Volato Group, Inc. — 2023 Form 10-K
Business context and reporting period. This is the audited annual report for the year ended December 31, 2023, not a standalone fourth-quarter report. Volato provides private aviation services through aircraft sales and its ownership program, charter and deposit products, and aircraft management. It completed its business combination with PROOF Acquisition Corp. I on December 1, 2023; the transaction was accounted for as a reverse recapitalization. At year-end, Volato reported 24 HondaJets in its floating fleet and six managed aircraft.
Financial performance and liquidity
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $73.3 million | $96.7 million |
| Cost of revenue | $82.0 million | $94.3 million |
| Gross profit (loss), derived | $(8.7) million | $2.4 million |
| Operating loss | $(37.5) million | $(9.2) million |
| Net loss | $(52.8) million | $(9.4) million |
| Adjusted EBITDA, non-GAAP | $(32.1) million | $(9.0) million |
| Cash used in operating activities | $(30.4) million | $(21.4) million |
Revenue fell 24%. Aircraft sales declined 68% to $21.4 million, while aircraft usage revenue increased 162% to $37.8 million; managed-aircraft revenue was $14.1 million, down 3%. The gross loss equates to an approximately 11.8% gross margin, compared with approximately 2.5% gross margin in 2022. Selling, general and administrative expense rose 148% to $28.8 million, reflecting higher staffing, marketing and public-company costs. Net loss included a $13.4 million loss from the fair-value change in the forward purchase agreement and $3.4 million of net interest expense. The filing reports 11,273 flight hours, up 124% year over year.
Year-end cash was $14.5 million, with an additional $2.2 million of restricted cash. Current assets were $46.5 million and current liabilities $47.6 million on the balance sheet. Net cash from financing activities was $37.5 million, including $24.2 million from preferred stock and $19.1 million of business-combination proceeds, partly offset by forward-purchase-agreement payments. The company reported $27.4 million of net SAC G280 credit-facility debt, bearing 12.5% interest, and a $1.0 million related-party note due March 2024. Its aircraft purchase commitments include $161.1 million for 23 HondaJets and $79.0 million for four Gulfstream G280s.
Material changes, outlook and risks
- Growth and revenue mix: Flight activity and usage revenue expanded substantially, but lower aircraft deliveries drove the overall revenue decline. Management expected 8–10 HondaJet deliveries and one to two G280 deliveries in 2024, with remaining deliveries expected in 2025.
- Funding and going concern: The auditor issued an unmodified opinion but included an explanatory paragraph stating that losses, operating cash outflows and limited positive working capital raise substantial doubt about the company’s ability to continue as a going concern. Management expects cash, aircraft sales, greater utilization, expense management and possible debt or equity financing to support operations for at least 12 months; it cautions that additional financing may not be available on acceptable terms.
- Operational and market risks: Key exposures include discretionary demand and competition, pilot availability and labor costs, aircraft delivery and manufacturer dependence, maintenance and safety events, fuel prices, regulation, and the need for external capital. The company does not hedge fuel exposure. A hypothetical 10% fuel-price increase was estimated to add about $0.7 million to 2023 fuel expense.
- Other notable items: The company paid $18.9 million under a forward purchase agreement and received $2.5 million following a partial termination; the agreement’s year-end fair value was approximately $3.0 million. In 2023 it raised $24.2 million through preferred stock and converted $38.4 million of convertible notes into equity. No material pending litigation was identified in the financial-statement note. Management assessed internal control over financial reporting as effective; the auditor did not attest to that assessment.
Important facts for investors to verify
- Reconcile the filing’s statement of approximately $3 million of positive working capital with the balance-sheet figures, which imply a current-liability excess of about $1.1 million.
- Confirm the timing, funding and resale economics of the aircraft delivery commitments, including the G280 facility balance, remaining financing availability and required cash deposits.
- Assess near-term liquidity and debt maturities, particularly the related-party note due March 2024 and management’s reliance on aircraft sales or new financing.
- Review the forward purchase agreement’s settlement terms, valuation assumptions and potential future cash proceeds or obligations.
- Check the annual report’s disclosure-controls section: it refers to an evaluation “as of December 31, 2021,” while the internal-control report addresses December 31, 2023.