What changed in this filing

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Item 1. Financial Statements

2024-05-14 compared with 2023-11-09 · 557 added, 903 removed, 472 unchanged (76% of the section changed)

3 unchanged sentences

(in thousands, except share data)

September 30, 2023

March 31, 2024

December 31, 2023

$ 2,471  

$ 2,174  

$ 2,556 $ 60,257

Restricted cash

34,289  

39,222  

16,832  

24,895  

99,453 12,009

36,990 11,866

Restricted investments

80,183  

114,648  

20,213 88,213

Prepaid expenses and other assets

Cost of construction

48,153  

48,242  

71,695 64,212

Constructed assets, net

78,110  

39,709  

76,835 77,283

Right-of-use assets

56,829  

56,716  

116,651 70,527

Long-lived assets, net

12,075  

$ 332,777  

$ 331,204  

11,839 11,829

$ 444,389 $ 402,199

Liabilities and equity

Accounts payable, accrued expenses and other liabilities

$ 13,903  

$ 14,184  

$ 13,816 $ 16,740

Operating lease liabilities

55,027  

53,531  

116,357 69,437

Loans payable and finance lease liabilities

10,561  

Bonds payable, net of debt issuance costs and premiums

162,368  

162,210  

162,471 162,420

Warrants liability

27,820 12,045

Total liabilities

244,763  

232,829  

329,329 269,953

Commitments and contingencies (Note 15)

Stockholders’

Stockholders’ equity

Preferred stock;

$ 0.0001 par value;

10,000,000 shares authorized as of September 30, 2023;

10,000,000 shares authorized as of March 31, 2024;

none issued and outstanding

1 unchanged sentence

200,000,000 shares authorized;

15,252,574 and 14,962,831 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

24,537,559 and 24,165,523 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

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 September 30, 2023 and December 31, 2022, respectively

42,046,356 and 42,046,356 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

31,139  

29,560  

91,788 88,198

Accumulated deficit

( 8,791 )  

Accumulated other comprehensive income (loss)

Total Sky Harbour Group Corporation stockholders’

22,651  

26,279  

( 38,301 ) ( 19,361 )

Accumulated other comprehensive income

Total Sky Harbour Group Corporation stockholders’ equity

54,183 69,155

Non-controlling interests

65,363  

72,096  

88,014  

98,375  

60,877 63,091

115,060 132,246

Total liabilities and equity

$ 332,777  

$ 331,204  

$ 444,389 $ 402,199

See accompanying Notes to Unaudited Consolidated Financial Statements

3 unchanged sentences

Three Months Ended

Nine months ended

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

March 31, 2024

March 31, 2023

Rental revenue

$ 2,502  

$ 5,337  

$ 1,236  

Total revenue

Loss on impairment of long-lived assets

General and administrative

10,838  

12,136  

Total expenses

17,667  

16,483  

Operating loss

( 3,399 )  

( 4,544 )  

( 12,330 )  

Other (income) expense:

Interest expense

Unrealized gain on warrants

( 1,597 )  

( 1,452 )  

( 37 )  

( 252 )  

Unrealized loss on warrants

Total other (income) expense

( 1,400 )  

( 1,452 )  

( 1,999 )  

( 3,092 )  

( 12,394 )  

Net loss attributable to non-controlling interests

( 1,810 )  

( 2,479 )  

( 6,788 )  

Net loss attributable to Sky Harbour Group Corporation shareholders

$ ( 189 )  

$ ( 613 )  

$ ( 5,606 )  

Loss per share

$ ( 0.01 )  

$ ( 0.04 )  

$ ( 0.37 )  

$ ( 0.01 )  

$ ( 0.04 )  

$ ( 0.37 )  

Weighted average shares

15,245  

14,949  

15,132  

13,628  

15,245  

14,949  

15,132  

13,628  

See accompanying Notes to Unaudited Consolidated Financial Statements

3 unchanged sentences

Three Months Ended

Nine Months Ended  

September 30, 2023

September 30, 2022

September 30, 2023  

September 30, 2022  

$ ( 12,394 )  

March 31, 2024

March 31, 2023

Other comprehensive income (loss), before related income taxes:

Unrealized gain (loss) on available-for-sale securities

( 147 )  

Unrealized gain (loss) on available-for-sale securities

Total comprehensive loss

$ ( 11,873 )  

See accompanying Notes to Unaudited Consolidated Financial Statements

SKY HARBOUR GROUP CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’

CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

(in thousands, except share data)

Redeemable Sky Series B

Accumulated Other

Preferred Units

Comprehensive

Stockholders’

Income (Loss)

Balance at December 31, 2023

14,962,831  

42,192,250  

$ 29,560  

$ ( 3,184 )  

$ ( 102 )  

26,279  

$ 72,096  

$ 98,375  

Share-based compensation

Exchange of Class B Common Stock

145,894  

( 145,894 )  

( 184 )  

Other comprehensive income

( 6,196 )  

( 2,565 )  

Balance at March 31, 2023

15,108,725  

42,046,356  

$ 30,137  

$ ( 9,380 )  

$ 20,837  

$ 69,432  

$ 90,269  

Share-based compensation

Vesting of restricted stock units

124,261  

Shares withheld for payment of employee taxes

Exercise of warrants

Other comprehensive income

Net income (loss)

( 2,412 )  

Balance at June 30, 2023

15,233,211  

42,046,356  

$ 30,639  

$ ( 8,602 )  

$ 22,155  

$ 67,101  

$ 89,256  

Share-based compensation

Vesting of restricted stock units

19,363  

Payment of equity issuance costs

Other comprehensive income

( 189 )  

( 1,810 )  

Balance at September 30, 2023

15,252,574  

42,046,356  

$ 31,139  

$ ( 8,791 )  

$ 22,651  

$ 65,363  

$ 88,014  

Redeemable Series B

Balance at March 31, 2024

Accumulated Other

Preferred Units

Comprehensive

Stockholders’

Income (Loss)

Balance at December 31, 2022

$ 54,029  

$ 16,931  

Sky incentive compensation prior to recapitalization

Net income (loss) prior to recapitalization

( 1,247 )  

Yellowstone Transaction and recapitalization

( 54,029 )  

14,937,581  

42,192,250  

28,681  

28,686  

( 15,707 )  

81,024  

94,003  

Sky incentive compensation following recapitalization

Net loss following recapitalization

( 15,763 )  

( 2,504 )  

Balance at March 31, 2022

14,937,581  

42,192,250  

$ 28,681  

$ ( 15,763 )  

$ 12,923  

$ 78,583  

$ 91,506  

Share-based compensation

Other comprehensive income (loss)

( 84 )  

Net income (loss)

12,665  

( 2,402 )  

10,263  

Balance at June 30, 2022

14,937,581  

42,192,250  

$ 28,841  

$ ( 3,098 )  

$ ( 84 )  

$ 25,664  

$ 76,266  

$ 101,930  

Share-based compensation

Issuance of initial commitment shares

25,000  

Exercise of warrants

Other comprehensive income (loss)

( 147 )  

( 613 )  

( 2,479 )  

Balance at September 30, 2022

14,962,831  

42,192,250  

$ 29,254  

$ ( 3,711 )  

$ ( 231 )  

$ 25,317  

$ 73,872  

$ 99,189  

Exchange of Class B Common Stock

Other comprehensive income

Balance at March 31, 2023

See accompanying Notes to Unaudited Consolidated Financial Statements

2 unchanged sentences

(in thousands)

Nine months ended

September 30, 2023

September 30, 2022

Three months ended

March 31, 2024

March 31, 2023

Cash flows from operating activities:

$ ( 12,394 )  

Adjustments to reconcile net loss to net cash used in operating activities:

1 unchanged sentence

Straight-line rent adjustments, net

( 188 )  

Equity-based compensation

Loss on impairment of long-lived assets

Non-cash operating lease expense

Unrealized loss (gain) on warrants

Unrealized loss on warrants

Changes in operating assets and liabilities:

1 unchanged sentence

Right-of-use asset initial direct costs

( 26 )  

Accounts payable, accrued expenses and other liabilities

Net cash used in operating activities

( 6,263 )  

Cash flows from investing activities:

Purchases of long-lived assets

( 597 )  

Payments for cost of construction

( 40,043 )  

Investment in notes receivable, net

( 2,040 )  

Net cash provided by acquisition of business

Purchases of available for sale investments

( 5,427 )  

Purchases of held-to-maturity investments

( 103,994 )  

Proceeds from available for sale investments

14,011  

Proceeds from held-to-maturity investments

138,434  

48,466  

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash flows from financing activities:

Proceeds from issuance of BOC PIPE

45,000  

Proceeds from Yellowstone trust

15,691  

Proceeds from exercise of warrants

Principal payments for loans payable and finance leases

( 513 )  

Refund of debt issuance costs

Payments for equity issuance costs

Net cash (used in) provided by financing activities

( 510 )  

52,790  

Net decrease in cash and restricted cash

( 4,636 )  

Payments of employee taxes related to vested equity awards

Net cash provided by financing activities

Net increase in cash and restricted cash

Cash and restricted cash, beginning of year

41,396  

203,935  

Cash and restricted cash, end of period

$ 36,760  

$ 17,894  

See accompanying Notes to Unaudited Consolidated Financial Statements

1 unchanged sentence

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

(in thousands, except share data)

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.”

The Company is organized 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 “Sky Common Units”).

As of September 30, 2023 , SHG owned approximately 26.2 % of the Sky Common Units and the prior holders of Sky Common Units (the “LLC Interests”) owned approximately 73.8 % of the Sky Common Units and control the Company through their ownership of the Company's Class B Common Stock, $ 0.0001 par value (“Class B Common Stock”).

Sky Harbour Group Corporation and its consolidated subsidiaries are collectively referred to as the “Company.”

As of March 31, 2024 , SHG owned approximately 36.9 % of the Sky Common Units and the prior holders of Sky Common Units (the “LLC Interests”) owned approximately 63.1 % of the Sky Common Units and control the Company through their ownership of the Company's Class B Common Stock, $ 0.0001 par value (“Class B Common Stock”).

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements and the related notes (the “Financial Statements”) have been prepared in conformity with the U.S.

Securities and Exchange Commission (the “SEC”) requirements for quarterly reports on Form 10 -Q, and consequently exclude certain disclosures normally included in audited consolidated financial statements prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).These Financial Statements include the accounts of the Company and its consolidated subsidiaries.

The accompanying unaudited consolidated financial statements and the related notes (the “Financial Statements”) have been prepared in conformity with the U.S.

All intercompany balances and transactions have been eliminated in consolidation.

The Financial Statements should be read in conjunction with the audited consolidated financial statements and the notes contained in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2022, which includes additional disclosures and a summary of the Company's significant accounting policies.

In the Company’s opinion, these Financial Statements include all adjustments, consisting of normal recurring items, considered necessary by management to fairly state the Company’s results of operation, financial position, and cash flows.

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

The Financial Statements should be read in conjunction with the audited consolidated financial statements and the notes contained in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2023, which includes additional disclosures and a summary of the Company's significant accounting policies.

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

Use of Estimates

3 unchanged sentences

Risks and Uncertainties

The Company’s operations have been limited to-date.

For most of its history, the Company has been 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.

The Company’s operations have been limited to-date.

For most of its history, the Company has been engaged in securing access to land through ground leases and developing and constructing aviation hangars.

Liquidity and Capital Resources

6 unchanged sentences

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.

There are no unconsolidated variable interest entities (“VIEs”) in which Sky is considered to be the primary beneficiary.

Sky’s ownership percentage in each of its consolidated subsidiaries is 100 %, unless otherwise disclosed.

Cost of Construction

4 unchanged sentences

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.

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.

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. 

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.

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.

1 unchanged sentence

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.

Warrants liability

On January 25, 2022 ( the "Closing Date") we completed the transactions (the "Yellowstone Transaction") contemplated by the Equity Purchase Agreement, dated as of August 

1, 2021 (the “Equity Purchase Agreement”), between SHG's legal predecessor, Yellowstone Acquisition Company (“Yellowstone”), and Sky.

The Company accounts for the warrants assumed in the Yellowstone Transaction (see Note 9  — 

Warrants ) 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.

The Company accounts for its Warrants (as defined in Note 10 — Warrants ) 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.

5 unchanged sentences

There are no options given to the lessee to purchase the underlying assets.

Rental revenue is recognized in accordance with ASC Topic 842, Leases (see Note 7 — 

Leases ) 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 is recognized in accordance with ASC Topic 842, Leases (see Note 8 — Leases ) 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.

3 unchanged sentences

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 three and nine months ended September 30, 2023, rental revenue includes $ 920 and $ 1,224 of variable lease payments, respectively.

Variable lease revenue recognized during the three and nine months ended September 30, 2023 included a negotiated lease termination fee received from a tenant of two hangars at OPF (as defined in Note 4 —

Cost of Construction and Constructed Assets ) whereby the Company agreed to release the tenant from its lease obligations in exchange for approximately 8.5 months of additional rent.

For the three and nine months ended September 30, 2022, rental revenue includes $ 28 and $ 96 of variable lease payments, respectively.

As of September 30, 2023 and December 31, 2022 , the deferred rent receivable included in prepaid expenses and other assets was $ 304 and $ 83 , respectively.

For the three months ended March 31, 2024, rental revenue includes $ 379 of variable lease payments.

For the three months ended March 31, 2023, rental revenue includes $ 117 of variable lease payments.

As of March 31, 2024 and December 31, 2023 , the deferred rent receivable included in prepaid expenses and other assets was $ 403 and $ 367 , 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.

Rent received in advance consisted of $ 175 and $ 95  as of September 30, 2023 and December 31, 2022 , respectively.

For the three and nine months ended September 30, 2023 

there were two  tenants that individually accounted for more than 10% of the Company's revenue. The Company derived approximately 46 % and 38 % of its revenue from two  tenants for the three and nine months ended September 30, 2023, respectively.

For the three and nine months ended September 30, 2022, the Company derived approximately 82 % and 87 % of its revenue from two tenants, respectively.

Rent received in advance consisted of $ 359 and $ 241 as of March 31, 2024 and December 31, 2023 , respectively.

For the three months ended March 31, 2024 the Company derived approximately 10 % of its revenue from one tenant.

For the three months ended March 31, 2023 the Company derived approximately 45 % of its revenue from three tenants, including 20 % from a single tenant.

SHG is classified as a corporation for Federal income tax purposes and is subject to U.S.

1 unchanged sentence

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 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.

5 unchanged sentences

When a valuation allowance is increased or decreased, a corresponding tax expense or benefit is recorded.

The Company recorded income tax expense of $ 0 and the effective tax rate was 0.0 % for the three and nine months ended September 30, 2023  and 2022.

The effective income tax rate for the 

three and nine months ended September 30, 2023  and 2022 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 due to the cumulative losses sustained by the Company to date.

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 condensed consolidated financial statements.

The Company recorded income tax expense of $ 0 and the effective tax rate was 0.0 % for the three months ended March 31, 2024 and 2023.

The effective income tax rate for the three months ended March 31, 2024 and 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 due to the cumulative losses sustained by the Company to date.

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.

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.

The Company is 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.

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:

Restricted Cash 1,500

Long-lived assets

Total assets 12,545

Accounts payable, accrued expenses and other liabilities 1,427

Loans payable and finance lease liabilities

Total liabilities 12,501

Total fair value of net assets acquired 44

Effective settlement of net receivable from Rapidbuilt 44

Total consideration transferred

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.

Investments and Restricted 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.

Pursuant to provisions within the Master Indenture of the Series 2021 Bonds, as defined in Note 8 — 

Bonds payable, loans payable, and interest , the Company invests the funds held in the restricted trust bank accounts 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.

Pursuant to provisions within the Master Indenture of the Series 2021 Bonds, as defined in Note 9 — 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.

Therefore, such investments are reported as “Restricted investments” in the accompanying consolidated balance sheets.

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 three and nine  months ended September 

The held-to-maturity restricted investments are carried on the consolidated balance sheet at amortized cost.

As of September 30, 2023, 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 fair value of the Company’s restricted investments is estimated utilizing Level 1 inputs including prices for U.S.

As of March 31, 2024, 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 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.

The following tables are summaries of the amortized cost, unrealized gains, unrealized losses, and fair value by investment type as of September 30, 2023 and December 31, 2022:

September 30, 2023

The following tables are summaries of the amortized cost, unrealized gains, unrealized losses, and fair value by investment type as of March 31, 2024 and December 31, 2023:

March 31, 2024

Amortized Cost

3 unchanged sentences

Investments, available for sale:

Treasuries  

$ 16,534  

$ 16,832  

Total investments  

$ 16,534  

$ 16,832  

Treasuries $ 36,300 $ 690 $ - $ 36,990

Total investments $ 36,300 $ 690 $ - $ 36,990

Restricted investments, held-to-maturity:

Treasuries  

80,183  

( 1,114 )  

79,668  

Total restricted investments  

$ 80,183  

$ ( 1,114 )  

$ 79,668  

Treasuries 20,213 88 ( 722 ) 19,579

Total restricted investments $ 20,213 $ 88 $ ( 722 ) $ 19,579

December 31, 2023

4 unchanged sentences

Investments, available for sale:

Treasuries  

$ 24,997  

$ ( 167 )  

$ 24,895  

Total investments  

$ 24,997  

$ ( 167 )  

$ 24,895  

Treasuries $ 11,554 $ 312 $ - $ 11,866

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

Restricted investments, held-to-maturity:

Treasuries  

114,648  

( 1,991 )  

112,956  

Total restricted investments  

$ 114,648  

$ ( 1,991 )  

$ 112,956  

The following table sets forth the maturity profile of the Company's investments and restricted investments as of September 

Treasuries 88,213 105 ( 694 ) 87,624

Total restricted investments $ 88,213 $ 105 $ ( 694 ) $ 87,624

The following table sets forth the maturity profile of the Company's investments and restricted investments as of March 31, 2024:

Restricted Investments

Due within one year

$ 16,832  

$ 63,432  

$ 36,990 $ 6,392

Due one year through five years

16,751  

$ 16,832  

$ 80,183  

$ 36,990 $ 20,213

Cost of Construction and Constructed Assets

The Company’s portfolio as of September 30, 2023 includes the following completed and in-development projects:

Sugar Land Regional Airport (“SGR”), Sugar Land, TX (Houston area);

Miami-Opa Locka Executive Airport (“OPF”), Opa-Locka, FL (Miami area);

Nashville International Airport (“BNA”), Nashville, TN;

Centennial Airport (“APA”), Englewood, CO (Denver area);

Phoenix Deer Valley Airport (“DVT”), Phoenix, AZ;

Addison Airport (“ADS”), Addison, TX (Dallas area).

The Company’s portfolio as of March 31, 2024 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;

Orlando Executive Airport (“ORL”), Orlando, FL;

Phoenix Deer Valley Airport (“DVT”), Phoenix, AZ;

San José Mineta International Airport (“SJC”), San Jose, CA;

Sugar Land Regional Airport (“SGR”), Sugar Land, TX (Houston area).

Constructed assets, net, and cost of construction, consists of the following:

September 30, 2023

March 31, 2024

December 31, 2023

1 unchanged sentence

Buildings, SGR, BNA, and OPF (Phase I)

$ 80,611  

$ 40,921  

$ 80,232 $ 80,232

Accumulated depreciation

( 2,501 )  

$ 78,110  

$ 39,709  

( 3,397 ) ( 2,949 )

$ 76,835 $ 77,283

Cost of construction:

OPF (Phase II), APA (Phase I), DVT (Phase I), and ADS (Phase I & II)

$ 48,153  

$ 48,242  

Depreciation expense for the three months ended September 30, 2023 and 2022 totaled $ 449 and $ 135 , respectively.

Depreciation expense for the 

nine months ended September 30, 2023 and 2022 totaled $ 1,289 and $ 409 , respectively.

$ 71,695 $ 64,212

Depreciation expense for the three months ended March 31, 2024 and 2023 totaled $ 448 and $ 392 , respectively.

Long-lived Assets

Long-lived assets, net, consists of the following:

September 30, 2023

March 31, 2024

December 31, 2023

Ground support equipment

$ 1,034  

$ 1,057 $ 1,051

Machinery and equipment

1 unchanged sentence

Purchase deposits and construction in progress

12,710  

13,119 12,792

Accumulated depreciation

( 635 )  

$ 12,075  

$ 1,150  

Depreciation expense for the three months ended September 30, 2023 and 2022 totaled $ 221 and $ 13 , respectively.

Depreciation expense for the 

nine months ended September 30, 2023 and 2022 totaled $ 361 and $ 38 respectively.

Capitalized depreciation of long-lived assets included in cost of construction totaled $ 59 and $ 178 for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2023 and December 31, 2022, long-lived assets included approximately $ 435 and $ 650 , respectively, of purchase deposits towards long-lived assets which are not being depreciated as the assets have not been placed into service.

( 1,280 ) ( 963 )

$ 11,839 $ 11,829

Depreciation expense for the three months ended March 31, 2024 and 2023 totaled $ 181 and $ 58 , respectively.

Capitalized depreciation of long-lived assets included in cost of construction totaled $ 136 and $ 0 for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024 and December 31, 2023, long-lived assets included approximately $ 665 and $ 362 , respectively, of purchase deposits towards long-lived assets which are not being depreciated as the assets have not been placed into service.

Supplemental Balance Sheet and Cash Flow Information

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”).

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 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:

Restricted Cash  

Long-lived assets

10,821  

Total assets  

12,614  

Accounts payable, accrued expenses and other liabilities  

Loans payable and finance lease liabilities

11,074  

Total liabilities  

12,570  

Total fair value of net assets acquired  

Effective settlement of net receivable from Rapidbuilt  

Total consideration transferred

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 three and nine months ended September 30, 2023.

Accounts payable, accrued expenses and other liabilities

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

September 30, 2023

March 31, 2024

December 31, 2023

Costs of construction

$ 6,317  

$ 6,098  

$ 6,987 $ 7,022

Employee compensation and benefits

Professional fees

$ 13,903  

$ 14,184  

Tenant security deposits

$ 13,816 $ 16,740

Supplemental Cash Flow Information

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

Nine months ended

September 30, 2023

September 30, 2022

Three months ended

March 31, 2024

March 31, 2023

Accrued costs of construction, including capitalized interest

$ 8,593  

$ 10,121  

$ 5,769 $ 5,542

Accrued costs of long-lived assets

Accrued equity issuance costs

Proceeds receivable from exercise of Warrants

Debt issuance costs and premium amortized to cost of construction

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

Nine months ended

September 30, 2023

September 30, 2022

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

Three months ended

March 31, 2024

March 31, 2023

Right-of-use assets obtained in exchange for operating lease liabilities

$ 1,368  

$ 2,876  

Net decrease in right-of-use assets and operating lease liabilities due to lease remeasurement

$ ( 206 )  

$ 46,422 $ 168

Net increase in right-of-use assets and operating lease liabilities due to lease remeasurement

The following table summarizes interest paid:

Nine months ended

September 30, 2023

September 30, 2022

Three months ended

March 31, 2024

March 31, 2023

Interest paid

$ 7,256  

$ 5,533  

$ 3,664 $ 3,470

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:

Nine months ended

September 30, 2023

September 30, 2022

Three months ended

March 31, 2024

March 31, 2023

Cash, beginning of year

$ 2,174  

$ 6,805  

$ 60,257 $ 2,174

Restricted cash, beginning of year

39,222  

197,130  

12,009 39,222

Cash and restricted cash, beginning of year

$ 41,396  

$ 203,935  

$ 72,266 $ 41,396

Cash, end of period

$ 2,471  

$ 3,796  

$ 2,556 $ 2,853

Restricted cash, end of period

34,289  

38,392  

99,453 70,303

Cash and restricted cash, end of period

$ 36,760  

$ 42,188  

All of the Company’s ground leases at airports are classified as operating leases under ASC Topic 842.

$ 102,009 $ 73,156

The table below summarizes operating lease expense for the three months ended March 31, 2024 and March 31, 2023 recorded in the captions within our consolidated statement of operations:

Three months ended

March 31, 2024

March 31, 2023

Operating expenses

$ 1,275 $ 939

General and administrative expenses

Total operating lease expense

$ 1,302 $ 963

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’s lease population does not include any residual value guarantees.

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 lease population does not include any residual value guarantees.

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 the three and nine month periods ended September 30, 2023 and 2022 .

These variable payments were not material in amount for the three month periods ended March 31, 2024 and 2023 .

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 14 — 

Commitments and Contingencies .

The Company’s ground leases have remaining terms ranging between 25  to 73  years, including options for the Company to extend the terms.

See Note 15 — Commitments and Contingencies .

The Company’s ground leases have remaining terms ranging between 16 to 73 years, including options for the Company to extend the terms.

These leases expire between 2040 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.

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 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.

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

Nine months ended

September 30,

On March 23, 2024, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “SJC Lease”) at 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.

On March 27, 2024, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “ORL Lease”) at 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.

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

Three months ended

Cash paid for amounts included in measurement of lease liabilities:

Operating cash flows from operating leases

Operating cash flows from finance leases

Operating cash flows from operating leases as lessee

$ 1,504  

$ 1,384  

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

Weighted Average Remaining Lease Term

September 30, 2023

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

Weighted Average Remaining Lease Term (in years)

March 31, 2024

December 31, 2023

Operating leases as lessee (in years)

Operating leases

Finance leases

Weighted Average Discount Rate

Operating leases as lessee

4.65 %  

The Company’s future minimum lease payments required under leases as of 

September 30, 2023  were as follows: 

Year Ending December 31,  

Operating leases

Finance Leases  

5.16 % 5.08 %

Finance leases

4.99 % 5.00 %

The Company’s future minimum lease payments required under leases as of March 31, 2024 were as follows:

Year Ending December 31, Operating Leases

Finance Leases

2024 (remainder of year)

Thereafter  

199,870  

Total lease payments  

209,793  

2025 5,342 24

2026 6,545 17

Thereafter 339,478 -

Total lease payments 369,142 64

Less imputed interest

( 154,766 ) 

$ 55,027  

( 252,785 ) ( 4 )

$ 116,357 $ 60

The Company leases the hangar facilities that it constructs to third -party tenants.

2 unchanged sentences

Lease agreements with tenants are either on a month-to-month basis or have a defined term with an option to extend the term.

The defined term leases vary in length from one to ten years with options to renew for additional term(s) given to the lessee. There are no options given to the lessee to purchase the underlying assets.

The defined term leases vary in length from one to ten years with options to renew for additional term(s) given to the lessee.

There are no options given to the lessee to purchase the underlying assets.

The leases may contain variable fees, most commonly in the form of tenant reimbursements, which are recoveries of the common area maintenance and operating expenses of the property and are recognized as income in the same period as the expenses are incurred.

1 unchanged sentence

The leases do not contain any restrictions or covenants to incur additional financial obligations by the lessee.

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

September 30, 2023 :

Tenant leases to which the Company is the lessor require the following non-cancelable future minimum lease payments from tenants as of March 31, 2024 :

Year Ending December 31,

1 unchanged sentence

2024 (remainder of year)

$ 1,639  

Total lease payments

22,370  

Less rent concessions to be applied at Company’s discretion

$ 22,156  

Less rent concessions to be applied at Company’s discretion

Bonds payable, loans payable, and interest

Bonds payable

On May 20, 2021, Sky formed a new wholly-owned subsidiary, Sky Harbour Capital LLC (“SHC”), as a parent corporation to its wholly-owned subsidiaries that operate each of the aircraft hangar development sites under its ground leases.

SHC 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”).

SHC 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.

1 unchanged sentence

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 subleasehold 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.

The obligations of the Borrowers are collateralized by certain leasehold and subleasehold 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.

8 unchanged sentences

Principal repayments due under the Series 2021 Bonds are paid annually, commencing July 1, 2032.

March 22, 2023 ,  SHC elected to modify the scope of the Series 

2021  Bonds pursuant to the terms of the Master Indenture, in order to reallocate a portion of the proceeds of the Series 

2021  Bonds to its project site located at ADS (the “ADS Project”) .

In connection with the election to modify the scope of the Series 

2021  PABs to include the ADS Project, (i) Addison Hangars LLC (“Sky Harbour Addison”) and OPF Hangars Landlord LLC (“OPF Hangars”) joined as members of the Obligated Group, (ii) Sky Harbour Holdings LLC contributed its membership interest in OPF Hangars to SHC, (iii) SHC pledged its equity interest in each of Sky Harbour Addison and OPF Hangars to the Master Trustee as security for the obligations under the Series 

2021  Bonds, (iv) Sky Harbour Addison granted to the Master Trustee a mortgage on its leasehold interest in the real property comprising the ADS Project, (v) OPF Hangars granted the Master Trustee a mortgage on its leasehold interest in the real estate comprising the project located in Opa Locka, Florida, and (vi) Sky Harbour Services LLC, a wholly-owned subsidiary of the Company, has agreed to waive all management fees and development fees during the construction period of the projects associated with the Series 

2021  Bonds.

As of September 30, 2023 

and December 31, 2022, the fair value of the Company’s Series 2021 - 1 Bonds was approximately $ 117.3 million and $ 119.5 million, respectively.

As of September 30, 2023 and December 31, 2022, the fair value of the Company’s bonds is estimated utilizing Level 

2  inputs including prices for the bonds on inactive markets.

The following table summarizes the Company’s Bonds payable as of September 30, 2023 and December 31, 2022 :

September 30, 2023

On March 22, 2023 , SHC elected to modify the scope of the Series 2021 Bonds pursuant to the terms of the Master Indenture, in order to reallocate a portion of the proceeds of the Series 2021 Bonds to its project site located at ADS (the “ADS Project”) .

In connection with the election to modify the scope of the Series 2021 PABs to include the ADS Project, (i) Addison Hangars LLC (“Sky Harbour Addison”) and OPF Hangars Landlord LLC (“OPF Hangars”) joined as members of the Obligated Group, (ii) Sky Harbour Holdings LLC contributed its membership interest in OPF Hangars to SHC, (iii) SHC pledged its equity interest in each of Sky Harbour Addison and OPF Hangars to the Master Trustee as security for the obligations under the Series 2021 Bonds, (iv) Sky Harbour Addison granted to the Master Trustee a mortgage on its leasehold interest in the real property comprising the ADS Project, (v) OPF Hangars granted the Master Trustee a mortgage on its leasehold interest in the real estate comprising the project located in Opa Locka, Florida, and (vi) Sky Harbour Services LLC, a wholly-owned subsidiary of the Company, has agreed to waive all management fees and development fees during the construction period of the projects associated with the Series 2021 Bonds.

As of March 31, 2024 and December 31, 2023, the fair value of the Company’s Series 2021 - 1 Bonds was approximately $ 125.9 million and $ 116.5 million, respectively.

As of March 31, 2024 and December 31, 2023, the fair value of the Company’s bonds is estimated utilizing Level 2 inputs including prices for the bonds on inactive markets.

The following table summarizes the Company’s Bonds payable as of March 31, 2024 and December 31, 2023 :

March 31, 2024

December 31, 2023

1 unchanged sentence

Series 2021 Bonds Principal

$ 166,340  

$ 166,340 $ 166,340

Premium on bonds

Bond proceeds

166,589  

166,589 166,589

Debt issuance costs

( 4,753 )  

( 4,753 ) ( 4,753 )

Accumulated amortization of debt issuance costs and accretion of bond premium

Total Bonds payable, net

$ 162,368  

$ 162,210  

Rapidbuilt 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 “Rapidbuilt 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 Rapidbuilt Loan will be guaranteed by Sky.

The Rapidbuilt 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 Rapidbuilt 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.

The weighted-average interest rate was 8.53 % and 8.44 % for the three and nine months ended September 30, 2023, respectively.

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 Rapidbuilt Loan is December 1, 2025.

The Rapidbuilt Loan is secured by the accounts, intellectual property, equipment, inventory, vehicles, and property of the Rapidbuilt Borrowers, and contains customary affirmative and negative covenants.

$ 162,471 $ 162,420

Loans Payable and Finance Leases

The following table summarizes the Company's loans payable and finance lease liabilities as of March 31, 2024 and December 31, 2023:

March 31, 2024

December 31, 2023

Maturity Dates

Weighted-Average Interest Rates

December 2025

8.65 % $ 8,383 8.53 % $ 8,768

Equipment loans

August 2026 - September 2028

8.03 % 422 8.09 % 475

Finance leases

September 2024 - July 2027

4.99 % 60 5.00 % 67

Total Loans payable and finance leases

8.59 % $ 8,865 8.47 % $ 9,311

The following table sets forth the details of interest expense:

Three months ended

Nine months ended

September 30, 2023

September 30, 2022

September 30, 2023

September 30, 2022

$ 1,969  

$ 1,735  

$ 5,522  

$ 5,205  

March 31, 2024

March 31, 2023

$ 1,929 $ 1,735

Accretion of bond premium and amortization of debt issuance costs

1 unchanged sentence

capitalized interest

( 1,787 )  

( 1,810 )  

( 5,364 )  

( 1,786 ) ( 1,788 )

Interest expense

SHG's legal predecessor, 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”) as part of Yellowstone’s initial public offering. Yellowstone.

In addition, Yellowstone sold 7,719,779 private placement warrants (the “Private Placement Warrants”, and together with the Public Warrants, the “Warrants”) to BOC Yellowstone LLC (the “Sponsor”).

SHG's legal predecessor, Yellowstone Acquisition Company (“YAC”), 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 BOC Yellowstone LLC (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.

The Warrants remain outstanding under the same terms and conditions to purchase shares of the Company’s Class A Common Stock.

As of September 30, 2023 , 6,798,964  and 7,719,779  Public and Private Warrants remain outstanding, respectively.

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 Securities Purchase Agreement (the “Private Placement Purchase Agreement”) entered into on November 1, 2023 with certain investors, 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 based on the publicly listed trading price as of the valuation date.

Accordingly, the Public Warrants are classified as Level 1 financial instruments.

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.

The closing price of the Public Warrants was $ 0.20 and $ 0.20 per warrant on September 30, 2023 and December 31, 2022, respectively.

The aggregate fair value of the Warrants was approximately $ 2.9 million and $ 2.9 million as of September 30, 2023 and December 31, 2022, respectively.

The Company recognized unrealized gains of approximately $ 1.6 million and $ 1.5 million during the three months ended September 30, 2023 and 2022, respectively.

The Company did not recognize an unrealized gain or loss during the nine months ended September 30, 2023.

The Company recognized an unrealized gain of approximately $ 2.9 million during the nine months ended September 30, 2022.

During the three months ended March 31, 2024 , 253,703 Warrants were exercised, resulting in approximately $ 2.9 million of proceeds, of which approximately $ 1.4 million was receivable by the Company as of March 31, 2024.

As of March 31, 2024 , 15,806,640 Warrants remain outstanding.

The closing price of the Warrants was $ 1.76 and $ 0.75 per warrant on March 31, 2024 and December 31, 2023 , respectively.

The aggregate fair value of the outstanding Warrants was approximately $ 27.8 million and $ 12.0 million as of March 31, 2024 and December 31, 2023 , respectively.

During the three months ended March 31 2024 and March 31, 2023, the Company recorded unrealized losses of approximately $ 16.2 million and $ 4.2 million, respectively.

Equity and Redeemable Equity

Common Equity

As of September 30, 2023 , there were 15,252,574  and 42,046,356  shares of Class A Common Stock and Class B Common Stock outstanding, respectively.

As of March 31, 2024 , there were 24,537,559 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.

Common Stock Purchase Agreement

On August 18, 2022, the Company entered into a Common Stock Purchase Agreement (the “B.

Riley Stock Purchase Agreement”) with B.

Riley Principal Capital II, LLC (“B.

Riley”).

Pursuant to the B.

Riley 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 B.

Riley 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.

Riley 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"), directly 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 B.

Riley 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 B.

Riley Stock Purchase Agreement.

In consideration for entering into the B.

Riley Stock Purchase Agreement and concurrently with the execution of the B.

Riley 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.

As of September 

30, 2023, the Company has not directed B.

At-the-Market Facility

On March 27, 2024, the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with B.

Riley Securities, Inc.

Riley”) with respect to an “at the market” offering program (the “ATM Facility”), under which the Company may, from time to time, at its sole discretion, issue and sell through B.

Riley, acting as sales agent, up to $ 100 million of shares of Class A Common Stock.

Pursuant to the ATM Agreement, the Company may sell the shares through B.

Riley by any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended.

Riley will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon instructions from the Company, including any price or size limits or other customary parameters or conditions the Company may impose.

The Company will pay B.

Riley a commission of 3.0 % of the gross sales price per share sold under the ATM Agreement, subject to certain reductions.

The Company has made no sales to date under the ATM Facility.

The Company is not obligated to sell any shares under the ATM Agreement.

The offering of shares pursuant to the ATM Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through B.

Riley, of all of the shares subject to the ATM Agreement and (ii) termination of the ATM Agreement in accordance with its terms.

In connection with entering into the ATM Agreement, on March 27, 2024, the Company and B.

Riley terminated (the “B.

Riley Termination”) the Common Stock Purchase Agreement (the “B.

Riley Stock Purchase Agreement”) dated August 18, 2022.

As a result of the B.

Riley Termination, the Company recognized approximately $ 0.1 million of expense associated with the write-off of deferred equity issuance costs.

From August 18, 2022 through March 27, 2024, the Company had not directed B.

Riley to purchase any Class A Common Stock pursuant to the B.

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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 September 30, 2023 and represents the Sky Common Units held by holders other than SHG.

The LLC Interests’ ownership in Sky is presented as non-controlling interests within the Equity section of the consolidated balance sheet as of March 31, 2024 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 September 30, 2023 , the LLC interests owned approximately 73.8 % of the Sky Common Units outstanding.

As of March 31, 2024 , the LLC interests owned approximately 63.1 % 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 September 30, 2023, the former majority shareholder owned approximately 49 % of the partnership interests in Overflow.

As of March 31, 2024 , the former majority shareholder owned approximately 49 % of the partnership interests in Overflow.

Equity Compensation

Restricted Stock Units (“RSUs”)

In February 2023, the Company granted time-based RSUs to certain employees under the Company’s 2022 Incentive Award Plan.

545,522 of time-based awards were granted at a grant date fair value of $ 5.75 , which will vest ratably over a four -year period beginning on the first anniversary of the grant date and ending on February 13, 2027.

During the three and nine months ended September 30, 2023, the Company recognized stock compensation expense of approximately $ 0.5 million and $ 1.4 million, respectively associated with all RSU awards, which is recorded within General and Administrative Expenses within the statement of operations.

During the three and nine  months ended September 30, 2022, the Company recognized stock compensation expense of $ 0.3 million and $ 0.5 million, respectively.

As of September 30, 2023, there are approximately 956,869 non-vested RSUs outstanding with a weighted average grant date fair value of $ 6.53 . The unrecognized compensation costs associated with all unvested RSUs at September 30, 2023 

was approximately $ 5.8  million that is expected to be recognized over a weighted-average future period of 3.0 years.

Restricted Stock Units (“RSUs”)

In February 2024, the Company granted time-based RSUs to certain employees under the Company’s 2022 Incentive Award Plan.

430,002 of time-based awards were granted at a grant date fair value of $ 12.33 , which will vest ratably over a four -year period beginning on the first anniversary of the grant date and ending on February 15, 2028.

During the three months ended March 31, 2024 , the Company recognized stock compensation expense of approximately $ 0.9 million associated with all RSU awards, which is recorded within General and Administrative Expenses within the statement of operations.

During the three months ended March 31, 2023, the Company recognized stock compensation expense of $ 0.4 million.

As of March 31 2024, there are approximately 1,189,636 non-vested RSUs outstanding with a weighted average grant date fair value of $ 9.78 .

The unrecognized compensation costs associated with all unvested RSUs at March 31, 2024 was approximately $ 9.4 million that is expected to be recognized over a weighted-average future period of 3.2 years.

Non-qualified Stock Options (“NSOs”)

In February 2024, the Company granted to certain employees options to purchase 438,781 shares of Class A Common Stock at an exercise price of $ 11.63 under the Company's 2022 Incentive Award Plan.

The NSOs vest ratably over a four -year period beginning on the sixth anniversary of the grant date and have a term of 10 years.

The options were valued at $ 7.32 using a Black -Scholes pricing model.

During the three months ended March 31, 2024, the Company recognized stock compensation expense of $ 0.1 million associated with all NSO awards.

The unrecognized compensation costs associated with all unvested NSOs at March 31, 2024 was approximately $ 3.2 million that is expected to be recognized over a weighted-average future period of 8.9 years.

Sky Incentive Units

The Company recognized equity-based compensation expense relating to awarded equity units of Sky (the “Sky Incentive Units”) of $ 72 and $ 238 for the three and 

nine months ended September 30, 2023 , respectively, and $ 85 and $ 256 for the three and nine months ended September 30, 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’

As of September 30, 2023 , there was $ 0.5 million of total unrecognized compensation expense that is expected to be recognized over a weighted-average future period of 1.6 years.

Earnings (loss) per Share

The Company recognized equity-based compensation expense relating to awarded equity units of Sky (the “Sky Incentive Units”) of $ 45 and $ 85 for the three months ended March 31, 2024 , and March 31, 2023 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 March 31, 2024 , there was $ 0.2 million of total unrecognized compensation expense that is expected to be recognized over a weighted-average future period of 1.2 years.

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. 

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.

Three Months Ended

Nine Months Ended

September 30, 2023  

September 30, 2022  

September 30, 2023  

September 30, 2022  

$ ( 3,092 )  

Net loss attributable to non-controlling interests

Basic and diluted net loss attributable to Sky Harbour Group Corporation shareholders

( 613 )  

Based and diluted weighted average shares of Class A Common Stock outstanding  

15,245  

14,949  

15,132  

13,628  

Loss per share of Class A Common Stock –

Basic and diluted

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):

March 31, 2024

March 31, 2023

Net loss attributable to non-controlling interests

Basic and diluted net loss attributable to Sky Harbour Group Corporation shareholders

Based and diluted weighted average shares of Class A Common Stock outstanding

Loss per share of Class A Common Stock – Basic and diluted

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):

Three Months Ended

Nine Months Ended

September 30, 2023  

September 30 , 2022  

September 30 , 2023  

September 30, 2022  

March 31, 2024

March 31, 2023

Shares subject to unvested restricted stock units

Shares subject to unvested stock options

Shares issuable upon the exercise of Warrants

14,519  

Shares issuable upon the exchange of Class B Common Stock

42,046  

42,192  

42,046  

42,192  

Shares issuable upon the exercise and exchange of Sky Incentive Units

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 three and nine months ended September 30, 2023, 

the Company recognized $ 41 and $ 157 of expense, respectively, within General and administrative expense under the terms of this agreement.

For the three and nine months ended September 30, 2022, the Company recognized $ 50 and $ 134 of expense, respectively, associated with this agreement.

The related liability is included in Accounts payable, accrued expenses and other liabilities on the consolidated balance sheet as of September 30, 2023 .

For the three and nine months ended September 

30, 2023, the Company recognized $ 3  and $ 98 of expense, respectively, for consulting services, to a company that employed the chief financial officer until prior to July 1, 2021.

The Company recognized $ 40 and $ 85 of expense during the three and nine months ended September 30, 2022 to the same company.

Accumulated Other Comprehensive Income

The following table summarizes the components of Accumulated other comprehensive income:

Unrealized gain on

Available-for-sale

Balance as of December 31, 2023

Other comprehensive income before reclassifications

Amounts reclassified to other (income) expense

Balance as of March 31, 2024

Unrealized gain on

Available-for-sale

Balance as of December 31, 2022

Other comprehensive income before reclassifications

Amounts reclassified to other (income) expense

Balance as of March 31, 2023

Commitments and Contingencies

In addition to the lease payment commitments discussed in Note

7 — 

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.

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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.

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.

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If this amount is not expended, the Company is subject to a reduction of the term of the lease.

The Company has contracts for construction of the APA Phase I and DVT Phase I projects.

The Company 

terminate any of the contracts or suspend construction without cause.

There are 

no  termination penalties under the APA Phase I or DVT Phase I construction contracts.

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the components of Accumulated other comprehensive income (loss):

Unrealized gain (loss) on

Available-for-sale

Balance as of December 31, 2022

$ ( 102 )  

Other comprehensive income before reclassifications  

Amounts reclassified to other (income) expense

( 121 )  

Balance as of September 30, 2023

Subsequent Events

PWK Ground Lease

On October 11, 2023, the Company entered into a ground lease agreement (the "PWK Lease") with Chicago Executive Airport ("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.

PWK is jointly owned by the Village of Wheeling and City of Prospect Heights, Illinois, and acts a primary reliever and general aviation airport within the Chicago metropolitan area.

The FAA reported nearly 100,000 total airport operations at PWK in 2021 and 2022, with steady growth forecasted each year thereafter.

SGR Phase II Lease Termination

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. 

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) agreed to sell and issue to the Investors at an initial closing an aggregate of 6,586,154 shares (the “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 “PIPE Warrants”), for an aggregate purchase price of $ 42.8 million (the "Initial Financing"), and (ii) agreed to sell and issue to the Investors at the second closing, if any, up to an aggregate of 2,307,692 PIPE Shares (the "Additional PIPE Shares") and accompanying PIPE Warrants to purchase up to an aggregate of 400,000  shares of Class A Common Stock (the "Additional PIPE Warrants") for an aggregate purchase price of up to $ 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”).

The amount of Additional PIPE Shares and Additional PIPE Warrants, if any, to be issued in connection with the Additional Financing will be determined by Altai Capital Falcon LP (the “Lead Investor”) in its sole discretion, and the closing of the Additional Financing will occur, if at all, at the sole discretion of the Lead Investor, on or before November 30, 2023, subject to customary closing conditions.

The PIPE Warrants are similar in form and substance to the Company’s public warrants to purchase Class A Common Stock. The PIPE Warrants are exercisable at an exercise price of $ 11.50 per share, subject to adjustment as set forth therein.

The PIPE Warrants are fully exercisable and expire on January 25, 2027.

For further information regarding the terms of the PIPE Warrants, see the section entitled “Warrants”

in Exhibit 4.4 (Description of Securities) to our Form 

10 -K for the fiscal year ended December 

31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on March 

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.

Registration Rights Agreement

On November 1, 2023, in connection with the execution of the Private Placement Purchase Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the Investors.

Pursuant to the Registration Rights Agreement, certain holders of the Company’s securities are entitled to certain customary registration rights, and the Company is required to prepare and file a resale registration statement (the “Registration Statement”) with the SEC to register the resale of the PIPE Shares, the PIPE Warrants and 130 % of the shares of Class A Common Stock issuable upon exercise of the PIPE Warrants (collectively, the “PIPE Securities”), and to use its best efforts to cause the Registration Statement to be declared effective by the SEC by the earlier of (i) 180 days following the Initial Closing Date and (ii) the fifth business day after the date the Company is notified by the SEC that the Registration Statement will not be “reviewed”

or will not be subject to further review.

MANAGEMENT ’

S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes included elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”), as well as the information contained in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities Exchange Commission (the “SEC”) on March 24, 2023 (the “Form 10-K”), which is accessible on the SEC’s website at www.sec.gov.

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 SJC Lease contains customary milestones by which the Company must complete additional construction.

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.

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.

In addition to the matters described in this note, the Company is involved is various legal proceedings and claims in the ordinary course of its business.

Although the Company cannot predict with certainty the ultimate resolution of these matters, which involve judgements that are inherently subjective, the Company does not expect that the ultimate disposition of such other contingencies or matters will materially affect its financial condition, results of operations or cash flows.

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 three months ended March 31, 2024 , the Company recognized $ 69 of expense within General and administrative expense under the terms of this agreement.

For the three months ended March 31, 2023, the Company recognized $ 62 of expense associated with this agreement.

The related liability is included in Accounts payable, accrued expenses and other liabilities on the consolidated balance sheet as of March 31, 2024 .

For the three months ended March 31, 2024 , the Company recognized $ 0 of expense for consulting services, to a company that employed the chief financial officer until prior to July 1, 2021.

The Company recognized $ 88 of expense during the three months ended March 31, 2023 to the same company.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes included elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”), as well as the information contained in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities Exchange Commission (the “SEC”) on March 27, 2024 (the “Form 10-K”), which is accessible on the SEC’s website at www.sec.gov.

Cautionary Note Regarding Forward-Looking Statements

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,”

“estimates,”

“anticipates,”

“expects,”

“intends,”

“plans,”

“may,”

“might,”

“will,”

“potential,”

“projects,”

“predicts,”

“continue,”

or “should,”

or, in each case, their negative or other variations or comparable terminology.

These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “might,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology.

There can be no assurance that actual results will not materially differ from expectations.

These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to:

expectations regarding the Company’s strategies and future financial performance, including the Company’s future business plans or objectives, prospective performance and commercial opportunities and competitors, services, pricing, marketing plans, operating expenses, market trends, revenues, liquidity, cash flows and uses of cash, capital expenditures, and the Company’s ability to invest in growth initiatives;

These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to:

the effects of general economic conditions, including inflation, rising interest rates, and availability of construction materials and labor for our development projects;

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These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors”

in the Form 10-K.

These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in the Form 10-K.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

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Overview and Background

We are an aviation infrastructure development company building the first nationwide network of hangar campuses for business aircraft.

We develop, lease, and manage general aviation hangars across the United States, targeting airfields in markets with significant aircraft populations and high hangar demand.

Our hangar campuses feature exclusive private hangars and a full suite of dedicated services specifically optimized for home-based, versus transient, aircraft.

We are an aviation infrastructure development company building the first nationwide network of home basing hangar campuses for business aircraft.

We develop, lease, and manage general aviation hangars across the United States, targeting airfields in markets with significant aircraft populations and high hangar demand.

Our home basing hangar campuses feature exclusive private hangars and a full suite of dedicated services specifically optimized for home-based, versus transient, aircraft.

The physical footprint of the U.S.

business aviation fleet grew by almost 28 million square feet in the ten years preceding the beginning of the COVID-19 pandemic, with hangar supply lagging dramatically, especially in key growth markets.

business aviation fleet grew by almost 28 million square feet in the ten years preceding the beginning of the COVID-19 pandemic, with hangar supply lagging dramatically, especially in key growth markets.

As the fleet of private jets in the United States continues to grow, with recent new aircraft deliveries exceeding retirements, demand for hangar space is at a premium in part because new jets require more square footage of hangar space and the pace of new hangar construction has lagged behind the demand.

The cumulative square footage of the business aircraft fleet in the United States increased 50% between 2010 and 2021.

Moreover, over that same period, there was an 81% increase in the square footage of larger private jets –

those with greater than a 24-foot tail height.

A recent study conducted by a business aircraft manufacturer forecasted that business aircraft will only continue to grow in the next ten years, with up to 8,500 new business jet deliveries worth approximately $278 billion expected to be delivered between 2024 and 2033, with larger private jet deliveries expected to increase approximately 15% in 2024.

These projections are further supported by data from the major business aviation manufacturers that suggest the current order backlog for new business aviation aircraft is almost $47 billion.

These larger footprint aircraft do not fit in much of the existing hangar infrastructure and impose stacking challenges and constraints in the traditional shared or community hangars operated by FBOs. The addition of winglets (the vertical extensions on aircraft wingtips) on most modern business jets inhibits wing-over-wing storage.

Moreover, over that same period, there was an 81% increase in the square footage of larger private jets – those with greater than a 24-foot tail height.

A recent study conducted by a business aircraft manufacturer forecasted that business aircraft will only continue to grow in the next ten years, with up to 8,500 new business jet deliveries worth over $275 billion expected to be delivered between 2024 and 2033, further supported by data from the major business aviation manufacturers that suggest the current order backlog for new business aviation aircraft is over $49 billion.

The addition of winglets (the vertical extensions on aircraft wingtips) on most modern business jets inhibits wing-over-wing storage.

Aircraft hangars are in high demand and short supply, with some airports compiling waiting lists that can exceed several years.

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airports by targeting high-end tenants in markets where there is a shortage of private and FBO hangar space, or where such hangars are or are becoming obsolete.

We realize economies of scale in construction through a proprietary prototype hangar design replicated at our hangar campuses across the United States.

We expect to realize economies of scale in construction through a prototype hangar design replicated at our hangar campuses across the United States.

This allows for centralized procurement, straightforward permitting processes, efficient development processes, and the best hangar in business aviation.

Unlike a service company, our revenues are mostly derived from long-term rental agreements, offering stability and forward visibility of revenues and cash flows.

This allows the Company to fund its development through the public bond market, providing capital efficiency and mitigating refinance risk.

With six airport campuses either in development or ongoing operations, the company is targeting fourteen additional airfields in the current growth phase, and an additional 30 in the next.

The table below presents certain information with respect to our portfolio as of September 30, 2023.

Sugar Land Regional Airport (“SGR”), Sugar Land, TX (Houston area);

Miami-Opa Locka Executive Airport (“OPF”), Opa-Locka, FL (Miami area);

Nashville International Airport ("BNA"), Nashville, TN;

Centennial Airport (“APA”), Englewood, CO (Denver area); 

Phoenix Deer Valley Airport (“DVT”), Phoenix, AZ;

Unlike a service company, our revenues are mostly derived from long-term rental agreements, offering stability and forward visibility of revenues and cash flows.

This allows the Company to fund its development through the public bond market, providing capital efficiency and mitigating refinance risk.

We seek to develop our home basing hangar campuses on long-term ground leases (or sub-leases thereof) at airports with suitable infrastructure serving metropolitan centers across the United States.

We lease each of our properties under long-term ground leases.

The table below presents certain information with respect to our portfolio as of March 31, 2024.

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;

Orlando Executive Airport (“ORL”), Orlando, FL;

Phoenix Deer Valley Airport (“DVT”), Phoenix, AZ;

San José Mineta International Airport (“SJC”), San Jose, CA;

Sugar Land Regional Airport (“SGR”), Sugar Land, TX (Houston area).

PROPERTIES IN OPERATION

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Square Footage

September 30, 2023

March 31, 2024

December 2020

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Construction Cost

Completion Date

Square Footage (1)

In Development

December 2023

February 2025

In Construction

November 2022

Predevelopment

February 2025

In Construction

December 2022

Predevelopment

February 2025

Predevelopment

In Construction

Predevelopment

In Development

November 2024

ORL Phase I (2)

Predevelopment

ADS Phase III

Predevelopment

SJC Renovation

In Development

SJC Phase II (2)

Predevelopment

$386.3 - 428.9

Our projections associated with the commencement and completion of construction, estimated total construction cost, hangars, and rentable square footage of our properties in development are inherently subjective and require judgement to estimate.

We believe that our estimates of construction costs and timelines are subject to variability based on various factors including, but not limited to, changes in anticipated site plans, hangar mix, hangar specifications, executed guaranteed maximum price construction contracts, and general market conditions.

Our ground leases at SJC and ORL were executed in March 2024, and we have not yet formed preliminary estimates regarding the projected construction timeline, total construction costs, or hangar mix associated with our ORL Phase I and SJC Phase II development projects.

Recent Developments

On October 11, 2023, we entered into a ground lease agreement (the “PWK Lease”) with Chicago Executive Airport (“PWK”).

The term of the PWK Lease will be 50 years and is divided into two parcels, allowing for the development of a hangar campus on up to 25 acres of land at PWK.

On March 23, 2024, we entered into the SJC Lease at SJC with the City of San Jose.

The property at SJC includes additional land on which we intend 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.

On March 27, 2024, we entered into the ORL Lease at ORL with 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 the construction period, with lease payments commencing contemporaneously with the term.

The ORL Lease contains options exercisable by us to extend the ORL Lease an additional 20 years based on our total expenditures in subsequent phases at ORL.

Factors That May Influence Future Results of Operations

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However, our existing and potential tenants are subject to economic, regulatory and market conditions that may affect their level of operations and demand for hangar space, which could impact our results of operations.

For example, during the three months ended September 30, 2023, a tenant renting two hangars at OPF made the determination that it was necessary to change its business plans in the greater Miami market, which ultimately resulted in the negotiated settlement of the tenant’s lease with the Company and their exit from our OPF hangar campus.

For example, during the year ended December 31, 2023, a tenant renting two hangars at OPF made the determination that it was necessary to change its business plans in the greater Miami market, which ultimately resulted in the negotiated settlement of the tenant’s lease with us and their exit from our OPF hangar campus.

Accordingly, we actively monitor certain key factors, including changes in those factors (fuel prices, new aircraft deliveries, hangar rental rates) that we believe may provide early indications of conditions that may affect the level of demand for new leases and our lease portfolio.

See “—

Risks Related to our Business and Operations ”

within the Form 10-K for more information about the risks related to our tenants and our lease payments.

See “— Risks Related to our Business and Operations ” within the Form 10-K for more information about the risks related to our tenants and our lease payments.

Ground Lease Expense

One of our largest expenses is the lease payments under our ground leases.

For the nine months ended September 30, 2023 and 2022, our operating lease expense for ground leases was $2.8 million and $2.8 million, respectively.

For the three months ended March 31, 2024 and 2023, our operating lease expense for ground leases was $1.2 million and $0.9 million, respectively.

As we enter into new ground leases at new airport sites, our payments to airport landlords will continue to increase into the future.

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Economic conditions and actions by policymaking bodies are contributing to rising interest rates, which, along with increases in our borrowing levels, could increase our future borrowing costs.

We expect to issue additional debt to finance future site developments and higher interest rates would impact our overall economic performance.

We expect to issue additional debt to finance future site developments and higher interest rates would impact our overall economic performance.

In addition, we are subject to credit spreads demanded by fixed income investors.

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General and Administrative Expenses

The general and administrative expenses reflected in our statement of operations are reflective of the professional, legal and consulting fees, payroll costs, and other general and administrative expenses, including those necessary to support our business as a public company such as expenses associated with corporate governance, SEC reporting, and other compliance matters. While we expect that our general and administrative expenses will rise in some measure as our portfolio of campuses grows, we expect that such expenses as a percentage of our portfolio will decrease over time due to efficiencies, economies of scale, insourcing of job functions, and cost control measures.

While we expect that our general and administrative expenses will rise in some measure as our portfolio of campuses grows, we expect that such expenses as a percentage of our portfolio will decrease over time due to efficiencies, economies of scale, insourcing of job functions, and cost control measures.

Construction Material Costs and Labor

When constructing our hangar campuses, we use various materials and components.

We contract for certain of our materials and labor with general contractors under guaranteed maximum price contracts upon receipt of building permits. This allows us to mitigate certain of the risks associated with increases in certain building materials and labor costs between the time construction begins on a hangar campus and the time it is completed.

When constructing our home basing hangar campuses, we use various materials, assemblies, and labor components.

We contract for our materials and labor with various general contractors under guaranteed maximum price (GMP) contracts upon receipt of building permits.

This allows us to mitigate certain inflationary pressures associated with increases in certain building materials and labor costs between the time construction begins at a hangar campus and the time it is completed.

Typically, the materials and most of the components used to construct our hangar campuses are readily available in the United States.

We continue to monitor the supply markets to achieve the best prices available.

Typically, the price changes that most significantly influence our operations are price increases in steel, concrete, and labor. We believe that recent inflationary pressures and market conditions will lead to continued increases in construction costs as well as market rental rates for hangars within our hangar campus development projects.

We continue to monitor the supply markets and ensure robust competition to achieve the best prices available.

Typically, the price changes that most significantly influence our operations are price increases in steel, concrete, and labor.

We believe that recent inflationary pressures and market conditions will lead to continued increases in construction costs and market rental rates for hangars within our development projects.

However, there can be no assurance that we will be able to increase the lease rates for the hangars within our hangar campuses to absorb these increased costs and/or delays, if at all.

In May 2023, we acquired a controlling interest in Rapidbuilt, a metal building and hangar door manufacturer, that we expect will ultimately result in a reduction in the overall cost of the metal building and hangar door components at all future hangar campus development projects.

We expect that over time this vertical integration will enable us to deliver metal buildings to each development site in shorter timeframes, which we believe will reduce the overall construction duration of each development project.

We intend to continue to aggressively take action to mitigate these inflationary pressures, reduce construction costs, and shorten development schedules, both in the near term at our APA Phase I, DVT Phase I, and ADS Phase I development projects, and in the long term at future projects.

We structure our guaranteed maximum price construction contracts with shared savings clauses to incentivize the general contractors to reduce construction costs.

At our SGR and BNA development projects, our total construction costs were lower than both our original pricing estimate and the project’s contracted guaranteed maximum price.

No assurance can be given that our cost mitigation strategies will be successful, the costs of our projects will not exceed budgets or the guaranteed maximum price for such projects, or that the completion will not be delayed beyond the projected completion dates.

In May 2023, we acquired a controlling interest in Rapidbuilt, a metal building and hangar door manufacturer, that we expect will ultimately result in an increase in quality and a reduction in the overall cost of the metal building and hangar door components at future development projects.

We expect that over time this vertical integration will enable us to deliver metal buildings to most of our development sites in shorter times as compared to the anticipated lead times associated with conventional metal building fabricators.

We believe internal building fabrication will provide us opportunities to aggressively target continued schedule compression at most of our development projects in the future.

In December 2023, we engaged several structural engineering firms to perform an independent peer review of the hangar buildings designed for our DVT Phase I and APA Phase I development projects.

The independent peer reviews determined a significant design defect existed within our prototype hangar building designs that requires retrofitting to both meet and exceed our standards and the respective local building codes.

The anticipated retrofitting efforts are also expected to be applied to ADS Phase I, and we project that the aggregate additional cost of such retrofits could total between $26 to $28 million and require an additional three to five months of construction duration for each project impacted.

Given the planned design enhancements at our APA Phase I, DVT Phase I, and ADS Phase I development projects, we anticipate that our total construction costs for these projects to each be greater than our original estimates, and outside of the scope of the guaranteed maximum price construction contracts.

In March 2024, we funded the increase in estimated costs by contributing $27 million of our corporate cash holdings to SHC, thereby restricting the use of such cash to the project scope of the Series 2021 Bonds.

In May 2024, we updated many of our preliminary estimates based on our intention to begin incorporating a larger hangar prototype into our home basing hangar campuses, which is intended to provide an increase in rentable square footage of hangar, office, and lounge space upon completion.

This larger hangar prototype requires an increase in construction materials and components, and we expect its incorporation into multiple future development projects will ultimately result in cost savings through the realization of economies of scale.

Our updated estimates of total construction costs do not include projections of potential cost reductions due to such efficiencies.

We intend to continue to aggressively mitigate inflationary pressures, reduce construction costs to the greatest extent possible, and pursue compressed development schedules.

We currently structure our guaranteed maximum price construction contracts with shared savings clauses to incentivize the general contractors to reduce construction costs.

No assurance can be given that our cost mitigation strategies will be successful, the costs of our ongoing and future projects will not exceed budgets or the guaranteed maximum price for such projects, or that the completion will not be delayed beyond the projected completion dates.

Current Capital Requirements and Future Expenditures for Expansion

We previously funded SHC with over $200 million to fund the two phases at each of our five ground leased airport locations.

These construction funds and reserves are held at the bondholder trustee.

We previously funded SHC with over $200 million to fund the two phases at our initial five ground leased airport locations.

We maintain the ability to include up to $50 million in new projects outside the original five locations to be funded with a portion of the existing proceeds held by the trustee as long as certain approvals and supplemental consultant reports are provided showing that such new project would result in better coverage of debt service than previously contemplated projects.

We exercised this ability utilizing approximately $26 million of the $50 million available and received the requisite approvals and reports in March 2023 with respect to our ADS Phase I development project.

Subsequent Events 

in the Notes to Consolidated Financial Statements, to begin to fund additional airport campuses and reach up to 20 airport campuses over the next several years.

On average, each future campus is anticipated to be composed of an average of 10-20 hangars and is expected to cost approximately $55 million per campus, with 60% or more to be funded with additional private activity bonds.

All these future hangar campus projects are discretionary and require us to identify the appropriate airports with the target hangar demand economics, secure required ground leases and permits, and complete future construction at such sites.

We exercised this ability utilizing approximately $26 million of the $50 million available and received the requisite approvals and reports in March 2023 with respect to our ADS Phase I development project.

We previously raised equity capital, along with potential future debt and further equity issuances, including the Private Placement Purchase Agreement entered into on November 1, 2023, see Liquidity and Capital Resources — Private Placement and Securities Purchase Agreement below, to begin to fund additional airport campuses and reach up to 20 airport campuses over the next several years.

We also have the ability to access the capital markets through our ATM Facility and through our effective shelf registration statement on Form S-3.

On average, each future campus is anticipated to be composed of at least 100,000 rentable square feet and is expected to cost approximately $55 million per campus, with 60% or more to be funded with additional private activity bonds or other indebtedness.

All future hangar campus projects are discretionary and require us to identify the appropriate airports with the target hangar demand economics, secure required ground leases and permits, and complete future construction at such sites.

The cumulative 20 airport site business plan is estimated to cost approximately $1.2 billion, with approximately 65% to 75% anticipated from long-term private activity bonds and the balance with equity or equity linked financing.

Our ability to raise additional equity and/or debt financing will be subject to a number of risks, including our ability to obtain financing upon reasonable terms, if at all, costs of construction, delays in constructing new facilities, operating results, and other risk factors. In the event that we are unable to obtain additional financing, we may be required to raise additional equity capital, creating additional dilution to existing stockholders.

There can be no assurance that we would be successful in raising such additional equity capital on favorable terms, if at all. 

In the event that we are unable to obtain additional financing, we may be required to raise additional equity capital, creating additional dilution to existing stockholders.

There can be no assurance that we would be successful in raising such additional equity capital on favorable terms, if at all.

Even if we can obtain such additional equity financing if needed, there can be no assurance that we would be successful in raising such additional financing on favorable terms, if at all.

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Once a capital project is complete, the cost of the capital project is reclassified to Constructed Assets on the accompanying balance sheet and we begin 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.

We account for leases under Accounting Standards Codification (“ASC”) Topic 842, Leases.

We determine whether a contract contains a lease at the inception of the contract.

ASC Topic 842 requires lessees to recognize operating lease liabilities and right-of-use (“ROU”) assets for all leases with terms of more than 12 months on the consolidated balance sheets.

We have made an accounting policy election that will keep leases with an initial term of 12 months or less off our 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 we will exercise our options to renew the leases, the renewal terms are included in the lease term and the resulting ROU asset and operating lease liability balances. We have elected to not capitalize any interest cost that is implicit within our operating leases into cost of construction on the consolidated balance sheet, but instead, we expense our ground lease cost in the consolidated statements of operations. 

We have elected to not capitalize any interest cost that is implicit within our operating leases into cost of construction on the consolidated balance sheet, but instead, we expense our ground lease cost in the consolidated statements of operations.

We have lease agreements with lease and non-lease components;

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Recent Accounting Pronouncements

See Note 2 — 

Basis of Presentation and Significant Accounting Policies in the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the expected dates of adoption and effects on results of operations and financial condition.

See Note 2 — Basis of Presentation and Significant Accounting Policies in the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the expected dates of adoption and effects on results of operations and financial condition.

Results of Operations

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

The following table sets forth a summary of our consolidated results of operations for the periods indicated below and the changes between the periods (in thousands). 

Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023

The following table sets forth a summary of our consolidated results of operations for the periods indicated below and the changes between the periods (in thousands).

Three months ended

September 30, 2023

September 30, 2022

Rental revenue

Total revenue

Loss on impairment of long-lived assets

General and administrative

Total expenses

Operating loss

Other (income) expense:

Interest expense

Unrealized gain on warrants

Total other (income) expense

Net income (loss)

Revenues for the three months ended September 30, 2023 were approximately $2.5 million, compared to approximately $0.4 million for the three months ended September 30, 2022.

The $2.1 million, or 481%, increase was primarily the result of the cumulative impact of certain additional tenant leases in place at our SGR, BNA, and OPF hangar campuses as compared to the three months ended September 30, 2022, additional tenant leases commencing at our OPF and BNA hangar campuses during the three months ended September 30, 2023, and approximately $0.4 million of net non-recurring adjustments to revenue recognized during the three months ended September 30, 2023.

Operating Expenses

Operating expenses increased approximately $0.4 million, or 36%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

The increase reflects higher operating costs associated with the commencement of operations at our BNA and OPF hangar campuses during the three months ended December 31, 2022 and March 31, 2023, respectively.

Salaries, wages, and benefits associated with our campus personnel increased by approximately $0.1 million, primarily driven by headcount increases at our BNA and OPF hangar campuses.

Other operating expenses increased approximately $0.3 million, primarily driven by increased insurance, property taxes, and utilities associated with operations at our OPF, BNA, and SGR hangar campuses. 

Depreciation Expense

Depreciation increased approximately $0.5 million, or 352%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

The increase reflects a full quarter of depreciation associated with our OPF and BNA hangar campuses, which opened during the three months ended March 31, 2023, and the three months ended December 31, 2022, respectively.

The increase was also partially driven by the placement of additional ground support equipment into service throughout 2022 and 2023 and a full quarter of depreciation related to Rapidbuilt, which was acquired during the three months ended June 30, 2023.

General and Administrative Expenses

For the three months ended September 30, 2023, and 2022, general and administrative expenses were approximately $3.6 million and $3.6 million, respectively.

The approximately 1% decrease was primarily due to a decrease of approximately $0.4 million related to other administrative expenses, largely driven by decreased corporate insurance premiums and an approximately $0.3 million decrease in professional fees, which was primarily driven by decreased in legal and accounting related costs and our efforts to internalize job functions.

These decreases were offset by an approximately $0.7 million increase in salaries, wages, and other benefits, driven by an increase in headcount and expense recognized associated with our equity compensation program.

Other (Income) Expense

Other income decreased from approximately $1.5 million to approximately $1.4 million for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

This decrease was primarily due to an approximately $0.2 million increase in interest expense due to the Rapidbuilt acquisition, offset by a $0.1 million difference in the mark-to-market adjustment of the outstanding warrants at September 30, 2023 as compared to September 30, 2022.

Results of Operations

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

The following table sets forth a summary of our consolidated results of operations for the periods indicated below and the changes between the periods (in thousands). 

Nine months ended

September 30, 2023

September 30, 2022

March 31, 2024

March 31, 2023

Rental revenue

Total revenue

Loss on impairment of long-lived assets

General and administrative

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Total other (income) expense

Revenues for the nine months ended September 30, 2023 were approximately $5.3 million, compared to approximately $1.2 million for the nine months ended September 30, 2022.

The $4.1 million, or 332%, increase was primarily the result of tenant leases commencing at our OPF and BNA hangar campuses during the nine months ended September 30, 2023, as well as the cumulative impact of certain additional tenant leases in place at our SGR and BNA hangar campuses as compared to the nine months ended September 30, 2022.

Revenues for the three months ended March 31, 2024 were approximately $2.4 million, compared to approximately $1.1 million for the three months ended March 31, 2023.

The $1.3 million, or 117%, increase was primarily the result of the cumulative impact of certain additional tenant leases in place at our BNA and OPF hangar campuses as compared to the three months ended March 31, 2023.

The increase in occupancy at our OPF and BNA hangar campuses for the three months ended March 31, 2024 as compared to March 31, 2023 resulted in increased fixed rental revenues of approximately $1.1 million.

Revenue associated with our delivery of aircraft fuel increased approximately $0.2 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Operating Expenses

Operating expenses increased approximately $1.5 million, or 42%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

The increase reflects higher operating costs associated with the commencement of operations at our BNA and OPF hangar campuses, which opened during the three months ended December 31, 2022 and March 31, 2023, respectively.

Salaries, wages, and benefits associated with our campus personnel increased by approximately $0.6 million, primarily driven by headcount increases at our BNA and OPF hangar campuses.

Other operating expenses increased approximately $0.9 million, primarily driven by increased insurance, property taxes, and utilities associated with operations at our OPF, BNA, and SGR hangar campuses. 

Operating expenses increased approximately $0.3 million, or 16%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

The increase in operated expense is primarily reflective of increased ground lease expense, which increased approximately $0.3 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

The increase in ground lease expense was driven by new ground leases signed at PWK, BDL, and POU during the three months ended December 31, 2023, and at SJC and ORL during the three months ended March 31, 2024.

Salaries, wages, and benefits associated with our campus personnel increased by approximately $0.1 million, primarily driven by a headcount increase associated with the anticipated commencement of operations at our SJC hangar campus.

Other operating expenses decreased by approximately $0.1 million, primarily driven by decreased utility expenses associated with operations at our OPF and BNA hangar campuses due to higher occupancy levels.

Depreciation Expense

Depreciation increased approximately $1.2 million, or 269%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

The increase reflects the opening of our OPF hangar campus during the three months ended March 31, 2023, the opening of our BNA hangar campus during the three months ended December 31, 2022 and the placement of additional ground support equipment into service throughout 2022 and 2023.

Depreciation increased approximately $0.2 million, or 40%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

The increase reflects a full quarter of depreciation associated with our OPF hangar campus, which opened during the three months ended March 31, 2023.

The increase was also partially driven by the placement of additional ground support equipment into service throughout 2023 and 2024 and a quarter of depreciation related to Rapidbuilt, which was acquired during the three months ended June 30, 2023.

General and Administrative Expenses

For the nine months ended September 30, 2023, and 2022, general and administrative expenses were approximately $10.8 million and $12.1 million, respectively.

The approximately $1.3 million decrease was primarily due to an approximately $1.6 million decrease in professional fees, which was primarily driven by decreased in legal and accounting related costs due non-recurring transaction costs incurred during the nine months ended September 30, 2022, and our efforts to internalize job functions.

Other administrative expenses decreased approximately $0.6 million primarily due to decreased corporate insurance premiums.

These decreases were offset by an approximately $0.9 million increase in salaries, wages, and other benefits, primarily driven by an increase in expense recognized associated with our equity compensation program.

For the three months ended March 31, 2024, and 2023, general and administrative expenses were approximately $4.9 million and $3.5 million, respectively.

The approximately $1.4 million, or 38%, increase was primarily due to an approximately $1.3 million increase in salaries, wages, and other benefits, driven by an increase in corporate headcount and expense recognized associated with our equity compensation programs.

Headcount and compensation expenses increased approximately $0.7 million, non-cash equity compensation expense increased approximately $0.6 million, and professional fees increased approximately $0.1 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

This increase in professional fees was partially attributable to the recognition of approximately $0.1 million of expense associated with the B.

Riley Termination.

Other (Income) Expense

Other (income) expenses decreased from approximately $2.9 million of income to less than $0.1 million of expense for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

This decrease was primarily due to a $2.9 million difference in the mark-to-market adjustment of the outstanding warrants at September 30, 2023 as compared to September 30, 2022.

Other expense increased from approximately $4.1 million to approximately $16.0 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

This increase was primarily due to an approximately $12.0 million difference in the mark-to-market adjustment of the outstanding warrants at March 31, 2024 as compared to March 31, 2023.

Liquidity and Capital Resources

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Our primary sources of cash include the potential issuance of equity and debt securities and rental payments from tenants.

Our long-term liquidity requirements include lease payments under our ground leases with airport authorities, repaying principal and interest on outstanding borrowings, funding the construction costs of our hangar campus development projects (see “—

Construction Material Costs and Labor ”), funding for operations, and paying accrued expenses. 

We believe that we have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional private activity bonds and other debt and the issuance of additional equity securities.

However, as we have recently become a publicly-traded company, we cannot assure you that we will have access to these sources of capital or that, even if such sources of capital are available, that these sources of capital will be available on favorable terms.

We believe that we have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional private activity bonds and other debt and the issuance of additional equity securities.

We also have the ability to utilize our $100 ATM Facility or otherwise utilize our registration statement on Form S-3 to access the capital markets.

However, as we have recently become a publicly-traded company, we cannot assure you that we will have access to these sources of capital or that, even if such sources of capital are available, that these sources of capital will be available on favorable terms.

Our ability to incur additional debt will depend on multiple factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that are or may be imposed by future lenders.

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Our cash deposits may exceed the amount of insurance provided on such deposits.

Generally, these deposits may be redeemed upon demand and the majority are maintained with a major financial institution with reputable credit.

Generally, these deposits may be redeemed upon demand and the majority are maintained with a major financial institution with reputable credit.

Our restricted cash is held in trust at a major financial institution pursuant to the Series 2021 Bonds indenture.

We monitor the relative credit standing of financial institutions with whom we transact and limit the amount of credit exposure with any one entity.

We monitor the relative credit standing of financial institutions with whom we transact and limit the amount of credit exposure with any one entity.

Our portfolio of investments and restricted investments is composed entirely of U.S.

Treasury securities as of September 30, 2023.

The following table summarizes our cash and cash equivalents, restricted cash, investments, and restricted investments as of September 30, 2023 and December 31, 2022 (in thousands):

September 30, 2023

Treasury securities as of March 31, 2024.

The following table summarizes our cash and cash equivalents, restricted cash, investments, and restricted investments as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024

December 31, 2023

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Private Placement and Securities Purchase Agreement

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

Riley Stock Purchase Agreement

On August 18, 2022, we entered into a Common Stock Purchase Agreement and a Registration Rights Agreement (collectively referred to as the “B.

Riley Stock Purchase Agreement”) with B.

Riley Principal Capital, LLC (“B.

Riley”).

Pursuant to the B.

Riley Stock Purchase Agreement, we have the right, in our sole discretion, to sell to B.

Riley up to 10 million shares of our Class A Common Stock at 97% of the volume weighted average price of our Class A Common Stock calculated in accordance with the B.

Riley Stock Purchase Agreement, over a period of 36 months subject to certain limitations and conditions contained in the B.

Riley Stock Purchase Agreement.

Sales and timing of any sales of Class A Common Stock are solely at our election, and we are under no obligation to sell any securities to B.

Riley under the B.

Riley Stock Purchase Agreement.

As consideration for B.

Riley’s commitment to purchase shares of our Class A Common Stock, we have issued 25,000 shares of our Class A Common Stock to B.

Riley as initial commitment shares and may issue up to an aggregate of 75,000 shares of our Class A Common Stock to B.

Riley as additional commitment shares if certain conditions are met.

Equity Financing

On January 25, 2022 (the "Closing Date") we completed the transactions (the "Yellowstone Transaction") contemplated by the Equity Purchase Agreement, dated as of August 1, 2021 (the “Equity Purchase Agreement”), between Yellowstone and Sky.

On the Closing Date, Yellowstone changed its name to Sky Harbour Group Corporation, and Sky restructured its capitalization, issuing its Sky Common Units to the Company.

As a result of the Yellowstone Transaction, the Sky Common Units that Sky issued to BOC YAC in respect of its Series B Preferred Units were converted into 5,500,000 shares of the Company’s Class A Common Stock and holders of Sky Common Units received one share of the Company’s Class B Common Stock for each Common Unit.

As consideration for the issuance of Sky Common Units to the Company, Yellowstone contributed approximately $48 million of net proceeds to us, consisting primarily of the BOC PIPE, and the amount held in the Yellowstone trust account, net of redemptions and transaction costs.

On November 1, 2023, we entered into a Securities Purchase Agreement (the “Private Placement Purchase Agreement”) with certain investors (collectively, the “Investors”), pursuant to which we (i) sold and issued to the Investors on November 2, 2023 an aggregate of 6,586,154 shares (the “Initial PIPE Shares”) of our 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 on November 29, 2023 an aggregate of 2,307,692 shares of our Class A Common Stock (the “Additional PIPE Shares” and, together with the Initial PIPE Shares, the “PIPE Shares”) and accompanying warrants to purchase 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.

Together with the Initial Financing, the aggregate PIPE financing through the Private Placement Purchase Agreement totaled approximately $57.8 million.

At-the-Market Facility

On March 27, 2024, we entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with B.

Riley Securities, Inc.

Riley”) with respect to an “at the market” offering program (the “ATM Facility”), under which we may, from time to time, at our sole discretion, issue and sell through B.

Riley, acting as sales agent, up to $100 million of shares of Class A Common Stock.

Pursuant to the ATM Agreement, we may sell the shares through B.

Riley by any method permitted that is deemed an “at the market” offering as defined in Rule 415 under the Securities Act.

Riley will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon instructions from us, including any price or size limits or other customary parameters or conditions we may impose.

We will pay B.

Riley a commission of 3.0% of the gross sales price per share sold under the ATM Agreement.

We are not obligated to sell any shares under the ATM Agreement.

The offering of shares pursuant to the ATM Agreement will terminate upon the earlier to occur of (i) the issuance and sale, through B.

Riley, of all of the shares subject to the ATM Agreement and (ii) termination of the ATM Agreement in accordance with its terms.

We have made no sales under the ATM Facility to date and will only do so when our stock price is at prices our board of directors deems appropriate.

Private Activity Bonds

On September 14, 2021, SHC completed an issuance through the Public Finance Authority (Wisconsin) of $166.3 million of Senior Special Facility Revenue Bonds (Aviation Facilities Project), Series 2021 (the “PABs”).

The PABs are comprised of three maturities:

$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.

$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 Sky received bond proceeds that were $0.2 million above its face value.

(b) fund debt service and other operating expenses such as ground lease expense during the initial construction period;

and (d) pay certain costs of issuance related to the PABs.

The net proceeds from the issuance of the PABs proceeds are being used to (a) finance or refinance the construction of various aviation facilities consisting of general aviation aircraft hangars and storage facilities located and to be located on the SGR site, the OPF site, the BNA site, the APA site, and the DVT site; (b) fund debt service and other operating expenses such as ground lease expense during the initial construction period; (c) fund deposits to the Debt Service Reserve Fund; and (d) pay certain costs of issuance related to the PABs.

Debt Covenants

4 unchanged sentences

The PABs are subject to a Continuing Disclosure Agreement whereby SHC is obligated to provide electronic copies of (i) monthly construction reports, (ii) quarterly reports containing quarterly financial information of SHC and (iii) annual reports containing audited consolidated financial statements of SHC to the Municipal Securities Rulemaking Board.

As of September 30, 2023, we were in compliance with all debt covenants.

As of March 31, 2024, we were in compliance with all debt covenants.

Lease Commitments

The table below sets forth certain information with respect to our future minimum lease payments required under leases as of September 30, 2023 (in thousands):

The table below sets forth certain information with respect to our future minimum lease payments required under leases as of March 31, 2024 (in thousands):

Year Ending December 31,

2 unchanged sentences

2024 (remainder of year)

 199,870

Total lease payments

 209,793

Less imputed interest

Contractual Obligations

The following table sets forth our contractual obligations as of September 30, 2023 (in thousands):

The following table sets forth our contractual obligations as of March 31, 2024 (in thousands):

Principal payments on bonds payable

5 unchanged sentences

We do not maintain any off-balance sheet arrangements.

The following table summarizes our sources and uses of cash for the nine months ended September 30, 2023 and 2022 (in thousands):

Nine months ended

September 30, 2023

September 30, 2022

The following table summarizes our sources and uses of cash for the three months ended March 31, 2024 and 2023 (in thousands):

Three months ended

March 31, 2024

March 31, 2023

Cash and restricted cash at beginning of period

Net cash used in operating activities

Cash provided by (used in) investing activities

Net cash (used in) provided by financing activities

Net cash provided by investing activities

Net cash provided by financing activities

Cash and restricted cash at end of period

1 unchanged sentence

Cash provided by operating activities is significantly influenced by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business.

Included in net cash used in operating activities are certain non-recurring legal, accounting, and consulting costs incurred for up to four quarters as a result of becoming a public company. Our working capital consists primarily of cash, receivables from tenants, prepaid expenses, accounts payable, accrued compensation, accrued other expenses, and lease liabilities.

The timing of collection of our tenant receivables, and the timing of spending commitments and payments of our accounts payable, accrued expenses, accrued payroll and related benefits, all affect these account balances.

 Net cash used in operating activities was approximately $6.3 million for the nine months ended September 30, 2023, as compared to cash used in operating activities of approximately $25.3 million for the same period in 2022.

The $19.0 million decrease in cash used in operating activities was primarily attributable to a $14.6 million favorable change in the Company's working capital position, which was primarily driven by $9.6 million of initial direct costs associated with the purchase of our former landlord's leasehold interest at our OPF campus during the nine months ended September 30, 2022.

The decrease was also partially attributable to a reduction in corporate insurance premiums paid during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. The decrease was also partially attributable to a $4.4 million decrease in net loss, net of non-cash adjustments. The decrease in net loss was primarily driven by an increase in revenue and a decrease in non-recurring general and administrative expenses incurred in the expansion of our business, including transaction-related expenses incurred during the nine months ended September 30, 2023.

Included in net cash used in operating activities are certain non-recurring legal, accounting, and consulting costs incurred for up to four quarters as a result of becoming a public company.

Our working capital consists primarily of cash, receivables from tenants, prepaid expenses, accounts payable, accrued compensation, accrued other expenses, and lease liabilities.

The timing of collection of our tenant receivables, and the timing of spending commitments and payments of our accounts payable, accrued expenses, accrued payroll and related benefits, all affect these account balances.

Net cash used in operating activities was approximately $4.4 million for the three months ended March 31, 2024, as compared to cash used in operating activities of approximately $4.6 million for the same period in 2023.

The $0.1 million decrease in cash used in operating activities was primarily attributable to an approximately $0.6 million decrease in net loss, net of non-cash adjustments.

The decrease in net loss, net of non-cash adjustments was primarily driven by an increase in rental revenue.

The decrease was offset by an approximately $0.5 million unfavorable change in the Company's working capital position, which was primarily driven by the timing of vendor payments and tenant receipts.

Investing Activities

1 unchanged sentence

Treasury Securities.

As our business expands, we expect to continue to invest in our current and anticipated future portfolio of hangar campus development projects.

 Cash provided by investing activities was approximately $2.1 million for the nine months ended September 30, 2023, as compared to cash used in investing activities of approximately $213.5 million for the same period in 2022.

The decrease of approximately $215.7 million in cash used in investing activities was driven primarily by approximately $90.0 million and $14.0 increases in proceeds received from the Company's held-to-maturity and available for sale investments, respectively, during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2023.

The decrease was also attributable to a decreases of approximately $90.0 million and $24.6 million in held-to-maturity and available-for-sale U.S.

Treasury purchases, respectively. The impact of our U.S.

Treasury investment activities was offset by an approximately $4.4 million increase in capital expenditures.

As our business expands, we expect to continue to invest in our current and anticipated future portfolio of hangar campus development projects.

Net cash provided by investing activities was approximately $33.9 million for the three months ended March 31, 2024, as compared to cash provided by investing activities of approximately $36.3 million for the same period in 2023.

The decrease of approximately $2.4 million of cash provided by investing activities was driven primarily by an increase of approximately $95.8 million of available for sale U.S.

Treasury purchases, offset by increases of approximately $64.3 million and $27.9 million in proceeds received from the Company's available for sale and held-to-maturity investments, respectively.

The decrease was further driven by an approximately $0.1 million increase in capital expenditures.

Financing Activities

Our primary financing activities have consisted of capital raised to fund the growth of our business and proceeds from debt obligations incurred to finance our hangar campus development projects.

Our primary financing activities have consisted of capital raised to fund the growth of our business and proceeds from debt obligations incurred to finance our hangar campus development projects.

We expect to raise additional equity capital and issue additional indebtedness as our business grows.

Net cash used in financing activities was approximately $0.5 million for the nine months ended September 30, 2023, as compared to net cash provided by financing activities of approximately $52.8 million for the same period in 2022.

The approximately $53.3 million decrease in net cash provided by financing activities was primarily driven by $45.0 million of proceeds received from the issuance of the BOC PIPE and approximately $6.9 million of net proceeds from the Yellowstone trust account, both occurring during the nine months ended September 30, 2022 and not recurring during the nine months ended September 30, 2023.

Net cash provided by financing activities was approximately $0.3 million for the three months ended March 31, 2024, as compared to net cash provided by financing activities of $0 for the same period in 2023.

The approximately $0.3 million increase in net cash provided by financing activities was primarily driven by $1.5 million of proceeds received from the exercise of Warrants during the three months ended March 31, 2024, offset by approximately $0.7 million and $0.4 million of payments associated with vested equity awards and loan principal payments, respectively.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements