SKYH filing — read by section

Item 8. Financial Statements and Supplementary Data

ITEM 8. 
 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 
 
 INDEX TO FINANCIAL STATEMENTS 

 Financial Statements 
 Page 
 
 Report of Independent Registered Public Accounting Firm (PCAOB ID: 274 ); EisnerAmper LLP, New York, NY
 43 

 Balance Sheets - December 31, 2023 and December 31, 2022 
 44 

 Statements of Operations - Years Ended December 31, 2023 and December 31, 2022 
 45 

 Statements of Comprehensive Income (Loss) - Years Ended December 31, 2023 and December 31, 2022 46 

 Statements of Changes In Stockholders' Equity - Years ended December 31, 2023 and December 31, 2022 
 47 

 Statements of Cash Flows - Years ended December 31, 2023 and December 31, 2022 
 48 

 Notes to Financial Statements 
 49 

 42
 
 Table of Contents 
 
 Report of Independent Registered Public Accounting Firm 

 To the Stockholders and Board of Directors
 Sky Harbour Group Corporation:

 Opinion on the Financial Statements 

 We have audited the accompanying consolidated balance sheets of Sky Harbour Group Corporation and Subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 Basis for Opinion 

 These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 /s/ EisnerAmper

 We have served as the Company’s auditor since 2020.

 EISNERAMPER LLP 

 New York, New York 

 March 27, 2024

 43
 
 Table of Contents 
 
 SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES 

 CONSOLIDATED BALANCE SHEETS 

 (in thousands, except share data) 

 December 31, 2023 
 December 31, 2022 
 
 Assets 
 
 Cash
 $ 60,257 $ 2,174 

 Restricted cash
 12,009 39,222 

 Investments
 11,866 24,895 

 Restricted investments
 88,213 114,648 

 Prepaid expenses and other assets
 6,003 4,448 

 Cost of construction
 64,212 48,242 

 Constructed assets, net
 77,283 39,709 

 Right-of-use assets
 70,527 56,716 

 Long-lived assets, net
 11,829 1,150 

 Total assets 
 $ 402,199 $ 331,204 

 Liabilities and equity 
 
 Accounts payable, accrued expenses and other liabilities
 $ 16,740 $ 14,184 

 Operating lease liabilities
 69,437 53,531 

 Bonds payable, net of debt issuance costs and premiums
 162,420 162,210 

 Loans payable and finance lease liabilities
 9,311 - 

 Warrants liability
 12,045 2,904 

 Total liabilities 
 269,953 232,829 

 Commitments and contingencies (Note 17)
 
 Stockholders’ equity 
 
 Preferred stock; $ 0.0001 par value; 10,000,000 shares authorized as of December 31, 2023; none issued and outstanding
 - - 

 Class A common stock, $ 0.0001 par value; 200,000,000 shares authorized; 24,165,523 and 14,962,831 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively
 2 1 

 Class B common stock, $ 0.0001 par value; 50,000,000 shares authorized; 42,046,356 and 42,192,250 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively
 4 4 

 Additional paid-in capital
 88,198 29,560 

 Accumulated deficit
 ( 19,361 ) ( 3,184 ) 

 Accumulated other comprehensive income (loss)
 312 ( 102 ) 

 Total Sky Harbour Group Corporation stockholders’ equity 
 69,155 26,279 

 Non-controlling interests
 63,091 72,096 

 Total equity 
 132,246 98,375 

 Total liabilities and equity 
 $ 402,199 $ 331,204 

 See accompanying Notes to Consolidated Financial Statements 

 44
 
 Table of Contents 
 
 SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES 

 CONSOLIDATED STATEMENTS OF OPERATIONS 

 (in thousands, except per share data) 

 Year ended 
 
 December 31, 2023 
 
 December 31, 2022 
 
 Revenue: 
 
 Rental revenue
 
 $ 
 7,575 
 
 $ 
 1,845 
 
 Total revenue 
 
 7,575 
 
 1,845 
 
 Expenses: 
 
 Operating
 
 7,168 
 
 5,046 
 
 Depreciation
 
 2,278 
 
 695 
 
 Loss on impairment of long-lived assets
 
 - 
 
 248 
 
 General and administrative
 
 15,122 
 
 14,714 
 
 Total expenses 
 
 24,568 
 
 20,703 
 
 Operating Loss
 
 ( 16,993 
 ) 
 
 ( 18,858 
 ) 
 
 Other (income) expense: 
 
 Interest expense, net of capitalized interest
 
 541 
 
 - 
 
 Other (income) expense
 
 ( 737 
 ) 
 
 ( 98 
 ) 
 
 Unrealized loss (gain) on warrants
 
 8,644 
 
 ( 5,082 
 ) 
 
 Total other (income) expense 
 
 8,448 
 
 ( 5,180 
 ) 
 
 Net loss 
 
 $ 
 ( 25,441 
 ) 
 
 $ 
 ( 13,678 
 ) 
 
 Net loss attributable to non-controlling interests
 
 ( 9,264 
 ) 
 
 ( 10,494 
 ) 
 
 Net loss attributable to Sky Harbour Group Corporation shareholders 
 
 $ 
 ( 16,177 
 ) 
 
 $ 
 ( 3,184 
 ) 
 
 Loss per share 
 
 Basic
 
 $ 
 ( 0.98 
 ) 
 
 $ 
 ( 0.23 
 ) 
 
 Diluted
 
 $ 
 ( 0.98 
 ) 
 
 $ 
 ( 0.23 
 ) 
 
 Weighted average shares 
 
 Basic
 
 16,456 
 
 13,965 
 
 Diluted
 
 16,456 
 
 13,965 
 
 See accompanying Notes to Consolidated Financial Statements 

 45
 
 Table of Contents 
 
 SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES 

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) 

 (in thousands) 

 Year Ended 
 
 December 31, 2023 
 
 December 31, 2022 
 
 Net loss
 
 $ 
 ( 25,441 
 ) 
 
 $ 
 ( 13,678 
 ) 
 
 Other comprehensive loss, before related income taxes:
 
 Unrealized gains (losses) on available-for-sale securities
 
 684 
 
 ( 102 
 ) 
 
 Total other comprehensive loss
 
 $ 
 ( 24,757 
 ) 
 
 $ 
 ( 13,780 
 ) 
 
 See accompanying Notes to Consolidated Financial Statements 

 46
 
 Table of Contents 
 
 SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES 

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY 

 (in thousands, except share data) 

 Redeemable Sky Series B 
 
 Class A 
 
 Class B 
 
 Additional 
 
 Accumulated Other 
 
 Total 
 
 Non- 
 
 Preferred Units 
 
 Common Stock 
 
 Common Stock 
 
 Paid-in 
 
 Accumulated 
 
 Comprehensive 
 
 Stockholders’ 
 
 Members 
 
 Controlling 
 
 Total 
 
 Shares 
 
 Amount 
 
 Shares 
 
 Amount 
 
 Shares 
 
 Amount 
 
 Capital 
 
 Deficit 
 
 Loss 
 
 Equity 
 
 Equity 
 
 Interests 
 
 Equity 
 
 Balance at December 31, 2021
 
 - 
 
 $ 
 54,029 
 
 - 
 
 $ 
 - 
 
 - 
 
 $ 
 - 
 
 $ 
 - 
 
 $ 
 - 
 
 $ 
 - 
 
 - 
 
 $ 
 16,931 
 
 $ 
 - 
 
 $ 
 16,931 
 
 Sky incentive compensation prior to recapitalization
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 23 
 
 - 
 
 23 
 
 Net income (loss) prior to recapitalization
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 ( 1,247 
 ) 
 
 - 
 
 ( 1,247 
 ) 
 
 Yellowstone Transaction and recapitalization, See Note 3
 
 - 
 
 ( 54,029 
 ) 
 
 14,937,581 
 
 1 
 
 42,192,250 
 
 4 
 
 28,681 
 
 - 
 
 - 
 
 28,686 
 
 ( 15,707 
 ) 
 
 81,024 
 
 94,003 
 
 Share-based compensation
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 764 
 
 - 
 
 - 
 
 764 
 
 - 
 
 - 
 
 764 
 
 Sky incentive compensation following recapitalization
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 320 
 
 320 
 
 Issuance of initial commitment shares
 
 - 
 
 - 
 
 25,000 
 
 - 
 
 - 
 
 - 
 
 112 
 
 - 
 
 - 
 
 112 
 
 - 
 
 - 
 
 112 
 
 Exercise of warrants
 
 - 
 
 - 
 
 250 
 
 - 
 
 - 
 
 - 
 
 3 
 
 - 
 
 - 
 
 3 
 
 - 
 
 - 
 
 3 
 
 Other comprehensive income (loss)
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 ( 102 
 ) 
 
 ( 102 
 ) 
 
 - 
 
 - 
 
 ( 102 
 ) 
 
 Net income (loss) following recapitalization
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 ( 3,184 
 ) 
 
 - 
 
 ( 3,184 
 ) 
 
 - 
 
 ( 9,248 
 ) 
 
 ( 12,432 
 ) 
 
 Balance at December 31, 2022
 
 - 
 
 - 
 
 14,962,831 
 
 1 
 
 42,192,250 
 
 4 
 
 29,560 
 
 ( 3,184 
 ) 
 
 ( 102 
 ) 
 
 26,279 
 
 - 
 
 72,096 
 
 98,375 
 
 Share-based compensation
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 1,816 
 
 - 
 
 - 
 
 1,816 
 
 - 
 
 443 
 
 2,259 
 
 Vesting of restricted stock units
 
 - 
 
 - 
 
 228,312 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 Shares withheld for payment of employee taxes
 
 - 
 
 - 
 
 ( 65,585 
 ) 
 
 - 
 
 - 
 
 - 
 
 ( 377 
 ) 
 
 - 
 
 - 
 
 ( 377 
 ) 
 
 - 
 
 - 
 
 ( 377 
 ) 
 
 Exchange of Class B Common Stock
 
 - 
 
 - 
 
 145,894 
 
 - 
 
 ( 145,894 
 ) 
 
 - 
 
 184 
 
 - 
 
 - 
 
 184 
 
 - 
 
 ( 184 
 ) 
 
 - 
 
 Issuance of PIPE Shares, net of equity issuance costs
 
 - 
 
 - 
 
 8,893,846 
 
 1 
 
 - 
 
 - 
 
 57,012 
 
 - 
 
 - 
 
 57,013 
 
 - 
 
 - 
 
 57,013 
 
 Exercise of warrants
 
 - 
 
 - 
 
 225 
 
 - 
 
 - 
 
 - 
 
 3 
 
 - 
 
 - 
 
 3 
 
 - 
 
 - 
 
 3 
 
 Other comprehensive income (loss)
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 414 
 
 414 
 
 - 
 
 - 
 
 414 
 
 Net loss
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 - 
 
 ( 16,177 
 ) 
 
 - 
 
 ( 16,177 
 ) 
 
 - 
 
 ( 9,264 
 ) 
 
 ( 25,441 
 ) 
 
 Balance at December 31, 2023
 
 - 
 
 $ 
 - 
 
 24,165,523 
 
 $ 
 2 
 
 42,046,356 
 
 $ 
 4 
 
 $ 
 88,198 
 
 $ 
 ( 19,361 
 ) 
 
 $ 
 312 
 
 $ 
 69,155 
 
 $ 
 - 
 
 $ 
 63,091 
 
 $ 
 132,246 
 
 See accompanying Notes to Consolidated Financial Statements 

 47
 
 Table of Contents 
 
 SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES 

 CONSOLIDATED STATEMENTS OF CASH FLOWS 

 (in thousands) 

 Year ended 
 
 December 31, 2023 
 
 December 31, 2022 
 
 Cash flows from operating activities: 
 
 Net loss
 
 $ 
 ( 25,441 
 ) 
 
 $ 
 ( 13,678 
 ) 
 
 Adjustments to reconcile net loss to net cash used in operating activities:
 
 Depreciation and amortization
 
 2,278 
 
 695 
 
 Straight-line rent adjustments, net
 
 ( 239 
 ) 
 
 10 
 
 Equity-based compensation
 
 2,259 
 
 1,217 
 
 Loss on impairment of long-lived assets
 
 - 
 
 248 
 
 Non-cash operating lease expense
 
 2,121 
 
 1,960 
 
 Unrealized loss (gain) on warrants
 
 8,644 
 
 ( 5,082 
 ) 
 
 Changes in operating assets and liabilities:
 
 Prepaid expenses and other assets
 
 ( 440 
 ) 
 
 ( 1,981 
 ) 
 
 Right-of-use asset initial direct costs
 
 ( 26 
 ) 
 
 ( 9,567 
 ) 
 
 Accounts payable, accrued expenses and other liabilities
 
 3,109 
 
 ( 1,313 
 ) 
 
 Net cash used in operating activities
 
 ( 7,735 
 ) 
 
 ( 27,491 
 ) 
 
 Cash flows from investing activities: 
 
 Purchases of long-lived assets
 
 ( 767 
 ) 
 
 ( 1,050 
 ) 
 
 Payments for cost of construction
 
 ( 55,373 
 ) 
 
 ( 44,917 
 ) 
 
 Investment in notes receivable, net
 
 ( 2,040 
 ) 
 
 ( 2,199 
 ) 
 
 Net cash provided by acquisition of business
 
 1,793 
 
 - 
 
 Purchases of available for sale investments
 
 ( 54,481 
 ) 
 
 ( 29,997 
 ) 
 
 Purchases of held-to-maturity investments
 
 ( 171,991 
 ) 
 
 ( 193,822 
 ) 
 
 Proceeds from available for sale investments
 
 68,194 
 
 79,126 
 
 Proceeds from held-to-maturity investments
 
 198,397 
 
 5,021 
 
 Net cash used in investing activities
 
 ( 16,268 
 ) 
 
 ( 187,838 
 ) 
 
 Cash flows from financing activities: 
 
 Proceeds from issuance of PIPE Shares
 
 57,312 
 
 45,000 
 
 Proceeds from issuance of PIPE Warrants
 
 497 
 
 - 
 
 Proceeds from Yellowstone trust
 
 - 
 
 15,691 
 
 Proceeds from exercise of warrants
 
 3 
 
 3 
 
 Payments for equity issuance costs
 
 ( 800 
 ) 
 
 ( 9,153 
 ) 
 
 Refund of debt issuance costs
 
 - 
 
 1,249 
 
 Payments of loans payable
 
 ( 1,762 
 ) 
 
 - 
 
 Payments of employee taxes related to vested equity awards
 
 ( 377 
 ) 
 
 - 
 
 Net cash provided by financing activities
 
 54,873 
 
 52,790 
 
 Net (decrease) increase in cash and restricted cash
 
 30,870 
 
 ( 162,539 
 ) 
 
 Cash and restricted cash, beginning of year
 
 41,396 
 
 203,935 
 
 Cash and restricted cash, end of year
 
 $ 
 72,266 
 
 $ 
 41,396 
 
 See accompanying Notes to Consolidated Financial Statements 

 48
 
 Table of Contents 
 
 SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES 

 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 

 DECEMBER 31, 2023 

 (in thousands, except share data) 

 1. 
 Organization and Business Operations 
 
 Sky Harbour Group Corporation (“SHG”) is a holding company organized under the laws of the State of Delaware and, through its main operating subsidiary, Sky Harbour LLC and its subsidiaries (collectively, “Sky”), is an aviation infrastructure development company that develops, leases and manages general aviation hangars for business aircraft across the United States. Sky Harbour Group Corporation and its consolidated subsidiaries are collectively referred to as the “Company.”

 On January 25, 2022 ( the “Closing Date”), our predecessor, YAC, a special purpose acquisition company incorporated in Delaware on August 25, 2020, consummated the Yellowstone Transaction contemplated by the Equity Purchase Agreement, dated as of August 1, 2021 ( the “Equity Purchase Agreement”), with Sky, a Delaware limited liability company.

 As a result of the closing of the Yellowstone Transaction, and collectively with the other transaction described in the Equity Purchase Agreement, the Company was reorganized as an umbrella partnership-C corporation, or “Up-C”, structure in which substantially all of the operating assets of the Company are held by Sky and SHG’s only substantive assets are its equity interests in Sky (the “Common Units”). As of the Closing Date, SHG owned approximately 26.1 % of the common units of Sky (the “Sky Common Units”), and the prior holders of Sky’s Existing Common Units (the “LLC Interests”) owned approximately 73.9 % of the Sky Common Units and control the Company through their ownership of the Class B Common Stock, $ 0.0001 par value (“Class B Common Stock”) of the Company. As of December 31, 2023 , the Company and the LLC Interests owned approximately 36.5 % and 63.5 % of Sky Common Units, respectively. See Notes 2 and 3 for additional discussion related to the Yellowstone Transaction.

 2. 
 Basis of Presentation and Significant Accounting Policies 
 
 Basis of Presentation 

 The accompanying consolidated financial statements and the related notes (the “Financial Statements”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission. These Financial Statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

 Certain historical amounts have been reclassified to conform to the current year’s presentation.

 Notwithstanding the legal form of the Yellowstone Transaction pursuant to the terms therein, the Yellowstone Transaction was accounted for as a reverse recapitalization in accordance with GAAP (the “Reverse Recapitalization”). Under this method of accounting, YAC was treated as the acquired company for financial reporting purposes, and Sky was treated as the accounting acquirer. In accordance with this accounting method, the Yellowstone Transaction was treated as the equivalent of Sky issuing stock for the net assets of YAC, accompanied by a recapitalization.

 Sky was deemed the accounting acquirer for purposes of the Yellowstone Transaction based on an evaluation of the following facts and circumstances:

 • The LLC Interests, through their ownership of the Class B Common Stock, hold a majority voting interest in the Company;

 • The LLC Interests have the ability to nominate and elect the majority of the Company’s Board of Directors;

 • Sky’s senior management team comprises the senior management of the Company; and

 • Sky’s assets were larger in relative size compared to YAC’s assets prior to the Yellowstone Transaction.

 Thus, the financial statements included in this Report reflect (i) the historical operating results of Sky prior to the Yellowstone Transaction; (ii) the combined results of Sky and SHG from the date of the Yellowstone Transaction; and (iii) the net assets of SHG (formerly YAC) were stated at historical cost, with no goodwill or other intangible assets recorded.
 
 49 
 
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 Use of Estimates 

 The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Such estimates include assumptions used within impairment analyses, estimated useful lives of depreciable assets and amortizable costs, estimates of inputs utilized in determining the fair value of financial instruments such as warrants, estimates and assumptions related to right-of-use assets and operating lease liabilities, and estimates and assumptions used in the determination of the fair value of assets acquired and liabilities assumed in business combinations. Actual results could differ materially from those estimates.
 
 Risks and Uncertainties 

 The Company’s operations have been limited to-date. For most of its history, the Company was engaged in securing access to land through ground leases, and developing and constructing aviation hangars. The major risks faced by the Company is its future ability to obtain additional tenants for the facilities that it constructs, and to contract with such tenants for rental income in an amount that is sufficient to meet the Company’s financial obligations, including increasing construction costs due to inflation and increased borrowing costs to the extent that the Company incurs additional indebtedness.
 
 Liquidity and Capital Resources 

 As a result of ongoing construction projects and business development activities, including the development of aircraft hangars and the leasing of available hangar space, the Company has incurred recurring losses and negative cash flows from operating activities since its inception. The Company expects to continue to invest in such activities and generate operating losses in the near future.

 The Company obtained long-term financing through bond and equity offerings to fund its construction, lease, and operational commitments, and believes its liquidity is sufficient to allow continued operations for more than one year after the date these financial statements are issued.
 
 Significant Accounting Policies 

 Basis of Consolidation 

 SHG is deemed to have a controlling interest of Sky through its appointment as the Managing Member of Sky, in which SHG has control over the affairs and decision-making of Sky. The interests in Sky not owned by the Company are presented as non-controlling interests. Sky’s ownership percentage in each of its consolidated subsidiaries is 100 %, unless otherwise disclosed.
 
 Cash and Restricted Cash 

 The Company’s cash is held at a major commercial bank, which cash balance may at times exceed the Federal Deposit Insurance Corporation limit. To date, the Company has not experienced any losses on its cash deposits. The Company monitors the relative credit standing of financial institutions with whom the Company transacts and limits the amount of credit exposure with any one entity. 

 Pursuant to the Company’s bond offering described in Note 10 — Bonds Payable, Loans Payable, and Interest , various restricted trust bank accounts were established at a major financial institution. Such trust bank accounts are included in Restricted cash and Restricted investments on the consolidated balance sheet as of December 31, 2023 and December 31, 2022 .
 
 50 
 
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 Investments 

 Investments of the Company's cash in various U.S. Treasury securities have been classified as available-for-sale and are carried at estimated fair value utilizing Level 1 inputs as determined based upon quoted market prices.

 Unrealized gains and losses are excluded from earnings and are reported as a component of comprehensive income (loss). The Company periodically evaluates whether declines in fair values of its available-for-sale securities below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company's ability and intent to hold the available-for-sale security until a forecasted recovery occurs or its contractual maturity. Additionally, the Company assesses whether it has plans to sell the security or it is more likely than not it will be required to sell any available-for-sale securities before recovery of its amortized cost basis. Realized gains and losses and declines in fair value judged to be other than temporary, if any, on available-for-sale securities are included in other (income) expenses. The costs of investments sold is based on the specific-identification method.

 Restricted Investments Held-to-Maturity 

 Pursuant to provisions within the Master Indenture of the Series 2021 Bonds, as defined in Note 10 — Bonds Payable, Loans Payable, and Interest , the Company invests the funds held in the restricted trust bank accounts in various U.S. Treasury securities. Therefore, such investments are reported as “Restricted investments” in the accompanying consolidated balance sheets. The fair value of the Company’s restricted investments is estimated utilizing Level 1 inputs including prices for U.S. Treasury securities with comparable maturities on active markets.

 Unrealized losses on certain of the Company's investments and restricted investments are primarily attributable to changes in interest rates. The Company does not believe the unrealized losses represent impairments because the unrealized losses are due to general market factors. The Company has not recognized an allowance for expected credit losses related to its investments or restricted investments as the Company has not identified any unrealized losses attributable to credit factors during the years ended December 31, 2023 and December 31, 2022. The Company has the ability and intent to hold these restricted investments until maturity, and as a result, the Company would not expect the value of these investments to decline significantly due to a sudden change in market interest rates. The held-to-maturity restricted investments are carried on the consolidated balance sheet at amortized cost.
 
 Cost of Construction 

 Cost of construction on the consolidated balance sheets is carried at cost. The cost of acquiring an asset includes the costs necessary to bring a capital project to the condition necessary for its intended use. Costs are capitalized once the construction of a specific capital project is probable. Construction labor and other direct costs of construction are capitalized. Professional fees for engineering, procurement, consulting, and other soft costs that are directly identifiable with the project and are considered an incremental direct cost are capitalized. Activities associated with internally manufactured hangar buildings, including materials, direct manufacturing labor, and manufacturing overhead directly identifiable with such activities are allocated to our construction projects and capitalized. The Company allocates a portion of its internal salaries to both capitalized cost of construction and to general and administrative expense based on the percentage of time certain employees worked in the related areas. Interest, net of the amortization of debt issuance costs and premiums, and net of interest income earned on bond proceeds, is also capitalized until the capital project is completed.
 
 Constructed assets, net 

 Constructed assets on the consolidated balance sheets consists of developed aircraft hangar buildings and are carried at cost less accumulated depreciation. Once a capital project is complete, the Company begins to depreciate the constructed asset on a straight-line basis over the lesser of the life of the asset or the remaining term of the related ground lease, including expected renewal terms.
 
 Other long-lived assets 

 Long-lived assets on the consolidated balance sheets consists principally of land, buildings, machinery and equipment, ground support equipment, software, and computer equipment. Long-lived assets are carried at cost less accumulated depreciation. Maintenance and repair expenses are charged to expense as incurred. Depreciation is recognized on a straight-line basis over 3 to 20 years, based on the estimated useful life of the assets.
 
 Impairment of long-lived assets 

 The Company’s assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment analyses are based on, in part, the Company’s current plans, intended holding periods and available market information at the time the analyses are prepared. An impairment exists when the carrying amount of an asset exceeds the aggregate projected future cash flows over the anticipated holding period on an undiscounted basis. An impairment loss is measured based on the excess of the property’s carrying amount over its estimated fair value. Estimates of fair value are determined using discounted cash flow models, which consider, among other things, anticipated holding periods, current market conditions and utilize unobservable quantitative inputs, including appropriate capitalization and discount rates. If the estimates of the projected future cash flows, anticipated holding periods, or market conditions change, evaluation of impairment losses may be different and such differences could be material to the consolidated financial statements. The evaluation of anticipated cash flows is subjective and is based, in part, on assumptions regarding future occupancy, rental rates and other factors that could differ materially from actual results.
 
 51 
 
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 Leases 

 The Company accounts for leases under Accounting Standards Codification (“ASC”) Topic 842, Leases . The Company determines whether a contract contains a lease at the inception of the contract. ASC Topic 842 requires lessees to recognize lease liabilities and right-of-use (“ROU”) assets for all operating leases with terms of more than 12 months on the consolidated balance sheets. The Company has made an accounting policy election to not recognize leases with an initial term of 12 months or less on the Company’s consolidated balance sheets and will result in recognizing those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. When management determines that it is reasonably certain that the Company will exercise its options to renew the leases, the renewal terms are included in the lease term and the resulting ROU asset and lease liability balances.

 The Company has lease agreements with lease and non-lease components; the Company has elected the accounting policy to not separate lease and non-lease components for all underlying asset classes. The Company has not elected to capitalize any interest cost that is implicit within its operating leases into cost of construction on the consolidated balance sheet, but instead, expenses its ground lease cost as a component of operating expenses in the consolidated statements of operations.

 All of the Company’s ground leases at airports are classified as operating leases under ASC Topic 842. Management has determined that it is reasonably certain that the Company will exercise its options to renew the leases, and therefore the renewal options are included in the lease term and the resulting ROU asset and operating lease liability balances. As the Company’s lease agreements do not provide a readily determinable implicit rate, nor is the rate available to the Company from its lessors, the Company uses its incremental borrowing rate to determine the present value of the lease payments. 

 The Company has operating leases that contain variable payments, most commonly in the form of common area maintenance and operating expense charges, which are based on actual costs incurred. These variable payments were excluded from the calculation of the ROU asset and operating lease liability balances since they are not fixed or in-substance fixed payments. These variable payments were not material in amount for both of the years ended December 31, 2023 and 2022 . Some of the leases contain covenants that require the Company to construct the hangar facilities on the leased grounds within a certain period and spend a set minimum dollar amount. For one of the leases, the shortfall (if any) must be paid to the lessor. See Note 17 — Commitments and Contingencies. 
 
 Warrants liability 

 The Company accounts for the warrants assumed in the Yellowstone Transaction and the warrants sold and issued in connection with the Private Placement Purchase Agreement (as defined in Note 12 — Equity and Redeemable Equity ) in accordance with the guidance contained in ASC Topic 815, “Derivatives and Hedging” (“ASC 815” ), under which warrants that do not meet the criteria for equity classification and must be recorded as derivative liabilities. Accordingly, the Company classifies the warrants as liabilities carried at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until the warrants are exercised or expire, and any change in fair value is recognized as an unrealized gain or loss in the consolidated statements of operations.
 
 Fair Value of Financial Instruments 

 ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value and establishes a framework for measuring fair value. The objective of fair value is to determine the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). ASC Topic 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels: Level 1 – quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities; Level 2 – quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data; and Level 3 – unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. Considerable judgment is necessary to interpret Level 2 and 3 inputs in determining the fair value of financial and non-financial assets and liabilities. Accordingly, fair value estimates may be different than the amounts that may ultimately be realized upon sale or disposition of these assets or settlement of these liabilities.
 
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 Business Combinations 

 The Company accounts for business combinations using the acquisition method of accounting under ASC Topic 805, Business Combinations , whereby the total purchase price is allocated to tangible and intangible assets acquired and liabilities assumed based on respective estimated fair values. The initial valuations are derived from estimated fair value assessments and assumptions used by managements. The excess of the acquisition price over those estimated fair values, if any, is recorded as goodwill. Transaction-related expenses and restructuring costs, if any, are expensed as incurred.
 
 Revenue recognition 

 The Company leases the hangar facilities that it constructs to third parties. The Company determines whether a contract contains a lease at the inception of the contract. The lease agreements are either on a month-to-month basis or have a defined term and may have options to extend the term. Some of the leases contain options to terminate the lease by either party with given notice. The Company expects to continue to derive benefit from the underlying assets after the end of the lease term through further leasing arrangements. The underlying assets are the leasehold interest that the Company has in connection with its ground leases. There are no options given to the lessee to purchase the underlying assets.

 Rental revenue is recognized in accordance with ASC 842 and includes fixed payments of cash rents, which represents revenue each tenant pays in accordance with the terms of its respective lease and is recognized on a straight-line basis over the term of the lease. Rental revenue and the corresponding rent and other receivables are recorded net of any concessions and uncollectible tenant receivables for all periods presented. The Company evaluates the collectability of tenant receivables for payments required under the lease agreements. If the Company determines that collectability is not probable, the Company recognizes any difference between revenue amounts recognized to date under ASC 842 and payments that have been collected from the lessee, including any additional rent or lease termination fees, as a current period adjustment to rental revenue.

 Variable lease payments consist of tenant reimbursements for common area maintenance, utilities, and operating expenses of the property, and various other fees, including fees associated with the delivery of aircraft fuel, late fees, and lease termination fees. Variable lease payments are charged based on the terms and conditions included in the respective tenant leases and are recognized in the same period as the expenses are incurred. For the years ended December 31, 2023 and December 31, 2022, rental revenue includes $ 1,565 and $ 156 of variable lease payments, respectively. Variable lease revenue recognized during the year ended December 31, 2023 included a negotiated lease termination fee received from a tenant of two hangars at OPF whereby the Company agreed to release the tenant from its lease obligations in exchange for approximately 8.5 months of additional rent. 

 As of December 31, 2023 and December 31, 2022, the deferred rent receivable included in prepaid expenses and other assets was $ 367 and $ 83 , respectively. Rent received in advance represents tenant payments received prior to the contractual due date, and is included in accounts payable, accrued expenses, and other liabilities in the consolidated balance sheet. Rent received in advance consisted of $ 241 and $ 95 as of December 31, 2023 and December 31, 2022, respectively.

 For the year ended December 31, 2023 and 2022 , the Company derived 30 % and 78 % of its revenue from two tenants, respectively.
 
 Advertising Costs 

 The Company expenses the cost of advertising and marketing as incurred. Advertising and marketing costs recognized as general and administrative expenses totaled $ 279 for the year ended December 31, 2023 , and $ 340 for the year ended December 31, 2022 .
 
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 Income Taxes 

 SHG is classified as a corporation for Federal income tax purposes and is subject to U.S. Federal and state income taxes. SHG includes in income, for U.S. Federal income tax purposes, its allocable portion of income from the “pass-through” entities in which it holds an interest, including Sky. The “pass-through” entities, are not subject to U.S. Federal and certain state income taxes at the entity level, and instead, the tax liabilities with respect to taxable income are passed through to the members, including SHG. As a result, prior to the Yellowstone Transaction, Sky was not subject to U.S. Federal and certain state income taxes at the entity level.

 The Company follows the asset and liability method of accounting for income taxes. This method gives consideration to the future tax consequences associated with the differences between the financial accounting and tax basis of the assets and liabilities as well as the ultimate realization of any deferred tax asset resulting from such differences, as well as from net operating losses and other tax-basis carryforwards. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. When a valuation allowance is increased or decreased, a corresponding tax expense or benefit is recorded.

 Amounts payable under the Tax Receivable Agreement, as defined in Note 3 — Yellowstone Transaction , are accrued by a charge to income when it is probable that a liability has been incurred and the amount is estimable.
 
 Recently Adopted Accounting Pronouncements 

 Credit Losses (Topic 326 ) 

 In June 2016, the FASB issued ASU No. 2016 - 13, Financial Instruments - Credit Losses (Topic 326 ): Measurement of Credit Losses on Financial Instruments (“ASU 2016 - 13” ). Subsequent to the issuance of ASU 2016 - 13, the FASB clarified the guidance through several ASUs. The collective new guidance (ASC 326 ) generally requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used and establishes additional disclosures related to credit risks. The Company adopted this guidance using the modified retrospective method in the first quarter of fiscal year 2023. The adoption did not have a material impact on the Company’s consolidated financial statements.

 Recently Issued Accounting Pronouncements 

 Segment Reporting (Topic 280 ) 

 In November 2023, the FASB issued ASU No. 2023 - 07, Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The disclosure requirements included in ASU No. 2023 - 07 are required for all public entities, including entities with a single reportable segment. ASU No. 2023 - 07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. The guidance is required to be applied on a retrospective basis. We are currently evaluating the impact of the standard on our consolidated financial statement disclosures.

 Income Taxes (Topic 740 ) 

 In December 2023, the FASB issued ASU No. 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures . The amendments in this update apply to all entities that are subject to Topic 740, Income Taxes . The standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The amendments in this update are effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this updated standard on its disclosures to the consolidated financial statements.
 
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 3. 
 Yellowstone Transaction 
 
 As contemplated by the Equity Purchase Agreement, on the Closing Date, the following occurred:

 • YAC changed its name to Sky Harbour Group Corporation.

 • All outstanding shares of stock held by the Sponsor were converted into shares of Class A Common Stock of the Company.

 • Sky restructured its capitalization and issued to the Company 14,937,581 Sky Common Units, which was equal to the number of outstanding shares of Class A Common Stock immediately after giving effect to the Equity Purchase Agreement. The number of outstanding shares after the Equity Purchase Agreement reflected the redemption of Class A Common Stock (by former holders of the special purpose acquisition company shares that elected to redeem such shares) and the Class A Common Stock issued as a result of the BOC PIPE investment (the “BOC PIPE”), the reclassification of the existing Sky Common Units (other than the Sky Incentive Units), existing Sky Series A preferred units (the “Series A Preferred Units”) and Series B preferred units (the “Series B Preferred Units”) into Sky Common Units.

 • Certain adjustments were affected to the number of Sky Incentive Units to reflect the new capital structure.

 • SHG was appointed as the managing member of Sky under the Third Amended and Restated Operating Agreement (the “A&R Operating Agreement”).

 • The Sky Common Units issued to the Sponsor in respect of Sky’s Series B Preferred Units were converted into 5,500,000 shares of Class A Common Stock of the Company.

 • The LLC Interests received one share of Class B Common Stock for each Sky Common Unit that they held, and as consideration for the issuance of 14,937,581 Sky Common Units by Sky to the Company, YAC contributed to Sky the net amount held in the YAC trust account after deducting the amount required to fund the redemption of the Class A Common Stock held by eligible stockholders who properly elected to have their shares redeemed as of the Closing Date and the amount of various transaction costs.

 • The YAC Warrants that were issued and outstanding immediately prior to the Closing Date became SHG Warrants.

 The following table reconciles the elements of the Yellowstone Transaction to the consolidated statements of changes in equity for the year ended December 31, 2022: 

 Yellowstone Transaction 
 
 Cash - Yellowstone trust and cash, net of redemptions
 $ 15,691 

 Cash - BOC PIPE investment
 45,000 

 Less: transaction costs and advisory fees
 ( 12,731 ) 

 Net proceeds from the Yellowstone Transaction
 $ 47,960 

 Conversion of Sky Series B preferred units to Class A Common Stock
 54,029 

 Less: Initial fair value of Warrants liability assumed on 1/25/2022
 ( 7,986 ) 

 Net adjustment to total equity from the Yellowstone Transaction
 $ 94,003 

 The following table reconciles the number of shares of SHG Common Stock immediately following the consummation of the Yellowstone Transaction:

 Number of shares 
 
 Yellowstone Common stock, outstanding prior to Yellowstone Transaction
 13,598,898 

 Less: redemption of Yellowstone Common Stock
 ( 12,061,041 ) 

 Common stock of Yellowstone, net of redemptions
 1,537,857 

 Shares held by Sponsor
 3,399,724 

 Conversion of Sky Series B units to Class A Common Stock
 5,500,000 

 Shares issued in BOC PIPE investment
 4,500,000 

 Class A Common Stock outstanding after the Yellowstone Transaction
 14,937,581 

 Class B Common Stock issued to LLC Interests
 42,192,250 

 Total shares of common stock following the Yellowstone Transaction
 57,129,831 

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 Tax Receivable Agreement 

 On the Closing Date, in connection with the completion of the Yellowstone Transaction and as contemplated by the Equity Purchase Agreement, the Company, Sky, the LLC Interests, and the TRA Holder Representative, entered into a tax receivable agreement (the “Tax Receivable Agreement”). Pursuant to the Tax Receivable Agreement, the Company will generally be required to pay the LLC Interests 85 % of the amount of savings, if any, in U.S. federal, state, local, and foreign taxes that are based on, or measured with respect to, net income or profits, and any interest related thereto that the Company realizes, or is deemed to realize, as a result of certain tax attributes, including:

 • existing tax basis in certain assets of Sky and certain of its direct or indirect subsidiaries, including assets that will eventually be subject to depreciation or amortization, once placed in service, attributable to Sky Common Units acquired by the Company from a TRA Holder, as determined at the time of the relevant acquisition;

 • tax basis adjustments resulting from taxable exchanges of Sky Common Units (including any such adjustments resulting from certain payments made by the Company under the Tax Receivable Agreement) acquired by the Company from a TRA Holder pursuant to the terms of the A&R Operating Agreement; and

 • tax deductions in respect of portions of certain payments made under the Tax Receivable Agreement (each of the foregoing, collectively, the “Tax Attributes”).

 As of December 31, 2023 , no transactions occurred that would result in a cash tax savings benefit that would trigger the recording of a liability under the terms of the Tax Receivable Agreement.

 4. 
 Rapidbuilt Acquisition 
 
 On May 12, 2023 ( the “Option Exercise Date”), Sky exercised its option to acquire a 51 % equity interest in Overflow Ltd., a Texas limited partnership (“Overflow”), and its wholly-owned operating subsidiary, Rapidbuilt, Inc., a Texas corporation (“Rapidbuilt”), for nominal consideration (the “Rapidbuilt Acquisition”). As a result of the Rapidbuilt Acquisition, Weatherford Steel Buildings Holdings LLC, a Delaware limited liability company and wholly-owned subsidiary of Sky (“WSBH”), owns a 50 % limited partnership interest in Overflow, and Weatherford Steel Buildings GP LLC, a Delaware limited liability company and wholly-owned subsidiary of Sky (“WSB GP”), owns a 1 % general partnership interest in Overflow. 

 Rapidbuilt is a manufacturer of pre-engineered steel buildings that previously entered into a supplier arrangement with Sky. Rapidbuilt and Sky’s strategic partnership has resulted in a standard set of proprietary prototype hangar designs, which are intended to deliver high-quality business aviation facilities, lower construction costs, minimize development risk, expedite permit issuance, and facilitate the implementation of refinements across Sky’s portfolio. The Company had pre-existing relationships with Rapidbuilt through a vendor agreement entered into in July 2022 to acquire construction materials related to the Company's development projects (the "Rapidbuilt Vendor Agreement") and a revolving line of credit loan and security agreement (the "Rapidbuilt Loan Agreement") to fund the working capital requirement of Rapidbuilt. These pre-existing relationships were effectively settled in the acquisition and the net receivable balance of $ 44 is included within the consideration transferred. No gain or loss was recognized in the effective settlement of the Rapidbuilt Vendor Agreement and the Rapidbuilt Loan Agreement.

 The total cash purchase consideration was nominal. The Company accounted for the acquisition using the acquisition method of accounting, whereby the total purchase price was allocated to assets acquired and liabilities assumed based on respective estimated fair values. The estimated fair values of the acquired assets and assume liabilities are based on preliminary calculations and subject to further refinement and may require adjustments to arrive at the final purchase price accounting. The Company expects the final purchase price allocation to be completed in a period of time that will not exceed one year from the Option Exercise Date. There can be no assurance that such finalization will not result in material changes from the preliminary purchase price allocation.

 The following tables summarize the preliminary allocation of the purchase price to the fair value of the assets acquired and liabilities assumed for the Rapidbuilt Acquisition:

 May 12, 2023 
 
 Cash
 $ 293 

 Restricted Cash
 1,500 

 Long-lived assets
 10,752 

 Total assets
 12,545 

 Accounts payable, accrued expenses and other liabilities
 1,427 

 Loans payable and finance lease liabilities
 11,074 

 Total liabilities
 12,501 

 Total fair value of net assets acquired
 44 

 Effective settlement of net receivable from Rapidbuilt
 44 

 Total consideration transferred
 $ 44 

 Following the Rapidbuilt Acquisition, substantially all of Overflow and Rapidbuilt's activities relate to the manufacturing of pre-engineering hangar structures for Sky's hangar development projects. As such, the pro-forma effect of this acquisition on revenues and earnings was not material. The transaction costs associated with the acquisition were immaterial for the year ended December 31, 2023. 

 .

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 5. 
 Investments and Restricted Investments 
 
 The following tables are summaries of the amortized cost, unrealized gains, unrealized losses, and fair value by investment type as of December 31, 2023 and December 31, 2022: 

 December 31, 2023 
 
 Amortized Cost 
 Gross Unrealized Gains 
 Gross Unrealized Losses 
 Estimated Fair Value 
 
 Investments, available for sale:
 
 U.S. Treasuries
 $ 11,554 $ 312 $ - $ 11,866 

 Total investments
 $ 11,554 $ 312 $ - $ 11,866 

 Restricted investments, held-to-maturity:
 
 U.S. Treasuries
 88,213 105 ( 694 ) 87,624 

 Total restricted investments
 $ 88,213 $ 105 $ ( 694 ) $ 87.624 

 December 31, 2022 
 
 Amortized Cost 
 Gross Unrealized Gains 
 Gross Unrealized Losses 
 Estimated Fair Value 
 
 Investments, available for sale:
 
 U.S. Treasuries
 $ 24,997 $ 65 $ ( 167 ) $ 24,895 

 Total investments
 $ 24,997 $ 65 $ ( 167 ) $ 24,895 

 Restricted investments, held-to-maturity:
 
 U.S. Treasuries
 114,648 299 ( 1,991 ) 112,956 

 Total restricted investments
 $ 114,648 $ 299 $ ( 1,991 ) $ 112,956 

 The following table sets forth the maturity profile of the Company's investments and restricted investments as of December 31, 2023: 

 Investments 
 Restricted Investments 
 
 Due within one year
 $ 11,866 $ 74,390 

 Due one year through five years
 - 13,823 

 Total
 $ 11,866 $ 88,213 

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 6. 
 Cost of Construction and Constructed Assets 
 
 The Company’s portfolio as of December 31, 2023 includes the following completed and in-development projects:

 ●
 Addison Airport ("ADS"), Addison, TX (Dallas area);
 
 ●
 Bradley International Airport ("BDL"), Windsor Locks, CT (Hartford area);
 
 ●
 Centennial Airport ("APA"), Englewood, CO (Denver area);
 
 ●
 Chicago Executive Airport ("PWK"), Wheeling, IL (Chicago area);
 
 ●
 Hudson Valley Regional Airport ("POU"), Wappingers Falls, NY (New York area);
 
 ●
 Miami-Opa Locka Executive Airport ("OPF"), Opa Locka, FL (Miami area);
 
 ●
 Nashville International Airport ("BNA"), Nashville, TN;
 
 ●
 Phoenix Deer Valley Airport ("DVT"), Phoenix, AZ; and
 
 ●
 Sugar Land Regional Airport ("SGR"), Sugar Land, TX (Houston area).
 
 Constructed assets, net, and cost of construction, consists of the following:

 December 31, 2023 
 December 31, 2022 
 
 Constructed assets, net of accumulated depreciation: 
 
 Buildings, SGR, BNA, and OPF (Phase I)
 $ 80,232 $ 40,921 

 Accumulated depreciation
 ( 2,949 ) ( 1,212 ) 

 $ 77,283 $ 39,709 

 Cost of construction: 
 
 OPF (Phase II); APA (Phase I); DVT (Phase I); and ADS (Phase I & II)
 $ 64,212 $ 48,242 

 The BNA, OPF Phase I, and SGR projects are being depreciated over a weighted-average useful life of approximately 47.0 years. Depreciation expense for the year ended December 31, 2023 and 2022 totaled $ 1,737 and $ 633 , respectively. 

 7. 
 Long-lived Assets 
 
 Long-lived assets, net, consists of the following:

 December 31, 2023 
 December 31, 2022 
 
 Ground support equipment
 $ 1,051 $ 485 

 Machinery and equipment
 3,783 - 

 Buildings
 5,380 - 

 Land
 1,620 - 

 Other equipment and fixtures
 596 110 

 Purchase deposits and construction in progress
 362 650 

 12,792 1,245 

 Accumulated depreciation
 ( 963 ) ( 95 ) 

 $ 11,829 $ 1,150 

 Long-lived assets are being depreciated over a weighted-average use life of approximately 11.2 years. Depreciation expense for the year ended December 31, 2023 and 2022 totaled $ 541 and $ 61 , respectively. Capitalized depreciation of long-lived assets included in cost of construction totaled $ 331 and $ 0 for the years ended December 31, 2023 and December 31, 2022, respectively . As of December 31, 2023 and December 31, 2022 , long-lived assets included approximately $ 362 and $ 650 , respectively, of purchase deposits towards long-lived assets which are not being depreciated as the assets have not been placed into service.

 In June 2022, the Company evaluated the development progress related to its smart hangar app. This evaluation included the decision to abandon previous software development efforts and the transition of development efforts to a new third -party development company. In connection with this evaluation, the Company determined that previously capitalized software costs associated with the abandoned development were not recoverable and recognized an impairment loss of $ 248 during the year ended December 31, 2022. 

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 8. 
 Supplemental Balance Sheet and Cash Flow Information 
 
 Accounts payable, accrued expenses and other liabilities 

 Accounts payable, accrued expenses and other liabilities, consists of the following:

 December 31, 2023 
 December 31, 2022 
 
 Costs of construction
 $ 7,022 $ 6,098 

 Employee compensation and benefits
 2,438 2,047 

 Interest
 3,474 3,470 

 Professional Fees
 1,154 1,621 

 Other
 2,652 948 

 $ 16,740 $ 14,184 

 Supplemental Cash Flow Information 

 The following table summarizes non-cash investing and financing activities:

 Year ended 
 
 December 31, 2023 
 December 31, 2022 
 
 Accrued costs of construction, including capitalized interest
 $ 9,875 $ 8,164 

 Accrued costs of long-lived assets
 32 - 

 Accrued equity issuance costs
 1,000 1,500 

 Debt issuance costs and premium amortized to cost of construction
 210 282 

 The following table summarizes non-cash activities associated with the Company’s operating leases:

 Year ended 
 
 December 31, 2023 
 December 31, 2022 
 
 Right-of-use assets obtained in exchange for operating lease liabilities
 $ 16,870 $ 3,260 

 Net decrease in right-of-use assets and operating lease liabilities due to lease remeasurement
 ( 1,639 ) ( 11,500 ) 

 The following table summarizes interest paid:

 Year ended 
 
 December 31, 2023 
 December 31, 2022 
 
 Interest paid
 $ 7,481 $ 5,533 

 The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets to the total shown within the consolidated statements of cash flows:

 Year ended 
 
 December 31, 2023 
 December 31, 2022 
 
 Cash, beginning of year
 $ 2,174 $ 6,805 

 Restricted cash, beginning of year
 39,222 197,130 

 Cash and restricted cash, beginning of year
 $ 41,396 $ 203,935 

 Cash, end of year
 $ 60,257 $ 2,174 

 Restricted cash, end of year
 12,009 39,222 

 Cash and restricted cash, end of year
 $ 72,266 $ 41,396 

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 9. 
 Leases 
 
 Lessee 

 The table below summarizes operating lease expense for the years ended December 31, 2023 and December 31, 2022 recorded in the captions within our consolidated statement of operations:

 Year Ended 
 
 December 31, 2023 
 December 31, 2022 
 
 Operating expenses
 $ 4,047 $ 3,735 

 General and administrative expenses
 96 81 

 Total operating lease expense $ 4,143 $ 3,816 

 The Company’s ground leases have remaining terms ranging between 26 to 73 years, including options for the Company to extend the terms. These leases expire between 2049 and 2097, which include all lease extension options available to the Company. Certain of the Company's ground leases contain options to lease additional parcels of land at the Company's option within a specified period of time. In addition to the Company’s ground leases, the company has operating leases for office space and ground support vehicles, and finance leases for vehicles supporting operations at Rapidbuilt.

 The Company’s ground lease at OPF was entered into in May 2019 through its wholly owned subsidiary, Sky Harbour Opa Locka Airport LLC (“SHOLA”), with AA Acquisitions LLC (“AA”). AA is the master ground lessee of Miami Dade County (“MDC”), the ultimate landowner. On April 29, 2022, the Company, through a wholly-owned subsidiary outside the Obligated Group (as defined in Note 10 — Bonds Payable, Loans Payable, and Interest ), purchased AA’s underlying interest in the ground lease for approximately $ 8.5 million and now leases the OPF property directly from MDC (the “OPF Lease Transaction”). The OPF Lease Transaction also required the Company to pay approximately $ 1.0 million in assignment fees to MDC, which, along with the $ 8.5 million purchase price, were recognized as initial direct costs and presented as a component of right-of-use assets. Following the OPF Lease Transaction, SHOLA continues to be obligated under the existing sublease but to an affiliate within the Company. The OPF Lease Transaction extends the term of the lease at OPF for the Company to approximately 57 years. The Company has accounted for the OPF Lease Transaction as a lease modification requiring remeasurement and remeasured the right-of-use asset and operating lease liability utilizing the Company’s incremental borrowing rate as of the date of remeasurement. As a result of the remeasurement, non-cash subtractions to the right-of-use asset and operating lease liability of $ 12,289 were recorded during April 2022. 

 In January 2023, the Company executed a lease amendment with the Town of Addison, Texas, to add two additional parcels of land (the "ADS Expansion Parcels") to the existing lease at ADS (the "ADS Lease"). The land associated with the ADS Expansion Parcels became available for possession in June 2023 for one parcel, and is expected to become available for possession in July 2024 for the other. The lease term for the ADS Expansion Parcels will be 40 years from the completion of construction for each respective parcel, and will effectively extend the term of the existing ADS Lease to be co-terminus with the ADS Expansion Parcels. The ADS Lease and the ADS Expansion Parcels contain no additional extension options as the lease term is the maximum allowable term permitted by the Town of Addison.

 In October 2023, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the "PWK Lease") with PWK. The PWK Lease is divided into two parcels, with the first parcel containing approximately 15 acres of land ("PWK Phase I"). Under the terms of the PWK Lease, it is the intent of PWK to grant the Company a second parcel containing approximately 10 acres of land ("PWK Phase II"). The grant of the PWK Phase II land is at the sole discretion of PWK following the Company's completion of its development project at PWK Phase I. The term of the PWK Lease will be 50 years from the acceptance of the PWK Phase I parcel following customary due diligence and completion of a land survey, with lease payments commencing following the completion of construction. The PWK Lease contains no additional extension options exercisable by the Company or PWK.

 The Company was subject to requirements in its ground lease at SGR with respect to the Company's contemplated SGR Phase II project that defined (i) a minimum improvement amount of $ 2.0 million and (ii) that related construction commence by October 2023, unless otherwise waived or amended. In October 2023, the Company allowed the ground lease associated with the parcels designated for the SGR Phase II project to automatically terminate. The Company did not incur any lease termination penalties, nor had it capitalized any historical costs associated with the contemplated SGR Phase II project. 

 In December 2023, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “BDL Lease”) at BDL with the Connecticut Airport Authority (“CAA”). The BDL Lease covers a parcel containing approximately 8 acres of land at BDL. The initial term of the BDL Lease will be 30 years from the earlier of the date of completion of construction or June 30, 2026, with lease payments commencing contemporaneously with the term. The BDL Lease contains options exercisable by the Company to extend the BDL Lease an additional 20 years following the expiration of the initial term. The BDL Lease contains customary milestones by which the Company must submit site design plans and financing plans. 

 In December 2023, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement at POU with the County of Dutchess, New York (the “POU Lease”). The POU Lease covers two parcels containing approximately 7 acres of land at POU. The initial term of the POU Lease will be 15 years from the date of completion of construction, with lease payments commencing upon the earlier of completion of construction or December 2025. The POU Lease contains language permitting the Company to extend the POU Lease an additional 25 years at any point following the execution of the POU Lease, subject to Dutchess County legislative approval. The Company intends to seek the 25 -year extension in the first half of 2024. The POU Lease contains a customary due diligence period in which the Company holds the right to terminate the POU Lease within 270 days of its execution, as well as customary deadlines by which the Company must submit site design plans and commence construction.

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 Supplemental consolidated cash flow information related to the Company’s leases was as follows: 

 Year ended 
 
 December 31, 2023 
 December 31, 2022 
 
 Cash paid for amounts included in measurement of lease liabilities: 
 
 Operating cash flows from operating leases
 $ 1,971 $ 1,822 

 Operating cash flows from finance leases
 2 - 

 Financing cash flows from finance leases
 18 - 

 Supplemental consolidated balance sheet information related to the Company’s leases was as follows: 

 Weighted Average Remaining Lease Term in years 
 December 31, 2023 
 December 31, 2022 
 
 Operating leases
 53.40 55.30 

 Finance leases
 2.70 - 

 Weighted Average Discount Rate 
 
 Operating leases
 5.08 % 4.62 % 

 Finance leases
 5.00 % - 

 The Company’s future minimum lease payments required under leases as of December 31, 2023 were as follows: 

 Year Ending December 31, 
 Operating Leases 
 Finance Leases 
 
 2024
 $ 2,080 $ 29 

 2025
 2,323 24 

 2026
 3,296 17 

 2027
 3,727 2 

 2028
 3,634 - 

 Thereafter
 249,683 - 

 Total lease payments
 264,743 72 

 Less imputed interest
 ( 195,306 ) ( 5 ) 

 Total
 $ 69,437 $ 67 

 Lessor 

 Tenant leases to which the Company is the lessor require the following non-cancelable future minimum lease payments from tenants as of December 31, 2023 :

 Year Ending December 31, 
 Operating Leases 
 
 2024
 $ 7,428 

 2025
 6,313 

 2026
 4,012 

 2027
 2,834 

 2028
 1,203 

 Thereafter
 2,257 

 Total lease payments
 24,047 

 Less rent concessions to be applied at Company’s discretion
 ( 214 ) 

 Total
 $ 23,833 

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 10. 
 Bonds payable, Loans payable and interest 
 
 Bonds payable 

 On May 20, 2021, Sky formed a new wholly-owned subsidiary, Sky Harbour Capital LLC, as a parent corporation to its wholly-owned subsidiaries that operate each of the aircraft hangar development sites under its first six ground leases. Sky Harbour Capital LLC and these subsidiaries form an Obligated Group (the “Obligated Group” or the “Borrowers”) under a series of bonds that were issued in September 2021 with a principal amount of $ 166.3 million (the “Series 2021 Bonds”). The members of the Obligated Group are jointly and severally liable under the Series 2021 Bonds. SHG and its other subsidiaries are not members of the Obligated Group and have no obligation to repay the bonds.

 The Series 2021 Bonds are payable pursuant to a loan agreement dated September 1, 2021 between the Public Finance Authority (of Wisconsin) and the Borrowers. The payments by the Borrowers under the loan agreement are secured by a Senior Master Indenture Promissory Note, Series 2021 - 1 issued by the Obligated Group under an indenture (the “Master Indenture”). The obligations of the Borrowers are collateralized by certain leasehold and sub-leasehold deeds of trust or mortgages on the Borrowers’ interests in the development sites and facilities being constructed at each airport where the Borrowers hold ground leases. In addition, the Borrowers have assigned, pledged and granted a first priority security interest in all funds held under the Master Indenture and all right, title and interest in the gross revenues of the Borrowers. Furthermore, Sky, Sky Harbour Holdings LLC and Sky Harbour Capital LLC have each pledged as collateral its respective ownership interest in any of the Borrowers.

 The bond trustee established various restricted bank accounts which were initially funded with the bond proceeds and cash on hand. The bond trustee will continue to control the Borrowers’ cash receipts and disbursements under a Trust Agreement. Such restricted funds are available to fund the construction expenditures of the two phases of OPF, BNA, DVT, APA, and ADS Phase I, with certain approvals and supplemental reports, up to $ 25 million at other airport sites, in addition to certain operating expenses such as ground lease expense. These accounts also include funds to pay debt service through the end of construction at each site and various reserve funds such as a ramp-up reserve, debt service reserve, and a maintenance reserve fund. Such trust bank accounts total approximately $ 98.8 million, of which $ 10.6 million and $ 88.2 million and included in Restricted cash and Restricted investments, respectively, on the consolidated balance sheet as of December 31, 2023 .

 The Borrowers have agreed to use all commercially reasonable efforts to jointly maintain a Debt Service Coverage Ratio (as defined in the agreement) of 1.25 for each applicable test period; provided, however, that the failure to maintain this ratio will not be considered an event of default so long as the Obligated Group takes all commercially reasonable action for correcting such deficiency. The measurement of the Debt Service Coverage Ratio will commence with the period ending December 31, 2024. If the Debt Service Coverage Ratio as of the end of any fiscal quarter is less than 1.0, the parent companies of the Borrowers will make contributions to the borrowers or otherwise cause the Debt Service Coverage Ratio to be at least 1.0 within 10 business days of the test date. If the Debt Service Coverage Ratio as of the end of any fiscal quarter is less than 1.25 , Sky Harbour Capital LLC must deliver to the trustees, within 120 days, an independent consultant’s report and a specific plan designed to achieve a Debt Service Coverage Ratio of 1.25 in the following fiscal year.

 The Series 2021 Bonds have principal amounts, interest rates, and maturity dates as follow: $ 21.1 million bearing interest at 4.00 %, due July 1, 2036; $ 30.4 million bearing interest at 4.00 %, due July 1, 2041; and $ 114.8 million bearing interest at 4.25 %, due July 1, 2054. The Series 2021 Bond that has a maturity date of July 1, 2036 was issued at a premium, and the Company received bond proceeds that were $ 0.2 million above its face value. The bond premium is being amortized as a reduction of interest expense over the life of the bond. Interest is payable on each January 1 and July 1, commencing January 1, 2022. Principal repayments due under the Series 2021 Bonds are paid annually, commencing July 1, 2032. 

 The bonds maturing on July 1, 2036 are subject to optional early redemption, at the option of Sky Harbour Capital LLC, on or after July 1, 2028, in whole or in part, at a redemption price equal to the principal amount plus interest accrued to the redemption date. The bonds maturing on July 1, 2041 and July 1, 2054 are subject to optional early redemption, at the option of Sky Harbour Capital LLC, on or after July 1, 2031, in whole or in part, at a redemption price equal to the principal amount plus interest accrued to the redemption date. An extraordinary optional redemption is permitted in the event of damage or destruction of any of the underlying assets.

 The Series 2021 Bonds are mandatorily redeemable upon the occurrence of certain events. Upon the sale of an asset by any Borrower, the applicable portion of the Series 2021 Bonds is subject to special mandatory redemption at prices specified in the agreement. Upon the occurrence of a determination of taxability in which the interest income of any of the bonds does not qualify as being excludable from the gross income of the holder (with limited exclusions), the Series 2021 Bonds are subject to mandatory redemption within 60 days, at a redemption price equal to the principal amount plus accrued interest. Upon the termination of any ground lease of a Borrower, and unless certain other certifications can be made, the Series 2021 Bonds are subject to redemption in an amount and at a redemption price as specified in the agreement. In lieu of redemption, the Bonds may be purchased by any of the Borrowers or by any party designated by Sky Harbour Capital LLC.

 As of December 31, 2023 and December 31, 2022, the fair value of the Company's Series 2021 Bonds was approximately $ 116.5 million and $ 119.5 million, respectively. The fair value of the Company's bonds is estimated utilizing Level 2 inputs including prices for the bonds on inactive markets.

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 The following table summarizes the Company’s Bonds payable as of December 31, 2023 and December 31, 2022 :

 December 31, 2023 
 December 31, 2022 
 
 Bonds payable: 
 
 Series 2021 Bonds Principal
 $ 166,340 $ 166,340 

 Premium on bonds
 249 249 

 Bond proceeds
 166,589 166,589 

 Debt issuance costs
 ( 4,753 ) ( 4,753 ) 

 Accumulated amortization of debt issuance costs and accretion bond premium
 584 374 

 Total Bonds payable, net
 $ 162,420 $ 162,210 

 In connection with the issuance of the Bonds Payable, the Company originally recognized debt issuance costs totaling $ 6 million which are being amortized into interest using the effective interest method over the life of the bonds. Interest that is incurred at the stated interest rate of the bonds, as well as the amortization of bond premium and amortization of debt issuance costs are capitalized and added to the cost of construction on the consolidated balance sheet. During the year ended December 31, 2022, the Company received a refund of approximately $ 1.2 million of debt issuance costs associated with the issuance of the Bonds Payable, and recognized the refund as a reduction of debt issuance costs.
 
 Vista Loan and Guaranty Agreement 

 In connection with the Rapidbuilt Acquisition, Sky and Vista Bank (the “Lender”) entered into a consent, waiver, and second amendment (the “Loan Amendment”) and a guaranty agreement (the “Guaranty Agreement”) associated with the senior loan agreement between Overflow and Rapidbuilt (collectively, the “Rapidbuilt Borrowers”), and the Lender (the “Vista Loan”). Pursuant to the Loan Amendment, (i) the Lender consented to the change in control with respect to the Rapidbuilt Borrowers; (ii) the Lender waived any pre-existing events of default on the part of the Rapidbuilt Borrowers; (iii) the Lender agreed to release certain borrowed funds held in reserve, subject to specified terms and conditions; and (iv) the Rapidbuilt Borrowers agreed to certain reserve enhancement obligations, including the ability to repay principal early at the sole discretion of the Rapidbuilt Borrowers. Pursuant to the Guaranty Agreement, all of the Rapidbuilt Borrowers’ obligations under the Vista Loan will be guaranteed by Sky.

 The Vista Loan was originated in December 2020 between the Borrowers and the Lender and had approximately $ 10.3 million outstanding as of the Option Exercise Date. The Vista Loan accrues interest at a per annum rate equal to 3.00 % above the three -month secured overnight financing rate published for first day of each calendar quarter by the Federal Reserve Bank of New York. Interest is payable on a monthly basis, and the Rapidbuilt Borrowers agreed to make certain reserve enhancement payments on January 1, April 1, July 1, and October 1 of each calendar year. The maturity date of the Vista Loan is December 1, 2025. The Vista Loan is secured by the accounts, intellectual property, equipment, inventory, vehicles, and property of the Rapidbuilt Borrowers, and contains customary affirmative and negative covenants.

 Loans Payable and Finance Leases 

 The following table summarizes the Company's loans payable and finance lease liabilities as of December 31, 2023 and December 31, 2022: 

 December 31, 2023 December 31, 2022 

 Maturity Dates Weighted-Average Interest Rates Balance 
 Weighted-Average Interest Rates 
 Balance 
 
 Vista Loan
 December 2025 8.53 % $ 8,768 $ - $ - 

 Equipment loans
 August 2026 - September 2028 8.09 % 475 - - 

 Finance leases
 September 2024 - July 2027 5.00 % 67 - - 

 Total Loans payable and finance leases
 8.47 % $ 9,310 - $ - 

 Interest 

 The following table sets forth the details of interest expense:

 Year ended 
 
 December 31, 2023 
 December 31, 2022 
 
 Interest
 $ 7,481 $ 6,941 

 Accretion of bond premium and amortization debt issuance costs
 210 282 

 Total interest incurred
 7,691 7,223 

 Less: capitalized interest
 ( 7,150 ) ( 7,223 ) 

 Interest expense
 $ 541 $ - 

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 11. 
 Warrants 
 
 As part of Yellowstone’s initial public offering, Yellowstone issued to third -party investors 6,799,439 warrants which entitled the holder to purchase one share of Class A Common Stock at an exercise price of $ 11.50 per share (the “Public Warrants”). In addition, 7,719,779 private placement warrants were sold to the Sponsor. Each Private Warrant allows the Sponsor to purchase one share of Class A Common Stock at an exercise price of $ 11.50 per share. Following the Yellowstone Transaction, the Public Warrants and Private Warrants remain outstanding under the same terms and conditions to purchase shares of the Company’s Class A Common Stock. The terms of the Private Warrants are identical to those of the Public Warrants, except for that so long as the Private Warrants are held by the Sponsor or its permitted transferees, they may be exercised on a cashless basis.

 In connection with the Private Placement Purchase Agreement, the Company issued to third -party investors 1,541,600 PIPE Warrants (together with the Public Warrants and the Private Warrants, the “Warrants”). The PIPE Warrants are similar in form and substance to the Company’s Public Warrants. 

 The Warrants contain an exercise price of $ 11.50 per share and expire on January 25, 2027. The Company determined the fair value of its Public Warrants and PIPE Warrants based on the publicly listed trading price as of the valuation date. Accordingly, these warrants are classified as Level 1 financial instruments. As the terms of the Private Warrants are identical to those of the Public Warrants, the Company determined the fair value of its Private Warrants based on the publicly listed trading price of the Public Warrants as of the valuation date and have classified the Private Warrants as Level 2 financial instruments.

 As of December 31, 2023 , 6,798,974 and 7,719,779 Public and Private Warrants remain outstanding, respectively. As of December 31, 2023, the aggregate number of PIPE Warrants outstanding was 1,541,600 .

 The closing price of the Warrants was $ 0.75 and $ 0.20 per warrant on December 31, 2023 and December 31, 2022, respectively. The aggregate fair value of the Warrants was approximately $ 12.0 million and $ 2.9 million as of December 31, 2023 and December 31, 2022, respectively. During the year ended December 31, 2023 , the Company recorded an unrealized loss of approximately $ 8.6 million. During the year ended December 31, 2022, the Company recorded an unrealized gain of approximately $ 5.1 million.

 12. 
 Equity and Redeemable Equity 
 
 Prior to the Yellowstone Transaction 

 Sky and its members initially entered into a Limited Liability Company Agreement on February 12, 2018. This LLC agreement was subsequently amended and restated on March 12, 2021 ( the “First A&R Operating Agreement”), which was again amended and restated on September 14, 2021 ( the “Second A&R Operating Agreement”). On January 25, 2022, in connection with the Yellowstone Transaction, Sky, its members, and SHG entered into the A&R Operating Agreement.

 On August 1, 2021, Sky entered into the Equity Purchase Agreement with Yellowstone. In conjunction with the Equity Purchase Agreement, Boston Omaha Corporation agreed to invest $ 55.0 million of equity in the form of Redeemable Series B Preferred Units through its affiliate BOC YAC Funding LLC (“BOC YAC”). On September 14, 2021, Sky issued 8,049 Series B Preferred Units to BOC YAC in exchange for the $ 55.0 million. The Series B Preferred Units contained redemption rights for both Sky and for the holders of the Series B Preferred Units under certain circumstances. Because the Series B Preferred Units were redeemable in cash, they were previously classified as Temporary Equity, between the Liabilities and Equity sections of the consolidated balance sheet. They were carried at their net issuance price and not reflected at redemption value in the consolidated balance sheet because no Series B Preferred Units were redeemed between December 31, 2021 and January 25, 2022, the date such Units were automatically converted to the Company’s Class A Common Stock equal to the original $ 55.0 million investment at the conversion price of $ 10 per share.

 Recapitalization 

 Prior to the Closing Date, there were 31,250 Series A Preferred Units, 8,049 Series B Preferred Units, and 27,035 Founder Units authorized, issued and outstanding. As a result of the Reverse Recapitalization on the Closing Date, the Series A Preferred Units and Founder Units converted into 42,192,250 Sky Common Units and the LLC Interests received 42,192,250 shares of SHG’s Class B Common Stock. The Series B Preferred Units converted to 5,500,000 shares of SHG’s Class A Common Stock, and Sky issued 14,937,581 Sky Common Units to SHG, which was equivalent to the total number of shares of the SHG’s Class A Common Stock outstanding on the Closing Date.

 As of December 31, 2023 , there were 24,165,523 and 42,046,356 shares of Class A Common Stock and Class B Common Stock outstanding, respectively. Holders of Class A Common Stock and Class B Common Stock vote together as a single class on all matters submitted to the stockholders for their vote or approval, except as required by applicable law. Holders of Class A Common Stock and Class B Common Stock are entitled to one vote per share on all matters submitted to the stockholders for their vote or approval.

 The holders of Class A Common Stock are entitled to receive dividends, as and if declared by the Company’s Board of Directors out of legally available funds. With respect to stock dividends, holders of Class A Common Stock must receive Class A Common Stock. The holders of Class B Common Stock do not have any right to receive dividends other than stock dividends consisting of shares of Class B Common Stock, as applicable, in each case paid proportionally with respect to each outstanding share of Class B Common Stock.

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 Forward Purchase Agreement 

 On January 17, 2022, the Company entered into a forward purchase agreement (the “Forward Purchase Agreement”) with ACM ARRT VII E LLC (the “Counterparty”), pursuant to which the Counterparty had the right, but not the obligation, to purchase up to 7,000,000 shares of Class A Common Stock from shareholders who had redeemed shares, or indicated an interest in redeeming shares, prior to the closing of the Yellowstone Transaction. The Counterparty purchased 664,909 such shares and, immediately following the Closing Date, pursuant to the agreement, the Company paid to the Counterparty a forward price of approximately $ 6.7 million. The Counterparty also had the right to sell such shares to others during an 18 -month term, terminating the Company’s forward purchase obligations, and repaying to the Company a portion of the forward price, in amounts corresponding to the number of shares sold. On March 7, 2022, the Counterparty notified the Company that it had sold the 664,909 shares covered by the agreement. As a result, a total of approximately $ 6.7 million was remitted to the Company by the Counterparty.

 Common Stock Purchase Agreement 

 On August 18, 2022, the Company entered into a Common Stock Purchase Agreement (the “Stock Purchase Agreement”) with B. Riley Principal Capital II, LLC (“B. Riley”). Pursuant to the Stock Purchase Agreement, subject to the conditions and limitations set forth therein, the Company has the right, but not the obligation, from time to time at the Company's sole discretion over a 36 -month term of the Stock Purchase Agreement, to direct B. Riley to purchase up to 10 million shares of the Company's Class A Common Stock in the aggregate.

 Under the Stock Purchase Agreement, on any trading day selected by the Company, the Company has the right, in its sole discretion, to present B. Riley with a purchase notice (each, a "VWAP Purchase Notice"), directing B. Riley (as principal) to purchase a specified amount of shares not to exceed the lesser of (i) one million shares of Common Stock and (ii) 20 % of the total aggregate number (or volume) of shares of Class A Common Stock traded on the NYSE American at a price(the "VWAP Purchase Price") equal to the product of 0.97 and the VWAP of the Company's Class A Common Stock on the applicable date for each VWAP Purchase Notice, subject to certain limitations contained in the Stock Purchase Agreement. Sales of Class A Common Stock pursuant to the Stock Purchase Agreement, and the timing of any such sales, are solely at the discretion of the Company, and the Company is under no obligation to sell any securities to B. Riley under the Stock Purchase Agreement.

 In consideration for entering into the Stock Purchase Agreement and concurrently with the execution of the Stock Purchase Agreement, the Company issued to B. Riley 25,000 shares of Class A Common Stock as initial commitment shares and will issue up to an aggregate of 75,000 shares of its Class A Common Stock as additional commitment shares if certain conditions and milestones are met. The Company recognized expense associated with the issuance of such commitment shares of $ 112 during the year ended December 31, 2022 based on the fair value of the Company's Class A Common Stock on the date of issuance. As of December 31, 2023, the Company has not directed B. Riley to purchase any Class A Common Stock pursuant to the B. Riley Purchase Agreement.

 Private Placement and Securities Purchase Agreement 

 On November 1, 2023, the Company entered into a Securities Purchase Agreement (the “Private Placement Purchase Agreement”) with certain investors (collectively, the “Investors”), pursuant to which the Company (i) sold and issued to the Investors at an initial closing an aggregate of 6,586,154 shares (the “Initial PIPE Shares”) of the Company’s Class A Common Stock and accompanying warrants to purchase up to 1,141,600 shares of Class A Common Stock (the “Initial PIPE Warrants”), for an aggregate purchase price of $ 42.8 million (the "Initial Financing"), and (ii) sold and issued to the Investors at a second closing, an aggregate of 2,307,692 shares (the “Additional PIPE Shares”, and, together with the Initial PIPE Shares, the “PIPE Shares” ) of the Company’s Class A Common Stock and accompanying warrants to purchase up to an aggregate of 400,000 shares of Class A Common Stock (the “Additional PIPE Warrants” and, together with the Initial PIPE Warrants, the “PIPE Warrants”) for an aggregate purchase price of $ 15.0 million (the “Additional Financing” and, together with the Initial Financing, the “Financing”).

 The closing of the Initial Financing occurred on November 2, 2023 ( the “Initial Closing Date”), and the closing of the Additional Financing occurred on November 9, 2023 ( the “Second Closing Date”). Together with the Initial Closing Date, the aggregate PIPE financing through the Price Placement Purchase Agreement totaled $ 57,810,000 .

 The Private Placement Purchase Agreement includes certain covenants, including a limitation on the Company’s use of the net proceeds from the Financing, certain customary standstill restrictions for a period of 90 days following the Initial Closing Date and a restriction on paying any extraordinary dividend to the extent it would result in the issuance of a number of shares of Class A Common Stock upon exercise of the PIPE Warrants (without regard to any limitations on exercise of the PIPE Warrants) in excess of the number of shares of Class A Common Stock permissible by the NYSE American LLC to be issued without stockholder approval. In addition, pursuant to the Private Placement Purchase Agreement, the Company granted to the Lead Investor certain participation rights with respect to certain future equity and debt offerings by the Company until the eighteen -month anniversary of the Initial Closing Date. In addition, the Investors entered in to a six month customary lock-up agreement beginning on the Initial Closing Date.

 Non-controlling interests 

 The LLC Interests’ ownership in Sky is presented as non-controlling interests within the Equity section of the consolidated balance sheet as of December 31, 2023 and represents the Sky Common Units held by holders other than SHG. The holders of LLC Interests may exchange Sky Common Units along with an equal number of Class B Common Shares, for Class A Common Shares on the Company. The LLC Interests do not have the option to redeem their Sky Common Units for cash or a variable number of Class A Common Shares, nor does SHG have the option to settle a redemption in such a manner. As of December 31, 2023 , the LLC interests owned approximately 63.5 % of the Sky Common Units outstanding. 

 The former majority shareholder's ownership in Overflow is presented as a non-controlling interest within the Equity section of the consolidated balance sheet. As of December 31, 2023, the former majority shareholder owned approximately 49 % of the partnership interests in Overflow.

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 13. 
 Equity Compensation 
 
 Restricted Stock Units ( “ RSUs ” ) 

 On January 25, 2022, the Company's 2022 Incentive Award Plan (the “2022 Incentive Award Plan”) became effective following approval by the Company's shareholders. The 2022 Incentive Award Plan provides for grants of stock-based compensation awards, including without limitation, non-qualified stock options, incentive stock options, stock appreciation rights, or SARs, restricted stock awards, restricted stock unit awards, incentive unit awards other stock or cash based awards and dividend equivalent awards. Employees, officers, and consultants of the Company or any parent or affiliate, including Sky, or any non-employee director of the Company’s Board of Directors are eligible to receive awards under the 2022 Incentive Award Plan. An aggregate of 5.2 million shares of Class A Common Stock are issuable pursuant to the 2022 Incentive Award Plan.

 On an annual basis, the Company grants RSUs which have time-based conditions and are classified as equity awards. During the year ended December 31, 2023, the Company granted 545,522 time-based RSUs to certain employees under the Company’s 2022 Incentive Award Plan at a weighted average grant date fair value of $ 5.75 . The RSUs will vest ratably over a four -year period beginning on the first anniversary of the grant date and ending on fourth anniversary. All RSUs were valued at their fair market value, which is the closing price of the Company's stock on the date of the grant.

 The following tables presents a summary of RSU activity for the year ended December 31, 2023: 

 Number of Shares 
 Weighted-Average Grant Date Fair Value 
 
 Unvested as of January 1, 2023 645,000 $ 7.64 

 Granted 545,522 5.75 

 Vested ( 191,317 ) 7.65 

 Forfeited
 ( 68,500 ) 5.97 

 Unvested as of December 31, 2023
 930,705 $ 6.65 

 During the years ended December 31, 2023 , and December 31, 2022, the Company recognized stock compensation expense of $ 1,816 and $ 764 , respectively, associated with the RSUs. The unrecognized compensation costs associated with all unvested RSUs at December 31, 2023 was $ 5,070 that is expected to be recognized over a weighted-average future period of 2.7 years.

 Sky Incentive Units 

 In May 2021, Sky granted 3,951 Sky Incentive Units to certain employees. In connection with the Yellowstone Transaction and the execution of the Third A&R Operating Agreement, the number of existing Sky Incentive Units outstanding was adjusted based on a defined unit conversion ratio to reflect the new capital structure (see Note 12 — Equity and Redeemable Equity ) and remain Sky Incentive Units, resulting in 2,807,750 outstanding Sky Incentive Units. These Incentive Units may be exchanged for Sky Common Units at the holder’s discretion upon vesting. There were no changes to the terms or conditions of the Sky Incentive Units effected by the Yellowstone Transaction. The Sky Incentive Units are classified as equity instruments.

 The Sky Incentive Units were valued as of the date of grant using the Option-Pricing Method described in the AICPA Accounting and Valuation Guide entitled Valuation of Privately Held Company Equity Securities Issued as Compensation. The Option-Pricing Method treated profit units (such as Sky Incentive Units) and the capital units outstanding at the time of the valuation (Sky’s Series A Preferred Units, Series B Preferred Units, and the Founder Units) as call options on the total equity value of Sky, with exercise (or strike) prices based on the incremental equity required to repay liquidation preferences for the various holders of Sky interests. The values of the options associated with each strike price were calculated using the Black-Scholes option pricing model based on the grant date. The Sky Incentive Units were classified as Level 3 in the fair value hierarchy. The key inputs and assumptions used in the valuation of the Sky’s Incentive Units were:

 Fair value of total equity
 $ 62,287,970 

 Term (in years)
 5 

 Risk-free interest rate
 0.84 % 

 Volatility
 57 % 

 Below is a summary of activity related to the Sky Incentive Units for the Year ended December 31, 2023 :

 Sky Incentive Units 
 Weighted-average grant date fair value 
 
 Sky units outstanding as of December 31, 2022 (as previously presented)
 3,951 $ 318.44 

 Sky units outstanding as of December 31, 2022 (recast for recapitalization)
 2,807,750 $ 0.45 

 Granted
 - $ - 

 Forfeitures
 - $ - 

 Sky units outstanding as of December 31, 2023
 2,807,750 $ 0.45 

 Vested Units outstanding as of December 31, 2023
 2,232,735 $ 0.45 

 Non-vested Units outstanding as of December 31, 2023
 575,015 $ 0.45 

 The Company recognized equity-based compensation expense on a straight-line basis over the requisite service period and has elected to account for forfeitures of Sky Incentive Units if and when they occur. The Company recorded equity-based compensation expense relating to Sky Incentive Units of $ 444 and $ 341 for the years ended December 31, 2023, and December 31, 2022, respectively, which is recorded within General and Administrative Expenses within the statement of operations, and as a component of the non-controlling interest in the consolidated statement of changes in stockholders’ equity. As of December 31, 2023 , there was $ 257 of total unrecognized compensation expense that is expected to be recognized over a weighted-average future period of 1.4 years.

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 14. 
 Income Taxes 
 
 Effective Tax Rate Reconciliation 

 We are subject to taxation in all jurisdictions in which we operate that impose an income tax on our business activities. The components of the income tax expense for the years ended December 31, and the tax effects of temporary differences that give rise to deferred taxes at December 31, are as follows:

 Year Ended December 31, 
 
 2023 
 2022 
 
 Income tax benefit: 
 
 Deferred federal income tax benefit
 ( 1,382 ) ( 1,558 ) 

 Deferred state income tax benefit
 ( 37 ) ( 285 ) 

 Total income tax benefit before valuation allowance
 ( 1,419 ) ( 1,843 ) 

 Valuation allowance
 1,419 1,843 

 Total income tax benefit
 $ - $ - 

 A reconciliation of the statutory federal income tax expense to the income tax expense (benefit) from continuing operations provided at December 31, 2023 and December 31, 2022 is as follows:

 For the Year Ended December 31, 
 
 2023 
 2022 
 
 Income tax benefit at the federal statutory rate of 21%
 ( 3,698 ) $ ( 554 ) 

 State income tax benefit, net of federal benefit
 ( 133 ) ( 225 ) 

 Unrealized gain on warrants
 1,815 ( 1,067 ) 

 Stock-based compensation
 105 - 

 Other, net
 492 3 

 Change in valuation allowance
 1,419 1,843 

 Total income tax benefit
 $ - $ - 

 The Company recorded income tax expense of $ 0 and the effective tax rate was 0.0% for the years ended December 31, 2023 and 2022. The effective income tax rate for the year ended December 31, 2023 differs from the federal statutory rate of 21 % primarily due to a full valuation allowance against net deferred tax assets as it is more likely than not that the deferred tax assets will not be realized.

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 Components of the Company’s deferred tax assets at December 31, 2023 and December 31, 2022 are as follows:

 For the Year Ended December 31, 

 2023 2022 

 Deferred tax assets:
 
 Amortization
 27 $ 470 

 Difference between book and tax capital accounts
 485 90 

 Stock-based compensation
 139 179 

 Lease liability
 14 - 

 Net operating loss carryforwards
 4,146 1,923 

 Valuation allowance
 ( 4,080 ) ( 2,661 ) 

 Total deferred tax assets
 $ 731 $ 1 

 Deferred tax liabilities:
 
 Unrealized Gain/Loss on investments
 $ ( 1 ) $ ( 1 ) 

 Long-lived assets
 ( 716 ) - 

 Right-of-use assets
 ( 14 ) $ - 

 Total deferred tax liabilities
 $ ( 731 ) $ ( 1 ) 

 Total
 $ - $ - 

 The realization of deferred tax assets, including net operating loss carryforwards ("NOLs"), is dependent on the generation of future taxable income sufficient to realize the tax deductions, carryforwards, and credits. Valuation allowances on deferred tax assets are recognized if it is determined that it is more likely than not that the asset will not be realized. For the year ended December 31, 2023 , we recorded a full valuation allowance due to historical losses before income taxes which reduced management's ability to rely on future expectations of income.

 As of December 31, 2023 , we have available federal tax operating loss carryforwards of approximately $ 14.4 million, including approximately $ 1.7 million generated by our legal predecessor prior to the Yellowstone Transaction. All federal tax operating loss carryforwards arose in tax years subsequent to 2017. Tax operating loss carryovers arising in years after 2017 may be carried forward indefinitely but are only available to offset 80% of future taxable income. We have available state tax operating loss carryforwards of approximately $ 14.4 million, which are available to reduce future state taxable income and would begin to expire in tax year 2040 in various amounts. Utilization of our net operating loss carryforwards may be subject to substantial annual limitations due to the ownership change limitations provided by Section 382 of the Internal Revenue Code, as amended, and similar state provisions.

 Uncertain Tax Positions 

 We believe that there are no tax positions taken or expected to be taken that would significantly increase or decrease unrecognized tax benefits within 12 months of the reporting date.

 The federal and state statutes of limitation for assessment of tax liability generally lapse within three years after the date the tax returns are filed. However, income tax attributes that are carried forward, such as net operating loss carryforwards, may be challenged and adjusted by taxing authorities at any time prior to the expiration of the statute of limitations for the tax year in which they are utilized. As of December 31, 2023 , we do not have any open exams; however, all tax years, including those of our legal predecessor, are subject to examination by the Internal Revenue Service. 

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 15. 
 Earnings (loss) per Share 
 
 Basic earnings (loss) per share of Class A Common Stock is computed by dividing net income (loss) attributable to SHG by the weighted-average number of shares of Class A Common Stock outstanding during the period. Diluted net income (loss) per share of Class A Common Stock is computed by dividing net income (loss) attributable to SHG, adjusted for the assumed exchange of all potentially dilutive securities, by the weighted-average number of shares of Class A Common Stock outstanding adjusted to give effect to potentially dilutive shares using the treasury stock or if-converted method as appropriate. Shares of the Company’s Class B Common Stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B Common Stock under the two -class method has not been presented. 

 Year Ended 
 
 December 31, 2023 
 December 31, 2022 
 
 Numerator:
 
 Net loss
 $ ( 25,441 ) $ ( 13,678 ) 

 Less: Net loss attributable to non-controlling interests
 ( 9,264 ) ( 10,494 ) 

 Basic and diluted net loss attributable to Sky Harbour Group Corporation shareholders
 ( 16,177 ) ( 3,184 ) 

 Denominator:
 
 Based and diluted weighted average shares of Class A Common Stock outstanding
 16,456 13,965 

 Loss per share of Class A Common Stock – Basic and diluted
 $ ( 0.98 ) $ ( 0.23 ) 

 Potentially dilutive shares excluded from the weighted-average shares used to calculate the diluted net loss per common share due the Company's net loss position were as follows (in thousands):

 Year Ended 
 
 December 31, 2023 
 December 31, 2022 
 
 Shares subject to unvested restricted stock units
 931 645 

 Shares issuable upon the exercise of Warrants
 16,061 14,519 

 Shares issuable upon the exchange of Class B Common Stock
 42,046 42,192 

 Shares issuable upon the exercise and exchange of Sky Incentive Units
 2,808 2,808 

 16. 
 Accumulated Other Comprehensive Income (Loss) 
 
 The following table summarizes the components of Accumulated other comprehensive income (loss):

 Unrealized gain (loss) on Available-for-sale Securities 
 Total 
 
 Balance as of December 31, 2021
 $ - $ - 

 Other comprehensive loss before reclassifications
 ( 81 ) ( 81 ) 

 Amounts reclassified to other (income) expense
 ( 21 ) ( 21 ) 

 Balance as of December 31, 2022
 $ ( 102 ) $ ( 102 ) 

 Other comprehensive income before reclassifications
 684 684 

 Amounts reclassified to other (income) expense
 ( 270 ) ( 270 ) 

 Balance as of December 31, 2023
 $ 312 $ 312 

 During the years ended December 31, 2023 and December 31, 2022, the Company reported reclassifications of $ 270 and $ 21 , respectively, of unrealized gains on available-for-sale securities to net income as a component of other (income) expense.

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 17. 
 Commitments and Contingencies 
 
 In addition to the lease payment commitments discussed in Note 9 — Leases , the ground leases to which the Company is a party contain covenants that require the Company to conduct construction of hangar facilities on the leased grounds within a certain period and in some cases, to spend a minimum dollar amount.

 The APA Lease requires the Company to improve the property in accordance with a development plan included in the lease and to complete such improvements within 24 -months of the issuance of permitting documents. Construction began on the APA Phase I project in October 2022. 

 The DVT Lease requires approximately $ 15.3 million and $ 14.6 million of improvements to be made for Phase I and for Phase II, if such option is exercised, respectively, within 12 -months after receiving permitting documents for each Phase, but in no event later than May 2026. Construction began on the DVT Phase I project in December 2022. 

 The Company has committed to spend $ 10.0 million in capital improvements on the ADS construction project. If this amount is not expended, the Company is subject to a reduction of the term of the lease.

 The PWK Lease contains a requirement that the Company must commence construction within six months of the issuance of permits and must complete construction within 18 months of construction commencement. If the Company is unable to adhere to the prescribed timeline and unable to receive an extension from PWK, the PWK Lease is subject to termination.

 The Company has contracts for construction of the APA Phase I, DVT Phase I, and ADS Phase I projects. The Company may terminate any of the contracts or suspend construction without cause. There are no termination penalties under the construction contracts.

 18. 
 Related Party Transactions 
 
 On September 20, 2021, the Company entered into a non-exclusive agreement with Echo Echo, LLC, a related party to the Founder and CEO, for the use of a Beechcraft Baron G58 aircraft. The effective date of the agreement was September 8, 2021 and the agreement automatically renews annually. The agreement can be terminated without penalty if either party provides 35 days written notice, or if the aircraft is sold or otherwise disposed of. The Company is charged per flight hour of use along with all direct operating costs. Additionally, the Company will also incur the pro rata share of maintenance, overhead and insurance costs of the aircraft. For the years ended December 31, 2023 , and December 31, 2022, the Company recognized $ 215 and $ 194 of expense, within general and administrative expense under the terms of this agreement. The related liability is included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheet as of December 31, 2023 . 

 For the year ended December 31, 2023 , the Company paid $ 105 for consulting services to a company that employed the chief financial officer until prior to July 1, 2021 and with which the Company had a pre-existing vendor relationship. The Company paid $ 108 during the year ended December 31, 2022 to the same company.

 19. 
 Subsequent Events 
 
 On March 23, 2024, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “SJC Lease”) at San Jose Mineta International Airport (“SJC”) with the City of San Jose. The SJC Lease covers approximately 7 acres of property that contains an approximately 38,000 square foot hangar, approximately 19,000 square feet of office space, and approximately 108,000 square feet of apron and ramp space. The property at SJC includes additional land on which the Company intends to develop approximately 28,000 square feet of additional hangar space. The initial term of the SJC Lease will be 20 years from May 1, 2024, and contains a mutual option to extend the SJC Lease an additional 5 years following the expiration of the initial term. The SJC Lease contains customary milestones by which the Company must complete additional construction.

 On March 27, 2024, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “ORL Lease”) at Orlando Executive Airport (“ORL”) with the Greater Orlando Aviation Authority (“GOAA”). The ORL Lease covers a parcel containing approximately 20 acres of land at ORL. The initial term of the ORL Lease will be 30 years from expiration of construction period, with lease payments commencing contemporaneously with the term. The ORL Lease contains options exercisable by the Company to extend the ORL Lease an additional 20 years based on the Company's total expenditures in subsequent phases at ORL. The ORL Lease requires that the Company construct $ 30 million of improvements in its initial phase of construction within 24 months of the effective date of the lease. The ORL Lease contains other customary milestones by which the Company must commence and complete subsequent phases of construction.

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 ITEM 9. 
 
 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES 
 
 Not applicable.
Sky Harbour Group Corp 10-K

Item 8. Financial Statements and Supplementary Data
