What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-12 compared with 2024-08-13 · 277 added, 235 removed, 912 unchanged (36% of the section changed)

3 unchanged sentences

(in thousands, except share data)

June 30, 2024

September 30, 2024

December 31, 2023

5 unchanged sentences

16,741 88,213

Prepaid expenses and other assets

Accounts receivable, prepaid expenses and other assets

Cost of construction

23 unchanged sentences

$ 0.0001 par value;

10,000,000 shares authorized as of June 30, 2024;

10,000,000 shares authorized as of September 30, 2024;

none issued and outstanding

1 unchanged sentence

200,000,000 shares authorized;

24,878,700 and 24,165,523 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

25,326,328 and 24,165,523 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Class B common stock, $ 0.0001 par value;

50,000,000 shares authorized;

42,046,356 and 42,046,356 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

42,046,356 and 42,046,356 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

15 unchanged sentences

Three Months Ended

Six months ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Nine months ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Rental revenue

7 unchanged sentences

Total other (income) expense

Net income (loss)

Net loss attributable to non-controlling interests

Net income (loss) attributable to Sky Harbour Group Corporation shareholders

Earnings (loss) per share

Net loss attributable to Sky Harbour Group Corporation shareholders

Loss per share

Weighted average shares

4 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Net income (loss)

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Unrealized gains on available-for-sale securities

Realized gains on available-for-sale securities reclassified to the consolidated statements of operations

Total comprehensive income (loss)

Total comprehensive loss

See accompanying Notes to Unaudited Consolidated Financial Statements

23 unchanged sentences

Balance at June 30, 2024

Share-based compensation

Vesting of restricted stock units

Shares withheld for payment of employee taxes

Exchange of Sky Incentive Units

Payment of equity issuance costs

Other comprehensive income

Balance at September 30, 2024

Accumulated Other

10 unchanged sentences

Exercise of warrants

Other comprehensive income (loss)

Other comprehensive income

Net income (loss)

Balance at June 30, 2023

Share-based compensation

Vesting of restricted stock units

Other comprehensive income

Balance at September 30, 2023

See accompanying Notes to Unaudited Consolidated Financial Statements

2 unchanged sentences

(in thousands)

Six months ended

June 30, 2024

June 30, 2023

Nine months ended

September 30, 2024

September 30, 2023

Cash flows from operating activities:

5 unchanged sentences

Realized gain on available for sale investments

Gain on disposition of assets

Unrealized loss on warrants

Changes in operating assets and liabilities:

Prepaid expenses and other assets

Accounts receivable, prepaid expenses and other assets

Right-of-use asset initial direct costs

4 unchanged sentences

Payments for cost of construction

Proceeds from disposition of long-lived assets

Investment in notes receivable, net

4 unchanged sentences

Proceeds from held-to-maturity investments

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash flows from financing activities:

11 unchanged sentences

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

(in thousands, except share data)

3 unchanged sentences

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 June 30, 2024 , SHG owned approximately 37.2 % of the Sky Common Units and the prior holders of Sky Common Units (the “LLC Interests”) owned approximately 62.8 % 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”).

As of September 30, 2024 , SHG owned approximately 37.6 % of the Sky Common Units and the prior holders of Sky Common Units (the “LLC Interests”) owned approximately 62.4 % 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

56 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 six months ended June 30, 2024 , rental revenue includes $ 673 and $ 1,053 of variable lease payments, respectively.

For the three and six months ended June 30, 2023 , rental revenue includes $ 187 and $ 304 of variable lease payments, respectively.

As of June 30, 2024 and December 31, 2023 , the deferred rent receivable included in prepaid expenses and other assets was $ 404 and $ 367 , respectively.

For the three and nine months ended September 30, 2024 , rental revenue includes $ 817 and $ 1,870 of variable lease payments, respectively.

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

As of September 30, 2024 and December 31, 2023 , the deferred rent receivable included in prepaid expenses and other assets was $ 501 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 $ 262 and $ 241 as of June 30, 2024 and December 31, 2023 , respectively.

For the three and six months ended June 30, 2024 the Company did not derive 10 % of its revenue from any single tenant.

For the three and six months ended June 30, 2023 the Company derived approximately 29 % and 30 % of its revenue from two tenants, respectively.

Rent received in advance consisted of $ 297 and $ 241 as of September 30, 2024 and December 31, 2023 , respectively.

For the three and nine months ended September 30, 2024 the Company did not derive 10% of its revenue from any single tenant.

For the three and nine months ended September 30, 2023 the Company derived approximately 46 % and 38 % of its revenue from two tenants, respectively.

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

10 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 six months ended June 30, 2024 and 2023.

The effective income tax rate for the three and six months ended June 30, 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.

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, 2024 and 2023.

The effective income tax rate for the three and nine months ended September 30, 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

48 unchanged sentences

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 six months ended June 30, 2024 .

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

As of June 30, 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.

As of September 30, 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 set forth summaries of the amortized cost, unrealized gains, unrealized losses, and fair value by investment type as of June 30, 2024 and December 31, 2023 :

June 30, 2024

The following tables set forth summaries of the amortized cost, unrealized gains, unrealized losses, and fair value by investment type as of September 30, 2024 and December 31, 2023 :

September 30, 2024

Amortized Cost

19 unchanged sentences

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 June 30, 2024 :

The following table sets forth the maturity profile of the Company's investments and restricted investments as of September 30, 2024 :

Restricted Investments

4 unchanged sentences

Cost of Construction and Constructed Assets

The Company’s portfolio as of June 30, 2024 includes the following completed and in-development projects:

The Company’s portfolio as of September 30, 2024 includes the following completed and in-development projects:

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

7 unchanged sentences

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

Salt Lake City International Airport (“SLC”), Salt Lake City, UT;

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

2 unchanged sentences

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

June 30, 2024

September 30, 2024

December 31, 2023

Constructed assets, net of accumulated depreciation:

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

BNA, OPF Phase I, SGR, and SJC Renovation

$ 84,053 $ 80,232

3 unchanged sentences

Cost of construction:

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

ADS Phase I, ADS Phase II, APA Phase I, BDL Phase I, DVT Phase I, OPF Phase II, ORL Phase I, and PWK Phase I

$ 120,443 $ 64,212

Depreciation expense for the three months ended June 30, 2024 and 2023 totaled $ 450 and $ 448 , respectively.

Depreciation for the six months ended June 30, 2024 and 2023 totaled $ 898 and $ 839 , respectively.

Depreciation expense for the three months ended September 30, 2024 and 2023 totaled $ 456 and $ 449 , respectively.

Depreciation expense for the nine months ended September 30, 2024 and 2023 totaled $ 1,354 and $ 1,289 , respectively.

Long-lived Assets

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

June 30, 2024

September 30, 2024

December 31, 2023

8 unchanged sentences

$ 12,227 $ 11,829

Depreciation expense for the three months ended June 30, 2024 and 2023 totaled $ 191 and $ 83 , respectively.

Depreciation for the six months ended June 30, 2024 and 2023 $ 373 and $ 141 , respectively.

Capitalized depreciation of long-lived assets included in cost of construction totaled $ 130 and $ 119 for the three months ended June 30, 2024 and 2023, respectively.

Capitalized depreciation of long-lived assets included in cost of construction totaled $ 266 and $ 119 for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024 and December 31, 2023, long-lived assets included approximately $ 653 and $ 362 , respectively, of purchase deposits towards long-lived assets which are not being depreciated as the assets have not been placed into service.

Depreciation expense for the three months ended September 30, 2024 and 2023 totaled $ 189 and $ 221 , respectively.

Depreciation for the nine months ended September 30, 2024 and 2023 totaled $ 562 and $ 361 , respectively.

Capitalized depreciation of long-lived assets included in cost of construction totaled $ 112 and $ 59 for the three months ended September 30, 2024 and 2023, respectively.

Capitalized depreciation of long-lived assets included in cost of construction totaled $ 378 and $ 178 for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024 and December 31, 2023, long-lived assets included approximately $ 898 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

1 unchanged sentence

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

June 30, 2024

September 30, 2024

December 31, 2023

Costs of construction

$ 13,652 $ 7,022

Employee compensation and benefits

1 unchanged sentence

Tenant security deposits

$ 21,202 $ 16,740

Supplemental Cash Flow Information

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

Six months ended

June 30, 2024

June 30, 2023

Nine months ended

September 30, 2024

September 30, 2023

Accrued costs of construction, including capitalized interest

$ 13,021 $ 8,593

Accrued costs of long-lived assets

1 unchanged sentence

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

Six months ended

June 30, 2024

June 30, 2023

Nine months ended

September 30, 2024

September 30, 2023

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

$ 59,192 $ 1,368

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

$ 70 $ ( 206 )

The following table summarizes interest paid:

Six months ended

June 30, 2024

June 30, 2023

Nine months ended

September 30, 2024

September 30, 2023

Interest paid

$ 7,496 $ 7,256

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:

Six months ended

June 30, 2024

June 30, 2023

Nine months ended

September 30, 2024

September 30, 2023

Cash, beginning of year

$ 60,257 $ 2,174

Restricted cash, beginning of year

12,009 39,222

Cash and restricted cash, beginning of year

$ 72,266 $ 41,396

Cash, end of period

$ 3,540 $ 2,471

Restricted cash, end of period

70,627 34,289

Cash and restricted cash, end of period

The table below sets forth a summary of operating lease expense for the three and six months ended June 30, 2024 and 2023 recorded in the captions within our consolidated statement of operations:

$ 74,167 $ 36,760

The table below sets forth a summary of operating lease expense for the three and nine months ended September 30, 2024 and 2023 recorded in the captions within our consolidated statement of operations:

Three months ended

Six months ended

June 30, 2024

June 30, 2023

June 30, 2024 June 30, 2023

Nine months ended

September 30, 2024

September 30, 2023 September 30, 2024 September 30, 2023

Operating expenses

10 unchanged sentences

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 six months ended June 30, 2024 and 2023 .

These variable payments were not material in amount for the three and nine months ended September 30, 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.

17 unchanged sentences

The IAD Lease requires the Company to commence construction related to IAD Phase II within five years of the receipt of the certificate of occupancy for IAD Phase I.

In August 2024, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “SLC Lease”) at Salt Lake City International Airport (“SLC”) with the Salt Lake City Corporation.

The SLC Lease covers approximately 8.4 acres of property at SLC.

The initial term of the SLC Lease will be 30 years from the earlier of certificate of occupancy or 24 months from the expiration of the diligence period, as defined in the SLC Lease, with lease payments commencing contemporaneously with the term.

The SLC Lease contains two options exercisable by the Company to extend the SLC Lease for an additional 20 years following the expiration of the initial term.

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

Six months ended

Nine months ended

September 30,

Cash paid for amounts included in measurement of lease liabilities:

5 unchanged sentences

Weighted Average Remaining Lease Term (in years)

June 30, 2024

September 30, 2024

December 31, 2023

20 unchanged sentences

4.98 % 5.00 %

The Company’s future minimum lease payments required under leases as of June 30, 2024 were as follows:

The Company’s future minimum lease payments required under leases as of September 30, 2024 were as follows:

Year Ending December 31, Operating Leases

8 unchanged sentences

$ 129,981 $ 47

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

The Company leases the hangar facilities that it constructs or rents from municipal landlords to third -party tenants.

These leases have been classified as operating leases.

6 unchanged sentences

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 June 30, 2024 :

Tenant leases to which the Company is the lessor require the following non-cancelable future minimum lease payments from tenants as of September 30, 2024 :

Year Ending December 31,

1 unchanged sentence

2024 (remainder of year)

Total lease payments

Less rent concessions to be applied at Company’s discretion

Bonds payable, loans payable, and interest

19 unchanged sentences

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 June 30, 2024 and December 31, 2023 , the fair value of the Company’s Series 2021 - 1 Bonds was approximately $ 134.2 million and $ 116.5 million, respectively.

As of June 30, 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 June 30, 2024 and December 31, 2023 :

June 30, 2024

As of September 30, 2024 and December 31, 2023 , the fair value of the Company’s Series 2021 - 1 Bonds was approximately $ 141.5 million and $ 116.5 million, respectively.

As of September 30, 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 September 30, 2024 and December 31, 2023 :

September 30, 2024

December 31, 2023

11 unchanged sentences

Loans Payable and Finance Leases

The following table summarizes the Company's loans payable and finance lease liabilities as of June 30, 2024 and December 31, 2023 :

June 30, 2024

December 31, 2023

The following table summarizes the Company's loans payable and finance lease liabilities as of September 30, 2024 and December 31, 2023 :

September 30, 2024 December 31, 2023

Maturity Dates

13 unchanged sentences

Three months ended

Six months ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Nine months ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

$ 1,912 $ 1,969 $ 5,763 $ 5,522

Accretion of bond premium and amortization of debt issuance costs

50 52 152 158

Total interest incurred

1,962 2,021 5,915 5,680

capitalized interest

(1,785 ) (1,787 ) (5,357 ) (5,364 )

Interest expense

$ 177 $ 234 $ 558 $ 316

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”).

9 unchanged sentences

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.

During the three and six months ended June 30, 2024 , 3,639 and 257,342 Warrants were exercised, respectively, resulting in approximately $ 3.0 million of proceeds.

As of June 30, 2024 , 15,803,001 Warrants remain outstanding.

The closing price of the Warrants was $ 1.24 and $ 0.75 per warrant on June 30, 2024 and December 31, 2023 , respectively.

The aggregate fair value of the outstanding Warrants was approximately $ 19.6 million and $ 12.0 million as of June 30, 2024 and December 31, 2023 , respectively.

During the three months ended June 30, 2024 and 2023, the Company recorded unrealized gains associated with the change in fair value of the Warrants of approximately $ 8.2 million and $ 2.6 million, respectively.

During the six months ended June 30, 2024 and 2023, the Company recorded unrealized losses associated with the change in fair value of the Warrants of approximately $ 8.0 million and $ 1.6 million, respectively.

During the nine months ended September 30, 2024 , 257,342 Warrants were exercised, resulting in approximately $ 3.0 million of proceeds.

There were no warrants exercised during the three months ended September 30, 2024.

As of September 30, 2024 , 15,803,001 Warrants remain outstanding.

The closing price of the Warrants was $ 2.25 and $ 0.75 per warrant on September 30, 2024 and December 31, 2023 , respectively.

The aggregate fair value of the outstanding Warrants was approximately $ 35.6 million and $ 12.0 million as of September 30, 2024 and December 31, 2023 , respectively.

During the three months ended September 30, 2024 , the Company recorded an unrealized loss associated with the change in fair value of the Warrants of approximately $ 16.0 million.

During the three months ended September 30, 2023, the Company recorded an unrealized gain of approximately $ 1.6 million.

During the nine months ended September 30, 2024 and 2023, the Company recorded unrealized losses associated with the change in fair value of the Warrants of approximately $ 23.9 million and $ 0 , respectively.

Common Equity

As of June 30, 2024 , there were 24,878,700 and 42,046,356 shares of Class A Common Stock and Class B Common Stock outstanding, respectively.

As of September 30, 2024 , there were 25,326,328 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.

13 unchanged sentences

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

During the three and six months ended June 30, 2024, the Company sold 7,407 shares of Class A Common Stock under the ATM Facility at a weighted-average sales price of $ 12.42 .

During the three months ended September 30, 2024, the Company sold no shares of Class A Common Stock under the ATM Facility.

During the nine months ended September 30, 2024, the Company sold 7,407 shares of Class A Common Stock under the ATM Facility at a weighted-average sales price of $ 12.42 .

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

10 unchanged sentences

Riley Stock Purchase Agreement.

Private Placement and Securities Purchase Agreement

On September 16, 2024, the Company entered into a Securities Purchase Agreement (the “2024 Private Placement Purchase Agreement”) with certain investors (collectively, the “Initial Investors”), pursuant to which the Company agreed to sell and issue to the Initial Investors at an initial closing an aggregate of 3,352,106 shares (the “Initial PIPE Shares”) of the Company’s Class A Common Stock for an aggregate purchase price of approximately $ 31.8 million (the “Initial Closing”), and agreed to sell and issue to the Initial Investors at a second closing, at the option of the Initial Investors, up to an aggregate of number of shares equal to the number of each such Initial Investor's Initial PIPE Shares purchased in the Initial Closing (the “Second Closing PIPE Shares”) at the same purchase price of $ 9.50 per share (the “Second Closing” and, together with the Initial Closing, the “PIPE Financing”).

The 2024 Private Placement Purchase Agreement provided that, at any time prior to the Initial Closing, and at the sole discretion of the Company, additional investors (“Additional Investors” and, together with the Initial Investors, the “Investors” ) could execute a joinder to the 2024 Private Placement Purchase Agreement pursuant to which they would agree to purchase additional shares of Class A Common Stock (the “Additional PIPE Shares”) in the Initial Closing, along with the option to purchase Second Closing PIPE Shares.

The 2024 Private Placement Purchase Agreement includes certain covenants, including a limitation on the Company’s use of the net proceeds from the PIPE Financing and a restriction on the Company’s issuance of additional shares of Class A Common Stock for a period of 90 days following the Initial Closing Date, as defined in Note 17 — Subsequent Events , subject to certain exceptions.

The Initial Closing occurred on October 25, 2024.

See Note 17 — Subsequent Events .

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 June 30, 2024 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 September 30, 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 June 30, 2024 , the LLC interests owned approximately 62.8 % of the Sky Common Units outstanding.

As of September 30, 2024 , the LLC interests owned approximately 62.4 % 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 June 30, 2024 , the former majority shareholder owned approximately 49 % of the partnership interests in Overflow.

As of September 30, 2024 , the former majority shareholder owned approximately 49 % of the partnership interests in Overflow.

Equity Compensation

2 unchanged sentences

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 and six months ended June 30, 2024 , the Company recognized stock compensation expense of approximately $ 0.9 million and $ 1.9 million, respectively, associated with all RSU awards, which is recorded within General and Administrative Expenses within the statement of operations.

During the three and six months ended June 30, 2023, the Company recognized stock compensation expense of $ 0.5 million and $ 0.9 million, respectively.

As of June 30 2024, there are approximately 1,029,697 unvested RSUs outstanding with a weighted average grant date fair value of $ 9.82 .

The unrecognized compensation costs associated with all unvested RSUs at June 30, 2024 was approximately $ 8.4 million that is expected to be recognized over a weighted-average future period of 2.9 years.

During the three and nine months ended September 30, 2024 , the Company recognized stock compensation expense of approximately $ 0.8 million and $ 2.7 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, 2023, the Company recognized stock compensation expense of $ 0.5 million and $ 1.4 million, respectively.

As of September 30 2024, there are approximately 958,707 unvested RSUs outstanding with a weighted average grant date fair value of $ 9.76 .

The unrecognized compensation costs associated with all unvested RSUs at September 30, 2024 was approximately $ 7.6 million that is expected to be recognized over a weighted-average future period of 2.7 years.

Non-qualified Stock Options (“NSOs”)

2 unchanged sentences

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

During the three and six months ended June 30, 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 June 30, 2024 was approximately $ 3.1 million that is expected to be recognized over a weighted-average future period of 8.6 years.

During the three and nine months ended September 30, 2024, the Company recognized stock compensation expense of approximately $ 0.1 million and $ 0.2 million, respectively, associated with all NSO awards.

The unrecognized compensation costs associated with all unvested NSOs at September 30, 2024 was approximately $ 3.0 million that is expected to be recognized over a weighted-average future period of 8.4 years.

Sky Incentive Units

The Company recognized equity-based compensation expense relating to awarded equity units of Sky (the “Sky Incentive Units”) of $ 45 and $ 91 for the three and six months ended June 30, 2024, respectively, and $ 81 and $ 166 for the three and six months ended June 30, 2023, respectively.

The Company recognized equity-based compensation expense relating to awarded equity units of Sky (the “Sky Incentive Units”) of $ 45 and $ 136 for the three and nine months ended September 30, 2024, respectively, and $ 72 and $ 238 for the three and nine months ended September 30, 2023, respectively.

Expense associated with the Sky Incentive Units 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 June 30, 2024 , there was $ 0.2 million of total unrecognized compensation expense that is expected to be recognized over a weighted-average future period of 0.9 years.

As of September 30, 2024 , there was $ 0.1 million of total unrecognized compensation expense that is expected to be recognized over a weighted-average future period of 0.7 years.

Earnings (loss) per Share

4 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Net income (loss)

$ 4,163 $ ( 1,634 ) $ ( 17,036 ) $ ( 10,394 )

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Net loss attributable to non-controlling interests

( 1,598 ) ( 2,412 ) ( 3,858 ) ( 4,978 )

Basic net income (loss) attributable to Sky Harbour Group Corporation shareholders

5,761 778 ( 13,178 ) ( 5,416 )

Net (loss) attributable to LLC Interests

( 1,462 ) ( 2,412 ) - -

Diluted net income (loss) attributable to Sky Harbour Group Corporation shareholders

$ 4,299 $ ( 1,634 ) $ ( 13,178 ) $ ( 5,416 )

Basic weighted average shares of Class A Common Stock outstanding

24,734 15,167 24,504 15,076

Effect of dilutive exchange of Class B Common Stock

42,046 42,046 - -

Effect of dilutive exchange of Sky Incentive Units

Effect of dilutive restricted stock

Diluted weighted average shares outstanding

69,534 57,213 24,504 15,076

Earnings (loss) per share of Class A Common Stock – Basic

$ 0.23 $ 0.05 $ ( 0.54 ) $ ( 0.36 )

Earnings (loss) per share of Class A Common Stock – Diluted

$ 0.06 $ ( 0.03 ) $ ( 0.54 ) $ ( 0.36 )

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

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

Basic 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 to the Company's net loss position were as follows (in thousands):

Three Months Ended

Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Shares subject to unvested restricted stock units

813 1,005 1,030 1,005

Shares issuable upon the exercise of unvested stock options

Shares issuable upon the exercise of Warrants

15,803 14,519 15,803 14,519

Shares issuable upon the exchange of Class B Common Stock

- - 42,046 42,046

Shares issuable upon the exercise and exchange of Sky Incentive Units

18 2,808 2,556 2,808

Accumulated Other Comprehensive Income

5 unchanged sentences

Amounts reclassified to other (income) expense

Balance as of June 30, 2024

Balance as of September 30, 2024

Unrealized gain on

3 unchanged sentences

Amounts reclassified to other (income) expense

Balance as of June 30, 2023

Balance as of September 30, 2023

Commitments and Contingencies

In addition to the lease payment commitments discussed in Note 8 — 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.

In addition to the lease payment commitments discussed in Note

Leases , the ground leases to which the Company is a party contain covenants that require the Company to conduct construction of hangar facilities on the leased grounds within a certain period and in some cases, to spend a minimum dollar amount.

The APA Lease requires the Company to improve the property in accordance with a development plan included in the lease and to complete such improvements within 24 -months of the issuance of permitting documents.

9 unchanged sentences

The ORL Lease contains other customary milestones by which the Company must commence and complete subsequent phases of construction.

The SLC Lease requires that the Company make minimum capital improvements of $ 40 million.

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

8 unchanged sentences

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 six months ended June 30, 2024 , the Company recognized $ 18 and $ 87 of expense, respectively, within General and administrative expense under the terms of this agreement.

For the three and six months ended June 30, 2023, the Company recognized $ 54 and $ 116 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 June 30, 2024 .

For the three and six months ended June 30, 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 $ 8 and $ 95 of expense during the three and six months ended June 30, 2023, respectively, to the same company.

Additionally, the Company is responsible for reimbursing its pro rata share of maintenance, overhead and insurance costs of the aircraft.

On September 19, 2024, the Company entered into an additional non-exclusive agreement with Echo Echo, LLC for the use of an Epic E1000GX aircraft.

The effective date of the agreement was August 30, 2024 and the agreement automatically renews annually.

The agreement can be terminated without penalty if either party provides 30 days written notice, or if the aircraft is sold or otherwise disposed of.

Additionally, the Company is responsible for reimbursing its pro rata share of the direct operating costs of the aircraft, exclusive of maintenance and insurance.

For the three and nine months ended September 30, 2024 , the Company recognized $ 108 and $ 195 of expense, respectively, within General and administrative expense under the terms of these agreements.

For the three and nine months ended September 30, 2023, the Company recognized $ 41 and $ 157 of expense, respectively, associated with these agreements.

The related liability is included in Accounts payable, accrued expenses and other liabilities on the consolidated balance sheet as of September 30, 2024 .

For the three and nine months ended September 30, 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 $ 3 and $ 98 of expense during the three and nine months ended September 30, 2023, respectively, to the same company.

Subsequent Events

On August 8, 2024, the Company, through a wholly-owned subsidiary of the Company, entered into a ground lease agreement (the “SLC Lease”) at Salt Lake City International Airport (“SLC”) with the Salt Lake City Corporation.

The SLC Lease covers approximately 8.4 acres of property at SLC.

The SLC Lease contains two options exercisable by the Company to extend the SLC Lease for an additional 20 years following the expiration of the initial term.

Under the terms of the SLC Lease, the Company is required to make minimum capital improvements of $ 40 million.

SLC is owned and operated by the Salt Lake City Corporation and is located in Salt Lake City, Utah.

Private Placement and Securities Purchase Agreement

On October 25, 2024, the Additional Investors each executed a joinder to the 2024 Private Placement Purchase Agreement, pursuant to which the Additional Investors agreed to purchase, and the Company agreed to sell, an aggregate of 603,684 Additional PIPE Shares (together with the Initial PIPE Shares, the “First Closing PIPE Shares”) for an aggregate purchase price of $ 5.7 million.

The Initial Closing of the PIPE Financing occurred on October 25, 2024, and 3,955,790 First Closing PIPE Shares were issued to the Investors for an aggregate purchase price of $ 37.6 million, on October 25, 2024 ( the “Initial Closing Date”).

The Investors have the option to purchase up to an aggregate of 3,955,790 Second Closing PIPE Shares for an aggregate purchase price of up to $ 37.6 million at the Second Closing.

Each Investor has the option to purchase in the Second Closing up to a number of Second Closing PIPE Shares equal to the number of such Initial Investor’s Initial PIPE Shares purchased in the Initial Closing, at the same purchase price of $ 9.50 per share.

The amount of Second Closing PIPE Shares, if any, to be issued at the Second Closing will be determined by each Investor in its sole discretion pursuant to each of their allocations, and the Second Closing will occur, if at all, at the sole discretion of the Investors, on or before December 20, 2024 ( the “Second Closing Date”), subject to customary closing conditions.

To the extent any Investor does not elect to purchase its full allocation of Second Closing PIPE Shares, such Second Closing PIPE Shares (the “Shortfall Shares” and, together with the First Closing PIPE Shares and the Second Closing PIPE Shares, the “PIPE Shares”) may be purchased by other Investors who have elected to purchase their full allocation of Second Closing PIPE Shares (the “Full Option Investors”).

Any Shortfall Shares will be divided among the Full Option Investors on a pro rata basis based on the Initial PIPE Shares to be purchased by such Full Option Investors in the Initial Closing.

To the extent any Full Option Investor does not elect to purchase its full allocation of Shortfall Shares, such Shortfall Shares may be purchased by Altai Capital Management, L.P.

or its affiliates, as it may designate in its sole discretion.

On the Initial Closing Date, the Investors entered into a customary lock-up agreement that restricts sales of shares of Class A Common Stock by the Investors for a period of six months beginning on the Initial Closing Date, subject to certain exceptions.

Pursuant to the terms of the 2024 Private Placement Purchase Agreement, on the Initial Closing Date, the Company entered into a Registration Rights Agreement (the “2024 PIPE Registration Rights Agreement”) with the Investors.

Pursuant to the 2024 PIPE Registration Rights Agreement, the Investors are entitled to certain customary registration rights, and the Company is required to prepare and file a resale registration statement with the SEC to register the resale of the PIPE Shares and to use its best efforts to cause such registration statement to be declared effective by the SEC by the earlier of (i) the later of ( x ) the 180th calendar day following the Initial Closing Date, or on the next succeeding business day if such date falls on a day that is not a business day and (y) the 15th calendar day following the Second Closing Date, if any, or on the next succeeding business day if such date falls on a day that is not a business day, and (ii) the 5th business day after the date the Company is notified (orally or in writing whichever is earlier) by the SEC that such registration statement will not be “reviewed” or will not be subject to further review;

provided, however, that the Company shall have 10 additional business days if required to update for a quarterly filing.

POU Ground Lease Extension

On November 7, 2024, the Company, through a wholly-owned subsidiary of the Company, executed an amendment to its ground lease agreement at Hudson Valley Regional Airport (“POU”) with the County of Duchess, New York (the “Amended POU Lease”).

The Amended POU Lease extended the term of such ground lease from 15 year to 40 years from the completion of construction, with lease payments commencing upon the earlier of completion of construction or December 2025.

The Amended POU Lease contains an option exercisable by the Company to extend the Amended POU Lease an additional 10 years following the expiration of the initial term.

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

44 unchanged sentences

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

The table below presents certain information with respect to our portfolio as of June 30, 2024.

The table below presents certain information with respect to our portfolio as of September 30, 2024.

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

7 unchanged sentences

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

Salt Lake City International Airport (“SLC”), Salt Lake City, UT;

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

6 unchanged sentences

Square Footage

June 30, 2024

September 30, 2024

December 2020

5 unchanged sentences

Estimated Total

Construction Cost

Square Footage (1)

13 unchanged sentences

Predevelopment

SJC Renovation

In Construction

Predevelopment

$561.0 - 626.8

3 unchanged sentences

Recent Developments

In May 2024, we entered into the IAD Lease at IAD with MWAA.

The IAD Lease covers approximately 18 acres of property at IAD.

The initial term of the IAD Lease will be approximately 50 years and expire on March 31, 2074, and contains an option exercisable by us to extend the IAD Lease an additional 10 years following the expiration of the initial term.

The IAD Lease requires us to commence construction related to IAD Phase II within five years of the receipt of the certificate of occupancy for IAD Phase I.

In August 2024, we entered into the SLC Lease at SLC with the Salt Lake City Corporation.

3 unchanged sentences

Under the terms of the SLC Lease, we are required to make minimum capital improvements of $40 million.

In September 2024, we entered into the 2024 Private Placement Purchase Agreement with the Initial Investors, pursuant to which, among other things, we agreed to sell and issue to the Initial Investors at an initial closing an aggregate of 3,352,106 Initial PIPE Shares for an aggregate purchase price of approximately $31.8 million.

In October 2024, the Additional Investors each executed a joinder to the 2024 Private Placement Purchase Agreement, pursuant to which the Additional Investors agreed to purchase, and the Company agreed to sell, an aggregate of 603,684 additional shares of Class A Common Stock at the Initial Closing for an aggregate purchase price of approximately $5.7 million.

The Initial Closing of the 2024 Private Placement Purchase Agreement occurred in October 2024, and we sold 3,955,790 First Closing PIPE Shares to the Investors at an aggregate purchase price of approximately $37.6 million.

Factors That May Influence Future Results of Operations

9 unchanged sentences

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

For the six months ended June 30, 2024 and 2023, our operating lease expense for ground leases was $3.5 million and $1.8 million, respectively.

For the nine months ended September 30, 2024 and 2023, our operating lease expense for ground leases was $6.0 million and $2.8 million, respectively.

We elect to expense rather than capitalize ground lease expense incurred at hangar campus sites under development and will incur expense under U.S.

3 unchanged sentences

Interest Expense

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.

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

While benchmark interest rates have been reduced and additional reductions are expected in the coming quarters, we do not yet know the level of such reductions and the ultimate impact on our borrowing costs.

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

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

34 unchanged sentences

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 previously raised equity capital, along with potential future debt and further equity issuances, including the 2024 Private Placement Purchase Agreement and 2023 Private Placement Purchase Agreement entered into on September 16, 2024 and November 1, 2023, respectively, 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 200,000 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.

On average, each future campus is anticipated to be composed of 200,000 rentable square feet and is expected to cost approximately $55 million per campus, with 65% 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.

40 unchanged sentences

Results of Operations

Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 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

June 30, 2024

June 30, 2023

September 30, 2024

September 30, 2023

Rental revenue

7 unchanged sentences

Total other (income) expense

Net income (loss)

Revenues for the three months ended June 30, 2024 were approximately $3.6 million, compared to approximately $1.7 million for the three months ended June 30, 2023.

The $1.9 million, or 109%, increase was primarily the result of the commencement of operations at SJC during the three months ended June 30, 2024 and the impact of increased occupancy at our BNA and OPF hangar campuses.

Revenue associated with our delivery of aircraft fuel increased approximately $0.4 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Revenues for the three months ended September 30, 2024 were approximately $4.1 million, compared to approximately $2.5 million for the three months ended September 30, 2023.

The $1.6 million, or 64%, increase was primarily the result of the commencement of operations at SJC during the three months ended June 30, 2024 and the impact of increased occupancy at our BNA and OPF hangar campuses, offset by approximately $0.4 million of net non-recurring adjustments to revenue recognized during the three months ended September 30, 2023, primarily associated with a negotiated lease termination fee from a former tenant of two hangars at OPF.

Revenue associated with our delivery of aircraft fuel increased approximately $0.4 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Operating Expenses

Operating expenses increased approximately $1.6 million, or 95%, for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

The increase in operated expense is primarily reflective of increased ground lease expense, which increased approximately $1.3 million for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

The increase in ground lease expense was driven primarily by a full quarter of expense associated with the ground lease signed at SJC during the three months ended March 31, 2024.

The increase in ground lease expense was also driven by the ground leases signed at PWK, BDL, and POU during the three months ended December 31, 2023, ORL during the three months ended March 31, 2024, and IAD during the three months ended June 30, 2024.

Operating expenses increased approximately $2.0 million, or 120%, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

The increase in operating expense is primarily reflective of increased ground lease expense, which increased approximately $1.6 million for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

The increase in ground lease expense was driven primarily by a full quarter of expense associated with the ground and hangar lease signed at SJC during the three months ended March 31, 2024.

The increase in ground lease expense was also driven by the ground leases signed at PWK, BDL, and POU during the three months ended December 31, 2023, ORL during the three months ended March 31, 2024, IAD during the three months ended June 30, 2024, and SLC during the three months ended September 30, 2024.

Salaries, wages, and benefits associated with our campus personnel increased by approximately $0.2 million, primarily driven by a headcount increase associated with the commencement of operations at our SJC hangar campus.

1 unchanged sentence

Depreciation Expense

Depreciation increased approximately $0.1 million, or 21%, for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

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

Depreciation expense remained materially consistent for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

General and Administrative Expenses

For the three months ended June 30, 2024, and 2023, general and administrative expenses were approximately $4.6 million and $3.7 million, respectively.

For the three months ended September 30, 2024, and 2023, general and administrative expenses were approximately $4.6 million and $3.6 million, respectively.

The approximately $1.0 million, or 30%, increase was primarily due to an approximately $0.7 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 $0.4 million and non-cash equity compensation expense increased approximately $0.3 million.

Marketing and other pursuit costs increased by approximately $0.2 million, reflecting our growth strategy in securing airport site acquisitions and potential tenants.

Other (Income) Expense

Other income increased from approximately $2.6 million to approximately $9.1 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

This increase was primarily due to an approximately $5.6 million difference in the mark-to-market adjustment of the outstanding warrants at June 30, 2024 as compared to June 30, 2023.

The increase was also partially due to an approximately $1.0 million increase in other income, primarily due to interest earned on our investments in U.S.

Other expense increased from approximately $1.4 million of income for the three months ended September 30, 2023, to approximately $15.8 million of expense for the three months ended September 30, 2024.

This increase was primarily due to an approximately $17.6 million difference in the mark-to-market adjustment of the outstanding warrants at September 30, 2024 as compared to September 30, 2023.

The increase was also partially offset by an approximately $0.3 million increase in other income, primarily due to interest earned on our investments in U.S.

Treasuries classified as available for sale.

Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 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).

Six months ended

June 30, 2024

June 30, 2023

Nine months ended

September 30, 2024

September 30, 2023

Rental revenue

7 unchanged sentences

Total other (income) expense

Revenues for the six months ended June 30, 2024 were approximately $6.0 million, compared to approximately $2.8 million for the six months ended June 30, 2023.

The $3.2 million, or 112%, increase was primarily the result of the commencement of operations at our SJC hangar campus and the cumulative impact of certain additional tenant leases in place at our BNA and OPF hangar campuses as compared to the six months ended June 30, 2023.

The commencement of operations at our SJC hangar campus together with the increase in occupancy at our OPF and BNA hangar campuses for the six months ended June 30, 2024 as compared to June 30, 2023 resulted in increased rental revenues of approximately $2.6 million.

Revenue associated with our delivery of aircraft fuel increased approximately $0.6 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Revenues for the nine months ended September 30, 2024 were approximately $10.1 million, compared to approximately $5.3 million for the nine months ended September 30, 2023.

The $4.8 million, or 90%, increase was primarily the result of the commencement of operations at our SJC hangar campus and the cumulative impact of certain additional tenant leases in place at our BNA and OPF hangar campuses as compared to the nine months ended September 30, 2023.

The commencement of operations at our SJC hangar campus together with the increase in occupancy at our OPF and BNA hangar campuses for the nine months ended September 30, 2024 as compared to September 30, 2023 resulted in increased rental revenues of approximately $3.8 million.

Revenue associated with our delivery of aircraft fuel increased approximately $1.0 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Operating Expenses

Operating expenses increased approximately $1.9 million, or 55%, for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

The increase in operated expense is primarily reflective of increased ground lease expense, which increased approximately $1.7 million for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

The increase in ground lease expense was driven primarily by a full quarter of expense associated with the ground lease signed at SJC during the three months ended March 31, 2024.

The increase in ground lease expense was also driven by new ground leases signed at PWK, BDL, and POU during the three months ended December 31, 2023 and at ORL and IAD during the six months ended June 30, 2024.

Operating expenses increased approximately $3.9 million, or 76%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

The increase in operating expense is primarily reflective of increased ground lease expense, which increased by approximately $3.3 million for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

The increase in ground lease expense was driven primarily by two full quarters of operating lease expense associated with the ground and hangar lease signed at SJC during the three months ended March 31, 2024.

The increase in ground lease expense was also driven by new ground leases signed at PWK, BDL, and POU during the three months ended December 31, 2023 and at ORL, IAD, and SLC during the nine months ended September 30, 2024.

Salaries, wages, and benefits associated with our campus personnel increased by approximately $0.4 million, primarily driven by a headcount increase associated with the commencement of operations at our SJC hangar campus in April 2024.

Depreciation Expense

Depreciation increased approximately $0.3 million, or 30%, for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

The increase reflects a full six months of depreciation associated with our OPF hangar campus, which opened during the six months ended June 30, 2023.

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

Depreciation increased approximately $0.3 million, or 16%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

The increase reflects a full nine months of depreciation associated with our OPF hangar campus, which opened during the nine months ended September 30, 2023.

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

General and Administrative Expenses

For the six months ended June 30, 2024, and 2023, general and administrative expenses were approximately $9.5 million and $7.3 million, respectively.

For the nine months ended September 30, 2024, and 2023, general and administrative expenses were approximately $14.1 million and $10.8 million, respectively.

The approximately $3.3 million, or 30%, increase was primarily due to an approximately $3.0 million increase in salaries, wages, and other benefits, driven by an increase in corporate headcount and expense recognized associated with our equity compensation programs.

1 unchanged sentence

Other (Income) Expense

Other expense increased from approximately $1.5 million to approximately $6.9 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

This increase was primarily due to an approximately $6.4 million difference in the mark-to-market adjustment of the outstanding warrants at June 30, 2024 as compared to June 30, 2023.

The increase was also partially due to an approximately $1.0 million increase in other income, primarily due to interest earned on our investments in U.S.

Other expense increased from approximately $0.1 million to approximately $22.7 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

This increase was primarily due to an approximately $23.9 million difference in the mark-to-market adjustment of the outstanding warrants at September 30, 2024 as compared to September 30, 2023.

The increase was also partially offset by an approximately $1.5 million increase in other income, primarily due to interest earned on our investments in U.S.

Treasuries classified as available for sale.

4 unchanged sentences

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 million ATM Facility or otherwise utilize our registration statement on Form S-3 to access the capital markets.

We also have the ability to utilize our $100 million ATM Facility or otherwise utilize our shelf 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.

6 unchanged sentences

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

Treasury securities as of June 30, 2024.

The following table summarizes our cash and cash equivalents, restricted cash, investments, and restricted investments as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024

Treasury securities as of September 30, 2024.

The following table summarizes our cash and cash equivalents, restricted cash, investments, and restricted investments as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

December 31, 2023

4 unchanged sentences

2024 Private Placement and Securities Purchase Agreement

On September 16, 2024, we entered into the 2024 Private Placement Purchase Agreement with the Initial Investors relating to, among other things, the issuance and sale to the Initial Investors at an initial closing an aggregate of 3,352,106 Initial PIPE Shares of our Class A Common Stock for an aggregate purchase price of $31.8 million.

On October 25, 2024, the Additional Investors each executed a joinder to the 2024 Private Placement Purchase Agreement, pursuant to which the Additional Investors agreed to purchase, and we agreed to sell, an aggregate of 603,684 additional shares of First Closing PIPE Shares for an aggregate purchase price of $5.7 million.

The Initial Closing under the 2024 Private Placement Purchase Agreement occurred on October 25, 2024, and 3,955,790 First Closing PIPE Shares were issued to the Investors for an aggregate purchase price of $37.6 million.

The Investors have the option to purchase up to an aggregate of 3,955,790 shares of Second Closing PIPE Shares for an aggregate purchase price of up to $37.6 million.

The amount of Second Closing PIPE Shares, if any, to be issued at the Second Closing will be determined by each Investor in its sole discretion pursuant to each of their allocations, and the Second Closing will occur, if at all, at the sole discretion of the Investors, on or before the Second Closing Date, subject to customary closing conditions.

2023 Private Placement and Securities Purchase Agreement

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

10 unchanged sentences

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

During the three and six months ended June 30, 2024, we sold 7,407 shares of Class A Common Stock under the ATM Facility at a weighted-average sales price of $12.42.

During the three months ended September 30, 2024, we sold no shares of Class A Common Stock under the ATM Facility.

During the nine months ended September 30, 2024, we sold 7,407 shares of Class A Common Stock under the ATM Facility at a weighted-average sales price of $12.42.

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

14 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 June 30, 2024, we were in compliance with all debt covenants.

As of September 30, 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 June 30, 2024 (in thousands):

The table below sets forth certain information with respect to our future minimum lease payments required under leases as of September 30, 2024 (in thousands):

Year Ending December 31,

5 unchanged sentences

Contractual Obligations

The following table sets forth our contractual obligations as of June 30, 2024 (in thousands):

The following table sets forth our contractual obligations as of September 30, 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 six months ended June 30, 2024 and 2023 (in thousands):

Six months ended

June 30, 2024

June 30, 2023

The following table summarizes our sources and uses of cash for the nine months ended September 30, 2024 and 2023 (in thousands):

Nine months ended

September 30, 2024

September 30, 2023

Cash and restricted cash at beginning of period

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Net cash provided by (used in) financing activities

2 unchanged sentences

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 $5.5 million for the six months ended June 30, 2024, as compared to cash used in operating activities of approximately $5.7 million for the same period in 2023.

The $0.2 million decrease in cash used in operating activities was primarily attributable to an approximately $2.1 million decrease in net loss, net of non-cash adjustments.

Net cash used in operating activities was approximately $6.6 million for the nine months ended September 30, 2024, as compared to cash used in operating activities of approximately $6.2 million for the same period in 2023.

The $0.4 million increase in cash used in operating activities was primarily attributable to an approximately $2.5 million unfavorable change in the Company's working capital position, which was primarily driven by the timing of vendor payments and tenant receipts.

The change in working capital position was offset by an approximately $2.1 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 and the impact of increases in non-cash operating lease expense and equity-based compensation expense.

The decrease was offset by an approximately $1.9 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

2 unchanged sentences

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 $54.4 million for the six months ended June 30, 2024, as compared to cash used in investing activities of approximately $16.4 million for the same period in 2023.

The increase of approximately $70.8 million of cash provided by investing activities was driven primarily by increases of approximately $142.3 million and $18.0 million in proceeds received from the Company's available for sale and held-to-maturity investments, respectively, and approximately $53.0 million and $6.1 million of decreases in purchase of held-to-maturity investments and capital expenditures, respectively.

The increase was offset by an increase of approximately $148.8 million of available for sale U.S.

Treasury purchases for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Net cash provided by investing activities was approximately $8.4 million for the nine months ended September 30, 2024, as compared to cash provided by investing activities of approximately $2.1 million for the same period in 2023.

The increase of approximately $6.3 million of cash provided by investing activities was driven primarily by an increase of approximately $185.1 million in proceeds received from the Company's available-for-sale investments, and a decrease of approximately $104 million of purchases of held-to-maturity investments.

These increases were offset by an increase of approximately $201.5 million of available-for-sale U.S.

Treasury purchases for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Proceeds received from the Company's held-to-maturity investments decreased by approximately $67.0 million and capital expenditures increased by approximately $14.7 million for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Financing Activities

1 unchanged sentence

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

Net cash provided by financing activities was approximately $1.0 million for the six months ended June 30, 2024, as compared to net cash used in financing activities of nearly $0 for the same period in 2023.

The approximately $1.0 million increase in net cash provided by financing activities was primarily driven by $2.9 million of proceeds received from the exercise of Warrants during the six months ended June 30, 2024, offset by increases of approximately $0.9 million and $0.9 million in payments associated with vested equity awards and loan principal payments, respectively.

Net cash provided by financing activities was approximately $0.2 million for the nine months ended September 30, 2024, as compared to net cash used in financing activities of approximately $0.5 million for the same period in 2023.

The approximately $0.7 million increase in net cash provided by financing activities was primarily driven by $2.9 million of proceeds received from the exercise of Warrants during the nine months ended September 30, 2024, offset by increases of approximately $1.1 million, $0.8 million, and $0.4 million in payments associated with vested equity awards, loan principal payments, and equity issuance costs, respectively.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

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