Note 11 – Discontinued Operations

Assets and Liabilities from discontinued operations

The results of operations, assets, and liabilities of the Disposal Group have been reclassified as discontinued operations for all periods presented. The comparative consolidated balance sheet as of December 31, 2025 has been recast to present the assets and liabilities of the discontinued operation separately in accordance with ASC 205-20-45-10. The comparative consolidated statements of operations for the periods presented have been recast to segregate the results of discontinued operations from continuing operations.

The Disposal Group was not classified as held for sale prior to the completion of the divestiture on March 9, 2026. In accordance with ASC 205-20-45-10, the assets and liabilities of the discontinued operation are presented separately in the comparative balance sheet for periods prior to the period of disposal, using “held for disposition” presentation, notwithstanding that the held-for-sale criteria were not met in those prior periods.

The following table presents the major classes of assets and liabilities of the discontinued operations as of December 31, 2025:

The loss recognized on the disposal of the Disposal Group is presented within discontinued operations in the consolidated statements of operations for the three months ended March 31, 2026. See Note 10 – Acquisitions, Investments and Disposals for additional detail on the consideration received and the calculation of the loss on disposition.

Leases

On February 27, 2025, as a result of the acquisition of Flewber Global, Inc., the Company assumed a 3-year lease agreement for a lease for an office suite at the air-taxi’s base of operation located at 7160 Republic Airport, Farmingdale, NY 11735. The lease agreement was originally signed on August 18, 2021, and was amended and extended on August 27, 2024, prior to the Company’s purchase of Flewber Global, Inc. The extended term commenced September 1, 2024 and expires August 31, 2027. The lease provides exclusive use of office space and non-exclusive use of hangar space sufficient to cover the footprint of the Company’s leased aircraft.

The lease is classified as an operating lease. Lease payments consist of fixed monthly base rent; initially $2,590 per month for the office space and $3,000 per month for the hangar space; subject to scheduled 3% annual escalations through the remainder of the term, plus reimbursement of the Company’s proportionate share of operating expenses. There are no residual value guarantees, purchase options, renewal options, or material restrictions or covenants imposed on the Company under the lease.

On September 9, 2025, the Company, through its subsidiary Ponderosa Air LLC, entered into an Exclusive Aircraft Dry Lease Agreement with SEG Jets LLC for the lease of one 2020 Cirrus Design Corp. SF50 aircraft (U.S. Registration No. N25MG) for a term of twenty-four (24) months commencing upon delivery of the aircraft. The lease requires monthly payments of approximately $23,778 and a security deposit equal to one month’s rent, which may be applied to the final month’s payment at the Lessor’s discretion. The lease includes a right of first refusal for Ponderosa Air LLC to extend the lease at market terms or to match any bona fide third-party offer to purchase the aircraft during the lease term. Under the terms of the agreement, the lessee is responsible for all operational costs, including crew, fuel, maintenance, hangar, and insurance expenses, as well as maintaining compliance with FAA Part 135 operational standards. The aircraft is leased on an “as is” basis and must be returned in airworthy condition at the end of the lease.

Operating lease right-of-use assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is the Company’s incremental borrowing rate, estimated to be 7% for real estate leases and 5.5% for equipment leases, including the aircraft lease, as the interest rate implicit in most of its leases is not readily determinable.

In connection with the execution of the aircraft dry lease described above, the Company recognized a new right-of-use asset and corresponding lease liability of $542,373 based on the present value of future lease payments under the 24-month term, using a discount rate of 5.5%.

Operating right-of-use assets are summarized below.

Operating lease liabilities are summarized below

In connection with the sale of Fly Flyte Inc., see Note 10 – Acquisitions, Investments and Disposals, on March 9, 2026 the Company’s operating leases for office and plane facilities, with a net right-of-use asset carrying value of $524,548 and corresponding operating lease liabilities of $507,910, were derecognized upon the divestiture, as the lessee under the underlying lease agreements was the entity included in the disposal group. All lease payments contractually due had been remitted prior to the closing, and no material lease obligations remained past due at the date of sale. Upon the loss of control and deconsolidation of the divested entity in accordance with ASC 810-10-40, the right-of-use assets and operating lease liabilities were removed from the Company’s consolidated balance sheet, and their net carrying value was included in the net assets disposed of in the determination of the loss on sale. Accordingly, as of December 31, 2025, the operating leases were recognized on the consolidated balance sheet, but as of March 31, 2026, they were no longer recognized.

Loss from discontinued operations

On March 9, 2026, the Company sold to Buyer (i) 800,200 shares, representing 80.02% of the outstanding common stock of Fly Flyte, and (ii) 100% of the membership interests of Ponderosa Air, LLC. The Buyer held the remaining 19.98% of Fly Flyte prior to the transaction and owns 100% of the entity following the closing. As a result, the Company no longer holds a controlling interest in the Disposal Group.

The disposal represented the Company’s exit from the ownership and operation of the air-charter business and constituted a strategic shift having a major effect on the Company’s operations and financial results. Accordingly, the results of the Disposal Group are reported as discontinued operations for all periods presented in accordance with ASC 205-20. The 2026 results reflect operations for the period from January 1, 2026 through the March 9, 2026 closing date.

Consideration for the transaction consisted of cash, a promissory note, and shares of the Buyer’s Series D Convertible Preferred Stock, together with the Buyer’s assumption of certain liabilities, as further described in Note 10 – Acquisitions, Investments and Disposals. The transaction resulted in a net loss on disposition of $912,840, recognized within discontinued operations in the accompanying condensed consolidated statements of operations and comprehensive loss.

Statement of Operations Information

The following table summarizes the major classes of line items included in loss from discontinued operations:

During the three months ended March 31, 2026 and 2025, the Company recorded $67,077 and $18,519, respectively, as operating lease expense, which is included in cost of revenue on the condensed consolidated statements of operations and comprehensive loss. The components of the lease expense were as follows:

Continuing Involvement

Following the disposition, the Company retains two relationships with the Disposal Group and the Buyer: a passive equity investment in the Buyer’s non-voting Series D Convertible Preferred Stock, accounted for under ASC 321, and a services agreement entered into in April 2026 under which a subsidiary of the Company provides marketing, creative, growth, and product-advisory services to Fly Flyte for a fixed monthly fee. The services agreement is not contingent on the Disposal Group’s results of operations, and neither relationship provides the Company with the ability to significantly influence the operating or financial policies of the Disposal Group. Because the services agreement was entered into subsequent to March 31, 2026, no amounts were recognized under the agreement during the period. See Note 10 – Acquisitions, Investments and Disposals for the Company’s analysis of the loss of control and deconsolidation under ASC 810-10-40, and Note 14 – Subsequent Events for the terms of the services agreement.

Statements of Cash Flow Information

The cash flows of the Disposal Group have not been separately classified and are included within the respective categories of the Condensed Consolidated Statements of Cash Flows for all periods presented. Depreciation and amortization of the Disposal Group included within discontinued operations was approximately $104,135 and $62,716 for the three months ended March 31, 2026 and 2025, respectively, and there were no material capital expenditures or other significant noncash items.

Supplemental cash flow and other information related to leases was as follows:

The weighted-average remaining lease term and weighted-average discount rate are presented as not applicable as of March 31, 2026, as the Company’s operating leases were derecognized on March 9, 2026 in connection with the divestiture of the Disposal Group. See Leases above.