AerSale Corp 10-K

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ​ AERSALE CORPORATION ​ Index to the Consolidated Financial Statements ​ ​ Page Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) 41 Consolidated Balance Sheets as of December 31, 2025 and 2024 44 Consolidated Statements of Operations for the years ended December 31, 2025, 2024, and 2023 45 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025, 2024, and 2023 46 Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024, and 2023 47 Notes to Consolidated Financial Statements for the years ended December 31, 2025, 2024, and 2023 48-77 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 40 Table of Contents Report of Independent Registered Public Accounting Firm ​ ​ Board of Directors and Stockholders Aersale Corporation ​ Opinion on the financial statements ​ We have audited the accompanying consolidated balance sheets of AerSale Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. ​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 10, 2026 expressed an unqualified opinion. ​ Basis for opinion ​ These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ Critical audit matters ​ The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ​ Assessment of Used Serviceable Material (“USM”) Inventory Cost from Dismantled Aircraft and Engines ​ As described further in Note B to the consolidated financial statements, for aircraft and engine parts that originate from dismantled aircraft and engines (“USM dismantled inventory”), cost is determined using a ratio calculated based on the relationship of the cost of the dismantled aircraft or engine at the time of purchase to the total estimated sales value of the dismantled aircraft or engine at the time of purchase. The Company evaluates this ratio periodically, and if necessary, 41 Table of Contents updates sales value estimates and makes prospective adjustments to this ratio on a product line basis. Any amounts identified with an estimated sales value lower than the carrying value is reduced to the estimated net realizable value at the time of the review. We identified the assessment of the USM dismantled inventory cost as a critical audit matter. ​ The principal considerations for our determination that the assessment of the USM dismantled inventory cost is a critical audit matter are the magnitude of the USM dismantled inventory balance and that certain inputs and assumptions used in determining the USM dismantled inventory cost are subject to significant management judgment. These inputs and assumptions include the future sale and repair cost estimates and the ratio applied to the sale price net of repair cost at the time of sale. The assessment of these inputs required a high degree of auditor judgment in evaluating the future demand for various product lines and repair cost of the USM dismantled inventory and the ratio to be applied to the sale price net of repair cost at the time of sale. ​ Our audit procedures related to testing the USM dismantled inventory cost included the following, among others: ​ ● We tested the design and operating effectiveness of controls relating to the Company’s USM inventory costing process. ● We tested future sale and repair estimates by examining historical sales and repair cost data as well as incorporating current market information. ● We evaluated the reasonableness of the ratio applied to the sale price net of repair cost of each individual airframe and/or engine part to determine its allocated cost by comparing the selected ratio to supporting documentation. ● We conducted sensitivity analysis around the inventory costing assumptions applied. ​ Assessment of Goodwill Impairment within the Asset Management Solutions (“AMS”) and Aircraft Composite Technologies (“ACT”) Reporting Units ​ As described in Notes B and F to the consolidated financial statements, goodwill related to the Asset Management Solutions (“AMS”) and Aircraft Composite Technologies (“ACT”) reporting units was $13.4 million and $6.0 million, respectively, as of December 31, 2025. Goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value. A quantitative assessment involves determining the fair value of each reporting unit using market participant assumptions. We identified the assessment of the impairment of goodwill within the AMS and ACT reporting units as a critical audit matter. ​ The principal considerations for our determination that the assessment of the impairment of goodwill within the AMS and ACT reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the AMS and ACT reporting units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to future revenues and certain operating expenses, operating margins, terminal growth rates, and discount rates; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. ​ Our audit procedures related to goodwill impairment within the AMS and ACT reporting units included the following, among others: ​ ● We tested the design and operating effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s AMS and ACT reporting units. ● We tested management’s process for developing the fair value estimates. ● We tested the completeness and accuracy of underlying data used in the discounted cash flow models. ● We evaluated the reasonableness of the significant assumptions used by management related to future revenues and certain operating expenses, operating margins, terminal growth rates, and discount rates. The evaluation of management’s assumptions related to future revenues and certain operating expenses, operating margins, and terminal growth rates involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the AMS and ACT reporting units; (ii) the 42 Table of Contents consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. ● Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the discount rate and terminal growth rate assumptions. ● We conducted sensitivity analysis around the discount and revenue growth assumptions applied. ​ ​ ​ /s/ GRANT THORNTON LLP ​ ​ We have served as the Company’s auditor since 2017 ​ Fort Lauderdale, Florida March 10, 2026 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 43 Table of Contents ​ AERSALE CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (in thousands, except share and par value data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ December 31, ​ ​ 2025 ​ 2024 Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 4,379 ​ $ 4,698 Accounts receivable, net of allowance for credit losses of $ 1,173 as of December 31, 2025 and December 31, 2024 ​ 42,654 ​ 34,646 Income tax receivable ​ ​ 1,728 ​ ​ 1,994 Inventory: ​ ​ ​ ​ ​ ​ Aircraft, airframes, engines, and parts, net ​ 205,379 ​ 224,832 Advance vendor payments ​ 5,679 ​ 6,803 Deposits, prepaid expenses, and other current assets ​ 9,170 ​ 11,057 Total current assets ​ 268,989 ​ 284,030 Fixed assets: ​ ​ ​ ​ ​ Aircraft and engines held for lease, net ​ 102,361 ​ 67,847 Property and equipment, net ​ 32,006 ​ 36,331 Inventory: ​ ​ ​ ​ ​ Aircraft, airframes, engines, and parts, net ​ 158,385 ​ 130,958 Operating lease right-of-use assets ​ ​ 30,130 ​ 33,105 Deferred income taxes ​ 8,784 ​ 10,171 Deferred financing costs, net ​ 1,024 ​ 1,296 Other assets ​ 586 ​ 595 Goodwill ​ 19,860 ​ 19,860 Other intangible assets, net ​ 18,347 ​ 20,530 Total assets ​ $ 640,472 ​ $ 604,723 ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ Accounts payable ​ $ 29,645 ​ $ 34,184 Accrued expenses ​ 7,233 ​ 7,400 Income tax payable ​ 329 ​ - Lessee and customer purchase deposits ​ 780 ​ 1,734 Current operating lease liabilities ​ ​ 4,313 ​ ​ 4,356 Current portion of long-term debt ​ ​ 993 ​ ​ 605 Deferred revenue ​ 530 ​ 1,781 Deferred insurance proceeds ​ ​ 28,610 ​ ​ 24,910 Total current liabilities ​ 72,433 ​ 74,970 Revolving credit facility ​ ​ 110,053 ​ 39,235 Long-term debt ​ ​ 1,284 ​ 1,209 Long-term lease deposits ​ ​ 3,492 ​ ​ 2,987 Long-term operating lease liabilities ​ ​ 28,190 ​ ​ 30,565 Maintenance deposit payments and other liabilities ​ 589 ​ 52 Warrant liability ​ ​ - ​ ​ 85 Total liabilities ​ ​ 216,041 ​ ​ 149,103 Stockholders’ equity: ​ ​ ​ ​ ​ Common stock, $ 0.0001 par value. Authorized 200,000,000 shares; issued and outstanding 47,221,513 and 53,252,563 shares as of December 31, 2025 and December 31, 2024, respectively ​ 5 ​ 5 Additional paid-in capital ​ 276,729 ​ 316,493 Retained earnings ​ 147,697 ​ 139,122 Total stockholders' equity ​ 424,431 ​ 455,620 Total liabilities and stockholders’ equity ​ $ 640,472 ​ $ 604,723 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 44 Table of Contents AERSALE CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (in thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ Products ​ $ 206,472 ​ $ 214,950 ​ $ 217,455 Leasing ​ 35,071 ​ 22,146 ​ 14,513 Services ​ 93,743 ​ 107,970 ​ 102,535 Total revenue ​ 335,286 ​ 345,066 ​ 334,503 Cost of sales and operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of products ​ 143,258 ​ 141,152 ​ 155,376 Cost of leasing ​ 12,136 ​ 8,468 ​ 4,599 Cost of services ​ 74,118 ​ 91,510 ​ 82,107 Total cost of sales ​ 229,512 ​ 241,130 ​ 242,082 Gross profit ​ 105,774 ​ 103,936 ​ 92,421 Selling, general and administrative expenses ​ 89,984 ​ 94,192 ​ 103,191 Income (loss) from operations ​ 15,790 ​ 9,744 ​ ( 10,770 ) Other (expense) income: ​ ​ ​ ​ ​ ​ Interest (expense) income, net ​ ( 8,330 ) ​ ( 5,703 ) ​ 155 Other income, net ​ ​ 2,982 ​ 1,495 ​ 666 Change in fair value of warrant liability ​ ​ 85 ​ 2,301 ​ 2,270 Total other (expense) income, net ​ ( 5,263 ) ​ ( 1,907 ) ​ 3,091 Income (loss) before income tax provision ​ 10,527 ​ 7,837 ​ ( 7,679 ) Income tax (expense) benefit ​ ( 1,952 ) ​ ( 1,986 ) ​ 2,116 Net income (loss) ​ $ 8,575 ​ $ 5,851 ​ $ ( 5,563 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.18 ​ $ 0.11 ​ $ (0.11) Diluted ​ $ 0.18 ​ $ 0.11 ​ $ ( 0.15 ) Weighted average shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ 48,378,882 ​ ​ 53,113,508 ​ ​ 51,291,424 Diluted ​ ​ 48,754,585 ​ ​ 53,359,085 ​ ​ 51,457,821 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ ​ 45 Table of Contents AERSALE CORPORATION AND SUBSIDIARIES Consolidated Statements of Stockholders’ Equity Years ended December 31, 2025, 2024, and 2023 AerSale Corporation Stockholders (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-in ​ Retained ​ Shares of ​ Treasury Stock, ​ Stockholders’ ​ ​ ​ ​ Amount ​ ​ ​ Shares ​ ​ ​ Capital ​ ​ ​ Earnings ​ ​ ​ Treasury Stock ​ ​ ​ at Cost ​ ​ ​ Equity Balance at December 31, 2022 ​ $ 5 51,189,461 ​ $ 306,141 ​ $ 138,834 ​ - ​ $ - ​ $ 444,980 Share-based compensation ​ ​ - ​ - ​ ​ 12,051 ​ ​ - ​ - ​ ​ - ​ ​ 12,051 Shares issued under the 2020 Employee Stock Purchase Plan ​ 0 ​ 45,755 ​ ​ 566 ​ ​ - ​ - ​ ​ - ​ ​ 566 Shares issued under the 2020 Equity Incentive Plan ​ ​ 0 ​ 1,719,214 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 0 Shares surrendered for tax withholdings on equity awards ​ ​ - ​ - ​ ​ ( 7,019 ) ​ ​ - ​ - ​ ​ - ​ ​ ( 7,019 ) Net loss ​ - ​ - ​ ​ - ​ ​ ( 5,563 ) ​ - ​ ​ - ​ ​ ( 5,563 ) Balance at December 31, 2023 ​ $ 5 52,954,430 ​ $ 311,739 ​ $ 133,271 ​ - ​ $ - ​ $ 445,015 Share-based compensation ​ ​ - ​ - ​ ​ 4,347 ​ ​ - ​ - ​ ​ - ​ ​ 4,347 Shares issued under the 2020 Employee Stock Purchase Plan ​ ​ 0 ​ 89,923 ​ ​ 531 ​ ​ - ​ - ​ ​ - ​ ​ 531 Shares issued under the 2020 Equity Incentive Plan ​ ​ 0 ​ 208,210 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 0 Shares surrendered for tax withholdings on equity awards ​ ​ - ​ - ​ ​ ( 124 ) ​ ​ - ​ - ​ ​ - ​ ​ ( 124 ) Net income ​ ​ - ​ - ​ ​ - ​ ​ 5,851 ​ - ​ ​ - ​ ​ 5,851 Balance at December 31, 2024 ​ $ 5 53,252,563 ​ $ 316,493 ​ $ 139,122 ​ - ​ $ - ​ $ 455,620 Share-based compensation ​ ​ - ​ - ​ ​ 4,887 ​ ​ - ​ - ​ ​ - ​ ​ 4,887 Shares issued under the 2020 Employee Stock Purchase Plan ​ ​ 0 ​ 76,256 ​ ​ 386 ​ ​ - ​ - ​ ​ - ​ ​ 386 Shares issued under the 2020 Equity Incentive Plan ​ ​ 0 ​ 321,265 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 0 Shares surrendered for tax withholdings on equity awards ​ ​ - ​ - ​ ​ ( 37 ) ​ ​ - ​ - ​ ​ - ​ ​ ( 37 ) Purchase of treasury stock ​ ​ - ​ - ​ ​ - ​ ​ - ​ 6,428,571 ​ ​ ( 45,000 ) ​ ​ ( 45,000 ) Retirement of treasury stock ​ ​ 0 ​ ( 6,428,571 ) ​ ​ ( 45,000 ) ​ ​ - ​ ( 6,428,571 ) ​ ​ 45,000 ​ ​ 0 Net income ​ ​ - ​ - ​ ​ - ​ ​ 8,575 ​ - ​ ​ - ​ ​ 8,575 Balance at December 31, 2025 ​ $ 5 47,221,513 ​ $ 276,729 ​ $ 147,697 ​ - ​ $ - ​ $ 424,431 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 46 Table of Contents AERSALE CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 ​ 2023 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ 8,575 ​ $ 5,851 ​ $ ( 5,563 ) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 19,334 ​ 16,048 ​ 10,459 Amortization of debt issuance costs ​ 392 ​ 337 ​ 400 Amortization of operating lease assets ​ ​ 557 ​ 365 ​ ​ 359 Inventory reserve ​ 3,476 ​ 3,695 ​ 1,507 Provision for doubtful accounts ​ - ​ 195 ​ - Deferred income taxes ​ 1,387 ​ 2,032 ​ ( 916 ) Change in fair value of warrant liability ​ ​ ( 85 ) ​ ​ ( 2,301 ) ​ ​ ( 2,270 ) Share-based compensation ​ ​ 4,887 ​ ​ 4,347 ​ ​ 12,051 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable ​ ( 8,008 ) ​ ( 3,601 ) ​ ( 2,966 ) Income tax receivable ​ ​ 266 ​ ​ ( 366 ) ​ ​ ( 1,628 ) Inventory ​ ( 54,800 ) ​ ( 78,029 ) ​ ( 168,632 ) Deposits, prepaid expenses, and other current assets ​ 1,887 ​ 1,450 ​ ( 1,772 ) Other assets ​ 9 ​ ( 745 ) ​ 103 Advance vendor payments ​ 1,124 ​ 28,954 ​ ( 5,884 ) Accounts payable ​ ( 4,539 ) ​ 4,287 ​ 8,768 Income tax payable ​ ​ 329 ​ - ​ - Accrued expenses ​ ( 232 ) ​ 1,832 ​ ( 3,537 ) Deferred revenue ​ ( 1,251 ) ​ ( 1,217 ) ​ 1,643 Lessee and customer purchase deposits ​ ( 449 ) ​ 3,152 ​ ( 15,668 ) Deferred insurance proceeds ​ ​ 3,700 ​ ​ 24,910 ​ ​ - Other liabilities ​ 472 ​ ( 12 ) ​ ( 604 ) Net cash (used in) provided by operating activities ​ ( 22,969 ) ​ 11,184 ​ ( 174,150 ) Cash flows from investing activities: ​ ​ ​ ​ ​ ​ Proceeds from sale of assets ​ 6,381 ​ 12,900 ​ 14,450 Acquisition of aircraft and engines held for lease, including capitalized costs ​ ( 4,160 ) ​ ( 14,978 ) ​ - Purchase of property and equipment ​ ( 6,081 ) ​ ( 14,052 ) ​ ( 11,359 ) Net cash (used in) provided by investing activities ​ ( 3,860 ) ​ ( 16,130 ) ​ 3,091 Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Proceeds from long-term debt ​ ​ 1,173 ​ 2,429 ​ ​ 8,559 Repayments of long-term debt ​ ( 710 ) ​ ( 9,174 ) ​ - Proceeds from revolving credit facility ​ 305,418 ​ 192,644 ​ 82,700 Repayments of revolving credit facility ​ ( 234,600 ) ​ ( 182,409 ) ​ ( 53,700 ) Payments of debt issuance costs ​ ​ ( 120 ) ​ ​ ( 126 ) ​ ​ ( 1,362 ) Purchase of treasury stock ​ ​ ( 45,000 ) ​ - ​ ​ - Proceeds from the issuance of Employee Stock Purchase Plan shares ​ ​ 386 ​ ​ 531 ​ ​ 566 Taxes paid related to net share settlement of equity awards ​ ​ ( 37 ) ​ ​ ( 124 ) ​ ​ ( 7,019 ) Net cash provided by financing activities ​ 26,510 ​ 3,771 ​ 29,744 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Decrease in cash and cash equivalents ​ ( 319 ) ​ ( 1,175 ) ​ ( 141,315 ) Cash and cash equivalents, beginning of period ​ 4,698 ​ 5,873 ​ 147,188 Cash and cash equivalents, end of period ​ $ 4,379 ​ $ 4,698 ​ $ 5,873 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of cash activities ​ ​ ​ ​ ​ ​ Income tax (refunds) payments, net ​ $ ( 468 ) ​ $ ( 13 ) ​ $ 1,159 Interest paid ​ $ 8,031 ​ $ 5,648 ​ $ 1,520 Supplemental disclosure of noncash investing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Reclassification of inventory to equipment held for lease, net ​ $ 33,552 ​ $ 43,210 ​ $ 7,036 Reclassification of inventory to property and equipment, net ​ $ 3,417 ​ $ - ​ $ - Reclassification of equipment held for lease, net from property and equipment, net ​ $ ( 8,773 ) ​ $ - ​ $ - ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 47 Table of Contents AERSALE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - DESCRIPTION OF THE BUSINESS Organization AerSale Corporation (the “Company” or “we”), a Delaware corporation, is headquartered in Doral, Florida, with additional offices, hangars, and warehouses located globally. Description of the Business The Company is a worldwide provider of aftermarket commercial aircraft and engines (“Flight Equipment”) and their parts to airlines, leasing companies, manufacturers of original equipment, government and defense contractors, and repair and overhaul service providers. We focus on mid-life assets and monetize them through our Asset Management Solutions segment. Asset Management Solutions activities include monetization of the assets through leasing or sale of whole asset components, or through teardown activities in support of our Used Serviceable Material (“USM”) activities. Our monetizing services have been developed to maximize returns on mid-life Flight Equipment throughout their operating life, in conjunction with realizing the highest residual value of Flight Equipment at their retirement. We do this by utilizing our deep market and technical knowledge in management of Flight Equipment sales, leasing and Maintenance, Repair, and Overhaul (“MRO”) activities. Beyond providing asset management services on our own Flight Equipment, we additionally provide asset management services to third-party clients complementing their infrastructure to optimize their Flight Equipment investments. While our offering to customers includes leasing of mid-life Flight Equipment, this service is offered in the context of a broader strategy to extract the maximum value from those assets. Frequently, we will offer a lease of an asset for the time period before its next scheduled overhaul (“green time”) on a short term or “spot” lease, with the intent of disassembling the asset at the conclusion of the lease. In turn, the vast majority of assets that we acquire are ultimately disassembled into parts once the remaining green time has been utilized. Through its Technical Operations (“TechOps”) segment, the Company also operates six Federal Aviation Administration (“FAA”) Title 14 Code of Federal Regulations Part 145 Certified Repair Facilities (the MROs) located in Goodyear, Arizona, Millington, Tennessee, Roswell and Rio Rancho, New Mexico, as well as two facilities in Miami, Florida. These facilities provide the Company flexibility and control to quickly prepare Company aircraft, engines, and inventory for market, as their selective refurbishment is frequently required to meet customers’ unique demand. In addition to maintaining the Company’s fleet of aircraft, the MROs provide external customer support for maintaining their aircraft with general maintenance, preservation, lease return work, repair services, and long-term storage programs. Leveraging its robust engineering team, TechOps also provides highly specialized technical support to our MRO facilities, as well as developing advanced technical repairs, modifications and products marketed as Engineered Solutions. Engineered Solutions includes the design, manufacture, and installation of new products, systems, and services that can enhance aircraft performance, safety, and service life. ​ NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and all of its wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated upon consolidation. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company’s cash equivalents are held primarily in interest-bearing accounts. 48 Table of Contents Foreign Currency The Company has determined that the functional currency for its foreign subsidiaries is the U.S. dollar. The primary economic environment in which the entities generate or expend cash is in U.S. dollars as evidenced by the cash flows in or out from revenue, operating expenses, investing, and financings. Only general office expenses and payroll transactions are denominated in local currency for our foreign subsidiaries. Accounts Receivable Accounts receivable include amounts receivable from customers for aircraft and engine parts sales, aircraft and engine basic and supplemental rents, and aircraft services. Contingent rents, also referred to as supplemental rent, which are unbilled, are also included in accounts receivable. The Company sells to a variety of customers worldwide. For certain transactions and customers not requiring payment in full prior to shipment of goods, the Company extends credit based on an evaluation of the customers’ financial condition. The Company monitors exposure to credit losses and maintains an allowance for doubtful accounts for estimated losses in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses, current market conditions, customers’ financial condition, amount of receivables in dispute, current receivables aging, and current payment patterns. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. A rollforward of the allowance for credit losses is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 Balance at beginning of year ​ ​ ​ $ 1,173 ​ $ 978 Provision ​ - ​ 195 Write-offs ​ - ​ - Balance at end of year ​ $ 1,173 ​ $ 1,173 ​ Inventory Inventory, which consists of whole Flight Equipment held for sale, as well as related parts, is valued at the lower of cost or net realizable value (“NRV”). For purchases of whole aircraft and engines for sale or lease, cost is determined using the specific identification method whereby total cost is the cost paid, including certain capitalizable asset acquisition costs, to acquire such assets as a whole. Additionally, the Company purchases certain whole Flight Equipment to disassemble and supply its engine and airframe parts inventory. For aircraft and engine parts that originate from such dismantled Flight Equipment, cost is determined using a ratio calculated based on the relationship of the cost of the dismantled aircraft or engine at the time of purchase to the total estimated sales value of the dismantled aircraft or engine at the time of purchase. At the time of sale, this ratio is applied to the sale price of each individual airframe and/or engine part to determine its allocated cost. At the time of sale, the sum of an individual part’s allocated cost and actual repair or overhaul costs incurred represent the total cost for such part. Our allocation of inventory between short term and long term reflects the inventory’s operating cycle, which is longer than one year due to teardown and repair lead times. Inventory expected to be monetized within 18 months as well as work-in-process and inventory used in MROs are reported under current assets on the Consolidated Balance Sheets. Inventory not expected to be sold within the operating cycle is classified as noncurrent inventory on the Consolidated Balance Sheets. The Company evaluates this ratio periodically, and if necessary, updates sales value estimates and makes prospective adjustments to this ratio on a product line basis. Any amounts identified with an estimated sales value lower than the carrying value is reduced to the estimated NRV at the time of the review. The Company recorded additional inventory reserves due to this NRV valuation, which is reflected as a component of cost of products in the Consolidated Statements of Operations. These additional inventory reserves were as follows (in thousands): 49 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Inventory reserves ​ $ 165 ​ $ 897 ​ Expenditures required for the repair of engine and airframe parts are capitalized as inventory and are expensed as cost of products when associated parts are sold. The Company periodically evaluates its whole aircraft and engines in inventory and Flight Equipment held for lease to determine if events or market circumstances indicate that the assets’ most likely disposition has changed. Should conditions exist at the time of the Company’s Consolidated Balance Sheets that would suggest a more likely use as an asset held for lease rather than sale or disassembly for parts inventory or vice versa, it will be reclassified at its then-current book value between inventory – aircraft, airframes, engines, and parts, net and fixed assets - aircraft and engines held for lease, net. This transaction is a noncash item and if it occurs, is reflected in the schedule of supplemental cash flows. The carrying value of inventory is reviewed regularly, giving consideration to factors such as its physical condition, sales patterns, and expected future demand to estimate the amount necessary to write down our slow-moving, obsolete, or damaged inventory. Such inventory may be held for periods beyond one year. The Company recorded inventory scrap losses which are reflected as a component of cost of products in the Consolidated Statements of Operations. These scrap losses are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Scrap loss reserves ​ $ 3,311 ​ $ 2,798 ​ Flight Equipment Held for Lease Flight Equipment held for lease is stated at cost, less accumulated depreciation. Certain internal and external professional fees, major improvements, modifications, and maintenance incurred in connection with the acquisition of Flight Equipment that are required to get the Flight Equipment ready for initial service are capitalized and depreciated over the remaining life of the Flight Equipment, and are reported in the investing activities section of the Consolidated Statements of Cash Flows. Subsequent to placing Flight Equipment into service, the cost of maintenance and improvements to Flight Equipment is normally expensed unless the improvements materially increase the long-term value of the Flight Equipment or extend the useful life of the Flight Equipment. The capitalized costs are depreciated over the lesser of the remaining useful life of the Flight Equipment or the estimated useful life of the capitalized improvements. Aircraft airframe components are depreciated over the assets’ useful life using the straight-line method to the estimated residual value based on the total remaining life before disassembly or outright scrap metal value. Aircraft current useful life is 7 years. Engines are depreciated using the straight-line method to the estimated residual value based on the total life remaining before disassembly. To arrive at the total engine life remaining before disassembly, the remaining life of the engine’s life-limited parts, the estimated utilization, and condition, as well as the aircraft fleet supported by the engine model are considered. Upon completion of its service life as a leased asset, Flight Equipment is reclassified to inventory at its carrying value. The Company discontinues the depreciation of Flight Equipment when it is held as inventory for ultimate parts sales. Differences between estimates of useful lives and residual values and actual experience may result in future impairments of aircraft or engines and/or additional gains or losses upon disposal. The Company reviews residual values of aircraft and engines periodically based on knowledge of current residual values and residual value trends to determine if they are appropriate and records adjustments as necessary. Cash flows related to the purchase and sale of Flight Equipment are presented as operating activities when the predominant source of cash flows related to the asset is from the ultimate parts sales of the assets. If the predominant source of cash flows related to the asset is expected to be from leasing of the asset, the cash flows are presented as investing activities. Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Depreciation is recognized over the estimated useful lives of the respective assets on a straight-line basis, ranging from 2 to 15 years . Leasehold improvements are amortized on a straight-line basis over the shorter of the terms of the respective leases and the estimated useful lives 50 Table of Contents of the respective assets. Property and equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Repairs and maintenance expenditures are expensed as incurred, unless such expenses extend the useful life of the asset, in which case they are capitalized. Goodwill In accordance with Accounting Standards Codification (“ASC”) 350, Intangibles — Goodwill and Other, (“ASC 350”), goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying value. A quantitative assessment involves determining the fair value of each reporting unit using market participant assumptions. An entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit. Our annual assessment date for goodwill is October 1st. For purposes of reviewing impairment and the recoverability of goodwill, we must make various assumptions regarding estimated future cash flows and other factors in determining the fair values of the reporting unit, including market multiples, discount rates, etc. The Company performed a qualitative impairment assessment as of the Company’s annual impairment testing date of October 1, 2025 and concluded there were no triggering events that may have indicated the fair value of one or more of the Company’s reporting units more likely than not did not exceed their carrying values. During the quarter ended December 31, 2025, the Company’s stock price decreased significantly and had not recovered by December 31, 2025, which management considered a triggering event. As a result, management decided that one or more of the Company’s reporting units more likely than not did not exceed their carrying values. Therefore, the Company performed a quantitative goodwill impairment assessment for the Asset Management Solutions and ACT reporting units as of December 31, 2025, and determined that the fair values exceeded the carrying values for each reporting unit as of December 31, 2025. As such, the quantitative tests did not result in a goodwill impairment for the Company’s reporting units. ​ The Company performed a quantitative impairment analysis for each of the quarters ended March 31, 2024, June 30, 2024, September 30, 2024 and December 31, 2024 due to a triggering event that may indicate the fair value of one or more of the Company’s reporting units more likely than not did not exceed their carrying value. The triggering event was due to the significant decline in the market price of the Company’s common stock. The Company concluded that the fair value of each reporting unit exceeded its carrying value as of the end of each quarter tested, and thus no impairment was recorded during the year ended December 31, 2024 (see Note P – Business Segments for a discussion about our business segments). Other Intangible Assets Intangibles arising from business combinations, including customer relationships, FAA certificates, and AerAware flight manuals, are initially recorded at fair market value. Customer relationships are amortized over ten years . Straight-line amortization is utilized. Where there are no legal, regulatory, contractual, or other factors that would reasonably limit the useful life of an intangible assets, that asset is classified as indefinite lived and such intangible assets are not amortized. Other intangible assets with indefinite lives are assessed for impairment annually, or more frequently when events or circumstances indicate there may be an impairment. These assets are carried at the estimated fair value at the time of acquisition. Our annual assessment date for indefinite lived intangible assets is July 1st. The Company performed a qualitative impairment analysis as of July 1, 2025, and July 1, 2024, on the indefinite lived intangible assets and concluded there were no impairments, respectively. Other intangible assets are reviewed for impairment if any event or change in circumstance indicates that an impairment may have occurred. The Company annually reviews the estimated lives and methods used to amortize other 51 Table of Contents intangible assets. The actual amounts of amortization expense may differ materially from our estimates, depending on the results of our annual review. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events and circumstances include, but are not limited to, prolonged industry downturns, a significant decline in the Company’s market value, and significant reductions in the Company's projected cash flows. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. Obligations and Instruments Potentially Settled in the Company’s Common Stock In connection with any obligations and instruments potentially to be settled in the Company’s stock, the Company accounts for the instruments in accordance with ASC Topic 815, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in a Company’s Own Stock (“ASC 815”). ASC 815 addresses the initial balance sheet classification and measurement of contracts that are indexed to, and potentially settled in, the Company’s stock. Under this pronouncement, contracts are initially classified as equity or as either assets or liabilities, depending on the situation. All contracts are initially measured at fair value and subsequently accounted for based on the then current classification. Contracts initially classified as equity do not recognize subsequent changes in fair value as long as the contracts continue to be classified as equity. For contracts classified as assets or liabilities, the Company reports changes in fair value in earnings and records these changes in the financial statements as long as the contracts remain classified as assets or liabilities. If contracts classified as assets or liabilities are ultimately settled in shares, any previously reported gains or losses on those contracts continue to be included in earnings. The classification of a contract is reassessed at each balance sheet date. Revenue Recognition Products Revenue — Used Serviceable Material (“USM”) Sales Revenue from sales of USM is measured based on consideration specified in a contract with a customer, and excludes any sales commissions and taxes collected and remitted to government agencies. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. The parts are sold at a fixed price with no right of return. In determining the performance obligation, management has identified the promise in the contract to be the shipment of the spare parts to the customer. Title passes to the buyer when the goods are shipped, and the buyer is responsible for any loss in transit and the Company has a legal right to payment for the spare parts once shipped. We generally sell our USM products under standard 30-day payment terms, subject to certain exceptions. Customers neither have the right to return products nor do they have the right to extended financing. The Company has determined that physical acceptance of the spare parts to be a formality in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Spare parts revenue is based on a set price for a set number of parts as defined in the purchase order. The performance obligation is completed once the parts have shipped and as a result, all of the transaction price is allocated to that performance obligation. The Company has determined that it is appropriate to recognize spare parts sales at a point in time (i.e., the date the parts are shipped) in accordance with ASC 606. Products Revenue — Whole Asset Sales Revenue from whole asset sales is measured based on consideration specified in the contract with the customer. The Company and customer enter into an agreement which outlines the place and date of sale, purchase price, condition 52 Table of Contents of the whole asset, bill of sale and the assignment of rights and warranties from the Company to the customer. The Company has identified the transfer of the whole asset as the performance obligation. The transaction price is set at a fixed dollar amount per fixed quantity (number of whole assets) and is explicitly stated in each contract. Whole asset sales revenue is based on a set price for a set number of assets, which is allocated to the performance obligation discussed above, in its entirety. The Company has determined the date of transfer to the customer is the date the customer obtains control over the asset and would cause the revenue recognition. Payment is required in full upon customers’ acceptance of the whole asset on the date of the transfer, unless the Company extends credit terms to customers it deems creditworthy. Leasing Revenue The Company leases Flight Equipment under operating leases that contain monthly base rent and reports rental income straight line over the life of the lease as it is earned. Additionally, the Company’s leases provide for supplemental rent, which is calculated based on actual hours or cycles of utilization and, for certain components, based on the amount of time until maintenance of that component is required. In certain leases, the Company records supplemental rent paid by the lessees as maintenance deposit payments and other liabilities in recognition of the Company’s contractual commitment to reimburse qualifying maintenance. Reimbursements to the lessees upon receipt of evidence of qualifying maintenance work are charged against existing maintenance deposit payments and other liabilities. In leases where the Company is responsible for performing certain repairs or replacement of aircraft components or engines, supplemental rent is recorded as revenue in the period earned. In the event of premature lease termination or lessee default on the lease terms, revenue recognition will be discontinued when outstanding balances are beyond the customers’ deposits held. Flight Equipment leases are billed in accordance with the lease agreement and invoices are due upon receipt. Services Revenue Revenue for services is recognized as performance obligations are fulfilled and the benefits are transferred to the customer. At contract inception, we evaluate if the contract should be accounted for as a single performance obligation or if the contract contains multiple performance obligations. In some cases, our service contract with the customer is considered one performance obligation as it includes factors such as the good or service being provided is significantly integrated with other promises in the contract, the service provided significantly modifies or customizes the other good or service or the goods or services are highly interdependent or interrelated with each other. If the contract has more than one performance obligation, the Company determines the standalone price of each distinct good or service underlying each performance obligation and allocates the transaction price based on their relative standalone selling prices. The transaction price of a contract, which can include both fixed and variable amounts, is allocated to each performance obligation identified. Some contracts contain variable consideration, which could include incremental fees or penalty provisions related to performance. Variable consideration that can be reasonably estimated based on current assumptions and historical information is included in the transaction price at the inception of the contract but limited to the amount that is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. For most service contracts, our performance obligations are satisfied over time as work progresses or at a point in time based on transfer of control of products and services to our customers. We receive payments from our customers based on billing schedules or other terms as written in our contracts. For our performance obligations that are satisfied over time, we measure progress in a manner that depicts the performance of transferring control to the customer. As such, we utilize the input method of cost-to-cost to recognize revenue over time as this depicts when control of the promised goods or services are transferred to the customer. Revenue is recognized based on the relationship of actual costs incurred to date to the estimated total cost at completion of the performance obligation. We are required to make certain judgments and estimates, including estimated revenue and costs, as well as inflation and the overall profitability of the arrangement. Key assumptions involved include future labor costs and efficiencies, overhead costs and ultimate timing of product delivery. Differences may occur between the judgments and estimates made by management and actual program results. Under most of our MRO contracts, if the contract is terminated for convenience, we are entitled to payment for items delivered, fair compensation for work performed, the costs of settling and paying other claims and a reasonable profit on the costs incurred or committed. 53 Table of Contents Changes in estimates and assumptions related to our arrangements accounted for using the input method based on labor hours are recorded using the cumulative catchup method of accounting. These changes are primarily adjustments to the estimated profitability for our long-term programs where we provide MRO services. We have elected to use certain practical expedients permitted under ASC 606. Shipping and handling fees and costs incurred associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of sales in our Consolidated Statements of Operations, and are not considered a performance obligation to our customers. Our reported revenue on our Consolidated Statements of Operations is net of any sales or related non-income taxes. Maintenance and Repair Costs The cost of maintenance, repairs, and re-leasing of Flight Equipment that does not extend the useful life of Flight Equipment is expensed as incurred. Costs incurred for planned major maintenance activities that materially increase the long-term value of the Flight Equipment or extend the useful life of the Flight Equipment are capitalized and depreciated over the lesser of the remaining useful life of the Flight Equipment or the estimated useful life of the capitalized improvements. Pursuant to certain of the Company’s aircraft leases, the lessee is responsible for performing required maintenance and repairs on the leased asset, and is required to make monthly maintenance reserve payments to the Company, in arrears following the usage month. Upon the lessee’s presentation of invoices evidencing the completion of qualifying maintenance, the Company will reimburse the lessee for the cost of the maintenance, up to the amount of the maintenance reserve payments that have been received by the Company. Unless otherwise provided in the contract, the Company records such maintenance reserve payments paid by the lessees as maintenance deposit payments and other liabilities in the Consolidated Balance Sheets to record the Company’s contractual commitment to reimburse such qualifying maintenance. Reimbursements to the lessees upon receipt of evidence for qualifying maintenance work are charged against the existing maintenance deposit payments and other liabilities. For other lease contracts (primarily engine lease contracts) where the terms of the lease are designed specifically to allow the Company to directly manage the occurrence, timing, and associated cost of qualifying maintenance work on the Flight Equipment, maintenance reserve payments collected during the lease are recognized as leasing revenue in the period earned. Any amounts of maintenance reserve payments remaining at the end of a lease contract are recognized as lease revenue or applied against outstanding accounts receivable at lease termination. Share-Based Compensation The Company accounts for share-based compensation to employees in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”). Under ASC 718, the Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and, for those awards subject only to service conditions, the Company recognizes the costs on a straight-line basis over the requisite service period for the entire award the employee is required to provide service in exchange for the award, which generally is the vesting period. For awards with performance and service conditions, we begin recording share-based compensation when achieving the performance criteria is probable and we recognize the costs using the accelerated attribution method. Our policy is to recognize forfeitures as they occur. The estimated number of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, such amount will be recorded as a cumulative adjustment in the period estimates are revised. Changes in the Company’s estimates and assumptions may cause us to realize material changes in share-based compensation expense in the future. The Company has issued share-based awards with performance-based vesting criteria. Achievement of the milestones must be probable before the Company begins recording share-based compensation expense. When the 54 Table of Contents performance-based vesting criteria is considered probable, the Company begins to recognize compensation expense at that time. In the period that achievement of the performance-based criteria is deemed probable, U.S. GAAP requires the immediate recognition of all previously unrecognized compensation since the original grant date. As a result, compensation expense recorded in the period that achievement is deemed probable could include a substantial amount of previously unrecorded compensation expense related to the prior periods. For any share-based awards where performance-based vesting criteria is no longer considered probable, previously recognized compensation cost would be reversed. The Company applies Accounting Standards Update (“ASU”) 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which generally expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees and supersedes the guidance in ASC 505-50, Equity-Based Payments to Non-employees, which previously included the accounting for nonemployee awards. Sales Taxes The Company’s policy is to present taxes collected from customers and remitted to governmental authorities on a net basis. The Company records the amounts collected as a current liability and relieves such liability upon remittance to the taxing authority without impacting revenue or expenses. Earnings Per Share Basic earnings (loss) per share is computed by dividing net earnings (loss) attributable to the Company’s common stockholders by the weighted average number of common shares outstanding during the periods. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock and is calculated using the treasury stock method for stock options and unvested shares. Deferred Insurance Proceeds In April 2024, one of the Company’s leased secondary parts warehouses in Roswell, New Mexico was destroyed by a fire. Inside the warehouse were various aircraft parts typically sold by the Company as USM. The Company carries insurance covering these parts, with a limit of $ 100 million and a $ 10,000 deductible. The Company filed a claim for the replacement value of the inventory that was destroyed or rendered not sellable by the fire in the amount of $ 67.6 million, which was revised to $ 104.5 million. The cost basis of the destroyed inventory was $ 6.0 million. As of December 31, 2025, the Company collected approximately $ 34.6 million from the insurance companies associated with this claim, of which $ 3.7 million was collected during the year ended December 31, 2025. The Company has deferred the recognition of a gain on insurance proceeds collected under this claim in excess of the loss amount until a full settlement of the claim is reached with our insurers. The deferred gain in the amount of $ 28.6 million and $ 24.9 million as of December 31, 2025 and December 31, 2024, respectively, is presented under deferred insurance proceeds in the Consolidated Balance Sheets. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained on examination by the taxing authorities. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in the income tax provision. 55 Table of Contents New Accounting Pronouncements Adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. This guidance was adopted by us in the first quarter of 2025. Refer to Note M – Income Taxes for disclosures resulting from the adoption of ASU 2023-09. New Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Reporting Comprehensive Income—Expense Disaggregation Disclosures (“ASU” 2024-03”), which requires public entities to disclose, in a tabular presentation, the following expense items (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other types of depletion expenses, as well as other types of expenses when applicable. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this guidance on our consolidated financial statements and disclosure. There have been no other accounting pronouncements issued but not yet adopted by us which are expected to have a material impact on our consolidated financial statements. NOTE C - SIGNIFICANT RISKS AND UNCERTAINTIES Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property and equipment, useful lives and residual values of Flight Equipment held for lease, allowances for doubtful accounts and sales returns, the income tax provision, impairment of long-lived assets, valuation of inventory, and valuation and useful lives of intangibles, goodwill and contingencies. Risks and Uncertainties The Company is impacted by the general economic conditions of the commercial aviation industry. A decrease in passenger and/or air cargo traffic worldwide could result in strains on the Company’s lessees and cause them to default under their leases with the Company, which could negatively impact the Company’s cash flows and results of operations. The value of Flight Equipment held for operating leases is subject to fluctuations in the values of commercial aircraft and engines worldwide. A material decrease in aircraft or engine values could have a downward impact on lease rentals and residual values and may require impairments to be taken on such assets. Additionally, impairment charges may be required to reduce the carrying value of inventory. The nature of the Company’s business is capital intensive and demands significant capital requirements. To meet the Company’s current purchase commitments and future aircraft and engine acquisitions, the Company may need to (i) access committed debt facilities, and/or (ii) secure additional financing, and/or (iii) use existing available cash balances. The Company is also subject to regulation by various governmental agencies with responsibilities over civil aviation. Increased regulations imposed by organizations such as the FAA may significantly affect industry operations and costs. 56 Table of Contents The Company conducts business in certain foreign countries, some of which are politically unstable or subject to military or civil conflicts. Consequently, the Company is subject to a variety of risks such as civil strife, political instability, import and export regulations, compliance with foreign laws, treaties, regulations, uncertainties arising from foreign local less developed business practices, difficulty in repossessing Flight Equipment when a lessee defaults, cultural considerations, restriction on fund transfers, and exposure to the Foreign Corrupt Practices Act and other anti-bribery laws. The Company periodically reviews the carrying values of accounts receivable, inventory, goodwill, other intangible assets, and long-lived assets; the recoverable value of deferred income tax assets, and the sufficiency of accruals and provisions, substantially all of which are sensitive to the above risks and uncertainties. Concentrations of Credit Risk Financial instruments that potentially subject the Company to credit risk principally consist of cash and cash equivalents and accounts receivable. During the year ended December 31, 2025, no customer accounted more than 10% of total revenue. During the year ended December 31, 2024, one customer accounted for 15 % of total revenue. During the year ended December 31, 2023, two customers accounted for 25 % of total revenue. No customer made up more than 10% of our trade receivable balance as of December 31, 2025 and 2024. Cash The Company maintains cash and cash equivalent balances with high-quality financial institutions, which at times exceed the Federal Deposit Insurance Corporation insurance limits. While the Company monitors daily the cash balances in its operating accounts and adjusts the balances as appropriate, these balances could be impacted if one or more of the financial institutions with which the Company deposits fails or is subject to other adverse conditions in the financial or credit markets. To date, the Company has experienced no loss or lack of access to its invested cash or cash equivalents; however, no assurance can be provided that access to invested cash and cash equivalents will not be impacted by adverse conditions in the financial and credit markets. ​ Subsequent Events The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated financial statements were issued. ​ NOTE D - REVENUE The timing of revenue recognition, customer billings, and cash collections results in a contract asset or contract liability at the end of each reporting period. Contract assets consist of unbilled receivables or costs incurred where revenue recognized over time exceeds the amounts billed to customers. We record a receivable when revenue is recognized prior to invoicing and we have an unconditional right to consideration (only the passage of time is required before payment of that consideration is due) and a contract asset when the right to payment is conditional upon our future performance. Contract liabilities include advance payments and billings in excess of revenue recognized. Certain customers make advance payments prior to our satisfaction of our performance obligations on the contract. These amounts are recorded as contract liabilities until such performance obligations are satisfied. Contract assets and contract liabilities are determined on a contract by contract basis. Contract assets are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2025 ​ ​ ​ December 31, 2024 ​ ​ ​ Change Contract assets ​ $ 4,076 ​ $ 6,166 ​ $ ( 2,090 ) ​ Contract assets are reported within deposits, prepaid expenses, and other current assets on our Consolidated Balance Sheets. Changes in contract assets primarily result from the timing difference between the performance of 57 Table of Contents services. Contract liabilities are reported as deferred revenue on our Consolidated Balance Sheets and amounted to $ 1.8 million as of December 31, 2024, of which $ 0.7 million was related to contract liabilities for services to be performed. For the year ended December 31, 2025, the Company recognized as revenue the entire opening balance of our contract liabilities included in the deferred revenue beginning balance for services performed as the timing between customer payments and our performance of the services is generally no longer than six months . Disaggregation of Revenue The Company reports revenue by segment. The following tables present revenue by segment, as well as a reconciliation to total revenue (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ Asset Management ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Solutions ​ ​ ​ TechOps ​ ​ ​ Total Revenue USM ​ $ 120,078 ​ $ 17,570 ​ $ 137,648 Whole asset sales ​ 56,434 ​ - ​ 56,434 Engineered solutions ​ - ​ 12,390 ​ 12,390 Total products ​ 176,512 ​ 29,960 ​ 206,472 Leasing ​ 35,071 ​ - ​ 35,071 Services ​ - ​ 93,743 ​ 93,743 Total revenue ​ $ 211,583 ​ $ 123,703 ​ $ 335,286 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2024 ​ ​ Asset Management ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Solutions ​ ​ ​ TechOps ​ ​ ​ Total Revenue USM ​ $ 83,174 ​ $ 16,454 ​ $ 99,628 Whole asset sales ​ ​ 110,147 ​ - ​ 110,147 Engineered solutions ​ - ​ 5,175 ​ 5,175 Total products ​ 193,321 ​ 21,629 ​ 214,950 Leasing ​ 22,146 ​ - ​ 22,146 Services ​ - ​ 107,970 ​ 107,970 Total revenue ​ $ 215,467 ​ $ 129,599 ​ $ 345,066 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2023 ​ ​ Asset Management ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Solutions ​ ​ ​ TechOps ​ ​ ​ Total Revenue USM ​ $ 63,418 ​ $ 15,278 ​ $ 78,696 Whole asset sales ​ ​ 137,236 ​ 218 ​ ​ 137,454 Engineered solutions ​ - ​ 1,305 ​ 1,305 Total products ​ 200,654 ​ 16,801 ​ 217,455 Leasing ​ 14,513 ​ - ​ 14,513 Services ​ - ​ 102,535 ​ 102,535 Total revenue ​ $ 215,167 ​ $ 119,336 ​ $ 334,503 ​ ​ ​ ​ ​ ​ ​ ​ 58 Table of Contents NOTE E - INVENTORY Inventory consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2025 ​ ​ ​ December 31, 2024 USM ​ $ 147,742 ​ $ 118,025 Whole assets ​ ​ 118,855 ​ ​ 141,770 Work-in-process ​ ​ 20,439 ​ ​ 27,358 MRO and engineered solutions ​ ​ 76,728 ​ ​ 68,637 ​ ​ $ 363,764 ​ ​ 355,790 Less short term ​ ( 205,379 ) ​ ( 224,832 ) Long term ​ $ 158,385 ​ $ 130,958 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In December 2025, one of our leased warehouses in Roswell, New Mexico was destroyed by a fire; however, the incident did not cause a significant disruption to the Company’s operations as the Company’s owned and leased Flight Equipment, heavy and component MRO operations, and the vast majority of its USM inventory were located at other facilities not affected by the fire. The Company filed a claim for the replacement value of the inventory that was destroyed or rendered not sellable by the fire in the amount of $ 1.5 million. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOTE F - INTANGIBLE ASSETS In accordance with ASC 350, goodwill and other intangible assets deemed to have indefinite lives are not amortized, but are subject to annual impairment tests. The Company reviews and evaluates its goodwill and indefinite life intangible assets for potential impairment at a minimum annually or more frequently if circumstances indicate that impairment is possible. The Company determined the fair value of assets acquired and liabilities assumed using a variety of methods. An income approach based on discounted cash flows was used to determine the values of our trademarks, customer relationships and FAA certifications. The assumptions we used to estimate the fair value of our reporting units are based on historical performance, as well as forecasts used in our current business plan and require considerable management judgment. The Company’s goodwill and intangible assets as defined by ASC 350 are related to its acquired subsidiaries, AerSale Component Solutions (d/b/a AerSale Landing Gear Solutions) (“ALGS”), Avborne Component Solutions (d/b/a AerSale Component Solutions) (“ACS”), and Aircraft Composite Technologies (“ACT” or “AerSale AeroStructures - Miami”), which are included in the TechOps segment, as well as Qwest Air Parts (“Qwest”), which is included under the Asset Management Solutions segment. 59 Table of Contents ​ Goodwill and other intangibles consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2025 ​ ​ ​ December 31, 2024 Asset Management: ​ ​ ​ ​ ​ ​ FAA Certifications ​ $ 724 ​ $ 724 Goodwill ​ 13,416 ​ 13,416 ALGS: ​ ​ ​ ​ FAA Certifications ​ 710 ​ 710 Goodwill ​ 379 ​ 379 ACS: ​ ​ ​ ​ Trademarks ​ 600 ​ 600 FAA Certifications ​ 7,300 ​ 7,300 Goodwill ​ 63 ​ 63 ACT: ​ ​ ​ ​ ​ Trademarks ​ 200 ​ 200 FAA Certificates ​ 796 ​ 796 Goodwill ​ 6,002 ​ 6,002 Total intangible assets with indefinite lives ​ $ 30,190 ​ $ 30,190 ​ The Company performed a qualitative impairment analysis as of October 1, 2025 on the goodwill for the Asset Management Solutions and TechOps segment, and concluded there was no impairment. In addition, the Company performed a qualitative impairment analysis as of July 1, 2025 on the intangible assets with indefinite lives and concluded there were no impairments. ​ During the quarter ended December 31, 2025, the Company’s stock price decreased significantly and had not recovered by December 31, 2025, which management considered a triggering event. As a result, management decided that one or more of the Company’s reporting units more likely than not did not exceed their carrying values. Therefore, the Company performed a quantitative goodwill impairment assessment for the Asset Management Solutions and ACT reporting units as of December 31, 2025, and determined that the fair values exceeded the carrying values for each reporting unit as of December 31, 2025. As such, the quantitative tests did not result in a goodwill impairment for the Company’s reporting units. ​ In the first quarter of 2024, the Company identified a triggering event that may indicate the fair value of one or more of the Company’s reporting units more likely than not did not exceed their carrying values. The triggering event was due to the significant decline in the market price of the Company’s common stock. As a result and due to the lack of recovery of the Company’s stock price during the year ended December 31, 2024, the Company performed a quantitative goodwill impairment test for the Asset Management Solutions and ACT reporting units for each of the quarters ended March 31, 2024, June 30, 2024, September 30, 2024, and December 31, 2024, and determined that the fair values exceeded the carrying values for each reporting unit of as the end of each quarter tested. As such, the quantitative tests did not result in a goodwill impairment for the Company’s reporting units. In addition, the Company performed a qualitative assessment as of July 1, 2024 of other intangible assets with indefinite lives and concluded it was unlikely that they were impaired. 60 Table of Contents Intangible assets with definite useful lives are amortized on a straight-line basis over their estimated useful lives. Net book value of intangible assets with definite lives are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Useful Life ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In Years ​ December 31, 2025 ​ December 31, 2024 Asset Management: ​ ​ ​ ​ ​ ​ ​ ​ Customer relationships ​ 10 ​ $ 3,213 ​ $ 4,187 ALGS: ​ ​ ​ ​ ​ ​ Customer relationships ​ 10 ​ - ​ 10 ACS: ​ ​ ​ ​ ​ ​ Customer relationships ​ 10 ​ 613 ​ 823 ACT: ​ ​ ​ ​ ​ ​ Customer relationships ​ 10 ​ 3,583 ​ 4,505 AerSale: ​ ​ ​ ​ ​ ​ ​ ​ AerAware flight manuals ​ 10 ​ ​ 608 ​ ​ 675 Total intangible assets with definite lives, net ​ ​ ​ $ 8,017 ​ $ 10,200 ​ Amortization expense was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Amortization expense ​ $ 2,184 ​ $ 2,131 ​ $ 2,126 ​ The estimated aggregate amount of amortization expense for intangible assets is as follows (in thousands): ​ ​ ​ ​ Year ending December 31: ​ ​ 2026 $ 2,174 2027 ​ 2,174 2028 ​ 2,157 2029 ​ 1,176 2030 ​ 68 Thereafter ​ 268 Total estimated aggregate amortization expense $ 8,017 ​ Accumulated amortization amounted to $ 13.7 million and $ 11.5 million as of December 31, 2025 and December 31, 2024, respectively. ​ There has been no goodwill activity for the years ended December 31, 2025 and 2024. ​ Other intangible assets are reviewed at least annually or more frequently if any event or change in circumstance indicates that an impairment may have occurred. No triggering events have been identified for the periods reported. ​ 61 Table of Contents NOTE G - PROPERTY AND EQUIPMENT, NET Property and equipment, net, consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Useful Life ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In Years ​ December 31, 2025 ​ December 31, 2024 Tooling and equipment 5  –  15 ​ $ 18,967 ​ $ 17,481 Furniture and other equipment 3  –  15 ​ 14,589 ​ 13,985 Computer software 3  –  5 ​ 1,521 ​ 2,555 Leasehold improvements 2  –  15 ​ 28,008 ​ 25,527 Flight equipment held for R&D ​ 2  –  8 ​ ​ - ​ ​ 8,383 ​ ​ ​ ​ 63,085 ​ 67,931 Less accumulated depreciation ​ ​ ​ ( 31,079 ) ​ ( 31,600 ) ​ ​ ​ ​ $ 32,006 ​ $ 36,331 ​ Depreciation expense was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ 2024 ​ 2023 Depreciation expense ​ $ 5,178 ​ $ 5,501 ​ $ 3,736 ​ ​ NOTE H - AIRCRAFT AND ENGINES HELD FOR LEASE, NET Aircraft and engines held for operating leases, net, consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2025 ​ ​ ​ December 31, 2024 Aircraft and engines held for lease ​ $ 134,868 ​ $ 96,910 Less accumulated depreciation ​ ( 32,507 ) ​ ( 29,063 ) ​ ​ $ 102,361 ​ $ 67,847 ​ Total depreciation expense included in cost of leasing in the Consolidated Statements of Operations is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Depreciation expense ​ $ 11,972 ​ $ 8,416 ​ $ 4,597 ​ Contingent rental fees recognized as revenue related to supplemental rent were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Contingent rental fees ​ $ 17,537 ​ $ 11,717 ​ $ 7,693 ​ The Company’s current operating lease agreements for Flight Equipment on lease expire over the next month to six years . The minimum future lease rentals contracted to be received under these existing operating leases of Flight Equipment at December 31, 2025 are as follows (in thousands): ​ ​ ​ ​ ​ Year ending December 31: ​ ​ ​ ​ ​ 2026 ​ $ 17,149 2027 ​ ​ 11,062 2028 ​ 6,755 2029 ​ ​ 6,051 2030 ​ ​ 5,873 Thereafter ​ ​ 2,236 Total minimum lease payments ​ $ 49,126 62 Table of Contents ​ These amounts are based upon the assumption that Flight Equipment under operating leases will remain on lease for the length of time specified by the respective lease agreements. ​ ​ ​ NOTE I - FAIR VALUE MEASUREMENTS Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs. These inputs are prioritized as follows: ● Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities. ● Level 2: Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs. ● Level 3: Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants price the asset or liability. The valuation techniques that may be used to measure fair value are as follows: ● Market approach–Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. ● Income approach–Uses valuation techniques to convert future amounts to a single present amount based on current market expectation about those future amounts. ● Cost approach–Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). The Company measures the fair value of certain assets and liabilities on a nonrecurring basis when U.S. GAAP requires the application of fair value, including events or changes in circumstances that indicate that the carrying amounts of assets may not be recoverable. Assets subject to these measurements include intangible assets acquired in business combinations. The Company’s financial instruments, other than cash and cash equivalents, consist principally of accounts receivable and accounts payable. The fair value of such approximates the carrying value of these financial instruments because of their short-term nature. ​ Borrowings under the Revolving Credit Agreement (as defined in Note L – Financing Arrangements) approximate fair value due to the variable interest rate on the facility. The Company’s borrowings under the Revolving Credit Agreement are carried at historical cost and adjusted for principal payments. ​ Borrowings under the CIBC Equipment Loan (as defined in Note L – Financing Arrangements) approximate fair value due to the variable interest rate on the loan. The Company’s borrowings under the Equipment Loan are carried at historical cost and adjusted for principal payments. ​ 63 Table of Contents NOTE J - ACCRUED EXPENSES The following is a summary of the components of accrued expenses (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2025 ​ ​ ​ December 31, 2024 Accrued compensation and related benefits ​ $ 2,907 ​ $ 3,457 Accrued legal fees ​ 853 ​ 741 Commission fee accrual ​ 1,064 ​ 758 Accrued federal, state and local taxes and fees ​ 160 ​ 120 Other ​ 2,249 ​ 2,324 ​ ​ $ 7,233 ​ $ 7,400 ​ ​ NOTE K - WARRANT LIABILITY As of December 31, 2024, warrants to purchase a total of 623,834 shares of the Company’s common stock were outstanding (the “Private Warrants”). The Private Warrants expired unexercised during the year ended December 31, 2025. Each of the Private Warrants entitled the registered holder to purchase one share of the Company’s common stock at a price of $ 11.50 per share, subject to adjustment. The Private Warrants expired at 5:00 p.m., New York City time, on December 22, 2025. The Private Warrants included provisions that affected the settlement amount. Such variables are outside of those used to determine the fair value of a fixed-for-fixed instrument, and as such, the Private Warrants did not meet the criteria for equity treatment under guidance contained in ASC 815. The Company classified the Private Warrants as a liability at their fair value subject to re-measurement at each balance sheet date and adjusted at each reporting period until exercised or expired, and any change in fair value is recognized in the Company's Consolidated Statements of Operations. The fair value of the of the Private Warrant as of December 31, 2025 was zero as they expired. Prior to their expiration, the fair value of the Private Warrants was determined using the Black-Scholes option pricing model. The following table represents the assumptions for the Black-Scholes option-pricing model used in determining the fair value of the Private Warrants as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 Risk-free interest rate ​ 4.38 % Expected volatility of common stock ​ 41.71 % Expected option term in years ​ 1.0 ​ The significant assumptions utilized in the Black-Scholes calculation consist of interest rate for U.S. Treasury Bonds, as published by the U.S. Federal Reserve, and expected volatility estimated using historical daily volatility of guideline public companies. ​ NOTE L - FINANCING ARRANGEMENTS Outstanding debt obligations as of December 31, 2025 and 2024 consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ December 31, ​ ​ 2025 ​ 2024 $ 180.0 million Wells Fargo senior secured revolving credit facility ​ $ 110,053 ​ $ 39,235 $ 10.0 million CIBC property and equipment revolving term loan ​ ​ 2,277 ​ ​ 1,814 Total ​ 112,330 ​ ​ 41,049 Less current portion ​ ( 993 ) ​ ​ ( 605 ) Total long-term portion ​ $ 111,337 ​ $ 40,444 ​ At December 31, 2025 and 2024, total deferred financing costs were $ 1.0 million and $ 1.3 million, respectively. Amortized debt issuance costs are recorded in interest expense through maturity of the related debt using the straight-line method, which approximates the effective interest method. 64 Table of Contents ​ Amortization expense was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Amortization expense ​ $ 392 ​ $ 337 ​ $ 400 ​ $ 180.0 million Wells Fargo Senior Secured Revolving Credit Facility On July 20, 2018, our subsidiary, AerSale, Inc. and other subsidiary borrowers entered in a secured amended and restated Revolving Credit Agreement (as amended, the “Revolving Credit Agreement”). The Revolving Credit Agreement initially provided for a $ 110.0 million aggregate amount of revolver commitments subject to borrowing base. The Revolving Credit Agreement included a $ 10.0 million sub facility for letters of credit and for borrowings on same-day notice referred to as “swingline loans”. The maximum amount of such commitments available at any time for borrowings and letters of credit is determined according to a borrowing base calculation equal to the sum of eligible inventory and eligible accounts receivable reduced by the aggregate amount, if any, of trade payables of the loan parties, as defined in the Revolving Credit Agreement. Extensions of credit under the Revolving Credit Agreement are available for working capital and general corporate purposes. On March 9, 2023, we amended the Revolving Credit Agreement to replace the benchmark rate from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”). On July 25, 2023, the Revolving Credit Agreement was amended to increase the maximum commitments thereunder to $ 180.0 million aggregate amount, expandable to $ 200.0 million, subject to conditions and the availability of lender commitments and borrowing base limitations, and the maturity date was extended to July 24, 2028. As of December 31, 2025, the Company had $ 67.2 million of availability, subject to borrowing base limitations. The obligations of AerSale, Inc. under the Revolving Credit Agreement are guaranteed by the Company, and other subsidiaries of AerSale, Inc. may be designated as borrowers on a joint and several basis. Such obligations are also secured by substantially all of the assets of the Company. The interest rate applicable to loans outstanding on the Revolving Credit Agreement is a floating rate of interest per annum of SOFR plus a margin of 2.25 % to 2.75 %. The applicable interest rate as of December 31, 2025 and 2024, was 6.62 % and 7.52 %, respectively. Interest expense on the Revolving Credit Agreement was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Interest expense ​ $ 7,694 ​ $ 4,849 ​ $ 733 ​ The Company’s ability to borrow on the Revolving Credit Agreement is subject to ongoing compliance by the Company with various customary affirmative and negative covenants. The Revolving Credit Agreement requires the Company to meet certain financial and nonfinancial covenants. The Company was in compliance with these covenants as of December 31, 2025 and 2024. $ 10.0 million CIBC Property and Equipment Revolving Term Loan On November 22, 2024, the Company entered into a property and equipment revolving term loan (the “CIBC Equipment Loan”) with a total advance commitment of $ 10.0 million for the purpose of financing capital expenditures on property and equipment. Advances made by the lender are convertible into term loans at the option of the lender at a rate of SOFR plus 3.0 % and have a maturity date of thirty-six ( 36 ) months from the term loan conversion date. Advances under this loan are collateralized by the property and equipment it finances and require interest only payment until converted to a term loan, at which point, principal and interest payments are required. 65 Table of Contents Effective November 30, 2025, we amended the CIBC Equipment Loan to extend the term of the advance commitment until November 30, 2026 and reduce the total advance commitment to $ 2.5 million. During the year ended December 31, 2025, the Company borrowed an additional $ 1.2 million under this facility, which was converted to a term loan maturing on September 25, 2028. As of December 31, 2024, borrowings under this facility were converted to a term loan maturing on December 23, 2027. The effective rate on this facility as of December 31, 2025 and 2024 was 6.84 % and 7.37 %, respectively. Maturities of the Equipment Loan as of December 31, 2025 are as follows (in thousands): ​ ​ ​ ​ Year ending December 31: ​ ​ 2026 $ 993 2027 ​ 993 2028 291 Total payments $ 2,277 ​ The Equipment Loan is subject to ongoing compliance by the Company in the form of various customary affirmative and negative covenants, as well as certain financial covenants. The Company was in compliance with these covenants as of December 31, 2025 and 2024. ​ NOTE M - INCOME TAXES Income tax expense (benefit) consisted of (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current ​ ​ ​ Deferred ​ ​ ​ Total Year ended December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. federal ​ $ 217 ​ $ 1,318 ​ $ 1,535 U.S. state ​ 297 ​ ( 433 ) ​ ( 136 ) Foreign ​ 51 ​ 502 ​ 553 Total income tax expense ​ $ 565 ​ $ 1,387 ​ $ 1,952 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current ​ ​ ​ Deferred ​ ​ ​ Total Year ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. federal ​ $ ( 410 ) ​ $ 1,456 ​ $ 1,046 U.S. state ​ 360 ​ 562 ​ 922 Foreign ​ 4 ​ 14 ​ 18 Total income tax (benefit) expense ​ $ ( 46 ) ​ $ 2,032 ​ $ 1,986 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current ​ ​ ​ Deferred ​ ​ ​ Total Year ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. federal ​ $ ( 1,570 ) ​ $ ( 806 ) ​ $ ( 2,376 ) U.S. state ​ 128 ​ ( 110 ) ​ 18 Foreign ​ 242 ​ - ​ 242 Total income tax benefit ​ $ ( 1,200 ) ​ $ ( 916 ) ​ $ ( 2,116 ) ​ ​ ​ ​ 66 Table of Contents Tax Rate Reconciliation The provision (benefit) for income taxes on pre-tax income differs from the amount computed by applying the U.S. federal statutory income tax rate of 21.0 % for the years ended December 31, 2025, 2024 and 2023 due to the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ ​ Amount ​ ​ ​ Percent ​ ​ ​ Amount ​ ​ ​ Percent U.S. federal statutory tax rate ​ $ 2,211 ​ 21.0 % ​ ​ 1,646 ​ 21.0 % State and local income taxes, net of federal income tax effect (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current state tax provision ​ ​ 234 ​ 2.2 % ​ ​ 284 ​ 3.6 % Deferred state tax provision ​ ​ ( 433 ) ​ ( 4.1 ) % ​ ​ 562 ​ 7.2 % Foreign tax effects ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ireland (2) ​ ​ ( 247 ) ​ ( 2.3 ) % ​ ​ 17 ​ 0.2 % Effects of cross border tax laws ​ ​ 611 ​ 5.8 % ​ ​ ( 14 ) ​ ( 0.2 ) % Tax credits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development tax credits ​ ​ ( 480 ) ​ ( 4.6 ) % ​ ​ ( 621 ) ​ ( 7.9 ) % Foreign tax credit ​ ​ ( 344 ) ​ ( 3.3 ) % ​ ​ ( 10 ) ​ ( 0.1 ) % Nontaxable or nondeductible items ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Share-based payment awards ​ ​ 177 ​ 1.7 % ​ ​ 467 ​ 6.0 % Warrants ​ ​ ( 18 ) ​ ( 0.2 ) % ​ ​ ( 483 ) ​ ( 6.2 ) % Other ​ ​ 40 ​ 0.4 % ​ ​ 138 ​ 1.8 % Other adjustments ​ ​ 201 ​ 1.9 % ​ ​ - ​ - % Effective tax rate ​ $ 1,952 ​ 18.5 % ​ $ 1,986 ​ 25.3 % ​ (1) States taxes in Florida and Arizona made up the majority (greater than 50 percent) of the tax effect in this category. (2) Ireland standard corporation tax rate is 12.5 % for the years ended December 31, 2025, 2024, and 2023. ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2023 Provision for income tax at the federal statutory rate ​ $ ( 1,613 ) State taxes ​ 165 Permanent differences ​ ( 328 ) Change in valuation allowance  ​ ( 1,313 ) Executive compensation ​ ​ 3,016 Return to provision ​ ​ 151 FDII deduction ​ ​ - R&D credit ​ ​ ( 1,174 ) Stock-based compensation ​ ​ ( 1,020 ) Other ​ - Total income tax benefit ​ $ ( 2,116 ) ​ Taxes Paid Income taxes paid (net of refunds received) were as follows (in thousands): ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2025 Federal ​ ​ ​ $ ( 944 ) State ​ 666 Foreign ​ ( 190 ) Total net income taxes refunded ​ $ ( 468 ) ​ ​ 67 Table of Contents The following jurisdictions individually exceeded 5% of total state income taxes paid (net of refunds received) (in thousands): ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2025 Arizona ​ ​ ​ $ 354 Florida ​ ​ 328 Texas ​ ​ 37 Tennessee ​ ​ 24 Illinois ​ ​ ( 27 ) New Mexico ​ ​ ( 49 ) All other states ​ ​ ( 1 ) Total state ​ $ 666 ​ Significant Components of Deferred Taxes Deferred tax assets and liabilities reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities as of December 31, 2025 and 2024 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Deferred tax assets: ​ ​ ​ ​ ​ Net operating losses ​ $ 5,895 ​ $ 2,986 Foreign tax credit carryforwards ​ 1,272 ​ 768 Inventory basis differences ​ 9,479 ​ 8,544 Maintenance deposit payments ​ 127 ​ 10 Deferred revenue ​ 128 ​ 420 Allowance for doubtful accounts ​ 374 ​ 276 Start up costs ​ ​ 526 ​ ​ 566 Stock-based compensation ​ ​ 1,369 ​ ​ 1,003 Business interest expense - 163(j) limitation ​ ​ 214 ​ ​ 1,343 Accrued expenses ​ 562 ​ 11 Lease obligations ​ ​ 7,344 ​ ​ 8,010 Section 174 capitalization ​ ​ - ​ ​ 4,472 R&D credit ​ ​ 1,528 ​ ​ 1,055 Other ​ 424 ​ 162 Total deferred tax assets ​ ​ 29,242 ​ 29,626 Deferred tax liabilities: ​ ​ ​ ​ Fixed assets ​ ( 11,716 ) ​ ( 11,081 ) Right-of-use assets ​ ​ ( 6,771 ) ​ ​ ( 7,582 ) Intangible assets ​ ​ ( 1,111 ) ​ ​ ( 792 ) Other ​ ​ ( 860 ) ​ ​ - Total deferred tax liabilities ​ ( 20,458 ) ​ ( 19,455 ) Deferred income taxes, net ​ $ 8,784 ​ $ 10,171 ​ The deferred tax assets are adjusted by a valuation allowance if, based on the weight of available evidence, it is more likely than not that a portion or all the deferred assets will not be realized. After considering all of the evidence, both positive and negative, it was determined more likely than not that the Company's net deferred tax asset in the U.S. jurisdiction will be realizable as of December 31, 2025. 68 Table of Contents At December 31, 2025 and December 31, 2024, the Company had net operating losses available for carry-forward for Federal income tax purposes of approximately $ 26.1 million and $ 13.8 million, respectively. At December 31, 2025, the Company had net operating losses available for carry-forward for State income tax purposes of approximately $ 9.8 million. These net operating loss carryforwards acquired prior to 2025 will expire on various dates through 2035. Utilization of the net operating loss carryforwards as of December 31, 2025 are subject to annual limitations under Sec. 382 of the Internal Revenue Code. A deferred tax asset has been recorded only for those carryforwards that the Company expects to utilize prior to expiration. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and in Ireland. Tax years beginning in 2022 through 2024 are open for examination by the U.S. Internal Revenue Service and tax years beginning in 2021 through 2024 are open for examination by various state taxing jurisdictions in which the Company is subject to tax. Tax years beginning in 2021 through 2024 are open for examination by the Irish taxing authorities. ASC 740, Income Taxes, provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. ASC 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, and disclosure and transition. As of December 31, 2025 and 2024, there was no reserve for uncertain tax positions. ​ NOTE N - EARNINGS PER SHARE The computation of basic and diluted earnings per share (“EPS”) is based on the weighted average number of common shares outstanding during each period. The following table provides a reconciliation of the computation for basic and diluted earnings per share as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Net income (loss) ​ $ 8,575 ​ $ 5,851 ​ $ ( 5,563 ) Less: change in FV of warrants ​ ​ - ​ ​ - ​ ​ ( 2,270 ) Income (loss) attributable to common stockholders for EPS ​ $ 8,575 ​ $ 5,851 ​ $ ( 7,833 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average number of shares outstanding - basic ​ 48,378,882 ​ 53,113,508 ​ 51,291,424 Additional shares from assumed exercise of warrants ​ ​ - ​ ​ - ​ ​ 166,397 Additional shares from assumed stock-settled restricted stock units ​ ​ 370,659 ​ ​ 245,577 ​ ​ - Additional shares issued under the Employee Stock Purchase Plan ​ ​ 5,044 ​ ​ - ​ ​ - Weighted-average number of shares outstanding - diluted ​ ​ 48,754,585 ​ ​ 53,359,085 ​ ​ 51,457,821 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings (loss) per share - basic: ​ $ 0.18 ​ $ 0.11 ​ $ (0.11) Earnings (loss) per share - diluted: ​ $ 0.18 ​ $ 0.11 ​ $ ( 0.15 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Anti-dilutive shares/units excluded from earnings per share - diluted: ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional shares from assumed stock-settled restricted stock units ​ ​ - ​ ​ - ​ ​ 192,687 ​ ​ ​ ​ NOTE O - STOCKHOLDERS’ EQUITY Common Stock The Company’s common stock consist of $ 0.0001 par value, 200,000,000 shares authorized, of which 47,221,513 and 53,252,563 shares were issued and outstanding as of December 31, 2025 and 2024, respectively. 69 Table of Contents On March 18, 2025, the Company repurchased, directly from a selling stockholder, 6,428,571 shares of the Company’s common stock, par value $ 0.0001 per share, at a price of $ 7.00 per share for total consideration of $ 45.0 million. The purchased shares were retired. Effective November 8, 2022, the Board of Directors approved to repurchase, directly from selling stockholders, 1,500,000 shares of the Company’s common stock, par value $ 0.0001 per share, at a price of $ 14.8025 per share for a total of $ 22,203,750 . ​ 2020 Equity Incentive Plan The Company maintains the 2020 Equity Incentive Plan (the “2020 Plan”) and has registered 10,200,000 shares of common stock issuable under the Plan. The 2020 Plan authorizes discretionary grants of incentive stock options to employees of the Company and its qualifying subsidiaries. The 2020 Plan also authorizes discretionary grants of non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents or other equity or cash-based awards to employees and consultants of the Company and its subsidiaries and to members of the Board of Directors of the Company. To the extent that an award under the 2020 Plan expires, is cancelled, forfeited, terminated, settled in cash or is otherwise settled without issuance of the full number of shares to which it relates, it will become or again be available for awards under the 2020 Plan. The 2020 Plan is administered by the Company's Compensation Committee. The Compensation Committee has complete, full and final authority to: designate participants; determine the types of awards to be granted; determine the terms of awards; interpret and administer the 2020 Plans and any agreements and awards thereunder. As of December 31, 2025, 3,185,260 shares of common stock remain available for future grants. Restricted stock unit activity under the 2020 Plan for the year ended December 31, 2025 and 2024 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ ​ ​ Amount ​ ​ ​ Grant Date Fair Value Outstanding at December 31, 2023 ​ 532,399 ​ $ 14.82 Granted ​ 1,148,201 ​ 7.07 Forfeited ​ ( 78,986 ) ​ 14.66 Vested ​ ( 221,337 ) ​ 14.90 Outstanding at December 31, 2024 ​ 1,380,277 ​ $ 8.38 Granted ​ 1,533,722 ​ 6.03 Forfeited ​ ( 101,484 ) ​ 8.62 Vested ​ ( 326,764 ) ​ ​ 10.30 Expired ​ ( 10,404 ) ​ ​ 16.02 Outstanding at December 31, 2025 ​ 2,475,347 ​ $ 6.63 ​ ​ ​ ​ ​ ​ ​ For the restricted stock unit awards granted under the 2020 Plan containing both service and performance conditions, the Company recognizes compensation expense when the awards are considered probable of vesting. Restricted stock units are considered granted, and the service inception date begins, when a mutual understanding of the key terms and conditions between the Company and the employee have been established. The fair value of these awards is determined based on the closing price of the shares on the grant date. The probability of vesting restricted share awards granted with future performance conditions is evaluated at each reporting period and compensation expense is adjusted based on the probability assessment. ​ As of December 31, 2025, the Company’s restricted stock units include 1,536,258 performance-based awards that have vesting provisions subject to both time vesting and the achievement of certain performance milestones ranging from 80 % to 200 % vesting targets, while the remaining 939,089 awards vest over a period ranging from one to three years . ​ For the year ended December 31, 2025 and 2023, the Company recognized share-based compensation expense of $ 0.3 million and $ 7.9 million, respectively, for certain performance-based awards given that the achievement of the performance milestones was deemed probable for accounting purposes. For the year ended December 31, 2024, the 70 Table of Contents Company did not recognize share-based compensation expense for the performance-based awards given that the achievement of the performance milestones have been deemed not probable for accounting purposes. ​ Stock Options Stock options granted under the 2020 Plan have exercise terms of 10 years and vest in equal installments of one-third of the total number of options granted on each of the first three anniversaries from the grant date beginning one year after the date of grant, and are assigned an exercise price equal to the closing stock price on the day prior to the date of grant. Options are expensed on a straight-line basis over the grant vesting period, which is considered to be the requisite service period. In order for the options to vest, the employee must be in the continuous employment of the Company since the date of the grant. Except for qualifying retirement after the nine-month anniversary of the grant date, any portion of the grant that has not vested will be forfeited upon termination of employment ​ Under the 2020 Plan, the fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. When determining expected volatility, the Company considers the historical volatility of the Company’s stock price, or benchmark companies when the option exercise period exceeds period for which stock data is available for the Company. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant, based on the options’ expected term. The assumptions used in the Black-Scholes option-pricing model for options during the year ended December 31, 2025 and 2024 as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Grant Date ​ ​ August 6, 2025 ​ August 1, 2025 ​ July 1, 2024 ​ June 7, 2024 Risk-free interest rate ​ 3.77 % ​ 3.77 % ​ 4.44 % ​ 4.42 % Expected volatility of common stock ​ 43.56 % ​ 43.56 % ​ 50.03 % ​ 50.04 % Dividend yield ​ - ​ - ​ - ​ - Expected option term in years ​ 6.0 ​ 6.0 ​ 6.0 ​ 6.0 Grant-date fair value (per share) ​ $ 2.92 ​ $ 2.80 ​ $ 3.46 ​ $ 3.73 ​ Stock option activity under the 2020 Plan for the years ended December 31, 2025 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount ​ ​ ​ Weighted Average Exercise Price per Share ​ ​ ​ Weighted Average Remaining Contractual Life (Years) ​ ​ ​ Aggregate Intrinsic Value (in thousands) (1) Outstanding at December 31, 2023 ​ - ​ $ - ​ - ​ $ - Granted ​ 646,301 ​ ​ 7.02 ​ 9.44 ​ ​ - Forfeited ​ - ​ ​ - ​ - ​ ​ - Outstanding at December 31, 2024 ​ 646,301 ​ $ 7.02 ​ 9.44 ​ $ - Granted ​ 763,485 ​ ​ 6.08 ​ - ​ ​ 788 Forfeited ​ ( 38,646 ) ​ ​ 7.02 ​ - ​ ​ 3 Expired ​ ( 32,205 ) ​ ​ 7.02 ​ - ​ ​ 3 Outstanding at December 31, 2025 ​ 1,338,935 ​ $ 6.48 ​ 9.01 ​ $ 839 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable at December 31, 2025 ​ 191,811 ​ $ 7.02 ​ 8.44 ​ $ 20,459 Exercisable at December 31, 2024 ​ - ​ $ - ​ - ​ $ - ​ (1) Total shares valued at the market price of the underlying stock as of December 31, 2025 less the exercise price. ​ As of December 31, 2025 and 2024, the unrecognized compensation costs related to these awards was $ 2.1 million and $ 1.6 million, respectively. The Company expects to recognize those costs over a weighted average period of 1.5 years. The total grant date fair value of stock options awarded during the year ended December 31, 2025 was $ 2.2 million. ​ 71 Table of Contents 2020 Employee Stock Purchase Plan The Company also maintains the 2020 Employee Stock Purchase Plan (the “ESPP”) and has registered 500,000 shares of common stock issuable under the ESPP. For the years ended December 31, 2025 and 2024, the Company issued 76,256 and 89,923 shares, respectively, pursuant to the ESPP and 235,406 shares remain available for future issuance. ​ NOTE P - BUSINESS SEGMENTS The Chairman and Chief Executive Officer is our Chief Operating Decision Maker (“CODM”). We report operational data to our CODM at the segment level, which he uses to evaluate performance and allocate resources based on gross profit and income (loss) from operations by segment. While the Company believes there are synergies between the two business segments, they are managed separately because they have different risks and opportunities. The two reportable segments are: ● Asset Management Solutions-comprised of activities to extract value from strategic asset acquisitions through leasing, trading, or disassembling for product sales. ● TechOps - comprised of MRO activities; and product sales of internally developed engineered solutions and other serviceable products. The Asset Management Solutions segment provides leasing solutions of Flight Equipment to passenger and cargo operators worldwide. Assets considered to be at or near the end of their useful lives, supplied by our leasing portfolio or acquisitions, are analyzed for return maximization to assess whether they will be sold as whole assets or disassembled and sold as individual spare parts and components. The TechOps segment consists of aftermarket support and services businesses that provide maintenance support for aircraft and aircraft components, and sale of engineered solutions. Our MRO business also engages in longer term projects such as aircraft modifications, cargo conversions of wide-body aircraft, and aircraft storage. The segment also includes MRO of landing gear, thrust reversers, and other components. Cost of sales consists principally of the cost of product, direct labor, and overhead. Our engineered solutions revenue consists of sales of products internally developed as permitted by Supplemental Type Certificates issued by the FAA. These products are proprietary in nature and function as non-original equipment manufacturer solutions to airworthiness directives and other technical challenges for operators. In order to develop these products, we engage in research and development activities. Our TechOps segment will engage in the repair and sale of used serviceable materials through their ability to overhaul existing inventory. The accounting policies for the segments are the same as those described in Note B – Summary of Significant Accounting Policies. Our reportable segments are aligned principally around the differences in products and services. Gross Profit is calculated by subtracting cost of sales from revenue; income from operations is calculated by subtracting unapplied operating expenses and selling, general and administrative expenses. The assets and certain expenses related to corporate activities are not allocated to the segments. The segment reporting excludes the allocation of interest (expense) income, net, other income, net, change in fair value of warrant liability, and income tax expense (benefit). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 72 Table of Contents Selected financial information for each segment is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Revenue ​ ​ ​ ​ ​ ​ ​ Asset Management Solutions ​ ​ ​ ​ ​ ​ ​ Aircraft ​ $ 35,957 ​ $ 41,749 ​ $ 80,877 Engine ​ 175,626 ​ 173,718 ​ 134,290 ​ ​ ​ 211,583 ​ ​ 215,467 ​ ​ 215,167 TechOps ​ ​ ​ ​ ​ ​ MRO services ​ ​ 93,743 ​ ​ 107,970 ​ ​ 102,535 Product sales ​ 29,960 ​ 21,629 ​ 16,583 Whole asset sales ​ ​ - ​ ​ - ​ ​ 218 ​ ​ 123,703 ​ 129,599 ​ 119,336 Total ​ $ 335,286 ​ $ 345,066 ​ $ 334,503 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Cost of sales ​ ​ ​ ​ ​ ​ Asset Management Solutions ​ ​ ​ ​ ​ ​ Aircraft ​ $ 24,009 ​ $ 27,223 ​ $ 58,138 Engine ​ 113,511 ​ ​ 105,803 ​ 89,374 ​ ​ ​ 137,520 ​ ​ 133,026 ​ ​ 147,512 TechOps ​ ​ ​ ​ ​ ​ ​ ​ ​ MRO services ​ ​ 74,118 ​ ​ 91,510 ​ ​ 82,107 Product sales ​ 17,874 ​ ​ 16,594 ​ 12,822 Whole asset sales ​ ​ - ​ ​ - ​ ​ ( 359 ) ​ ​ 91,992 ​ ​ 108,104 ​ 94,570 Total ​ $ 229,512 ​ $ 241,130 ​ $ 242,082 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Gross profit ​ ​ ​ ​ ​ ​ Asset Management Solutions ​ ​ ​ ​ ​ ​ Aircraft ​ $ 11,948 ​ $ 14,526 ​ $ 22,739 Engine ​ 62,115 ​ 67,915 ​ 44,916 ​ ​ ​ 74,063 ​ ​ 82,441 ​ ​ 67,655 TechOps ​ ​ ​ ​ ​ ​ ​ ​ ​ MRO services ​ ​ 19,625 ​ ​ 16,460 ​ ​ 20,428 Product sales ​ 12,086 ​ 5,035 ​ 3,761 Whole asset sales ​ ​ - ​ ​ - ​ ​ 577 ​ ​ 31,711 ​ 21,495 ​ 24,766 Total ​ $ 105,774 ​ $ 103,936 ​ $ 92,421 ​ 73 Table of Contents The following table reconciles segment gross profit to income (loss) before income tax provision (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ 2024 ​ 2023 ​ ​ ​ ​ Asset Management Solutions ​ ​ ​ ​ TechOps ​ ​ ​ ​ Total ​ ​ ​ Asset Management Solutions ​ ​ TechOps ​ ​ Total ​ Asset Management Solutions ​ ​ TechOps ​ ​ Total Gross Profit ​ ​ ​ $ 74,063 ​ ​ ​ $ 31,711 ​ ​ ​ $ 105,774 ​ ​ ​ $ 82,441 ​ ​ ​ $ 21,495 ​ ​ ​ $ 103,936 ​ ​ ​ $ 67,655 ​ ​ ​ $ 24,766 ​ ​ ​ $ 92,421 Operating expenses ​ ( 13,167 ) ​ ​ ( 9,442 ) ​ ​ ( 22,609 ) ​ ( 11,870 ) ​ ​ ( 10,933 ) ​ ​ ( 22,803 ) ​ ( 15,588 ) ​ ​ ( 11,341 ) ​ ​ ( 26,929 ) Selling, general and administrative expenses ​ ( 13,982 ) ​ ​ ( 14,709 ) ​ ​ ( 28,691 ) ​ ( 15,567 ) ​ ​ ( 18,884 ) ​ ​ ( 34,451 ) ​ ( 15,362 ) ​ ​ ( 16,956 ) ​ ​ ( 32,318 ) Segment income (loss) from operations ​ 46,914 ​ ​ 7,560 ​ ​ 54,474 ​ 55,004 ​ ​ ( 8,322 ) ​ ​ 46,682 ​ 36,705 ​ ​ ( 3,531 ) ​ ​ 33,174 Other corporate expenses (1) ​ ​ ​ ​ ​ ​ ​ ( 38,684 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 36,938 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 43,944 ) Income (loss) from operations ​ ​ ​ ​ ​ ​ ​ 15,790 ​ ​ ​ ​ ​ ​ ​ ​ 9,744 ​ ​ ​ ​ ​ ​ ​ ​ ( 10,770 ) Other (expense) income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest (expense) income, net ​ ​ ​ ​ ​ ​ ​ ​ ( 8,330 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 5,703 ) ​ ​ ​ ​ ​ ​ ​ ​ 155 Other income, net ​ ​ ​ ​ ​ ​ ​ ​ 2,982 ​ ​ ​ ​ ​ ​ ​ ​ 1,495 ​ ​ ​ ​ ​ ​ ​ ​ 666 Change in fair value of warrant liability ​ ​ ​ ​ ​ ​ ​ ​ 85 ​ ​ ​ ​ ​ ​ ​ ​ 2,301 ​ ​ ​ ​ ​ ​ ​ ​ 2,270 Income (loss) before income tax provision ​ ​ ​ ​ ​ ​ ​ $ 10,527 ​ ​ ​ ​ ​ ​ ​ $ 7,837 ​ ​ ​ ​ ​ ​ ​ $ ( 7,679 ) ​ (1) Other corporate expenses include other unapplied payroll expenses and benefits, telecommunications and IT support, professional fees, office rent, and depreciation, among others. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 Total Assets ​ ​ ​ ​ Asset Management Solutions ​ $ 434,680 ​ $ 383,336 TechOps ​ ​ 193,724 ​ 205,655 Corporate ​ ​ 12,068 ​ 15,732 ​ ​ $ 640,472 ​ $ 604,723 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Total depreciation and amortization expense ​ ​ Asset Management Solutions ​ $ 13,382 ​ $ 9,909 ​ $ 6,043 TechOps ​ ​ 4,839 ​ 5,042 ​ ​ 3,549 Corporate ​ ​ 1,113 ​ 1,097 ​ ​ 867 ​ ​ $ 19,334 ​ $ 16,048 ​ $ 10,459 Total capital expenditures ​ ​ ​ ​ ​ ​ ​ ​ ​ Asset Management Solutions ​ $ 4,206 ​ $ 15,350 ​ $ 488 TechOps ​ ​ 5,264 ​ 11,755 ​ ​ 9,206 Corporate ​ ​ 771 ​ 1,925 ​ ​ 1,665 ​ ​ $ 10,241 ​ $ 29,030 ​ $ 11,359 ​ The following table presents revenue based on the customers’ geographic location and long-lived assets located in the United States, our country of domicile, as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ 180,921 ​ $ 215,198 ​ $ 145,076 Foreign ​ 154,365 ​ 129,868 ​ 189,427 Total revenue ​ $ 335,286 ​ $ 345,066 ​ $ 334,503 ​ 74 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Long-lived assets ​ ​ ​ ​ ​ ​ Domestic ​ $ 138,952 ​ $ 130,086 Foreign ​ ​ 33,622 ​ 14,482 Total long-lived assets ​ $ 172,574 ​ $ 144,568 ​ For the year ended December 31, 2025, the Company had no customer from which revenue generated exceeded 10% of total sales. For the year ended December 31, 2024, the Company had one customer from which revenue generated exceeded 10 % of total sales. Total sales to this customer amounted to $ 50.9 million, of which $ 33.5 million was included in TechOps segment and $ 17.4 million was included in the Asset Management Solutions segment. Intersegment sales includes amounts invoiced by a segment for work performed for another segment. Amounts are based on actual work performed or products sold and agreed-upon pricing which is intended to be reflective of the contribution made by the supplying business segment. All intersegment transactions have been eliminated upon consolidation. Intersegment revenue is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Asset Management Solutions ​ ​ $ 1,977 ​ $ 828 ​ $ 1,599 TechOps ​ ​ 7,910 ​ 11,921 ​ 21,359 Total intersegment revenue ​ ​ $ 9,887 ​ $ 12,749 ​ $ 22,958 ​ ​ NOTE Q  -  LEASES The Company leases facilities, offices, and equipment. The Company evaluates whether a contractual arrangement that provides it with control over the use of an asset is a lease. The right-of-use (“ROU”) asset and related operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the term of the lease. The implicit rate of our lease arrangements is not readily determinable nor is it disclosed by our lessors; therefore, the Company uses its incremental borrowing rate based on information available at the lease commencement date to discount the lease payments. The Company classifies a lease as operating or finance using the classification criteria set forth in ASC Topic 842. Some of our leases are non-cancellable and may include renewal or termination options. Renewal or termination options that are reasonably certain to be exercised are included in the determination of the term of a lease. The Company’s lease agreements typically do not contain any significant residual value guarantees or restrictive covenants, and may include variable lease payments related to escalation clauses based on consumer price index rates, as well as maintenance and other services. Variable lease payments that depend on an index or rate are included in the determination of ROU asset and lease liabilities using the index or rate at the lease commencement date, whereas variable lease payments that do not depend on an index or rate are recorded as lease expense in the period incurred. Lease expense is recognized over the term of the lease on a straight-line basis unless another systematic basis is more representative of the pattern in which the Company expects to consume the asset’s future economic benefits. ROU assets are evaluated for impairment in a manner consistent with the treatment of other long-lived assets. The Company made an accounting policy election to not recognize lease assets or liabilities for leases with a term of twelve months or less. ​ ​ ​ ​ ​ ​ 75 Table of Contents The components of lease expense for the years ended December 31, 2025, 2024, and 2023 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Operating lease cost ​ $ 6,929 ​ $ 6,763 ​ $ 7,001 Short-term lease cost ​ ​ 1,172 ​ ​ 1,139 ​ ​ 392 Variable lease cost ​ ​ 442 ​ ​ 869 ​ ​ 397 ​ ​ $ 8,543 ​ $ 8,771 ​ $ 7,790 ​ Our operating leases expire at various dates through 2035. Maturities of our operating lease payments as of December 31, 2025 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating ​ ​ Leases Year ending December 31: ​ ​ ​ 2026 ​ $ 6,372 2027 ​ ​ 5,809 2028 ​ 5,631 2029 ​ 4,691 2030 ​ 4,729 Thereafter ​ 14,649 Total undiscounted payments ​ ​ 41,881 Less: imputed interest ​ ​ ( 9,378 ) Present value of minimum lease payments ​ ​ 32,503 Less: Operating lease liabilities - current ​ ( 4,313 ) Operating lease liabilities - non-current ​ $ 28,190 ​ ​ ​ Our weighted-average remaining lease term and weighted-average discount rate are as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 Remaining lease term (years) ​ 7.35 ​ 7.80 Discount Rate ​ 6.91 % ​ 6.83 % ​ ​ Supplemental cash flow information related to leases were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2025 ​ ​ ​ 2024 Cash paid for amounts included in the measurement of lease liabilities ​ ​ 4,258 ​ ​ 4,498 Operating lease liabilities arising from obtaining ROU assets ​ ​ 2,080 ​ ​ 10,449 ​ ​ NOTE R - COMMITMENTS AND CONTINGENCIES Management Compensation Certain executive management entered into employment agreements with the Company. The contracts provide that such management may earn discretionary bonuses, computed upon a sliding percentage scale of their base salaries, based on the overall financial performance of the Company and each individual’s contributions, subject to approval by the Company’s Board of Directors. Additionally, under certain termination conditions, such contracts provide for severance 76 Table of Contents payments under the Company’s Severance Plan, including payment of base salary, bonus, and fringe benefits. The contracts include certain noncompete clauses commencing upon the employee’s separation from the Company. Litigation The Company could be involved in litigation incidental to the operation of the business. The Company intends to vigorously defend all matters in which the Company is named as a defendant, and, for insurable losses, maintain levels of insurance to protect against adverse judgments, claims or assessments that may affect the Company. Although the adequacy of existing insurance coverage of the outcome of any legal proceedings cannot be predicted with certainty, based on the current information available, the Company does not believe the ultimate liability associated with known claims or litigation, if any, in which the Company is involved will materially affect the Company’s consolidated financial condition or results of operations. ​ NOTE S - BENEFIT PLANS The Company sponsors an employee retirement savings plan that qualifies under Section 401(k) of the Internal Revenue Code. Participating employees may contribute, but not more than statutory limits. The Company makes nondiscretionary 3 % safe harbor contributions of participants’ eligible earnings who have completed the plan’s eligibility requirements. The contributions are made to the plan on behalf of the employees. Total nondiscretionary contributions to the plan were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Nondiscretionary contributions ​ ​ ​ $ 1,526 ​ ​ ​ $ 1,564 ​ ​ ​ $ 1,495 ​ ​ ​ ​ ​ ​ ​ 77 Table of Contents ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ​