What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-03-15 compared with 2021-03-16 · 21 added, 705 removed, 0 unchanged (100% of the section changed)

FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

common stock and warrants are currently listed on the Nasdaq Capital Market under the symbols “ASLE”

and “ASLEW,”

respectively since December 23, 2020.

of February 3, 2021, there were 1,300 holders of record of our common stock and 932 holders of record of our Warrants.

have not paid any cash dividends on the common stock to date.

Any decision to declare and pay dividends in the future will be

made at the discretion of the Board and will depend on, among other things, our results of operations, financial condition, cash

requirements, contractual restrictions and other factors that the Board may deem relevant.

Currently, the terms of the PSP funding

prohibit us from paying stock dividends through March 31, 2022.

Accordingly, we are prohibited from declaring any cash dividends

to holders of the common stock prior to that date.

of Equity Securities by the Issuer or Affiliated Purchasers

Sales of Unregistered Securities

February 7, 2019, Monocle consummated its initial public offering (the “Monocle IPO”) of 17,250,000 units, inclusive

of 2,250,000 units sold to the underwriters upon the election to fully exercise their over-allotment option, at a price of $10.00

per unit, generating total gross proceeds of $172.5 million.

Each unit consisted of one share of Monocles’s common stock,

par value $0.0001 per share (“Monocle Common Stock”), and one redeemable warrant of Monocle.

Each warrant entitled

the holder thereof to purchase one share of Monocle Common Stock for $11.50 per share, subject to adjustment.

and Company, LLC and Chardan Capital Markets, LLC acted as the joint book-running managers of the offering.

The securities sold

in the offering were registered under the Securities Act on a registration statement on Form S-1 (File No.

The SEC declared the registration statement effective on February 6, 2019.

Simultaneously

with the consummation of the Monocle IPO and the full over-allotment option, Monocle also consummated a private placement (the

“Monocle Private Placement”) of an aggregate of 717,500 private units to Monocle Partners, LLC and Cowen Investments

II LLC at a price of $10.00 per private unit, generating total proceeds of $7,175,000.

Such securities were issued pursuant to

the exemption from registration contained in Section 4(a)(2) of the Securities Act.

paid a total of $3,450,000 underwriting discounts and commissions and $564,101 for other costs and expenses related to the Monocle

After deducting the underwriting discounts and commissions and the offering expenses, the total net proceeds from the Monocle

IPO, including the full exercise of the underwriters’

over-allotment option, and the Monocle Private Placement were approximately

$175,660,899, of which $174,225,000 was placed in a trust account.

deducting payments to existing shareholders of $165.8 million in connection with their exercise of redemption rights and the payment

of $10.2 million of expenses paid from the trust account, the remainder of the trust account is now held on our balance sheet

to fund our operations and continued growth.

following graph compares the cumulative total stockholder return for (i) our common stock, (ii) the Standard &

Poor’s 500 Stock Index (“S&P 500”) and (iii) the S&P 500 Aerospace & Defense Index (“S&P

Our common stock is shown from February 28, 2019, the first day Monocle’s common stock was traded

following its initial public offering, through December 31, 2020.

For the period between February 28, 2019 through December 22,

2020 the figures relate to Monocle’s common stock, and for the period between December 23, 2020 through December 31,

2020, the figures relate to AerSale Corporation’s common stock.

The graph assumes an initial investment of $100 in Monocle’s

common stock at the market close on February 28, 2019.

This performance graph shall not be deemed "soliciting material"

or to be "filed"

with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities

under that Section, and shall not be deemed to be incorporated by reference into any filing of AerSale Corporation under the Securities

Act or the Exchange Act.

MANAGEMENT’S

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read

the following management’s discussion and analysis together with the financial statements and related notes included elsewhere

in this Annual Report on Form 10-K.

This discussion contains forward-looking statements about AerSale’s business, operations

and industry that involve risks and uncertainties, such as statements regarding AerSale’s plans, objectives, expectations

and intentions.

AerSale’s future results and financial condition may differ materially from those currently anticipated

by AerSale because of the factors described in the sections entitled “Risk Factors”

and “Cautionary Note Regarding

Forward Looking Statements.”

A discussion of the year ended December 31, 2019 compared to the year ended December 31,

2018 is included in our final prospectus filed pursuant to Rule 424(b)(3) (File No.

333-252703), filed with the

SEC on February 10, 2020 under the heading “Management’s Discussion and Analysis of Financial Condition and Results

of Operations.”

Monocle Acquisition

Corporation (“Monocle”) was initially formed on August 20, 2018 for the purpose of effecting a merger, share

exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more

On December 22,

2020, (the “Closing Date”), Monocle consummated the previously announced business combination pursuant to that certain

Amended and Restated Agreement and Plan of Merger, dated September 8, 2020 (the “Merger Agreement”) by and among

Monocle, AerSale Corporation (f/k/a Monocle Holdings Inc.), a Delaware corporation (the “Company”), AerSale Aviation, Inc.

(f/k/a AerSale Corp.), a Delaware corporation (“AerSale Aviation”), Monocle Merger Sub 1 Inc., a Delaware corporation

(“Merger Sub 1”), Monocle Merger Sub 2 LLC, a Delaware limited liability company (“Merger Sub 2”), and

Leonard Green & Partners, L.P., a Delaware limited partnership, solely in its capacity as the initial Holder Representative

(as defined in the Merger Agreement).

The transactions contemplated by the Merger Agreement are referred to herein as the “Merger”

or the “Business Combination”

and in connection therewith, Monocle merged with and into us, whereby we survived the

merger and became the successor issuer to Monocle by operation of Rule 12g-3 under the Exchange Act.

Upon the consummation

of the Merger:

(a) Merger Sub 1 was merged with and into Monocle, with Monocle surviving the merger as a wholly-owned direct

subsidiary of the Company (the “First Merger”), and (b) Merger Sub 2 was merged with and into AerSale Aviation,

with AerSale Aviation surviving the merger as a wholly-owned indirect subsidiary of the Company (the “Second Merger”).

In connection with the closing of the Business Combination (the “Closing”), AerSale Aviation changed its name from

“AerSale Corp.”

to “AerSale Aviation, Inc.”

and the Company changed its name from “Monocle

Holdings Inc.”

to “AerSale Corporation”.

Immediately following the Merger, the Company contributed all of its

ownership in Monocle to AerSale Aviation which will continue as a wholly owned subsidiary of the Company.

AerSale operates as

a platform for serving the commercial aviation aftermarket sector.

AerSale’s top executives have on average over 30 years

of experience in aircraft and engine (“Flight Equipment”) management, sales and maintenance services, and are supported

by an experienced management team.

In 2010, AerSale partnered with private equity firm Leonard Green & Partners, L.P.

to scale our business and finance the creation of a purpose-built and fully integrated aviation company.

AerSale has established

a global footprint focused on providing products and services that maximize the value of Flight Equipment in the middle to end

of its operating life cycle.

We are a worldwide

provider of aftermarket commercial aircraft, engines, and their parts to passenger and cargo airlines, leasing companies, original

equipment manufacturers (“OEM”), government and defense contractors, and maintenance, repair and overhaul (“MRO”)

service providers.

AerSale reports its activities in two business segments:

Asset Management Solutions, comprised of activities

that extract value from strategic asset acquisitions either as whole assets or by disassembling for used serviceable material

(“USM”);

and TechOps, comprised of MRO activities for aircraft and their components, and sales of internally developed

engineered solutions products.

AerSale focuses on

mid-life Flight Equipment and monetizes them through its Asset Management Solutions segment.

Asset Management Solutions’

activities include monetization of assets through the lease or sale of whole assets, or through disassembly activities in support

of AerSale’s USM-related activities.

AerSale’s monetizing services have been developed to maximize returns on mid-life

Flight Equipment throughout their operating life, in conjunction with realizing the highest residual value of Flight Equipment

at its retirement.

AerSale accomplishes this by utilizing its deep market and technical knowledge related to the management of

Flight Equipment sales, leasing and MRO services.

To extract value from the remaining flight time on whole assets, AerSale provides

flexible short-term (generally less than five years) leasing solutions of Flight Equipment to passenger and cargo operators across

Once the value from the Flight Equipment’s flight time has been extracted, Flight Equipment is considered to

be at or near the end of its useful life and is analyzed for return maximization as either whole asset sales or disassembled for

sale as USM parts.

Revenues from this segment are segregated between Aircraft and Engine depending on the asset type that generated

Lease revenues and the related depreciation from aircraft and engines installed on those aircrafts is recognized

under the Aircraft category.

Revenues from sales of whole aircraft and related cost of sales are allocated between the Aircraft

and Engine categories based on the allocated cost basis of the asset sold.

AerSale’s TechOps

segment provides internal and third-party aviation services, including internally developed engineered solutions, full heavy aircraft

maintenance and modification, component MRO, as well as end-of-life disassembly services.

AerSale’s MRO business also engages

in longer-term projects such as aircraft modifications, cargo/tanker conversions of aircraft, and aircraft storage.

segment also includes MRO services for landing gear, thrust reversers, hydraulic systems, and other aircraft components.

AerSale utilizes these

capabilities to support its customers’

Flight Equipment, as well as to maintain and improve AerSale’s owned Flight

Equipment, which is subsequently sold or leased to AerSale’s customers.

These processes require a high degree of expertise

on each individual aircraft or component that is being serviced.

AerSale’s knowledge of these processes allow AerSale to

assist customers to comply with applicable regulatory and OEM requirements.

A significant amount of skilled labor is required

to support this process, which the Company has accumulated through its diversified offerings.

In addition to AerSale’s

aircraft and USM parts offerings, AerSale develops Engineered Solutions consisting of Supplemental Type Certificates (“STCs”)

that can be installed on existing Flight Equipment to improve performance, comply with regulatory requirements, or improve safety.

An example of these solutions is the AerSafe®

product line, which AerSale has designed and obtained Federal Aviation Administration

(“FAA”) approval to sell as a solution for compliance with the FAA’s fuel tank flammability regulations.

products are proprietary in nature and function as non-OEM solutions to regulatory requirements and other technical challenges,

often at reduced delivery time and cost for operators.

In order to develop these products, AerSale engages in research and development

Impact of COVID-19

COVID-19 has been

declared a global health pandemic by the World Health Organization.

COVID-19 has impacted nearly all regions of the world, which

has driven the implementation of significant, government-imposed measures to prevent or reduce its spread, including travel restrictions,

the closing of borders, “shelter in place”

orders and business closure.

As a result, commercial airlines have experienced

a decline in demand for air travel.

The reduced number of aircraft in service and corresponding flying hours negatively impacts

the demand for AerSale’s services, and prolonged reduction could materially and adversely affect AerSale’s business,

operating results, financial condition, and liquidity.

An extended pandemic, or the threat thereof, could also result in capacity

restrictions that may lead to lower productivity in AerSale’s service locations, temporary closure of AerSale’s offices

and facilities, travel restrictions for AerSale’s workforce and other voluntary actions that may result in business disruptions.

Early in March 2020,

as AerSale began to see the impacts to its customers, the Company took decisive actions to position itself for the short-term

impacts of COVID-19, while allowing the Company the flexibility to quickly pursue the opportunities that would follow.

cancelled approximately $20 million of feedstock opportunities under negotiation, as it evaluated the impacts of COVID-19 on asset

The Company also reexamined its structure and executed measures in March 2020 to adjust the business through

strategic headcount reductions and suspension of various other initiatives to reduce costs by over $20 million on an annualized

These measures enabled the Company to remain cash flow positive through the year ended December 31, 2020.

While we expect that

the effects of COVID-19 will continue to negatively impact some of AerSale’s business units, we believe that our counter

cyclical business units are positioned to perform well during this same period.

These include AerSale’s TechOps MROs in

Goodyear, AZ and Roswell, NM, which are experiencing outsized growth due to the high demand for aircraft preservation and storage,

as well as AerSale’s Asset Management Solutions business units responsible on the buy-side for acquisition of surplus Flight

Equipment assets.

As the pandemic is reigned in and passenger air travel continues to normalize, revenues for these same business

units are expected to grow as aircraft are re-activated from storage and require MRO services (e.g.

de-preservation, inspection,

maintenance, repairs, testing, reconfiguration, etc.) for return to service, and as demand for AerSale’s Asset Management

Solutions sale-side activities pick up in step with increased demand for aircraft, engines, USM, and component MRO services due

to associated growth in passenger air travel.

Due to the substantial

decrease in passenger air travel and the consequential market decline in aircraft ‘belly space’

used to ship cargo,

COVID-19 has dramatically increased the demand for dedicated freighter aircraft to meet the sustained demand for air cargo shipments.

This has accelerated an opportunity for AerSale to supply air cargo operators with feedstock freight aircraft, serviceable engines

and USM components to meet their expanding operations amid the pandemic.

AerSale also expects

the effects of COVID-19 to have a significantly greater negative impact on AerSale’s non-integrated competitors which are

exclusively concentrated in highly vulnerable aviation down-cycle sectors (e.g.

flight equipment leasing, component MRO, and USM

For this reason, management is actively engaged in multiple M&A initiatives amid the current attractive environment

to acquire low-performing businesses that we expect will rebound when the commercial aviation market returns to pre-COVID levels

and which, in the interim, will increase AerSale’s scale, capabilities, and market reach, as well as benefit from operating

with the integrated AerSale business structure.

AerSale’s customer

base is diverse, and the Company has increasingly been able to cross-sell its products and services across multiple channels,

not only for passenger aircraft, but also for cargo and government customers, including the US Department of Defense.

expects demand for Flight Equipment and services that support passenger traffic to gradually start recovering in the first half

of 2021, and then accelerate through the second half of 2021 and beyond as available vaccines and therapeutics, advances in public

health capacity, and safety protocols affecting the way passengers fly, make air travel more attractive for business and personal

There is a high degree of uncertainty regarding the pace of this recovery, with a wide variance among industry analysts.

For planning purposes, the Company has assumed that the demand for passenger air travel will not reach 2019 levels until 2023.

However, AerSale is already starting to see signs of a recovery in commercial aviation and believes that the 2 nd quarter

of 2020 represented the trough for AerSale revenue and Adjusted EBITDA.

The current dislocation

in the commercial aviation market presents certain unique opportunities for AerSale, and the Company is capitalizing on its business

model to take advantage of these potential opportunities.

Company is well positioned to acquire a substantial amount of feedstock with aircraft retirements forecasted to reach a total

of 4,000 between 2020 and 2024.

feedstock of in-production aircraft will allow the Company to participate in burgeoning USM markets that have previously relied

almost exclusively on OEM new material;

expanding its presence in a $4 billion plus market that is forecasted to grow as customers

look for low cost, high quality solutions.

USM material typically provides a cost advantage over OEM new material of approximately

anticipates accelerated acquisition of additional Flight Equipment and is particularly focused on responding to the expected

increase in demand for passenger-to-freighter conversion feedstock, as well as to flight operators and lessors looking to

acquire used replacement engines in order to avoid costly engine repairs.

The Company has

experienced a dramatic rise in demand for dry desert aircraft storage services at its Goodyear, AZ and Roswell, NM facilities.

Typical demand for aircraft storage pre-COVID was averaging just over 100 aircraft, while the number of aircraft in storage

surpassed 450 by the end of 2020, out of a total capacity of up to 650 aircraft.

As one of the largest providers of aircraft

storage, the Company is seeing a significant rise in storage and preservation revenues, which is expected to continue through

As many of the aircraft

in storage at our facilities will return to service with new operators in a normalizing market going forward, AerSale expects

to see a surge in demand for the Company’s aircraft MRO services, including interior modifications, cargo conversion

services, and equipment upgrades.

Record numbers of

aircraft in storage at our facilities is also expected to significantly increase AerSale’s “first-access”

aircraft buying opportunities, while simultaneously providing a significant savings advantage through the reduced logistical

costs associated with purchasing aircraft on-site.

AerSale will accelerate

the organic expansion of MRO capabilities within its TechOps facilities (e.g.

increased landing gear MRO operations at the

Company’s Landing Gear Solutions facility in Rio Rancho, NM);

however, as with the Asset Management Solutions segment,

greater focus is now being shifted towards targeted pandemic-resilient markets, including cargo, defense, and government sectors.

Management expects

to see an uptick in mergers and acquisition (“M&A”) opportunities from non-integrated and less disciplined

competitors who had been heavily acquiring mid-life assets in the overheated pre-COVID market run up.

AerSale believes it

is entering an ideal period to accelerate its non-organic growth through increased M&A initiatives, while benefiting from

greater market share and workforce availability in a less-crowded and less-competitive landscape.

The Company believes

that its available liquidity under its existing credit facility and the cash proceeds from the closing of the Merger will provide

it with sufficient resources to take advantage of the business opportunities it foresees with its adaptive business strategy.

The Company has a proven historical track record of highly disciplined asset acquisitions in post recessionary environments achieving

high returns and minimal inventory obsolescence charges.

As the Company responds

to the changing business environment caused by COVID-19, it expects the mix of business in its two business segments to change,

with the percentage of business coming from TechOps increasing.

The Company believes that this short-term change in mix demonstrates

the ability of its diverse offerings to respond effectively to changing market dynamics.

As the commercial aviation market recovers,

the Company expects both segments to benefit from the recovery.

There are many uncertainties

regarding COVID-19, and we continue to closely monitor the impact of the pandemic on all aspects of our business, including how

it is impacting our customers, employees, suppliers, vendors, business partners and distribution channels.

for additional risks and uncertainties related to COVID-19’s impact on our business, including “The 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.”

Critical Accounting Policies and Estimates

The preparation of

Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States (“U.S.

GAAP”) requires AerSale’s management to make estimates and assumptions that affect the reported amounts of assets

and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the

reported amounts of revenues and expenses during the reporting periods.

Actual results could differ from those estimates.

Significant items

subject to such estimates and assumptions include revenue recognition, the useful lives of property and equipment, useful lives

and residual values of Flight Equipment held for lease, allowances for doubtful accounts and sales returns, the income tax provision,

impairment of long-lived assets, valuation of inventory, valuation and useful lives of intangibles, goodwill and contingencies.

AerSale believes the

following critical accounting policies are affected by its judgments and estimates used in the preparation of AerSale’s

Consolidated Financial Statements:

Revenue Recognition

Sales of aircraft

and engine parts, which may include sales of whole aircraft and engines, are reported net of estimated returns and allowances.

The reserve for returns and allowances is calculated as a percentage of sales based on historical return percentages.

Freight costs charged

to buyers are recorded in both revenue and selling, general and administrative expenses within the Consolidated Statements of

AerSale leases Flight

Equipment under operating leases that contain monthly base rent and reports basic rental income straight line over the life of

the lease as it is earned.

Additionally, AerSale’s leases provide for maintenance reserves (also known as supplemental rent),

which is calculated based on the number of hours or cycles an operator uses the leased Flight Equipment and, for certain components,

based on the amount of time until maintenance of that component is required.

In certain leases, AerSale records supplemental rent

paid by the lessees as maintenance deposit payment liabilities in recognition of AerSale’s contractual commitment to reimburse

qualifying maintenance.

Reimbursements to the lessees upon receipt of evidence of qualifying maintenance work are charged against

the existing maintenance deposit payment liabilities.

In leases where AerSale is responsible for performing certain repairs or

replacement of aircraft components or engines, supplemental rent is recorded as revenue in the period earned.

In the event of

premature lease termination or lessee default on the lease terms, revenue recognition will cease when the amount outstanding exceeds

the customer’s deposit held.

AerSale applies ASC

Revenue from Contracts with Customers (“ASC 606”).

Under ASC 606 revenue is measured based on the consideration

specified in a contract with a customer, and excludes any sales commissions and taxes collected and remitted to government agencies.

AerSale recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

When AerSale enters

into a contract, AerSale’s management evaluates if the contract should be accounted for as a single performance obligation

or if the contract contains multiple performance obligations.

In certain cases, AerSale’s service contract with a customer

is considered one performance obligation if the service provided meets certain criteria including the service being provided is

significantly integrated with other obligations under the relevant contract, the service provided significantly modifies or customizes

another good or service or the good or service is highly interdependent or interrelated with another good or service.

If the contract

has more than one performance obligation, AerSale determines the standalone price of each distinct good or service underlying

each performance obligation and allocates the transaction price based on the relative standalone selling prices.

The transaction price

of a contract, which can include both fixed and variable amounts, is allocated to each performance obligation identified.

contracts contain variable consideration, which could include incremental fees or penalty provisions related to performance.

consideration that can be reasonably estimated based on current assumptions and historical information is included in the transaction

price at the inception of the contract, but limited to the amount for which it is probable that a significant reversal in the

amount of cumulative revenue recognized will not occur.

Variable consideration that cannot be reasonably estimated is recorded

AerSale’s performance

obligations are satisfied over time as work progresses or at a point in time based on transfer of control of products and services

to AerSale’s customers.

The majority of AerSale’s sales of products are recognized at a point in time upon transfer

of control to the customer which generally occurs upon shipment.

For AerSale’s

service revenue, the performance obligations are generally satisfied over time.

AerSale measures progress in a manner that depicts

the performance of transferring control to the customer.

As such, AerSale utilizes the input method of cost-to-cost to recognize

revenue over time as this depicts when control of the promised goods or services are transferred to the customer.

Revenue is recognized

based on the relationship of actual costs incurred to date to the estimated total cost at completion of the performance obligation.

AerSale is required to make certain judgments and estimates, including estimated revenues and costs, as well as inflation and

the overall profitability of the arrangement.

Key assumptions involved include future labor costs and efficiencies, overhead costs,

and ultimate timing of product delivery.

Differences may occur between the judgments and estimates made by management and actual

program results.

Changes in estimates

and assumptions related to AerSale’s arrangements accounted for using the modified retrospective method are recorded using

the cumulative catch-up method of accounting.

Inventory is valued

at the lower of cost or market value.

For purchases of whole aircraft and engines for sale or lease, cost is determined using

the specific identification method whereby total cost is the cost paid, including certain capitalizable asset acquisition

costs, to acquire such assets as a whole.

Additionally, AerSale

purchases certain whole aircraft and engines to disassemble and supply its engine and airframe parts inventory.

For aircraft and

engine parts that originate from such dismantled aircraft and engines, cost is determined using a ratio calculated based on the

relationship of the cost of the dismantled aircraft or engine at the time of purchase to the total estimated sales value of the

dismantled aircraft or engine at the time of purchase.

At the time of sale, this ratio is applied to the sale price of each individual

airframe and/or engine part to determine its allocated cost.

At the time of sale, the sum of an individual part’s allocated

cost and actual repair or overhaul costs incurred represent the total cost for such part.

Inventory not expected to be sold within

the operating cycle is classified as non-current inventory on the Consolidated Balance Sheets.

AerSale evaluates

this ratio periodically, and if necessary, updates sales estimates and makes prospective adjustments to this ratio.

identified with an estimated sales value lower than the carrying value is reduced to the estimated sales value at the time of

Expenditures required for the repair of engine and airframe parts are capitalized as inventory and are expensed as

cost of sales when associated parts are sold.

During the year ended December 31, 2020, AerSale recorded an inventory reserve

of $13.1 million mostly related to the early discontinuation of an aircraft platform by its largest operator driven by the impact

of COVID-19 on demand for passenger flights.

In accordance with

ASC 350, “Intangibles - Goodwill and Other,”

goodwill is tested at least annually for impairment, or when events or

changes in circumstances indicate that the carrying amount of such assets may not be recoverable, by assessing qualitative factors

or performing a quantitative analysis in determining whether it is more likely than not that its fair value exceeds the carrying

A quantitative assessment involves determining the fair value of each reporting unit using market participant assumptions.

An entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair

value up to the amount of goodwill allocated to that reporting unit.

For purposes of reviewing

impairment and the recoverability of goodwill, AerSale’s management must make various assumptions regarding estimated future

cash flows and other factors in determining the fair values of the reporting unit, including market multiples, discount rates, etc.

As a result of the

COVID-19 pandemic and its impact on the aviation industry, AerSale performed a qualitative impairment analysis as of June 30,

The Company also performed its annual quantitative impairment analysis as of October 1, 2020 on the goodwill for the

Asset Management Solutions and TechOps segments, and concluded the fair value of each reporting unit exceeded their carrying values,

and thus no impairment charge was recorded.

Relationships and Other Intangible Assets

Intangibles arising

from business combinations, including customer relationships and FAA certificates are initially recorded at fair market value.

Customer relationships are amortized over ten years and favorable leases are amortized over the remaining term of the lease.

Straight-line

amortization is utilized.

Where there are no legal, regulatory, contractual, or other factors that would reasonably limit the

useful life of an intangible asset, that asset is classified as indefinite lived and such intangible assets are not amortized.

Other intangible assets

with indefinite and definite lives are assessed for impairment annually, or more frequently when events or circumstances indicate

there may be an impairment.

These assets are carried at the estimated fair value at the time of acquisition.

AerSale performed

a quantitative impairment analysis as of June 30, 2020 on the indefinite lived intangible assets and concluded

there were no impairments.

AerSale annually reviews

the estimated lives and methods used to amortize other intangible assets.

The actual amounts of amortization expense may differ

materially from AerSale’s estimates, depending on the results of AerSale’s annual review.

of Long-Lived Assets

Long-lived assets

to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount

of the asset may not be recoverable, and long-lived to be disposed of are reported at the lower of carrying amount or fair value

less cost to sell.

AerSale performed an impairment analysis on the property and equipment and concluded there was no impairment

for the year ended December 31, 2020.

On a quarterly basis,

AerSale’s management monitors its Flight Equipment lease portfolio for events that may indicate that a particular asset

may need to be evaluated for potential impairment.

These events may include a decision to sell an asset (in whole or as USM parts),

knowledge of specific damage to an asset, or supply/demand events that may affect AerSale’s ability to lease an asset in

On an annual basis, even absent any such triggering event, AerSale evaluates the carrying value of the assets in its

Flight Equipment lease portfolio to determine if any impairment exists.

Impairment may be

identified by several factors, including, comparison of estimated sales proceeds or undiscounted forecasted cash flows over the

life of the asset with the asset’s book value.

If the forecasted undiscounted cash flows are less than the book value, the

asset is written down to its fair value.

When evaluating for impairment, AerSale groups assets at the lowest level for which identifiable

cash flows are largely independent of the cash flows of other assets and liabilities.

In AerSale’s Flight Equipment portfolio,

this is at the individual asset level (e.g., engine or aircraft), as each asset generates its own stream of cash flows, including

lease rents, maintenance reserves and repair costs.

AerSale must make

assumptions which underlie the most significant and subjective estimates in determining whether any impairment exists.

estimates, and the underlying assumptions, are as follows:

value –

AerSale determines fair value by reference to independent appraisals, quoted market prices (e.g., an offer to

purchase) and other factors such as current data from airlines, engine manufacturers, and MRO providers as well as specific

market sales and repair cost data.

cash flows –

when evaluating the future cash flows that an asset will generate, AerSale makes assumptions regarding

the lease market for specific asset models, including estimates of market lease rates and future residual values.

If the undiscounted

forecasted cash flows and fair value of AerSale’s long-lived assets decrease in the future, AerSale may incur impairment

Inventory, which consists

of complete aircraft and engines held for sale, as well as related parts, is valued at the lower of cost or market value.

An impairment

charge for excess or inactive inventory is recorded based upon an analysis that considers current inventory levels, historical

sales patterns, and future sales expectations.

AerSale has recorded an impairment of its flight equipment for $3.0 million during

the year ended December 31, 2020.

Accounting for Maintenance Expenditures

and Maintenance Reserves

Pursuant to certain

of AerSale’s aircraft leases, the lessee is responsible for performing required maintenance and repairs on the leased asset

and is required to have the obligation to make monthly maintenance reserve payments to AerSale, in arrears following the usage

Upon the lessee’s presentation of invoices evidencing the completion of qualifying maintenance, AerSale will reimburse

the lessee for the cost of the maintenance, up to the amount of the maintenance payments that have been received by AerSale from

Unless otherwise provided in the relevant contract, AerSale records such maintenance payments paid by the lessees

as maintenance deposit payment liabilities to record AerSale’s contractual commitment to reimburse such qualifying maintenance.

Reimbursements to

the lessees upon receipt of evidence for qualifying maintenance work are charged against the existing maintenance deposit payment

For other lease contracts

(primarily engine lease contracts) where the terms of the lease are designed specifically to allow AerSale to directly manage

the occurrence, timing, and associated cost of qualifying maintenance work on the Flight Equipment, supplemental rent collected

during the lease is recognized as lease revenue in the period earned.

Any amounts of maintenance

deposit payments existing at the end of a lease contract are released and recognized as lease revenue or applied against outstanding

accounts receivable at lease termination.

Aircraft are depreciated

over the assets’

useful life using the straight-line method to the estimated residual value based on the total remaining

life before disassembly or outright scrap metal value.

AerSale’s typical aircraft useful lives range from two to ten years.

Engines are depreciated

using the straight-line method to the estimated residual value based on the total life remaining before disassembly.

at the total engine life remaining before disassembly, the remaining life of the engine’s life-limited parts, the estimated

utilization, and condition, as well as the aircraft fleet supported by the engine model are considered and evaluated on a quarterly

Recent Accounting Pronouncements

The most recent adopted

and to be adopted accounting pronouncements are described in Note B to AerSale’s Consolidated Financial Statements included

in this 10-K.

Results of Operations

and gross profit for AerSale’s two business segments for the years ended in December 31, 2020 and 2019 were as follows:

Year ended December 31, 2020 compared

to the year ended December 31, 2019

ended December 31,

thousands, except percentages)

Asset Management Solutions

ended December 31,

thousands, except percentages)

Asset Management Solutions

Total revenues decreased

$95.3 million or 31.3% to $208.9 million for the year ended December 31, 2020, from $304.2 million for the year ended December 31,

2019, driven by a decrease of $123.1 million, or 55.5%, within Asset Management Solutions and an increase of $27.9 million, or

33.8% million, within TechOps.

Asset Management Solutions

in the Asset Management Solutions segment decreased $123.1 million or 55.5%, to $98.7 million for the year ended December 31,

2020, from $221.8 million for the year ended December 31, 2019, due to a $45.1 million, or 45.7%, decrease in revenues

from Aircraft, and a $78.0 million, or 63.4%, decrease in revenues from Engines.

The decrease in Aircraft revenues is primarily

attributable to decreased activity in the A320 and B737 product lines as a result of lower trading and leasing volume.

The reduction

in revenue from Aircraft due to lower trading volume amounted to $27.4 million.

The decrease in Engines revenues is primarily

attributable to decreased activity in the CF6-80, CFM56, and V2500 product lines as a result of lower trading volume and USM sales,

for a total decrease of $39.6 million.

The reductions in leasing, USM sales, and asset trading are directly related to the global

decrease in demand for flight hours in response to the COVID-19 pandemic.

In June 2019, AerSale acquired Qwest Air Parts

and fully integrated this business within the operations of the Asset Management Solutions segment effective January 2020.

As such, the impact of this acquisition on total segment revenues for the year ended December 31, 2020 is not determinable.

Cost of sales in Asset

Management Solutions segment decreased $84.7 million or 55.0%, to $69.4 million for the year ended December 31, 2020, compared

to $154.1 million for the year ended December 31, 2019.

The decrease in cost of sales was primarily driven by the sales decrease

discussed above, and partially offset by the inventory reserve recorded during the year ended December 31, 2020.

in the Asset Management Solutions segment decreased $38.4 million or 56.7%, to $29.3 million for the year ended December 31,

2020, from $67.7 million for the year ended December 31, 2019.

The margin reduction is mainly attributable to an inventory

reserve and an impairment of Flight Equipment of which $12.9 million relates to Aircraft, and $3.0 million relates to Engines

for the year ended December 31, 2020, which was partially offset by additional lease margins from the settlement of aircraft

maintenance reserves.

gross profit margins decreased to 22.2% for the year ended December 31, 2020, from 27.9% for the year ended December 31,

2019 due to the impact of the inventory reserve and impairment adjustment noted above, offset by USM sales in various platforms

where costs had been fully recaptured and end-of-lease maintenance settlements.

Engines gross profit margins increased to 38.6%

for the year ended December 31, 2020, from 32.6% for the year ended December 31, 2019, primarily due to reduced cost

from lower utilization of leased engines by many of AerSale’s customers.

AerSale’s revenue

from TechOps increased by $27.8 million or 33.8%, to $110.2 million for the year ended December 31, 2020, compared to $82.4

million for the year ended December 31, 2019.

The increase was primarily driven by increased demand for maintenance and storage

programs, including preservation work, based on the increase in fleet groundings due to reduced passenger flight volume related

to COVID-19, as well as the ACT acquisition.

of sales in TechOps increased $21.7 million or 33.4%, to $86.7 million for the year ended December 31, 2020, from $65.0

million for the year ended December 31, 2019, which is consistent with the sales increase discussed above.

Gross profit in

TechOps increased $6.2 million or 35.4%, to $23.5 million for the year ended December 31, 2020, compared to $17.3 million

for the year ended December 31, 2019.

The increase in gross profit is primarily attributable to increased contributions from

maintenance and storage programs, along with higher gross profit driven by the acquisition of Aircraft Composite Technologies

(“ACT”) in January 2020, which generated revenues of $6.6 million and gross profit of $3.8 million.

margin increased by 20 bps to 21.3% for the year ended December 31, 2020 compared to 21.1% for the year ended December 31,

2019, and was largely attributable to an overall change in the product mix of the segment.

Selling, General

and Administrative Expenses

general and administrative expenses, excluding the transaction costs, decreased $4.2 million, or 7.0% to $55.6 million for

the year ended December 31, 2020, as compared to $59.8 million for the year ended December 31, 2019.

The decrease is

the direct result of cost saving initiatives implemented in response to the COVID-19 pandemic, partially offset by the Qwest and

ACT acquisitions in June 2019 and January 2020, respectively, which represent $3.1 million of the balance for the year

ended December 31, 2020.

The Coronavirus Aid,

Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020 and is intended to assist

the economy by issuing a relief package to preserve jobs in industries adversely impacted by the COVID-19 outbreak.

2020, the Company entered into an agreement with the U.S.

Department of the Treasury to receive $16.4 million in emergency relief

through the CARES Act payroll support program (“PSP1”) to be paid in installments.

The proceeds of the grant are recorded

within accrued expenses when received and are recognized as CARES Act proceeds in the statement of operations over the periods

that the funds are intended to compensate.

As of December 31, 2020, we had received $12.7 million in grant proceeds under

the CARES Act payroll support program and this amount has been recognized as CARES Act proceeds in the statement of operations.

We received the remaining balance of PSP1 during the first quarter of 2021.

As part of the Payroll Support Extension Law (“PSP Extension Law”), we entered into

a new agreement with the U.S.

Department 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, 2021.

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% of any previously received relief funds.

Costs (Recovered) Incurred

Transaction costs

recovered for the year ended December 31, 2020, were $1.4 million, as compared to costs incurred of $3.2 million for the

year ended December 31, 2019.

The recovery during 2020 is related to the release of consulting fees previously accrued for and expensed in 2019 but recorded as a reduction

of equity in December 2020 when paid upon the closing of the Merger.

Interest Expense

Interest expense decreased

to $1.6 million for the year ended December 31, 2020, as compared to $3.0 million for the year ended December 31, 2019.

As of December 31, 2020, AerSale had no outstanding debt.

effective tax rate from continuing operations for the year ended December 31, 2020 was 16.3% compared to 21.2% for the year

ended December 31, 2019.

The decrease in effective tax rate was mainly a result of an increase in favorable permanent differences

related to the transaction costs paid in 2020.

The difference between the effective tax rate and the statutory tax rate of 21%

for the year ended December 31, 2020 is primarily due to the impact of state income taxes, and permanent differences related to transaction costs and meals and entertainment expenses, amongst others.

The difference between

the effective tax rate and the statutory tax rate of 21% for the year ended December 31, 2019 was primarily due to the impact

of state and foreign income taxes, and return to provision adjustments.

Financial Position, Liquidity and Capital

As of December 31,

2020, AerSale had $29.3 million of cash and cash equivalents.

AerSale finances its growth through cash flows generated from operations

and borrowings secured by AerSale’s assets.

Cash derived from borrowings amounted to $96.7 million for the year ended December 31,

2020, compared to $77.7 million, for the year ended December 31, 2019.

In the same time periods $96.7 million and $77.7 million,

respectively, was used to pay down related debt.

The Company also received additional paid in capital resulting from the Merger

in the amount of $48.6 million.

As of December 31, 2020, AerSale had no outstanding debt balance.

Flows—year ended December 31, 2020 compared to year ended December 31, 2019

Flows from Operating Activities

cash used in operating activities was $12.2 million for the year ended December 31, 2020 compared to cash provided of $45.5 million

for the same period in 2019.

The decrease of $57.7 million was primarily attributable to the timing of inventory purchases, which

was primarily driven by the acquisition of Flight Equipment, as well as lower collections of trade receivables, and lower results

from operations excluding non-cash items.

Flows from Investing Activities

cash used in investing activities was $21.1 million for the year ended December 31, 2020, compared to cash used of $62.1

million in the same period for 2019.

Cash used during the year ended December 31, 2020 is primarily related to a business

acquisition totaling $17.0 million.

The decrease in cash used during the year ended December 31, 2020 when compared to prior

year is primarily related to lower acquisition of Flight Equipment to support the leasing portion of the Asset Management Solutions

segment in 2020, along with lower cash expended for business acquisitions.

from Financing Activities

cash provided by financing activities for the year ended December 31, 2020 was $45.2 million, compared to cash used

of $5.5 million in the same period for 2019.

The cash provided by financing activities for the year ended December 31,

2020 is driven by additional paid in capital resulting from the Merger in the amount of $48.6 million, net of debt repayments,

including full settlement of the Company’s long-term debt note.

The cash used in financing activities for the year ended

December 31, 2019 is primarily driven by the repayment of long-term debt from available cash.

Debt Obligations and Covenant Compliance

In July 2018,

AerSale’s revolving credit agreement (the “Revolving Credit Agreement”) was amended and restated to, among other

things, provide a $110.0 million aggregate amount of revolver commitments subject to borrowing base limitations and extend, subject

to certain conditions, the maturity date to July 20, 2021.

The Revolving Credit

Agreement provides commitments for a $110.0 million revolving credit facility and includes a $10 million sub facility for letters

of credit and for borrowings on same-day notice referred to as “swingline loans”.

The maximum amount of such commitments

available at any time for borrowings and letters of credit is determined according to a borrowing base calculation equal to the

sum of eligible inventory and eligible accounts receivable reduced by the aggregate amount, if any, of trade payables of the loan

parties, as defined in the Revolving Credit Agreement.

Extensions of credit under the Revolving Credit Agreement are available

for working capital and general corporate purposes.

The commitments under the Revolving Credit Agreement terminate on July 20,

2021, at which time all outstanding amounts on the Revolving Credit Agreement will be due and payable.

Management has engaged

in discussions with multiple banking institutions including the incumbent, Wells Fargo, who has expressed its intent to renew

the existing facility.

Management is evaluating the Wells Fargo offer along with proposals from other sources of financing.

As of December 31,

2020, there was no outstanding balance under the Revolving Credit Agreement and AerSale had $83.7 million of availability thereunder.

AerSale was in compliance with its debt covenants as of December 31, 2020.

Effective March 12,

2021, the Company amended its Revolving Credit Agreement to provide a $150.0 million aggregate amount of revolver commitments

subject to borrowing base limitations and extend, subject to certain conditions, the maturity date to March 12, 2024.

Contractual Obligations

Repayments of AerSale’s

gross debt obligations primarily consist of scheduled installments due under term loans and are funded by the use of unrestricted

cash reserves and from cash flows from ongoing operations.

The table below summarizes AerSale’s contractual commitments

at December 31, 2020:

due by period (in thousands)

$110.0 million Senior

Secured Revolving Credit Facility

Revolving Credit

Facility - Interest

$35.0 million Senior

Secured Notes Payable

Senior Secured Notes

Payable - Interest

Lease Commitments

As of December 31,

2020, the Company has purchase commitments for the acquisition of Flight Equipment, specifically Boeing 757-200 passenger aircraft,

in the amount of $45.9 million to be fulfilled by the first quarter of 2021, of which a 10% deposit has been paid.

are stored at our heavy MRO facility located at the Roswell Air Center in New Mexico and are equipped with Rolls-Royce RB211-535

series engines, and an additional six spares are included in the purchase.

AerSale believes its

equity base, internally generated funds, and existing debt facilities are sufficient to maintain its level of operations, as well

as the purchase commitments of $45.9 million noted above, through December 31, 2021.

If an event occurs that would affect

AerSale’s ability to meet its capital requirements, AerSale’s ability to continue to grow AerSale’s asset base

consistent with historical trends could be impaired and AerSale’s future growth limited to that which can be funded from

internally generated capital.

Off-Balance Sheet Arrangements

We did not have any

off-balance sheet arrangements as of December 31, 2020.

ITEM 5 MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is currently listed on the Nasdaq Capital Market under the symbol “ASLE”.

Holders of Record of our Common Stock

As of March 8, 2022, there were 5,298 holders of record of our common stock.

We have not paid any cash dividends on our common stock to date.

Any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that our Board of Directors may deem relevant.

Currently, the terms of the U.S.

Treasury Department’s Payroll Support Program prohibit us from paying cash dividends through September 30, 2022.

Accordingly, we are prohibited from declaring any cash dividends to holders of our common stock prior to that date.

Additionally, our credit facility limits our ability to pay cash dividends.

Purchases of Equity Securities by the Issuer or Affiliated Purchasers

During the quarter ended December 31, 2021, we did not repurchase any of our outstanding shares of common stock.

Recent Sales of Unregistered Securities

Performance Graph

The following graph compares the cumulative total stockholder return for (i) our common stock, (ii) the Standard & Poor’s 500 Stock Index (“S&P 500”) and (iii) the S&P 500 Aerospace & Defense Index (“S&P A&D”) for the period from February 28, 2019, the first day Monocle’s common stock was traded following its initial public offering, through December 31, 2020.

For the period between February 28, 2019 through December 22, 2020 the figures relate to Monocle’s common stock, and for the period between December 23, 2020 through December 31, 2020, the figures relate to AerSale Corporation’s common stock.

The graph assumes an initial investment of $100 in Monocle’s common stock and in each of the S&P 500 and S&P A&D at the market close on February 28, 2019, and assumes reinvestment of dividends.

This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of AerSale Corporation under the Securities Act or the Exchange Act.

The information required by Item 5 with respect to securities authorized for issuance under equity compensation plans is incorporated herein by reference to Part III, Item 12 of this Form 10-K.

ITEM 6 [RESERVED.]

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 5. Market for Registrant’s Common Equity