HARBOR DIVERSIFIED, INC. Annual Report Summary

The business you invested in a year ago has fundamentally changed. Harbor Diversified is no longer an airline; it has transitioned into a holding company focused on managing its remaining capital.

1. The Business Transformation

For years, Harbor Diversified operated Air Wisconsin. Following the loss of their contract with American Airlines, the company ceased airline operations. In January 2026, they completed the sale of their fleet, spare parts, and FAA operating license. Harbor is now a "shell" company with no active business operations, focusing entirely on protecting its remaining cash reserves.

2. Airline Performance Prior to Exit

During 2024, as the company prepared to wind down operations, activity levels declined significantly:

• Flights: Departures fell 12.6% to approximately 48,500.
• Passengers: Total passenger volume dropped 13.9% to roughly 2.15 million.
• Capacity: Available seat miles decreased 19.1% to approximately 1.4 billion.

To align with the closure, the company reduced its workforce by over 1,200 employees and cut administrative costs by roughly 85% from their peak.

3. Financial Position

The company’s financial focus has shifted from ticket revenue to the "Aviation Disposition." The sale of the airline generated approximately $125.9 million in cash. Harbor currently holds these liquid assets—cash and government-backed securities—with no major long-term debt or pension obligations. This equates to roughly $2.10 per share in cash value.

4. Strategic Outlook

Harbor is currently in a transition phase. Management is actively searching for a new business to acquire or merge with. Alternatively, the company may choose to liquidate and return the remaining $125.9 million to shareholders through a special cash payment or share buybacks.

5. Key Risks for Investors

• Regulatory Status: Because the company is now primarily a pool of cash, it faces the risk of being classified as an "investment company." This would trigger complex and costly regulations. The company is currently utilizing a one-year "safe harbor" exemption to identify a new business path. Failure to do so could result in mandatory registration as an investment company or a full shutdown.
• Reporting and Transparency: Harbor is not currently meeting standard SEC reporting deadlines for annual and quarterly filings. The company has indicated it does not intend to follow all standard public company disclosure rules, meaning investors may receive significantly less information regarding future plans or potential acquisitions than in the past.
• Operational Uncertainty: There is currently no business generating profit. The company’s value is tied entirely to management’s ability to execute a new strategy. Investors should be aware that legal and administrative costs continue to draw from the cash reserves while the company remains idle.

Investor Note: You are currently holding a stake in a company that is essentially a pool of cash waiting for a new purpose. Your investment outcome depends entirely on management's ability to either find a viable new business or successfully return the remaining capital to shareholders. Given the lack of standard financial reporting, monitoring the company’s official announcements regarding their "strategic alternatives" is the most important step you can take to track your investment.