What changed in this filing

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Item 1A. Risk Factors

2022-03-15 compared with 2021-03-16 · 458 added, 644 removed, 16 unchanged (99% of the section changed)

You should carefully consider the

risks and uncertainties described below and the other information in the Annual Report on Form 10-K before making an

investment in our common stock.

Our business, financial condition, results of operations, or prospects could be materially

and adversely affected if any of these risks occurs, and as a result, the market price of our common stock could decline and

you could lose all or part of your investment.

This Annual Report on Form 10-K also contains forward-looking statements

that involve risks and uncertainties.

See “Special Note Regarding Forward-Looking Statements.”

Our actual results

could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain

factors, including those set forth below.

Risks Related to AerSale’s

Business and Industry

coronavirus pandemic has had a material adverse impact on our business, operating results, financial condition, and liquidity,

and the duration and extent of the pandemic could prolong or increase the adverse impact.

COVID-19 pandemic has caused significant volatility in financial and other markets, which has raised the prospect of an extended

global recession.

The commercial aviation industry, including our operations, has been particularly and adversely impacted by

the COVID-19 pandemic.

Public health problems resulting from COVID-19 and precautionary measures instituted by governments and

businesses to mitigate its spread, including travel restrictions, quarantines, shelter in place directives, and shutting down

of non-essential businesses has and continues to contribute to a general slowdown in the global economy, and if it continues for

an extended period of time, it could have a material adverse impact to the businesses of our customers, suppliers and distribution

partners, and disrupt our operations.

Changes in our operations in response to the COVID-19 pandemic or employee illnesses resulting

from the pandemic, may result in inefficiencies or delays, including in sales and product development efforts and our manufacturing

and supply chain, and additional costs related to business continuity initiatives, that cannot be fully mitigated through succession

planning, employees working remotely, or teleconferencing technologies.

The spread of COVID-19 along with related travel restrictions

and operational issues has caused a decrease in the demand for air travel and has resulted in lower demand from civil aviation

customers for our products.

Passenger airline traffic has declined significantly since March 2020, and the decrease had a

material negative impact on the financial results for the year ended December 31, 2020.

We expect to continue to see reduced

demand in our non-cargo commercial businesses.

Moreover, if the COVID-19 pandemic continues to result in decreased worldwide commercial

activity, it could eventually adversely affect the demand for airline cargo services.

Reduced numbers of aircraft flying or flight

hours negatively impacts the demand for many of our products and services, and any prolonged reduction could materially and adversely

affect our business, operating results, financial condition, and liquidity.

While the full extent and impact of the COVID-19 pandemic

cannot be reasonably estimated with certainty at this time, COVID-19 has had a significant impact on our business, the businesses

of our customers and suppliers, as well as our results of operations and financial condition, and may have a material adverse

impact on our business, results of operations and financial condition in the long-term.

addition, we source parts and components for our business from various suppliers around the world.

Disruptions to our supply chain

and business operations, or to our suppliers’

or customers’

supply chains and business operations, could have adverse

effects on our ability to provide aftermarket support and services.

Moreover, a prolonged epidemic or pandemic, or the threat

thereof, could result in worker absences, lower productivity, voluntary closure of our offices and facilities, travel restrictions

for our employees and other disruptions to our business.

Any of these could have a material adverse effect on our business, financial

condition or results of operations.

have taken a number of actions in response to the decreased demand for certain products and services as a result of COVID-19,

including reducing operating expenditures by eliminating certain contractor positions and reducing all non-essential spending.

Certain of our facilities have experienced temporary disruptions as a result of the COVID-19 pandemic, and we cannot predict whether

any of our facilities will experience more significant disruptions in the future.

have also taken steps to improve our liquidity, including seeking financial assistance under the Coronavirus Aid, Relief, and

Economic Security Act (“CARES Act”).

Certain of our subsidiaries have received $16.4 million from the U.S.

Department (“Treasury”) through the Payroll Support Program (“PSP1”) under the CARES Act, of which $12.7

million was received prior to December 31, 2020 and the remaining amount was received during the first quarter of 2021.

part of the Payroll Support Extension Law (“PSP Extension Law”), we entered into a new agreement with the U.S.

of the Treasury (“PSP2”) on March 4, 2021 for the receipt of relief funds of $5.5 million.

In connection with

the financial assistance we have received under the Payroll Support Program, we are required to comply with certain provisions

of the CARES Act, including the requirement that funds provided pursuant to the Payroll Support Program be used exclusively for

the continuation of payment of employee wages, salaries and benefits;

the requirement against involuntary terminations and furloughs

and reductions in employee pay rates and benefits from the signing date of the Payroll Support Program agreement through March 31,

The agreement requires us to issue a recall to any employee who was terminated or furloughed between October 1, 2020

and March 4, 2021 and enable such employee to return to employment.

In addition, we are subject to provisions prohibiting

the repurchase of common stock and the payment of common stock dividends through March 31, 2022, as well as limitations on

the payment of certain employee compensation through October 1, 2022.

These restrictions may affect our operations and if

we do not comply with these provisions, we may be required to reimburse up to 100% any previously received relief funds.

particular, limitations on compensation may adversely impact our ability to attract and retain senior management or attract other

key employees during this critical time.

addition, we cannot predict the impact that COVID-19 will have on our customers, suppliers, vendors, and other business partners,

and each of their financial conditions;

ITEM 1A RISK FACTORS

You should carefully consider the risks and uncertainties described below and the other information in the Annual Report on Form 10-K before making an investment in our common stock.

Our business, financial condition, results of operations, or prospects could be materially and adversely affected if any of these risks occurs, and as a result, the market price of our common stock could decline and you could lose all or part of your investment.

This Annual Report on Form 10-K also contains forward-looking statements that involve risks and uncertainties.

See “Special Note Regarding Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below.

Risks Related to AerSale’s Business and Industry

The coronavirus (COVID-19) pandemic has had a material adverse impact on our business, operating results, financial condition, and liquidity, and the duration and extent of the pandemic could prolong or increase the adverse impact.

The COVID-19 pandemic has caused significant volatility in financial and other markets, which has raised the prospect of an extended global recession.

The commercial aviation industry, including our operations, has been particularly and adversely impacted by the COVID-19 pandemic.

Public health problems resulting from COVID-19 and precautionary measures instituted by governments and businesses to mitigate its spread, including travel restrictions, quarantines, shelter in place directives, and shutting down of non-essential businesses has and continues to contribute to a general slowdown in the global economy, and if it continues for an extended period of time, it could have a material adverse impact to the businesses of our customers, suppliers and distribution partners, and could disrupt our operations.

Changes in our operations in response to the COVID-19 pandemic or employee illnesses resulting from the pandemic may result in inefficiencies or delays, including in sales and product development efforts and our manufacturing and supply chain, as well as additional costs related to business continuity initiatives, that cannot be fully mitigated through succession planning, employees working remotely, or teleconferencing technologies.

The spread of COVID-19 along with related travel restrictions and operational issues has caused a decrease in the demand for air travel and has resulted in lower demand from civil aviation customers for our products.

Passenger airline traffic has declined significantly since March 2020, and we expect to continue to see reduced demand in our non-cargo commercial businesses.

Moreover, if the COVID-19 pandemic continues to result in decreased worldwide commercial activity, it could eventually adversely affect the demand for airline cargo services.

Reduced numbers of aircraft flying or flight hours negatively impacts the demand for many of our products and services, and any prolonged reduction could materially and adversely affect our business, operating results, financial condition, and liquidity.

While the full extent and impact of the COVID-19 pandemic cannot

be reasonably estimated with certainty at this time, COVID-19 has had a significant impact on our business and the businesses of our customers and suppliers, as well as our results of operations and financial condition, and an extended period of economic disruption could have a material adverse impact on our business, results of operations, access to sources of liquidity and overall financial condition.

In addition, the ongoing COVID-19 pandemic continues to be a rapidly evolving situation mainly due to the recent surge in COVID-19 variants.

In November 2021, a new Omicron variant of COVID-19 was detected in multiple countries, including the United States.

Public health officials and medical professionals have warned that COVID-19 cases may spike, particularly if vaccination rates do not quickly increase or if additional potent disease variants emerge.

It is unclear how long the resurgence due to the recent variants will last or the extent to which they will contribute to an increase in cases, and what safety measures governments will impose in response to such potential resurgences.

If cases rise, mask mandates, social-distancing, travel restrictions and stay-at-home orders could be reinstated.

Even before the increases in cases due to the Delta and Omicron variants, many individuals remained cautious about resuming activities.

The long-term impact of the new variants cannot be predicted at this time, and could depend on numerous factors, including vaccination rates among the population, the effectiveness of COVID-19 vaccines against these variants and the response by governmental bodies and regulators.

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the COVID-19 pandemic on our business.

An extended period of economic disruption could have a material adverse impact on our business, results of operations, access to sources of liquidity and overall financial condition.

Moreover, a prolonged epidemic or pandemic, or the threat thereof, could result in worker absences, lower productivity, voluntary closure of our offices and facilities, travel restrictions for our employees and other disruptions to our business.

Any of these could have a material adverse effect on our business, financial condition or results of operations.

We have taken a number of actions in response to the decreased demand for certain products and services as a result of COVID-19, including reducing all non-essential spending.

Certain of our facilities have experienced temporary disruptions as a result of the COVID-19 pandemic, and we cannot predict whether any of our facilities will experience more significant disruptions in the future.

We have also taken steps to improve our liquidity, including seeking financial assistance under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).

Certain of our subsidiaries received $16.4 million from the U.S.

Treasury Department (“Treasury”) through the Payroll Support Program (“PSP1”) under the CARES Act, of which $12.7 million was received prior to December 31, 2020 and the remaining amount was received during the first quarter of 2021.

As part of the Payroll Support Extension Law (“PSP Extension Law”), we entered into an agreement with the U.S.

Department of the Treasury (“PSP2”) on March 4, 2021 and received relief funds of $5.5 million during 2021.

Pursuant to the American Rescue Plan Act of 2021 (“ARP”), we entered into an agreement (“PSP3”) with the U.S.

Department of the Treasury on April 16, 2021 and received relief funds of an additional $5.5 million during 2021.

In connection with the financial assistance we have received under the Payroll Support Program, we are required to comply with certain provisions of the CARES Act, including the requirement that funds provided pursuant to the Payroll Support Program be used exclusively for the continuation of payment of employee wages, salaries and benefits.

In addition, we are subject to provisions prohibiting the repurchase of our securities and the payment of dividends through September 30, 2022, as well as limitations on the payment of certain employee compensation through April 1, 2023.

These restrictions may affect our operations and if we do not comply with these provisions, we may be required to reimburse up to 100% of any previously received relief funds.

In particular, limitations on compensation may adversely impact our ability to attract and retain senior management or attract other key employees during this critical time.

As of December 31, 2021, we were in compliance with all of these provisions.

In addition, we cannot predict the impact that COVID-19 will have on our customers, suppliers, vendors, and other business partners, and each of their financial conditions;

however, any material effect on these parties could adversely impact us.

The impact of

COVID-19 may also exacerbate other risks discussed in this “Risk Factors”

section, any of which could have a material

effect on us.

are affected by factors that adversely impact the commercial aviation industry.

a provider of products and services to the commercial aviation industry, we are generally affected by overall economic conditions

of that industry.

The commercial aviation industry is historically cyclical and has been negatively affected in the past by geopolitical

events, high fuel and oil prices, lack of capital, and weak economic conditions.

As a result of these and other events, from time

to time certain of our customers have filed for bankruptcy protection or ceased operation.

The impact of instability in the global

financial markets has led, and may in the future lead, airlines to reduce domestic or international capacity.

In addition, certain

of our airline customers have in the past been impacted by tight credit markets, which limited their ability to buy parts, services,

and Flight Equipment.

reduction in flight activity of aircraft both in the United States and abroad has resulted in, and may continue to result in,

reduced demand for parts support and maintenance activities for the type of aircraft affected.

Further, tight credit conditions

negatively impact the amount of liquidity available to buy parts, services, and Flight Equipment.

A deteriorating airline environment

may also result in additional airline bankruptcies, and in such circumstances we may not be able to fully collect outstanding

accounts receivable.

Reduced demand from customers caused by weak economic conditions, including tight credit conditions and customer

bankruptcies, may adversely impact our financial condition or results of operations.

A slowdown in the global economy, or a return

to a recession, would negatively impact the commercial aviation industry, and may adversely impact our financial condition or

results of operations.

ability to profitably manage mid-life Flight Equipment through the end of its life-cycles depends in part on our ability to successfully

source acquisition opportunities of used Flight Equipment on favorable terms to provide feedstock for the sale of USM parts.

inability to acquire Flight Equipment could adversely affect our financial condition or results of operations.

Our business, financial

condition, results of operations, and growth rates may be adversely affected by these and other events that impact the aviation

industry, including the following:

deterioration in

the financial condition of our existing and potential customers;

reductions in demand

for used Flight Equipment;

increased in-house

maintenance by airlines;

lack of new and/or

USM parts in the marketplace;

The impact of COVID-19 may also exacerbate other risks discussed in this “Risk Factors” section, any of which could have a material effect on us.

Supply chain disruptions could have adverse effects on our ability to provide certain services

We source parts and components for our business from various suppliers around the world.

Disruptions to our supply chain and business operations, or to our suppliers’ or customers’ supply chains and business operations, could have adverse effects on our ability to provide aftermarket support and services.

We are affected by factors that adversely impact the commercial aviation industry.

As a provider of products and services to the commercial aviation industry, we are generally affected by overall economic conditions of that industry.

The commercial aviation industry is historically cyclical and has been negatively affected in the past by geopolitical events, high fuel and oil prices, lack of capital, and weak economic conditions.

As a result of these and other events, from time to time certain of our customers have filed for bankruptcy protection or ceased operation.

The impact of instability in the global financial markets has led, and may in the future lead, airlines to reduce domestic or international capacity.

In addition, certain of our airline customers have in the past been impacted by tight credit markets, which limited their ability to buy parts, services, and Flight Equipment.

A reduction in flight activity of aircraft both in the United States and abroad has resulted in, and may continue to result in, reduced demand for parts support and maintenance activities for the type of aircraft affected.

Further, tight credit conditions negatively impact the amount of liquidity available to buy parts, services, and Flight Equipment.

A deteriorating airline environment may also result in additional airline bankruptcies, and in such circumstances we may not be able to fully collect outstanding accounts receivable.

Reduced demand from customers caused by weak economic conditions, including tight credit conditions and customer bankruptcies, may adversely impact our financial condition or results of operations.

A slowdown in the global economy, or a return to a recession, would negatively impact the commercial aviation industry, and may have a material adverse effect on our business, financial condition, liquidity and results of operations.

Our ability to profitably manage mid-life Flight Equipment through the end of its life-cycles depends in part on our ability to successfully source acquisition opportunities of used Flight Equipment on favorable terms to provide feedstock for the sale of USM parts.

Our inability to acquire Flight Equipment could adversely affect our financial condition or results of operations.

Our business, financial condition, results of operations, and growth rates may be adversely affected by these and other events that impact the aviation industry, including the following:

● deterioration in the financial condition of our existing and potential customers;

● reductions in demand for used Flight Equipment;

● increased in-house maintenance by airlines;

● lack of new and/or USM parts in the marketplace;

● climate change, environmental catastrophes and government regulations implemented to address them;

● the COVID-19 pandemic;

● acts of terrorism;

future outbreaks

of infectious diseases such as the novel coronavirus;

operating results vary, and comparisons to results for preceding periods may not be meaningful.

Due to a number of factors our

operating results may fluctuate, including for the following reasons:

● future outbreaks of infectious diseases such as the novel coronavirus;

● acts of God.

Our operating results vary, and comparisons to results for preceding periods may not be meaningful.

Due to a number of factors, our operating results may fluctuate, including for the following reasons:

● the COVID-19 pandemic;

the timing and number

of purchases and sales of Flight Equipment;

the timing and amount

of maintenance reserve revenues recorded resulting from the termination of long term leases, for which significant amounts

of maintenance reserves may have accumulated;

the termination,

or announced termination of production, of particular types of Flight Equipment;

the retirement or

announced retirement of particular aircraft models by aircraft operators;

● the timing and number of purchases and sales of Flight Equipment;

● the timing and amount of maintenance reserve revenues recorded resulting from the termination of long term leases, for which significant amounts of maintenance reserves may have accumulated;

● the termination, or announced termination of production, of particular types of Flight Equipment;

● the retirement or announced retirement of particular aircraft models by aircraft operators;

● seasonality of travel;

operating history of any particular engine, aircraft or engine or aircraft model;

timing of necessary overhauls of Flight Equipment.

risks may reduce our Flight Equipment utilization rates, lease margins, maintenance reserve revenues and proceeds from Flight

Equipment sales, and result in higher legal, technical, maintenance, storage, insurance and other costs related to repossession

and Flight Equipment being off-lease.

As a result of the foregoing and other factors, the availability of Flight Equipment for

lease or sale periodically experiences cycles of oversupply and undersupply of given engine or aircraft models.

The incidence

of an oversupply of Flight Equipment may produce substantial decreases in lease rates and the appraised or resale value of aviation

equipment and may increase the time spent and costs incurred to lease or sell Flight Equipment.

We anticipate that fluctuations

from period to period will continue in the future.

As a result, we believe that comparisons to results for preceding periods may

not be meaningful, and that results of prior periods should not be relied upon as an indication of our future performance.

values for our aviation products fluctuate, and we may be unable to recover our costs incurred with respect to engines, rotable

components and other aircraft parts.

make a number of assumptions when determining the recoverability of rotable components, engines, and other assets which are on

lease, available for lease, or supporting our long-term programs.

These assumptions include historical sales trends, current and

expected usage trends, replacement values, current and expected lease rates, maintenance expenses, residual values, future demand,

and future cash flows.

Reductions in demand for these assets or declining market values, as well as differences between actual

results and the assumptions we utilize in determining the recoverability of our Flight Equipment could result in impairment charges

in future periods, which may adversely impact our financial condition or results of operations.

value of any given aircraft model, or any engine model applicable thereto, can vary significantly based on supply in the market

Certain types of Flight Equipment may be used in significant numbers by commercial aircraft operators that experience financial

difficulties from time to time.

If such operators were to go into liquidation or similar proceedings, the resulting over-supply

of Flight Equipment from these operators could have an adverse effect on the demand for the affected engine and aircraft types

and the values of such Flight Equipment, which may adversely impact our financial condition or results of operations.

may not be able to repossess Flight Equipment when a lessee defaults, and even if we are able to repossess the Flight Equipment

from a defaulting lessee, we may have to expend significant resources in the repossession of such Flight Equipment and the subsequent

remarketing and re-leasing of the repossessed Flight Equipment.

a lessee defaults on its obligations under a lease and does not cure such default in a timely manner, we typically seek to terminate

the applicable lease and repossess the leased Flight Equipment.

If a defaulting lessee contests the termination and repossession

or is under court protection, enforcement of our rights under the lease may be difficult, expensive and time-consuming.

event the Flight Equipment is located outside of the United States, we may need to obtain governmental consents to export the

Flight Equipment back to the United States.

As a result, the relevant asset may be off-lease and not generating revenue for a

prolonged period.

In addition, we will incur direct costs associated with repossessing our Flight Equipment, which may include

legal and similar costs, costs of transporting, storing and insuring the Flight Equipment, and costs associated with necessary

maintenance and recordkeeping to make the Flight Equipment available for re-lease or sale.

During this time, we will not realize

revenue from the Flight Equipment being repossessed and will continue to be obligated to pay any debt financing related to the

Flight Equipment.

● the operating history of any particular engine, aircraft or engine or aircraft model;

● the timing of necessary overhauls of Flight Equipment.

These risks may reduce our Flight Equipment utilization rates, lease margins, maintenance reserve revenues and proceeds from Flight Equipment sales, and may result in higher legal, technical, maintenance, storage, insurance and other costs related to repossession and Flight Equipment being off-lease.

As a result of the foregoing and other factors, the availability of Flight Equipment for lease or sale periodically experiences cycles of oversupply and undersupply of given engine or aircraft models.

The incidence of an oversupply of Flight Equipment may produce substantial decreases in lease rates and the appraised or resale value of aviation equipment and may increase the time spent and costs incurred to lease or sell Flight Equipment.

We anticipate that fluctuations from period to period will continue in the future.

As a result, we believe that comparisons to results for preceding periods may not be meaningful, and that results of prior periods should not be relied upon as an indication of our future performance.

Market values for our aviation products fluctuate, and we may be unable to recover our costs incurred with respect to engines, rotable components and other aircraft parts.

We make a number of assumptions when determining the recoverability of rotable components, engines, and other assets which are on lease, available for lease, or supporting our long-term programs.

These assumptions include historical sales trends, current and expected usage trends, replacement values, current and expected lease rates, maintenance expenses, residual values, future demand, and future cash flows.

Reductions in demand for these assets or declining market values, as well as differences between actual results and the assumptions we utilize in determining the recoverability of our Flight Equipment could result in impairment charges in future periods, which may have a material adverse effect on our business, financial condition, liquidity and results of operations.

The value of any given aircraft model, or any engine model applicable thereto, can vary significantly based on supply in the market place.

Certain types of Flight Equipment may be used in significant numbers by commercial aircraft operators that experience financial difficulties from time to time.

If such operators were to go into liquidation or similar proceedings, the resulting over-supply of Flight Equipment from these operators could have an adverse effect on the demand for the affected engine and aircraft types and the values of such Flight Equipment, which may adversely impact our financial condition or results of operations.

We may not be able to repossess Flight Equipment when a lessee defaults, and even if we are able to repossess the Flight Equipment from a defaulting lessee, we may have to expend significant resources in the repossession of such Flight Equipment and the subsequent remarketing and re-leasing of the repossessed Flight Equipment.

When a lessee defaults on its obligations under a lease and does not cure such default in a timely manner, we typically seek to terminate the applicable lease and repossess the leased Flight Equipment.

If a defaulting lessee contests the termination and repossession or is under court protection, enforcement of our rights under the lease may be difficult, expensive and time-consuming.

In the event the Flight Equipment is located outside of the United States, we may need to obtain governmental consents to export the Flight Equipment back to the United States.

As a result, the relevant asset may be off-lease and not generating revenue for a prolonged period.

In addition, we will incur direct costs associated with repossessing our Flight Equipment, which may include legal and similar costs, costs of transporting, storing and insuring the Flight Equipment, and costs associated with necessary maintenance and recordkeeping to make the Flight Equipment

available for re-lease or sale.

During this time, we will not realize revenue from the Flight Equipment being repossessed and will continue to be obligated to pay any debt financing related to the Flight Equipment.

If an engine is installed on an airframe, the airframe may be owned by an aircraft lessor or other third party.

Our ability to recover engines installed on airframes owned by third-parties may depend on the cooperation of the airframe owner.

Additionally,

when a lessee of our Flight Equipment protection under the U.S.

Bankruptcy Code, creditors (including us) are automatically stayed

from enforcing their rights.

In the case of U.S.-certificated airlines, Section 1110 of the Bankruptcy Code provides certain

relief to lessors of aircraft equipment.

Section 1110 has been the subject of significant litigation, and we can give no

assurance that Section 1110 will protect our investment in Flight Equipment in the event of a lessee’s bankruptcy.

In addition, Section 1110 does not apply to lessees located outside of the United States, and applicable foreign laws may

not provide comparable protection to us.

are subject to significant government regulation and may need to incur significant expenses to comply with new or more stringent

governmental regulation.

aviation industry is highly regulated in the United States by the FAA and equivalent regulatory agencies in other countries.

to being placed into service the products and services that we provide for aircraft, engines and their components are required

to meet certain standards of airworthiness established by the FAA or the equivalent regulatory agencies in certain other countries.

We also operate repair stations that are licensed by the FAA and the equivalent regulatory agencies in certain other countries.

Specific regulations vary from country to country;

although regulatory requirements in other countries are generally satisfied

by compliance with FAA requirements.

New and more stringent governmental regulations may be adopted in the future that, if enacted,

may adversely impact our financial condition or results of operations.

revocation or suspension of our material licenses, certificates, authorizations, or approvals by the FAA or equivalent regulatory

agencies in other countries, may adversely impact our financial condition or results of operations.

of Flight Equipment are regulated by general civil aviation authorities, including the FAA in the United States and similar governmental

authorities in other countries, which regulate the maintenance of engines and issue airworthiness directives.

Airworthiness directives

typically set forth special maintenance actions or modifications with respect to certain engine and aircraft types or series of

specific engines that must be implemented for the engine or aircraft to remain in service.

Also, airworthiness directives may

require the lessee to make more frequent inspections of an engine, aircraft or particular engine parts.

Generally, the lessee

of our Flight Equipment is responsible for complying with all airworthiness directives.

However, if the Flight Equipment is off-lease

and in certain circumstances, if dictated by the terms of a Flight Equipment lease, we may be forced to bear the cost of compliance

with such airworthiness directives.

number of our leases require specific governmental or regulatory licenses, consents or approvals.

These include consents for certain

payments under the leases and for the export, import or re-export of our Flight Equipment.

Consents needed in connection with

future leasing or sale of our Flight Equipment may not be received timely or have economically feasible terms.

Any of these events

could adversely affect our ability to lease or sell Flight Equipment, which, in turn, may adversely impact our financial condition

or results of operations.

Department of Commerce (the “Commerce Department”) regulates exports of goods outside the United States.

subject to the Commerce Department’s and the U.S.

Department of State’s regulations with respect to the lease and

sale of aircraft, engines, engine parts and components, and airframes and accessory parts and components to foreign entities.

The Commerce Department and the U.S.

Department of State may, in certain cases, require us to obtain export licenses for certain

items exported to foreign countries.

Department of Homeland Security, through the U.S.

Customs and Border Protection,

enforces regulations related to the import of aircraft, engines, engine parts and components, and airframe and accessory parts

and components into the United States.

We must expend resources to comply with these regulations and our failure to comply with

these regulations may subject us to regulatory actions, which may adversely impact our financial condition or results of operations.

are prohibited from doing business with persons designated by the U.S.

Department of the Treasury’s Office of Foreign Assets

Control (“OFAC”) on its “Specially Designated Nationals List,”

and must monitor our operations and existing

and potential lessees and other counterparties for compliance with OFAC’s rules.

Similarly, sanctions issued by the United

Nations, the United States government, the European Union or other governments could prohibit or restrict us from doing business

in certain countries, or with certain customers or persons, and we must monitor our operations and existing and potential customers

and other counterparties for compliance with such sanctions.

We must expend resources to comply with these regulations and our

failure to comply with these regulations may subject us to regulatory actions, which may adversely impact our financial condition

or results of operations.

are also subject to a variety of other regulations including work-related and community safety laws.

The Occupational Safety and

Health Act of 1970 mandates general requirements for safe workplaces for all employees, and established the Occupational Safety

and Health Administration (“OSHA”) in the Department of Labor.

In particular, OSHA provides special procedures and

measures for the handling of certain hazardous and toxic substances.

In addition, specific safety standards have been promulgated

for workplaces engaged in the treatment, disposal or storage of hazardous waste.

Requirements under state law, in certain circumstances,

may mandate additional measures for facilities handling materials specified as extremely dangerous.

We believe that our operations

are in material compliance with OSHA’s health and safety requirements.

at our MRO facilities is dependent upon continued outsourcing by the airlines.

currently perform MRO activities at six leased locations.

Revenues at these facilities fluctuate based on demand for maintenance

which, in turn, is driven by the number of aircraft operating and the extent of outsourcing of maintenance activities by airlines.

In addition, certain airlines operate new fleet types and/or newer generation aircraft and we may not have contractual arrangements

to service these aircraft, nor technicians trained and certified to perform the required airframe maintenance, repair, and overhaul

activities on such aircraft.

If either the number of aircraft operating or the level of outsourcing of maintenance activities

for the aircraft models for which we are authorized to service declines, we may not be able to execute our operational and financial

plans at our MRO facilities, which may adversely impact our financial condition or results of operations.

operations would be adversely affected by a shortage of skilled personnel or work stoppages.

are dependent on an educated and highly skilled workforce because of the complex nature of many of our products and services.

Our ability to operate successfully and meet our customers’

demands could be jeopardized if we are unable to attract and

retain a sufficient number of skilled personnel, including qualified licensed mechanics, to conduct our business, or if we experience

a significant or prolonged work stoppage.

These and similar events may adversely affect our results of operations and financial

inability to obtain certain components and raw materials from suppliers could harm our business.

business is affected by the availability and price of the raw materials and component parts that we use to manufacture our products.

Our ability to manage inventory and meet delivery requirements may be constrained by our suppliers’

ability to adjust delivery

of long-lead time products during times of volatile demand.

The supply chains for our business could also be disrupted by external

events such as natural disasters, extreme weather events, labor disputes, governmental actions and legislative or regulatory changes.

As a result, our suppliers may fail to perform according to specifications when required, and we may be unable to identify alternate

suppliers or to otherwise mitigate the consequences of their non-performance.

Transitions to new suppliers may result in significant

costs and delays, including those related to the required recertification of parts obtained from new suppliers with our customers

and/or regulatory agencies.

Our inability to fill our supply needs could jeopardize our ability to fulfill obligations under customer

contracts, which could result in reduced revenues and profits, contract penalties or terminations, and damage to customer relationships.

Further, increased costs of such raw materials or components could reduce our profits if we were unable to pass along such price

increases on to our customers.

operate in highly competitive markets, and competitive pressures may adversely affect us.

The markets for our

products and services are highly competitive, and we face competition from a number of sources, both domestic and international.

Our competitors include aircraft manufacturers, aircraft component and parts manufacturers, airline and aircraft service companies,

other companies MRO services, other aircraft spare parts distributors and redistributors.

Certain of our competitors may have

substantially greater financial and other resources than we have and others may price their products and services below our selling

These competitive markets also create pressure on our ability to hire and retain qualified technicians and other skilled

We believe that our ability to compete depends on superior customer service and support, on-time delivery, sufficient

inventory availability, competitive pricing, and effective quality assurance programs.

These competitive pressures have a potential

impact on our business, which may adversely affect our results of operations and financial condition.

are exposed to risks associated with operating internationally.

conduct business in a number of foreign countries, certain of which are politically unstable or subject to military or civil conflicts.

Additionally, when a lessee of our Flight Equipment has protection under the U.S.

Bankruptcy Code, creditors (including us) are automatically stayed from enforcing their rights.

In the case of U.S.-certificated airlines, Section 1110 of the Bankruptcy Code provides certain relief to lessors of aircraft equipment.

Section 1110 has been the subject of significant litigation, and we can give no assurance that Section 1110 will protect our investment in Flight Equipment in the event of a lessee’s bankruptcy.

In addition, Section 1110 does not apply to lessees located outside of the United States, and applicable foreign laws may not provide comparable protection to us.

Success at our MRO facilities is dependent upon continued outsourcing by the airlines.

We currently perform MRO activities at six leased locations.

Revenues at these facilities fluctuate based on demand for maintenance which, in turn, is driven by the number of aircraft operating and the extent of outsourcing of maintenance activities by airlines.

In addition, certain airlines operate new fleet types and/or newer generation aircraft and we may not have contractual arrangements to service these aircraft, nor technicians trained and certified to perform the required airframe maintenance, repair, and overhaul activities on such aircraft.

If either the number of aircraft operating or the level of outsourcing of maintenance activities for the aircraft models for which we are authorized to service declines, we may not be able to execute our operational and financial plans at our MRO facilities, which may adversely impact our financial condition or results of operations.

Our operations would be adversely affected by a shortage of skilled personnel or work stoppages.

We are dependent on an educated and highly skilled workforce because of the complex nature of many of our products and services.

Our ability to operate successfully and meet our customers’ demands could be jeopardized if we are unable to attract and retain a sufficient number of skilled personnel, including qualified licensed mechanics, to conduct our business, or if we experience a significant or prolonged work stoppage.

The increasing competition for highly skilled and talented personnel could result in higher compensation costs, difficulties in maintaining a capable workforce, and leadership succession planning challenges.

These and similar events may adversely affect our results of operations and financial condition.

The inability to obtain certain components and raw materials from suppliers could harm our business.

Our business is affected by the availability and price of the raw materials and component parts that we use to manufacture our products.

Our ability to manage inventory and meet delivery requirements may be constrained by our suppliers’ ability to adjust delivery of long-lead time products during times of volatile demand.

The supply chains for our business could also be disrupted by external events such as natural disasters, extreme weather events, labor disputes, governmental actions and legislative or regulatory changes.

As a result, our suppliers may fail to perform according to specifications when required, and we may be unable to identify alternate suppliers or to otherwise mitigate the consequences of their non-performance.

Transitions to new suppliers may result in significant costs and delays, including those related to the required recertification of parts obtained from new suppliers with our customers and/or regulatory agencies.

Our inability to fill our supply needs could jeopardize our ability to fulfill obligations under customer contracts, which could result in reduced revenues and profits, contract penalties or terminations, and damage to customer relationships.

Further, increased costs of such raw materials or components could reduce our profits if we were unable to pass along such price increases on to our customers.

We operate in highly competitive markets, and competitive pressures may adversely affect us.

The markets for our products and services are highly competitive, and we face competition from a number of sources, both domestic and international.

Our competitors include aircraft manufacturers, aircraft component and parts manufacturers, airline and aircraft service companies, other companies MRO services, other aircraft spare parts distributors and redistributors.

Certain of our competitors may have substantially greater financial and other resources than we have

and others may price their products and services below our selling prices.

These competitive markets also create pressure on our ability to hire and retain qualified technicians and other skilled labor needs.

We believe that our ability to compete depends on superior customer service and support, on-time delivery, sufficient inventory availability, competitive pricing, and effective quality assurance programs.

These competitive pressures have a potential impact on our business, which may adversely affect our results of operations and financial condition.

We are exposed to risks associated with operating internationally.

We conduct business in a number of foreign countries, certain of which are politically unstable or subject to military or civil conflicts.

Consequently, we are subject to a variety of risks that are specific to international operations, including the following:

conflicts, civil strife, and political risks;

regulations that could erode profit margins or restrict exports;

with the U.S.

Foreign Corrupt Practices Act, the United Kingdom Bribery Act 2010, and other anti-bribery and anticorruption

the burden and cost

of compliance with foreign laws, treaties, and technical standards and changes in those regulations;

award and funding delays;

restrictions on transfers of funds;

and export duties and value added taxes;

exchange risk;

transportation

delays and interruptions;

uncertainties

arising from foreign local business practices and cultural considerations;

in United States policies on trade relations and trade policy, including implementation of or changes in trade sanctions,

tariffs, and embargoes.

a national referendum and enactment of legislation by the government of the United Kingdom, the United Kingdom formally withdrew

from the European Union and ratified a trade and cooperation agreement governing its future relationship with the European Union.

The agreement, which is being applied provisionally from January 1, 2021 until it is ratified by the European Parliament

and the Council of the European Union, addresses trade, economic arrangements, law enforcement, judicial cooperation and a governance

framework including procedures for dispute resolution, among other things.

Because the agreement merely sets forth a framework

in many respects and will require complex additional bilateral negotiations between the United Kingdom and the European Union

as both parties continue to work on the rules for implementation, significant political and economic uncertainty remains

about how the precise terms of the relationship between the parties will differ from the terms before withdrawal.

These developments,

or the perception that any related developments could occur, have had and may continue to have a material adverse effect on global

economic conditions and financial markets, and could significantly reduce global market liquidity, restrict the ability of key

market participants to operate in certain financial markets, increase restrictions on imports and exports between the United Kingdom

and other countries and increase regulatory complexities.

Asset valuations, currency exchange rates and credit ratings have been

and may continue to be subject to increased market volatility.

Lack of clarity about future United Kingdom laws and regulations

as the United Kingdom determines which European Union laws to replace or replicate, including with respect to trade relations

could depress economic activity and restrict our access to capital.

that we have or will adopt to reduce the potential impact of losses resulting from the risks of doing business internationally

may not be adequate, and the regions in which we operate might not continue to be stable enough to allow us to operate profitably

on our Flight Equipment could exceed the value of such Flight Equipment, which could negatively affect our ability to repossess,

lease or sell such Flight Equipment.

in favor of third parties may be attached to Flight Equipment we own, and in certain cases our engines may also be installed on

airframes to which liens in favor of third-parties unrelated to the engines have been attached.

These liens may secure substantial

sums that may in certain circumstances exceed the value of the particular Flight Equipment to which the liens have attached.

certain jurisdictions, a lien may give the lien holder the right to detain, in limited cases, sell or cause the forfeiture of

the Flight Equipment subject to the lien.

Liens held by third parties may have priority over our and our creditors’

in respective AerSale Flight Equipment, either because the third-party liens have priority under applicable local law, or because

our creditors’

security interests are not filed in jurisdictions outside the United States.

These liens and lien holders

could impair our ability to repossess and re-lease, or sell our Flight Equipment.

If our customers do not discharge these liens,

we may find it necessary to pay the claims secured by such liens to repossess the Flight Equipment subject to such third-party

certain countries, an engine affixed to an aircraft may become an accession to the aircraft and we may not be able to exercise

our ownership rights over the engine.

certain jurisdictions, leased engine affixed to an aircraft may become an accession to the aircraft, such that the ownership rights

of the owner of the aircraft supersede the ownership rights of the owner of the engine.

If an aircraft is security for the owner’s

obligations to a third-party, the security interest in the aircraft may supersede our rights as owner of the engine.

principle could limit our ability to repossess leased engine in the event of a lessee’s bankruptcy or lease default while

the aircraft with the engine installed remains in such a jurisdiction.

We may suffer a loss if we are not able to repossess engines

leased to lessees in these jurisdictions.

acquisitions expose us to risks, including the risk that we may be unable to effectively integrate acquired businesses.

have completed multiple acquisitions over the past few years, and have discussions with third parties regarding acquisitions on

a regular basis.

Acquisitions involve risks, including difficulties in integrating the operations and personnel, the effects of

amortization of any acquired intangible assets and the potential impairment of goodwill, and the potential loss of key employees

of the acquired business.

In addition, acquisitions often require substantial management resources, and have the potential to

divert our attention from our existing business.

For any businesses we may acquire in the future, we may not be able to execute

our operational, financial, or integration plans for the acquired businesses, which may adversely affect our results of operations

and financial condition.

are dependent upon continued availability of financing to manage our business and to execute our business strategy, and additional

financing may not be available on terms acceptable to us.

ability to manage our business and to execute our business strategy is dependent, in part, on the continued availability of debt

and equity capital.

Access to the debt and equity capital markets may be limited by various factors, including the condition of

overall credit markets, general economic factors, state of the aviation industry, our financial performance, and credit ratings.

Debt and equity capital may not continue to be available to us on favorable terms, or at all.

Our inability to obtain financing

on favorable terms may adversely affect our results of operations and financial condition.

existing debt includes restrictive and financial covenants.

current financing arrangements require us to comply with various restrictive covenants, and in certain cases contain financial

covenants that require us to comply with specified financial ratios and tests.

Our failure to meet these covenants could result

in default under these loan and debt agreements, and may result in a cross-default under other debt agreements.

In the event of

a default and our inability to obtain a waiver of the default, all amounts outstanding under our debt agreements could be declared

immediately due and payable.

Our failure to comply with these covenants may adversely affect our results of operations and financial

In addition, our receipt of funds under the CARES Act requires us to comply with certain covenants.

If we do not comply

with these covenants, the government may require us to repay the support given to us.

industry is susceptible to product and other liability claims, and claims not adequately covered by insurance may adversely affect

our results of operations and financial condition.

business exposes us to possible claims for property damage and bodily injury or death, which may result if an aircraft, engine,

engine part or component, airframe part or accessory, or any other aviation product that we have sold, manufactured, or repaired

fails, or if Flight Equipment we serviced or leased, or in which our products are installed, has an accident.

We carry substantial

liability insurance in amounts that we believe are adequate for our risk exposure, and commensurate with industry norms.

claims may arise in the future, and our insurance coverage may not be adequate to protect us in all circumstances.

Additionally,

we might not be able to maintain adequate insurance coverage in the future at an acceptable cost.

Any liability claim not covered

by adequate insurance may adversely affect our results of operations and financial condition.

are subject to unique business risks as a result of supplying equipment and services to the U.S.

government directly and as a

subcontractor, which could lead to a reduction in our net sales from, or the profitability of our supply arrangements with, the

engaged in supplying defense-related equipment and services to U.S.

government agencies are subject to business risks specific

to the defense industry.

● military conflicts, civil strife, and political risks;

● export regulations that could erode profit margins or restrict exports;

● compliance with the U.S.

Foreign Corrupt Practices Act, the United Kingdom Bribery Act of 2010, and other anti-bribery and anticorruption laws;

● the burden and cost of compliance with foreign laws, treaties, and technical standards and changes in those regulations;

● contract award and funding delays;

● potential restrictions on transfers of funds;

● import and export duties and value added taxes;

● foreign exchange risk;

● transportation delays and interruptions;

● uncertainties arising from foreign local business practices and cultural considerations;

● changes in United States policies on trade relations and trade policy, including implementation of or changes in trade sanctions, tariffs, and embargoes.

Following a national referendum and enactment of legislation by the government of the United Kingdom, the United Kingdom formally withdrew from the European Union and ratified a trade and cooperation agreement governing its future relationship with the European Union.

The agreement, which is being applied provisionally from January 1, 2021 and entered into force on May 1, 2021, addresses trade, economic arrangements, law enforcement, judicial cooperation and a governance framework including procedures for dispute resolution, among other things.

Because the agreement merely sets forth a framework in many respects and will require complex additional bilateral negotiations between the United Kingdom and the European Union as both parties continue to work on the rules for implementation, significant political and economic uncertainty remains about how the precise terms of the relationship between the parties will differ from the terms before withdrawal.

These developments, or the perception that any related developments could occur, have had and may continue to have a material adverse effect on global economic conditions and financial markets, and could significantly reduce global market liquidity, restrict the ability of key market participants to operate in certain financial markets, increase restrictions on imports and exports between the United Kingdom and other countries and increase regulatory complexities.

Asset valuations, currency exchange rates and credit ratings have been and may continue to be subject to increased market volatility.

Lack of clarity about future United Kingdom laws and regulations as the United Kingdom determines which European Union laws to replace or replicate, including with respect to trade relations could depress economic activity and restrict our access to capital.

Measures that we have or will adopt to reduce the potential impact of losses resulting from the risks of doing business internationally may not be adequate, and the regions in which we operate might not continue to be stable enough to allow us to operate profitably or at all.

The war in the Ukraine is creating an adverse climate for our business.

government has imposed enhanced export restrictions and controls on certain products and technology, as well as sanctions on certain industry sectors and parties in Russia, Belarus and parts of the Ukraine.

The governments of other jurisdictions in which we may conduct business, such as the European Union, have also implemented sanctions or other restrictive measures.

These sanctions and enhanced export controls, as well as any responses from Russia, could adversely affect the Company and/or our supply chain, business partners or customers, flight activity, demand for MRO and leasing services and the related macro environment.

The economic and security conditions could also limit the Company’s ability to provide its services or products to certain customers, as well as limit its ability to receive payments.

The totality of these events, sanctions and restrictions may have a material adverse effect on our business, financial condition, liquidity and results of operations.

These sanctions and restrictions may also jeopardize and adversely impact the availability and cost of insurance which covers any assets or operations that may be subject to these restrictions and enhanced sanctions.

Business acquisitions expose us to risks, including the risk that we may be unable to effectively integrate acquired businesses.

We have completed multiple acquisitions over the past few years, and have discussions with third parties regarding acquisitions on a regular basis.

Acquisitions involve risks, including difficulties integrating operations and personnel, the effects of amortization of any acquired intangible assets and the potential impairment of goodwill, and the potential loss of key employees of the acquired business.

In addition, acquisitions often require substantial management resources, and have the potential to divert our attention from our existing business.

For any businesses we may acquire in the future, we may not be able to execute our operational, financial, or integration plans for the acquired businesses, which may adversely affect our results of operations and financial condition.

We are subject to unique business risks as a result of supplying equipment and services to the U.S.

government directly and as a subcontractor, which could lead to a reduction in our net sales from, or the profitability of our supply arrangements with, the U.S.

Companies engaged in supplying defense-related equipment and services to U.S.

government agencies are subject to business risks specific to the defense industry.

We currently do, and may in the future, contract directly with the U.S.

government or act as a subcontractor

to customers contracting with the U.S.

government or act as a subcontractor to customers contracting with the U.S.

Accordingly, the U.S.

government may unilaterally suspend or prohibit us from

receiving new contracts pending resolution of alleged violations of procurement laws or regulations, revoke required security

clearance, reduce the value of existing contracts, or audit our contract related costs and fees.

addition, because we contract directly with the U.S.

government may unilaterally suspend or prohibit us from receiving new contracts pending resolution of alleged violations of procurement laws or regulations, revoke required security clearance, reduce the value of existing contracts, or audit our contract related costs and fees.

In addition, because we contract directly with the U.S.

government or act as a subcontractor to customers contracting with the U.S.

government, we may be subject to U.S.

government inquiries and investigations, including periodic audits of costs that we determine

are reimbursable under government contracts.

government agencies routinely audit government contractors to review performance

under contracts, cost structure and compliance with applicable laws, regulations, and standards, as well as the adequacy of and

compliance with internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation

and management information systems.

Any costs found to be misclassified or inaccurately allocated to a specific contract are not

reimbursable, and to the extent already reimbursed, must be refunded.

Also, any inadequacies in our systems and policies could

result in payments being withheld, penalties and reduced future business, and may adversely affect our results of operations and

financial condition.

business could be negatively affected by cyber or other security threats or other disruptions.

business depends heavily on information technology and computerized systems to communicate and operate effectively.

and technologies, or those of third parties on which we rely, could fail or become unreliable due to equipment failures, software

viruses, cyber threats, ransomware attacks, terrorist acts, natural disasters, power failures or other causes.

security threats are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to

our sensitive information, business e-mail compromises, ransomware attacks, and other electronic security breaches, including

at our customers, suppliers, subcontractors, and joint venture partners, that could lead to disruptions in mission critical systems,

unauthorized release of confidential or otherwise protected information, and corruption of data.

procedures and controls we utilize to monitor and mitigate these threats may not be sufficient to prevent security threats from

materializing.

If any of these events were to materialize, the costs related to cyber or other security threats or disruptions

may not be fully insured or indemnified, and may adversely affect our results of operations and financial condition.

expenditures incurred in implementing and maintaining cyber security and other procedures and controls may adversely affect our

results of operations and financial condition.

must comply with extensive environmental requirements, and any exposure to environmental liabilities may adversely affect us.

with federal, state, and local requirements relating to the discharge and emission of substances into the environment, the disposal

of hazardous wastes, the remediation and abatement of contaminants, and other activities affecting the environment, have had and

may continue to have an impact on our operations.

Certain of our facilities, including facilities acquired and operated by us

or one of our subsidiaries, have at one time or another been under active investigation for environmental contamination by federal

or state agencies.

We cannot assess the possible effect of compliance with future environmental requirements, or of future environmental

claims for which we may not have adequate indemnification or insurance coverage.

If we were required to pay the expenses related

to any future environmental claims for which neither indemnification nor insurance coverage were available, these expenses may

adversely affect our results of operations and financial condition.

regulatory developments in the United States and abroad concerning environmental issues such as climate change could adversely

affect our operations, and increase operating costs, and through their impact on our customers reduce demand for our products

and services.

government inquiries and investigations, including periodic audits of costs that we determine are reimbursable under government contracts.

government agencies routinely audit government contractors to review performance under contracts, cost structure and compliance with applicable laws, regulations, and standards, as well as the adequacy of and compliance with internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems.

Any costs found to be misclassified or inaccurately allocated to a specific contract are not reimbursable, and, to the extent already reimbursed, must be refunded.

Also, any inadequacies in our systems and policies could result in payments being withheld, penalties and reduced future business, and may adversely affect our results of operations and financial condition.

Our business could be negatively affected by cyber or other security threats or other disruptions.

Our business depends heavily on information technology and computerized systems to communicate and operate effectively.

Our systems and technologies, or those of third parties on which we rely, could fail or become unreliable due to equipment failures, software viruses, cyber threats, ransomware attacks, terrorist acts, natural disasters, power failures or other causes.

Cyber security threats are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to our sensitive information, business e-mail compromises, ransomware attacks, and other electronic security breaches, including at our customers, suppliers, subcontractors, and joint venture partners, that could lead to disruptions in mission critical systems, unauthorized release of confidential or otherwise protected information, and corruption of data.

As a result of the ongoing COVID-19 pandemic, certain functional areas of our workforce may function in a remote work environment, which could heighten the risk of these potential vulnerabilities.

The procedures and controls we utilize to monitor and mitigate these threats may not be sufficient to prevent security threats from materializing.

If any of these events were to materialize, the costs related to cyber or other security threats or disruptions may not be fully insured or indemnified, and may adversely affect our results of operations and financial condition or disruption of our ability to make financial reports and other public disclosures required of public companies.

Moreover, expenditures incurred in implementing and maintaining cyber security and other procedures and controls may adversely affect our results of operations and financial condition.

We may need to make significant capital expenditures to keep pace with technological developments in our industry.

The industries in which we participate are constantly undergoing development and change, and it is likely that new products, equipment, and MRO methods will be introduced in the future.

We may need to make significant expenditures to purchase new equipment, and to train our employees to keep pace with any new technological developments.

These expenditures may adversely affect our results of operations and financial condition.

We do not own certain intellectual property and tooling that is important to our business.

In our MRO business, OEMs of equipment that we maintain for our customers include language in repair manuals relating to their equipment asserting broad claims of proprietary rights to the contents of the manuals used in our operations.

Although we believe that our use of manufacture and repair manuals is lawful, there can be no assurance that OEMs will not try to enforce such claims, including through the possible use of legal proceedings, or that any such actions will be unsuccessful.

Our business also depends on using certain intellectual property and tooling that we have rights to use pursuant to license grants under our contracts with OEM customers.

These contracts contain restrictions on our use of the intellectual property and tooling, and may be terminated if we violate certain of these restrictions.

Our loss of a contract with an OEM customer and the related license rights to use an OEM’s intellectual property or tooling, may adversely affect our results of operations and financial condition.

Our operations depend on our facilities, which are subject to physical and other risks that could disrupt production.

Our facilities or our customers’ facilities could be damaged or disrupted by a natural disaster, war, or terrorist activity.

A major catastrophe, such as an earthquake, hurricane, fire, flood, tornado, pandemic, or other natural disaster at any of our sites, or war or terrorist activities in any of the areas where we conduct operations, could result in a prolonged interruption of our business.

Any disruption resulting from these events could cause significant delays in shipments of products, and the loss of sales and customers, and we may not have insurance to adequately compensate us for any of these events.

For leased facilities, timely renewal of leases, and risk mitigation from the sale of our leased facilities, is required to avoid any business interruption.

Our reputation, ability to do business and financial position, results of operations and/or cash flows may be impacted by the improper conduct of employees, agents, subcontractors, suppliers, business partners or joint ventures in which we participate.

We have implemented policies, procedures, training and other compliance controls, and have negotiated terms designed to prevent misconduct by employees, agents or others working on our behalf or with us that would violate the applicable laws of the jurisdictions in which we operate, including laws governing improper payments to government officials, the protection of export controlled products and services, cost accounting and billing, competition and data privacy.

However, we cannot ensure that it will prevent all such misconduct committed by our employees, agents, subcontractors, suppliers, business partners or others working on our behalf or with us, and this risk of improper conduct may increase as we expand globally.

In the ordinary course of business we may form and/or become a member of joint ventures.

We may be unable to prevent misconduct or other violations of applicable laws by these joint ventures (including their officers, directors and employees) or our partners.

Improper actions by those with whom or through whom we do business (including our employees, agents, subcontractors, suppliers, business partners and joint ventures) could subject us to administrative, civil or criminal investigations and monetary and non-monetary penalties, including suspension and debarment, which may adversely affect our results of operations and financial condition.

We are subject to certain limitations on employee compensation, payment of dividends and stock buy backs pursuant to the CARES Act.

In connection with the financial assistance we have received and may in the future receive through the Payroll Support Program, and loan program under the CARES Act pursuant to the CARES Act, we are subject to certain limitations, including:

(i) limitations on the payment of certain employee compensation through April 1, 2023, (ii) prohibitions on paying dividends to our stockholders through September 30, 2022;

accordingly no dividend has been paid or will be paid by the Company, and (iii) limitations on the Company or its affiliates from purchasing an equity security that is listed on a national securities exchange of the Company or any parent company through September 30, 2022 .

These restrictions will materially affect our operations, and we may not be successful in managing these impacts for the duration of the restrictions.

In particular, limitations on compensation may adversely impact our ability to attract and retain senior management, or attract other key employees during this critical time.

Our business might suffer if we were to lose the services of certain key employees.

Our business operations depend upon our key employees, including our executive officers.

Because our key employees have knowledge of our industry and customers, and would be difficult to replace, loss of any of these employees may adversely affect our results of operations and financial condition.

We could become involved in intellectual property litigation, which could have a material and adverse impact on our profitability.

We and other companies in our industry possess certain proprietary rights relating to designs, engineering, manufacturing processes and MRO procedures.

In the event that we believe that a third party is infringing upon our proprietary rights, we may bring an action to enforce such rights.

In addition, third parties may claim infringement by us with respect to their proprietary rights and may initiate legal proceedings against us in the future.

The expense and time of bringing an action to enforce such rights or defending against infringement claims can be significant, which may adversely affect our results of operations and financial condition.

Intellectual property litigation involves complex legal and factual questions which makes the outcome of any such proceedings subject to considerable uncertainty.

Not only can such litigation divert management’s attention, but it can also expose us to damages and potential injunctive relief which, if granted, may preclude us from making, using or selling particular products or technology.

Uncertainties resulting from our participation in intellectual property litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

There could also be public announcements of the results of hearings, motions or interim proceedings or developments that could be perceived negatively by analysts or investors and the value of such intellectual property could be diminished.

Accordingly, the market price of our common stock may decline.

Uncertainties resulting from the initiation and continuation of

intellectual property litigation or other proceedings could have a material adverse effect of our business, financial condition and results of operation.

If our subcontractors or suppliers fail to perform their contractual obligations, our contract profitability and our ability to win new contracts may be adversely affected.

We rely on subcontractors to perform a portion of the services we agree to provide our customers, and our suppliers provide necessary labor, inventory and component parts.

A failure by one or more of our subcontractors or suppliers to satisfactorily provide on a timely basis the agreed-upon services or supplies may affect our ability to perform our contractual obligations.

Deficiencies in the performance of our subcontractors and/or suppliers could result in liquidated damages or our customer terminating our contract for default.

A termination for default could expose us to liability and adversely affect our financial performance and our ability to win new contract awards.

Strategic and Financial Risks

We are dependent upon continued availability of financing to manage our business and to execute our business strategy, and additional financing may not be available on terms acceptable to us.

Our ability to manage our business and to execute our business strategy is dependent, in part, on the continued availability of debt and equity capital.

Access to the debt and equity capital markets may be limited by various factors, including the condition of overall credit markets, general economic factors, state of the aviation industry, our financial performance, and credit ratings.

Debt and equity capital may not continue to be available to us on favorable terms, or at all.

Our inability to obtain financing on favorable terms may adversely affect our results of operations and financial condition.

Our existing debt includes restrictive and financial covenants.

Certain current financing arrangements require us to comply with various restrictive covenants, and in certain cases contain financial covenants that require us to comply with specified financial ratios and tests.

Our failure to meet these covenants could result in default under these loan and debt agreements, and may result in a cross-default under other debt agreements.

In the event of a default and our inability to obtain a waiver of the default, all amounts outstanding under our debt agreements could be declared immediately due and payable.

Our failure to comply with these covenants may adversely affect our results of operations and financial condition.

In addition, our receipt of funds under the CARES Act requires us to comply with certain covenants.

If we do not comply with these covenants, the government may require us to repay the support given to us.

Restrictive covenants in the documents governing our existing and any future indebtedness may limit our current and future operations, particularly our ability to respond to changes in our business or to pursue our business strategies.

The documents governing our existing indebtedness contain, and the documents governing any future indebtedness will likely contain, a number of restrictive covenants that impose significant operating and financial restrictions, including restrictions on our ability to take actions that we believe may be in our interest.

The documents governing our existing indebtedness, among other things, limit our ability to:

● incur or guarantee additional indebtedness;

● make certain restricted payments or investments;

● enter into agreements that restrict distributions from restricted subsidiaries;

● sell or otherwise dispose of assets, including capital stock of restricted subsidiaries;

● enter into transactions with affiliates;

● create or incur liens;

● enter into sale/leaseback transactions;

● merge, consolidate or sell substantially all of our assets;

● make certain investments and acquire certain assets.

The restrictions could adversely affect our ability to:

● finance our operations;

● make strategic acquisitions or investments or enter into alliances;

● withstand a future downturn in our business or the economy in general;

● engage in business activities, including future opportunities, that may be in our interest;

● plan for or react to market conditions or otherwise execute our business strategies.

Our ability to obtain future financing or to sell assets could be adversely affected because substantially all of our assets have been pledged as collateral for the benefit of the holders of our indebtedness.

Unanticipated changes in our tax provision or exposure to additional income tax liabilities could affect our profitability.

Significant judgment is required in determining our provision for income taxes.

In the ordinary course of our business, there are transactions and calculations where the ultimate tax determination is uncertain.

Furthermore, changes in income tax laws and regulations, or their interpretation, could result in higher or lower income tax rates assessed or changes in the taxability of certain sales or the deductibility of certain expenses, thereby affecting our income tax expense and profitability.

Further consolidation in the aerospace industry could adversely affect our business and financial results.

The aerospace and defense industry is experiencing significant consolidation, including our customers, competitors and suppliers.

Consolidation among our customers may result in delays in the awarding of new contracts and losses of existing business.

Consolidation among our competitors may result in larger competitors with greater resources and market share, which could adversely affect our ability to compete successfully.

Consolidation among our suppliers may result in fewer sources of supply and increased cost to us.

Our financial results of operations could be adversely affected by impairment of our goodwill or other intangible assets.

When we acquire a business, we record goodwill equal to the excess of the amount we pay for the business, including liabilities assumed, over the fair value of the tangible and identifiable intangible assets of the business we acquire.

Goodwill and other intangible assets that have indefinite useful lives must be evaluated at least annually for impairment.

The specific guidance for testing goodwill and other non-amortized intangible assets for impairment requires management to make certain estimates and assumptions when allocating goodwill to reporting units and determining the fair value of reporting unit net assets and liabilities, including, among other things, an assessment of market conditions, projected cash flows, investment rates, cost of capital and growth rates, which could significantly impact the reported value of goodwill

and other intangible assets.

Changes in our estimates and assumptions could adversely impact projected cash flows and the fair value of reporting units.

Fair value is generally determined using a combination of the discounted cash flow, market multiple and market capitalization valuation approaches.

Absent any impairment indicators, we generally perform our evaluations annually using available forecast information.

If at any time we determine an impairment has occurred, we are required to reflect the reduction in value as an expense within operating income, resulting in a reduction of earnings and a corresponding reduction in our net asset value in the period such impairment is identified.

As part of management's annual evaluation, the quantitative analysis resulted in a conclusion that the fair value of our reporting units exceeded their carrying values;

therefore, goodwill and other indefinite lived intangibles were not impaired.

In the event there are deteriorations in business conditions or estimated cash flows beyond amounts previously or currently forecasted, there is a risk of future impairments on our goodwill balance.

Our exposure to variable interest rates, foreign currency exchange rates and swap counter party credit risk could materially and adversely affect our business, operating results and financial condition.

We are exposed to various types of market risk in the normal course of business, including the impact of interest rate changes and foreign currency exchange rate fluctuations.

Some of our indebtedness bears interest at variable rates, generally linked to market benchmarks such as LIBOR.

Any increase in interest rates would increase our finance expenses relating to our variable rate indebtedness and increase the costs of refinancing our existing indebtedness and issuing new debt.

In addition, in July 2017, the U.K.’s Financial Conduct Authority (“FCA”), which regulates LIBOR, announced its intent to phase out LIBOR by the end of 2021.

On March 5, 2021, the FCA announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative:

(a) immediately after December 31, 2021, in the case of the one-week and two-month U.S.

dollar settings;

and (b) immediately after June 30, 2023, in the case of the remaining U.S.

dollar settings.

The United States Federal Reserve has also advised banks to cease entering into new contracts that use USD LIBOR as a reference rate.

The Alternative Reference Rate Committee, a committee convened by the Federal Reserve that includes major market participants, has identified the Secured Overnight Financing Rate, or SOFR, a new index calculated by short-term repurchase agreements, backed by Treasury securities, as its preferred alternative rate for LIBOR.

At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates as the transition away from the LIBOR benchmarks is anticipated in coming years.

Accordingly, the outcome of these reforms is uncertain, and any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR’s phaseout could cause LIBOR to perform differently than in the past or cause LIBOR to cease to exist.

The consequences of these developments cannot be entirely predicted, but could cause potential increases in interest rates on our floating debt rate.

These uncertainties or their resolution also could negatively impact our funding costs, loan and other asset values, asset-liability management strategies and other aspects of our business and financial results.

Legal and Regulatory Risks

We are subject to significant government regulation and may need to incur significant expenses to comply with new or more stringent governmental regulation.

The aviation industry is highly regulated in the United States by the FAA and equivalent regulatory agencies in other countries.

Prior to being placed into service the products and services that we provide for aircraft, engines and their components are required to meet certain standards of airworthiness established by the FAA or the equivalent regulatory agencies in certain other countries.

We also operate repair stations that are licensed by the FAA and the equivalent regulatory agencies in certain other countries.

Specific regulations vary from country to country;

although regulatory requirements in other countries are generally satisfied by compliance with FAA requirements.

New and more stringent governmental regulations may be adopted in the future that, if enacted, may adversely impact our financial condition or results of operations.

Any revocation or suspension of our material licenses, certificates, authorizations, or approvals by the FAA or equivalent regulatory agencies in other countries, may adversely impact our financial condition or results of operations.

Users of Flight Equipment are regulated by general civil aviation authorities, including the FAA in the United States and similar governmental authorities in other countries, which regulate the maintenance of engines and issue

airworthiness directives.

Airworthiness directives typically set forth special maintenance actions or modifications with respect to certain engine and aircraft types or series of specific engines that must be implemented for the engine or aircraft to remain in service.

Also, airworthiness directives may require the lessee to make more frequent inspections of an engine, aircraft or particular engine parts.

Generally, the lessee of our Flight Equipment is responsible for complying with all airworthiness directives.

However, if the Flight Equipment is off-lease and in certain circumstances, if dictated by the terms of a Flight Equipment lease, we may be forced to bear the cost of compliance with such airworthiness directives.

A number of our leases require specific governmental or regulatory licenses, consents or approvals.

These include consents for certain payments under the leases and for the export, import or re-export of our Flight Equipment.

Consents needed in connection with future leasing or sale of our Flight Equipment may not be received timely or have economically feasible terms.

Any of these events could adversely affect our ability to lease or sell Flight Equipment, which, in turn, may adversely impact our financial condition or results of operations.

Department of Commerce (the “Commerce Department”) regulates exports of goods outside the United States.

We are subject to the Commerce Department’s and the U.S.

Department of State’s regulations with respect to the lease and sale of aircraft, engines, engine parts and components, and airframes and accessory parts and components to foreign entities.

The Commerce Department and the U.S.

Department of State may, in certain cases, require us to obtain export licenses for certain items exported to foreign countries.

Department of Homeland Security, through the U.S.

Customs and Border Protection, enforces regulations related to the import of aircraft, engines, engine parts and components, and airframe and accessory parts and components into the United States.

We must expend resources to comply with these regulations and our failure to comply with these regulations may subject us to regulatory actions, which may adversely impact our financial condition or results of operations.

We are prohibited from doing business with persons designated by the U.S.

Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) on its “Specially Designated Nationals List,” and must monitor our operations and existing and potential lessees and other counterparties for compliance with OFAC’s rules.

Similarly, sanctions issued by the United Nations, the United States government, the European Union or other governments could prohibit or restrict us from doing business in certain countries, or with certain customers or persons, and we must monitor our operations and existing and potential customers and other counterparties for compliance with such sanctions.

We are also subject to a variety of other regulations including work-related and community safety laws.

The Occupational Safety and Health Act of 1970 mandates general requirements for safe workplaces for all employees, and established the Occupational Safety and Health Administration (“OSHA”) in the Department of Labor.

In particular, OSHA provides special procedures and measures for the handling of certain hazardous and toxic substances.

In addition, specific safety standards have been promulgated for workplaces engaged in the treatment, disposal or storage of hazardous waste.

Requirements under state law, in certain circumstances, may mandate additional measures for facilities handling materials specified as extremely dangerous.

We believe that our operations are in material compliance with OSHA’s health and safety requirements.

We are subject to the U.S.

Foreign Corrupt Practices Act and other anti-corruption laws, as well as export control laws, import and customs laws, trade and economic sanctions laws and other laws governing our operations.

We are subject to the U.S.

Foreign Corrupt Practices Act and other anti-corruption laws, as well as export control laws, import and customs laws, trade and economic sanctions laws and other laws governing our operations.

Our operations are subject to anti-corruption laws including the U.S.

Foreign Corrupt Practices Act of 1977, as amended the (“FCPA”), the U.S.

domestic bribery statute contained in 18 U.S.C.

§201, the United Kingdom Bribery Act 2010, the U.S.

Travel Act, and other anti-corruption laws that apply in countries where we do business.

The FCPA and these other laws generally prohibit us and our employees and intermediaries from authorizing, promising, offering, or providing, directly or indirectly, improper or prohibited payments, or anything else of value, to government officials or other persons to obtain or retain business or gain some other business advantage.

We and certain of our customers operate in a number of jurisdictions that pose a high risk of potential FCPA violations, and we participate in collaborations and relationships with third parties whose corrupt or illegal activities could potentially subject us to liability under the FCPA

or local anti-corruption laws, even if we do not explicitly authorize or have actual knowledge of such activities.

In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted.

We are also subject to other laws and regulations governing our international operations, including regulations administered by the governments of the United States and authorities in the European Union, including applicable export control regulations, economic sanctions and embargoes on certain countries and persons, anti-money laundering laws, import and customs requirements and currency exchange regulations, collectively referred to as the Trade Control laws.

There is no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption laws, including the FCPA or other legal requirements, including Trade Control laws.

If we are not in compliance with the FCPA and other anticorruption laws or Trade Control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity.

Likewise, any investigation of any potential violations of the FCPA, other anti-corruption laws or Trade Control laws by the United States or other authorities could also have an adverse impact on our reputation, our business, financial condition and results of operations.

Efforts to ensure that our business arrangements with third parties will comply with applicable aviation and aerospace laws and regulations will involve substantial costs.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities or our business arrangements with third parties could be subject to challenge under one or more of such laws.

It is possible that governmental authorities will conclude that our business practices or the business practices of our customers who generate our revenues may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse .

If our operations or the operations of our customers who generate our royalties are found to be in violation of any of these laws or any other governmental regulations, we or the customers who generate our revenues may be subject to significant criminal, civil and administrative sanctions, including monetary penalties, damages, fines, disgorgement, and imprisonment.

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

Our business and financial results may be affected by various litigation and regulatory proceedings.

We are subject to litigation and regulatory proceedings in the normal course of business and could become subject to additional claims in the future.

These proceedings have included, and in the future may include, matters involving personnel and employment issues, workers’ compensation, personal and property injury, disputes relating to acquisitions (including contingent consideration), governmental investigations and other proceedings.

Some historical and current legal proceedings and future legal proceedings may purport to be brought as class actions on behalf of similarly situated parties including with respect to employment-related matters.

We discuss legal proceedings in the “Commitments, Contingencies and Uncertainties” footnote to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Some or all of our expenditures to defend, settle or litigate these matters may not be covered by insurance or could impact our cost and ability to obtain insurance in the future.

Litigation can be expensive, lengthy and disruptive to normal business operations, including to our management due to the increased time and resources required to respond to and address the litigation.

The results of complex legal proceedings are often uncertain and difficult to predict.

We cannot be certain of the ultimate outcomes of any such claims, and resolution of these types of matters, against us may result in significant fines, judgments or settlements, which, if uninsured, or if the fines, judgments and settlements exceed insured levels, could have a material adverse effect on our business, financial condition, liquidity or results of operations.

Liens on our Flight Equipment could exceed the value of such Flight Equipment, which could negatively affect our ability to repossess, lease or sell such Flight Equipment.

Liens in favor of third parties may be attached to Flight Equipment we own, and in certain cases our engines may also be installed on airframes to which liens in favor of third-parties unrelated to the engines have been attached.

These liens may secure substantial sums that may in certain circumstances exceed the value of the particular Flight Equipment to which the liens have attached.

In certain jurisdictions, a lien may give the lien holder the right to detain, in limited cases, sell or cause the forfeiture of the Flight Equipment subject to the lien.

Liens held by third parties may have priority over our and our creditors’ interest in respective AerSale Flight Equipment, either because the third-party liens have priority under applicable local law, or because our creditors’ security interests are not filed in jurisdictions outside the United States.

These liens and lien holders could impair our ability to repossess and re-lease, or sell our Flight Equipment.

customers do not discharge these liens, we may find it necessary to pay the claims secured by such liens to repossess the Flight Equipment subject to such third-party liens.

In certain countries, an engine affixed to an aircraft may become an accession to the aircraft and we may not be able to exercise our ownership rights over the engine.

In certain jurisdictions, a leased engine affixed to an aircraft may become an accession to the aircraft, such that the ownership rights of the owner of the aircraft supersede the ownership rights of the owner of the engine.

If an aircraft is security for the owner’s obligations to a third-party, the security interest in the aircraft may supersede our rights as owner of the engine.

This legal principle could limit our ability to repossess a leased engine in the event of a lessee’s bankruptcy or lease default while the aircraft with the engine installed remains in such a jurisdiction.

We may suffer a loss if we are not able to repossess engines leased to lessees in these jurisdictions.

Our industry is susceptible to product and other liability claims, and claims not adequately covered by insurance may adversely affect our results of operations and financial condition.

Our business exposes us to possible claims for property damage and bodily injury or death, which may result if an aircraft, engine, engine part or component, airframe part or accessory, or any other aviation product that we have sold, manufactured, or repaired fails, or if Flight Equipment we serviced or leased, or in which our products are installed, has an accident.

We carry substantial liability insurance in amounts that we believe are adequate for our risk exposure, and commensurate with industry norms.

However, claims may arise in the future, and our insurance coverage may not be adequate to protect us in all circumstances.

Additionally, we might not be able to maintain adequate insurance coverage in the future at an acceptable cost.

Any liability claim not covered by adequate insurance may adversely affect our results of operations and financial condition.

We must comply with extensive environmental requirements, and any exposure to environmental liabilities may adversely affect us.

Compliance with federal, state, and local requirements relating to the discharge and emission of substances into the environment, the disposal of hazardous wastes, the remediation and abatement of contaminants, and other activities affecting the environment, have had and may continue to have an impact on our operations.

Certain of our facilities, including facilities acquired and operated by us or one of our subsidiaries, have at one time or another been under active investigation for environmental contamination by federal or state agencies.

Under specific environmental laws and regulations, we could be held responsible for all of the costs relating to any contamination at our past or present facilities and at third party waste disposal sites.

If we fail to comply with applicable environmental laws and regulations, we could be subject to substantial fines or penalties and to civil and criminal liability.

We cannot assess the possible effect of compliance with future environmental requirements, or of future environmental claims for which we may not have adequate indemnification or insurance coverage.

If we were required to pay the expenses related to any future environmental claims for which neither indemnification nor insurance coverage were available, these costs and expenses may adversely affect our results of operations and financial condition.

Future regulatory developments in the United States and abroad concerning environmental issues such as climate change could adversely affect our operations, and increase operating costs.

Additionally, through their impact on our customers, such regulations could reduce demand for our products and services.

Actions may be taken in the future by the U.S.

government, state governments within the United States, foreign governments,

or the International Civil Aviation Organization to regulate the emission of greenhouse gases by the aviation industry.

nature of any such requirements and their applicability to us and our customers are difficult to predict, but the impact to us

and the aviation industry, including the potential for increased fuel costs, carbon taxes or fees, or a requirement to purchase

carbon credits, may adversely affect our results of operations and financial condition.

may need to make significant capital expenditures to keep pace with technological developments in our industry.

industries in which we participate are constantly undergoing development and change, and it is likely that new products, equipment,

and MRO methods will be introduced in the future.

We may need to make significant expenditures to purchase new equipment, and

to train our employees to keep pace with any new technological developments.

These expenditures may adversely affect our results

of operations and financial condition.

do not own certain intellectual property and tooling that is important to our business.

our MRO business, OEMs of equipment that we maintain for our customers include language in repair manuals relating to their equipment

asserting broad claims of proprietary rights to the contents of the manuals used in our operations.

Although we believe that our

use of manufacture and repair manuals is lawful, there can be no assurance that OEMs will not try to enforce such claims, including

through the possible use of legal proceedings, or that any such actions will be unsuccessful.

business also depends on using certain intellectual property and tooling that we have rights to use pursuant to license grants

under our contracts with OEM customers.

These contracts contain restrictions on our use of the intellectual property and tooling,

and may be terminated if we violate certain of these restrictions.

Our loss of a contract with an OEM customer and the related

license rights to use an OEM’s intellectual property or tooling, may adversely affect our results of operations and financial

operations depend on our facilities, which are subject to physical and other risks that could disrupt production.

facilities or our customers’

facilities could be damaged or disrupted by a natural disaster, war, or terrorist activity.

A major catastrophe, such as an earthquake, hurricane, fire, flood, tornado, pandemic, or other natural disaster at any of our

sites, or war or terrorist activities in any of the areas where we conduct operations, could result in a prolonged interruption

of our business.

Any disruption resulting from these events could cause significant delays in shipments of products, and the loss

of sales and customers, and we may not have insurance to adequately compensate us for any of these events.

For leased facilities,

timely renewal of leases, and risk mitigation from the sale of our leased facilities, is required to avoid any business interruption.

reputation, ability to do business and financial position, results of operations and/or cash flows may be impacted by the improper

conduct of employees, agents, subcontractors, suppliers, business partners or joint ventures in which we participate.

have implemented policies, procedures, training and other compliance controls, and have negotiated terms designed to prevent misconduct

by employees, agents or others working on our behalf or with us that would violate the applicable laws of the jurisdictions in

which we operate, including laws governing improper payments to government officials, the protection of export controlled products

and services, cost accounting and billing, competition and data privacy.

However, we cannot ensure that it will prevent all such

misconduct committed by our employees, agents, subcontractors, suppliers, business partners or others working on our behalf or

with us, and this risk of improper conduct may increase as we expand globally.

In the ordinary course of business we may form

and/or become a member of joint ventures.

We may be unable to prevent misconduct or other violations of applicable laws by these

joint ventures (including their officers, directors and employees) or our partners.

Improper actions by those with whom or through

whom we do business (including our employees, agents, subcontractors, suppliers, business partners and joint ventures) could subject

us to administrative, civil or criminal investigations and monetary and non-monetary penalties, including suspension and debarment,

which may adversely affect our results of operations and financial condition.

are subject to certain limitations on employee compensation pursuant to the CARES Act.

connection with the financial assistance we have received and may in the future receive through the Payroll Support Program, and

loan program under the CARES Act pursuant to the CARES Act, we are subject to the limitations on the payment of certain employee

compensation through October 1, 2022.

These restrictions will materially affect our operations, and we may not be successful

in managing these impacts for the duration of the restrictions.

In particular, limitations on compensation may adversely impact

our ability to attract and retain senior management, or attract other key employees during this critical time.

business might suffer if we were to lose the services of certain key employees.

business operations depend upon our key employees, including our executive officers.

Because our key employees have knowledge

of our industry and customers, and would be difficult to replace, loss of any of these employees may adversely affect our results

of operations and financial condition.

any of our customers were to become insolvent or experience substantial financial difficulties, our business, financial condition

and results of operations may be adversely affected.

any of the customers with whom we do business become insolvent or experiences substantial financial difficulties, we may be unable

to timely collect amounts owed to us by such customers, and may not be able to sell the inventory we have purchased for such customers,

which may adversely affect our results of operations and financial condition.

could become involved in intellectual property litigation, which could have a material and adverse impact on our profitability.

and other companies in our industry possess certain proprietary rights relating to designs, engineering, manufacturing processes

and MRO procedures.

In the event that we believe that a third party is infringing upon our proprietary rights, we may bring an

action to enforce such rights.

In addition, third parties may claim infringement by us with respect to their proprietary rights

and may initiate legal proceedings against us in the future.

The expense and time of bringing an action to enforce such rights

or defending against infringement claims can be significant, which may adversely affect our results of operations and financial

property litigation involves complex legal and factual questions which makes the outcome of any such proceedings subject to considerable

Not only can such litigation divert management’s attention, but it can also expose us to damages and potential

injunctive relief which, if granted, may preclude us from making, using or selling particular products or technology.

and time associated with such litigation may adversely affect our results of operations and financial condition.

government, state governments within the United States, foreign governments, or the International Civil Aviation Organization (“ICAO”) to regulate the emission of greenhouse gases by the aviation industry.

The precise nature of any such requirements and their applicability to us and our customers are difficult to predict, but the impact to us and the aviation industry, including the potential for increased fuel costs, carbon taxes or fees, or a requirement to purchase carbon credits, may adversely affect our results of operations and financial condition.

We may be adversely affected by global climate change, or by legal, regulatory or market responses to such change

Increasing stakeholder environmental, social and governance (ESG) expectations, physical and transition risks associated with climate change, and emerging ESG regulation and policy requirements may pose risk to our market outlook, financial outlook, cost of capital and global supply chain, which may impact our ability to achieve long-term business objectives.

Changes in environmental and climate change laws or regulations could lead to additional operational restrictions and compliance requirements upon us, our products and/or services, or otherwise could negatively impact our business.

The cost to comply with new and potential environmental laws and regulations could be substantial for the Company.

In October 2016, the International Civil Aviation Organization (“ICAO”) passed a resolution adopting the Carbon Offsetting and Reduction Scheme for International Aviation ("CORSIA"), which is a global, market-based emissions offset program to encourage carbon-neutral growth beyond 2020.

CORISA is scheduled to be implemented through multiple phases beginning in 2021.

ICAO continues to develop details regarding implementation, but we believe compliance with CORSIA will increase operating costs for us and our customers.

Risk Factors Related to our Common Stock

An active, liquid trading market

for our common stock may not continue.

is possible that an active trading market for our common stock may not be sustained.

If an active and liquid trading market does

not continue, our stockholders may have difficulty selling any of our common stock.

Among other things, in the absence of a liquid

public trading market:

you may not be able

to liquidate your investment in shares of common stock;

may not be able to resell your shares of common stock at or above the price attributed to them in the business combination;

the market price of

shares of common stock may experience significant price volatility;

there may be less efficiency

in carrying out your purchase and sale orders.

If securities

analysts do not publish research or reports about our business or if they publish negative evaluations of our common stock, the

price of our common stock could decline.

trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish

about us or our business.

Our share price may be volatile, and an active, liquid trading market for our common stock may not continue.

There can be no assurance that the market price of our common stock will not decline below its present market price.

Additionally, an active trading market for our common stock may not be sustained.

If an active and liquid trading market does not continue, our stockholders may have difficulty selling any of our common stock.

Among other things, in the absence of a liquid public trading market:

● you may not be able to liquidate your investment in shares of common stock;

● you may not be able to resell your shares of common stock at or above the price attributed to them in the Business Combination;

● the market price of shares of common stock may experience significant price volatility;

● there may be less efficiency in carrying out your purchase and sale orders.

If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our common stock, the price of our common stock could decline.

The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business.

If no or few analysts commence coverage of us, the trading price of our stock could be negatively affected.

Even if we do obtain analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our

stock, the price of our common stock could decline.

If one or more of these analysts cease to cover our common stock, we could

lose visibility in the market for our stock, which in turn could cause our common stock price to decline.

future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.

of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could adversely

affect the price of our common stock and could impair our ability to raise capital through the sale of additional shares.

shares of our common stock are freely tradable without restriction under the Securities Act, except for any shares of our common

stock that may be held or acquired by our directors, executive officers, and other affiliates, as that term is defined in the

Securities Act, which are be restricted securities under the Securities Act.

Restricted securities may not be sold in the public

market unless the sale is registered under the Securities Act or an exemption from registration is available.

Certain of our stockholders

and members of our management have rights, subject to certain conditions, to require us to file registration statements covering

shares of our common stock or to include shares in registration statements that we may file for ourselves or other stockholders.

Any such sales, including sales of a substantial number of shares or the perception in the market that the holders of a large

number of shares intend to sell shares, could reduce the market price of our common stock.

We may also issue shares of our common

stock or securities convertible into our common stock from time to time in connection with financings, acquisitions, investments,

or otherwise.

Any such issuance could result in ownership dilution to you as a stockholder and cause the trading price of our

common stock to decline.

Even if we do obtain analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our common stock could decline.

If one or more of these analysts cease to cover our common stock, we could lose visibility in the market for our stock, which in turn could cause our common stock price to decline.

Substantial future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.

Sales of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional shares.

Certain shares of our common stock are freely tradable without restriction under the Securities Act, except for any shares of our common stock that may be held or acquired by our directors, executive officers, and other affiliates, as that term is defined in the Securities Act, which are be restricted securities under the Securities Act.

Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from

registration is available.

Certain of our stockholders and members of our management have rights, subject to certain conditions, to require us to file registration statements covering shares of our common stock or to include shares in registration statements that we may file for ourselves or other stockholders.

Any such sales, including sales of a substantial number of shares or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.

We may also issue shares of our common stock or securities convertible into our common stock from time to time in connection with financings, acquisitions, investments, or otherwise.

Any such issuance could result in ownership dilution to you as a stockholder and cause the trading price of our common stock to decline.

We do not intend to pay dividends on our Common Stock in the foreseeable future.

We do not anticipate that we will pay any dividends on shares of our Common Stock in the foreseeable future.

We intend to retain any future earnings to fund operations, to service debt and other obligations, and to use for other corporate needs.

Further, our credit facilities and the CARES Act limit our ability to pay cash dividends.

As an “emerging growth company,” we cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our common stock less attractive to investors.

For as long as we remain an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), we take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”, including not being required to obtain an assessment of the effectiveness of our internal controls over financial reporting from our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, which we have elected to do.

We will remain an “emerging growth company” until the earlier of (1) the earliest of the last day of the fiscal year (a) following February 11, 2024, the fifth anniversary of us becoming a publicly-traded company, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our prior second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions.

If some investors find our common stock less attractive as a result, there may be a less active market for our common stock, our share price may be more volatile and the price at which our securities trade could be less than if we did not use these exemptions.

General Risk Factors

Our management has limited experience in operating

a public company.

executive officers have limited experience in the management of a publicly traded company.

Our management team may not successfully

or effectively manage our transition to a public company that will be subject to significant regulatory oversight and reporting

obligations under federal securities laws.

Their limited experience in dealing with the increasingly complex laws pertaining to

public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted

to these activities which will result in less time being devoted to our management and our growth.

We may not have adequate personnel

with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over

financial reporting required of public companies in the United States.

The development and implementation of the standards and

controls necessary for us to achieve the level of accounting standards required of a public company in the United States may require

costs greater than expected.

It is possible that we will be required to expand our employee base and hire additional employees

to support our operations as a public company which will increase our operating costs in future periods.

We will incur increased costs as

a result of becoming a public company.

a public company, we have incurred and will continue to incur significant legal, accounting, insurance, and other expenses that

we have not incurred as a private company, including costs associated with public company reporting requirements.

incurred and will incur costs associated with the Sarbanes-Oxley Act and related rules implemented by the SEC.

incurred by public companies for reporting and corporate governance purposes generally have been increasing.

We expect these rules and

regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although

we are currently unable to estimate these costs with any degree of certainty.

In estimating these costs, we took into account

expenses related to insurance, legal, accounting, and compliance activities, as well as other expenses not currently incurred.

These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including

director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially

higher costs to obtain the same or similar coverage.

These laws and regulations could also make it more difficult for us to attract

and retain qualified persons to serve on our board of directors, on our board committees, or as our executive officers.

if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines,

sanctions, and other regulatory action and potentially civil litigation.

business and financial results may be affected by various litigation and regulatory proceedings.

are subject to litigation and regulatory proceedings in the normal course of business and could become subject to additional claims

in the future.

These proceedings have included, and in the future may include, matters involving personnel and employment issues,

workers’

compensation, personal and property injury, disputes relating to acquisitions (including contingent consideration),

governmental investigations and other proceedings.

Some historical and current legal proceedings and future legal proceedings

may purport to be brought as class actions on behalf of similarly situated parties including with respect to employment-related

We cannot be certain of the ultimate outcomes of any such claims, and resolution of these types of matters against us

may result in significant fines, judgments or settlements, which, if uninsured, or if the fines, judgments and settlements exceed

insured levels, could adversely affect our business or financial results.

STAFF COMMENTS

As a public company in the United States, we are subject to the Sarbanes-Oxley Act.

We have determined our disclosure controls and procedures and our internal control over financial reporting are effective.

We can provide no assurance that we will, at all times, in the future be able to report that our internal controls over financial reporting are effective.

Companies that file reports with the SEC, including us, are subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”).

Section 404 requires management to establish and maintain a system of internal control over financial reporting.

Annual reports on Form 10-K filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must contain a report from management assessing the effectiveness of our internal control over financial reporting.

Ensuring we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis is a time-consuming effort that needs to be re-evaluated frequently.

Failure on our part to have effective internal financial and accounting controls would cause our financial reporting to be

unreliable, could have a material adverse effect on our business, operating results, and financial condition, and could cause the trading price of our common stock to fall.

Our management has limited experience in operating a public company.

Our executive officers have limited experience in the management of a publicly traded company.

Our management team may not successfully or effectively manage a public company that is subject to significant regulatory oversight and reporting obligations under federal securities laws.

Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to our management and our growth.

We may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United States.

The development and implementation of the standards and controls necessary for us to achieve the level of accounting standards required of a public company in the United States may require costs greater than expected.

It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company which will increase our operating costs in future periods.

If any of our customers were to become insolvent or experience substantial financial difficulties, our business, financial condition and results of operations may be adversely affected.

If any of the customers with whom we do business become insolvent or experience substantial financial difficulties, we may be unable to timely collect amounts owed to us by such customers, and we may not be able to sell the inventory we have purchased for such customers, which may adversely affect our results of operations and financial condition.

Our results of operations and liquidity needs could be materially negatively affected by market fluctuations or an economic downturn.

Our results of operations could be materially negatively affected by economic conditions generally, both in the United States and elsewhere around the world.

Concerns over inflation, energy costs, geopolitical issues, including tensions between Russia and Ukraine and Western countries, the availability and cost of credit, and the U.S.

financial markets have in the past contributed to, and may continue in the future contribute to, increased volatility and diminished expectations for the economy and the markets.

Domestic and international equity markets periodically experience heightened volatility and turmoil.

These events may have an adverse effect on us.

In the event of a market downturn, our results of operations could be adversely affected by those factors in many ways, including making it more difficult for us to raise funds if necessary, and our stock price may decline.

ITEM 1B UNRESOLVED STAFF COMMENTS

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors