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- Material Weakness (unchanged) — Eight material weaknesses disclosed including lack of banking controls, management override, and unauthorized distributions by former CEO.
- Going Concern (new) — Substantial doubt about ability to continue operations due to $4.3M Q1 loss, $1.4M restricted cash, and $1.9M unauthorized withdrawals.
- Related Party (new) — Former CEO transferred $1.9M to himself and wife's company without board approval before resigning.
FJET: revenue $0, net income -$4.3M. FJET discloses unauthorized withdrawals by ex-CEO, lawsuit, and going concern
Filed May 20, 2026 · Period ending March 31, 2026 · ~2 min read
Key Changes
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high
Former CEO Rick Svetkoff withdrew $1.9M without board approval before resigning Feb 19, 2026; company recognized $395K loss from misappropriation and is pursuing full recovery. Svetkoff filed $26M lawsuit Apr 9, 2026 alleging breach of fiduciary duty; company denies all claims and is evaluating counterclaims.
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high
Two banks restricted access to $1.4M in company funds ($685K cash, $713K short-term investments) due to litigation and disputes over account control. Combined with $1.9M in unauthorized withdrawals, approximately $3.3M of liquid assets are inaccessible or subject to dispute.
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high
Management disclosed substantial doubt about ability to continue as going concern. Cash declined from $4.6M at year-end 2025 to $1.4M at Mar 31, 2026; company states cash on hand will not satisfy obligations over next 12 months and depends on additional financing.
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high
Eight material weaknesses identified in internal controls, including lack of banking controls, management override, unauthorized distributions, and complex debt accounting. Disclosure controls deemed ineffective as of Mar 31, 2026; remediation plan outlined but no assurance of success.
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Company paid $5M deposit to Aerovision for F-4 Phantom II aircraft but cannot contact vendor and has received no aircraft availability information. Company reviewing legal remedies under $20M total agreement.
Summary
Starfighters Space's discloses a governance crisis centered on former CEO Rick Svetkoff's February 2026 resignation. Before stepping down, Svetkoff withdrew $1.9 million without board approval—$1.5 million offset against amounts the company owed him, with the remaining $395,000 recognized as a loss from misappropriation.
Two banks have frozen $1.4 million in company accounts due to the ensuing dispute, and Svetkoff filed a $26 million lawsuit in April alleging breach of fiduciary duty. The company denies all claims and is pursuing recovery of the full $1.9 million while evaluating counterclaims for conversion and breach of fiduciary duty. The fallout compounds existing liquidity pressure.
Cash fell from $4.6 million at year-end 2025 to $1.4 million at quarter-end, and management disclosed substantial doubt about the company's ability to continue as a going concern, stating current cash will not cover obligations over the next 12 months. Operating expenses more than doubled to $4.1 million in Q1 2026 (vs. $1.9 million in Q1 2025), driven by $2.2 million in stock-based compensation and higher professional fees related to the December 2025 IPO. The company also cannot contact Aerovision, the vendor to which it paid a $5 million deposit for F-4 Phantom II aircraft, and is reviewing legal remedies. Management identified eight material weaknesses in internal controls, including lack of banking controls and management override, and concluded disclosure controls were ineffective as of March 31, 2026. Watch whether the company secures additional financing before restricted cash is released, and whether the Svetkoff litigation or Aerovision dispute resolves in a way that restores liquidity. The subsequent-events note discloses that on April 9, 2026, former CEO Rick Svetkoff filed a complaint seeking $26 million in damages, and on May 11, 2026, the board appointed Jose Arias to an unspecified role.
Section-by-Section Diff
Controls
Disclosure controls ineffective due to eight identified material weaknesses, including unauthorized distributions and complex debt accounting.
Added in current filing · verify on EDGAR →
Based on this evaluation, our principal executive officer and principal financial officer concluded that during the period covered by this report, our disclosure controls and procedures were not effective as our management has identified material weaknesses.
Management concluded that disclosure controls and procedures were not effective as of March 31, 2026 due to identified material weaknesses. This represents a formal determination that the company's controls are insufficient to ensure accurate and timely financial reporting.
Added in current filing · verify on EDGAR →
During the year ended December 31, 2024, a material weakness was identified in our financial reporting controls over complex debt accounting.
Company identified a material weakness in 2024 related to complex debt accounting controls. This indicates the company struggled with proper accounting treatment for debt instruments and related derivatives.
Added in current filing · verify on EDGAR →
During the year ended December 31, 2025, seven material weaknesses were identified: Lack of controls over banking authorities, including the opening of and custody over bank accounts, and the review and approval over cash disbursements; Management’s override of controls due to lack of segregation of duties and insufficiently robust checks and balances; Incorrect recognition of stock-based compensation; The Company did not obtain board approval for all related party transactions; Classification of fixed asset additions; Complex debt accounting, inclusive of derivatives; and, Completeness of payables and expenses.
Seven material weaknesses were identified in 2025, including fundamental control failures around banking authorities, management override of controls, and lack of board approval for related party transactions. These represent serious governance and control deficiencies that could enable fraud or material misstatements.
Added in current filing · verify on EDGAR →
During the three months ended March 31, 2026, a material weakness was identified in our financial reporting controls over the accounting for the unauthorized distributions made by Rick Svetkoff.
A new material weakness was identified in Q1 2026 related to unauthorized distributions made by Rick Svetkoff. This suggests a control failure that allowed an individual to make unauthorized distributions from company funds.
Added in current filing · verify on EDGAR →
We plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate debt and stock-based compensation accounting requirements that apply to our financial statements, and to improve robustness of controls and approvals processes of transactions and disbursements.
Company outlined a remediation plan including adopting banking resolutions, dual-approval requirements, enhanced treasury controls, and improved vendor tracking. Management acknowledged these initiatives can only be accomplished over time with no assurance of success.
Legal Proceedings
Two new lawsuits disclosed: former CEO alleging $26M+ damages and unauthorized removals; creditor seeking $610K for unpaid 2014-2021 loans.
Added in current filing · verify on EDGAR →
On April 9, 2026, Richard "Rick" Svetkoff filed a complaint in the 18th Judicial Circuit in and for Brevard County, Florida (Case No. 26TC-245660994), against the Company, Timothy Franta (the Company's current CEO and a board member), board members Sean Bromley, Brian Goldmeier and Geoffrey "Hak" Hickman, and Flagship Bank as trustee for funds held in the name of the Company's wholly-owned subsidiary, Starfighters International, Inc. ("SFII"). Mr. Svetkoff previously served as the Company's CEO, President and Executive Chairman, and as a Director, until his voluntary resignation from these positions on February 19, 2026.
Former CEO Rick Svetkoff, who resigned February 19, 2026, filed suit April 9, 2026 against the company, current CEO, three board members, and a bank trustee. The complaint seeks damages exceeding $26 million for alleged breach of fiduciary duty, self-dealing, and mismanagement, plus injunctive relief including removal of certain directors and transfer of the starfighters.net domain. The company was subsequently removed Svetkoff from officer/director roles at multiple subsidiaries in March-April 2026.
Added in current filing · verify on EDGAR →
The Company contends that Mr. Svetkoff opened an offshore bank account in the Company’s name at Hamilton Reserve Bank of St. Kitts and Nevis and transferred approximately $1.0 million of SFII’s funds into that account without authorization, though the funds were subsequently returned and such account was closed. The Company also identified several issues related to banking transactions in SFII’s accounts at Flagship Bank in February 2026, including, but not limited to, unauthorized withdrawals and transfers of funds in the aggregate amount of $1,895,869 to Mr. Svetkoff and RLB Aviation, Inc., a corporation owned by Mr. Svetkoff’s wife, Brenda Svetkoff, without approval of the Company’s Board of Directors or audit committee.
Company alleges former CEO Svetkoff made unauthorized transfers totaling $1,921,159: $1.0M to offshore account (later returned), $1,895,869 to himself and his wife's company, $19,502 in personal rental payments, and $5,788 from an unapproved 2024 account. Company intends to pursue recovery of the full $1,921,159 and is evaluating counterclaims for conversion, misappropriation, and breach of fiduciary duty.
Added in current filing · verify on EDGAR →
On April 17, 2026, Mountain CI Holdings Ltd. filed a complaint against the Starfighters, Inc., a subsidiary of the Company, in the 18th Judicial Circuit in Brevard County, Florida. The plaintiff is seeking $610,000 for monies allegedly lent to Starfighters, Inc. in 2014 – 2021 which remained unpaid.
Separate creditor lawsuit filed April 17, 2026 seeking $610,000 for loans allegedly made to subsidiary Starfighters, Inc. between 2014-2021 that remain unpaid. Company denies allegations and intends to defend vigorously.
MD&A
First MD&A filing discloses CEO resignation, $1.9M unauthorized withdrawals, pending litigation, restricted bank accounts, and going-concern uncertainty.
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On February 19, 2026, our Board of Directors received by email a resignation letter pursuant to which Rick Svetkoff resigned as the Chief Executive Officer, President, Chairman and director of the Company. In his resignation letter, Mr. Svetkoff indicated that his disagreement with the Board and the Company related to the operations, policies and practices of the Company acting through the Board led to his decision to resign from all officer positions and as a director of the Company.
Former CEO Rick Svetkoff resigned from all positions on February 19, 2026, citing disagreements with the Board over operations, policies, and practices. Tim Franta was appointed as new CEO on February 22, 2026. The company states the resignation has not materially affected day-to-day operations but notes uncertainty about long-term competitive impact.
Added in current filing · verify on EDGAR →
The Company also identified several issues related to banking transactions in SFII’s accounts at Flagship Bank in February 2026, including, but not limited to, unauthorized withdrawals and transfers of funds in the aggregate amount in excess of $1.9 million to Mr. Svetkoff and RLB Aviation, Inc., a corporation owned by Mr. Svetkoff's wife, Brenda Svetkoff, as well as for rental payments for a residential private property, without approval of the Company's Board of Directors or audit committee.
Company identified $1.9 million in unauthorized withdrawals and transfers by former CEO Rick Svetkoff and related parties from subsidiary bank accounts without Board or audit committee approval. The company recognized a $395,033 loss from misappropriation (the portion exceeding amounts owed to Svetkoff) and intends to pursue recovery of the full $1.9 million.
Added in current filing · verify on EDGAR →
On April 9, 2026, Richard "Rick" Svetkoff filed a complaint in the 18th Judicial Circuit in and for Brevard County, Florida (Case No. 26TC-245660994), against the Company, Timothy Franta (the Company's current CEO and a board member), board members Sean Bromley, Brian Goldmeier and Geoffrey "Hak" Hickman, and Flagship Bank as trustee for funds held in the name of the Company's wholly-owned subsidiary, SFII.
Former CEO Rick Svetkoff filed a lawsuit seeking over $26 million in damages, alleging breach of fiduciary duty, self-dealing, mismanagement, and deceptive trade practices. The company denies all allegations, intends to vigorously defend itself, and is evaluating counterclaims for conversion, misappropriation, and breach of fiduciary duty. An adverse result could have a material adverse effect on the company.
Added in current filing · verify on EDGAR →
In relation to this pending litigation and ongoing dispute over controls of bank accounts, Flagship Bank has placed restrictions on all accounts held by SFII with the bank, which held cash and short-term investments totaling over $1.1 million. In addition, due to ongoing dispute over control of bank accounts, Regions Bank has also placed restrictions on all accounts held by our Texas subsidiary with the bank, which held cash and short-term investments totaling approximately $0.2 million.
Due to litigation and disputes over account control, Flagship Bank restricted access to $1.1 million and Regions Bank restricted access to $0.2 million in company funds. Combined with the $1.5 million in unauthorized withdrawals the company is pursuing recovery of, approximately $2.8 million of the company's liquid assets are currently inaccessible or subject to dispute.
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SFII paid the two instalments of the initial deposit advance to Aerovision, totaling $5,000,000, on January 24, 2025, and March 3, 2025. However, Aerovision has not provided any information as to the availability of any of the F-4 Phantom II aircraft contemplated to be purchased by SFII, and all recent attempts by our Company to contact Aerovision have been unsuccessful. We, acting through SFII, are reviewing what remedies might be available under the Aircraft Agreement.
Company paid $5 million in deposits to Aerovision for F-4 Phantom II aircraft acquisition but has received no information on aircraft availability and cannot contact Aerovision. The company is reviewing available remedies under the contract. This represents a significant capital commitment with uncertain recovery prospects.
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During the three months ended March 31, 2026, we incurred a net loss of $4,269,131 compared to net loss of $2,653,107 for the three months ended March 31, 2025. An analysis of the increase in net loss of $1,616,024 including the major components of our results for the periods, is below.
Net loss for Q1 2026 was $4.3 million, up 61% from $2.7 million in Q1 2025. The increase was driven by higher operating expenses including $2.2 million in stock-based compensation, increased professional fees ($1.3 million vs $192K), advertising ($508K vs $81K), and insurance ($206K vs $21K) related to becoming a public company, plus a $395K loss from misappropriation of assets.
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As of March 31, 2026, we had a positive working capital of $14,711,208 (current assets of $18,205,092, less current liabilities of $3,493,884) and as of December 31, 2025, we had a positive working capital of $17,091,337 (current assets of $20,143,416, less current liabilities of $3,052,079).
Working capital declined from $17.1 million at December 31, 2025 to $14.7 million at March 31, 2026, a decrease of $2.4 million. Cash and restricted cash declined from $4.6 million to $2.1 million. The company states it does not anticipate cash on hand will be adequate to satisfy obligations over the next 12 months, contributing to going-concern uncertainty.
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On January 21, 2026, we announced the successful completion of wind tunnel testing of STARLAUNCH 1, a key technical milestone in our air-launched rocket development efforts. The completed test campaign evaluated separation of the STARLAUNCH 1 vehicle from the Starfighters' aircraft platform across both subsonic and supersonic conditions.
Company completed wind tunnel testing for STARLAUNCH 1 air-launched rocket, demonstrating clean separation at Mach 0.85 and Mach 1.3 with strong agreement between CFD predictions and experimental results. The company has initiated procurement of instrumented drop test articles for further evaluation. This represents progress on the company's sub-orbital vehicle development program.
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In the current quarter, consulting fees include $984,060 in stock-based compensation related to options and RSUs issued during the previous year. There was no stock-based compensation in the comparative period.
Stock-based compensation totaled approximately $2.2 million in Q1 2026 (spread across consulting fees, professional fees, contract labor, advertising, and business development), compared to zero in Q1 2025. This non-cash expense significantly increased reported operating expenses following the company's December 2025 IPO and equity incentive plan implementation.
Notes
First-time disclosure of Q1 2026 financial statements showing $4.3M net loss, going concern, and disputes with former CEO.
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During the three months ended March 31, 2026, the Company recorded a net loss of $4,269,131 (March 31, 2025 - $2,653,107) and has a deficit of $37,699,562 (December 31, 2025 - $33,430,431).
Company reported Q1 2026 net loss of $4.3 million (vs. $2.7 million in Q1 2025), with accumulated deficit reaching $37.7 million. Operating expenses totaled $4.1 million, driven by consulting fees ($1.1M), professional fees ($1.3M), and advertising/promotion ($508K).
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As of March 31, 2026, the Company had cash in the amount of $1,402,025 (December 31, 2025 - $4,581,128). The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow.
Cash declined from $4.6 million at year-end 2025 to $1.4 million at March 31, 2026. Management disclosed substantial doubt about going concern, noting the company has not commenced principal operations and depends on additional financing.
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On February 3, 2026 and February 17, 2026, Rick Svetkoff withdrew and transferred funds amounting to $500,000 to an account not held in the name of the Company or its subsidiaries, and $1,395,869 to Rick Svetkoff and RLB Aviation, Inc., a company controlled by Brenda Svetkoff, respectively, without approval of the Company's Board of Directors or Audit Committee.
Former CEO Rick Svetkoff and spouse withdrew $1.9 million without board approval before resigning February 19, 2026. Company recognized $1.5 million as due from shareholder (offset against related-party notes payable) and $395K loss from misappropriation. Svetkoff filed $26 million lawsuit April 9, 2026 alleging breach of fiduciary duty.
Added in current filing · verify on EDGAR →
Due to ongoing dispute and a legal complaint filed by Rick Svetkoff, former CEO and Director, on April 9, 2026, Flagship Bank has placed restrictions on all accounts held by Starfighters International, Inc., a Florida subsidiary of the Company. As such, the Company reports cash of $684,758, and short-term investments of $503,286, as restricted as of March 31, 2026.
Two banks (Flagship and Regions) restricted company accounts totaling $685K cash and $713K short-term investments due to disputes with former CEO. Total restricted cash and investments at March 31, 2026: $1.4 million.
Added in current filing · verify on EDGAR →
As of March 31, 2026, Aerovision has not provided any information as to the availability of any of the F-4 Phantom II aircraft contemplated to be purchased by the Company, and all recent attempts by the Company to contact Aerovision have been unsuccessful. The Company is currently reviewing what remedies might be available under the Aircraft Agreement.
Company paid $5.15 million deposit to Aerovision for F-4 Phantom II aircraft acquisition but cannot contact vendor and has received no aircraft. Company reviewing legal remedies under $20 million total agreement.
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During the three months ended March 31, 2026, the Company recognized negative stock compensation of ($553,762) in connection with the stock options. On February 19, 2026, 1,390,000 options were forfeited upon the resignation of the former CEO, the former corporate secretary and spouse of the former CEO, and two immediate family members of the former CEO. The Company reversed $1,081,160 in stock compensation expense related to these forfeitures during the three months ended March 31, 2026.
Company reversed $1.1 million in stock compensation expense after former CEO and family forfeited 1.39 million options upon resignation. Net stock-based compensation for Q1 2026 was $1.8 million, primarily from RSU vesting ($2.4M) offset by option forfeitures.
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On December 18, 2025, the Company successfully closed its initial public offering and the Company's common shares are now traded on the NYSE American LLC (the "NYSE American") under the trading symbol "FJET".
Company completed IPO December 18, 2025, listing on NYSE American under ticker FJET. Raised $22.1 million in final Reg A round at $3.59/share. Converted outstanding convertible debentures and notes payable to 4.2 million shares. Total shares outstanding at March 31, 2026: 44.2 million.
Added in current filing · verify on EDGAR → · paraphrased
Total operating expenses (4,053,852) (1,879,553)
Operating expenses more than doubled to $4.1 million in Q1 2026 from $1.9 million in Q1 2025. Largest increases: consulting fees ($1.1M vs. $390K), professional fees ($1.3M vs. $192K), advertising/promotion ($508K vs. $81K). Company has not commenced principal space-launch operations.
Risk Factors
First-time disclosure: smaller reporting company exemption invoked; no material risk-factor changes from 2025 Annual Report.
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As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in the 2025 Annual Report.
Management explicitly states that no material changes to the company's risk profile have occurred since the 2025 Annual Report. This is a positive signal indicating stable operating conditions and no new material risks identified during the quarter.
Show 2 minor / wording changes
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We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
The company discloses it qualifies as a smaller reporting company under SEC rules and is therefore exempt from providing detailed risk-factor updates in quarterly filings. This is a structural disclosure about reporting obligations, not a change in underlying risk profile.
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You should carefully consider the risks discussed in the section entitled "Risk Factors" in Part I, Item 1A in our 2025 Annual Report, which could materially affect our business, financial condition, or future results.
The company directs readers to the 2025 Annual Report for the full set of risk factors. This is standard 10-Q practice for smaller reporting companies and does not indicate any new risks have emerged.
Financial Statements
Primary statements as printed on the EDGAR filing (iXBRL face). Companyfacts is used only when a statement is not on the HTML face. Not generated by the model.
Consolidated Statements of Operations (Unaudited)
| Description | Q1 ended Mar 31, 2026 | Q1 ended Mar 31, 2025 |
|---|---|---|
| Revenue: | ||
| Total revenue / net sales | — | — |
| Operating expenses: | ||
| Demand creation / marketing | 0.5 | 0.08 |
| Research and development | 0.08 | 0.3 |
| Operating overhead | 0.05 | 0.08 |
| Depreciation and amortization | 0.09 | 0.01 |
| Total operating expenses | 4.1 | 1.9 |
| Interest expense | — | 0.1 |
| Other income/(expense), net | (0.2) | (0.8) |
| Income before income taxes | (4.3) | (2.7) |
| Net income | (4.3) | (2.7) |
| Basic earnings per share | (0.10) | (0.13) |
| Diluted earnings per share | (0.10) | (0.13) |
Condensed Consolidated Balance Sheets
| Description | March 31, 2026 (unaudited) | December 31, 2025 |
|---|---|---|
| Assets | ||
| Current assets | ||
| Cash | 1,402,025 | 4,581,128 |
| Restricted cash | 736,014 | 50,592 |
| Short-term investments | 13,213,526 | 15,274,175 |
| Short-term investments restricted | 713,279 | - |
| Due from related party | 6,833 | 6,833 |
| Due from shareholder | 1,526,126 | - |
| Prepaid expenses | 607,289 | 230,688 |
| Total current assets | 18,205,092 | 20,143,416 |
| Right of use assets operating lease, net | 462,816 | 477,577 |
| Property, plant, and equipment, net of accumulated depreciation of $126,506 and $84,464, respectively | 2,303,786 | 2,396,977 |
| Long-term deposits | 5,368,914 | 5,368,914 |
| Total assets | 26,340,608 | 28,386,884 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities | ||
| Accounts payable and accrued liabilities | 1,030,846 | 966,088 |
| Deferred income | 134,002 | 149,000 |
| Lease liability | 58,943 | 55,898 |
| Grant payable | 743,967 | 354,967 |
| Related party notes payable | 1,526,126 | 1,526,126 |
| Total current liabilities | 3,493,884 | 3,052,079 |
| Lease liability non-current | 418,529 | 434,253 |
| Total liabilities | 3,912,413 | 3,486,332 |
| Commitments and contingencies - see Note 11 | ||
| Stockholders' Equity | ||
| Common stock, $0.00001 par value, 200,000,000 shares authorized; 44,173,972 issued and outstanding as of March 31, 2026 (43,891,846 as of December 31, 2025) | 441 | 438 |
| Additional paid-in-capital | 60,127,316 | 58,330,545 |
| Accumulated deficit | (37,699,562) | (33,430,431) |
| Total stockholders' equity | 22,428,195 | 24,900,552 |
| Total liabilities and stockholders' equity | 26,340,608 | 28,386,884 |
Consolidated Statements of Cash Flows (Unaudited)
| Description | Q1 ended Mar 31, 2026 | Q1 ended Mar 31, 2025 |
|---|---|---|
| Operating Activities: | ||
| Net cash from operating activities | (4.0) | (1.7) |
| Investing Activities: | ||
| Net cash from investing activities | 1.5 | (5.3) |
| Financing Activities: | ||
| Net cash from financing activities | — | 3.9 |
| Net increase/(decrease) in cash | (2.5) | (3.1) |
Amounts in millions USD (mixed scale; EPS as reported); EPS as reported. Statements found on the EDGAR/iXBRL face print as filed; the rest are presentation-friendly mappings of filer XBRL tags. Use EDGAR for interactive notes and detail. Interactive statements & notes on EDGAR ↗
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