Business Context and Reporting Period
Company: Surf Air Mobility Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: November 12, 2025
Reporting Period: Events occurring on November 10, 2025, and November 12, 2025.
The Company entered into a series of material definitive agreements to raise capital through a registered direct offering, a private placement, and the issuance of senior secured convertible notes. Additionally, the Company issued shares to Palantir Technologies Inc. as consideration for services and addressed potential funding interruptions related to the U.S. Department of Transportation's Essential Air Service (EAS) program.
Key Financial Metrics and Capital Structure
- Gross Proceeds: Approximately $85 million from the concurrent offerings (before estimated offering expenses of $6.2 million).
- Debt Issuance: $74 million aggregate principal amount of senior secured convertible notes due 2028 (sold at 87.8% of principal, yielding $65 million in proceeds).
- Equity Issuance:
- 3,975,901 Registered Shares and accompanying warrants at $3.32 per share.
- 2,048,195 Private Placement Shares and accompanying warrants at $3.32 per share.
- 1,881,579 shares issued to Palantir (1,000,000 registered + 881,579 unregistered) valued at approximately $6.0 million.
- 2,025,000 shares issued to Park Lane Investments LLC as consideration for credit support.
- Outstanding Indebtedness:
- As of November 7, 2025: $96.9 million.
- Pro forma as of November 7, 2025 (post-offering): $119.1 million.
- Liquidity Covenant: Required to maintain a minimum of $10.0 million in unrestricted cash and cash equivalents.
- Shares Outstanding: 52,266,051 shares as of November 7, 2025 (excluding new issuances).
Material Changes and Use of Proceeds
The Company utilized the net proceeds from the concurrent offerings to repay outstanding indebtedness, specifically:
- 4-year credit agreement with affiliates of Comvest Partners.
- Convertible note issued to Partners for Growth V.L.P. (PfG Convertible), with an initial prepayment of $4 million and subsequent monthly principal payments of at least $500,000.
- Mandatory convertible security issued to GEM Global Yield LLC SCS (GEM Mandatory).
Net proceeds from the Registered Direct Offering and Private Placement Shares are designated for funding separately capitalized subsidiaries. The Company received no cash proceeds from the Palantir Placement.
Outlook, Risks, and Contingencies
Management Commentary and Guidance
The filing does not provide specific financial guidance or revenue forecasts. Management intends to continue providing full scheduled EAS service despite funding uncertainties.
Risks and Contingencies
- Federal Funding Lapse: The DOT issued notices regarding a potential lapse in EAS program funding due to a federal government shutdown, with temporary authority extended only through November 18, 2025. There is no assurance of retroactive reimbursement for services provided during a lapse, which could increase working capital requirements.
- Debt Covenants and Default: The new Note carries a 15% default interest rate and complex redemption/repurchase triggers. Failure to maintain a resale registration statement could trigger liquidated damages of 2.0% upfront plus 24.0% per annum.
- Letter of Credit: The Company must maintain a $30.0 million irrevocable standby letter of credit to backstop the Note, with a 1.0% annual fee and 15.0% interest on drawn amounts.
- Equity Capacity: The Company must maintain at least $30.0 million in available capacity under an equity line of credit or ATM program.
Investor Verification Checklist
- Verify the status of the U.S. federal government shutdown and the specific funding authorization for the Essential Air Service (EAS) program post-November 18, 2025.
- Confirm the effective date of the resale registration statement for the Note conversion shares to avoid potential 24% per annum liquidated damages.
- Review the specific terms of the "PfG Convertible" and "GEM Mandatory" repayments to ensure the Company has sufficient liquidity to meet the $4 million initial payment and subsequent monthly obligations.
- Assess the impact of the $30 million Letter of Credit requirement on the Company's banking relationships and available credit lines.
- Monitor the Company's ability to maintain the $10 million minimum liquidity covenant amidst potential EAS payment delays.