals required or desirable for operations by GlobalX and their impact upon expectations as to future operations of GlobalX;\n\n•\nthe expected operations and performance of GlobalX’s business as compared to existing charter operators;\n\n•\nthe anticipated competitive response from existing charter operators as well as potential new market entrants which may compete with GlobalX;\n\n•\nimpact of existing or new governmental regulation on GlobalX;\n\n•\nfuture development and growth prospects;\n\n•\nexpected operating costs, general administrative costs, costs of services and other costs and expenses;\n\n•\nthe anticipated increase in the size of the airline passenger market in North America;\n\n7\n\n \n\n•\nability to meet current and future obligations;\n\n•\ntreatment under governmental regulatory regimes;\n\n•\nprojections of market prices and costs;\n\n•\nability to obtain equipment, services and supplies in a timely manner, including the ability to lease or purchase aircraft; and\n\n•\nability to obtain financing or leasing arrangements on acceptable terms, or at all.\n\n \n\nIf one or more of these inputs and assumptions is incorrect or fails to occur as anticipated, then there is a risk that GlobalX’s business model may not be implemented as anticipated and GlobalX may suffer a material adverse effect.\n\n \n\nIn addition, to successfully implement our growth strategy, we will require access to an additional number of airport gates and other services at airports we currently serve or may seek to serve. We believe there are currently significant restraints on gates and related ground facilities at many of the most heavily utilized airports in the United States. As a result, if we are unable to obtain access to a sufficient number of slots, gates or related ground facilities at desirable airports to accommodate our growing fleet, then we may be unable to compete in those markets, our aircraft utilization rate could decrease, and we could suffer a material adverse effect on our business, results of operations and financial condition. There can be no assurance that we will be able to enter into these arrangements on terms that we deem desirable or at all. Our Airport Use Agreement with Miami International Airport does not guarantee availability of boarding gates or landing slots at that airport.\n\n \n\nOur reputation and business could be adversely affected in the event of an emergency, accident or similar public incident involving our aircraft or personnel.\n\n \n\nA major safety incident involving GlobalX’s aircraft during operations would likely incur substantial repair or replacement costs to the damaged aircraft and a disruption in service. GlobalX could also incur potentially significant claims relating to injured passengers and parties, along with a significant negative impact on GlobalX’s reputation for safety, adversely affecting GlobalX’s ability to attract and retain passengers.\n\n \n\nWe may face unanticipated obstacles to the execution of GlobalX’s business plan.\n\n \n\nAs GlobalX’s business evolves and grows, its business plans may change significantly. GlobalX may need to make significant modifications to some or all of GlobalX’s stated strategies depending on future events or developments in the marketplace. We may struggle to adapt our business plan or fail to anticipate the changes that are necessary in order for our business to be successful. The execution of GlobalX’s business plan is capital intensive and may become subject to statutory or regulatory requirements.\n\n \n\nWe may require additional capital, which may not be available on terms acceptable to us or at all.\n\n \n\nThe ability of GlobalX to execute its build-out and growth strategy and achieve operations will depend on acquiring substantial additional financing through debt financing, equity financing or other means. Failure to obtain such financing may result in the delay or indefinite postponement of such growth strategy or even impact the ability of GlobalX to continue as a going concern.\n\n \n\nThere can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable to GlobalX. If additional financing is raised by GlobalX through the issuance of its securities, shareholders may suffer significant dilution. If additional financing is not available, or if available, not available on satisfactory terms, then this could result in a material adverse effect or could require GlobalX to reduce, delay, scale back or eliminate portions of its actual or proposed operations or could prevent GlobalX from continuing as a going concern.\n\n \n\nGlobalX may also need to raise capital by incurring long-term or short-term indebtedness in order to fund its business objectives. This could result in increased interest expense and decreased net income. Investors are cautioned that there can be no assurance as to the terms of such financing and whether such financing will be available. The level of GlobalX’s indebtedness could impair its ability to obtain additional financing in the future on a timely basis to take advantage of business opportunities that may arise.\n\n \n\nWe rely on third-party specialists and other commercial partners to perform functions integral to our operations.\n\n \n\nGlobalX is expected to secure goods and services from a number of third party suppliers. Any significant interruption in the provision of goods and services from any such key suppliers, some of which would be beyond GlobalX’s control, or any significant increase in price of such goods and services, could have a material adverse effect. GlobalX will be reliant upon providers of aircraft, such as Airbus and other third party leasing companies, which will make GlobalX susceptible to any problems connected with aircraft or engines or components, including defective materials, mechanical problems or negative perceptions in the traveling community. The delay or\n\n8\n\n \n\ninability of any provider of aircraft to deliver aircraft or engines or components as GlobalX requires could negatively impact GlobalX’s growth strategy and could result in a material adverse effect.\n\n \n\nOur business may become subject to disruption due to unscheduled maintenance and variability in fuel costs.\n\n \n\nGiven the limited number of aircraft GlobalX currently operates, if one or more aircraft becomes unavailable due to unscheduled maintenance, repairs or other reasons, GlobalX could suffer material adverse financial and reputational impacts.\n\n \n\nOur business has been and in the future may be materially adversely affected by the price and availability of aircraft fuel. Unexpected increases in the price of aircraft fuel or a shortage or disruption in the supply of aircraft fuel could have a material adverse effect on our business, results of operations and financial condition. For example, a major hurricane making landfall along the Gulf Coast could disrupt oil production, refinery operations and pipeline capacity in that region, possibly resulting in significant increases in the price of aircraft fuel and diminished availability of aircraft fuel supply. Fuel prices also may be affected by geopolitical and macroeconomic conditions and events that are outside of our control, including volatility in the relative strength of the U.S. dollar, the currency in which oil is denominated. Instability within major oil producing regions, such as the Middle East and Venezuela, Russia’s ongoing conflict in Ukraine, ongoing conflicts throughout the Middle East, changes in demand from major petroleum users such as China, and increases in competing energy sources are examples of these trends.\n\nGlobalX will be dependent on fuel to operate its business. Fuel supply is impacted by a host of global events outside of GlobalX’s control, such as significant weather events, market speculation, geopolitical tensions, refinery capacity, government taxes and levies, and GlobalX demand and supply. A significant change in fuel availability would materially affect GlobalX’s projected operating results and growth strategy.\n\n \n\nWe operate a limited number of aircraft types.\n\n \n\nCritical to GlobalX’s business model is a supply of modern and cost-effective aircraft that can service the various sectors required to fly GlobalX’s planned route network. If the A320 family of aircraft is not available in accordance with GlobalX growth strategy or if the aircraft lease or maintenance costs increase drastically, then there could be a material impact on GlobalX’s growth strategy, cost structure and potential profitability. In addition, a switch to a different family of aircraft could have a material adverse effect on our cost structure.\n\n \n\nA critical cost-saving element of our business strategy is to operate a limited number of aircraft types; however, our dependence on the A320 family of aircraft for all of our aircraft makes us vulnerable to any design defects or mechanical problems associated with this aircraft type or these engines. In the event of any actual or suspected design defects or mechanical problems with this family of aircraft, whether involving our aircraft or that of another airline, we may choose or be required to suspend or restrict the use of our aircraft. Our business could also be materially adversely affected if the public avoids flying on our aircraft due to an adverse perception of our plane type or engine type, whether because of safety concerns or other problems, real or perceived, or in the event of an accident involving such aircraft or engine. Our intellectual property rights, particularly our branding rights, are vulnerable, and any inability to protect them may adversely affect our business and financial results.\n\n \n\nWe consider our intellectual property rights, particularly our branding rights such as our trademark applicable to our airline, to be a significant and valuable aspect of our business. We aim to protect our intellectual property rights through a combination of trademark, copyright and other forms of legal protection, contractual agreements and policing of third-party misuses of our intellectual property, but cannot guarantee that such efforts will be successful. Our failure to obtain or adequately protect our intellectual property or any change in the law that lessens or removes the current legal protections of our intellectual property may diminish our competitiveness and adversely affect our business and financial results. Any litigation or disputes regarding intellectual property may be costly and time-consuming and may divert the attention of our management and key personnel from our business operations, either of which may adversely affect our business and financial results.\n\n \n\nOur quarterly results of operations fluctuate due to a number of factors, including seasonality.\n\n \n\nThe charter airline industry is seasonal. The demand for and the pricing of charter services does fluctuate throughout the year, as it does with most air travel industries. Historically, demand for air travel can vary greatly on a month to month basis different customers due to seasonality. This can be offset by managing the customer mix, longer term contracts with guaranteed minimum hours and focusing on different geographies. In as much as GlobalX has fixed costs relating to air crews, insurance, leases, rent, and other payments, lower periods of demand, combined with lower prices, could lead to negative cash flow and earnings for a given period.\n\n \n\n9\n\n \n\nThreatened or actual terrorist attacks or security concerns involving airlines could have a material adverse effect on our business, results of operations and financial condition.\n\n \n\nThe September 11, 2001 terrorist attacks and subsequent terrorist activity have caused uncertainty in the minds of the traveling public. The occurrence of a major terrorist attack or attempted terrorist attack (whether domestic or international and whether involving GlobalX or another carrier or no carrier at all) and additional restrictive security measures that are implemented in response could have a material adverse effect on passenger demand for air travel and on the number of passengers traveling on GlobalX’s flights. It could also lead to a substantial increase in insurance, airport security and other costs. Any resulting reduction in passenger revenues and/or increases in insurance, security or other costs could result in a material adverse effect.\n\n \n\nGeneral economic conditions may reduce the demand for our services.\n\n \n\nThe financial success of GlobalX may be sensitive to adverse changes in general economic conditions in the United States such as war, terrorist attacks, recession, inflation, labor disputes, demographic changes, pandemics, weather or climate changes, unemployment and interest rates. Such changing conditions could reduce demand in the marketplace for GlobalX’s services.\n\n \n\nInflation may have an adverse impact on our business, results of operations and financial condition.\n\nIn recent years, inflation increased throughout the U.S. economy. In response, the Federal Reserve raised certain benchmark interest rates in an effort to combat inflation. Inflation can adversely affect us by resulting in increased costs of goods and services, including those GlobalX uses in its operations, which would increase GlobalX’s expenses. In addition, GlobalX’s customers could also be affected by inflation, which could have a negative impact on demand for air travel. If the U.S. economy continues to feel the effects of inflationary pressures, then GlobalX’s business, results of operations and financial condition could be materially adversely affected.\n\nWe may become involved in litigation that may materially adversely affect us.\n\nGlobalX may be subject to litigation arising out of its operations. Damages claimed under such litigation may be material or may be indeterminate, and the outcome of such litigation may materially impact GlobalX’s business, results of operations, or financial condition. While GlobalX will assess the merits of any lawsuit and defend itself accordingly, it may be required to incur significant expense or devote significant financial resources to defending itself against such litigation. In addition, the adverse publicity surrounding such claims may result in a material adverse effect.\n\n \n\nIncreased labor costs, union disputes, employee strikes and other labor-related disruption, may adversely affect our business, results of operations and financial condition.\n\n \n\nGlobalX currently has and intends to maintain a non-unionized workforce. In the event that unionization activities occur with its workforce, GlobalX will incur increased labor costs. Increased labor costs will negatively impact GlobalX’s cost structure and will adversely affect GlobalX’s ability to successfully operate its business.\n\n \n\nMany factors could affect our ability to control our costs and to maintain a low cost structure.\n\n \n\nOur business plan calls for our operations to be based out of three primary hubs; MIA, AEX and HRL, with the vast majority of our projected flights consisting of daily round trips departing from and returning to their respective bases. If we are unable to continue to secure operating capacity at these hubs for our operations or planned expansion, then our business will be substantially harmed. And, assuming that we do obtain operating capacity at these locations, there is no guarantee that the fees and other costs related to operating out of these locations will not increase. Our operating performance and results of operations could be harmed by any such increase in fees or costs charged by the airport.\n\n \n\nWe rely heavily on technology and automated systems to operate our business and any failure of these technologies or systems or failure by their operators could harm our business.\n\n \n\nWe have put in place a significant amount of information technology and automated systems to operate our business. The functionality of these systems is one of the keys to achieving low operating costs. These systems include a computerized airline reservation system, flight operations system, financial planning, management and accounting systems, telecommunications systems, website and maintenance systems. For our operations to work efficiently, all of our systems will need to be able to accommodate a high volume of traffic, maintain secure information and deliver flight information. If any of our operational systems fail or experience interruptions, then we could lose a significant amount of revenue and experience operational difficulties which could lead to reputational harm and have a material adverse impact on our business.\n\n \n\n10\n\n \n\nUnauthorized breach of our information technology infrastructure could compromise the personally identifiable information of our passengers, prospective passengers or personnel and expose us to liability, damage our reputation and have a material adverse effect on our business, results of operations and financial condition.\n\n \n\nOur processing, storage, use and disclosure of personal data could give rise to liabilities as a result of government regulation or a significant data breach may adversely affect the Company’s business. In our regular business operations, we collect, transmit, process and store sensitive data, including personal and financial information of our customers and employees such as payment processing information and information of our business partners. GlobalX depends on the ability to use information we collect to provide our services and operate our business.\n\n \n\nGlobalX must manage increasing legislative, regulatory and consumer focus on privacy issues and data security. For example, in May 2018, the EU’s General Data Protection Regulation became effective, which imposes significant privacy and data security requirements, as well as potential for substantial penalties for non-compliance. Recent penalties imposed by regulators have resulted in substantial adverse financial consequences to those companies. Also, some of GlobalX’s commercial partners, such as credit card companies, have imposed data security standards that GlobalX must meet. These standards continue to evolve. GlobalX will continue its efforts to meet its privacy and data security obligations; however, it is possible that certain new obligations or customer expectations may be difficult to meet and could increase GlobalX’s costs.\n\n \n\nAdditionally, GlobalX must manage evolving cybersecurity risks. Our network systems and storage applications, and those systems and storage and other business applications maintained by our third-party providers, may be subject to attempts to gain unauthorized access, breach, malfeasance or other system disruptions. In some cases, it is difficult to anticipate or to detect immediately such incidents and the damage caused thereby. In addition, as attacks by cybercriminals become more sophisticated, frequent and intense, the costs of proactive defense measures may increase. While we continually work to safeguard our internal network systems, including through risk assessments, system monitoring, information security policies and employee awareness and training, and review and validate our third-party security standards, there is no assurance that such actions will be sufficient to prevent cyber-attacks or data breaches.\n\n \n\nThe loss, disclosure, misappropriation of or access to customers’, employees’ or business partners’ information or GlobalX’s failure to meet its obligations could result in legal claims or proceedings, penalties and remediation costs. A significant data breach or GlobalX’s failure to meet its obligations may adversely affect GlobalX’s reputation, relationships with our business partners, business, operating results and financial condition.\n\n \n\nFailure to comply with applicable environmental laws and regulations could have a material adverse effect on our business, results of operations and financial condition.\n\n \n\nWe expect to be subject to stringent federal, state, local and foreign laws, regulations and ordinances relating to the protection of the environment, including those relating to emissions to the air, discharges to surface and subsurface waters, safe drinking water, and the management of hazardous substances, oils and waste materials. Compliance with all environmental laws and regulations can require significant expenditures and any future regulatory developments in the U.S. and abroad could adversely affect operations and increase operating costs in the airline industry. Future operations and financial results may vary as a result of environmental laws and regulations. Compliance with environmental laws and regulations that may be applicable to us in the future could increase our cost base and could have a material adverse effect on our business, results of operations and financial condition. Governmental authorities in several U.S. and foreign cities are also considering or have already implemented aircraft noise reduction programs, including the imposition of nighttime curfews and limitations on daytime take-offs and landings, which could adversely affect our operations going forward, particularly if locally-imposed regulations become more restrictive or widespread.\n\n \n\nChanges in legislation, regulation and government policy have affected, and may in the future have a material adverse effect on, our business.\n\nExecutive orders could affect GlobalX’s business, operations, strategies and increase GlobalX’s costs of compliance. Any such changes may make it more difficult and/or more expensive for GlobalX to acquire or lease new aircraft or engines and parts to maintain existing aircraft or engines or make flying less profitable. GlobalX also faces uncertainty regarding increased tariffs under the second Trump Administration, which could result in retaliatory tariffs imposed on U.S. businesses from countries affected by such tariffs. While GlobalX cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the United States and other countries, the tariffs described above, the adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs, trade agreements or related policies have the potential to adversely impact GlobalX’s business, results of operations, and financial condition. Any tariffs imposed on commercial aircraft and related parts imported from outside the United States may have a material adverse effect on GlobalX’s fleet, business, financial condition and results of operations. To the extent that any such changes have a negative impact on us or the airline industry, including as a result of related uncertainty, these changes may materially and adversely impact GlobalX’s business, financial condition, results of operations and cash flows.\n\n11\n\n \n\nNon-compliance with regulations and guidelines for minimizing aircraft emissions and their impact on climate change.\n\n \n\nConcerns about climate change may prompt governments to introduce regulatory changes affecting the aviation industry, potentially resulting in increased costs. These changes could involve emission reduction requirements, capital investments in specific equipment or technologies, or other additional expenses linked to emissions. Indirectly, these regulatory activities may raise operating costs, including fuel expenses.\n\n \n\nAssets securing loans, such as aircraft, spare parts, and airport slots, may depreciate if there is a shift in customer demand towards low-carbon alternatives. Operational impacts, such as increased flight cancellations, may result in revenue loss. We may incur significant expenses to enhance the climate resilience of our infrastructure in response to the physical effects of climate change, although the materiality of such costs remains uncertain.\n\n \n\nGrowing public awareness of climate change threats might lead customers to reduce air travel frequency or opt for airlines perceived as more environmentally sustainable. Business customers may explore alternatives like virtual meetings and workspaces. The advancement of high-speed rail in markets served by short-haul flights may offer passengers lower-carbon travel options, affecting the demand for our services.\n\n \n\nIn addition, the ICAO endorsed the implementation of CORSIA. CORSIA aims to achieve carbon-neutral growth in the global aviation sector from 2021 to 2035. It mandates airlines to offset the increase in CO2 emissions, relative to an ICAO-defined baseline, for a significant majority of international flights. This offsetting is accomplished through the acquisition of carbon offsets or the utilization of low-carbon fuels.\n\n \n\nThe future costs associated with CORSIA compliance are uncertain, influenced by variables like the availability and pricing of carbon offset credits and low-carbon aircraft fuels. We acknowledge the potential impact on our business due to the uncertain landscape of compliance costs.\n\n \n\nNotably, we lack direct control over CORSIA compliance costs until 2032, as they are contingent on global aviation sector emissions growth. Beginning in 2033, such requirements incorporate a factor for individual airline operator emissions growth. Due to the competitive and unpredictable nature of the airline industry, we cannot assure the ability to offset CORSIA-related costs through fare adjustments, surcharges, revenue increases, or other operating cost reductions.\n\n \n\nWe have a significant amount of aircraft-related fixed obligations that could impair our liquidity and thereby harm our business, results of operations and financial condition.\n\n \n\nWe expect to lease or finance the majority of our aircraft. Our ability to pay the fixed costs associated with our contractual obligations under these leases and debt arrangements will depend on our operating performance and cash flow, which will in turn depend on, among other things, the success of our current business strategy, whether fuel prices continue at current price levels and/or further increase or decrease, further weakening or improving in the U.S. economy, as well as general economic and political conditions and other factors that are, to some extent, beyond our control. The amount of our aircraft related fixed obligations could have a material adverse effect on our business, results of operations and financial condition.\n\n \n\nRising maintenance and repair costs could adversely affect cash flow and results of operation.\n\n \n\nAs we anticipate taking delivery of all aircraft fresh from maintenance, our initial maintenance costs will in all likelihood be lower at delivery of the aircraft and rise throughout the term of the lease or ownership of the aircraft. Our fleet will require more maintenance as it ages and our maintenance and repair expenses for each of our aircraft will likely be incurred at approximately the same intervals. Moreover, because much of our current fleet has been acquired over a relatively short period, significant maintenance that is scheduled on each of these planes will likely occur at roughly the same time, meaning we will likely incur our most expensive scheduled maintenance obligations, known as heavy maintenance, across our present fleet around the same time. These more significant maintenance activities could result in out-of-service periods during which our aircraft are dedicated to maintenance activities and unavailable to generate revenue. In addition, we anticipate that the terms of our lease agreements will require us to pay supplemental rent, also known as maintenance reserves, to be paid to the lessor in advance of the performance of major maintenance, resulting in our recording significant prepaid deposits on our balance sheet. We expect scheduled and unscheduled aircraft maintenance expenses to increase as a percentage of our revenue over the next several years. Any significant increase in maintenance and repair expenses would have a material adverse effect on our business, results of operations and financial condition.\n\n \n\n12\n\n \n\nWe may face difficulties in recruiting and hiring our workforce.\n\n \n\nFrom time to time, the airline industry has experienced a shortage of personnel licensed by the FAA, especially pilots and mechanics. We expect to compete against the major U.S. and foreign flag airlines for labor in these highly-skilled positions. Major U.S. airlines may offer wage and benefit packages that exceed our wage and benefit packages. If we are unable to hire, train and retain qualified employees at its anticipated costs, we may be unable to successfully execute our business plan. Moreover, in the future, we may have to increase wages and benefits in order to attract and retain qualified personnel or risk considerable employee turnover.\n\n \n\nThe airline industry is particularly sensitive to changes in economic conditions.\n\n \n\nNegative economic conditions or a recurrence of such conditions would negatively impact our business, results of operations and financial condition. Our business and the airline industry in general are affected by many changing economic conditions beyond our control, including, among others:\n\n•\nchanges and volatility in general economic conditions, including the severity and duration of any downturn in the U.S. or global economy and financial markets;\n\n•\nchanges in consumer preferences, perceptions, spending patterns or demographic trends, including any increased preference for higher-fare carriers offering higher amenity levels, and reduced preferences for low-fare carriers offering more basic transportation, during better economic times;\n\n•\nhigher levels of unemployment and varying levels of disposable or discretionary income;\n\n•\ndepressed housing and stock market prices; and\n\n•\nlower levels of actual or perceived consumer confidence.\n\n \n\nThese factors can adversely affect the results of our operations, our ability to obtain financing on acceptable terms, and our liquidity generally. Unfavorable general economic conditions, such as higher unemployment rates, a constrained credit market, housing-related pressures and increased focus on reducing business operating costs can reduce spending for leisure, visiting friends and relatives, and business travel. For many travelers, in particular leisure travelers visiting friends and relatives, air transportation is a discretionary purchase that they can eliminate from their spending in difficult economic times. Unfavorable economic conditions could also affect our ability to raise prices to counteract increased fuel, labor or other costs, resulting in a material adverse effect on our business, results of operations and financial condition.\n\n \n\nRisks associated with our presence in international emerging markets, including political or economic instability, and failure to adequately comply with existing legal requirements, may materially adversely affect us.\n\n \n\nWe sometimes operate in countries with less developed economies, legal systems, financial markets and business and political environments that are vulnerable to economic and political disruptions, such as significant fluctuations in gross domestic product, interest and currency exchange rates, civil disturbances, government instability, nationalization and expropriation of private assets, trafficking and the imposition of taxes or other charges by governments. The occurrence of any of these events in markets served by us now or in the future and the resulting instability may have a material adverse effect on our business, results of operations and financial condition.\n\n \n\nWe emphasize compliance with all applicable laws and regulations and implement and refresh policies, procedures and certain ongoing training of our employees, third-party specialists and partners with regard to business ethics and key legal requirements; however, we cannot assure you that our employees, third-party specialists or partners will adhere to our code of ethics, other policies or other legal requirements. If we fail to enforce our policies and procedures properly or maintain adequate recordkeeping and internal accounting practices to record our transactions accurately, then we may be subject to sanctions. In the event we believe or have reason to believe our employees, third-party specialists or partners have or may have violated applicable laws or regulations, we may incur investigation costs, potential penalties and other related costs which in turn may have a material adverse effect on our reputation, business, results of operations and financial condition.\n\n \n\nWe face limits on foreign ownership and control.\n\n \n\nTo comply with restrictions imposed by federal law on foreign ownership of U.S. airlines, we restrict voting of shares of capital stock by non-U.S. citizens. The restrictions imposed by federal law currently require that no more than 25% of our stock be voted or controlled, directly or indirectly, by persons who are not U.S. citizens and that our president and at least two-thirds of the members of our board of directors be U.S. citizens.\n\n \n\n13\n\n \n\nTo be considered a U.S. citizen, you must be: (1) an individual who is a citizen of the U.S.; (2) a partnership each of whose partners is an individual who is a citizen of the U.S.; or (3) a corporation or association organized under the laws of the U.S. or a state, the District of Columbia, or a territory or possession of the U.S., of which the president and at least two-thirds of the board of directors and other managing officers are citizens of the U.S., which is under the actual control of citizens of the U.S., and in which at least 75 percent of the voting interest is owned and controlled by persons that are citizens of the U.S.\n\n \n\nNo shares of stock may be voted by or at the direction of non-U.S. citizens unless such shares are registered on a separate stock record, which is referred to as the foreign stock record. Further, no shares of a non-U.S. citizen’s capital stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by federal law.\n\n \n\nWe are subject to extensive regulation by the FAA, the DOT, the TSA, CBP and other U.S. and foreign governmental agencies, compliance with which could cause us to incur increased costs and adversely affect our business, results of operations and financial condition.\n\n \n\nAirlines are subject to extensive regulatory and legal compliance requirements, both domestically and internationally, that involve significant costs. In the last several years, Congress has passed laws, and the DOT, FAA and TSA have issued regulations, relating to the operation of airlines that have required significant expenditures. We expect to continue to incur expenses in connection with complying with government regulations. Additional laws, regulations, taxes and airport rates and charges have been proposed from time to time that could significantly increase the cost of airline operations or reduce the demand for air travel. If adopted, these measures could have the effect of raising charter prices, reducing revenue and increasing costs.\n\n \n\nWe cannot assure you that these and other laws or regulations enacted in the future will not harm our business. Our ability to operate as an airline is dependent on our maintaining certifications issued to us by the DOT and the FAA. The FAA has the authority to issue mandatory orders relating to, among other things, the grounding of aircraft, inspection of aircraft, installation of new safety-related items and removal and replacement of aircraft parts that have failed or may fail in the future. A decision by the FAA to ground, or require time consuming inspections of or maintenance on, our aircraft, for any reason, could negatively affect our business and financial results. Federal law requires that air carriers operating large aircraft be continuously “fit, willing and able” to provide the services for which they are licensed. Our “fitness” is monitored by the DOT, which considers factors such as unfair or deceptive competition, advertising, baggage liability and disabled passenger transportation. While the DOT has seldom revoked a carrier’s certification for lack of fitness, such an occurrence would render it impossible for us to continue operating as an airline. The DOT may also institute investigations or administrative proceedings against airlines for violations of regulations.\n\n \n\nInternational routes are regulated by treaties and related agreements between the United States and foreign governments. Our ability to operate international routes is subject to change because the applicable arrangements between the United States and foreign governments may be amended from time to time. Our access to new international markets may be limited by our ability to obtain the necessary certificates to fly the international routes. In addition, our operations in foreign countries are subject to regulation by foreign governments and our business may be affected by changes in law and future actions taken by such governments, including granting or withdrawal of government approvals and restrictions on competitive practices. We are subject to numerous foreign regulations based on the large number of countries outside the United States where we currently provide service. If we are not able to comply with this complex regulatory regime, then our business could be significantly harmed.\n\n \n\nRisk Factors Relating to Ownership of Our Common Stock\n\n \n\nWe do not know whether an active, liquid and orderly market will develop for our common stock or what the market price of our common stock will be, and, as a result, it may be difficult for you to sell your shares of our common stock.\n\n \n\nOur common stock currently trades on the OTCQB and CBOE CA and our Class B Non-Voting Common Stock trades on the CBOE CA, each with very limited daily trading volume. The market price of our common stock and our Class B Non-Voting Common Stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:\n\n•\nlimited daily trading volume resulting in the lack of a liquid market;\n\n•\nour success in purchasing aircraft, obtaining regulatory approval and other authorizations for our business;\n\n•\ngeneral market, political and economic conditions;\n\n•\nchanges in fuel prices;\n\n•\nchanges in earnings estimates and recommendations by financial analysts;\n\n•\nour failure to meet financial analysts’ performance expectations;\n\n14\n\n \n\n•\nchanges in market valuations of our competitors; and\n\n•\nthe expiration of the lock-up periods on shares of our common stock that were outstanding.\n\n \n\nUntil our common stock is listed on a qualified national securities exchange or our common stock price exceeds $5 per share, our common stock will be considered a “penny stock” and will not qualify for exemption from the “penny stock” restrictions, which may make it more difficult for you to sell your shares.\n\n \n\nOur common stock has traded on the OTCQB at a price of less than $5.00 per share and, as a result, is considered a “penny stock” by the SEC and subject to rules adopted by the SEC regulating broker-dealer practices in connection with transactions in “penny stocks.” The SEC has adopted regulations which generally define a “penny stock” to be any equity security that is not listed on a qualified national securities exchange and that has a market price of less than $5.00 per share, or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, these rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule relating to the penny stock market. Disclosure is also required to be made about current quotations for the securities and commissions payable to both the broker-dealer and the registered representative. Finally, broker-dealers must send monthly statements to purchasers of penny stocks disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. As a result of our common stock being subject to the rules on penny stocks, the liquidity of our common stock may be adversely affected.\n\n \n\nWe will require additional capital in the future and raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our business assets.\n\n \n\nWe will require additional capital in the future and we may seek additional capital through a combination of public and private equity offerings, debt financings, working capital lines of credit and potential licenses and collaboration agreements. We, and indirectly, our stockholders, will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any future offerings. To the extent that we raise additional capital through the sale of equity or debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. The incurrence of indebtedness would result in increased fixed payment obligations and could involve restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire additional aircraft and other operating restrictions that could adversely impact our ability to conduct our business. Additionally, any future collaborations we enter into with third parties may provide capital in the near term but limit our potential cash flow and revenue in the future.\n\n \n\nIf securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, then the price of our stock could decline.\n\n \n\nThe trading market for our common stock and our Class B Non-Voting Stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not currently have and may never obtain research coverage by industry or financial analysts. If no or few analysts commence coverage of us, then the trading price of our stock could decrease. Even if we do obtain analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our stock, then the price of our stock could decline. If one or more of these analysts cease to cover our stock, then we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.\n\n \n\nInsiders will continue to have substantial influence over us, which could limit your ability to affect the outcome of key transactions, including a change of control.\n\n \n\nOur directors, executive officers, holders of more than 5% of our outstanding stock and their respective affiliates beneficially own shares representing approximately 48% of our outstanding common stock . As a result, these stockholders, if they act together, will be able to influence our management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control of our company and might affect the market price of our common stock and our Class B Non-Voting Common Stock.\n\n \n\nExercise of our warrants or conversion of our Class A Non-Voting Common Stock may dilute the ownership interest of existing stockholders.\n\nHolders of our outstanding warrants and our Class A Non-Voting Common Stock may elect to convert their securities into shares of our common stock. As a result, the conversion of some or all of the convertible securities may dilute the ownership interests of existing stockholders. Any sales in the public market of the common stock issuable upon such conversion of the convertible securities could adversely affect prevailing market prices of our common stock. In addition, the existence of the convertible securities may encourage short selling by market participants because the conversion of the convertible securities could depress the price of our common stock.\n\n15\n\n \n\nWe do not intend to pay cash dividends on our common stock for the foreseeable future.\n\nWe have never declared or paid cash dividends on our common stock. We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business. We do not intend to pay cash dividends on our common stock in the foreseeable future. Any future determination to pay dividends on our common stock will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in current or future financing instruments, business prospects and such other factors as our board of directors deems relevant.\n\n \n\nSeparately, cash distributions have been made and paid to the holder of the 20% noncontrolling interest in Charter Air Solutions, LLC (“Top Flight”), a subsidiary of the Company, in which the Company holds an 80% membership interest, pro rata in accordance with the holder’s respective membership interests and in the manner set forth in Top Flight’s operating agreement. These distributions do not constitute dividends on the Company’s common stock and are not subject to the dividend policy described herein.\n\n \n\nOur corporate charter and Bylaws include provisions limiting voting and ownership by non-U.S. citizens.\n\n \n\nTo comply with restrictions imposed by federal law on foreign ownership of U.S. airlines, our Certificate of Incorporation and Bylaws restrict voting of shares of our common stock by non-U.S. citizens. The restrictions imposed by federal law currently require that no more than 25% of our stock be voted, directly or indirectly, by persons who are not U.S. citizens, that no more than 49.9% of our outstanding stock be owned (beneficially or of record) by persons who are not U.S. citizens and that our president and at least two-thirds of the members of our board of directors and senior management be U.S. citizens. Our Bylaws provide that the failure of non-U.S. citizens to register their shares on a separate stock record, which we refer to as the “foreign stock record,” would result in a suspension of their voting rights in the event that the aggregate foreign ownership of the outstanding common stock exceeds the foreign ownership restrictions imposed by federal law. Our Bylaws also provide that any transfer or issuance of our stock that would cause the amount of our stock owned by persons who are not U.S. citizens to exceed foreign ownership restrictions imposed by federal law will be void and of no effect.\n\n \n\nOur Bylaws further provide that no shares of our common stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by federal law. If it is determined that the amount registered in the foreign stock record exceeds the foreign ownership restrictions imposed by federal law, then shares will be removed from the foreign stock record in reverse chronological order based on the date of registration therein, until the number of shares registered therein does not exceed the foreign ownership restrictions imposed by federal law. To our knowledge, we are currently in compliance with these ownership restrictions.\n\n \n\nWe are an “emerging growth company” and a “smaller reporting company” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.\n\n \n\nWe are an “emerging growth company,” as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permitted and plan to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include, but are not limited to: (i) exemption from compliance with the auditor attestation requirements pursuant to SOX; (ii) exemption from compliance with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; (iii) reduced disclosure about our executive compensation arrangements; and (iv) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.\n\n \n\nWe incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.\n\n \n\nAs a public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company. SOX, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and other applicable securities rules and regulations, including the rules of national securities exchanges, impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.\n\nWe expect that we will need to hire additional accounting, finance, and other personnel as we continue to grow to comply with public company reporting requirements, as a public company, and our management and other personnel will need to devote a substantial amount of time towards maintaining compliance with these requirements. These requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, the rules and regulations applicable to us as a public company may make it more difficult and more expensive for us to maintain director and officer liability insurance, which could make it\n\n16\n\n \n\nmore difficult for us to attract and retain qualified members of our board of directors. We are currently evaluating these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.\n\n \n\nPursuant to Section 404 of SOX, we are required to furnish a report by our management on our internal control over financial reporting beginning with our second filing of an Annual Report on Form 10-K with the SEC after we became a public company. However, while we remain an emerging growth company or smaller reporting company, we are not required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 of SOX within the prescribed period, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we need to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we are not able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404 of SOX. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.\n\nDelaware law and provisions in our Certificate of Incorporation and Bylaws might discourage, delay, or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.\n\n \n\nProvisions in our Certificate of Incorporation and Bylaws may discourage, delay, or prevent a merger, acquisition, or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. Therefore, these provisions could adversely affect the price of our common stock.\n\n \n\nIn addition, Section 203 of the General Corporation Law of the State of Delaware, or DGCL, prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns, or within the last three years has owned, 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.\n\nAny provision of our Certificate of Incorporation, Bylaws, or Delaware law that has the effect of delaying or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our capital stock and could also affect the price that some investors are willing to pay for our common stock.\n\n \n\nWe may experience volatility in the trading price of our shares due to fluctuations in our quarterly operating results or other factors.\n\n \n\nSignificant fluctuations in the price of our securities could contribute to the loss of all or part of your investment. Trading in the shares\n\nof our common stock has been volatile, often has limited volume and is subject to fluctuations in response to various factors, some of\n\nwhich are beyond our control. Accordingly, the valuation ascribed to us and our common stock may not be indicative of the price that\n\nwill prevail in the trading market in the future. Any of the factors in this Annual Report on Form 10-K could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline. 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. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.\n\n \n\nOur disclosure controls and procedures may not prevent or detect all errors or acts of fraud.\n\n \n\nAs a public company, we are subject to the periodic reporting requirements of the Exchange Act. Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit under the Exchange Act are accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.\n\n \n\nThese inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or\n\n17\n\n \n\nmore people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected."}